Ohr Pharmaceutical's (OHRP) CEO Irach Taraporewala On Q4 2014 Results - Earnings Call Transcript

| About: Ohr Pharmaceutical, (OHRP)
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Ohr Pharmaceutical, Inc. (NASDAQ:OHRP) Q4 2014 Earnings Conference Call December 22, 2014 5:00 PM ET

Executives

Paul Arndt - LifeSci Advisors

Irach Taraporewala - CEO and President

Sam Backenroth - CFO and VP of Business Development

Jason Slakter - Chief Medical Officer

Analysts

Jonathan Aschoff - Brean Capital

Aaron Martin - AIGH Investment Partners

Operator

Good day and welcome to the Ohr Pharmaceutical Fiscal Year Ended September 30th, 2014 Financial and Business Update Conference Call.

Today's call is being recorded.

At this time will turn the conference over to Paul Arndt of LifeSci Advisors. Please go ahead, sir.

Paul Arndt

Thank you, Shane [ph]. Good afternoon everyone. This afternoon Ohr released financial results and provided a business update for the fourth quarter and year ended September 30, 2014. If you did not yet receive the release, it is available on the Investor Relations section of the company's website at www.ohrpharmaceutical.com.

This call is being webcast and a replay will be available on the website until January 5, 2015. Before we begin, we'd like to remind you that some of the information contained in the news release and on this conference call contain forward-looking statements that involve risks, uncertainties and assumptions that are difficult to predict. Words of expression reflecting optimism, satisfaction with current prospects, as well as words such as believe, intend, expect, plan, anticipate, and similar variations, identify forward-looking statements, but their absence does not mean that the statement is not forward-looking.

Such forward-looking statements are not a guarantee of performance and the company's actual results could differ materially from those contained in such statements. Several factors that could cause or contribute to such differences are described in detail in the company's 10-K filed today, as well as additional filings with the SEC. These forward-looking statements speak only as of the date of this release and the conference call, Monday, December 22nd, 2014. And the company undertakes no obligation to publicly update any forward-looking statements or supply new information regarding the circumstances after the date of this release.

Participating in today's call from the company are Chief Executive Officer Irach Taraporewala, the company's Chief Medical Officer Dr. Jason Slakter, and Chief Financial Officer and Vice President of Business Development Sam Backenroth. With that, I'd like to turn the call over to Irach. Irach, go ahead, sir.

Irach Taraporewala

Thank you, Paul. I'm very pleased to be here today to discuss our financials and review our progress over the last year. Fiscal 2014 has been a transformative year for Ohr Pharmaceutical. With positive clinical data from our phase two IMPACT study, our acquisition of SKS Ocular, and the build-out of our management team, we are well-positioned for a year of great progress in 2015 as well. We have already reviewed the IMPACT data in detail with you, and Jason will go over some of the important points again in his discussion in just a few minutes.

The highlights are that treatment of patients with wet AMD with Squalamine eye drops, also known as OHR-102, in combination with Lucentis, was associated with an improvement in visual acuity, which is the most clinically relevant endpoint for back-of-the-eye disorders. Furthermore, we reported additional positive data at the AAO conference in the fall, showing Squalamine combination therapy, also resulted in an improvement in retinal anatomy in these patients.

Following these results, we have had a very successful end of phase two meeting with the FDA, which gives us a clear path for future registration study. Importantly, we were very pleased with the guidance the agency provided on our planned phase two trials and their agreement on a nine-month visual acuity primary efficacy endpoint.

Considering that this primary endpoint will be at the same nine months time point as our phase two study, we believe we have set a very realistic goal of achieving a similar outcome in phase three. So we will conduct two identical confirmatory studies as required by the FDA. These phase two trials will measure the efficacy of combination chemotherapy -- combination therapy, compared with Lucentis monotherapy and treatment of eye patients. All patients will be followed for safety for two years.

We anticipate commencing these studies in the first half of calendar 2015, with the goal of submitting a new drug application, NDA, following collection and analysis of the nine months primary efficacy data.

Wet AMD, as most of you know, is the leading cause of blindness in the elderly in the U.S. and in many other countries. Coupled with the aging of the baby-boomer population, it is estimated that there will be an increasing incidence of this devastating disease in coming years. Certainly, substantial and meaningful visual acuity gains are the most important therapeutic goals in treating these patients, compromised central vision in the elderly as a result of AMD, and oftentimes lead to other devastating health issues that include physical as well as psychological declines that negatively impact the quality of patients' lives.

Treatment for these impacts result in increased costs to the healthcare system. For these reasons, we see a great need in the marketplace for a non-invasive eye drop treatment that provides substantial augmentation of visual acuity gains and restored eye sight, versus current standards of care in wet AMD.

In other positive clinical developments, we reported interim data in August at the 2014 Annual Meeting of the American Society of Retina Specialists for Squalamine to treat macular edema secondary to branch or central retinal vein occlusion. These data demonstrated that the combination of topical Squalamine Eye Drop and intravitreal Lucentis led to a mean gain in visual acuity of 20.3 letters and resolution of fovial edema in 95% of the patients at week 10.

We also announced earlier in the year an investigator-sponsored phase two clinical trial to test Squalamine Eye Drop in patients with diabetic macular edema or DME. DME affects more than half-a-million patients in the U.S. alone. Based on the data seen in the IMPACT study, we have modified design and endpoints of this study to focus on visual acuity improvement, and we have expanded the expected enrollment to 90 patients.

The primary endpoints in this placebo-controlled trial, when measured, change in retinal thickness and change in best-corrected visual acuity or BCVA over 24 weeks. Secondary objectives of the study include additional BCVA measurements, change in fovial thickness, evaluation of the need for rescue injections of Squalamine of these centers, and an assessment of the safety and tolerability of Squalamine eye drops. Our expanded pipeline now includes both early and late-stage clinical assets that address multi-billion-dollar market opportunities for retinal disease, glaucoma and other ocular indications.

Our acquisition of privately-held SKS Ocular, LLC has helped facilitate our stated goal of becoming a full-fledged ophthalmic pharmaceutical company, with a strong pipeline of drug candidates. Upon closing of the transaction in June, we have gained the propriety patent-protected sustained-release technology platform, as well as a pipeline of preclinical sustained release drug on product candidates, and addressed ocular indications including glaucoma, ocular allergy, retinal disease, among other ophthalmic indications.

As part of this acquisition, we also gained a dedicated team of scientists and biomedical engineers who are a great addition to the growing Ohr Pharmaceutical team. In conjunction with this acquisition, we have appointed Dr. Jason Slakter, Glenn Stoller and Peter Kaiser senior roles at Ohr. We also gained a state-of-the-art research laboratory facility in San Diego, California.

And finally, we are very pleased that we are pursuing a sustained-release program in an ocular indication under a research agreement with Alcon. We are positioning Ohr Pharmaceutical to become a recognized leader in ophthalmic drug delivery.

In February, we formed a joint venture with Cold Spring Harbor Laboratory, called DepYMed, to advance the preclinical and clinical development of our Trodusquemine and analogues as PTB1B, a phosphatase inhibitor, display a role in many biological processes and may have potential uses in indications including cancer, diabetes and obesity. The initial clinical focus of the joint venture will be in oncology applications, and DepYMed anticipates initiating a phase one dose escalation study evaluating Trodusquemine in breast cancer patients in the first calendar quarter of 2015. We have also recently hired an experienced full-time CEO/COO to manage the DepYMed company and further the development of the program. Longer term our goal is to monetize these non-ophthalmology assets through a license agreement, partnership, joint venture or sale, although we have not advanced any plans on that front to date.

In fiscal 2014 we were able to advance the clinical and preclinical development of our ophthalmology products. Fiscal 2015 is going to be a very crucial and exciting time at Ohr Pharmaceutical. We have a number of critical milestones during this time period. We will be reporting final data from our Squalamine wet AMD eye drop trial in the first quarter of 2015. Final data from the Squalamine diabetic retinopathy trial are expected to be reported in the first half of 2015. We also expect to have final data from the Squalamine retinal vein occlusion trial in the first half of 2015. And lastly, we expect to initiate trial in wet AMD in the first half of 2015.

Overall our strategy is to demonstrate the value of Squalamine eye drops in various back-of-the-eye disorders. We anticipate the broader clinical utility of Squalamine eye drops as a non-injected, non-invasive treatment to provide superior patient outcomes in multiple back-of-the-eye disorders. This will become apparent and provide an ever-widening opportunity to grow and expand Ohr Pharmaceutical cooperation [ph], and carry out our vision of building a world-class ophthalmology organization.

And now I'll turn the call over to Dr. Jason Slakter, our Chief Medical Officer, to discuss our clinical data in a little more detail.

Jason Slakter

Thank you, Irach. As you know, the ongoing IMPACT study is a randomized, double-masked, placebo controlled phase two study to evaluate the efficacy and safety of Squalamine eye drops used in combination with Lucentis PRN for the treatment of advanced exudative form of age-related macular degeneration, also known as wet AMD. The trial has enrolled 142 newly-diagnosed treatment naïve patients at 23 sites in the United States, of which the first 62 had completed the treatment period at the time of the planned interim analysis that we announced earlier this year.

All patients received an initial intravitreal injection of Lucentis at study entry, and then underwent a one-to-one randomization to receive either Squalamine eye drops or placebo eye drops administered twice daily for the nine months of the trial. Patients had monthly follow-up visits where they were evaluated and retreated as needed with Lucentis if pre-specified clinical and OCT criteria were met.

The results of this interim analysis showed that Squalamine eye drops, in conjunction with Lucentis, provided substantial gains in visual acuity in this patient population, exceeding the visual acuity gains seen in the group receiving Lucentis alone. More specifically, this interim analysis data showed a mean gain in visual acuity of 10.4 letters, with Squalamine eye drops plus Lucentis PRN, versus 6.3 letters in the placebo eye drop plus PRN Lucentis arm at the end of the nine-month study. This represents a 65% additional relative benefit in vision gain.

The magnitude of the gain in visual acuity was particularly impressive. Forty-eight percent or nearly half of the Squalamine treated patients achieved a gain of 15 letters or three lines or more on the standard ETDRF eye chart, versus placebo treated patients. This represents an improved vision that permits patients to see an object one-half the size they could at the start of the study, by being treated with Squalamine and Lucentis in combination. These visual acuity improvements were seen as early as four weeks into the trial and the relative difference in visual acuity between the two treatment arms continued to increase throughout the study.

It is of note that our trial enrolled patients across the full spectrum of wet AMD subtypes, including both the occulled-only [ph] and classic containing lesion forms, with varying underlying lesion sizes. In addition, this study's inclusion criteria allowed for patients with diabetes without evidence of diabetic eye disease to be enrolled in the study. Our Squalamine Eye Drop formulation is shown to be safe and well-tolerated in the subjects enrolled in the study to date.

In October, at the late-breaker session at the American Academy of Ophthalmology Conference, data were presented that further demonstrated the visual acuity and anatomical benefits of Squalamine combination therapy. This data shows that the combination of Squalamine plus Lucentis resulted in a marked improvement in sub-retinal, hyper-reflective material, an OCT-based anatomical biomarker for wet AMD. The regression of this sub-retinal hyper-reflective material observed on spectral domain OCT was greater in the Squalamine combination arm compared to the Lucentis monotherapy arm.

Importantly, a clear relationship was demonstrated between this reduction in the sub-retinal hyper-reflective material biomarker and the improvements in visual acuity seen in the study. The Squalamine combination arm also had a greater proportion of patients with total resolution of this material compared to the Lucentis monotherapy arm. These effects indicate the potential of Squalamine Eye Drop as a disease-modifying therapy in exhibited AMD.

I'm now pleased to turn the call over to Sam for a financial report. Following that, there will be a brief Q&A session. Sam?

Sam Backenroth

Thank you, Jason.

For the fiscal year ended September 30th, 2014, we reported a net loss of approximately $9.1 million or $0.41 per share, compared with $5.7 million or $0.31 per share for the 2013 fiscal year. Operating expenses for fiscal 2014 totaled approximately $9.1 million, compared to $4.6 million for the fiscal year ended September 30, 2013.

For fiscal 2014, operating expenses consisted of approximately $4 million in research and development costs, $1.8 million in professional fees, $2.8 million in salary and wages, and approximately $600,000 in general and administrative expenses. This compared with fiscal 2013 expenses of approximately $2.6 million in research and development costs, $600,000 in professional fees, $1.1 million in salaries and wages, and $300,000 in general and administrative expenses. Cash and equivalents for the fiscal year ended September 30, 2014 totaled $13.2 million, up from $5.1 million at September 30th, 2014.

You may recall we raised $16.9 million in net proceeds from our registered direct offering in April of this year. Based on current projections and estimations, we anticipate expenses will increase in fiscal year 2015, particularly expenses related to clinical development activities with the initiation of our phase three clinical program in the first half of 2015. However, including the increased costs, we remain confident that we have sufficient cash flow planned operations through September 2015.

And with that, operator, please provide instructions to start the question-and-answer portion of this call.

Question-and-Answer Session

Operator

Thank you. At this time we'll be conducting a question-and-answer session. [Operator Instructions]

Our first question comes from Jonathan Aschoff from Brean Capital.

Jonathan Aschoff - Brean Capital

Thank you guys. I have some phase three questions. I was hoping you could give us all the detail you can about the end of phase two FDA meeting minutes that, as far as I can tell, support about as desirable a phase three trial as one could want. And along with that question, I was just curious about what the FDA said to you given that you had interim phase two data in hand, and how much concordance between interim phase two data and final phase two data does that favorable phase three guidance require?

Jason Slakter

Well, thanks, Jonathan. This is Jason Slakter. I'll try to tackle a good part of that series of questions.

As far as the feedback we got from the FDA in the phase two meeting, I can say that we were extremely pleased. We had certainly asked for the opportunity to initiate our phase three program. We had asked for earlier endpoint that has traditional 12 months, and we received that with the guidance to allow us to go forward with a nine-month primary read-out. We had asked to seek a very clinically meaningful endpoint of three-line vision gains in our population, and we were extremely pleased that they agreed with us on that plan. And the overall support of our ability to proceed forward based on the interim data was also supportive of our program and the development pathway forward.

As far as requesting about the full data set based upon the fact that we are using the same 23 investigators and sites, similar patient population enrolled by the same individuals being treated in the similar fashion, we have no reason at this point to expect that the second half of the phase two will read out any differently than the first half. And again, we look forward to that analysis in the first quarter of next year.

Jonathan Aschoff - Brean Capital

Okay, thanks. Also, how much cash do you think is enough to start phase three and what I mean is or are the primary catalyst/catalysts around which, you know, raising further capital after trial initiation would be likely?

Sam Backenroth

Well, I mean, you know, as we said before, we have sufficient capital to initiate these two phase three clinical trials and get us through September 30th of next year, which gets us through multiple different catalysts. Obviously there are three primary phase two catalysts, and that is the final data for the wet AMD study in the first quarter of next year, and then the two investigator-sponsored trials, one in retinal vein occlusion and one in proliferative diabetic retinopathy which we anticipate to be presented at the conference in the first half of next year, and then of course, in addition, the initiation of phase three clinical trials in the first half of next year as well.

Jonathan Aschoff - Brean Capital

Actually, is there anything going on with any talks with investigators without doing any investigator trials for dry AMD?

Jason Slakter

Not -- it's Jason -- it's not as of yet. No. We feel that the main focus right now obviously is on the existing investigator sponsored trial in proliferative retinopathy, retinal vascular occlusion disease, the DME trial that's now starting, and of course wrapping up the phase two study and preparing for the phase three clinical program for registration.

Jonathan Aschoff - Brean Capital

Okay. Thanks guys.

Operator

Thank you. Our next question comes from Rick Alkin [ph] from Oppenheimer.

Unverified Participant

Hi, Sam. A couple of things. Are there any plans to consolidate the company's offices into, say, one location? And do you expect the professional fees to go down in fiscal 2015?

Sam Backenroth

Yeah, I mean at this point there are no plans to consolidate any of the offices. The way that we're functioning, corporate is in New York and laboratory and research and development primarily taking place in San Diego. And we're very pleased with the way things are going.

As far as professional fees, we would not expect them to go down during fiscal 2015.

Unverified Participant

Okay. I just thought that they might go down because a large part of that or at least a significant part of that was from the acquisition of SKS.

Sam Backenroth

Well, the -- some part of the professional fees were related to the offering and the SKS acquisition, but as we start to build out and as you start to head into phase three program, obviously you would expect professional fees to continue to at least remain constant, not rise, in the next fiscal year.

Unverified Participant

Okay.

Operator

Do you have any further questions?

Our next question comes from Aaron Martin from AIGH Investment Partners.

Aaron Martin - AIGH Investment Partners

Hi guys. Congratulations on the progress. Can you clarify a little bit of confusion? There's a little bit noise in the marketplace from a competitor in terms of, you know, whether, you know, including diabetic retinopathy patients in wet AMD trial, were there diabetic patients in Orh's phase two trial?

Jason Slakter

Okay. I'm happy to clarify that. We did not include diabetic retinopathy at all in the wet AMD trial. I think the confusion comes from the fact that our inclusion criteria -- our criteria permitted patients with an underlying disease diagnosis of diabetes. So in other words, it's expected that 18% to 24% of the patients with wet macular degeneration actually also have the diagnosis of diabetes which are being treated. That doesn't mean that they had diabetic eye disease, it just means they have underlying disease -- underlying medical condition of diabetes. Those patients were allowed in the trial. We had about 16% overall patients with the underlying diagnosis of diabetes, none of which had any diabetic eye manifestations, and specifically all patients enrolled in this study were screened to ensure that they had only findings of exudative AMD and no other findings of retinopathy, whatsoever.

Aaron Martin - AIGH Investment Partners

Okay, great. Let's just engage a little bit on the, you know, some of the smaller programs. What can we look forward to in terms of the sustained release program with Alcon? What kind of -- I mean what can you tell us about it? What kind of perhaps operational milestones should we be looking for?

Jason Slakter

I mean unfortunately, at this point, based on the confidential nature of that relationship, that is something that we can only discuss based on what's been filed and that has been filed as part of an exhibit to our 10-Q. We are hopeful that we'll be able to speak a lot more about that program coming up in 2015, but that's not something that we're providing guidance on right now. And that's --

Aaron Martin - AIGH Investment Partners

Is there a timeframe when we will do more?

Jason Slakter

I'd say sometime in 2015.

Aaron Martin - AIGH Investment Partners

Okay. And similarly, on the DepYMed, you talked about initiating a phase one trial in Q1. What can you tell us about that trial? Is there a location set already, you know, how large of a trial is it? What can you tell us about that one?

Irach Taraporewala

The dry protocol is going to be finalized. It will be held most likely in our location in the New York City area. It will be the same clinical trial site.

Aaron Martin - AIGH Investment Partners

Okay. Thank you very much.

Operator

Thank you. At this time we have no further questions. I will turn the call back over to Irach for closing comments.

Irach Taraporewala

Thank you, Shane [ph].

As you can see, we have been making extremely positive progress on all aspects of our business. In particular we have made great strides in the clinical and preclinical development of our ophthalmology products, which we hope will change the standard of care in the AMD among other related indications.

Fiscal 2014 laid the groundwork for fiscal 2015 to be a very exciting time at Ohr, as we have a number critical milestones. First, we anticipate reporting final data from our Squalamine wet AMD phase two trial in the first quarter of 2015. We are also targeting to report clinical data from the diabetic retinopathy trial as well as the final data from our retinal vein occlusion trial in the first half of 2015. Lastly, we expect to initiate our phase trials on wet AMD in the first half of the next year.

We look forward to reporting to you on our progress in the coming weeks and months on all these exciting fronts. I thank you all for participating in the call today, and have a good evening. Thank you.

Operator

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

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