Ophthotech Corporation
Overview
Ophthotech (OPHT) is a biopharmaceutical company specializing in the development of novel therapeutics to treat ophthalmic diseases, with a focus on orphan and age-related retinal diseases. The company currently have two product candidates, Zimura® (avacincaptad pegol), an anti-complement factor C5 aptamer, and Fovista® (pegpleranib), an anti-platelet derived growth factor, or PDGF, aptamer. Prior to 2017, the Company's primary focus was on developing Fovista and Zimura for various types of age-related macular degeneration, or AMD, which is a disorder of the central portion of the retina, known as the macula, that may result in blindness. In December 2016, the company announced that two of its three pivotal, Phase 3 clinical trials for Fovista in combination with the anti-vascular endothelial growth factor, or anti-VEGF, drug Lucentis® (ranibizumab) for the treatment of wet AMD, failed to meet their primary endpoint. The company announced in early 2017 that the company had engaged a financial advisor to assist it in reviewing its strategic alternatives, including identifying potential business development opportunities. Also beginning in early 2017, the company undertook a reassessment of its development plans for Zimura and Fovista, which included an evaluation of the scientific rationale for potentially developing these product candidates in one or more other ophthalmic indications for which there is a high unmet need.1
On July 26, 2017, the company announced that Ophthotech is pursuing a strategy to leverage its clinical experience and retina expertise to identify and develop therapies to treat multiple ophthalmic orphan diseases for which there are limited or no treatment options available. The company believe that there are advantages of orphan drug development, including regulatory exclusivity, the potential for smaller clinical trials and the potential for an accelerated development timeline of the orphan retinal indications. In parallel, Ophthotech is continuing its on-going programs in age-related retinal diseases. The company believe that by leveraging its ophthalmic expertise and by focusing on orphan eye diseases together with its on-going programs in age-related retinal diseases, the company will have multiple potential opportunities to bring ophthalmic therapeutics to market. The company also are continuing its business development efforts to identify and potentially obtain rights to additional products, product candidates and technologies that would complement its strategic goals as well as other compelling ophthalmology opportunities.
Zimura
As part of its strategic review process, the company reassessed its development plans for its product candidate Zimura. The company applied the same rigor in reassessing its development plans for Zimura as the company used in performing diligence on third party opportunities considered as part of its strategic review process. The company's Zimura reassessment included an extensive review of scientific literature regarding the role of complement in ophthalmic diseases. Upon the conclusion of this reassessment, the company determined to accelerate its development of Zimura in additional ophthalmic indications. The company's ongoing and planned clinical studies for Zimura are:
- a planned randomized, controlled clinical trial evaluating the safety and efficacy of Zimura monotherapy for the treatment of Stargardt disease, an inherited retinal orphan disease causing vision loss during childhood or adolescence for which patients have no approved treatment. This trial is scheduled to start by the end of 2017 and the company plan to work with the U.S. Food and Drug Administration, or FDA, to address the regulatory pathway for Zimura for the treatment of Stargardt disease;
- a planned, open-label Phase 2a clinical trial of Zimura in combination with an anti-VEGF drug for the treatment of wet AMD in patients who have not previously been treated with anti-VEGF drugs, or treatment-naïve patients. This trial is scheduled to start by the end of 2017. Ophthotech is ceasing to enroll additional patients in its ongoing open label Phase 2a clinical trial of Zimura in wet AMD patients who have been previously treated with anti-VEGF drugs, or treatment-experienced patients;
- a planned open-label Phase 2a clinical trial of Zimura in combination with an anti-VEGF drug for the treatment of idiopathic polypoidal choroidal vasculopathy, or IPCV, an age-related retinal disease involving the choroidal vasculature characterized by the presence of polypoidal lesions, which leads to vision loss. This trial is scheduled to start by the end of 2017;
- an ongoing randomized, double‑masked, controlled Phase 2/3 clinical trial to evaluate the safety and efficacy of Zimura monotherapy in patients with geographic atrophy, or GA, a form of dry AMD; and
- a planned Phase 2a clinical trial of Zimura monotherapy in non-infections intermediate and posterior uveitis, a rare inflammatory disease of the back of the eye, which is scheduled to be initiated during 2018.
The company plan to further reassess its development strategy for Zimura in treating GA in light of the results of a competitor’s Phase 3 clinical trials of a complement inhibitor being studied for the treatment of GA. These results are expected during the second half of 2017.
Fovista
In December 2016, the company announced initial, top-line data from two pivotal clinical trials, which the company refer to as OPH1002 and OPH1003, evaluating the safety and efficacy of 1.5mg of Fovista administered in combination with monthly 0.5mg Lucentis® (ranibizumab) anti-VEGF therapy compared to monthly 0.5mg Lucentis monotherapy for the treatment of wet AMD. The pre-specified primary endpoint of mean change in visual acuity at 12 months was not achieved for either OPH1002 or OPH1003. Moreover, the company did not observe any clinically meaningful visual benefit when 1.5mg of Fovista was added to a monthly regimen of 0.5mg Lucentis therapy for any subgroup of patients that Ophthotech has analyzed from the OPH1002 and OPH1003 trials, including subgroups based on baseline visual acuity, baseline lesion size or the baseline amount of the classic component of choroidal neovascularization, or CNV. Following the December 2016 data announcement, the company subsequently stopped treating patients in, and terminated, both the OPH1002 and OPH1003 trials. In light of the data from the OPH1002 and OPH1003 trials, the company also stopped treating patients in its additional Phase 2 clinical trials that were evaluating the potential additional benefits of Fovista administered in combination with anti-VEGF drugs in wet AMD patients, which the company previously referred to collectively as the Fovista Expansion Studies.
As part of its strategic review process, the company also reassessed its Fovista program and explored the scientific rationale for Fovista as a potential treatment in orphan indications. During 2016, the National Eye Institute commenced a Phase 1/2 clinical trial studying the potential role of Fovista in combination with Lucentis for the treatment of retinal capillary hemangiomas associated with the orphan disease Von-Hippel-Lindau Syndrome. This trial remains ongoing with initial data expected to be available during 2018. Ophthotech is also planning a pre-clinical program for Fovista in retinoblastoma, a rare cancer of the eye in children. Pre-clinical research has shown that the PDGF signaling pathway may play a role in retinoblastoma. The company's strategy for its Fovista wet AMD development program will be primarily determined by the initial, top-line data from OPH1004 and in the context of its other two failed Phase 3 clinical trials. OPH1004, a Phase 3 clinical trial, is evaluating the safety and efficacy of 1.5 mg of Fovista administered in combination with 2.0mg Eylea® (aflibercept) or 1.25mg Avastin® (bevacizumab) anti-VEGF therapy compared to 2.0mg Eylea or 1.25mg Avastin monotherapy for the treatment of wet AMD. Data from its OPH1004 trial are expected by the end of the third quarter of 2017. The company believe that the failure of OPH1002 and OPH1003 to show any clinically meaningful visual benefit in adding 1.5mg of Fovista to a monthly regimen of 0.5mg of Lucentis, and the recent failure of a competitor’s Phase 2 trial investigating the combination of a PDGF inhibitor and a VEGF inhibitor, are indicative of a low likelihood of success for OPH1004. As a result of its ongoing reassessment of its development programs and potential business development opportunities, the company may modify, expand or terminate some or all of its development programs or clinical trials at any time. The company generally expect that the company will not engage in internal early stage research and drug discovery and will thus avoid the related costs and risks of these activities.
Age-related retinal diseases
There are two forms of AMD, dry AMD and wet AMD. Dry AMD can progress to wet AMD. Although dry AMD is the most common form of AMD, there are no therapies approved by the FDA or European Medicines Agency, or EMA, to treat this condition. Ophthotech is currently developing its product candidate Zimura as a monotherapy for the treatment of GA, a form of dry AMD, as well as in combination with an anti-VEGF drug for the treatment of wet AMD. Zimura is an inhibitor of complement factor C5, a protein that is associated with complement mediated inflammation and cell damage, which the company believe may be involved in the development and progression of dry AMD and wet AMD. Ophthotech has completed a multicenter, uncontrolled, open-label Phase 1/2a clinical trial of Zimura monotherapy for the treatment of GA, a multicenter, uncontrolled, open-label, ascending dose and parallel group Phase 1/2a clinical trial of Zimura administered in combination with Lucentis for the treatment of wet AMD and a very small, uncontrolled, open-label Phase 2a clinical trial investigating Zimura's potential role when administered in combination with an anti-VEGF drug for the treatment of IPCV, in patients who do not respond adequately to treatment with anti-VEGF monotherapy or for whom anti-VEGF monotherapy fails. A recent peer-reviewed publication cited the role of anti-VEGF therapy in complement activation. The company believe that supplementing anti-VEGF therapy with an anti-complement such as Zimura in wet AMD may have the potential to further enhance the efficacy of anti-VEGF monotherapy and decrease its potentially unwanted side effects.
Stargardt Disease
Stargardt disease is a rare, inherited genetic disease that causes progressive damage to the macula and retina and loss of central vision in children and adolescents. The autosomal recessive form of the disease is referred to as STGD1. Multiple sources, including the National Eye Institute and Genetics Home Reference, both of which are affiliated with the U.S. National Institutes of Health, estimate the prevalence of Stargardt disease to be between 1 in 8,000 and 1 in 10,000, implying an overall prevalence of 32,000 to 41,000 affected persons in the United States, with, the company believe, at least as many affected persons in Europe. There are currently no therapies approved by the FDA or EMA to treat Stargardt disease. The FDA has recognized Stargardt as an orphan disease, with several treatments in development having received orphan product designation from the FDA.
Visual Cycle Waste Accumulation and MAC Accumulation - The Potential for Zimura
STGD1 is caused by mutations to the ABCA4 gene, which is responsible for making a protein that helps to clear byproducts resulting from the visual cycle from inside photoreceptors in the eye. With a defective copy of the ABCA4 protein, these waste byproducts accumulate in the retinal pigment epithelium, or RPE, which is a layer of cells within the retina on which photoreceptors are dependent. Waste byproducts that accumulate in the RPE are referred to as bisretinoids. The company believe that the accumulation of bisretinoids in RPE cells leads to activation of the complement system. The final product of all three complement pathways is the membrane-attack complex, or MAC. In RPE cells, MAC is normally cleared by lysosomes, which are organelles within cells responsible for waste degradation and disposal. Bisretinoid accumulation leads to lysosomal dysfunction, potentially preventing the clearance of MAC. MAC accumulation also negatively impacts energy production mitochondria. The company believe that bisretinoid and MAC accumulation in RPE cells leads to RPE cell deterioration, resulting in the loss of photoreceptor cells and decreases in vision over time.
In April 2017, Proceedings of the National Academy of Sciences , or PNAS, published a study reporting on the effects of complement modulation in the RPE of a mouse model of Stargardt disease. Injection of a recombinant adeno-associated virus containing the coding sequence for a protein that inhibits complement activation, Crry, into an albino ABCA4 mutant mouse model led to a two-fold reduction in the accumulation of bisretinoids and a 30% increase in the number of photoreceptor nuclei. The study findings indicate that the inhibition of complement activation may lead to healthier RPE cells, which in turn are better capable of processing bisretinoids in the albino ABCA4 mutant mice when compared to untreated mice. Research performed at Duke University and published in a paper appearing in 2013 in Investigative Ophthalmology & Visual Science demonstrated that cell damage resulting from the combination of complement activation and visual cycle waste accumulation was far more damaging than either component individually in RPE cells in vitro . When complement factor C5 was blocked, there was a significant improvement in RPE cell viability in vitro . Based on the data from these in vitro and in vivo experiments, the company believe molecules involved in inhibition or regulation of complement activation and MAC accumulation become prime targets for therapeutic intervention in STGD1.
Zimura is an inhibitor of complement factor C5. Uninhibited, the cleavage of C5 results in the formation of downstream complement molecules, including MAC. The company believe that MAC may be responsible for the harmful effects of complement activation and that therefore complement factor C5 is a promising target for inhibition. The company believe that the pre-clinical studies described above provide a strong rationale to explore the potential effect of Zimura in STGD1 patients.
The company plan to initiate a randomized, controlled clinical trial evaluating the safety and efficacy of Zimura monotherapy for the treatment of Stargardt disease by the end of 2017. The company also plan to work with the FDA to address the regulatory pathway for its Stargardt program. In July 2017, the company entered into an agreement with Foundation Fighting Blindness, or FFB, a highly-distinguished organization recognized for its scientific commitment to orphan inherited retinal degenerative diseases with an established network of scientists and a robust patient registry. FFB has recently completed the largest natural history in Stargardt disease to date which is referred to as ProgStar. Ophthotech has engaged FFB to provide it with information from its publicly available ProgStar study which the company plan to use in the design and implementation of its planned clinical trial of Zimura for Stargardt disease.
On-going business development activities
In early 2017, the company engaged Leerink Partners, a financial advisor, and initiated a plan to review its strategic alternatives in order to maximize shareholder value following the failure of two of its three pivotal Fovista trials. Without limiting any option, the principal focus of this plan, based on its deep expertise and experience in ophthalmology, has been to actively explore obtaining rights to additional products, product candidates and technologies to treat ophthalmic diseases, particularly those of the back of the eye. The company reviewed a large number of assets and technology platforms during the first half of 2017 and are actively continuing to review assets or technology platforms that would complement its strategic goals in addition to other compelling ophthalmology opportunities.
Leerink Partners continues to assist its management and its board of directors in evaluating its strategic alternatives. We, with Leerink’s assistance, have considered multiple opportunities over the last several months, including in-licensing, obtaining rights to products, product candidates or technologies, acquisitions, mergers and reverse mergers. Ophthotech is committed to being opportunistic and will reconsider new compelling opportunities if and as they emerge.
As of June 30, 2017 , the company had $196.4 million in cash, cash equivalents, and marketable securities, of which approximately $20 million to $35 million is committed to the wind-down of OPH1002 and OPH1003 and the Fovista Expansion Studies, implementation of a previously announced reduction in personnel and related costs, cancellation fees related to manufacturing commitments, and obtaining initial, top-line data for the OPH1004 trial by the end of the third quarter of 2017.
Novartis Agreement
In May 2014, the company entered into a licensing and commercialization agreement with Novartis Pharma AG, which the company refer to as the Novartis Agreement. Under the Novartis Agreement, the company granted Novartis exclusive rights under specified patent rights, know-how and trademarks controlled by it to manufacture, from bulk active pharmaceutical ingredient, or API, supplied by it, standalone Fovista products and products combining Fovista with an anti-VEGF drug to which Novartis has rights in a co-formulated product, for the treatment, prevention, cure or control of any human disease, disorder or condition of the eye, and to develop and commercialize those licensed products in all countries outside of the United States, which the company refer to as the Novartis Territory. The company agreed to use commercially reasonable efforts to complete its ongoing pivotal Phase 3 clinical program for Fovista and Novartis agreed to use commercially reasonable efforts to develop a standalone Fovista product and a co-formulated product containing Fovista and an anti-VEGF drug to which Novartis has rights, as well as a pre-filled syringe presentation of such products and to use commercially reasonable efforts, subject to obtaining marketing approval, to commercialize licensed products in the Novartis Territory in accordance with agreed development and marketing plans.
The original Novartis Agreement does not specifically address the current status of the Fovista Phase 3 program, wherein the parties are dependent on the OPH1004 data outcome to assess and determine future plans for Fovista. In July 2017, the company and Novartis entered into a letter agreement to streamline the process and timeline for evaluating data, once it becomes available, from the OPH1004 trial, and, depending on the results from the OPH1004 trial, determining a regulatory strategy in the European Union for Fovista. In the letter agreement, the parties agreed to suspend their affirmative obligations under the Novartis Agreement regarding development, manufacture and commercialization of Fovista products pending receipt of the OPH1004 data and the determination of a regulatory strategy in the European Union.
Novartis paid it a $200.0 million upfront fee upon execution of the Novartis Agreement. Novartis also paid it $50.0 million upon the achievement of each of two patient enrollment-based milestones, and $30.0 million upon the achievement of a third, and final, enrollment-based milestone, for an aggregate of $130.0 million. Under the terms of the Novartis Agreement, Novartis is also obligated to pay it up to an aggregate of an additional $300.0 million upon achievement of specified regulatory milestones, including marketing approval and reimbursement approval in certain countries in the Novartis Territory. In addition, Novartis has agreed to pay it up to an aggregate of an additional $400.0 million if Novartis achieves specified sales milestones in the Novartis Territory. Novartis also is obligated to pay it royalties with respect to standalone Fovista products and combination Fovista products that Novartis successfully commercializes. The company will receive royalties at a mid-thirties percentage of net sales of standalone Fovista products and a royalty of approximately equal value for sales of combination Fovista products. Such royalties are subject to customary deductions, credits, and reductions for lack of patent coverage or market exclusivity. Novartis’s obligation to pay such royalties will continue on a licensed product-by-licensed product and country-by-country basis until Novartis’s last actual commercial sale of such licensed product in such country. The company will continue to be responsible for royalties the company owe to third parties on sales of Fovista products.
The company retained control over the design and execution of its pivotal Phase 3 clinical program for Fovista and remain responsible for funding the costs of that program, subject to Novartis’s responsibility to provide Lucentis, an anti-VEGF drug to which Novartis has rights in the Novartis Territory, for use in the Phase 3 trials already initiated and in other Phase 2 and Phase 3 clinical trials in the Novartis Territory initiated following the effective date of the Novartis Agreement. Novartis will have control over, and will be responsible for the costs of, all other clinical trials that may be required to obtain marketing approvals in the Novartis Territory for licensed products under the agreement. Novartis is also responsible for costs associated with co-formulation development, pre-filled syringe development and other development costs in the Novartis Territory, but excluding regulatory filing fees in the European Union for the standalone Fovista product, for which the company will be responsible.
Overview of Funding History and Requirements
The company were incorporated and commenced active operations in 2007. The company's operations to date have been primarily limited to organizing and staffing its company, acquiring rights to product candidates, business planning, raising capital and developing Fovista and Zimura. The company acquired its rights to Fovista from (OSI) Eyetech, Inc., or Eyetech, in July 2007. The acquisition included an assignment of license rights and obligations under an agreement with Archemix Corp. Ophthotech has licensed rights to its product candidate Zimura from Archemix Corp. Since inception, Ophthotech has incurred significant operating losses. As of June 30, 2017 , the company had an accumulated deficit of $664.3 million . The company's net loss was $65.3 million for the six months ended June 30, 2017 , and $193.4 million for the year ended December 31, 2016 , and the company expect to continue to incur significant operating losses for the foreseeable future. Ophthotech has not generated any revenues from product sales and have financed its operations primarily through private placements of its preferred stock, venture debt borrowings, funding under its royalty purchase and sale agreement with Novo A/S, which the company refer to as the Novo Agreement, its initial public offering of common stock, which the company closed in September 2013, its follow-on public offering of common stock, which the company closed in February 2014, and funds the company received under the Novartis Agreement. The company received net proceeds from its initial public offering of $175.6 million, after deducting underwriting discounts and commissions and other offering expenses payable by it. The company received net proceeds from the follow-on public offering of $55.4 million, after deducting underwriting discounts and commissions and other offering expenses payable by it. Ophthotech has received $125.0 million of funding under the Novo Agreement, which constitutes the full amount of funding under that agreement. The company also received an upfront payment of $200.0 million from Novartis upon the execution of the Novartis Agreement, $50.0 million upon the achievement of each of two patient enrollment-based milestones, and $30.0 million upon the achievement of a third, and final, enrollment-based milestone, for an aggregate of $130.0 million.
The company expect to continue to incur research and development expenses as the company continue its Zimura and Fovista development programs, including as the company initiate new clinical trials and continue the continue the OPH1004 trial, for which the company expect initial, top-line data to be available by the end of the third quarter of 2017, and as the company wind down the OPH1002 and OPH1003 trials and the Fovista Expansion Studies. Due to the terminations of the OPH1002 and OPH1003 trials and the Fovista Expansion Studies, its overall research and development expenses have decreased significantly compared to prior years. However, as the company commence new clinical trials for Zimura, pre-clinical or clinical development programs for Fovista, or any new development efforts in relation to additional product candidates the company may in-license or acquire as the company pursue its updated business plan, the company expect that its overall research and development expenses will begin to increase from the current level of expenditure.
The company plan to continue to reassess its existing Zimura and Fovista development programs throughout 2017. The company expect that its reassessment of its Fovista development program for the treatment of wet AMD will be primarily determined by the initial, top-line data from OPH1004 and in the context of its other two failed Phase 3 clinical trials. The company expect that its reassessment of its Zimura development program for GA may be particularly affected by the results of a competitor’s Phase 3 clinical trials of a complement inhibitor being studied for the treatment of GA. Data from its OPH1004 trial are expected by the end of the third quarter of 2017 and data from its competitor’s Phase 3 trials for the treatment of GA are expected during the second half of 2017. As a result of its ongoing assessment of its development programs, the company may modify, expand or terminate some or all of its development programs or clinical trials at any time. The outcome of these reassessments, as well as the progress of its plans to potentially acquire additional products, product candidates or technologies will determine whether and to what extent the company will continue to incur research and development costs for each of its development programs going forward.
The company's ability to become and remain profitable depends on its ability to generate revenue in excess of its expenses. The company do not expect to generate significant product revenue unless, and until, the company obtain marketing approval for, and commercialize, any of its product candidates, which, if Ophthotech is successful, may take at least several years. The company may be unsuccessful in its efforts to develop and commercialize these product candidates. Even if the company succeed in developing and commercializing one or more of its product candidates, the company may never achieve sufficient sales revenue to achieve or maintain profitability. The company's capital requirements will also depend on many other factors, including whether Ophthotech is successful in its pursuit to acquire or in-license and subsequently develop additional product candidates or technologies. The company may need to obtain substantial additional funding in connection with its continuing operations. If Ophthotech is unable to raise capital when needed or on attractive terms, the company could be forced to delay, reduce or eliminate its research and development programs or any future commercialization efforts.
