Muller On The FDA, PIXL And Dairy Farms

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Avedro CEO David Muller updates us on Avedro’s securing FDA approval for its KXL System. He also tells us what he learned on his dairy farm in Vermont. Podcast Description for Web: Avedro’s long saga with the FDA continues. Last week, the firm resubmitted the NDA for its riboflavin ophthalmic solution/KXL System, which should be the final step toward the company securing FDA approval. Founder and CEO David Muller explains how Avedro worked to overcome the latest setback and how he, as the company’s leader, manages expectations of employees, investors, and customers as the company suffers delay after delay. He also gives an update on Avedro’s promising Photorefractive Intrastromal Cross-Linking (PiXL) refractive technology and explains what he learned about himself while running a dairy farm in Vermont.

Podcast Guest

Transcript

Tom Salemi: David Muller, welcome back to the OIS Podcast.

David Muller: Thanks. Happy to be here and thanks for inviting me.

TS: We’ve been following your story along at OIS. I’m sure it’s probably a longer story than you had hoped, but when we last checked in with our hero in the spring OIS, you had had a positive recommendation from the FDA panel for your system, but you hit a bit of a hiccup, and you reported that at OIS in the spring. But you had some good news last week. Can you bring us up to date on the KXL System and the FDA approval?

DM: Sure, no problem. Just as a recap, as you pointed out, we did get a panel recommendation for approval for our system. But after the panel meeting, the FDA came back to us with really a handful of questions, five or six questions, which really just related to the equivalence of the KXL device, which is our commercial device that we plan on selling in the US, and the UV-X device, which was actually the device that was used in the clinical trials. They just had some questions regarding really the beam profile, beam shape, alignment of the system with respect to the patient’s eye. All questions that were, in the end, very reasonable questions to answer. And over the past several months, four or five months, we’ve been working with the agency really on a very close basis to determine exactly what questions they wanted answered, and the equivalence criteria between the two systems. And we developed those questions and answers with the agency, and that’s what we submitted to them a week or so ago.

TS: And I hate to ask you this, but do you have any anticipation of when you may get some news one way or the other? I don’t want to jinx you and say good news.

DM: Sure. Well, it’s funny. As we get to November, I do have this Groundhog Day feeling. This is the third time in a row we’ve really filed with the agency around this time of year, and at the end, we end up with each time with a 6-month PDUFA date. So they by statute, they essentially have to provide us with an answer by April 15, I believe would be the PDUFA date. But because there is significantly less work to do on this filing than on our previous resubmissions, we’re hoping for an earlier date. But I think realistically for planning purposes, we just look at April 15 as our target date.

TS: What lessons have you taken away from this experience? It’s always easy for us in the industry, especially folks in the media like myself, to sort of point at the FDA and just kind of roll our eyes and say, there they go again.

DM: Right.

TS: But there’s two people sitting on both sides of the table. As a chief executive and as perhaps a member of a board of a company down the road that is coming upon a similar experience, what lessons have you walked away? What would you have done differently and what would you advise someone to do differently in this sort of exchange?

DM: Sure. Well, unfortunately, I think that this was one – you know, I’ve asked that question to myself a number of times. And unfortunately, there really wasn’t much else we could have done. I think where the little breakdown came in is at a place where I think you would get acknowledgement at FDA is that because we’re a combination drug-device, the processes at the agency haven’t been all that slick with respect to how to move combinations through the process. And there are more and more of those all the time. I think people get, even at the Congressional level, as the new regs get promulgated for the FDA, they’re trying to figure out how to manage combination products better. And I think my only lesson would be to, I guess, is to as working through the process, try to continue to work with the agency to enhance the process of working with multiple decision makers as opposed to single decision makers. And that’s really what I think caused our issue, that the channel to approval in a combination product is not quite as straightforward as the channel in a single department product, so to speak.

TS: And you’ve had some success outside of the US with this system. Does it add to the sort of frustration that you’re seeing sales outside the US and you’re still getting a red light here inside? And how do you sort of deal with those two different experiences?

DM: Well, I think it hasn’t been the most fun experience. I think not only we, but I think patients and the ophthalmologists in the US see this as particularly frustrating when we – you know, we have now approval in China. We just got approval there, which is fairly odd to get approval in China before the US because that’s a pretty rigorous process also. So it’s been a little bit frustrating having this huge delay in the US for something which is outside the US fairly well acknowledged as the standard of care for keratoconus. But I think at the end of the day, we’ve learned in all of the regulated products that you just have to be able to put up with that and live with it. I think one has to be able to live with the frustration. I think the good news for us is that we’ve been able to generate a good business outside the US and provide us a place where we can use our platform and continue to advance the company. It will be a pleasure to finally have it come into the US, though.

TS: I bet. As the CEO, is the message the same? Because you’re dealing with many different groups that you need to manage relationships with. You have your employees, you have your investors, you have the outside regulators, you’ve got the ophthalmologists who are looking for this system. Is your message consistent for each group? Or do you have to sort of – obviously not change your story, but focus on different parts of the story for each population your dealing with?

DM: Yeah, I think it’s an interesting point. The story is consistent, but each stakeholder has a different issue that they’re dealing with, and each one presents its own difficulties. I think the stakeholders that it’s hard to address, that I know are frustrated, are the ophthalmologists who really want to get ahold of this technology. There’s not much we can say to them except we’re hoping we’re going to get there. I think, you know, the agency, they have their mission, which is not to support commercialism, but to bring the safest, most effective products to market. So that’s one message. And then clearly deal with investors is making sure that they understand where we are with respect to both market potential and the regulators to make sure that as they continue to invest their money, they know they’re investing in something that ultimately they’ll get a return on. And I think that’s probably one of the more difficult things to manage because they’re not seeing us on an everyday basis, and it’s hard to transmit the enthusiasm that doctors in the US have for cross-linking, unless you’re right in the thick of it like we are at the company. So it is a different message for each stakeholder, but the consistent story across all.

TS: I read recently that you, before your start at Avedro, had a farm in Vermont, a dairy farm. I think you did cheese. You ever wake up in the morning and wonder why you gave up the gentleman farmer life?

DM: No, I should probably just the opposite. I think I learned the lesson that I’ve seen repeated over and over by entrepreneurs, which is you know you’re very successful at something, and therefore you feel you’re going to be very successful at anything you do if it’s in the same vein. And so I think Summit was a fairly successful experience for me and I tried to translate that into natural foods. And while it was fun and the business itself was top line successful, there were a lot of problems with it that kept me from being bottom line successful. And so it was a great experience. I licked my wounds and came back to ophthalmology.

TS: And you are having some success here as well. I don’t want to just focus on the negatives. I think you’ve got the PiXL system, which is you’re beginning to see some long term success there. Can you bring us up to date on that?

DM: Sure. That’s an interesting full circle experience here at Avedro because for those who remember when we started Avedro back in 2008, the goal was to use microwaves to treat – non-invasively to treat low myopes and low astigmatic patients and the like. And time has moved on since then, but we started creating the PiXL system in around 2010 and 2011. The idea was to develop a non-invasive cross-linking system that could treat refractive errors, both myopia, astigmatism, hyperopia, with the target market being the native emmetropes but also the – or ametropes but also the post-IOL patients who always need this little – a lot of them need a little tune up post IOL. And we started treating patients in a real systematic way. Just about a year ago, when looked at really a GCP protocol to look at the ability to get predictive and stable refractive changes. And so now those patients are now just maturing to one year. And in the range of one and a half diopters or so of sphere and probably a little bit more than that in astigmatism, we can with reasonable predictability and very good stability get these refractive change in normal corneas. And these patients are seeing well, we don’t have any of the sequellae that you typically would say along with the Lasik. There’s no glare or halo because of the natural way that PiXL reshapes the cornea, and we see no dry eye because we’re not severing any nerve plexus. So what we’ve developed now is really a system where eye drops on the eye, light on the eye and really pretty much the next day you’ve got most of the refractive changes already in place.

TS: So what does this mean long term? I mean this sounds like an enormous opportunity. I think as I revealed in an earlier podcast, I’m a coward and don’t want anything done to my eyes that can’t be undone. So this is –

DM: Right.

TS: So I hear this, and this sounds like OK, I might give this one a shot. Do you expect to tap into a large population of scaredy-cats like myself?

DM: Well, I think it’s scaredy-cats and also just ones that normally wouldn’t think of surgery. It’s interesting, when we started Avedro, we actually did a lot of market research into whether people who are not choosing to Lasik now would choose to have something like this. And we brought in some very seedy marketing people from the consumer side, and one of the interesting things they pointed out was we shouldn’t think about PiXL as being a disruptive technology because the market space that we’re addressing is essentially untouched now. The patients below 2 diopters, almost none of those, relatively speaking, get Lasik or PRK. And so we’re opening up a new market whose population is actually much larger than the population of, say, 2 diopters and over. Two diopters and under actually represents more people in the US. So I think it’s reasonable to think that we should be able to make as big an impact into that market as Lasik has made into the upper market, the higher myopes. So I think worldwide number of procedures that one could easily think of getting to is 4 or 5 million. But I think the other side of it, though, which is I think maybe even more important, certainly probably initially, are these pseudophakic patients who oftentimes have some residual myopia and astigmatism that isn’t enough to make somebody want to do a Lasik procedure on them, but it is enough so that the patients aren’t totally happy with their result. And as we all know, it’s this new generation, baby boomers and all that are going on to get – going on for cataract surgery is not the same patient as 30 years ago. These are people with very active life styles and they want to be able to see well post surgery. And I think an important thing is that as we look at the doctors who are accepting or starting to bring on the femtosecond lasers for cataract surgery, they’re the certain group of surgeons. They’re the people that do cornea and cataract at the same time. They’re the very high end practice. But if you actually look at the volume of cataract surgery that’s done, probably 90% of it is done not by that group. It’s sort of the average guy that’s churning patients through. And they really don’t have a modality that they can easily tune up the patients. They’re not corneal surgeons, they don’t want to buy an excimer laser, they don’t want to refer their patients out. And so this is a nice opportunity for them to be able to offer something to their patients without actually having to reach out and market to a new patient group. These are patients that come and sit in their chairs every day, 50% of whom could use a refractive tune- up in at least one eye. So I think it’s something that really is going to spark a lot of interest in that group. It’s a way to really – it’s a revenue generator and a patient outcome improvement device.

TS: What sort of – we’ve got obviously AAO coming up. What sort of reception are you expecting there? Are you bracing yourself for a lot of interest in the PiXL system? Of course people interested in updates of KXL as well?

DM: I think it’s just starting. I think that the – we expect to show a lot of the data at this meeting. We’re not actually having a big event like we normally do I think just because I think it’s a little tougher to corral people in Las Vegas than most places. So we’re putting that off for a big launch introduction at ASCRS when we hope to have approval for the KXL system, and then I think at that time be able to start showing off the PiXL system to people who have potential interest. And with the idea that hopefully we’ll be able to start a PiXL trial in the US next year.

TS: So my invitation didn’t get lost in the mail, that’s good. I’m glad.

DM: No.

TS: Just final question. I know you can’t say much about it, but I know you’ve been raising money and hopefully you’ll have some news on that coming up. Any comments on that experience, and how have you been able to convey the message regarding all your interactions with the FDA and your updates in PiXL to investors? Is it a story that you find is selling and that is being received well?

DM: Well, yeah. I think fortunately with the new investors I think we’ve been able to present a couple things, which is no longer is PiXL a fantasy. When you have one year results, you really know that if it’s pretty good on the first try, you can always make it better. So we’ve actually had really good response from that side. But also because we work very closely with our investors, we’ve been able to share with them in detail all the correspondence with the FDA and the like, so I think that they have been easily convinced that we’re on the track to move this ahead. And I think it’s an opportunity for them to finally begin to see the barn door, so to speak, with FDA approval coming. I think the other thing I’d actually like to mention, too, is for those who might be interested that for the first time, this is International CXL Congress that’s been held outside the US for about the past ten years. And it’s where all the new things are highlighted and all the new data is presented. And in anticipation of having approval here at some point in the not too distant future, that congress has been moved to Boston this year. So I think it’s an opportunity for US doctors to not have to travel quite so far to get the update on all the really most valid and exciting scientific things that are going on in cross-linking. That’ll take place in early December.

TS: Ah, December in Boston. It’s lovely that time of year.

DM: Yeah. OK, don’t rub it in.

TS: I’m here too, so I’m being self-deprecating as you can be. Well, that’s great. I’m happy to hear it’s coming to town and I’ll try to make my way down that way. Well, thanks for giving us the update. And I look forward to seeing you in Las Vegas.

DM: Sure. Thanks a lot, Tom. See you out there.