Ocugen, Inc.

Good morning and welcome to the Ocugen third quarter 2022 business update and financial results call. At this time, all participants are in a listen only mode. A question and answer session will follow the presentation. If you should require operator assistance, please press star zero on your telephone keypad. Please note this call is being recorded. I will now turn the call over to Tiffany Hamilton, Ocugen's Head of Corporate Communications.

Thank you, Angela. Joining me today are Ocugen's Chairman, CEO, and Co-Founder, Dr. Shankar Musunuri, who will provide a business update, and our Chief Accounting Officer and Senior Vice President of Finance, Jessica Crespo, who will provide more updates on our financial results. Earlier this morning, we issued a press release detailing business activity for Q3 2022. We encourage listeners to review this press release, which is available on our website at oxygen.com. This call is being recorded and a replay along with the accompanying slide presentation will be available on the investor section of the Oxygen website for approximately 45 days. This presentation contains forward-looking statements within the meaning of the private security Litigation Reform Act of 1995, which are based on the beliefs and assumptions of the Oxygen Incorporated and on information currently available to management. All statements contained in this presentation, other than statements of historical fact, are forward-looking statements. We may in some cases use terms such as predict, believe, potential, proposed, continue, estimate, anticipate, expect, plans, intends, may, could, might, will, should, or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Such statements are subject to numerous important factors, risks, and uncertainties that may cause actual events or results to differ materially from our current expectations. These and other risks and uncertainties are more fully described in our periodic filings with the Securities and Exchange Commission, FDC, including the risk factors described in the section entitled Risk Factors, in the quarterly and annual report that we file with the SEC. Forward-looking statements that we make in this presentation speak only as of the date of this presentation, except as required by law. We assume no obligation to update forward-looking statements contained in this presentation, whether as a result of new information, future events, or otherwise, after the date of this presentation. Finally, Occupant's third quarter 10-Q will be filed soon after today's call. I will now turn the call to Dr. Musaner.

Thank you, Tiffany. Good morning, and thank you for joining our call. I'm very proud of the important accomplishments we achieved in the third quarter. With courageous innovation as the driving force behind everything we do, we're diligently progressing with our cell and gene therapies and pursuing broader development and expansion of our vaccine program, which now includes a unique mucosal vaccine for RQ500 for COVID-19. We're also very enthusiastic about the potential of our modified gene therapy platform that we shared in more detail at the American Academy of Ophthalmology conference in Chicago and our first R&D day last week. The Ocugen team continues to charge ahead to establish ourselves as a fully integrated, patient-centric biotech company. As we meet our clinical and regulatory milestones, I'm especially confident that the team is welcome poised to drive science in new directions and break new ground for patients who have no effective therapeutic options and people who want choice in the fight against COVID-19. Today, we are going to provide updates on our vaccines, gene, and cell therapy programs. I would like to start with OccuGen's vaccines program. COVID-19 remains persistent, and the world critically needs more effective and safe vaccine options. we are realizing some of the limitations of vaccines currently available in the United States in terms of their durability and capability to reduce transmission. Up until now, much of the attention has been on reducing hospitalization rates, but we need to think much more broadly and consider what effects new variants will pose and what is required to face the unique challenges that this next phase of COVID-19 will bring. As I alluded to earlier, in September, we announced our licensing agreement with Washington University to develop, manufacture, and commercialize its proprietary mucosal vaccine in the United States, Japan, and Europe. RQ500 has the potential to generate rapid local immunity in the nose, mouth, upper airways, and lungs where SARS-CoV-2 enters and infects the body. We believe that a mucosal vaccine can help reduce the transmission rate by generating neutralizing IgG, mucosal IgA, and T cell responses. This approach represents a potential universal booster, regardless of previous COVID-19 vaccination. We intend to work closely with the U.S. government agencies tasked with pandemic preparedness on the regulatory pathway and the initiation of clinical trials. Additionally, we are addressing the public's need for a more durable immune response to COVID-19 with continued development of our candidate vaccine, Covaxin. Enrollment was completed and dosing continues in the Phase 2-3 immunobridging and broadening clinical trial with top-line data expected in early 2023. We are encouraged that no safety concerns have been identified in the trial today. As part of the technology transfer, we successfully completed a demonstration batch at Jubilant Hollister. We will have the ability to move forward once World Health Organization concerns with our partner have been resolved. Now, moving on to our gene therapy program. OccuGEN is deeply committed to our core technology focused on inherited retinal diseases, along with other blindness diseases affecting larger patient populations. We are making progress in our vital work in retinitis pigmentosa, a disease for which there is no cure, no medicines to block disease progression, and limited treatments to help manage the patient's tragic journey that ultimately leads to blindness. The Independent Data and Safety Monitoring Board completed a review of safety data for subjects enrolled in cohort two for the RQ400 Phase 1-2 clinical trial for retinitis pigmentosa, and recommended proceeding to enroll subjects in cohort 3. We have dosed the first patient, and the company expects to complete cohort 3 enrollment by the end of the year. By the end of the phase 1-2 study, data will be collected and analyzed from dosed RP and LCA patients before initiating the phase 3 efficacy trial. Currently, RP is associated with mutations in more than 100 genes affecting approximately 2 million people globally. The current study will start enrolling patients with a Leber congenital hemorrhagic cyst, or LCA, up to 90 mutations. LCA is a rare eye disease associated with mutations in more than 25 genes. Ocuportin, also leveraging our modifier gene therapy platform, is being developed to utilize the nuclear hormone receptor gene, RORA, for the treatment of dry age-related macular degeneration, or dry AMD, which affects approximately 9 to 10 million Americans alone. In this quarter, we are announcing the addition of OQ410ST to potentially treat Sargot disease, an orphan disease that will be investigated along with dry AMD. We have successfully completed CGMP manufacturing in support of clinical trials, and are currently conducting IND enabling studies. OQGEN is planning to file IND applications to initiate Phase I-II clinical trials for both these programs in Q2 2023. Another product modality in the retinal disease space is based on a novel fusion protein. OQ200 is designed to treat type threatening diseases such as diabetic macular edema, diabetic retinopathy, and wet AMD. Oxygen is currently executing IND enabling studies and is planning to submit an IND application in the first quarter of 2023 to initiate a phase one trial targeting DME. Regarding our regenerative cell therapies, in May, we expanded our pipeline into cell therapy and orthopedics with Neocot. Neocot shows potential to accelerate healing and reduce pain, rebuilding damaged knee cartilage and limiting the progression of osteoarthritis. Ocigen is working with the FDA to complete the Phase III protocol to advance its development and is building its own manufacturing suite to prepare for the study. Earlier this year, the FDA granted a regenerative medicine, advanced therapy, or RMAT designation to Neocort for the repair of full thickness lesions of the knee cartilage in adults. Our ambitious clinical agenda and the rigor in clinical development to advance our pipeline is reflective of our culture of courageous innovation. We're relentless in our pursuit towards our long-term goals and reaching the patients who can potentially benefit from our diverse pipeline. I will now turn the call to Jess to provide our third quarter 2022 financial results.

Thank you, Shankar, and good morning, everyone. I'll now provide an overview of the key financial results for the third quarter of 2022. Our research and development expenses for the three months ended September 30th, 2022 were $15.6 million compared to $6.3 million for the three months ended September 30th, 2021. The increase in research and development is primarily driven by cost incurred to execute on our clinical trials. General and administrative expenses for the three months ended September 30th, 2022 were $7.5 million compared to $4.5 million for the third quarter of 2021. Our net loss was approximately $21.9 million, or 10 cents net loss per share for the third quarter of 2022, compared to a net loss of approximately $10.8 million, or 5 cents net loss per share for the third quarter of 2020. Our cash, cash equivalents, and restricted cash totaled $101.6 million as of September 30th, 2022, compared to $95.1 million at the year end, December 31st, 2021. We are focused on efficiently managing and prioritizing the use of our capital. Our plans to work with the U.S. government agencies for support and the funding of our COVID-19 vaccine program has allowed us to extend our cash run into the fourth quarter of 2023. That concludes my update for the quarter. Tiffany, back to you.

Okay. Thanks, Jess. And with that, we'll open the call for questions. Angela?

At this time, if you would like to ask a question, please press star followed by the one on your telephone keypad. Your first question comes from the line of Jennifer Kim with Cantor Fitzgerald. Your line is open.

Hey, everyone. Congrats on the quarter, and thanks for taking our questions. I have a few here. The first is, I think you mentioned that the R&D cost reflects the cost incurred for clinical trials. I'm just wondering how should we think about those OpEx numbers going forward in terms of where GNA and R&D are at for the quarter? And I know that you said that you're building manufacturing sites to prepare for neocard and overall expansion. My second question is just the top line results for the Phase 2-3 for Covaxin. Can you walk us through what the next steps and the timeline for those steps would look like in terms of your discussions with agencies and and the potential for conducting an adult safety trial, et cetera?

Yes. Jennifer, good morning. Thank you. I'll let Jess answer the first question.

Sure.

Hi, Jennifer. I'll do the second one.

Yeah. So with regards to the cost on a go-forward basis, I think this quarter is probably a decent proxy for our go-forward expenses, looking at R&D and G&A.

And your second question is related to NEOCAR internal Could you repeat your second question, Jen?

Yeah, yeah, sure. It's for the Phase 2823 data for Kaweckson. Can you walk us through sort of what the next steps would look like after the top line data and the timeline for that in terms of your discussions and where you should go next?

Yes, yeah. So the top line data, as we stated, we have completed enrollment, and we are currently going to do the data analysis after we're done with the collecting all the samples from the patients after the second dose. And we're anticipating to release the top-line results early next year. And then the study will get completed. Obviously, as we mentioned before, the data will also give some direction on dosing patients who have taken mRNA before. That means in addition to NAVY patients, we also had mRNA patients because it's very difficult to enroll 100% new patients at this stage in our little pandemic case. And therefore, we are going to get data, bolster data on patients who took mRNA with our vaccine. And so based on that, once again, we are already working with the FDA on the next safety protocol, which we believe may be needed for U.S. study in U.S. demographic for BLA. But however, based on the bolster data, that will shed a lot of light into how we move forward. Because we believe Covaxin can make a good booster with a broad immune response for people who took the Moderna shot, which is only based on spike.

Okay. That's very helpful. And if I could squeeze one more question. As you expand to include LCA patients in your OCU400 trial, are you expanding at the cohort three dose? And then how many LCA patients would then be needed to then support moving into phase three?

Yeah. No, that's a good question. So, yes, that's the plan, just like you stated. Our goal is to go with the most tolerable dose into LCA, and we'll be recruiting three patients.

All right. Thanks, guys. Thank you. Thank you.

Your next question comes from the line of Robert LaBoyer with Noble Capital. Your line is open.

Good morning. I had a question on NEOCAR and if there are any timeframes that you can give us as to finalizing the phase three protocol or starting the clinical trials.

Yeah, currently, Robert, We're still, there are two steps to it. One is getting our protocol finalized with FDA. We've been working with them. It takes some time. The second step, most important step, I think that, I think we know we'll get that squared off in the next few months. The actually most rate limiting is our manufacturing. Because cell therapy is almost like a personalized medicine. You don't need large manufacturing facilities, but you do need highly scientific, you know, small facilities It's a very complex science where we can manage with good control. So that's why Octogen has committed to build our own facilities in our R&D expansion. We're actually preparing those facilities. So that's the rate limiting. One is getting FDA protocol agreement. The second most important step is getting our facilities ready for this. And we're anticipating those facilities will be ready for the end of next year.

Okay, great. That's very helpful. Thank you.

Your next question comes from the line of Daniel Gadawan with Chardin. Your line is open.

Hi, good morning. Yeah, good morning. Thank you for taking the question. Just a couple here. So there's two vaccines in the pipeline, the collection and the OCU500. What is your strategy for them working together? Are you looking at them as being complementary? I just wanted to see what the big picture is for both of them.

Yeah, absolutely. So RQ500, obviously, mucosal vaccine is really needed, irrespective of what your vaccinated status is. So that will, I mean, we have to control the transmission, right? I mean, that's really important. Otherwise, virus will continue to mutate. All the experts in the field believe you really need something, mucosal vaccine, where you can stop the entry of virus. So I think that's going to be good for the long-term, too. And our Covaxin offers a broad immune response. I mean, ideally, if everyone gets Covaxin and establishing a broad immune response, you have adaptive immunity. So, you know, you'll have ability to fight off, you know, emerging variants potentially. And then you take mucosal vaccine as a booster, which is inhaled or intranasal, which will be very convenient even for kids in the long term. And it's also easier to make this vaccine. It's based on adenoviral vector platform. So as the new variants come in on an annual basis, it's easy to produce this vaccine compared to our inactivated viral vaccine, cold virus vaccine. So that's the distinct feature. So obviously, it's really needed. I mean, this nuclear vaccine is a great, great need right now where the pandemic is going.

Okay, got it. That was helpful. Another one on OCO-400, are you still guiding to report the initial data by mid-2023? And if so, what are some of the key metrics that we should be paying particular attention to?

Yes. I mean, we'll continue to monitor the data, and our goal is to give some data rates by mid-next year. And as we mentioned before, the phase one to clinical trial, the primary endpoint is safety. However, we are monitoring efficacy based on observational endpoints. And each mutation may have a different endpoint going into phase three. So that's the reason, you know, there are multiple observational endpoints, you know, looking at broadly functional as well as structural endpoints. Structural means, you know, under OCP, you'll be looking at the structure of the retina. You know, is there any stabilization of degeneration? Stabilizing a signal is really important in these patients, right? You're protecting from degeneration. And so you're looking at structural aspects and functional aspects, looking at, you know, like a perimetry or looking at mobility. And some of those data will be, you know, we're hoping to release by mid-next year. Got it. Thank you very much.

Your next question comes from the line of Jonathan Ashkoff with Roth Capital Partners. Your line is open.

Thanks, guys, and good morning. My one question is on Covaxin. To what extent, or actually, I'm sorry, it's on OCU 500. To what extent do you think that someone's vaccination status prior to getting 500 might allow them to neutralize what's on that adenovirus and make it not really that effective.

Good morning, Jonathan. I think when you give mucosal vaccines, typically, you know, if your system is primed, it's really important. With, you know, most of Americans are primed with, you know, mRNA. So if they have two shots primed, mucosal vaccine does help. So our goal is to really target as a universal booster vaccine. That's a potential target. And people who are vaccinated before, it's really important to prime before they get the mucosal vaccine. At least the data is pointing out. That's where you get the full benefit. Okay. Thank you.

Your next question comes from the line of Uir with Mizuho Securities. Your line is open.

Hi, guys. Thanks for taking my question. Just curious, with the, you know, with vaccination, essentially, I guess, moving from government pay to commercial pay, just wondering how you guys are thinking about the role for both Covaxin and, I guess, ultimately, OCU 500. Thanks. Yeah.

So I think you have seen, you know, some of our competitors' vaccine players have announced their pricing. You know, some of them want to price it over $100 a dose. They're anticipating it will move into private market. However, so the Covaxin, you know, follows the traditional path. Somebody wants to take it as a primary series, which would be a very good primary series vaccine, as well as a booster. However, with the mucosal vaccine, there is a lot of emphasis from all the way from governmental agencies to all the experts in the field. They're supporting it. They're really worried about significant mutations coming up if you don't control the transmission. Therefore, there is a great need for it, and we're working with government agencies. We believe something novel like that, something to control the transmission, because, you know, largest democracies, I mean, the countries out there, including India and China, they launched mucosal vaccine, and we are way behind it. I think it's time. We're hoping our government will step up after the elections and support the development of mucosal vaccine, which is RT500. And we believe, you know, for that, something like that to control the transmission, where everyone agrees, they should have government support. That's what we believe. And eventually that may become private too in future years. But at least in the short term, we believe government should really support new federal banking.

And just following up on your comment about the OCU-500 being authorized in China and India, can you give us a sense of how effective that is in those countries and whether it's broadly used? Thanks.

Yeah, in India, I mean, the data is public. Both the companies have published some of the data coming out of their clinical trials. I mean, obviously, in India, they just launched it, and their phase 3 data looks good compared to Covaxin head-to-head, and they showed good not only IgGs, but also mucosal immunogenic response. They also stated, you know, it neutralizes, you know, emerging variants. or variants of concern today, which are existing. And from the other vaccine in China, which is inhalation vaccine, it's widely rolled out. In fact, there's some public information out there. As of last week, they rolled it out for many, many large cities in China. So we don't know how the data is, but at least publicly available data looks good. So both of them are pointing out Mucosal vaccines may be very beneficial to control this pandemic and transmission.

There are no further questions at this time. This concludes the Q&A portion. I will now turn the call back over to Chairman, CEO, and co-founder, Dr. Shankar Musuneri.

Thank you, Angela. I'd like to conclude the call with some additional parting thoughts. We have shown remarkable progress to achieve our vision of creating a fully integrated patient-centric biotechnology company that targets unmet medical needs and impacts public health. We pointed this out last week during our R&D day that between 2023 and 2027, we're targeting BLA filing and product launches in each of the next five years, reflecting what we mean by courageous innovation. We believe our gene therapies have potential to bring significant value to our patients and shareholders as discussed at the R&D day. We had to prioritize our resources on gene therapies while seeking partnership with the government agencies for vaccines to support public health in the short term. Once we start getting data reads next year on gene therapies, it will allow OxyGEN to potentially form partnerships outside of US to support our growth. In the long term, we will continue to strengthen our pipeline to become leaders in disease areas we represent and continue to offer hope for patients across the globe. Thank you for joining us today.

And everyone, have a great day.

This concludes today's call. You may now disconnect.