IVERIC bio, Inc. (NASDAQ:ISEE) is a science-driven biopharmaceutical company focused on the discovery and development of novel treatments for retinal diseases with significant unmet medical needs. The company's lead asset is its clinical stage product candidate avacincaptad pegol (ACP), a complement C5 inhibitor, which is currently targeting geographic atrophy (GA), intermediate age-related macular degeneration (AMD), and autosomal recessive Stargardt disease (STGD1).

Business Overview

IVERIC bio's Pipeline and Clinical Trials

Avacincaptad Pegol (ACP) for Geographic Atrophy (GA)

IVERIC bio's lead program is the development of ACP for the treatment of GA, the advanced stage of AMD. In October 2019, the company announced positive 12-month data from its first Phase 3 clinical trial, GATHER1, evaluating ACP for the treatment of GA. In GATHER1, the company observed a 27.7% (p-value = 0.0063) reduction in the mean rate of growth (slope) estimated based on GA area between the ACP 2 mg group and the corresponding sham control group over 12 months, when performing the primary analysis, and a 35.4% (p-value = 0.0050) reduction in the mean rate of growth (slope) estimated based on GA area between the two groups over 12 months, when performing the supportive analysis.

In June 2020, the company started enrolling patients in GATHER2, its second Phase 3 clinical trial evaluating ACP for the treatment of GA. In September 2022, the company announced positive 12-month top-line data from this trial. In GATHER2, the company observed a 14.3% (p-value = 0.0064) reduction in the mean rate of growth (slope) in GA area between the ACP 2 mg group and the sham control group at 12 months with the primary analysis, and a 17.7% (p-value = 0.0039) reduction in the mean rate of growth (slope) in GA area between the two groups at 12 months with the supportive analysis.

In March 2023, the company announced results from an exploratory time-to-event analysis from the GATHER1 and GATHER2 clinical trials evaluating reduction in vision loss with ACP 2 mg versus sham treatment. The results signaled up to a 59% reduction in the rate of vision loss with ACP 2 mg compared to sham treatment at 12 months.

The company believes that with the statistically significant results from its GATHER1 and GATHER2 trials and the safety profile of ACP to date, it has sufficient data from two independent, adequate and well-controlled pivotal clinical trials of ACP in GA secondary to AMD to support an application for marketing approval.

In November 2022, the FDA granted breakthrough therapy designation to ACP for the treatment of GA secondary to AMD. In December 2022, the company completed the rolling submission of its new drug application (NDA) to the FDA for marketing approval of ACP for the treatment of GA secondary to AMD. In February 2023, the FDA accepted the NDA for filing and granted priority review with a Prescription Drug User Fee Act (PDUFA) target action date of August 19, 2023.

Avacincaptad Pegol (ACP) for Intermediate AMD and STGD1

In addition to GA, IVERIC bio is evaluating ACP for the treatment of intermediate AMD and STGD1. The company is currently conducting the STAR trial, an international, randomized, double-masked, sham controlled, multi-center clinical trial evaluating the safety and efficacy of ACP for the treatment of STGD1.

IC-500: HtrA1 Inhibitor

IVERIC bio's pipeline also includes IC-500, a preclinical product candidate for the treatment of GA secondary to AMD and potentially other age-related retinal diseases. The company is currently evaluating this program in light of available scientific and clinical information about this mechanism of action and its strategic goals.

Gene Therapy Research Programs

IVERIC bio's portfolio also includes several ongoing gene therapy research programs, each of which uses adeno-associated virus (AAV) for gene delivery. These AAV mediated gene therapy programs are targeting the following orphan inherited retinal diseases (IRDs): Leber Congenital Amaurosis type 10 (LCA10), STGD1, and IRDs associated with mutations in the USH2A gene.

Financials

For the full year 2022, IVERIC bio reported an annual net loss of $175.7 million, with no revenue generated. The company's annual operating cash flow was -$163.8 million, and its annual free cash flow was -$164.5 million.

In the first quarter of 2023, the company reported a net loss of $72.2 million, with no revenue generated. Research and development expenses were $42.1 million, up from $22.6 million in the prior year period, primarily due to increased costs associated with the ongoing GATHER2 trial, increased manufacturing activities, and the initiation of the open-label extension (OLE) study for ACP. General and administrative expenses were $31.8 million, up from $12.1 million in the prior year period, primarily due to increases in personnel costs, including share-based compensation, associated with staffing for commercial preparation.

Liquidity

As of March 31, 2023, IVERIC bio had approximately $599.9 million in cash, cash equivalents, and available-for-sale securities. The company estimates that its current financial resources, including its committed loan facilities, will be sufficient to fund its planned capital expenditure requirements, debt service obligations, and operating expenses through at least the next twelve months.

Pending Acquisition by Astellas

On April 28, 2023, IVERIC bio entered into an agreement to be acquired by Astellas US Holding, Inc., a subsidiary of Astellas Pharma Inc., for $40.00 per share in cash, valuing the company at approximately $5.5 billion. The transaction is expected to close in the third quarter of 2023, subject to customary closing conditions, including approval by IVERIC bio's shareholders and regulatory approvals.

Risks and Challenges

IVERIC bio faces several risks and challenges in the development and commercialization of its product candidates. These include the potential for delays or disruptions in its clinical trials and research and development programs due to the COVID-19 pandemic or other factors, the ability to successfully scale up and validate the manufacturing process for ACP, and the ability to obtain regulatory approvals and successfully commercialize ACP, if approved.

Additionally, the company's heavy reliance on the success of ACP, its lead product candidate, exposes it to significant risk. Failure to obtain regulatory approval or successfully commercialize ACP could have a material adverse effect on the company's business, financial condition, and prospects.

Conclusion

IVERIC bio's pipeline of ophthalmology product candidates, led by the promising ACP program for the treatment of GA, represents a significant opportunity in the retinal disease space. However, the company's mounting losses and heavy reliance on the success of ACP create substantial risks that investors should carefully consider. The pending acquisition by Astellas provides a potential path forward, but the outcome remains uncertain. Investors should closely monitor the company's progress, particularly the FDA's review of the ACP NDA and the closing of the Astellas transaction, as these events will be critical in determining the future direction of IVERIC bio.