Kodiak Sciences Inc. (KOD) Earnings

Management highlights

• Kodiak is a retina-focused company with three late-phase clinical programs: tarcocimab, KSI-501, and KSI-101. • Tarcocimab has three positive Phase 3 studies in diabetic retinopathy, retinal vein occlusion, and wet AMD, with a strong six-month durability signal. GLOW2 in diabetic retinopathy is recruiting, and tarcocimab is added to DAYBREAK in wet AMD. • KSI-501 is a bispecific antibody biopolymer conjugate inhibiting IL-6 and VEGF, with Phase 1 study in DME showing positive signals. It's in Phase 3 DAYBREAK study in wet AMD. • KSI-101 is for macular edema associated with inflammation, with Phase 1b study planned in Q2 2024, aiming for dual Phase 2b/3 pivotals later.

Guidance

• Plan to advance three clinical programs into Phase 3 studies in 2024, with GLOW2 for tarcocimab enrolling, DAYBREAK for KSI-501 and tarcocimab, and dual pivotals for KSI-101. • Intend to bring these programs to meaningful inflections within cash runway.

Segment performance

No specific financial performance by product segment with absolute revenue and contribution % provided in the transcript.

Risks & headwinds

• Uncertainties around clinical trial outcomes, regulatory approvals, and market acceptance of the products.

Analyst Q&A

• Q: This is [Indiscernible] [Xiao Jin Wei] on the line for Michael Yee. I have two questions regarding the 501 bispecific pivotal study. I noticed that there are multiple arms for tarcocimab and KSI-501 in that study. I wonder if those patients would be randomized to each of the arms at the beginning or they would be treated as needed and given more flexibility of the dosing, and what's your estimate of the sample size? And second question is, can you clarify if you plan to include data from the DAYBREAK, the pivotal study for 501 as well in the same BLA filing of tarcocimab?

  A: To try to make sure that we understood the question. It's around the DAYBREAK study, and that study is planned to include aflibercept as the comparator and then to include arms for tarcocimab as well as KSI-501. So the first objective of including an experimental arm with tarcocimab in the study is it's very efficient economically for us and operationally. But also, the data from the study will yes be included in the BLA filing for tarcocimab. So our objective on the timing of the DAYBREAK study and also the GLOW2 study are for those studies to finish at approximately the same time and to feed the same BLA. So that's an important element. Then on the study designed for DAYBREAK, we're still in discussions with FDA to make sure that we get to the study that meets our needs. Our objective is to include durability for both tarcocimab and KSI-501 and to be able to go from monthly dosing all the way through six month dosing to be able to showcase the power of our ABC platform medicines from the standpoint of immediacy but also their powerful durability.

• Q: So does that mean that you would have multiple arms of tarcocimab as well as 501, and that essentially requires a big study for you to run?

  A: We haven't disclosed the precise design of the study yet. As you know, within ophthalmology, the regulatory landscape is evolving. One of our core objectives for the DAYBREAK study is that it'd be cost effective. Kodiak has a substantial amount of experience running many of these studies in the big diseases in retina. And so, obviously we're going to try not to have more groups than we need to have to be able to like achieve our objectives. So let's stay tuned and see where we come out on the study design.

• Q: A few questions from me. Number one, regarding the upcoming Phase 3 DAYBREAK trial. I know the design is currently being finalized, but if you could provide any color on what dose will be used? And a follow up question to that is how is the enhanced KSI-501 formulation different from the formulation used in the recent prior Phase 1 DMA study, and have a follow up?

  A: For the DAYBREAK study, the plan is to use a similar 100 microliter volume. So therefore, it'll be driven by the formulation strength of the formulations themselves. So both the tarcocimab and the KSI-501 formulations are 50 mg/mil strength. For this pivotal at 100 microliters, so there'll be 5 milligrams each. And each one of those molecules will be in there, what we call, kind of go to market formulation or commercial scale up formulation, which as we've mentioned does include adjustments from what was tested previously with tarcocimab in our pivotal program and also what was used in the Phase 1 program for KSI-501. So as I said, we're at an important point of departure as we step into these new studies with these adjusted and enhanced formulations. And we're excited to be able to showcase what these molecules can do in these next set of pivotals.

• Q: And I guess my follow up question is, just want to clarify why exactly tarcocimab is being added as an active comparator in the DAYBREAK trial. Is it correct to assume that the FDA is not requiring this and that Kodiak is proactively doing this in order to have dosing flexibility on the label?

  A: We really struggled somewhat with what to do to finish the tarcocimab program and I would say it took us some months to figure out what we wanted our plan to be. And on the one hand, we wanted to lean into additional work in wet AMD, because that represents a large part of the market, right, for the anti-VEGFs. On the other hand, we didn't want to run the study where, let's say, different stakeholders or investors were worried about the probability of success, because we'd have so much hanging on the outcome. So in the end, we decided to run the GLOW2 study as our core study for approval for tarcocimab, which will have a very high probability of success given that it's essentially the same study as GLOW1, which was a tremendously successful outcome. And then in addition, we decided that we would tuck in an additional group into the pivotal study we wanted to run for KSI-501. So economically, it's very cash efficient to tuck that in. Having decided to run that additional wet AMD study then we will end up with the DAYLIGHT study as a successful study, and we hope the DAYBREAK study also has a successful study for tarcocimab. And our overall package will then include five successful, we hope, pivotal studies for tarcocimab. And at the same time, we're checking a box for KSI-501 and it will be the first of its two pivotal studies that we will need to file [approved] [Indiscernible]. So if you think about Kodiak's program with three, what I call, late phase molecules, right, with all of them being run through pivotal studies starting imminently, that's the philosophy that we're bringing to the next several years of Kodiak's development.

• Q: What is being assumed in terms of milestones between now and your cash runway into 2026?

  A: Well, certainly, the completion of the two tarcosimab pivotals as well as the completion of the 501 pivotal. And we're in discussions with FDA currently on the design of the Phase 2b/3 studies for 101. And depending a little bit on those designs and how they translate into enrollment, we're hopeful that we'll be able to get those studies out in that timeframe as well.

• Q: Two for us please. Maybe as a follow up to a prior comment, recognizing that the potency remains the same between the two formulations that you have. Can you share what may -- or maybe speak to what data you've seen that supports that durability of the original formulation will carry over as you transition from the biopolymer conjugate to now a mix of the conjugate plus free antibody?

  A: We believe more broadly that disease variability in patients is what drives durability more strongly than the amount of conjugate that we have. So for example, in our Phase 1b study, we tested 2.5 mgs versus 5 mgs of fully conjugated material. And there's very little distinction between the durability that we saw on the 2.5 milligram dose and the 5 milligram dose. So as we bring the level of conjugate down on the margin to allow a broader amount of free protein, we believe that we can bring the best of both worlds into both the tarcosimab and the KSI-501 formulations without impacting durability and creating a powerful medicine for patients.

• Q: And then just maybe one quickly on the Phase 1 data that you have seen in DME for the 16 patients from the Phase 1. Could you just share or speak a little bit more about what gives you the confidence to move directly from that in the 16 patients to a Phase 3 trial now in wet AMD?

  A: I think the important point about the Phase 1 study with KSI-501 was to gauge safety as well as to gauge bioactivity in terms of vision and OCT. And given the broad overlap across the retinal vascular diseases and with the existing agents, the idea of starting in DME where you can see predictable responses of bioactivity and safety and then using that kind of as a point of departure into any number of the different diseases. So I mean, the four reasons that give us confidence to move directly into Phase 3 in wet AMD based on the KSI-501 Phase 1 is, one, I mean the durability profile of the platform. Two, the dual mechanism of action, right, with best in class of VEGF inhibition from the trap and where we also target IL 6, which is a known culprit of suboptimal response and reactivation of disease in wet AMD. Third is our enhanced formulation. And four, the 10 years of design, the manufacturing and the clinical and the operational experience that we have, the three INDs, the three molecules in clinical phase, the two first in human studies, the eight clinical trials, seven of them pivotal. So we're not starting from scratch here. And furthermore, in the future, we may be thinking of exploring KSI-501 and DME and RVO as well.

• Q: Victor, based on current data, do you believe 501 is better than tarcocimab? And a related question is for DAYBREAK. Other than being cost effective to avoid running an independent Phase 3 study for tarcocimab, will you try to design in a way to power to show the clinical benefit differences between 501 versus tarcocimab?

  A: I don't think it’s important whether tarcocimab or 501, whether one is better than the other. There's clearly an opportunity for, let's say, a twice a year in the majority of patients anti-VEGF agent, and tarcocimab is just needs to get pushed over the finish line and why don't we see how physicians like it. And by running GLOW2 and having that tuck in group and the DAYBREAK study and wet AMD, we're going to be creating a useful amount of data for physicians, for tarcocimab. It’s not our objective to power a distinction between tarcocimab and 501 in DAYBREAK. I mean if 501 showed maybe some trend that it was better than aflibercept or better than tarcocimab, we see that as very positive because we're obsoleting those agents with our own agent. And the question there for the 501 program is it's going to need a second pivotal. And so, at what point do we think it would be useful and important to start that, such that it’s a molecule that could be on a point -- a path to enter the market? I mean, if both molecules perform as we hope, right, tarcocimab and 501 showing a differentiated durability profile and they both meet the primary endpoint, it's a problem that we would be delighted to have.

• Q: Where do you think about how IL-6 inflammation is, or like where do you think IL-6 inflammation is particularly relevant in the context of this space? And then I'll ask my second after.

  A: Well, I think, you know, we believe that it’s broadly relevant, both within the high prevalence diseases that represent the anti-VEGF market and we believe it's highly relevant outside of that into what we call sort of that greenfield area of macular edema and inflammation or the uveitic complex. And we believe those are two different opportunities and that's why we have two different molecules to be able to develop into both of them, right? So the KSI-101 allows us to have the protein alone, which is really a sledgehammer, highly potent on the two mechanisms at a very high formulation strength that should have a strong immediacy. So we're excited about that. And obviously IL-6 plays a very important role in driving the macular edema in those patients and also in driving the inflammation. Within the retinal vascular diseases, inflammation clearly plays an important role. I think the question though when you think about the drug development, what is necessary to show in a pivotal program and do you want to play around for several years in Phase 2 studies trying to explore what large subgroups within say wet AMD or what large subgroup within DME, where that inflammation is driving elements of the efficacy or the lack of efficacy in those patients. So rather than take that approach, what we're planning to do is to run the non-inferiority pivotals to get the molecule approved in the different indications based on our expertise in running those studies. And then, work either in parallel or in smaller studies or in investigator sponsored studies or post approval to be able to really tie patients with high inflammation to the drug to be able to show some improved level of efficacy. But we don't think we need to do that in Phase 2 setting. We can drive these molecules for approval in the non-inferiority setting and then work with physicians to showcase the special contribution of the mechanism.

• Q: And then just a quick follow-up for DAYBREAK, you mentioned dosing 501 every four to 24 weeks and then dosing aflibercept according to the label. What is your perspective on the recent FDA draft guidance regarding the use of a comparable dosing regimen in terms of like dosing frequency with the active comparator?

  A: Well, that's a good question. I think, we've been in constant communication with the agency for all three clinical programs and we will confirm the study design once we have all the information necessary. And that's really all we want to share for now in terms of the specifics. It’s needless to say what the final study design for all of our pivotals will be based on feedback from the FDA. I do think historically looking back Kodiak has driven innovation within study design with FDA successfully for ourselves and other companies have followed our example. And at this stage, we're in discussion and we'll see kind of where we end up.

• Q: I have one on 501 in wet AMD specifically for the second pivotal study. Are you guiding for -- with regards of any timelines when you plan on starting the trial, and will that also include tarcocimab or do you plan to generate tarcocimab data from DAYBREAK first before initiating the second study?

  A: We don't -- we haven't disclosed and we don't have a complete plan for the second study of wet AMD. We know that we need one for approval for 501 in that case. But we haven't thought -- we haven't disclosed and we have a plan of it’s sequential or is it somewhat overlap between the two studies.

• Q: What do you think are the potential consequences if tarcocimab does not succeed in the DAYBREAK study?

  A: Well, I guess, we believe that tarcocimab can be an important medicine for patients with wet AMD. But rather than just relying on the results of the DAYLIGHT study where we dose monthly, we've decided that it makes sense to demonstrate that by having a full group in DAYBREAK. So if we didn't meet the end point in DAYBREAK then physicians would not feel excited to use it in wet AMD or presumably maybe based on having two unsuccessful studies in wet AMD, we might not be able to get approval in the indication. So it represents a bet that we're making. We're optimistic and we think it can drive substantial demand in wet AMD for tarcocimab and be really important. So in some way, introducing tarcocimab into the DAYBREAK study is a gamble but it's one that's educated based on our detailed review of our data. And also the adjustments that we've made to the go-to market material and also our, I suppose expertise or lessons learned from having run six pivotal so far. So we're excited to run tarcocimab in DAYBREAK and to see the data and hopefully to include that and to share that with the community and we think it can be really powerful.