Ocular Therapeutix Inc.'s potential $315 million pact with Regeneron Pharmaceuticals Inc. brought no up-front payment and only $10 million upon the exercise of an option – a carefully considered move, said Chief Financial Officer Brad Smith. "We looked at different deal structures," he said. "In our discussions with Regeneron, there may have been a possibility for some up-front consideration. We felt that, based on where we might end up, it would be better in the long run for the company to have the kind of milestone payments that we've got and that were increased significantly as a result of the tradeoff that we made, as well as higher royalties. That's really what we prioritized."

The collaboration, option and license agreement with Tarrytown, N.Y.-based Regeneron is to develop a sustained-release formulation of the latter's approved VEGF trap Eylea (aflibercept) for wet age-related macular degeneration (AMD) and other retinal diseases. If Regeneron exercises its option, Ocular, of Bedford, Mass. – responsible for moving the product through phase I experiments – would collect $10 million. Regeneron would take the ball from there, with Ocular standing to rake in as much as $155 million in regulatory and development payments and up to $150 million in commercialization milestone rewards: $100 million for the first sale and $50 million potentially afterward, along with tiered high single-digit to low-to-midteen royalties on future net sales.

Smith said during a conference call with investors that a joint research committee will be made up of three representatives from each company. "Ultimately, if there are any kinds of disputes, Regeneron will have the authority to resolve those. We're not giving any guidance at this point as to exactly when we think we would be prepared to go into a first-in-human trial [but] based on the work we've done together to date, we're confident about moving this program forward through a couple of preclinical studies that need to be done and then the human clinical trial."

Questioned further about the preclinical work yet to be done, CEO Amar Sawhney said experiments so far have focused on demonstrating feasibility.

The final formulation must be established, and "definitive toxicology studies" lie ahead. He stressed that, "while [the deal] is exclusive if they exercise the option, it is restricted to anti-VEGF mechanisms," leaving others, such as tyrosine kinase inhibitors, for Ocular to test with its hydrogel-based approach. "We have the ability to partner or develop those ourselves separately," he said. "Also, all small molecules up to a certain molecular weight are excluded," which means Ocular has "a fair amount of leeway. It doesn't tie us up too much. Our calculus was that Eylea is a hard drug to beat – it is the best drug out there, and the biosimilar world has not caught up yet. For us to proceed into this realm, it's best for us to proceed with a partner and a partner of the pedigree of Regeneron."

He declined to specify how far along is the work with the company, but added that Ocular also has done "a fair amount of work with bevacizumab [Avastin, Roche Holding AG]" and Eylea "is very well-behaved, probably better behaved than bevacizumab as an agent" when combined with the Ocular system.

Avastin is often used off-label in wet AMD. The other big player in the space is Lucentis (ranibizumab, Roche AG/Novartis AG).


About this time a year ago, a pair of top-line datasets from what analysts called a successful phase III trial in allergic conjunctivitis and a phase IIb study said to have done its job in glaucoma/ocular hypertension (OH) apparently didn't convince investors in Ocular, who took shares down 52 percent. The phase III study met its FDA-required endpoint with a "one and done," preservative-free steroid that protects patients for the entire allergy season with a "tremendous" safety profile, CEO Sawhney said at the time. In glaucoma/OH, the phase IIb study "was not specifically powered for anything – it was meant to inform us on the design of the phase III trial, which is exactly what it's doing," while showing efficacy that justifies moving ahead, he added. (See BioWorld Today, Oct. 26, 2015.)

Regeneron, for its part, earlier this month chalked a failure in the phase II combo trial in wet AMD, reporting on the CAPELLA study testing the VEGF trap product co-formulated with rinucumab, an anti-platelet-derived growth factor (PDGF) receptor beta antibody. The trial turned up no improvement in best corrected visual acuity compared to intravitreal Eylea injection monotherapy at 12 weeks, the primary endpoint. Patients in both groups showed a 5.8-letter improvement, whereas those treated with Eylea by itself gained 7.5 letters. Raymond James analyst Chris Raymond noted in a report at the time that "management has consistently talked this combination down" in favor of its Eylea/anti-angiopoietin2 (Ang2) duo, which has reached phase II trials not only in AMD but also in diabetic macular edema (DME). (See BioWorld Today, Oct. 3, 2016.)

As a hedge against any slowdown in sales for Eylea (this is also the strategy with a sustained-release formulation in the arrangement with Ocular), Regeneron and Bayer AG, of Leverkusen, Germany, in March broadened their efforts in eye disease with a $130 million agreement to test the compound alongside the anti-Ang2 antibody nesvacumab. The deal brought a $50 million up-front payment for Regeneron, which will share global development costs for the program with Bayer, given exclusive commercialization rights to the product outside the U.S. and sharing potential profits equally with Regeneron. Inside the U.S., Regeneron hangs on to selling rights, all profits and as much as $80 million more if development and regulatory goals are hit. Eylea was approved for diabetic retinopathy in patients with DME in May 2015, having earlier won U.S. clearance in AMD. (See BioWorld Today, March 25, 2016.)