QLT, Inc. (NASDAQ:QLTI)
30th Annual JPMorgan Healthcare Conference Call
January 11, 2012 11:00 am ET
Robert Butchofsky - President and CEO
Good morning everyone. Thank you for joining us this morning. I know it's been a long and busy week. So we're glad you could be here to learn about the QLT story.
The story over the past six years during my tenure as CEO hasn't just been a great period for the company. I want to just stop and tell you how we got where we are today. Essentially, we've had a number of issues we've had to deal with. We have broadened the pipeline that forms the basis for the ongoing company. But we had to deal with a number of different issues including litigation on a couple of fronts. We've gone through a series of divestments and associated restructuring for the company.
We've cleaned up our balance sheet by eliminating convertible debt and done a couple of Dutch auctions during that period of time. We've restructured both of our revenue streams. And then we finally settled the last piece of our litigation about two-and-a-half years ago.
I tell you this is not because it's a great part of the story, but I think it's important to understand how we got to where we are today. And also, I think it's helped us to build some credibility with investors, because we've executed on all these things to the most part to the best we could.
So where are we today? The company today is basically very strong ocular-only focus company. There is two programs that form the basis for our pipeline, a synthetic retinoid for two orphan indications, and then a drug delivery system for delivery to the front part of the eye.
We have a strong balance sheet, over $200 million in cash, and we also have a royalty revenue stream from an asset that we divested, Eligard, which is a prostate cancer drug. We've collected about $75 million from that asset and have another $125 million remaining. We carry the net present value of that asset on our balance sheet, which is currently amounting to $109 million.
We're a publicly traded company, about $350 million market cap. So there is a strong underlying asset value in addition to the pipeline which I'm going to spend most of my time focusing on today.
Where are we going? I think the rallying cry for QLT today is that we plan to have three Phase III programs running a year from now in 2013. Again, the retinoid orphan drug development for leber congenital amaurosis and retinitis pigmentosa, and that's going under global development currently. And then also our punctal plug drug delivery program is progressing as well. I'll highlight both of those programs for you.
This is an overview of our pipeline currently. In both of the green arrows for the synthetic retinoid, we plan on progressing towards pivotal studies beginning later this year. We're also doing a confirmatory Phase II study in glaucoma around our proprietary plug delivery system.
I want to start by talking to you about the synthetic retinoid program, QLT091001. The mechanism of action for this drug is we're targeting two specific genetic mutations that take place in the visual cycle pathway. These two mutations take place, first is called LRAT, the second is called RPE65. The RPE65 mutation is the more prevalent of the two. But the essential problem with these two diseases is they block the production of precursors that are vital to the production of rhodopsin.
Rhodopsin is the chemical that's responsible for transmitting light impulses to the brain. So the key elements or signatures of these two diseases are poor functional vision, especially in low light conditions.
QLT001 enters the metabolic pathway just past the second of these two mutations and you can essentially view this as enzyme replacement. We're providing replacement for 11-cis-retinal, which is one of the precursors for the formation of rhodopsin.
The first disease we're targeting is a pediatric disease called leber congenital amaurosis or LCA. This is a disease usually diagnosed soon after birth because of significant visual abnormalities. It's start to be the most devastating of the inherited retinal diseases, because ultimately one-third of these patients progress to total lack of light perception blindness, not just legal blindness, but no light perception blindness.
Nystagmus is a hallmark. That's wandering of the eyes, looking for input from visual stimulus. And again, the two specific genetic mutations we're targeting, LRAT and RPE65, lead to a treatment eligible patient population that we estimate about 2,000 patients worldwide. There is no approved therapeutic treatments for this disease.
The second disease we're targeting is a disease that impacts older patients, meaning impacting juvenile but also up to age 50 or beyond, called retinitis pigmentosa or RP. It's a similar disease to LCA. Only it's adult-onset in nature instead of pediatric. Night blindness is typically the first symptom that patients notice. And again, we're targeting the same two genetic mutations with this disease that we target for LCA.
The overall patient population for retinitis pigmentosa is around 300,000; however, the treatment eligible patient population with these specific genetic mutations we're targeting is around 3,000 patients. So overall between both of these diseases, we have a treatment eligible patient population that we estimate about 5,000 patients on a worldwide basis.
What have we demonstrated so far with this molecule? We've had this drug in the Phase Ib study that has been completed now for leber congenital amaurosis. It was an open-label single-center study. We treated 14 subjects in total, seven with the LRAT mutation and seven with the RPE65 mutation. This drug is administered orally, once a day over the course of a week.
The visual function parameters we've done a variety of functional tests, over a dozen functional tests, but I will focus my comments today on what we think are the two most relevant visual field which is measure of peripheral vision and visual acuity which is a measure of fine vision. These are both accepted regulatory endpoints. I'll talk about the regulatory endpoints later in the presentation.
This is a graphic of the visual acuity results generated thus far. Our primary endpoint was at day 14. This is about a six letter improvement in vision overall for the patient population that was included in this analysis. That's a little bit over one line of vision improvement. Five letters equals one line of vision gain. We excluded three subjects from this analysis, one subject who was beyond the legal limit of visual acuity. This patient only had hand motion vision at baseline, and they were a protocol exception. We enrolled the patient to include them in the database. The patient actually did improve significantly as I'll talk about on the next slide. We also excluded two patients that received a lower dose when we were doing some dose ranging within this Phase Ib study.
This is not representative of the overall results, but this is our best overall responder. This was a 10-year-old little girl who came from China to be tested in this trial. She was legally blind at baseline with vision amount 20/250. After treatment with 001, she improved over 30 letters or six lines of vision to a near normal category of vision which is around 20/60 overall. It's important to highlight that this little girl who is legally blind at baseline after treatment the near normal vision is what is requirement in most states in the United States to be able to drive a motor vehicle. Also importantly, the treatment response was held even after one course of treatment for 12 months of follow-up.
This slide is meant to represent the shifts that occur looking at ICD-9 vision categories ranging from blind or near blind up to near normal. The red line signifies a shifting after treatment between these low vision categories. So overall, we had four patients who shifted vision categories after treatment with this drug, including the near blind patient that was enrolled as a protocol deviation. The Chinese girl that I highlighted on the previous slide was the patient who actually shifted two lines from severe low vision up to near normal.
The second visual acuity parameter that we looked at in the study that I'm going to focus on today is GVF which stands for Goldmann Visual Field. Again, this is a measure of peripheral vision within the eye. Only 13 of the 14 subjects enrolled had a detectable visual field at baseline. The blind patient I referenced had no visual field at baseline.
All of the patients to be included and all of the follow-up exams had to have two baseline results prior to going on drug in a longer history of GVF testing. Most of the clinicians believe that a 20% improvement from baseline is considered clinically relevant.
And then we also had an independent analysis of this data conducted at the Johns Hopkins Institute, the Wilmer Eye Institute in Baltimore that was done independently from the trial. They eliminated several patients, especially in the long-term follow-up, because they didn't have the baseline examiner at each of the follow-up visits.
This is a summary of the data that we've been able to capture in six patients thus far that had the same examiner going out to 12 months of follow-up. You see between a 40% and 50% expansion in patients' visual field overall following treatment with 001. That was highly statistically significant.
This is just to try and demonstrate to you with the pictorial view of what the experience is that the diminished visual field can have for some of these patients. This is meant to signify a full visual field. So 180-degree view that most of us with normal vision would have as we look at the Burrard bridge in Vancouver. This again was a statistically significant mapping that was done for us on behalf of the Johns Hopkins Group and this shows what one patient's visual field would have looked like at baseline. You see about a 25% field compared to 180-degree view that those of us with normal vision would have. It's not uncommon to see fingers and also pieces of retina that are non-functional even within the central part of the eye or the macula of the eye.
Following treatment, the simulation is dramatic expansion with almost a full cross-sectional improvement in visual acuity. And obviously this is extremely important for ambulation so that these patients don't walk in or bump in to objects. And following treatment after three months, you see a further expansion of the visual field.
Overall, we saw statistically and clinically relevant improvements in the Goldmann Visual Field. The effects were robust across the treatment groups and averaging we saw about a 40% to 50% improvement overall in patients' visual fields.
The visual function test is not the only test that we look at in this trial. We also look at quality of life measurements. Patients routinely report ability to see better or do better in classroom settings. In addition, two of our 14 subjects walked using a blind cane prior to treatment. And both of those subjects no longer need to use their cane and can ambulate normally which is especially critical I think as all of you can appreciate for children going to school.
They also report aspects in terms of dark adaptation, the ability to see things at night that they potentially have never seen before. This will include the moon, stars, fireworks, things like that. So significant improvements. In addition, parents report that their children are typically more confident, self-reliant. They are grooming themselves better and their teachers report that they do better in school. So we think this drug will have a significant impact on the quality of life. And that will be one of the measures we follow in our pivotal study.
Tolerability for the drug. Overall, it's well tolerated. We do see transient headache and photophobia or increased sensitivity to light. This is pretty common side effect. We're not entirely sure that this is totally related to the drug impact. One of the hypothesis is it could be related to over-stimulation of the visual cortex of the brain. The headaches and photophobia typically resolve in a few hours after treatment.
We also see mild changes in chemistry, notably increases in triglyceride levels and also decreases in HDL levels. These have not been significant or major. They typically return to baseline usually within seven days following the treatment.
Where are we on the regulatory process and patents? We've been granted orphan designation in the U.S. and Europe. We also had the first patent issue last year. It's a method-of-use patent that expires in 2027. We have been granted Fast Track status in the U.S.
Where are we going? This is what we expect will be the pivotal study design for the LCA portion of the study. Approximately 30 to 40 subjects will dose the drug 40 mg/m2 for seven days. We will have a retreatment protocol in place for this. We have not started retreating patients yet.
The primary endpoint will be visual field. Second endpoints will be visual acuity and quality of life. We plan on the study being placebo-controlled and cross-over, and we're still discussing the endpoints with the FDA in terms of timelines. We do expect to get the study started in the second half of this year.
Upcoming milestones for this program. We completed enrollment of the first 14 subjects in the retinitis pigmentosa portion of the trial. Due to investigator interest and high demand from patients, we've overenrolled that study. We're planning on continuing to enroll 20 subjects. We expect to report data from that study in the first quarter. We have a retreatment protocol underway in the Phase Ib study. We have ongoing dialogs with the FDA and EMA. If the RP patient study is successful, we plan on moving that study towards Phase III at the end of this year and early into next year as well.
I want to turn now to our punctal plug drug delivery system. This is a combination drug device to deliver medications to the surface of the eye. It's a small implant that goes into the tear duct of the eye and it's placed by either an optometrist or ophthalmologist in a quick and simple office procedure.
The first area we're focusing on this delivery system is glaucoma. Glaucoma is a slowly progressive and asymptomatic disease that lends itself well to this type of delivery platform. Glaucoma is the leading cause of blindness among African Americans and Hispanics and the second leading cause of blindness behind macular degeneration in Caucasians. 50% of glaucoma is undiagnosed. In some of major countries around the world and worldwide, there are literally millions and millions of people that suffer from this disease.
Issue with glaucoma is there is extremely weak adherence to eye drops, which is how 90% of patients are initially treated that are diagnosed with glaucoma. Only between 33% and 40% of glaucoma patients persist with their ocular medications at one year. In spite of that, this is a $4 billion market opportunity.
40% of newly diagnosed patients have not filled their prescription within two months, clearly demonstrating they were not taking their medications that they were initially prescribed. 20% of patients don't visit their ophthalmologists in the 18 months after treatment.
I want to talk about compliance with eye drops. There is a physical demand for compliance. It's much more complicated than just taking an oral drug regimen. About 10% to 20% of patients are just unable or unwilling to actually put a drop in their eye. They have a fear or phobia of doing it. There are a number of pieces in the literature.
This is a study done by Alan Robin, who was at our R&D day last month. He had an interest in learning more about this topic. But essentially what he found is only about 75% of patients could actually get a drop in the eye. And of those, only about 39% could either get one drop or multiple drops. So they're not only underdosing, frequently they overdose as well. And then if they happen to touch the eye drop bottle to the lid, the lid is typically full of bacteria and they tend to get contamination of the eye drop bottle. Overall, the story is only about 25% of patients can properly take their eye drop medications as prescribed.
When we think we have a novel solution to this problem, first the key around this delivery system is actually the drug insert. And in a very small space, that really is around 2 millimeters in size. We're able to maximize the drug load in order to deliver approximately 90 days of latanoprost in this case to the surface of the eye. We deliver that using a punctal plug that's been optimized to have very high retention rates, but importantly is also relatively easy to insert. It's comfortable for the patient and then has a fairly high retention rate.
Where are we in development of this platform? We've conducted several Phase II studies that most recently was announced in August of last year. This was a first trial that we actually did both lower occlusion as well as upper occlusion. The reason we did that was to increase the drug load from prior studies, which was previously kept at 95 micrograms, but for the most recent study, we're able to deliver a total drug load of 141 micrograms. And that is essentially equivalent to what you would achieve with an eye drop over a 90-day period of time.
We initially enrolled 95 subjects. We used our proprietary plug in the lower punctum of the eye, but we used a commercially available plug in the upper punctum of the eye. We did that, because we didn't know if we needed to improve the retention rates overall. So this study was essentially designed to answer the question of can the higher drug load administered with double plugging lead to a 5 millimeter reduction in pressure or greater.
In terms of the upper plug, we anticipate that we would have about a 50% retention rate, and that's what happened. And that's led to a large number of patients being excluded from the efficacy analysis.
This is our efficacy analysis looking at change from baseline and intra-ocular pressure. At week two, which was the primary endpoint, we had a 6.2 millimeter reduction in pressure. At week four, which was the secondary endpoint, we had a 5.7 millimeter reduction pressure, clearly surpassing the predefined goal of 5 millimeters or greater reduction in pressure.
In addition, the percentage of patients that had either a 5 millimeter decrease in pressure at week two, that was 73%. It was at 60% at week four. Additionally, patients that had 6 millimeters or greater averaged about 50% between the two varying time points.
How about safety and tolerability? Overall, the most frequently reported event was tearing. The percentage breakdown between occasional, mild and moderate is included in the slide. We did not lose any patients because of excess of tearing, but this is something obviously because we blocked both drainage canals for the tears. It is is something we're going to have to continue to evaluate carefully.
Most subjects up to 87% either had no awareness of the plug or mild awareness of the plug by four weeks. I equate this to people who wear contact lenses. First time you put a contact lens in your eye, you typically notice that for a period of a couple of days, but then most patients quickly become acclimated to it, become second nature over time. Importantly, there were no serious ocular adverse events and there were three non-ocular adverse events, but again this is an elderly patient population averaging about 75 years of age.
Our lower plug retention in this study was excellent. We had a 95% retention rate at four weeks. I mentioned previously that we used a commercial plug in the Glau 11 study. Since that data became announced in August, we did the initial trial with our upper plug, a proprietary QLT-owned upper plug. And we determined we had 81% retention rate at four weeks. So that work will continue in parallel to the next clinical trial.
Overall study results, we had a reduction in IOP that met our criteria. That was clinically relevant and robust at all of our time points. The plugs are well tolerated and with good patient acceptability. We continue to move forward with our development in this platform. And this truly is a platform for drugs. We look at this as a potential replacement for a number categories of eye drops that exist today.
We do have other glaucoma medications and formulation work. We also have a nonsteroidal formulation that we're looking at for post-cataract inflammation. Then we're looking at ocular steroids, antibiotics and dry eye therapies, all areas where eye drops are chronically used today.
The next study is going to attempt to address a number of questions including the location, whether upper or lower is important, the overall dose. We've been able to increase the dose once again. So we're going to an arm with the 190 microgram dose and we'll also continue to look at the tearing effect.
The studies are really being run as two separate studies looking at the effect of double plugging on the eye, looking at the regimen we used in the Glau 11 study and 95 microgram lower with the 46 microgram upper. We have been able to formulate a 95 microgram upper. So we'll compare those two arms.
Separately, we will look at the impact of the potential upper plug placement has. The reason upper plug placement may be important is because the target for this molecule is inside the eye. Therefore the drug has to penetrate the cornea. It's thought that because the upper lid blinks over the eye that might spread the drug more evenly and could lead to increased efficacy. So we are going to compare a blank lower plug with the 95 microgram upper and 95 microgram lower plug with the blank upper and then a 95 microgram upper plug with nothing in the lower punctum. That trial is underway. We expect to complete in the second half of this year and move forward from there potentially with a Phase III program in 2013.
Overall, our upcoming milestones, the next critical milestone for the company is the retinitis pigmentosa data, which is coming in the first quarter. We will continue on retreatment and have that data in the LCA patient population within the first and second quarter. We will continue to have dialogs with the FDA and move towards a pivotal study in the second half with LCA and begin our preparations for pivotal studies with retinitis pigmentosa and the glaucoma punctal plug program. So it's going to be a big year for us.
I appreciate you coming out today. Thank you very much for your time.
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