By Brian Marckx, CFA
READ THE FULL EYEG RESEARCH REPORT
FDA Approves IDE for OBG-PRK Pivotal Study, Topline Results Expected Later This Year…
The major recent news on the operating front was yesterday’s announcement that the FDA approved EyeGate’s (EYEG) Investigational Device Exemption (IDE) seeking clearance to conduct what is intended to be a pivotal U.S. registration study for their Ocular Bandage Gel (OBG) candidate in photorefractive keratectomy (PRK).
Key details of this study, which was first posted on clinicaltrials.gov (NCT03938883) on May 6th, include;
- N = 260
- Inclusion criteria:
◦ subjects that have undergone PRK with a fresh epithelial defect
◦ subjects with best corrected visual acuity (BCVA) of 20/20 or better at baseline
◦ prospective, randomized (1:1), masked (reading center) controlled pivotal study of OBG versus a bandage contact lens (BCL) in subjects which have undergone bilateral PRK. BCL is considered standard-of-care for treating PRK
◦ one (of the two) surgically repaired eyes of each subject will be designated the ‘study eye’
◦ assessments will begin on Day 2 (i.e. two days following surgery)
◦ treatment protocol
• OBG arm: applied to both eyes 4x/day (i.e. QID) for 2 weeks
• BCL arm: Johnson & Johnson’s (JNJ) Acuvue Oasys plano lens applied to both eyes and discontinued once complete re-epithelialization has occurred in both eyes
- Primary endpoint:
◦ proportion of eyes with complete corneal re-epithelialization on Day 3 (and no recurrent erosions)
◦ evaluated by masked reading center using digital photography of fluorescein stained slit lamp photos and image analysis
- Secondary endpoint: time to corneal re-epithelialization (and no recurrent erosions)
Our comments: design of this OBG-PRK pivotal study is nearly identical to that of both previous OBG-PRK pilot studies. Specifically, both pilot studies compared OBG QID for 2 weeks to BCL (Acuvue Oasys plano lens) in patients which underwent PRK. And, ‘proportion of subjects with complete corneal re-epithelization of epithelial defect on day 3’ was a primary endpoint in both pilot studies. ‘Time to corneal re-epithelialization’ was also measured.
Given the near-identical trial designs of the pivotal PRK study as compared to the earlier pilot studies and the positive results of both pilot studies, which indicated OBG was more effective than BCL, we like the chances of ultimate success of this upcoming pivotal FDA study. (See our detailed discussion surrounding the design and results of the two PRK pilot studies in the body of this report).
FDA IDE approval has additional positive implications: FDA IDE approval of this OBG-PRK pivotal study is a significant event as it not only represents a major step towards potential eventual U.S. marketing clearance of OBG in an initial indication (i.e. PRK) but also signals that a pivotal study (or other pathway towards label expansion) in punctate epitheliopathies (PE) is likely to quickly follow. The PE market, as we explain below, is ~10x the size of the domestic PRK market, representing a potential multi billion-dollar opportunity for EYEG. So, while not to minimize the initial commercial prospects in PRK, news of this IDE approval may have even much more significant positive implications for EyeGate.
As such, we remain eager to not only hear updates related to progress of this pivotal PRK study, but also updates as to EYEG’s progress towards validating the effectiveness of OBG in the treatment of punctate epitheliopathies. EyeGate notes in the press release announcing the IDE approval that they expect to begin enrollment this month (following updates to the patient consent document as requested by FDA) and to have topline results by current year-end. If positive, the results will be used as primary support for a De Novo FDA filing (for U.S. marketing clearance).
Q4 Financial Results
In early May EYEG announced financial results for their first quarter ending March 31st. Revenue of $2.7M represented the remainder of the previously unrecognized portion of milestones (which had been carried as deferred revenue on the balance sheet) related to the EGP-437 development agreements with Bausch Health Companies (BHC, formerly Valeant Pharmaceuticals). As a reminder, EYEG had previously disclosed that they received a notice of termination from BHC on December 14, 2018 notifying them that BHC was voluntarily terminating these agreements effective March 14, 2019. As a result, all rights to the EGP-437 platform reverted back to EyeGate. EYEG received an aggregate of ~$13.8M under the two EGP-437 related agreements with BHC, all of which EyeGate is entitled to keep.
EYEG reiterated (in their Q1 10-Q) that they continue to analyze the EGP-437 data from the respective studies in anterior uveitis and post-cataract surgery and that they “will be assessing our strategic options for EGP-437 going forward” (this was the same language in their 2018 10-K). As we first noted in our Q4’18 update in March (IDE Filing for OBG-PRK Expected in Q2. EYEG s Timelines Have OBG-PRK U.S. Launch in 2020. March 27, 2019), the decision by BHC to return full rights to EYEG comes as little surprise given the disappointing results from EGP-437 programs. We continue to expect that OBG will occupy all of EYEG’s focus given the positive results in both lead indications.
Operating expenses were $1.9M, down 47% yoy (from $3.5M), down 25% sequentially (from $2.5M) and inline with our $1.9M estimate. Both the yoy and qoq decrease relates to lower R&D expense, which fell largely as a result of slowing activity of the EGP-437 programs. Meanwhile (as indicated) the two OBG programs continue to progress very rapidly. As a reminder topline data from the initial PE study and the second PRK study was announced in November 2018. Additional information related to the results of both studies were subsequently released (all of which we detail in the body of this report). Meanwhile, G&A expense increased to $1.1M in the most recent quarter, up 19% on a yoy basis and +8% from Q4’18.
Cash used in operating activities was $2.2M in Q1’19, compared to $4.1M and $2.0M in the prior-year and three-month periods, respectively. Cash balance was $5.9M at quarter-end which, at the current burn rate, represents approximately 8 months’ worth of operating funds. While we continue to expect that EYEG will need to go to the capital markets in the not-too-distant future, we also continue to foresee potentially significant upcoming milestones that we think could help bolster the appetite for and pricing of a potential raise. Among these are several that could relate to further clinical and regulatory progress of OBG in PRK and PE.
As noted, this includes imminent commencement of enrollment of the OBG-PRK study and topline results by year-end. Additional progress towards further validating OBG for PE could also be on the near-term horizon and could similarly represent value-inflection events in our opinion.
REFRESHER ON THE OBG PROGRAMS
As a reminder, OBG is the lead CMHA-S candidate which came from the Jade Therapeutics acquisition and is being developed for corneal repair indications. The strong safety profile of the compound and expected (relatively streamlined) de novo 510(k) FDA pathway (in November 2016 FDA confirmed de novo 510(k) is an appropriate pathway for OBG to pursue in seeking U.S. regulatory clearance), means the development-to-commercial timeline could be relatively short. See our Appendix for more background on the compound.
As we have noted in recent updates, we think the de-risked nature of OBG (based on the long history of HA being used in human eyes and its broad use and extensive successful testing for corneal repair in animals) means that the likelihood of eventual commercialization could be reasonably high, particularly given the positive results of both PRK-pilot studies (the first of which was published in the Journal of Cataract & Refractive Surgery in March 2018).
Initial PRK Pilot Study Results…
Photorefractive keratectomy (“PRK”) is a type of vision-correction laser eye surgery - recovery from which includes regrowth of the epithelium (i.e. thin outer layer of the cornea). In January 2017 EyeGate announced encouraging top-line results of its first human OBG pilot study in patients that had undergone PRK surgery. While the study was small, results indicated that OBG may be associated with faster corneal healing following eye surgery as compared to standard of care. The pilot study compared OBG to artificial tears with bandage contact lens (BCL) in patients undergoing bilateral PRK.
Ocular Bandage Gel photoreactive keratectomy pilot study
‣ Objective: evaluate safety and performance of OBG eye drop administered 4x/day for 14 days with or
without a BCL as compared to artificial tears and a BCL in healing of corneal epithelial defects
‣ Primary efficacy endpoint: complete wound closure by Day 3
‣ Design: prospective, randomized, controlled study in up to 39 subjects undergoing bilateral PRK surgery.
‣ Subjects randomized to one of three cohorts;
◦ Arm 1 (n=12): EyeGate Ocular Bandage Gel 4x/day for 2 weeks after surgery without a BCL
◦ Arm 2 (n=14): EyeGate Ocular Bandage Gel 4x/day for 2 weeks after surgery in combination with a BCL
◦ Arm 3 (n=13): Artificial tears 4x/day and BCL
Topline results of the pilot study, which was the first in-human study of OBG, showed a greater proportion of OBG-treated patients versus those treated with standard of care met the primary endpoint of complete wound closure by Day 3. Specifically, the data showed that 10 of the 12 (83%) patients treated with OBG alone (i.e. no BCL) met the primary endpoint, compared to 9 of the 14 (64.3%) OBG+BCL patients and just 7 of the 13 (53.8%) artificial tears+BCL patients.
Remaining wound surface area on Days 1 (24 hours following surgery) and 3 were also assessed and similarly favored the OBG-alone cohort which had an average wound size of just 18.5mm on Day 1 and 0.02mm on Day 3. This compares to 39.5mm and 0.37mm in the SOC patients at Days 1 and 3, respectively.
View Exhibit I
While specifics were not provided relative to adverse events, EYEG did note in their PR that the study demonstrated safety and tolerability.
Initial PE and 2nd PRK Pilot Studies…
Results of these most recent pilot studies, announced in mid-November 2018, appear to further support the effectiveness of OBG in healing of corneal wounds (PRK) and in the treatment of dry eye (PE).
2nd PRK Pilot study design: Officially titled, A Randomized, Masked (Reading Center), Prospective Pilot Study of the Safety and Effectiveness of the EyeGate Ocular Bandage Gel, a 0.75% Crosslinked Hyaluronic Acid Applied Topically, Versus a Bandage Contact Lens for Acceleration of Re-epithelialization of Large Corneal Epithelial Defects in Patients Having Undergone Photorefractive Keratectomy (PRK), it was designed largely similar to that of the initial PRK study, with some exceptions. The most significant difference is that this second PRK study did not include an OBG+BCL cohort (as the initial study did) but instead incorporated two OBG-alone treatment arms, differentiated by treatment regimen and overall number of administrations. Clearly, the reason for this new PRK pilot study incorporating two OBG-alone cohorts (and not using an OBG+BCL) arm was because of the superior efficacy of the OBG-alone group in the initial study.
One of the OBG-alone cohorts was dosed at the same regimen as was used in the first study (i.e. QID for 2 weeks), while the other OBG-alone arm used a slightly more front-end weighted (i.e. 8x/day for 3 days, then QID for 11 days) dosing schedule and included 21% more aggregate administrations (i.e. 68 vs 56).
The study enrolled 45 patients (initial study n=39) which had undergone bilateral PRK (with epithelial removal using alcohol in a 9.0 mm well or trephine at the time of surgery to ensure consistency of the size of the ablation area). Control, which consisted of artificial tears (AT) 4x/day for two weeks, is similar to the initial study. Primary endpoint (per clinicaltrials.org) which was assessed via (a masked) designated reading center (Tufts), was time to complete corneal re-epithelization (i.e. wound healing) as assessed on Day 3 (same as initial study) post-surgery. (The following is from EYEG’s public filings, PRs and presentations (while listed on clinicaltrials.org, not all details are included) so it is possible the actual design may be somewhat different);
‣ Randomized, masked, controlled 2-week study in up to 45 subjects undergoing bilateral PRK
‣ Subjects randomized to one of three cohorts (n=15 per arm);
◦ Arm 1: OBG every 2 hrs (8x/day) for 3 days then QID (i.e. 4x/day) for additional 11 days
◦ Arm 2: OBG QID for 2 weeks
◦ Arm 3: BCL (Acuvue Oasys plano lens) + AT QID for 2 weeks
‣ Primary efficacy endpoints based on fluorescein staining:
◦ Time to corneal re-epithelization and
◦ Proportion of subjects with complete corneal re-epithelization of epithelial defect on day 3
◦ Evaluated by a masked reading center (Tufts) using digital photography of fluorescein stained slit lamp photos and image analysis
Results: Topline results were announced in a press release in November 2018 and reported on epithelial healing as of Days 2, 3 and 4 (post-surgery). We note that while the clinicaltrials.org study design description does not reference Day 2 or Day 4 endpoints, we think they may have been included as a secondaries. As it relates to endpoints, EYEG’s 2018 10-K states that efficacy assessments included wound healing on Days 3 and 4 and wound size on Day 3. Below we include the totality of the results that EYEG released, which was sourced from PRs, SEC filings and investor presentations.
‣ Day 3: on the primary endpoint of complete corneal re-epithelization (i.e. wound healing), 73% (11/15) of Arm 1 OBG and 87% (13/15) of Arm 2 OBG eyes were completely healed (i.e. met the primary endpoint), compared to just 67% (10/15) of eyes receiving standard of care (SOC)
‣ Day 4: 100% (15/15) of eyes treated with both OBG regimens were completely healed at Day 4, compared to 87% (13/15) of eyes treated with SOC
View Exhibit II
‣ Day 2:
◦ maximum wound size was 67% smaller among Arm 1 OBG and 49% smaller among Arm 2 OBG at Day 2 as compared to SOC
◦ average wound size was 26% smaller among Arm 1 OBG and 6% smaller among Arm 2 OBG at Day 2 as compared to SOC
View Exhibit III
‣ Safety: “no concerns”, per topline results announced in November 2018
◦ Additional specifics are included in EYEG’s Q1’19 investor presentation including
• Three ocular adverse events in 3 patients; all mild, unrelated, expected and resolved
∙ Arm 1 OBG: 1 patient with mild corneal haze at Day 14
∙ Control arm: 2 patients with recurrent epithelial erosions all resolved by Day 14
• No non-ocular adverse events
• No change in IOP
• Slight decrease in BCVA on Day 14 in Arm 1 OBG due to mild expected post-PRK corneal haze
• SPEED used as safety: no worsening of symptoms in either arm. All arms equal at Day 14
The following is our best understanding of the punctate epitheliopathies (PE) study design based on information in EYEG recent investor presentations, press releases and SEC filings. Study included 30 patients; 15 x 2 arms (OBG or B&L rewetting drops) with PEs such as dry eye. Patients with a corneal staining score of NEI > 4 were included in the study. Other inclusion/exclusion criteria were not disclosed (although will be of interest if and when disclosed). Primary outcome was decrease in fluorescein staining of the cornea from baseline (Day 0) to each of three visits; Days 7, 14 and 28. Results also included performance on a ‘symptomology’ assessment. Symptomology was assessed (at all three visits) using ‘standard patient evaluation of eye dryness’ (SPEED). SPEED is a well-validated patient reported outcome questionnaire that is designed to evaluate the severity of dry eye symptoms over a certain time period. Symptoms include ‘dryness’, ‘grittiness’, ‘scratchiness’, ‘irritation’, ‘burning’, ‘watering’, ‘soreness’ and ‘eye fatigue’ and asks if these are ‘problematic’, ‘tolerable’, ‘uncomfortable’, ‘bothersome’ or ‘intolerable’. SPEED provides a score between 0 and 28, the higher the score, the more severe and intolerable. Additional details of the study design include;
‣ 42-Day trial: 2-week wash-out/run-in followed by 4 weeks treatment (OBG or saline)
◦ Day-14 screening: all subjects stop all topicals and take saline QID OU for 14 days
◦ Day-0 randomization: OBG QID for 28 days vs saline QID OU for 28 days
◦ Staining completed on Days 7, 14, 28
‣ Primary outcome is decrease in NEI fluorescein staining of the cornea from baseline (Day 0) to each visit (Days 7,14, 28) between the treatment and control arms
View Exhibit IV
‣ Staining: while the specifics of results on staining at each of the three visits was not disclosed, we do know that;
◦ measurements of the total cornea (which we assume refers to total NEI fluorescein staining score, i.e. primary outcome) did not show a significant difference in reduction between OBG and control treated eyes with OBG achieving 26% reduction and control achieving 23% reduction at Day 7
◦ measurements of the central cornea (which we think may be referring to the ‘center zone’ of the five NEI fluorescein staining zones) showed a reduction of up to 40% for OBG versus up to 23% for control when combining the results of both eyes (the visit Day/time-period was not disclosed)
View Exhibit V
‣ Symptomology (SPEED)
◦ Day 7: statistically significant improvement (p=0.343) favoring OBG
• OBG arm: SPEED score fell (i.e. symptoms improved) by 21.2% (from 12.9 at baseline to 10.1)
• Saline: SPEED score increased (i.e. symptoms worsened) by 1.7% (from 15.3 at baseline to 15.5)
◦ Day 14: just missed statistical significance (p=0.0573)
• OBG arm: SPEED score fell (i.e. symptoms improved) by 20.7% (from 12.9 at baseline to 10.2) at Day14)
• Saline: SPEED score fell (i.e. symptoms improved) by 0.4% (from 15.3 at baseline to 15.2)
◦ Day 28: statistically significant improvement (p=0.0464) favoring OBG
• OBG arm: SPEED score fell (i.e. symptoms improved) by 30.1% (from 12.9 at baseline to 9.0)
• Saline: SPEED score fell (i.e. symptoms improved) by 4.4% (from 15.3 at baseline to 14.6)
‣ Safety: “no safety concerns”, per topline results announced in November 2018
◦ Additional specifics are included in EYEG’s Q1’19 investor presentation including
• One ocular adverse event in the saline arm: mild, unrelated and resolved
∙ No ocular adverse events in OBG
• Three non-ocular adverse events in 2 patients in OBG arm and one in 1 saline arm patient
∙ All mild unrelated and resolved (hepatic stenosis, strep infections, H. pylori, etc)
• No change in slit lamp exam, IOP or BCVA
• SPEED was used as safety: no worsening of symptoms in OBG
View Exhibit VI
Separation even more evident when evaluated prior to 14-day washout…
The investigators also evaluated the change in SPEED scores (i.e. dry eye symptoms) from initial screening, that is, prior to the 14-day washout, through Day 0 (randomization day) and each evaluation period; Days 7, 14 and 28. What they found was that the OBG subjects showed even greater improvement in dry eye symptoms as compared to those in the saline (rewetting drops) when using the initial screening visit as a proxy for ‘baseline’. The results (below, and see table above) suggest that;
- saline improved symptoms of both cohorts similarly during the 14-day washout
- there was immediate separation favoring OBG once the treatment phase began
View Exhibit VII
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