EYPT - NASDAQ

Good morning. My name is Desean, and I will be your conference operator today. At this time, I would like to welcome everyone to the EyePoint Pharmaceuticals First Quarter 2023 Financial Results and Recent Corporate Development Conference Call. There will be a question and answer session to follow at the completion of the prepared remarks. Please be advised that this call is being recorded at the Company's request. I would now like to turn the call over to George Elston, Chief Financial Officer of EyePoint Pharmaceuticals.

Thank you, and thank you all for joining us on today's conference call to discuss EyePoint Pharmaceuticals' First Quarter 2023 financial results and recent corporate developments. With me today are Nancy Lurker, Chief Executive Officer; Dr. Jay Duker, President and Chief Operating Officer; and Scott Jones, Chief Commercial Officer. Nancy will begin with a review of recent corporate updates. Dr. Duker will then discuss Phase II clinical trials for EYP-1901, and Scott will comment on our first quarter 2023 commercial performance. I will close with commentary on the first quarter 2023 financial results. We will then open up the call for your questions. Earlier this morning, we issued a press release detailing our financial results as well as commercial and operational developments. A copy of the release can be found in the Investor Relations tab on the corporate website, www.eyepointpharma.com. Before we begin our formal comments, I'll remind you that various remarks we will make today constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These include statements about our future expectations, clinical developments and regulatory matters and time lines, the potential success of our products and product candidates, financial projections and our plans and prospects. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent annual report on Form 10-K, which is on file with the SEC and in other filings that we may make with the SEC in the future. Any forward-looking statements represent our views as of today only. While we may elect to update those forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views change. Therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today. I'll now turn the call over to Nancy Lurker, Chief Executive Officer of EyePoint Pharmaceuticals.

Thank you, George. Good morning, everyone, and thank you for joining us to discuss our continued success as we advance first-in-class therapeutics and delivery technologies to provide a brighter future for those at risk of losing their site. 2023 is off to a great start as we continue to build on the solid foundation we laid in 2022 and diligently execute on our clinical and corporate strategies. I'm very pleased with the progress we've made. We made great strides with our clinical trials for EYP-1901, including the completion of enrollment in the DAVIO 2 clinical trial for wet AMD and accelerated enrollment for our PAVIA trial in non-proliferative diabetic retinopathy. We also delivered a very strong first quarter performance for YUTIQ. And as such, we continue to stay focused on our goal of becoming the leader in sustained ocular drug delivery. Before turning the call over to my colleagues, I'll provide an overview of the advances we have made with our lead pipeline program, EYP-1901, discuss our achievements from quarter one, 2023 and provide a preview of the potentially value-creating milestones we have ahead. EYP-1901 is a potentially game-changing treatment for patients suffering from serious eye diseases. For example, when you look at wet age-related macular degeneration, otherwise known as wet AMD, we believe there's a disconnect between the disease course and how we're currently treating it. Wet AMD is a lifelong disease that's being treated with acute care as it's currently dosed at monthly or bimonthly intervals under a treat and extend model. This poses a tremendous treatment burden for patients who have to come into the retinal surgeons office for injections in the eye every one to two months for the rest of their lives or risk losing vision or even blindness. We believe EYP-1901 can potentially remedy this disconnect by providing a long-lasting treatment option for this chronic lifelong disease with dosing at an interval six months or longer. When used as a baseline therapy for patients following initial treatment with current standard of care such as aflibercept or forizumab, EYP-1901 has the potential to bring a new mechanism of action, significantly reduce the treatment burden of this disease, improve compliance and potentially ultimately result in better patient vision outcomes. Now turning to non-proliferative diabetic retinopathy or NPDR, approximately 90% of patients currently receive no course of treatment, apart from observation by the eye doctor until their disease progresses to vision loss. This passive treatment approach is primarily due to the very burdensome treatment nature of the short-acting drugs that are available. If a patient isn't actively experiencing visual loss, they are much less motivated to visit their retinal specialists for an injection every one to two months. We hear this thing consistently from retinal specialists. What they want is a longer-acting drug that doesn't require this demanding treatment schedule for their NPDR patients. So there remains a great unmet need for a safe, efficacious and convenient treatment option that proactively maintains a patient's vision over a longer period of time than the currently available therapeutic options. EYP-1901, which is dosed every nine months in our current Phase II NPDR PAVIA trial can potentially safeguard patients' vision for a much longer period of time between treatments. The current approach is used to treat these eye diseases seem okay when you look at treatment regimens outside of retina, where it's standard practice to address multiple mechanisms of action in a disease progression in parallel in order to improve treatment efficacy. We believe eye diseases, which have serious consequences such as blindness should be treated using all resources at our disposal through a multipronged approach that targets multiple disease drivers. Vorolanib, the active drug using EYP-1901 is a TKI and brings a new mechanistic approach as a pan-VEGF receptor blocker for the potential treatment of wet AMD, NPDR and diabetic macular edema patients. Additionally, one other potential treatment benefit of EYP-1901 mechanism of action is the potential for neuroprotection and anti-fibrotic benefits for patients. We presented preclinical data on vorolanib from a gold standard mouse model of retinal detachment at ARVO at the end of April that suggests that this differentiated advantage, which could be another benefit to set EYP-1901 apart from today's commercially approved therapies. Our erodableDurasert technology, which we call Durasert E tied these improvements together, delivering the active drug consistently and reliably with steady zero-order connected dosing over six to nine months in the eye. The underlying Durasert technology has been safely used in thousands of buys across four FDA-approved products, and we are confident in its ocular safety profile, which is always a number one consideration for patients and physicians, especially for treatments in the retina. Moving on, I am delighted to report the substantial progress we made in our two key Phase II trials of EYP-1901 in wet AMD and NPDR. First and foremost, we completed enrollment in our Phase II DAVIO clinical trial, evaluating EYP-1901 and wet AMD. We were incredibly pleased to exceed the original target enrollment of 144 patients, enrolling a total of 160 patients due to the high level of physician and patient interest in the trial. We remain on track to report top line results in the fourth quarter of this year. When combining the Phase I DAVIO results with a future Phase II DAVIO data, EYP-1901 is being studied in more eyes than any other TKI product in development for wet AMD. And we believe this is very important, particularly as we look at strategic considerations with potential partners. The body of evidence we have been collecting in EYP-1901 today, including both non-clinical and clinical data supports increased confidence in 1901. The proven value of the anti-VEGF pharmacological mechanism not only in wet-AMD, but across a number of VEGF-dependent retinal diseases supports a strong rationale for efficacy of EYP-1901 and in PDR. As a result, we believe that a smaller Phase II trial in NPDR will provide ample evidence of both fficacy and continued safety and will allow an accelerated path to initiate a Phase III program in this indication. Jay will talk further about our PAVIA trial. Looking ahead, we also plan to initiate a Phase II trial, evaluating EYP-1901 in diabetic macular edema in the first quarter of 2024. Importantly, we are keeping our eye on the future and remain actively engaged in expanding our sustained ocular delivery product pipeline beyond EYP-1901. We continue to evaluate molecules for potential use in our Durasert E technology, which can be tailored to each drug and disease indication. As an example, in February, we announced our exciting research collaboration with Rallybio to evaluate their C5 complement inhibitor using our Durasert E technology to develop a sustained delivery treatment option for geographic atrophy. We look forward to updating you on this evaluation over the coming quarters. Turning to our YUTIQ franchise. Once again, our commercial team delivered a very strong quarter with $7.4 million in YUTIQ net product revenue, which is a 60% increase over the first quarter of 2022. We remain very pleased with the performance of YUTIQ as it continues as a profitable franchise in 2023, and we expect single-digit millions in positive cash flow from the YUTIQ franchise this year. Scott Jones will provide additional color on this topic later on this call. Now let me turn the call over to Dr. Jay Duker, our President and Chief Operating Officer, who will provide an update on our lead program, EYP-1901 as well as our other initiatives. Jay?

Thank you, Nancy, and good morning to everyone. It's been an exciting and productive quarter for the EyePoint clinical team as we work to bring innovative ocular therapies to patients with serious eye disorders. Turning to our lead program. EYP-1901 is an investigational sustained release therapy that uses a bioerodible formulation of our Durasert technology or Durasert E with vorolanib a tyrosinkinase inhibitor that acts through intracellular binding of all VEGF receptors, thereby blocking all VEGF isoforms. At this year's ARVO 2023 meeting last month, we presented compelling preclinical data from a widely validated mouse model of retinal detachment that demonstrated vorolanib's differentiated mechanism of action compared with standard of care ligand blockers, which we believe may provide additional treatment benefits beyond the currently commercially available anti-VEGFs. These data showed that vorolanib significantly improved contrast thresholds in mice and resulted in both improved structure and functional endpoints compared with placebo, which suggests a neuroprotective effect against photoreceptor degeneration. Should this be reflected in clinical data, it would provide an important new mechanism of action for the treatment of VEGF-mediated chronic blinding user segment diseases such as wet age-related macular degeneration, diabetic retinopathy, diabetic macular edema and retinal vein occlusion. Additionally, compared to other TKIs, vorolanib features reduced off-target binding, specifically minimal activity against Tie2, leading to a potentially improved safety and efficacy profile of this differentiated molecule. Durasert E is based upon the same underlying technology used in our non-erodable products like YUTIQ. However, the non-erodable shell is removed. Durasert products have been delivered to over 80,000 eyes with a consistently strong safety profile. And based on the extensive prior clinical data evaluating Durasert in four FDA-approved indications, we are confident in EYP-1901's ability to consistently deliver the active drug, vorolanib, with a sustained constant dose within the therapeutic window using our erodable delivery technology, Durasert E. In wet AMD, EYP-1901 is being evaluated in our Phase II DAVIO 2 trial as a treat to maintain therapy with a goal to sustain the treatment effect for the majority of wet AMD patients up to six months or longer following a single injection of EYP-1901. By using EYP-1901 as a baseline maintenance therapy following the use of large molecule anti-VEGFs, we aim to provide a sustained delivery therapy with a new mechanism of action so that patients and practitioners can potentially have the flexibility to safely reduce the number of visits to the retinal specialists without sacrificing visual outcomes. Last summer, we reported positive 12-month safety and efficacy results at the American Academy of Ophthalmology meeting in Chicago for the Phase I DAVIO trial evaluating EYP-1901 in previously treated wet AMD. The DAVIO trial enrolled 17 patients and each received a single in-office intravitreal injection of EYP-1901 at one of four different dose levels. All enrolled patients were previously treated with standard of care anti-VEGF therapy. No reinjection with the study drug was performed during the trial and typical criteria for supplementation with a standard of care anti-VEGF was employed. Importantly, those 12-month data featured no reports of ocular SAEs or drug-related systemic SAEs. 53% of eyes were supplement free for up to six months and up to one year, 1/3 of us were supplemental anti-VEGF free after a single injection of EYP-1901. Additionally, there continued to be an impressive treatment burden reduction of 73% at 12 months compared to 75% at the six-month visit. On the heels of these positive data, we initiated two separate Phase II clinical trials of EYP-1901, one for the treatment of wet age-related macular degeneration called DAVIO 2, and the other studying the drug in non-proliferative diabetic retinopathy called the PAVIA trial. As Nancy noted earlier, we completed enrollment in the Phase II DAVIO 2 clinical trial in March of this year. All patients in the DAVIO 2 trial were previously treated with a standard of care anti-VEGF therapy and were randomly assigned to one of two doses of EYP-1901, approximately 2 milligrams or approximately 3 milligrams versus an on-label oplibercept control. EYP-1901 is delivered with a single intravitreal injection in the physician's office similar to current FDA-approved anti-VEGF treatments. The primary efficacy endpoint of the DAVIO 2 trial is non-inferiority change in visual acuity to the aflibercept control as measured by best corrected visual acuity six months after the EYP-1901 injection. Secondary efficacy endpoints include change in CST as measured by OCT time to first supplemental anti-VEGF reduction in treatment burden and overall safety. The trial ended up over enrolled, a testament to patients and investigators' enthusiasm about EYP-1901. Instead of the planned 144 patients, we enrolled 160 patients. We look forward to progressing the DAVIO 2 trial and anticipate top line results in the fourth quarter of 2023. Turning to non-proliferadiabetic retinopathy, or NPDR, it is a very common eye disease that affects almost 1/3 of diabetic adults over the age of 40 and is projected to impact over 14 million Americans by 2050. In NPDR, blood vessels are weakened, potentially leading to swelling of the macula, and eventually abnormal blood vessel growth. If left unchecked, NPDR can be the harbinger of severe visuals. As currently approved intravitreal therapies for NPDR requires significant visit and treatment burden, the vast majority of NPDR patients are merely observed and not treated. This provides a significant market opportunity for EYP-1901, which may be able to be effectively delivered at nine-month or longer intervals in NPDR. As a practicing retinal specialists, I would enthusiastically embrace a safe, effective and tolerable therapy to prevent the complications of NPDR. The first patient was dosed in the Phase II PAVIA clinical trial of EYP-1901 for the potential treatment of NPDR in September of 2022. Based on clinical and non-clinical data, EYP-1901 utilizes a proven anti-VEGF pharmacological mechanism that is a well-documented treatment across VEGF-mediated retinal diseases such as NPDR. And as a result of the strong proof-of-concept data, we have modified the Phase II PAVIA clinical trial evaluating EYP-1901 to enroll a minimum of 60 patients, which will represent a reduction from the original plan and of 105 patients. This change allows for a shortened time line to NPDR Phase II data and potentially an accelerated initiation of Phase III clinical trials. In the PAVIA trial patients are randomly assigned to one of two doses of EYP-1901, approximately 2 milligrams or 3 milligrams or to the control group, which will receive a sham injection. As in the DAVI0 2 study, EYP-1901 is delivered with a single intravitreal injection in the physician's office. The primary efficacy endpoint of the trial is improvement of at least two diabetic retinopathy severity scale levels at week 36. Secondary endpoints include onset of vision-threatening complications, occurrence of diabetic macular edema and/or proliferative disease, retinal ischemia and/or non-perfusion and safety. We anticipate completing enrollment for the Phase II PAVIA clinical trial in the second quarter of 2023 with initial top line data results in the first half of 2024. And with the abbreviated patient enrollment, we look forward to bringing this innovative treatment of NPDR to patients sooner. Additionally, we are on track to initiate a third Phase II clinical trial evaluating EYP-1901 in DME in the first quarter of 2024. Looking at our YUTIQ franchise, we continue to collect real-world data on the benefits of YUTIQ for the treatment of chronic non-infectious posterior segment uveitis in the Phase IV CALM registry study, which is conducted in collaboration with the Cleveland Clinic. Data from the UTI CALM Registry study were presented in three poster presentations in the 2023 ARVO Annual Meeting in April and demonstrated YUTIQ's effective control of inflammation in real-world patients living with chronic poster segment uveitis. Finally, as Nancy noted earlier, we continue to evaluate potential product candidates through internal discovery efforts, research collaborations and in-licensing arrangements to build our pipeline. We are very encouraged by the potential of our recently announced collaboration with Rallybio in which we are evaluating their C5 complement inhibitor in our Duraserttechnology for the treatment of geographic atrophy, or GA, a late complication of dry macular degeneration. We have been actively evaluating complement inhibitor molecules for use in our drug delivery technology as we see a significant opportunity to provide a sustained delivery treatment for geographic atrophy and potentially earlier forms of dry AMD. Similarly, to our approach with EYP-1901 by providing constant dosing of drug over time, we hope to see improved outcomes and reduce treatment burden for patients. As a practicing retinal physician, I am incredibly excited about the potential of treating patients with EYP-1901 as it represents a potential game-changing treatment options for patients with a variety of eye diseases. This is what drives our team every day, bringing site-saving treatment to patients at risk of losing their vision. Now let me turn the call over to Scott Jones, our Chief Commercial Officer, for the commercial update. Scott?

Thank you, Jay. Our commercial business is exclusively focused on our YUTIQ franchise now that we're no longer actively marketing to execute in the United States. We reported a record-breaking first quarter for YUTIQ with $7.4 million of net product revenue, a 60% increase from the first quarter of last year. This represents the most profitable first quarter since the product's launched, and we're particularly pleased with these results given that first quarter demand numbers typically trend downwards due to insurance deductible resets for patients. YUTIQ customer demand was approximately 930 units compared to approximately 650 units for the first quarter of 2022, a 43% increase. We're pleased with the continued customer demand increase for YUTIQ based on continued utilization by retinal physicians and consistent messaging from our marketing and sales teams. We're very pleased by the progress that we've made with our commercial business and expect a profitable YUTIQ franchise with profits in the single-digit millions this year. I'd like to thank our commercial team for their dedication to bring YUTIQ to physicians and patients in me. While DEXYCU remains available to patients in need, we don't expect any substantial revenues from the product going forward as it's no longer actively marketed in the U.S. following the discontinuation of pass-through reimbursement by CMS on January 1, 2023. I would now like to turn the call over to George to review the financials. George?

Thank you, Scott. As the financial results for the three months ended March 31, 2023, were included in the press release issued this morning, my comments today will be focused on a high-level review for the quarter. For the quarter ended March 31, 2023, total net revenue was $7.7 million compared to $9.3 million for the quarter ended March 31, 2022. Net product revenue for the first quarter was $7.4 million compared to net product revenues of $9 million for the first quarter ended March 31, 2022. The reduction in net product revenues was driven by a significant reduction in DEXYCU revenues due to the discontinuation of pass-through reimbursement for that product effective January 1, 2023. Net revenue from royalties and collaborations for the first quarter ended March 31, 2023, totaled $0.3 million, consistent with the same period in 2022. The Operating expenses for the first quarter ended March 31, 2023, totaled $29.2 million compared with $27.6 million in the prior year period. This increase was primarily driven by continued investment in R&D for EYP-1901 development, offset by a reduction in sales and marketing spend for DEXYCU. Nonoperating income net for the first quarter of 2023 totaled $0.4 million and net loss was $21.2 million or $0.56 per share compared to a net loss of $21 million or $0.56 per share for the prior year period. Cash and investments at March 31, 2023, totaled $122.5 million compared to $144.6 million at December 31, 2022. We expect the cash, cash equivalents and investments on hand at March 31, 2023, and expected net cash inflows from our product sales will enable us to fund our current and planned operations into the second half of 2024. In conclusion, we are pleased with EyePoint's progress in the first quarter of '23 and are well capitalized to advance our product pipeline to key value inflection points. I will now turn the call back over to Nancy for closing remarks.

Thank you, George. As you can see, 2023 is off to a strong start that sets us up for continued success as we execute on multiple clinical catalysts and strength in our commercial business. We are well positioned to achieve a number of potentially value-creating milestones, including most importantly, reading out our top line data from our Phase II DAVIO 2 clinical trial in the fourth quarter of this year. completing enrollment in the Phase II PAVIA trial oF EYP-1901 in NPDR in Q2 with top line data expected in the first half of 2024. Dosing of the first patient in the Phase II clinical trial of EYP-1901 in diabetic macular edema early next year and advancing our discovery stage pipeline for both our wholly owned product and partner programs while continuing to grow revenue for YUTIQ. Before opening the call to your questions, again, I must reiterate how appreciative I am of our exceptional team at EyePoint. Across the board, this team of talented professionals brings a passion and work ethic is unparalleled. I'm proud of all we've achieved and energized about the opportunities that lie ahead for us as we continue to transform the treatment landscape with innovative long-term solutions to improve both the vision and the lives of patients with serious eye diseases. Thank you all very much for listening this morning, and I'll now turn it over to the operator for questions.

One moment for the first question. First question comes from Yatin Suneja from Guggenheim.

I mean, a couple of questions for me. So the first one is FDA has recently issued this draft guidance for VMD studies. Can you maybe just comment on how your Phase II stack versus Phase II plans stack against that guidance? And then in terms of the expectation for the DAVIO 2, I mean, we understand the study is looking at non-inferiority, but curious to hear from you what sort of reduction in treatment on we should be looking at?

Okay. Yes, let me take the first one on the draft guidance, and Jay will take the DAVIO 2 reduction in treatment burden question. So we had a Type C meeting with the FDA well before the issue that guidance and before we actually started DAVIO 2. So we planned our DAVIO 2 study to mirror that guidance that came out because, again, the FDA did tell us when we have our type meeting what they expected and the guidance that came out mirrored what they told us. So we feel we're very well prepared for Phase III. We expect there'll be minor changes to our Phase III protocol from our Phase II, but of course, it's going to be dependent on the data that we see that reads out. But right now, we believe we're in very, very good shape with both our on our Phase III that it will meet that guidance that came out. So Jay, why don't you take the reduction in treatment burden question?

With respect to treatment burden reduction and Phase II in the pivotals, again, remind everybody that the primary endpoint is going to be non-inferiority change in visual acuity, which is not to say reduction in treatment burden isn't important because it's very important to patients and practitioners. We had a significant reduction in treatment burden in DAVIO, the Phase I trial of 75% at six months to 73% at one year. I think if our reduction in treatment burden is in the neighborhood of 50%, that would be an excellent result and anything better than that, obviously, would be even greater result. In talking to practitioners and asking them what type of reduction in treatment burden would be useful to them in practice, they actually will quote a number even less than 50%. Although, again, depending on the visual acuity results, the treatment burden, it will be in some ways secondary.

Got it. And then just one more. I mean there seem to be an enthusiasm from a physician, and that's what you're seeing in over-enrollment and faster enrollment. Could you maybe just articulate to us like what's going on? What's driving that enthusiasm among the physician and what you're dealing from the KOLs, especially for this whole TKI class in wet AMD.

Yes. So at a high level, practitioners for years have been interested in extending patients out longer between treatment visits. We saw, obviously, when Eylea became approved, that's one of the reasons it was accepted so rapidly. And I think we're seeing it again with the BISMA now. But those were extensions in real world of maybe a week or two of treatment interval. What we're offering, we hope, for the majority of patients is intervals of six months or longer between visits and injections. So again, we hope to see a significant increase in the interval between visits for the majority of wet-AMD patients. What's also driving this, of course, is that the aging population means more patients getting injections. The growing diabetic population, same effect. And now we have an FDA-approved geographic atrophy drug, which really can't be treat and extended beyond two months. That is going to fill up a lot of retina specialist offices. And so we're looking to safely offload patients to a longer treatment and visit interval without sacrificing the vision. So that's underlying it. Now obviously, when you tell a patient, you can sign up for a study and you might get a treatment just once over six months or longer, one injection versus your baseline of injection every six weeks, that really resonates with the patients also.

Next question, we have the line from Tyler Van Buren from Cowen.

I wanted to ask about the moderate to severe non-proliferative diabetic retina opportunity. Can you elaborate on the size of the patient population there? And specifically, what percent is diagnosed and then of the diagnosed, what percent are actually treated with available therapies. And then the second question is just related to the C5 inhibitor Rallybio program for geographic atrophy given that's topical with the $6 billion Iveric acquisition announced earlier this week. Can you give us a sense of how long it might take to get that program in the clinic or what steps need to be completed prior to getting into the clinic?

Scott, our Chief Commercial Officer and also heads up our early commercial development. I'll have some to answer the questions on the NPDR market. Let me just say real quickly as an overview, though, that this is an undeveloped market. So while the prevalence is high, the percent traded is low, Scott can -- if you have those numbers at your fingertips. And that is because, again, there's just the current treatments, no in it every month or every other month with the current therapies. We have a disease that's relatively unnoticeable to patients. And so it's basically watchful waiting until they start to see erosion of the vision, and that's when they start to treat. We think we can change that paradigm. So Scott, I'll turn it to you for that.

So if you look at the number of patients with diabetic retinopathy in the United States, it's currently about 8 million people. That number is increasing very rapidly. And in fact, if you look at -- and I think Jay even quoted this in some of the discussion he was having about NPDR. ASRS assumes that this number is going to grow just for NPDR to about 14 million people by 2050 So that the market is expanding very rapidly. As Nancy said, it is an undeveloped market today. And what I mean by that is it's a small percentage of these patients that are actually being treated either with lasers or with an anti-VEGF therapy. The vast majority of patients currently it's a wait-and-watch kind of approach with annual office visits. So today, about 3% of NPDR patients are being treated with an anti-VEGF Obviously, the driving factor there is the fact that these are younger patients who just don't want to come into the office quite so frequently. And so certainly, a long-acting product potentially allows us to rapidly expand that potential treated market.

I had a question on the C5 program.

I'm sorry, my apologies. So Jay, why don't you take the C5 question?

Yes. So we're really excited about the collaboration and the potential ability to put Rallybio C5 inhibitor, which is an apple body into one of our sustained delivery systems. So the pathway again is, I would say, are straightforward, not necessarily easy, but certainly straightforward. Formulation followed by typical pre-IND tox and PK studies, get the IND Phase I for safety and dose and a little bit of look at efficacy. And based on that type of Phase I, we might do a Phase II/III as the next study. So it's still early on. And when we have news to report, we will. But that's, again, the kind of high-level outline of how a product might like a sustained release complement inhibitor might be developed.

Next question, we have the line from Jennifer Kim from Cantor Fitzgerald.

On that, I guess my first question is on the NPDR trial size reduction. Can you elaborate on, I guess, the body of evidence that compelled you to reduce the trial size? And also, is it fair to assume that the 60 patients minimum would be evenly distributed by ARM? And specifically, does that body of evidence related at all to what you're seeing? I know it's on a blinded basis, the DAVIO 2 of safety or blinded doses or what goes into that evidence?

Yes. I'll take an overview of that and then Jay can elaborate. So first of all, if you recall, on vorolanib itself, there was a Phase I -- well, first of all, preclinical Phase I but two that were done by our partner beta on vorolanib. And those data all showed very solid efficacy. Now that was in wet AMD, but no safety issues in the eye. So that gives us confidence for vorolanib itself, coupled with this Phase I data on EYP-1901, which again, to the audience is a combination of vorolanib and our Durasert E formulation. Those data continue to show a very strong and positive safety profile, coupled with very, very good efficacy that we saw in the DAVIO 1 data. Further, if you look across all the anti-VEGF, there's always been a very consistent read-through across these various retinal diseases. And again, for the late person who might be on, basically, that means that if you're showing a positive result in wet AMD, you always see a positive in there's no exception, Jay can confirm that in other diseases like diabetic macular edema, diabetic retinopathy. So because of all that and our strong data that we've seen already across both vorolanib and EYP-1901, we don't believe we need to have as large of a trial that we originally anticipated. And in addition, the enrollment is going very nicely ahead of expectations. So based on all that, we've decided that we're going to reduce the size and be able then to get to Phase III sooner. I'll let Jay talk about the distribution by arm and any other comments.

Yes, this is all randomized and therefore, we would expect if randomization works, we would get approximately 20 in each of the three arms, if we end up with 60. And again, we're saying 60 as a minimum. As the enrollment continues, we probably will end up with an end of slightly greater than 60%. That has not yet been determined. But we're -- it's a statistical flip of a coin, how they end up, but we would expect in a 60 or more, that'd be pretty evenly balanced.

Okay. Great. And then my second question is, do you have any thoughts currently on -- since the DR data is reading out in the first half of this year, any thoughts on the timing and sizing of the Phase III program that indication?

We haven't really -- we're not ready to disclose that publicly. That's still under development, and it's very early still. So we'll skip that question.

Okay. That's fine. And then my last question is, any comments on, I guess, the overall tone you're hearing in your latest conversations with potential partners?

So let me just continue to state that we are prepared by ourselves if we feel that it's best for the Company and for investors. However, I want to state that right now, our goal is to partner this. There's a number of reasons for that. Number one, these are large global studies. We feel having a global partner will help us execute on those studies. The second reason, of course, is from a financing perspective, we would expect a partner would participate meaningfully in the cost of those studies. So we continue to have strong interest across the large strategics that are in the ophthalmology space. So we're optimistic. But of course, I want to reiterate, it is dependent on the results that come out of W-2. We do not expect that we will partner this before those results come out. But what we do want to do is be prepared to move quickly if the results are positive. The first goal that would be certainly in the first half of 2024, we would be able to announce a partnership. But suffice to say, the discussions are all going well.

Okay. And then maybe one -- sorry, one more quick question, and maybe this one is for Scott. Just on the growth in this quarter, it's pretty strong. I think it was higher than what I expected at least. How do you -- especially in the first quarter of the year, do you see that growth sort of sustaining over the next few quarters? Or does something drive that? Or I guess, how are you thinking about growth over the next few quarters?

Thanks for the question, Jennifer. And as always, we're not going to provide guidance on sales. But we are extremely happy with the YUTIQ performance and remain very confident. And I think it's largely being driven by the fact that it's really about consistent messaging within the retinal space and patient identification. And I think this is what has resonated extremely effectively with the physicians. And again, we remain very confident just based on what we're hearing anecdotally that physicians are starting to adopt the product more readily and more widely. So again, we remain confident moving forward.

Next question comes from the line of Colleen Kusy from Baird.

Maybe just a follow-up one on the FDA draft guidance and wet AMD. Can you just remind us how the retreatment -- your retreatment stipulation as compared to the retreatment guidance that the FDA has laid out?

Jay, why don't you take that one?

So we've been saying all along that we were interested in getting a label in wet AMD for every six months. The overall guidelines from the FDA for non-inferiority trial, which is what we intend to run as pivotals would be that we would be up against either monthly Lucentis or every other month Eylea after an Eylea load. The guidance does not state specifically anything more than that. And so I think that our Phase II trial, which is a single injection of EYP-1901 against on-label Eylea. The pivotals, again, we expect it to look very similar, except for reinjection every six months.

Got it. That's helpful. And then just on the neuroprotective and antifibrotic data that you presented, what clinical data would give you confidence that this thesis is playing out in wet AMD patients?

So ultimately, what matters most to physicians and patients to the FDA is visual acuity results. And so we don't have to be numerically or statistically superior to Eylea to have evidence that we are neuroprotective. But I think it may turn out that in a subgroup of patients, we may show improvement in visual acuity beyond just a simple drying effect. If we can do that and especially if we can identify the subgroup of patients who may benefit visually from our drug, I think that would be very helpful for not only acceptability but also commercial success. So in the end, preclinical models are terrific. But unless they actually correspond to something that is clinically meaningful to patients and practitioners then they're just models. So that's what we'll be looking for. And again, as I stated, it doesn't have to be numerically superior or already or numerical advantage of visual acuity across the entire cohort if there's a subgroup of improvers, I think that, that would be sufficient. Fibrosis is a little bit harder to show. And you can, again, that's a structural measurement that's really done on the basis of a florescent intogram. That's the gold standard for measuring fibrosis. And like most wet AMD studies, we're excluding patients at the beginning that have a lot of fibrosis. So you're already starting with a small amount of fibrosis and over a six-month period in W2, I think it might be difficult to show a meaningful reduction in the advancement of the fibrosis. But we'll be looking for that as a secondary end point. And certainly, we would be measuring that in the pivotal trials as well. But as I said earlier, structural changes are terrific, but ultimately, we've got to show functional stability or hopefully, at least in a separate improvement.

Yes. Let me just add as well that this is also one reason why we believe that we have a potential multibillion-dollar blockbuster on our hands if the data continue to play out. And the reason is because this pan-VEGF new mechanism of action that we have versus the current large molecule anti-VEGF like Eylea, Lucentis, Ebismo because they are block, again, just for the audience, what they do is they latch on to the VEGF in the eye and prevent it from blocking the receptors. But it's a very limited receptor base that they block. In our case, we block multiple VEGF receptors. And if you look at some of the early data, particularly even if you look at right, they block not only are they a ligand blocker but they also block ANG2. And we, with our receptor blocker, we block the mechanism that causes ANG2 as well to increase. So we blocked multiple VEGF receptors. We think there could be benefit to that, such as neuroprotection and anti-fibrotic benefits as well as other kinases. And if you look at other large disease areas, they almost always tackle diseases from multiple disease drivers. In these retinal eye diseases right now, the only thing that's available are this one mechanism that's on the market today. So we believe that our pan-VEGF that continue to play out could be a real benefit to patients and also be a driver for uptake in the marketplace. We also think it's one reason why we're seeing keen interest from the strategic because I know not only is it the keen benefit of getting this extended delivery important, but also having a different mechanism of action. So we remain very bullish because of the benefits we think that our product can provide.

Next question, we have the line from Daniel Catalin from Chardan.

I wanted to follow up on the NPDR study. Just wanted to ask how does reducing the trial from target enrollment of 15 patients to 60 affect your assumptions and confidence in the statistical analysis?

Yes. So even at 105 patients, the study was not powered for statistical significance non-inferiority. So we were looking for the trend that was seen with the other anti-VEGFs of the improvement in the DRSS scores. So if we observe that in the treated groups, even, I would say, percentage-wise, less than what might have been seen in the Lucentis and Eylea trials, I think that would give us great confidence that EYP-1901 is effective in NPDR. I think from a statistical perspective, again, the issues probably are a little bit more around determining the size of the pivotal trials based on those statistics, but we remain confident that even at 60 patients, 20 in a treatment arm, we'll get a very good idea of how effective our drug is over six months to nine months after injected.

Okay. Got it. And I have also a follow-up on neuroprotection data. How significant is neuroprotection issue in patients because you don't really hear that being discussed all that much? And do you expect other TKIs in development to provide similar benefits?

Let me just give a broad overview real quickly and then Jay can go into more detail. So let me just say this, look, having launched lots and lots of drugs throughout my career. Part of our job is to develop that market because it's not developed right now. And the reason is, again, because the current large molecule anti-VEGFs don't provide in all the preclinical data, and I believe they've tried to run some clinical data over the years, they don't show this effect. So part of our job is to start to develop that market. There's a well-developed path on how you do that, and we intend to pursue that. So it's additional studies we'll be doing both preclinical as well as looking at some additional markers potentially in our Phase III studies and then additional studies afterwards. So we intend that we will be pursuing this. As for other TKIs, yes, more than likely other TKIs will show this effect as well. But I'm going to let Jay talk specifically around some of the is we basically do not block that are important.

The issue on neuroprotection, it is a kind of a holy grail and not just retinal diseases, but obviously glaucoma. And we've been looking for agents that will block cell death in the retina for decades. With respect to wet AMD specifically, chronically, many patients lose vision, and they may lose vision because they have recurrent disease with active oxidation fluid or blood that takes the vision down and can't be recovered. They can have progressive geographic atrophy. But there are other patients who we never really allowed them to get oxidation and there's no definite geographic atrophy and the retina just thins and that's been referred to as macular atrophy, which is kind of a catch word for loss of the retinal tissue. Those are the type of eyes that if we can block that via neuroprotection that we'd be able to sustain or even improve visual acuity in these patients, certainly in the longer term. So that's really what we're looking for a lack of thinning structurally and better stability or improvement in visual acuity from that neuroprotective perspective. As for other TKIs, we really have no data on that. It certainly could be a class effect, and we're going to try to understand better which receptor blockage might affect this. There is one other theoretical possibility here. We have known for years that VEGF in normal levels in the eye is neuroprotective. And there's always been worry that by completely suppressing VEGF in an eye, you may accelerate in the long-term thinning and loss of vision. That's never really been shown. But because we're not blocking VEGF per se, we're blocking the receptor, it's theoretically possible that the VEGF that remains in the eye may continue to act as a neuroprotective agent. Now that's not what we looked at in our model, but that theoretically might be a second reason why a receptor blocker might lead to better visual acuity outcomes in the long term.

Jay, do you want to comment just quickly on DEXYCU?

Again, Nancy alluded to the fact that ANG2 down regulation appears to be beneficial to visual acuity as shown by Fibismo. DEXYCU blockage results in upregulation of ANG2 and vorolanib doesn't have much at all activity at the levels we're using on DEXYCU. And so we shouldn't be upregulating the ANG2.

Next question comes from the line of I-Eh Jen from Laidlaw & Co.

My first question is just followed the previous one in a slightly different way is that if I reduce the patient size for the PAVIO study, was there any information you may not be able to gain? And any perspective you think that will be different if you retain the 105 patients for that study?

Yes. So with the reduction in the end of the PAVIA study, I think I kind of alluded to this, I don't think -- certainly, again, we weren't powering this study to give statistical significance to the non-inferiority against the sham control. So it's not a matter of the statistics per se. But in order to determine the end of the pivotal trials, you want to get a pretty good idea of what the standard deviation is and what your treatment effect is overall. And until we have the results, I can't really answer the question. But we're still confident even in the reduced and that we should be able to plan for the pivotals accordingly depending on the treatment effect we see with that lower end. And again, everything you do, it's my practicing medicine, risks and benefits. And we think the benefit strategically to getting into the pivotal trial sooner far outweighs the risk here.

And then another question here is that I remember you have developed new injectors at this point. Any update on that development?

Yes. Let me make one quick comment on that, and Jay's team is responsible for the new injector, but we're pretty excited about that injector. It's proprietary. It will be patented, and we absolutely believe it's a best-in-class injector. So Jay, why don't you go into some of the specifics?

Yes. So the injector is on track, on target development. We expect to use it for the first time in our DME trial, which is slated to start in the first quarter of 2024. Again, the injector, we believe it will be state-of-the-art. We've tested it with retinal specialists and got excellent feedback. And as I said, the production is underway, and we're on target. Just to remind everybody, the current injection system is a modified T injector that was developed over 15 years ago. And while we're pleased with its function, it's worked fine, we think that a product like EYP-1901 and eventually you tie to serve a state-of-the-art injector, and that's what we're developing.

The next question comes from the line of Chaitanya Gollakota from H.C. Wainwright.

Most of my questions have been answered. So I just have one quick question. Have you received or garnered any FDA feedback on your regulatory plans in NPDR either before your Phase II reduction or even on your early Phase III plans?

Yes. So first of all, let me reiterate, we had a type theme meeting with the FDA because we wanted to make sure that our Phase II trials we're close enough to the Phase III that we could be confident in the structure you don't typically want to have big changes in your Phase III trials from your Phase II because it injects a lot more risk. So we got very good direction from the FDA at that Type C meeting, which was confirmed in the guidelines that have been subsequently issued on wet AMD clinical trials. The next that we'll have an end of Phase II meeting with the FDA to nail down more specifics, but again, that will happen after we read out on our Phase II studies. So we're planning for that as soon as we get those results that we'll have a meeting with the FDA. We will get the comments from the FDA on the design, so we don't expect it to change materially from the guidance. But of course, we'll ask for some more specifics for all trials, but we remain confident right now that we're on the right track, and we don't expect any major surprises.

And one quick one, and I might have missed this in your earlier remarks, but have you disclosed when the Rallybio asset would be in the clinic or not?

No, we haven't disclosed it. And as I did say earlier, when we have that type of news, we'll certainly announce that it would be very exciting for us and for Rallybio and potentially for the patients. And so we will be announcing that when we've got more clarity around it.

Let me also just make a comment, which is as to disclosure. On our current DAVIO 2 trial, if there were any safety signals, we would disclose that. And obviously, we've not disclosed any safety signals. So from that standpoint, we're pretty optimistic right now that EYP-1901 to date in the trial is showing good safety. Again, if there was any serious safety signals, we would report that. And obviously, we've not been notified of any serious safety issues. So that's all very, very positive.

The next question comes from the line of Julian Harrison from BTIG.

You're positioning EYP-1901 as a potential six-month regimen in wet AMD in nine months for NPDR. So I guess I'm just wondering if you could talk a little more about what gives you confidence in the longer injection intervals for NPDR and how important lung intervals are for growing the NPDR market, generally speaking.

So Jay, why don't you take the clinic the pharmacologic and clinical question, and then I'm going to ask Scott just to talk about the marketplace on nine months NPDR?

Sure. So in preclinical in vivo and in vitro studies, we believe EYP-1901 should release drug at therapeutic levels in humans for between eight and nine months. And so you might ask, why are you going for a six-month interval, and the answer is easy. That's what retina specialists want. We want to give them the flexibility to dose as often as every six months. But because some patients, and I can remind you, 1/3 of the eyes in our DAVIO trial went the full year with no supplements. So they'll have the flexibility to go longer if they choose to. With respect to NPDR, it is a more slowly moving disease, number one. Number two is the consequence of the disease a treatment effect, let's call it, wearing off a little bit early. It's not nearly as serious as what you might see in wet AMD. And so it would be hard pressed, I think, to show in a short term of just a month or two that if the insert were out of medication would make any difference. That's more around the PK in understanding the disease process. But again, and Scott can talk about this, we talked to a lot of retina specialists and ask them what they would want in such a therapy. And again, nine months to one year seems to be the answer.

Yes, Jay, I would just add to that, based on a number of different data points that we have from, as Jay said, talking with individual physicians, market research, reviewing some of the previous ASRS Pat survey data points. There's clearly a desire to treat NPDR if there is an appropriate interval. And as Jay mentioned, greater than six months, hopefully out to a year. And again, it's a challenge of getting these patients into the office as frequently as an AMD patient for treatment. Again, younger patients, working age, the ability to have them come back monthly by monthly is just non-existent, which is really why you see very low treatment very low rates of treatment today in this NPDR group of patients. So therefore, we believe there's a tremendous opportunity to grow the market substantially over the number of patients that are treated today. If you have a longer duration product, especially a product that is continuing to provide a daily micro-dose of product.