Iveric bio Stock: Further Upside Possible With Zimura (ISEE)

IVERIC bio (NASDAQ:ISEE) is a great speculative play to look into. I believe it is such, because it just reported positive results from the phase 3 GATHER2 study, using its complement 5 inhibitor known as Zimura (avacincaptad pegol) for the treatment of patients with geographic atrophy. What the final results provide is proof of concept that complement 5 inhibitors are ideal for treating this patient population. In addition, it also provided a huge boost in shareholder value because of the stock trading higher by 50% on this news. While it still does need to go through the FDA first for potential approval, I believe it has a great chance to do so based on the data that was just released. However, I believe there are still possible expansion opportunities. For starters, IVERIC is in the process of speaking to the FDA about using Zimura for the treatment of intermediate Age related macular degeneration. If the talks with the FDA go well with respect to this interaction, it can initiate a clinical study targeting this other population with Zimura in Q4 of 2022. Plus, you have to consider that it formed a licensing agreement with DelSiTech to develop a new formulation of Zimura. This will be done by using DelsiTech’s silica-based sustained release technology. In other words, there is potential here to further advance Zimura towards other possible eye diseases. Speaking of which, there is another catalyst for investors to look forward to in the coming months with respect to Zimura. IVERIC is using Zimura to treat patients with a rare eye disease, known as autosomal recessive Stargardt disease (STGD1). It was stated that results from this ongoing phase 2b STAR study will be reported soon after the GATHER2 results. As such, this is another possible trade/invest opportunity to keep an eye on.

GATHER2 Study Meets Primary Endpoint, NDA Catalyst On Its Way

IVERIC bio is traded higher on the back of the news that the GATHER2 study met its prespecified primary endpoint of mean rate of growth (slope) in geographic atrophy area at 12 months with statistical significance. Such a statistically significant reduction in the rate of GA progression at the 12-month endpoint was observed in both GATHER2 as noted here and also in GATHER1. In addition, this is the first time that such a primary endpoint was achieved in such an indication. Speaking of which, this means if the biotech can obtain regulatory approvals for the U.S. and European Union of Zimura for GA, it would be the first biotech to do so. Why? There are no FDA or EMA approved treatments for this indication. I do want to state though that the ability to achieve such a first highly depends if another company doesn’t obtain regulatory approval first. Apellis Pharmaceuticals (APLS) has its Complement C3 inhibitor known as Pegcetacoplan given FDA Priority Review, where a PDUFA date has been established for it of November 26, 2022. Apellis is seeking FDA approval of pegcetacoplan (EMPAVELI) for the treatment of patients with GA as well. It has already released results from a few studies at 18 months, but it plans to report top-line 24-month results from the phase 3 DERBY and OAKS study in September of 2022. It even has plans to submit a Marketing Authorization Application (MAA) to the European Medicines Agency (EMA) by the end of 2022, so that it can obtain European approval of pegcetacoplan for GA. If Apellis can obtain FDA approval as well for its complement C3 inhibitor pegcetacoplan, then it would be a competitor for IVERIC Bio.

Geographic atrophy (GA) is something that occurs in patients with age-related macular degeneration. It is coined as such, because the portions of atrophy (cell death that occurs in the macula) looks like an area of a map. Thus, the term, geographic atrophy. GA is bad because it causes a blind spot in the visual portion of the eye. A patient can have GA before, during or after having Wet age-related macular degeneration (Wet-AMD). In other words, these two eye diseases are not mutually exclusive. How are the results positive? Well, it all has to do with the prespecified primary endpoint, which was met in two areas evaluated. Both as the mean rate of growth (Slope) in GA area of 12 months, with or without Square root transformation. Such evaluations and statistical significance finding were as noted:

• Mean rate of GA growth (slope) mm square root transformation of Zimura compared to Sham control difference of 14.3% – Statistically significant with a p-value of p=0.0064
• Mean rate of GA growth (slope) mm without square root transformation of Zimura compared to Sham control difference of 17.7% – Statistically significant p-value of p=0.0039

Not only was Zimura able to achieve statistical significance with respect to the pre-specified primary endpoint, but it was able to do so with a great safety profile. This is evidenced by the fact that there are no inflammatory events or other major issues. Ocular adverse events were pretty much related to injection of Zimura into the eye. Based on the safety/efficacy data achieved IVERIC Bio plans to submit a New Drug Application (NDA) to the FDA by the end of Q1 of 2023.

Two Possible Expansion Opportunities Could Shine Through For Zimura

Even though IVERIC bio was able to obtain the prespecified primary endpoints in both GATHER1 and GATHER2 studies, there is potential to expand on a few opportunities as well. What do I mean by this? Well, I briefly noted above the possibilities. The first involves IVERIC entering into a licensing agreement with DelSiTech to develop new formulations of Zimura. Why the need for this type of advancement? Well, DelSiTech has silica-based sustained release technology, which can deliver medicine/treatment in a sustained manner over several months. The need for this is important, because eye drops have poor bioavailability and can’t penetrate the eye as well. Treatment with intravitreal injection into the back of the eye is likely better, but you can’t repeat such administration constantly over a short-period of time. As such, the goal is to incorporate Zimura into such a sustained over several months period using DelSiTech’s silica-based sustained release technology. This is one area where IVERIC can expand the potential of targeting other eye diseases and/or improving Zimura specifically for GA. Another area for expansion opportunity lies with respect to the ability to launch a clinical study using Zimura for the treatment of patients with intermediate Age related macular degeneration (AMD). Intermediate AMD meaning that there may be minimal or no vision loss; however, the disease is still prevalent. In essence, medium sized drusen or possibly one large one is still present in one or both of the eyes. The company is hoping to initiate such a clinical study in Q4 of 2022. The only way this will happen is if planned interaction with the FDA and other regulatory authorities goes well. If all is well with regulatory talks, then it will proceed to such an indication. Still, it is nice to know that Zimura might see expanded opportunity for the treatment of patients with intermediate AMD.

Zimura May Treat Rare Eye Disease As Well

The thing is that IVERIC has another possible expansion opportunity with the use of Zimura. However, this other opportunity is much further along. This involves the use of Zimura for the treatment of patients with autosomal recessive Stargardt disease 1 (STGD1). The use of this treatment is being explored for the treatment of this patient population in the ongoing phase 2b STAR trial. This study intends to enroll a total of 120 patients, who are being randomized to receive either Zimura or Sham injection over an 18-month period. The primary endpoint is looking to mean rate of change in area of ellipsoid zone defect measures by Spectral Domain-Optical Coherence Tomography (SD-OCT). The premise of using such an endpoint is to evaluate damage done to the eye. The absence of significant ellipsoid zone defect damage means greater vision such as improvement in visual acuity letter score (VALS). As such, the goal is to see if Zimura can achieve a greater reduction in terms of ellipsoid zone defect compared to sham control over an 18-month period. There is a catalyst opportunity here for investors/traders alike to look forward to. That is, IVERIC has stated that it intends to release topline results from the phase 2b STAR study soon after the GATHER2 study. This means results for the use of Zimura for the treatment of patients with STGD1 should be released in the coming weeks/months.

Financials

According to the 10-Q SEC filing, IVERIC bio had $312 million in cash, cash equivalents and available for sale securities. It believed that it would have enough cash to fund its operations for at least 12 months from the date of the 10-Q SEC filing done on July 26, 2022. However, in July of 2022, it entered into a term loan debt financing facility with Hercules Capital, Inc. and Silicon Valley Bank providing it the ability to borrow up to $250 million as non-dilutive debt financing. It initially has already started out with $50 million in borrowing, with the possibility for an additional $150 million in aggregate being available based on specific milestones being achieved. Such milestones would be development of Zimura and possibly regulatory events for it being achieved as well. The final $50 million is tied to the lenders’ approval. While IVERIC has the option to go this route, another possibility is a cash raise being done by selling shares on the open market. Why do I believe this is a possibility? That’s because typically when biotechs release good news, such done in the case positive results from the GATHER2 study, the stock traded higher by a huge margin. In this instance, a biotech tends to take advantage of a sharp rise by typically raising cash immediately. I believe it’s quite possible (not guaranteed) that it may elect to go the route of selling shares with a higher stock price now, as opposed to borrowing money under the loan developed with Hercules Capital and Silicon Valley Bank.

Risks To Business

There are several risk factors that investors should be aware of before investing in IVERIC Bio. The first risk to consider is the cash position again. While it can go the route of borrowing money under the deal it made with Hercules Capital and Silicon Valley Bank, it could also enact the selling of its common shares on the stock market. Again, my logic for this is that the stock is trading higher by at least 50% and biotechs tend to take advantage of such a sharp rise in their stock. A second risk factor to consider would be that there is no guarantee that Zimura will be approved for the treatment of patients with GA. Even then, the NDA filing of Zimura is not expected until the end of Q1 of 2023. Which means that the FDA first has to state that it accepts the NDA filing of this treatment for this population. From there, approval is not set in stone. A third risk would be with respect to competition. As I stated above, Apellis Pharmaceuticals has a Priority Review date of its complement C3 inhibitor pegcetacoplan for GA of November 26, 2022. If Apellis does obtain FDA approval for its treatment, then that would be competition for IVERIC. The final risk would deal with the upcoming data readout of the phase 2b STAR study, which is using Zimura for the treatment of patients with autosomal recessive Stargardt disease 1 (STGD1). Results are going to be released soon and there is no guarantee that it will achieve the same successful outcome, which was just achieved in the GATHER1 and GATHER2 studies.

Conclusion

The final conclusion is that IVERIC bio is a great speculative play to look into. I don’t yet want to say it’s a long-term biotech to own, because for me to say that, two events must occur. It must first have the NDA of Zimura for GA accepted by the FDA and then it must actually receive regulatory approval for marketing in the United States. I think it has a great chance to achieve these events, but in the case of the FDA you can never be too sure how it reacts to clinical data or how it reviews a specific application. I did state the potential it has with a few expansion opportunities though. Such opportunities are the ability to expand Zimura for the treatment of patients with autosomal recessive STGD1, intermediate AMD and an improved formulation of Zimura using DelSiTech silica-based sustained release technology. Again, with the goal to allow treatment to be administered in a sustained fashion over a period of months. There are many other programs in preclinical development, especially gene therapies for the treatment of several different types of eye disorders. However, all of these are in preclinical development. What I do like though is that IVERIC is not pinning all its hopes on GA with just Zimura. It is in preclinical development of a protein target known as HtrA1. By developing an HtrA1 inhibitor, it hopes to preserve retinal function and slow disease progression of GA. The goal is to reduce expression of HTRA1 and not allow protein overflow to cause AMD. Based on the proof of concept with Zimura for the treatment of patients with Geographic Atrophy (GA), plus the ability to expand to other indications, these are the reasons why I believe it is a great speculative biotech play to look into.