Q3 2019 Earnings Call
Good morning, ladies and gentlemen, thank you for standing by and welcome to the Okcular Therapeutics third quarter earnings Conference call.
Operator: Thank you for standing by, and welcome to the Ocular Therapeutix third quarter earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. It is now my pleasure to turn the call over to Donald Notman, Chief Financial Officer of Ocular Therapeutix. Please go ahead, sir.
At this time all participants are in listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. It is now my pleasure to turn the call over to Donald nominee Chief Financial Officer of ocular Therapeutix. Please go ahead Sir.
Thank you Daniel Good morning, everyone and thank you for joining us on our third quarter 2019 financial results and business update conference call.
Donald Notman: Thank you, Daniel. Good morning, everyone, and thank you for joining us on our third quarter 2019 financial results and business update conference call. This morning before the open, we issued a press release providing an update on the company's product development programs and details of the company's financial results for the quarter that ended September 30th, 2019. Press release can be accessed on the investors portion of our website at investors.ocutx.com. Leading the call today will be Antony Mattessich, our President and Chief Executive Officer, who will provide a summary of our corporate developments and an update on the Dextensa commercial launch.
This morning before the open we issued a press release, providing an update on the company's product development programs and details of the Companys financial results for the quarter ended September Thirtyth 29 team.
Press release can be accessed on the investors portion of our website and investors, who see you Gx dot com.
Leading the call today, the Anthony modest pitch, our president and Chief Executive Officer, who will provide summary of our corporate developments at an update on the DEXTENZA commercial launch also speaking on the call today will be Dr., Michael Goldstein, Our Chief Medical Officer, who will give an update on our clinical development pipeline. Following Michaels remarks I will.
Antony Mattessich: Also speaking on the call today will be Dr. Michael Goldstein, our Chief Medical Officer, who will give an update on our clinical developments and pipeline. Following Michael's remarks, I will provide an overview of the financial highlights for the third quarter of 2019 before turning the call back to Antony for a summary and questions. For Q&A, we will also be joined by Scott Corning, our Senior Vice President of Commercial.
Had an overview as a financial highlights for the third quarter 2019, before turning the call back and see where a summary and questions.
For Q1 day, we will also be joined by Scott Corning, Our senior Vice President commercial.
Unknown Executive: As a reminder, during today's call, we will be making certain forward-looking statements. Various remarks that we make during this call about the company's future expectations, plans, and prospects constitute forward-looking statements for purposes of the safe harbor provisions under the Private Security Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the risk factor section of the most recent quarterly report on Form 10-Q, which was filed with the SEC this morning, November 12, 2019. In addition, any forward-looking statements represent our view only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, except as we are required to do so by law, even if our views change. I will now turn the call over to Antony Mattessich. Thank y'all.
As a reminder, during today's call will be making certain forward looking statements various remarks, and we make during this call about the company's future expectations plans and prospects constitute forward looking statements for purposes of the safe Harbor provisions.
Securities Litigation Reform Act of 1995 actual results may differ materially from those indicated by these forward looking statements as a result, the various important factors, including those discussed in the risk factor section of the most recent quarterly report on Form 10-Q , which was filed with the FCC. This morning.
Every 12 to 29 team.
In addition, any forward looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date, while we may elect to update these forward looking statements at some point in future.
Specifically disclaim any obligation to do so except as we are required to do so by law.
Our views changed I will now turn call over to ask me.
Thanks now thank you everyone for joining the call today for an update on the events of the quarter, including an update on the company commercial wants to extend up and our pipeline.
Antony Mattessich: Thank you everyone for joining the call today for an update on the events of the quarter, including an update on the company, the commercial launch of Extensa, and on our pipeline. The launch of the Extensor remains the company's key focus.
The launch of extends remains the company's key focus for those who maybe use the October story extend as a bioresorbable enter kinda like to work insert that delivers 0.4 milligram tapering dose preservative free tax method zone for up to 30 days.
Antony Mattessich: For those who may be new to the ocular story, Dixenza is a bioresorbable intracanalicular insert that delivers 0.4 mg of a tapering dose of preservative-free dexamethasone for up to 30 days. Extens is approved for the treatment of ocular inflammation and pain following ophthalmic surgery. The product is the first of a novel dosage form and route of administration that has the potential to become a transformative product for both patients and physicians. For patients, Textenza offers the convenience of a full course of steroid treatment and a single preservative-free insert, and for surgeons, it puts control of the post-surgical steroid regimen back in their hands by mitigating the risk of patient non-compliance. We started the commercial phase of ArdexPenza launch in July of this year after securing a price with CMS, achieving full reimbursement for Medicare patients in the hospital and ASC settings, and securing a temporary C-code billable in the surgical setting.
Make sense is approved for the treatment ocular inflammation and pain following ophthalmic surgery.
Product is the first of a novel dosage form and route of administration.
Central to become a transformative product for both patients and physicians.
Patients to extend the offers the convenience of a full course of starting treatment and the single preservative free insert.
Or is it because control of the Postsurgical steroid regimen back in their hands my mitigating against the risk of patient noncompliance.
We started the commercial say, it's hard to extend the launch in July of this year after securing a price with CMS achieving full reimbursement in Medicare patients in a hospital in AOCI setting and securing a temporary SICOBE billable on the surgical setting.
Antony Mattessich: We are very pleased with our progress during the early stages as we continue to build the necessary elements to achieve a successful product launch and a hugely important step for Dick Fenza's early uptake, as well as for its long-term potential. On October 1st, CMS issued a permanent, product-specific J-code for Dick Fenza. The J code replaces the temporary C code. Compared to the C-code, a JCORD is easier and more familiar for billers and payers, so it can facilitate the broadening of coverage and accelerate immediate uptake, but most importantly for the expensive. Allows for billing across all sites of service, including the Upthalmic and Optometric offices. Extensa, unlike most products with faster payment status,
We're very pleased with our progress during the early stages as we continue to build the necessary elements to achieve a successful product launch.
Hugely important step it extends early uptake as well as for its long term potential on October Onest CMS issued a permanent product specific J code critics and.
The J code replaces the temporary CECO.
Compared C code J code of easier and more familiar for Billers and payers. So it can facilitate the broadening of coverage accelerate immediate uptick, but most importantly critics and that.
Allows for the billing across all sites of service, including the filming and Optimetrics office setting.
Extends that unlike most products will pass through payment status can be can be used in both the surgical and office setting.
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Antony Mattessich: Conveniently used in both a surgical and office setting, while the ASTs and hospitals remain our initial commercial focus and represent a large market opportunity of approximately 2 million cataract surgeries.
Well the atheism hospitals remain our initial commercial focus.
Represent a large market opportunity of approximately 2 million cataract procedures performed annually under Medicare part B.
Antony Mattessich: The issuance of a permanent J-code for dextenza offers great potential long-term benefits beyond the ASDs in hospitals and beyond the potential lapsed path to payment status. Overall, with a J code in place, I believe the extent of the marketing opportunity has the ability to broaden the commercial opportunity to an estimated 8 million steroid prescriptions written each year in the US alone.
The issuance of a permanent J code for it extends offers great potential long term benefit beyond the season hospitals and beyond the potential Watson patent payments as.
Overall for the J code in place.
I believe extend the has the ability to broaden the commercial opportunity to an estimated 8 million steroid prescriptions written each year in the U.S. alone.
Enjoy an evergreen reimbursement potential beyond this past year payback period.
Antony Mattessich: With a solid reimbursement platform in place, we've also been very pleased with the early feedback we're getting from surgeons.
With a solid reimbursement platform in place. We also been very pleased with the early feedback you're getting from surgeons.
Antony Mattessich: Initial Launch
Its initial launch over 7000 pieces of country with extensive and over 350 separate surgical sites.
Antony Mattessich: Over 7,000 patients have been treated with Extenza at over 350 separate surgical sites. Overall, surgeon reception has been positive. We believe the product is performing well, the procedure is proving easy to adopt, and surgeons are receiving favorable patient feedback. Perhaps most importantly, of the Centers Who Have Made Initial Purchases. As of the end of October, half of accounts had reordered the product, with over a third of accounts having reordered the product three or more times.
Overall search reception has been positive we believe the product is performing well the procedures proving easy to adopt and surgeons are receiving favorable patient feedback.
Perhaps most importantly.
Oh the centers what made initial purchases as at the end of October happy counts of reorder the product with over a third of accounts, having reorder the product three or more times.
Antony Mattessich: This is exactly what we want to see in the launch of a novel treatment like Xtend. So, we have a product that surgeons seem excited to use, with discernible patient benefits and a solid reimbursement foundation. The final players that influence product uptake are ASCs and hospitals for whom buy-and-build products like Nexenza represent a potential reimbursement risk. This group takes time to penetrate and convert.
This is exactly what we want to see in the launch of a novel treatment like extensive.
So we have a product and certain seem excited to use with discernible patient benefits and a solid reimbursement foundation.
The final players and influence product uptake or the AMC as hospitals for whom buying go products like DEXTENZA represent potential reimbursement risk.
This group takes time to penetrate and convert.
Antony Mattessich: Since the ASCs and hospital outpatient departments make the actual purchase and can only claim reimbursement after it is used in a covered patient, they are potentially left out of pocket if the product is not reimbursed. Consequently, there are a myriad of administrative procedures in place unique to each center to control purchases until a reliable patient selection protocol and reimbursement cycle are established. This dynamic is similar for every Buy and Build product, so the extent is no different in this regard.
Since the end of season hospital outpatient departments make the actual purchase and can only claim for reimbursement. After it is used in a covered patients there potentially left out of pocket.
The product is not reimbursed.
Consequently, there are myriad administrative procedures in place unique to each center to control purchases until a reliable patient selection protocol and reimbursement cycle are established.
This dynamic is similar for every buying built product would extend is no different in this regard.
Antony Mattessich: These administrative challenges effectively create an additional hurdle beyond FDA product approval, surgeon acceptance, and payer access. However, with physicians who desire to use expensive, patients who can benefit, and payers willing to reimburse, we believe that clearing the path is achievable. Given the additional requirements for buy-and-build pull-through, our team of key account managers, field reimbursement specialists, and our external reimbursement services hub are working to assure hospitals and AFCs that they can competently purchase Xtensa and be certain that protocols are in place to ensure that all purchased products will be reimbursed in a timely and predictable manner. While this takes time, once the procedures are established, we believe that orders will be driven primarily by a surge in demand for aid.
These administrative challenges effectively creating additional hurdle beyond up the product approval surgeon acceptance and payer access.
However, with physicians, who desire to use extensive patients who can benefit and payers willing to reimburse we believe that clearing the path is achievable.
Given the additional requirements for buying go full through our team is key account managers field reimbursement specialists in our external reimbursement services hub are working to assure hospitals and agencies.
We believe they can confidently purchase extends a and b certain that protocols are in place to ensure that all purchase product will be reimbursed in a timely and predictable manner.
While the six times once the procedures are established we believe that orders will be driven primarily by surgeon demand for years.
In the marketplace. We're seeing this dynamic play out in keeping with yet she broke records of buying bill products. We have seen end market update that is purchases made by the hospitals and nancy's from the distributor in our most recent month of October are greater than the combined total of the previous three months.
Antony Mattessich: In the marketplace, we are seeing this dynamic play out. In keeping with the S-shaped growth curves of buying no products, we have seen in-market uptake. That is, purchases made by hospitals and AFCs from the distributor in our most recent month of October were greater than the combined total of the previous three months.
Antony Mattessich: This exhilaration and our confidence in the cycle time it takes to clear an account have encouraged us to initiate an expansion in our field. Understanding the complexities of the marketplace and our reimbursement status, our strategy was to launch with a small team of 20 key account managers and focus deeply on a limited selection of surgeries. The reason for this approach was to ensure that we were able to build and test various strategies to clear pathways at representative ASCs and hospitals and better understand the conversion pathway. With this knowledge, with the J-Code now in place, and with greater awareness and receptivity to the Expensa in the marketplace, and with continued progress on the separate payment of the procedure code for insertion of the Expensa, we expect that the conversion time for newly covered ASCs in hospitals will accelerate.
This acceleration in our confidence in the cycle time and takes declare an account has occurred just a trigger and expansion our field.
I understand complexities in the marketplace in our reimbursement status. Our strategy was launch with a small team of 20 key account managers and focus deeply on a limited selection surgery centers.
The reason for our approach was to ensure that we were able to build and test various strategies to clear pathways that representative ask season hospitals and better understand conversion pathway.
With this knowledge for the J code now in place with a greater awareness and receptivity DEXTENZA marketplace and with continued progress on separate payment of the procedure code for insertion of extends that.
We expect that the conversion time for newly covered if these in hospitals will accelerate.
Antony Mattessich: We have expanded our field sales team by 50% to a total of 30 key account managers who will be active in the field starting in late November. So, in summary, we are pleased with where we are on Dick's Panza at this early stage of launch. Moving beyond the launch of Xtenza, we believe we have a pipeline of differentiated ophthalmic programs. Our immediate opportunity is to expand it, which we believe represents a franchise within a product, with the initial approval of treatment for ocular inflammation.
We have expanded our field sales team by 50% to totaled three key account managers will be active in the field starting in late November .
So in summary, we were pleased with where we are and extend that since early stage launch.
Moving beyond the launch of extend that we believe we have a pipeline of differentiated up how phallic programs.
Our immediate opportunities extensive which we believe represents a franchise within a product.
With the initial approval of treatment for ocular inflammation and pain following up Alex surgery.
Antony Mattessich: We now look to expand this potential in the treatment of allergic conjunctivitis and anticipate announcing Phase III data for this indication in the first half of 2020. Additionally, beyond Xtenza, our other pipeline programs adjust conditions for both the front and back of the eye and target large, underserved markets. To provide greater detail on our pipeline, I will be turning the call over to Dr. Goldstein, our Chief Medical Officer. However, before handing over to Mike, I want to say a few words about what we are doing to ensure that we have adequate capital to realize Ocular's potential, as disclosed a few days ago. We have completed a reallocation of our personnel that has resulted in an increase in our promotional capacity.
We now look to expand defense expenses potential in the treatment of allergic conjunctivitis and anticipate announcing phase three data for this indication and the first half 2020.
Beyond extends to our other pipeline programs adjusted conditions for both the front and back of the I can target large underserved markets.
To provide greater detail her pipeline I'll be turning the call over to Dr. Goldstein, our chief Medical Officer.
However, before handing over to Mike I want to say a few words about what we're doing to ensure that we have adequate capital to realize pocket as potential.
As we disclosed a few days ago.
Completed a reallocation of our personnel that this resulted in an increase in our promotional capability of 50%, but has reduced our overall expense burned by an estimated $11 million per year and another $14 million in one time savings and deferred program costs.
Antony Mattessich: and our promotional.
Antony Mattessich: but has reduced our overall expense by an estimated $11 million per year and another $14 million in one-time savings and deferred program costs. We expect the effect of our reallocation of resources to extend our runway through the fourth quarter of 2020. It is important to note that the forecast informing this runway expectation does not include any contribution from further infusions of capital into the company. It also preserves our ability to drive our current Phase I programs through to completion, add another IND to our pipeline, and execute on our life-cycle plan for Dexdenza. Without further ado, I will hand over to Mike.
We expect the effect of our reallocation of resources to extend our runway through the fourth quarter 2020.
It's important to note that the forecast and forming this runway expectation does not include any contribution from further infusions of capital into the company.
It also preserves our ability to drive our current phase one programs through completion at another I and the into our pipeline.
Execute on our lifecycle plan predicts Denver.
Without further Ado I'll hand over to Mike.
Thanks estimate.
Unknown Attendee: Thanks Antony. Dr. Spencer represents a franchise opportunity for the company. Physician and patient enthusiasm for the product has been high. We believe Dexenza represents a better way to deliver medicine to the eye compared to traditional eye drops. We are actively dosing patients in a Phase III clinical trial of Dexpensa in the treatment of ocular itching associated with allergic conjunctivitis. The current study is a multi-center, one-to-one, randomized, double-masked, placebo-controlled, phase 3 clinical trial that intends to enroll approximately 80 subjects.
The represents a franchise opportunity for the company.
Physician and patient this outcome for the product has been pie.
We believe DEXTENZA represents a better way to deliver medication to the compared to traditional eye drops.
Actively dosing patients in a phase three clinical trial fixed in the treatment of caricaturing associated with allergic conjunctivitis.
The current study as a multicenter one to one randomized double last placebo controlled phase three clinical trial that attempts to enroll approximately 80 subject.
Unknown Attendee: The study's primary objective is to evaluate the safety and efficacy of dexbenzo versus a placebo vehicle insert using the modified conjunctival allergen challenge model for the treatment of ocular itching associated with allergic conductivitis. The trial is designed to assess the effect of Dextenza compared to placebo and allergic responses using a series of successive allergen challenges over a 30-day period. The primary efficacy endpoint being evaluated in the study is ocular itching following insertion of Dextenza at multiple time points during the 30-day period. Allergic Conductivitis trials tend to enroll relatively quickly, and despite just dosing the first patient in October, we anticipate data from this trial in the first half of 2020.
The studies primary objective is to evaluate safety and efficacy of picks up the first of the placebo vehicle insert using the modified pub antibiotics and challenge model for the treatment ocular itching associated with allergic conjunctivitis.
The trial is designed to assess the effect of fixed on the compared to placebo allergic responses using a series of success allergen challenges over a 30 day period.
Primary efficacy endpoint being evaluated in this study is a good shape following and surged up DEXTENZA multiple time points during the third area.
But look we're to conduct provides trials tend to enroll relatively quickly. Despite just dosing. The first patient that October we anticipate data from this trial the first half of 2020.
Unknown Attendee: If successful, this trial will be part of our FDA submission to expand the potential indication of dextenza for the treatment of allergic connectivitis, which would be its first indication not associated with surgery. Dextenza and Allergic Conductivitis offer a novel way of delivering the drug to the surface and anterior segment of the eye in a way that we believe can improve upon the existing standard of care eye drop treatment regimen. Overall, we were thrilled with the interest we were receiving from the economic and optometric communities in requesting permission to start or actively conduct.
If successful this trial will be part of our FDA submission to expand the perpetual indication of fixed up but for the treatment of large affected by this which would be its first indication about associated with surgery.
Thanks, that's it allergic conjunctivitis offers a measurable way of delivering drug to the surface.
Whether they're.
In a way that we believe could approve.
Shifting standard of care Eyedrop treatment regimen.
Overall, we are thrilled with the interest we are receiving from the upcoming come up to metric communities in requesting permission to start or actively conduct investigator initiated trials around DEXTENZA. The interest points, the versatility of the product and the opportunity actually used to extend that in multiple areas beyond post cataract inflammation and pain patients.
Unknown Attendee: Investigator-Initiated Trials around Dexedensa. The interest points to the versatility of the product and the opportunity to potentially use Dexedensa in multiple areas beyond post-cataract inflammation and pain to benefit patients. Moving to the pipeline, or OTXPP, our intracanalicular Trabefrost insert, we met with the FDA to discuss data previously reported in May of 2019 from our completed Phase III trial. Our conversation with the agency was productive and involved a discussion around the importance of compliance and how a product like OTXPP could address the issue of non-compliance by delivering a prostaglandin analog formulated with our program's released hydro While the FDA did not feel that the data from this trial met the standard of clinical meaningfulness in the population studied, there were constructive discussions about potential pathways forward in specific patient populations for whom drops are problematic. Given the feedback and our desire to focus on higher-value opportunities within our pipeline, we continue our guidance that we have no immediate plans to bring this program forward without the assistance of a partner.
Moving to the pipeline or checks TP, our entire Kendall ocular travoprost insert we met with the FDA to discuss data previously reported in May of 2019 from our completed phase three trial.
Our conversation with the agency was productive and involve a discussion around the importance of compliance and our product mix TP could address the issue of non compliance by delivering a prostacyclin analogue formulated with our programs released hydrogels to lower intricate pressure for up to 12 weeks with a single insert.
While the update about feel that the data from this trial met the standard of clinical meaningfulness in the population study.
There were constructive discussions about potential pathways forward and specific patient population.
Drops are problematic.
Given the feedback and our desire to focus on higher value opportunities within our pipeline. We continue our guidance that we have no immediate plans to bring this program forward without the system so partner.
We're especially excited about OTI X T I see our other clinical stage Buckler program.
The product is the virus or growth travoprost containing hydrogel implant delivered via Intercarrier, all injection designed to deliver a higher level of I hope you reduction.
Unknown Attendee: We are especially excited about OTXTIC, our other clinical stage glaucoma program. The product is a bioresorbable Travoprost-containing hydrogel implant delivered via inter-chameral injection designed to deliver a higher level of IOP reduction than the inter-canellicular insert. We continue to enroll patients in a Phase I prospective multi-center open-label clinical trial to evaluate the safety, efficacy, durability, and tolerability of OTX-PIC. As this is an open-label trial, we are able to assess early biological activity and safety, and we continue to be encouraged by recent data. With data on our first patient now beyond 16 months, showing the ability to lower IOP with a single insert equivalent to daily administration of a trauma breast drop, we are excited about the potential for OTX-TIC. In addition, the hydrogel, as designed..., has consistently biodegraded for approximately five to seven months.
Sure Kevin Ellich EULAR answer.
We continue to enroll patients in a phase one perspective multicenter open label clinical trial to evaluate the safety efficacy durability of Tolerability Rotex TST.
As an open label trial, we are able to assess early biological activity and safety and we continue to be encouraged by the recent data.
Data on our first patient that would be on 16 months showing the ability to lower I hope the single insert equivalents of daily administration of a travel press drop we're excited about potential portfolio next year.
In addition, hydrogel as designed.
As consistently biodegraded approximately five to seven months.
With a target product profile from six to 12 months about ILORI current data showing efficacy beyond that with favorable safety profile. We have focused on optimizing the formulation and are currently evaluating these formulations in the third and fourth cohorts of this clinical trial.
We believe that these mitre formulation changes will only serve to enhance OTI X T I see.
Moving to the back of yet we continue to those subjects and a multicenter open label Phase one clinical trial for OTI ex Teekay.
Unknown Attendee: With a target product profile of 6-12 months of IOP lowering and current data showing efficacy beyond that with a favorable safety profile, we have focused on optimizing the formulation and are currently evaluating these formulations in the 3rd and 4th cohorts of this clinical trial. We believe that these minor formulation changes will only serve to enhance OTX-TIC. Moving to the back of the eye, we continue to dose subjects in a multi-center, open-label, phase 1 clinical trial for OTX-TKI. OTX-TKI is a bioresorbable hydrogel fiber implant with anti-angiogenic properties delivered by intravitreal injection being developed to treat patients with wet, age-related macular degeneration and other retinal diseases. We believe OTX-PKI carries the potential to be a next-generation treatment for wet age-related macular degeneration, given its ability to act upstream of VEGF and, therefore, may have broader anti-angiogenic properties.
Oh checks Teekay, ISO bioresorbable hydrogel fiber and class anti inflammatory properties delivered by Intravitreal injection being developed to treat patients with wet age related macular degeneration and other retinal diseases.
We believe ticks teekay carries a potential of being a next generation treatment for wet age related macular degeneration.
Given its ability to act upstream of Badger and therefore, it may have broader anti angiogenic properties.
Preclinical data demonstrated the ability to deliver an efficacious dose of teekay to the poster segment.
For the treatment of edge up induced leakage for an extended duration of up to 12 months with a single injection.
Just one trial is testing the safety durability of Tolerability, Oh chicks, teekay and evaluating biological activity by following visual acuity overtime and measuring retinal thickness using standard optical coherence tomography.
The first quarter subjects reported no safety concerns after meeting with the data safety monitoring Committee, we moved to the second higher dose cohort and are currently dosing this cohort.
Unknown Attendee: Preclinical data have demonstrated the ability to deliver an efficacious dose of TKI to the posterior segment of the eye for the treatment of VEGF-induced retinal leakage for an extended duration of up to 12 months with a single injection. The Phase I trial is testing the safety, durability, and tolerability of OTX-TKI and evaluating biological activity by following visual acuity over time and measuring retinal thickness using standard optical coherence The first cohort of subjects reported no safety concerns. After meeting with the Data Safety and Monitoring Committee, we moved to the second higher-dose cohort and are currently dosing this cohort. I would now like to turn the call back over to Donald, who will review our third quarter and the June 30th, 2019 financial results.
I would now like to turn the call back over to Donald will review, our third quarter ended June Thirtyth 2019 financial results.
Thanks, Michael net revenues for the third quarter total point $8 million, an aggregate consisting of $2.3 million and point $5 billion in net revenues and DEXTENZA and we're sure respectively as compared to point $5 million net revenues generated in third quarter 2018, all of which were related to reassure.
So.
And development expenses for the third quarter were $10.2 million versus 9.7 million for the comparable period in 2018.
And reflect an increase in costs associated with the phase one LTX T I see trial.
He is one of the TX Teekay I trial.
And the start of the phase three DEXTENZA allergic conjunctivitis trial as well as increases that unallocated costs. These were offset by a significant reduction in phase three clinical trial costs associated with MTX TP.
Donald Notman: Thanks, Michael. Net revenues for the third quarter totaled $0.8 million in aggregate, consisting of $0.3 million and $0.5 million in net revenues from Dextensa and Reshure, respectively, as compared to $0.5 million of net revenues generated in the third quarter of 2018, all of which were related to Reshure. Research and Development Expenses for the Third Quarter were $10.2 million versus $9.7 million for the comparable period in 2018, and reflect an increase in costs associated with the Phase 1 OTX-TIC trial, the Phase 1 OTX-TKI trial, and the start of the Phase 3 Dextensoallergic Conjunctivitis trial, as well as increases in unallocated costs. These were offset by a significant reduction in the Phase III clinical trial costs associated with OTX-TP.
Selling and marketing expenses for the third quarter was $6.8 million is compared to $1.1 billion for the same quarter in 2018.
This increase relates almost entirely to support is the commercial launch of DEXTENZA driven primarily by the hiring of new members of the commercial team in the second quarter 2019.
Leading camps F., our EMS and then by cells as well as increased spending on consulting trade shows conferences and related costs.
Finally general and administrative expenses were $6.2 million for the third quarter versus 4.4 million in the comparable quarter of 2018.
Increase in expenses for third quarter step primarily from increased personnel facilities Cups.
Offset by decreased professional fees.
Donald Notman: Selling and marketing expenses for the third quarter were $6.8 million as compared to $1.1 million for the same quarter in 2018. This increase relates almost entirely to support for the commercial launch of Dextenza, driven primarily by the hiring of new members of the commercial team in the second quarter of 2019. Including CAMs, FRMs, and MSLs, as well as increased spending on consulting, trade shows, conferences, and related costs. Finally, general and administrative expenses were $6.2 million for the third quarter versus $4.4 million in the comparable quarter of 2018. The increase in expenses for the third quarter stemmed primarily from increased personnel and facilities costs, offset by decreased professional costs. With respect to financial results for the third quarter, we reported a net loss of $18.9 million dollars, or a loss of $0.40 per share on a basic basis and $0.45 per share on a diluted basis.
With respect to financial results for the third quarter, we reported a net loss of $18.9 billion or lots of 40 cents per share in a basic and 45 cents per share on a diluted basis. This compares to net lots of $15 million or loss of 38 cents per share on a basic and diluted basis for the same period in 2000.
18.
Net loss for the third quarter included $3.9 million in noncash charges for stock based compensation and depreciation compared to $2.5 million for the same quarter in 2018.
In addition, the net loss for the quarter includes again in the amount of $5.7 million related to the change in the derivative liability.
As is the quarter ended September Thirtyth, 2019, we had $65.4 million and cash cash equivalents versus $61.8 million at the end of the second quarter of 2019.
These cash mats exclude restricted cash of 1.8 million and $6.8 million respectively.
Restricted cash was reduced by $5 million, a third quarter of 2019 as a result them in the amendment with the lenders of our 25 billion dollar term loan facility to eliminate the $5 million liquidity covenant.
Donald Notman: This compares to a net loss of $15 million, or a loss of 38 cents per share on a basic and diluted basis, for the same period in 2018. The net loss for the third quarter included $3.9 million in non-cash charges for stock-based compensation and depreciation, compared to $2.5 million for the same quarter in 2018. In addition, the net loss for the quarter includes a gain in the amount of $5.7 million related to the change in the derivative liability.
The cash balances balance benefited during the third quarter from $18.6 million in net proceeds generated from sale of common stock under the company's 2019 sales agreement or ATM under which the company may offer and sell its common stop having aggregate proceeds of up to $50 million from time to time.
The company has not made any additional sales under the ATM during the fourth quarter 20 like team.
Based on our current plans and forecast expenses. The company believes that our existing cash cash equivalents of $65.4 million as of September Thirtyth, 2019, and anticipated cash inflows from DEXTENZA product sales along with the expected cost savings from the operational restructuring announced last week.
Donald Notman: As of the quarter ended September 30, 2019, we had $65.4 million in cash and cash equivalents versus $61.8 million at the end of the second quarter of 2019. These cash amounts exclude restricted cash of $1.8 million and $6.8 million, respectively. Restricted cash was reduced by $5 million in the third quarter of 2019 as a result of an amendment with the lenders of our $25 million term loan facility to eliminate the $5 million liquidity covenant. The cash balance benefited during the third quarter from $18.6 million in net proceeds generated from the sale of common stock under the company's 2019 sales agreement, or ATM, under which the company may offer and sell its common stock, having aggregate proceeds of up to $50 million from time to
Will enable the company to fund its planned operating expenses that service obligations and capital expenditure requirements through the end of the fourth quarter 2020. This cash guidance is of course subject to a number of assumptions related to the revenues and expenses associated with the commercialization of DEXTENZA as well as the pace of the company.
Research and clinical development programs and other aspects of our business.
The company had approximately 48.1 million shares issued and outstanding as of November seven 2019.
This concludes my comments on a third quarter financial results and I would like to turn the call back to asking for some summary thoughts.
Thanks, Tom.
So before opening the call up for questions. Let me do a quick summary.
Donald Notman: The company has not made any additional sales under the ATM during the 4th quarter of 2019. Based on its current plans and forecasted expenses, the company believes that its existing cash and cash equivalents of $65.4 million as of September 30, 2019, and anticipated cash inflows from extensive product sales, along with the expected cost savings from the operational restructuring announced last week, will enable the company to fund its planned operating expenses, debt service obligations, and capital expenditure requirements through the end of the fourth quarter of 2020. This cash guidance is, of course, subject to a number of assumptions related to revenues and expenses associated with the commercialization of Dextensa, as well as the pace of the company's research and clinical development programs and other aspects of our business. The company had approximately 48.1 million shares issued at outstanding as of November 7, 2019. This concludes my comments on the third quarter financial results, and I would like to turn the call back to Antony for some summary thoughts.
But working through the complexities of pull through for buying go product and the Ophthalmics surgical setting we're pleased with that extend the launch in terms of end market sales acceleration and reordering patterns.
The performance has given us competence to expand our field force by 50%.
We are anticipating a long lifecycle create extends it with the issuance of our unique.
Fixed J code and the initiation of potentially our final triple trial for a label expansion into allergic conjunctivitis.
And our glaucoma program with inter camera OTI FTC IC, we now have efficacy beyond 16 months with a single inserts and made the decision to begin dosing our third patient cohort in our phase one trial.
Our back of the I programs continue to progress with Otrexup, Teekay <unk> and the dosing of the second cohort and its phase one trial.
Lastly, we have successfully completed restructuring program is designed to focus our efforts on maximizing the commercial opportunities extends it in advancing our high priority pipeline initiatives.
These efforts will save an estimated $11 million annually and approximately $14 million and one time program deferments that extend the company's current cash runway through the fourth quarter of 2020.
Antony Mattessich: Thanks, Donald. So before opening the call up for questions, let me do a quick summary. While working through the complexities of pull-through for a buy-and-build product in the ophthalmic surgical setting, we are pleased with the extent of the launch in terms of in-market sales acceleration and reordering patterns. Their performance has given us confidence to expand our field force by 50%. We are anticipating a long life cycle for Dextenza with the issuance of our unique HCPCS J-code and the initiation of potentially our final typical trial for a label expansion into allergic conjunctivitis. In our glaucoma program with intracameral OTX-TIC, we now have efficacy beyond 16 months with a single insert and have made the decision to begin dosing our third patient cohort in our phase one trial.
With that I'll turn the call over for questions.
Ladies and gentlemen to ask a question you will need a press star one on your telephone to withdraw your question press the pound Keith Please standby well, we compile the kuni roster.
Our first question comes from E. Chen with H.C. Wainwright. Your line is now open.
Hi, This is booz Allen in for each and then thanks for taking my question. So I just wanted to talk a little bit of older ambulatory surgical centers. The adopted DEXTENZA. So can you. Please.
How many of these centers are we talking about on how many do you expect to what you would end of 2019.
Yes. Thanks, Thanks for the question.
Antony Mattessich: Our back-of-the-eye programs continue to progress with OTX-TKI and the dosing of the second cohort in its Phase I trial. Lastly, we have successfully completed a restructuring program that is designed to focus our efforts on maximizing the commercial opportunities at Extensa and on advancing our high-priority pipeline initiatives. These efforts will save an estimated $11 million annually and approximately $14 million in one-time program deferments that extend the company's current cash runway through the fourth quarter of 2020. With that, I will turn the call over to questions.
Well, we were not going to disclose at the moment, what the number of of centers are.
We have they we're confident that the number that if we penetrate centers that we have that we'll be able to to reach the sort of internal figures that we have.
For DEXTENZA that we hope for the sales line, we're also adding at a very high rate.
As we mentioned.
The sales acceleration in October we sold more in October than we did in the in the entire launch period before for the whole quarter before.
We are we're adding them quickly and that we as we start to expand with the new field force, we we'll be able to reach centers.
Operator: Ladies and gentlemen, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Yi Chen with HC Wainwright. Your line is now open.
We have not that we havent as of today. So it is we expect a big expansion in that number will will start reporting that number on a regular basis as we go forward.
Yi Chen: Hi, this is Bubal and Inforeach, and thanks for taking my question. So I just wanted to talk a little bit about the ambulatory surgical centers that have adapted Dextensa. Can you please tell me how many of these centers we are talking about and how many you expect to have by the end of 2019? Yeah, thanks for the question.
But right now we're going to sort of keep that to ourselves for a bit.
All right understood.
Next one do you plan to report the end user demand for DEXTENZA in dozens of units per quarter going forward.
We haven't decided what what metrics were going to report going forward.
Antony Mattessich: Well, we're not going to disclose at the moment what the number of centers is. We have a, we're confident that the number, that if we penetrate the centers that we have, we'll be able to reach the sort of internal figures that we have for Dextenza that we hope for in the sales line. We're also adding at a very high rate. As we mentioned, just the sales acceleration in October, we sold more in October than we did in the entire launch period before, for the whole quarter before. We are, we're adding them quickly, and we as we start to expand with a new field force. We will be able to reach centers that we haven't been able to reach as of today.
Clearly once we get.
It was steady state where we.
When you start to have the the end market and the two market numbers start to sort of move with each other.
The two market sales will be pretty descriptive about what's happening in the marketplace.
So we will sort of agree on what what a set of metrics are that we'll be presenting on regularly going forward, but clearly as as the that the product ramps up that to market number would be your best indicator of the performance of the product.
Antony Mattessich: So it is, we expect a big expansion in that number. We'll start reporting that number on a regular basis as we go forward. But right now, we're going to sort of keep that to ourselves. Alright, understood.
Okay on that are little bit on investigator initiated trials, maybe you can provide us elaborate or books I view on does and how many centers are we talking about on what are your expected outcomes from this investigator initiated trials.
Antony Mattessich: So the next one, do you plan to report the end-user demand for Dexenza in terms of units per quarter going forward? We haven't decided what metrics we're going to report going forward. Clearly, once we get to a steady state where we start to have the in-market and the two-market numbers start to sort of move with each other, the two-market sales will be pretty descriptive about what's happening in the market. So we will sort of agree on what a set of metrics are that we'll be presenting on regularly going forward. But clearly, as the product ramps up, that two-market number will be your best indicator of the performance of the product. Okay, a little bit on investigator-initiated trials, maybe you can provide us with an elaborate or bird's-eye view on this and how many centers are we talking about, and what are your expected outcomes from this investigator-initiated trial? I'll hand it over to Mike Goldstein to talk about the IITs, Mike.
Sure I'll hand, it over to Mike Goldstein to talk about the Iraqis Mike.
Yes. Thanks for the question as mentioned there is widespread interest within both the ophthalmic and the optometric community on the investigator initiated trials.
We are looking at a whole range of different proposals covering multiple different.
Non cataract surgeries as well.
Timing around using the insert.
For cataract surgery.
And so at this point.
We are.
Executing on some of those proposals and evaluating others and really on a daily basis continue to get get get new thoughts ideas. So I think for us what's really exciting it theres that's widespread interest in both the optimal pelvic and optometric communities to be able to use that this product.
Unknown Attendee: Yeah, thanks for the question. As mentioned, there is widespread interest within both the public and the optometric community in investigator-initiated trials. We are looking at a whole range of different proposals covering multiple different non-cataract surgeries as well as different timing around using the insert for cataract surgery. And so at this point, we are executing on some of those proposals and evaluating others, and really on a daily basis, continue to get new thoughts and ideas. So I think for us, what's really exciting is there is this widespread interest in both the ophthalmic and optometric communities to be able to use this product in a myriad of different ways.
In a myriad of different ways.
Okay, great on a one final question from me three got still well Dx sticky I. So how many dosage is do you plan to overall.
Yes.
So once you get yep.
Thanks, Rick a question.
So for the design is to test to different doses and then to take the maximally tolerated dose forward and do a combination study in a combination arm along with an antibody.
Unknown Attendee: Okay, great. And one final question from me with regard to OTX, TKI. So how many dosages do you plan to test overall?
Right.
Okay. That's it from me. Thank you so much.
Thank you.
Thank you as a reminder, ladies and gentlemen that Star then one to ask a question.
Unknown Attendee: Thanks for the question. The design is to test two different doses and then take the maximally tolerated dose forward and do a combination study in a combination arm along with an anti-VEGF drug.
Our next question comes from Joe.
Patent Laura with Piper Jaffray. Your line is now open.
Hey, guys. Thanks for taking the questions. So so one of the Twoq call you mentioned that the 3000 patients had been treated with extended that number is now up to 7000, but it sounds like there's there's still a high level of sampling ongoing. So so maybe you could just help us understand.
Unknown Attendee: Okay, that's it for me. Thank you so much. Thank you.
Joseph Michael Catanzaro: Thank you. As a reminder, ladies and gentlemen, that's Star then one to ask a question. Our next question comes from Joe. Catanzaro, with Piper Jaffray, your line is now open.
Or.
Tell us the percent or your hit rate in terms of the number centers that have participated in DEXTENZA, Dave and then subsequently placed additional initial order and what's that timeframe from sampling to placing an initial order.
Joseph Michael Catanzaro: Hey guys, thanks for taking the question. So on the 2Q call, you mentioned that about 3,000 patients have been treated with Dexend. That number is now up to 7,000.
Unknown Speaker: Unknown Speaker So maybe you could just help us understand?
Unknown Attendee: Unknown Attendee, Dr. David Walsh, Dr. David Walsh, Dr. David Walsh, Dr. David Walsh
Well, it's hard to sort of put a an actual sort of number on what the difference between the deck DEXTENZA day and the the assay order because it's so variable.
Antony Mattessich: or tell us the percent or your hit rate in terms of the number of centers that have participated in VEXTEND today and then subsequently placed an initial order, and what's that time frame from sampling to placing an initial order. Well, it's hard to sort of put an actual sort of number on the difference between the Dexdenza Day and the ASC order because it's so variable. [inaudible] about the period when we expected them to cross.
One thing I cant confirms that we now sell more product than we have samples. So those lines of crossed which is about the period, where we expected them to cross.
So it's going forward clearly our sample numbers are coming down fast and our sales are going up.
Antony Mattessich: So it's going forward. Clearly, our sample numbers are coming down fast, and our sales are going up strongly, so we're kind of where we thought we would be at this point.
Strongly so we're we're kind of where we thought we'd be at this point.
Antony Mattessich: One of the key points about why we sort of entered the market the way we did, with a very tight field force of only 20 key account managers, was really to determine the kind of legs the product had and the uptake patterns that we would see with a key account manager in place. Now we've seen that, and we are confident enough from the cycle time that we're seeing to add to our field force by another 50%, or another 10 camps. So that cycle time and the type of ASC and type of hospital that we see we can target that has faster turnaround times, we understand now and have the ability to, as we enter new territories, shorten that cycle time. But clearly, getting that first order is the hardest. Okay, I got it.
One of the key points about why we sort of entered the market. The way we did with a with a very tight field force of only 20 key account managers, what's really to determine the kind of legs the product had and the uptake patterns that we would see with <unk> with a key account manager in place.
Now, we've seen that and and we're confident enough from the the cycle time that we're seeing.
To to add your field force by another 50% another 10 camps.
So that that that cycle time, and the that type of at sea and type of hospital that we see we can target that has faster turnaround times, we understand now.
And have the ability to whereas we enter new territories to shorten what that cycle time minutes.
But clearly getting that first orders the hardest fit.
Okay got it and if so what are you hearing from from centers that maybe have placed an initial commercial order, but haven't subsequently reordered wonder what are some reasons why that hasn't happened.
Antony Mattessich: And so what are you hearing from centers that maybe have placed an initial commercial order but haven't subsequently reordered? What are some reasons why that hasn't happened? Well, the main reason and pretty much the only reason we hear is that they're waiting to see the reimbursement. And so we, as we mentioned, we have of the centers that have ordered, 50% have reordered. That doesn't mean that only 50% are going to reorder. We're adding new centers very, very quickly with initial orders. And essentially, we are expecting virtually all of the centers that have ordered once to order again, but it's part of their process. Many of them will wait to see positive reimbursement from a number of patients before they order for a second time. So initial orders may be one or two inserts. They'll put them in a patient, then they'll submit, and then they'll wait for reimbursement. Now, provided they fill out the forms correctly and provided the MACs are comfortable with the submission, the payment comes relatively quickly, usually within three weeks.
Well the the main reason and pretty much the only reason, we hear that they're waiting to see the reimbursement.
So we as we mentioned we have the the of the centers that have ordered 50% of Reordered.
That doesn't mean that only 50% are going to reorder, we were adding new centers very very quickly with initial orders and essentially we are expecting virtually all of the centers that have ordered wants to order again.
But as part of their process.
Many of them, we'll wait and see a positive reimbursement from a number of patients before they order for a second time.
So initial orders, maybe one or two inserts.
Ill put them in a patient and then they'll submit.
And then they'll wait for for reimbursement.
Provided they fill out the forms correctly and provided the the Max are comfortable with with the submission the payment comes relatively quickly usually within three weeks.
Antony Mattessich: If there's something wrong on that form, or there is some... [inaudible] We simply don't have it, we don't expect any of the centers that have ordered not to reorder because we haven't heard anything from these centers saying that they are not interested in continuing with the product. Okay, got it. Thanks for taking my questions.
If there's something wrong on that form or there there is some.
Some glitch in the in the approval and clearly all of these will be approved if they are used in the right patient than that gets delayed so that that's really it's a really a time issue about the reordering.
We simply don't have but we don't expect any of the centers that have ordered not to reorder because we haven't heard anything from from these centers thing that they're not interested and continuing with the product.
Okay got it thanks for taking my questions.
Joseph Michael Catanzaro: Thank you. I am not showing any further questions at this time.
Thanks, Joe.
Thank you I'm not showing any further questions at this time I'll now turn the call Deckover CEO Anthony modestly for closing remarks.
Antony Mattessich: I will now turn the call back over to CEO Antony Mattessich for his closing remarks.
I'd just like to thank everybody for attending the call today, and we look forward to a very bright future.
Operator: I'd just like to thank everybody for attending the call today, and we look forward to a very bright future.
Ladies and gentlemen, thank you for participating in today's conference you may now disconnect.
Operator: Ladies and gentlemen, thank you for participating in today's conference. You may now disconnect.
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