Ocular Therapeutix, Inc.

Dr. Question and Answer session. To ask a question, please press star one. As a reminder, this conference call is being recorded and will be available for replay on the Investor Relations section of the Ocular Therapeutics website. I would now like to turn the call over to Ocular's Vice President of Investor Relations, Bill Slattery, Jr. Please go ahead, Mr. Slattery.

Good morning, everyone, and thank you for joining us today. Earlier this morning, we issued a press release outlining our financial results and business updates for the third quarter 2024. Mindful of everyone's time, Ocular's Executive Chairman, President, and CEO, Dr. Praveen Dougal, will briefly provide a summary of recent business highlights so we can quickly get to your questions. Joining Dr. Dougal for the Q&A portion of the call will be Donald Notman, Chief Financial Officer and Chief Operating Officer Sanjay Nayak, Chief Strategy Officer, and Steve Myers, Chief Commercial Officer. We refer everyone to this morning's press release and our Form 10-Q for a comprehensive update of third quarter financial and business results. During today's call, certain statements we will be making constitute forward-looking statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially as a result of a variety of factors, including risks and uncertainties identified in the risk factors section of our annual report on Form 10-K and our other SEC filings. With that, I'd like to hand the call over to Dr. Praveen Dougal to review our recent updates.

Praveen? Thank you, Bill, and thank you to everyone for joining us today. When I joined Ocular, our number one priority was bringing Xpaxly to market for wet age-related macular degeneration. Wet AMD affects about 1.65 million people in the United States, which translates to approximately one in every 160 adults. That means many of us are likely to know someone who is affected by this disease. And it reminds us that this market is large, and underserved, with up to 40% of patients discontinuing treatment within the first year alone. Just before AAO in mid-October, we reported that recruitment has progressed rapidly for SOLE1, allowing us to project full randomization by year-end 2024, which is well ahead of our prior guidance. We are thrilled to share that following this outstanding SOL1 recruitment success, our active study sites can now enroll new patients directly into SOL-R, our second registrational trial for ex-paxley in wet AMD. Let me repeat, SOL1 has reached a key enrollment milestone and we have turned the switch allowing clinical sites to directly enroll patients into SOLAR. This is a significant milestone, and we expect this adjustment to further accelerate the pace of SOLAR enrollment. As we reflect on the start of this year, there were widespread concerns that enrolling SOL1 would be challenging. The consensus was that The trial's unique superiority design, which we believe is directly in line with the FDA's draft guidance and validated with a special protocol agreement would lead to significant recruitment hurdles. In fact, some investors projected it would take us as long as 18 months to two years to complete randomization. In response, We assembled a world-class team who went beyond simply activating clinical trial sites. The team leaned on decades of experience and relationships to actively engage and communicate with the retina community in a way that resonated deeply. This extraordinary level of engagement sparked a remarkable level of enthusiasm and commitment from investigators and study coordinators for both our sole studies. Our approach has transformed what was expected to be a difficult enrollment process into one marked by rapid and enthusiastic participation. Accelerating the enrollment timelines for SOLE 1 has positioned us for an impactful year in 2025, setting the stage for a significant milestone with clinical data expected in the fourth quarter. By reaching enrollment targets ahead of schedule, we are advancing more rapidly toward the top line data that will provide pivotal insights into Xpaxley's potential in treating wet AMD. This acceleration brings us one step closer to potentially delivering a much needed therapeutic option to patients who deserve a more sustainable treatment and better long-term outcomes. But enrolling SOL1 is just the beginning. SOL1 is the first of two registrational studies for Xpaxly and wet AMD. Our second registrational trial, SOLAR, is a repeat dosing non-inferiority study. These two studies were meticulously crafted to work in harmony strategically designed to enhance each other's enrollment while providing a broad evaluation of Xpaxley's durability, repeatability, and flexibility. Goal one focuses on highlighting Xpaxley's durability. The goal here is to establish superiority in durability over two milligram Aflibrocept. SOLAR, on the other hand, is a more familiar repeat dosing non-inferiority trial that is designed to ensure our findings are robust and applicable in real-world settings. Both studies were thoughtfully aligned with regulatory guidance. SOLAR 1 supported by a special protocol agreement and SOLAR supported by a type C written response from the FDA earlier this year. Importantly, neither of these trials require sham for masking. The FDA has repeatedly stated, including most recently on a podium at AAO, that they do not recommend sham for masking because sham can elicit bias. In addition to taking important steps to reduce our regulatory risk, we've focused just as much attention on taking steps to de-risk the clinical outcomes and reduce variability between subjects. In SOL1, we are administering two loading doses of the Fliverset and require subjects to gain at least 10 ETDRS letters in BCVA or to reach approximately 20-20 vision prior to randomization. This ensures that we are only selecting subjects that have been responsive to anti-VEGF therapy and allows us to focus on durability of each treatment arm. Meanwhile, in SOLAR, we've gone a step further by incorporating five loading doses and two observation periods to carefully screen out subjects who are highly VEGF dependent. This approach emphasizes patient stability. Again, here we are continuing to focus on reducing risk by taking action to ensure that the enrolled patient population is as homogeneous as reasonably possible. By building in these measures, we're reducing variability, enhancing patient selection, and we believe strengthening the potential for successful clinical trial outcomes. From the onset, we also designed SOL1 and SOLAR to complement each other and boost recruitment for both studies. Initially, all subjects enrolling in SOLAR were required to be loading or randomization failures in SOL1. This approach ensured that SOLAR, which is widely seen as the more attractive trial for physicians to enroll their patients in, did not cannibalize enrollment in SOL1. As I shared at the outset of my comments, today we're announcing that SOL1 has reached a key enrollment milestone, and our trial sites are now enrolling subjects directly into SOLAR. We expect this important update will lead to further acceleration in SOLAR enrollment, which is already well underway. As SOL1 very quickly approaches complete randomization, subjects who are not ultimately randomized can seamlessly transition into SOLAR. This coordinated approach allowed us to avoid the typical slowdown seen toward the end of trial enrollment, creating a streamlined and efficient pathway that capitalizes on recruitment momentum at our clinical sites. We believe that this will provide us with a tremendous advantage as we continue to strengthen our deep history and strong relationships with our clinical trial sites. heading into 2025. The bottom line is that we've seen outstanding demand for participation in our expaxily clinical studies, underscoring the strong enthusiasm and interest within the retina community for a durable treatment option. This level of demand is particularly encouraging as it signals the excitement for Expaxly among both patients and physicians. Based on our historical clinical data generated for Expaxly, combined with actions we have taken to de-risk our SOL studies, we remain confident in the potential success of both SOL1 and SOLR. To date, Expaxly is the only TKI we are aware of to show proof of concept for monotherapy activity in treatment-naive wet AMD patients. To take that a step further, if you look at our prior U.S. wet AMD study, treatment with Xpaxly alone resulted in an impressive 100% ERP protocol rescue free rate at six months. And that was in a trial where no steps were taken to de-risk the patient population or trial design. We believe Xpaxly is the only TKI to show clear signals of efficacy in subjects with non-proliferative diabetic retinopathy, or NPDR. In our Helios trial, the administration of a single Xpaxly hydrogel, literally zero subjects were observed to have developed any vision-threatening complications at 48 weeks, compared to 38% of subjects in the sham control arm, which is in line with natural history data. In other words, not a single patient after just one injection of Axpaxli developed a potentially blinding complication at 48 weeks. Moreover, every subject in the Axpaxli arm with non-center-involved diabetic macular edema experienced disease improvement. It cannot be overstated. These types of results do not occur by accident. We believe the results from SOL1 and SOL-R may set a new standard, emphasizing the strengths of our data and underscoring our advantages in the competitive landscape. As such, it is imperative that we be prepared for a strong commercial launch. should Xpaxly be approved. If clinical demand is a proxy for commercial interest, and we believe it is, then we should plan for strong commercial interest in Xpaxly, potentially ushering in a new era of wet AMD treatment. We benefit greatly from having a remarkable commercial team that is currently achieving excellent results with Dextenza. the first and only drug-eluting intracanalicular insert. Xtensa utilizes the same elutex technology that is used in Xpaxly, and its performance strengthens our market presence and provides a strategic edge that we're committed to maintaining. We have taken several steps over the past few months to build on our existing commercial infrastructure to support the eventual manufacture and distribution of Xpaxly to retina specialists. And we plan to further expand these efforts in 2025. As we continue to execute, our commitment to the investment community is to maintain financial discipline. Based on our current operating plans, we believe our cash and cash equivalents of approximately $427 million on hand at the end of the third quarter provides runway into 2028 and fully funds Sol1 and Solar, the top line results. As we conclude the prepared remarks in today's call, I'd like to leave you with these key messages. Our mission at Ocular is clear. We are dedicated to becoming a leader in the treatment of retinal disease and improving vision in the real world. We are making outstanding progress on the two complementary studies in our registrational program for Xpaxley in wet AMD, Sol1 and SolR. Sol1 has reached a key enrollment milestone and we expect to complete SOL1 randomization by year end with top line data to follow in the fourth quarter of 2025. SOLAR enrollment continues to gain momentum and physicians can now enroll their patients directly into this clinical trial. In type C written responses received this year, the FDA has agreed that the design of these two studies should be sufficient to meet our regulatory requirements. And we believe positive data from these studies will enable us to achieve a differentiated product label, provide commercially relevant data, and meet the real-world need for a sustainable treatment option that improves long-term outcomes for patients with wet AMD. 2024 has been a year of significant change and tremendous execution at Ocular. But this is all in anticipation of what's ahead as we prepare for what we expect will be a milestone year in 2025. We thank you for your ongoing encouragement and support for ocular therapeutics. Operator, I would now like to open the call for questions.

At this time, we will be conducting a question and answer session. As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. We ask analysts to limit their questions to one so that others may have an opportunity to ask questions. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Tazeen Ahmed with Bank of America. Please proceed with your question.

Hi, guys. Good morning. Thanks for taking my question and congratulations on the continued momentum with the studies. Maybe a couple of points of clarification, Praveen. Can you talk to us about how many of the sites for SO-1 and SO-R are currently overlapping? And are you still planning on activating additional sites for SO-LAR? You know, the pace of enrollment has continued to be above expectations. Just curious if you still think you need additional sites to get to the finish line? Thanks.

Taveen, thank you for your question and good morning.

The answer is yes, there are quite a few sites that are overlapping and that is by design. As you know, these two studies are designed very thoughtfully to complement each other in terms of their recruitment. One of the really outstanding features here is that there is no slowdown. Typically what happens at about this time is the sponsor says look we are enrolling and please slow down uh we're completing enrollment and please slow down and the sites think of that as okay we gotta stop now and perhaps think of another trial uh that's not happening with us at all uh we are full speed ahead uh we don't slow down whatsoever and there's a seamless transition between soul one and solar so Yes, there are overlapping sites, and this is absolutely by design, so there's a seamless transition. And yes, we are continuing to activate other sites. SOLAR is a larger study, and we will continue to go ahead and press forward with that and execute as quickly as we possibly can.

Thank you.

Our next question comes from

Biren Amin with Piper Sandler. Please proceed with your question.

Yeah. Hi, guys. Thanks for taking my question, and congrats on all the progress. Praveen, you mentioned that you expect to have a differentiated product label with ExpaXly. Could you maybe define that for us? Is that based on treatment frequency, or are you focused on other metrics? Thank you.

Biren, good morning, and thank you for your question.

It's a very important question. And look, again, I go back to the design of SO1 and SOLAR. And what I would say is that as a clinician, I can tell you it answers all the questions that clinicians have, which is, you know, how relevant is this clinically in terms of the way I would treat a patient? It certainly answers the question of durability, which is from SOL1. It answers the question of repeatability, which is SOLAR. It answers questions in regards to how it compares to Aflibriset 2 milligram, as well as the high-dose ILEA. So our expectation is that if we are fortunate enough to have this drug approved, that we will have a strategic program in terms of a label that may include flexibility from six months to nine months with SOL-1 and SOL-R, repeatability based on SOL-R, as well as potentially the only label that will have a superiority. So we believe that we'll have both a regulatory advantage as well as a commercial advantage potentially if this drug should be approved.

Our next question comes from Tara Bancroft with TD Cowen.

Please proceed with your question.

Hi, good morning. So now that SOL-R enrollment can accelerate as a standalone trial, are you going to be providing regular updates on enrollment progress and what are your general expectations for how long enrollment could take for SOL-R now? Thanks.

Tara, thank you and good morning to you.

We will be providing updates as appropriate. What I would emphasize here is what I said in the beginning, which is how thoughtfully these two trials are designed. Realize that there is no slowdown here whatsoever. All the patients that are in SOL1 currently will seamlessly transition into SOLR. So SOLR, which is already recruiting, will have a really large bolus of patients coming in from SOL1. And that is, again, very thoughtfully and deliberately designed. So what I would also say is that from the very beginning, as you know, the challenge was really the enrollment of SOL1, which may be less of a familiar design than SOLAR. And I think most people have always said that SOLAR may be the more familiar treatment, the more familiar clinical trial design as it is a non-inferiority design. So, we do believe that that transition from SOL1 to SOLR will be seamless. We're very encouraged in terms of the recruitment pace for SOLR, and yes, we will provide updates when appropriate.

Thank you.

Our next question comes from Kelly Shee with Jefferies. Please proceed with your question.

Thank you for taking my questions. Just quickly, can you share with us the progress of the discussion with EMA? That's the first question. And secondly, as both so are, should greater physician and patient engagement be reflected by enrollment progress? Can you share what kind of patient population mostly suitable for YMD based on trial enrollment experience? Thank you very much.

Kelly, good morning to you and thank you for your question. In regards to regulatory agencies outside the U.S., we certainly are engaged in discussions. We haven't guided you yet as to the formal basis of those discussions and we will when appropriate. In terms of patient population, there are two different aspects to this. One is the patient population that we're enrolling for clinical trials and the other one is what would be relevant if this is approved and is out in the market. So in terms of the clinical trial, as you've heard from my prepared remarks, I think we've gone out of our way to make sure that we de-risk this patient population as much as possible in order to increase the chance of success. And we've done that in a very bespoke manner for each clinical trial, SOL1 and SOL-R, as we've discussed. With SOL-1, as you know, as a superiority study, what we've done is to select patients that we believe would be most responsive to anti-VEGF treatment. With SOL-R, what we've done is to select patients that would be as stable as possible for a non-inferiority clinical trial. Again, a very de-risked patient population. In regards to the market, We firmly believe that this drug, expaxily, if approved, will be the drug of choice for all patients. Our job at this point is to get this drug approved. However, what will happen, we believe, in the market, as has been shown historically, is a much wider use of this drug. Thank you for your question.

Thank you. Our next question comes from Sean McCutcheon with Raymond James.

Please proceed with your question.

Hi, good morning. Thanks for taking the question. Praveen, can you elaborate a bit more on the commercial efforts you alluded to in your comments? And obviously too early to talk about pricing specifics, but, you know, we hear a lot, and I'm sure you do as well, on speculation around the buy and build model for, you know, the currently marketed intravitreal injectable therapeutics in the space and how that could influence prescribing patterns. So what are your high-level thoughts on the pricing model for, say, a Q6 month or longer product and how that plays into your strategy on how you can leverage those incentives at these high-volume centers?

Thanks. Good morning, Sean, and thank you for your question.

It's a great question, and obviously we're a little bit early in terms of talking about pricing. What I will tell you is from a commercial point of view, look, I'm in a situation here where I'm very, very fortunate that we have a fantastic commercial team that has been very successful with Dextenza. And in order to leverage that talent into Retina is really a privilege. Look, in terms of pricing, we firmly believe that we will be able to obtain premium pricing. I think it is a little bit early at this point to talk about the specifics of the strategy for pricing. We will certainly address that when appropriate.

But thank you for the question.

Our next question comes from Jonathan Willeman with Citizens JMP.

Please proceed with your question.

Hi, this is Catherine on for John. Two quick ones for Dxtensa. I'm just wondering if you guys are reiterating your guidance for 2024 and also any commentary on the CMS rule for 2025 and kind of how that's going to affect pricing of Dxtensa going forward.

Catherine, again, thank you again for your question, and good morning.

I'm very fortunate, again, as I say, to have a fantastic commercial team for Dextenza, and I'm fortunate also to have Steve Myers here with me, who's our chief commercial officer. And let me hand over to Steve to answer that question. Steve?

Yeah, thanks, Praveen. Yes, Dextenza definitely remains on track to hit the guidance that we guided to previously, so we feel great there. Regarding the CMS rule, we are very pleased with the results of the rule. We continue to have separate payment in the ASC, but the rule concerns that we're gonna return separate payment in the HOPD. So we feel great about the rule that was issued and the effects it'll have in 2025.

Thanks for the question.

Thank you. Our next question comes from Yi Chen with HC Wainwright. Please proceed with your question.

Thank you for taking my questions.

I have a question regarding the program in diabetic retinopathy. So do you believe the next trial for NDR will be a Phase II or Phase III trial? And which ethics endpoint do you think will be appropriate as a pivotal trial endpoint? Is it DRSS improvements or is it disease progression from non-proliferative stage to proliferative stage of DRSS? Thank you.

Good morning and thank you for your question. It's a great question.

What I will tell you is, look, there are two takeaways that we have from the HELIOS study. One is the line of sight to the success of the SOLE programs. There is no doubt whatsoever that this drug is present safe and effective at 48 weeks for the Helios study. The second takeaway is the opportunity that we have for diabetic retinopathy and for diabetic macular edema. I think what's probably forgotten a little bit is that every single patient who had diabetic macular edema in the Helios study, and I mean every single patient, had improvement. And this was non-central involving diabetic macular edema, but even in this non-selected patient population, every single patient that had a non-center involving diabetic macular edema improved with the drug. That's a really important thing. What we've committed to doing is to going to the FDA and pursuing diabetic retinopathy as well as diabetic macular edema. We'll wait for the feedback from the FDA. We're very flexible in terms of what we need to do. We'll make a very thoughtful, strategic choice As to the endpoints, again, that is pending the discussion with the FDA. But what I want to emphasize here, which I think as a clinician I can tell you is absolutely remarkable, is what we look for is the prevention of blindness in diabetic retinopathy, what we call vision-threatening complications, and that primarily is diabetic macular edema as well as proliferative diabetic retinopathy. And with a single injection of Axpaxilate, At week 48, vision-threatening complications was literally zero. In the control arm, it was over 30%, which is what one would expect with the natural history studies. So to have the possibility of sitting with a patient and saying, Mr. Smith, your chance of having vision-threatening complications that are potentially blinding are over 30% year upon year, But with a single injection of Vax-Paxil, if you come to see me once a year as you would go to your dentist for teeth cleaning, your chance of maintaining vision and not going blind is literally zero. That's a pretty powerful argument. So we absolutely are very excited about diabetic retinopathy and diabetic macular edema, and we will pursue that. pending our discussion with the FDA. The only reason, and I want to emphasize that that hasn't happened as yet, is simply because our priority at this point is the SOUL programs, SOUL-1 and SOUL-R. And as SOUL-R gets underway, as you've heard, we will be pursuing diabetic retinopathy and diabetic macular edema. Thank you for your question.

Thank you for your

Our next question comes from Greg Harrison with Scotiabank. Please proceed with your question.

Hey, good morning. Thanks for taking the question. Just thinking about the regulatory submission in WebAMD, will you need to submit data from SOL1 and SOL-R simultaneously, or is there a potential for rolling submission once you have top line data from SOL1? Just trying to understand how much of a gating factor SOL-R enrollment will be.

Greg, thank you for your question, and good morning to you.

You know, look, what I would say is our regulatory path is about as clear as it can possibly be. As you know, we have a SPAR for SOL1. For SOLAR, we have a written type C meeting response. It clearly states that all we need are these two studies for approval. We don't need anything else. Traditionally, the FDA has required two positive studies. We believe that that will still be the case. We are in very close collaboration with the FDA, but at this point, our assumption is that we will need two positive studies, as has been the case historically. Thank you for your question.

Thank you.

This concludes our question and answer session.

I will now turn the call back over to Dr. Praveen Duggal for closing remarks.

Thank you. Once again, I'd like to thank everyone for taking the time to join our call today. We look forward to updating you on our progress. And if you have any follow-up questions, please reach out to Bill Slattery, our Vice President of Investor Relations. Thank you again for joining our call. Have a great day, everyone.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.