EyePoint Pharmaceuticals Inc (EYPT)

[Chance To See]

Presentation Transcript 09 10 2009

This is a transcript of the September 10, 2009 Rodman & Renshaw presentation. It’s very informative.

Note to iHub: This is my work (many hours) from listening to the publicly-broadcast webcast.

http://www.wsw.com/webcast/rrshq15/psdv/

Dr. Paul Ashton, CEO

Thank you very much for the opportunity to tell our story here. If any of you are interested in the company, I strongly suggest you look at safe harbor statement which is posted on our website and read it at your leisure.

Now, pSivida is focused on becoming the world’s leading provider of miniaturized, really tiny, sustained delivery devices. These can be administered locally. So we can go after the eye and just treat ocular conditions or potentially we can deliver into a different joint, or into the brain, or various other indications.

Now, we’re focused on becoming the world’s leader. And that sounds a very aggressive thing to say. But if you just look at the eye, currently there are three FDA-approved sustained delivery devices for the eye and we’ve actually developed two of them. So we’re already moving along here. Now, why have we been focusing on the eye primarily? Well these are the leading causes of blindness in the world. You’ve got cataract, diabetic retinopathy, age-related macular degeneration, and glaucoma.

And the first thing you’ll notice about those, is that there’s one which is well treated, which is cataract. And all of the others are essentially badly treated and they are all diseases of the back of the eye. Because it’s very difficult to get drugs into the back of the eye.

Now, the question would be, “Well, that’s fine, but how many people are really affected with these conditions?” There’s about 10 million people in the States who have a potentially blinding back-of-the-eye condition. Smaller sector here is macular degeneration with 2 million of those. About 4 million people with diabetic retinopathy, and about 4 million people with glaucoma.

OK, there’s a lot of people, how big is the market? Well, there’s one treatment that’s fairly effective for macular degeneration here. The so-called wet form. 15% of people with this disease have the wet form of the disease. And there is a treatment for that. it’s called Lucentis, it’s sold by Genentech, and last year it did about $800 million in sales. And clearly that’s the smallest – it’s a small fraction of this sector and this is the smallest section here of all of these indications.

So these are really big potential markets that we’re talking about.

Now, they’re largely untreated because it’s very difficult to get drugs into the back of the eye. Eye drops simply don’t work. When you take an eye drop, 98% will go into your nose. Only 2% will actually penetrate into the front of your eye, and virtually nothing gets into the back, the retina here, which is, after all, the target. Systemically, it’s very difficult to administer drugs systemically – to drive drugs across the blood/eye barrier, which is like the blood/brain barrier. So you have to have a lot of drugs systemically to get enough into the back of your eye and that causes systemic side-effects.

3:20
Our approach is very simple. We have a sustained delivery system that we simply inject directly into the eye itself and it will fit in the vitreous and release drugs, directly bathing the retina here. OK? And that’s our target after all.

Now, we’ve got a history of developing successfully products to treat the back of the eye. Our first product, Vitrasert, approved in ’96. It’s a surgical implantation. It’s implanted directly into the eye, required a 6 mm incision. The second product, developed with Bausch & Lomb, the Retisert device. That’s significantly smaller. It goes in through a 3 mm incision. This has a duration of 2 ½ years after single implantation. So very long-duration system. Now these two products are very good.

4:20
Most of this presentation is around our third generation, the Iluvien device. This is designed to be injected down a 25-guage needle, so it’s an office procedure. And theoretical duration is between 18 months and 3 years depending on which dose.

We are of course continuing the evolution of these systems. We have a bio-erodible system that’s in early stage clinical trials which I’ll just touch on in this presentation.

Now, we’re targeting diabetic macular edema, which, as I said, is a very significant disease. The best estimates I’ve been able to come up with are billion plus, between $1 and $3 billion is the potential size of this market in the U.S. I say potential because right now there’s no drugs actually approved for it. We do know that there’s well over a million people in the States who have visually-significant diabetic macular edema. It’s actually the world’s leading – the developed world’s leading cause of vision loss in people under 65 years of age. So it’s a very significant problem.

It is treatable with laser therapy, which sadly is not terribly effective. You essentially burn holes in the back of someone’s macula. Which, A, requires a bit of a steady hand, I guess, but two, just doesn’t work. Very poorly-effective treatment. So we have designed this system, the Iluvien. And if you have good eyesight you can just see this on the end of my thumb. It’s about the size of an eyelash, small enough as I say to be injected. It fits into the barrel of a needle so you can inject it directly into the eye.

It’s designed to last up to 36 months from a single administration. And it’s delivering in this case an FDA approved drug, fluocinolone acetonide, which is already approved.

[Phone rings.] That’s me.

6:30
Our Phase III clinical trials are already fully enrolled and we’re having preliminary top line data end of Q4 of this year. So this is very, very imminent data now.

Quick word of why we’re comfortable about this particular product. This is one of the first patients we treated. This is a photograph of the back of his eye. I won’t go into the details except to say this 27 year old had already maxed out on laser treatment. His vision when he came in was 20/100, which is one step away from legal blindness. He received a very large prototype device and three weeks later, amazingly, his vision had actually improved to 20/40. That’s legally able to drive. Was a stupendous result, albeit in one patient.

We have now fully enrolled our Phase III clinical trials. We have enrolled almost 1,000 patients in 100 sites. Most of the patients have been enrolled here in the U.S. About 650. We’ve got about 65 sites here, sites in Europe, Canada, and a few sites in India.

The trial is a three-year duration, but we have two-year data coming out in December and we intend to submit for FDA approval with that two-year data and a commitment to provide the agency with the additional one-year data after that. Primary end point is 15 letters of improvement on an eye chart. And that’s actually a big standard. That’s three lines of vision on an eye chart. And that perhaps has been one of the barriers to entry because that’s a big deal. It’s the same standard that’s applied for age-related macular degeneration.

Just to reiterate then, our enrollment for this trial is fully completed. We have 24 months data expected at the end of this year. December is the time we’re shooting for. And the end game, we anticipate filing in early 2010.

8:50
Now, we are very comfortable with the trial design. We’re very comfortable that the drug itself works. The trial is designed show that our device delivering that drug will show efficacy.

So, why are we so comfortable? Bausch & Lomb actually conducted the trial with the Retisert device, that’s that larger one I showed earlier, that released the same drug, fluocinolone acetonide. And at two years they found that 27% of patients actually gained three lines of vision [My Comment: Note that this is 2-year data. The later statement (17%) is 12-month data.] compared to only 8% with laser. That was statistically significant. [My Comment: See second question in Q&A section. Questioner says purpose of laser treatment is to halt progression of the disease by “stopping further deterioration and bleeding” not to improve vision.]

So right away when we’re designing our Phase III for this smaller device, we know the trial design that we need, we know the entry criteria that we need, we know the 200 patient trial [My Comment: the Retisert trial] showed statistical significance. Therefore one could assume, similar efficacy, you’re going to have a high likelihood of showing statistical significance with two trials each of 450 patients, which is what we’ve done.

10:20
Now there were some issues with the Retisert trial and DME Why was [wasn’t?] it approved last fall[?}

Here’s some of the issues. One, this is a surgical implantation You can’t have a double-masked study if people either get surgery or they don’t. So that’s a problem. We’ve got around that of course because this implant is injectable. We can make an injection into patients or literally poke them in the eye with a blunt needle. Patients don’t actually know if they’ve been injected or not. So that’s the first one.

Second issue, this is obviously a surgery so there are side effects associated with that. We’ve moved to an injectable now. We’d expect to see far fewer side effects.

The third point is that there are side[?] effects associated with the drug, fluocinolone acetonide. And we believe that by reducing – by controlling the dose, and having a lower dose and also another arm that has the same dose _____, we’re going to probe carefully the dose response to try to minimize the side effect profile.

Now, we are of course impatient people. In addition to the 1,000 patient clinical trial, we’ve also separately done a 37 patient trial, which is a PK [My Comment: see note 1 at the end] study, where we’ve been looking at blood levels that result from the ocular implant. The 12-month results have been published. They were presented at the ARVO Conference [My Comment: the Association for Research in Vision and Ophthalmology] in March of last year. We couldn’t actually find any detectable level of the drug as should be expected. We’re talking about very small amounts of drugs.

11:30
What we also can do with this trial is look at the incidence of elevated intraocular pressure, IOP, and compare that to the Reticert implant that B&L did. We could also take a peek at the efficacy. So at twelve months, this is the Reticert data, Illuvien high dose, Illuvien low dose. Retisert showed a 17% of patients gained three lines of vision. [My Comment: Note that this is 12-month data. The earlier statement (27%) was two-year data.] Our high dose showed 27%. And our low dose 23%. Very, very encouraging stuff. Now I must emphasize that this is a small trial, there’s only 37 patients in this study. So, is it encouraging? Absolutely. Does it prove efficacy? Of course not, it’s too small.

The Retisert safety data: 35% of patents showed at increase in IOP at 12 months compared to 24% with our low dose – and no one – sorry, no one with out low dose. OK? 24% with the high dose, none in the low dose. So this is extremely encouraging. We’ll find out what the actual data shows when of course we look at the Phase III clinical trial at the end of this year.

12:50
Where is the competition? I’ve just told you this is a multi-billion dollar opportunity. The competition right now is Genentech with Lucentis. That’s injected into the eye every six weeks. We believe that there may be a significant advantage for us there. We’re injecting we hope once every two to three years. They are also approximately two years behind us in the clinical program.

Allergens, a fantastic company. They have finished enrollment of their Phase III clinical trials. They’re again about two years behind us. They have an injectable device that is designed to be injected once every six months. So we’ll see where we are.

Now, what about cash? This product, the Iluvien device, is being developed with Alimera Scienes. They’re a VC-funded company and this is essentially their only product. When we signed the deal, Alimera paid us a $12 million license fee up front. They would pay us $25 million on FDA approval. In addition, Alimera owe us a $15 million note. Currently they are paying 8% interest on that, annual interest, every quarter. In April that will increase to 20%. In addition they have to start paying off the principal at $500,000 per month. If Alimera is acquired then that note would be payable immediately. Economics again [?} Alimera also pays all of the R&D costs and we get a 20% profit split.

We’re going to get a little short of time. This is our next generation system. You can see these new devices are about 30 times smaller than the current devices. This is early stage.

Now, if you look at the progression of our products here, first generation Vitrasert, Retisert, Iluvien, new stuff. It’s a very encouraging progression in approved products for the first two, late stage, early stage. It’s also a progression of our ability to do deals. Vitrasert was licensed to Bausch & Lomb as was Retisert. Iluvien to Alimera Sciences. We’ve also sublicensed the technology that underlies the Iluvien product to Pfizer. So Pfizer can actually use that same technology, put their own drugs into it to go after diseases by AMD, glaucoma, and yes, diabetic macular edema. Either way we’ll get paid. We have a lot of other potential marketing opportunities out there also.

If you look at our pipeline, we have a great pipeline. Two products approved on the market. One product in late-stage Phase III. Several products in Phase II that I haven’t had a chance to describe to you. And early stage.

Let’s look at the financial highlights. If you go back to our regular SEC filings, you’ll see a history of increasing revenues, declining cash burn, and absolutely importantly, inflow from partnerships. That’s largely how we’ve been running our company.

There’s 18 million shares outstanding right now. Warrants have an average exercise price of about $7 a share. Currently there’s about 13 million of those. Our largest single shareholder is actually Pfizer. They own about 10% of the company.

We have at our last filing $8 million in cash, no debt, and over $40 million to be collected from Alimera Sciences assuming things go well.

16:30
If you look at our accomplishments over the last two years. There’s the Alimera deal that we just described, that’s a $78 million deal. The Iluvien Phase III clinical trial finished enrollment. Phase II trials, which I haven’t had a chance to discuss, are underway. They are going after macular degeneration, both the small form, wet, which ____ Iluvien is merely $800 million, and of course the much more common dry form of the disease, dry [?]. We have a Pfizer license that was an $11 million equity investment plus R&D supports and over $150 million in milestones plus royalties. We’ve had good results from our pancreatic study, that’s in Phase II. And a consistent theme that you’ll see over the last few years is reduced cash burn and we have no requirement to raise cash. And that’s a very important point right now.

If you look at our milestones coming up, clearly the most important milestone is the two-year data end of December. You should also look for an NDA filing, approval, and milestone payments. We should also expect to see additional clinical trials with this and other technologies, and partnerships. That’s how we’re going to run our company.

So to summarize then, we have a near-term product finishing Phase III clinical trials. The data we’ll have in December of this year. Near term product going after a unserved billion dollar market opportunity.

We have a very strong IP position. How can you get any assurance over the IP position? Well, we’ve done deals with Pfizer and Alimera, who are backed by Domain and Venrock. None of those guys mess around. They are very serious about due diligence.

We’ve got lots of licensing agreements. Reduced our cash flow and we have cash in the bank. Over $40 million anticipated from our existing agreements.

And largest shareholders: Pfizer, Orbis which is an Australian fund, Midsummer here in New York, and QinetiQ, which is a UK defense contractor. QinetiQ is actually Europe’s largest employer of Ph.D.’s and they’re the ones who developed the BioSilicon technology, which is going to be our next generation.

So thank you very much indeed for you time. And if there’s any questions, we have time for about one and a half.

19:20
Q&A

Q. What price did Pfizer buy the stock at?
A. About $8 a share.

Q. I understand that the laser treatment is not necessarily to improve eyesight, but to stop further deterioration and bleeding, yet the primary endpoint here is to improve eyesight. That’s quite a bit different. Is that correct?

A. That’s correct. We are looking to improve eyesight.

Q. And is a secondary endpoint simply preventing deterioration?

A. Yeah, so we’ll look at that. We’ll also look at the underlying progression of diabetic retinopathy itself. One of the things I didn’t present here because it gets a little complicated was with the Reticert data, which remember is using the same drug but a larger device with all kinds of other issues, we actually saw a reversal of diabetic retinopathy, which is really quite shocking. That was very encouraging. So people with diabetic retinopathy severity score actually improved during the two years. We hope to see something similar.

Q. A follow-up. If the Phase III results show that you prevented the patient from getting worse, that in and of itself would not be satisfactory to the FDA?

A. We’ve – I’m not going to anticipate what the FDA is going to possibly allow, but we have told the FDA that we would seek approval based on percentage of people who’s vision improves by three lines on an eye chart.

Q. ______ approval depends upon your claim. If your claim is halting the progression then _______________.

A. It’s the simplest thing.

Q. When you talk about inter-ocular pressure how often do you measure that during the course of these trials? Do you measure it at different times, different products, different release [?] characteristics?

A. By the protocol, patients would come in for a follow-up visit, I believe, and I would need to check, one week, two weeks, one month, three months, and then every quarter unless there’s a reason to come more frequently. Now, if a condition develops, then of course it would be best medical practice. I myself have elevated intraocular pressure and I see my physician about once every six months. Or I should.

Q. Can you talk about any other competing delivery technologies _____?

A. Ummm, the only ones I’m aware of is two. One was SurModics had a competing device called the Ivation, which is – looks a bit like a cork screw. And you literally screw it into the eye. They had a deal with Merck and that kind of collapsed for whatever reason. So that’s one technology. So it’s a little – significantly more invasive, I think. It’s an operative procedure. You have to take the conge down and then tack it back up afterwards. The other one that is, that’s furthest along is Allergan’s product Ozurdex [?]. They’ve just had that approved for vein occlusion, different indication. And that actually looks similar to ours. It’s a bio-erodible system. It’s injected with a slightly larger needle and it delivers dexamethasone, corticosteroid as well, for approximately one month. And the hope is that in the one month you’ll buy a therapeutic effect that will last for six months. We’ll see what the clinical trials on that show. The data that they were approved on just in vein occlusion showed they had efficacy for three months and then they lost it by six. They were approved anyway. So that was good to see.


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1. From Wikipedia
PK = pharmacokinetic
Pharmacokinetics is often studied in conjunction with pharmacodynamics. Pharmacodynamics explores what a drug does to the body, whereas pharmacokinetics explores what the body does to the drug. Pharmacokinetics includes the study of the mechanisms of absorption and distribution of an administered drug, the rate at which a drug action begins and the duration of the effect, the chemical changes of the substance in the body (e.g. by enzymes) and the effects and routes of excretion of the metabolites of the drug.