Q2 2020 EyePoint Pharmaceuticals Inc Earnings Call

For 2020 financial results conference call there'll be a question and answer session to follow at the completion of the prepared remarks. Please be advised that this call is being recorded at the company's request I would now like to turn the call over to Georgia, Olson Chief Financial Officer Pharmaceuticals.

Thank you and thank you all for joining us on today's conference call to discuss I point Pharmaceuticals second quarter 2020 financial results and recent corporate development.

With me today is Nancy Lurker, President and Chief Executive Officer.

Dr., Jay do Gert Chief strategic scientific officer.

Got Jones, Chief commercial officer.

Yes, it will begin with a review of recent corporate updates, including our new commercial alliance with implements Rx that we announced yesterday.

Dr. Dugel will then discuss pipeline developments, where you why P. night, you know one and Utica 50, our six months treatment for posterior segment. Uveitis, then Scott will comment on recent progress made on our commercial activities and I will close with commentary on the second quarter 2020 financial results.

Well then open up the call for your questions, where we will be joined by Dr., Dario Paggiarino Senior Vice President and Chief Medical Officer.

Earlier. This morning, we should a press release detailing our financial results as well as commercial and operational developments.

A copy of the release can be found in the Investor Relations tab on the corporate website Www Dot <unk> pharma dot com.

Before we begin our formal comments I'll remind you that various remarks, we will make today constitute forward looking statements for the purposes of the Safe Harbor provisions under the private Securities Litigation Reform Act of 1995.

These include statements about our future expectations clinical development and regulatory matters and timelines the potential success of our products and product candidates financial projections, and our plans and prospects actual results may differ materially from those indicated by these forward looking statements as a result of various important factors include.

Adding those discussed in the risk factor section of our most recent annual report on form 10-K, which is on file with the FCC and in other filings that we may make with the FCC in the future.

Any forward looking statements represent our views as of today only while we may elect to update these forward looking statements at some point in the future. We specifically disclaim any obligation to do so even if our views chain.

Therefore, you should not rely on these forward looking statements as representing our views as of any date subsequent to today.

I'll now turn the call over to Nancy Lurker, President and Chief Executive Officer Lifepoint pharmacy.

Thank you George Good morning, everyone and thank you for joining us.

Our team has done a great job managing the business and balance sheet during the cold in 19 pandemic, we continue to put the safety of patients physicians and our employees as a top priority, while we produce our innovative drugs Dixie Q and you to move our R&D pipeline forward I continue to call and position I'm very proud.

What we've been able to accomplish and the high level of commitment professionalism and productivity that are I point colleagues have delivered despite the pandemic.

Well cold is 19 regulations and changes to normal operations have altered our approach engaging with the ocular disease community. We were encouraged to see the resumption of operations at ambulatory surgical centers for A.S.C. and you'd be out, especially with offices during the quarter.

And there's always U.S. regions, where stay at home orders have been needs.

As a result, we reported total net revenues of 4.1 million of which net product revenue was 3.7 million 2.9 million for your teeth and 800000 predicts the queue for the second quarter supported by improving customer demand for both products beginning in late may as cataract surgeries resumed.

Physician office visits increased.

These results are encouraging and we continue to actively monitor cobot 19 cases across the U.S. to ensure we are complying with health and safety guidelines, while continuing to call on are valued customers and providing much needed access to wear off your products.

While we cannot predict how patients physicians and I guess sees will respond to cope with 19 case trends in the coming on we were pleased to see an increasingly turn up customer demand month over month for both products during Q2 compared to the significant declines in demand we experienced in late Q1 through early Q2.

Yesterday, we announced an exciting new commercial lines with infamous Rx for the joint promotion objective view in the United States.

From a Saar X is a well established company in the cataract surgery market.

This alliance will substantially expand the reaches its important and innovative product using the imprimis Rx commercial organization. In addition to our efforts it I point.

We believe infamous Rx is the ideal partner to expand the commercialization of execute as we're able to leverage their existing infrastructure and relationship with ophthalmologists hospitals and agencies.

Yeah from a fourx will initially focused on converting their established customers that are currently using tri Moxi a combination injectable product that contains triumphant alone a set aside a well known steroids plus moxifloxacin another known antibiotic to execute.

The surgery centers and citizens already have experience using an injectable steroids post cataract surgery as an alternative to some of the eye drops they would otherwise prescribed for their patients.

We believe these customers, maybe especially well positioned to move toward F. The approved injectable treat that likes to execute with its ease of use solid efficacy and an established safety profile.

In addition, the F.D. recently published a notice of intent, which could impact the availability of several bulk compounded products such ask a tour or lack a nonsteroidal anti inflammatory often used for paying and a DEMA post cataract surgery.

And Moxifloxacin, an antibiotic often used to prevent infection post cataract surgery.

Off the list of approved drugs to be used in both compounding.

As a result at some point in the future should these will be finalized and take effect, we expect that drugs, such as time, oxy and others like it including compounded eye drops that contain these drugs they no longer be widely available for sale or distribution by large compounding pharmacies.

We believe that this partnership with MSR, Rick will be mutually beneficial for both companies and Scott Jones, Our Chief commercial officer will provide further color on this important aligned and our commercial performance later in the call.

Finally, we remain focused on managing our balance sheet with the structural changes, we announced in April and significant cost reductions, we've implemented as well as our current expectations for commercial business and possible transactions or anticipated financing activities. We believe our current cash runway concerned or offer you plan to 2021.

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In regard to our pipeline development, our preclinical good laboratory practice or GLP toxicology study for you why P. night, you know one remains on schedule.

Why P. Nike no one combines our bio erodible Durasert technology with we're rolling up.

An anti vascular endothelial growth factor or anti VEGF molecule and it's been advanced as a potential six months sustained treatment or wet age related macular degeneration or what Andy with potential expansion into other retinal diseases that are very attractive market opportunities with approximately eight.

<unk> billion in retinal disease global sales and over 6 billion in the U.S. alone.

We are excited about the potential for you I P 19, no. One is there a significant need for extended treatments for patients feel Blake frequent often monthly I injections for the rest of their lives.

Further provided an extended delivery treatments for ocular diseases, because it's very difficult challenges, including migration and inflammation and many drug candidates have failed in the clinic due to problems with their drug delivery technology.

Our non or Rotable Durasert technology has a proven track record with for F. D approved products, including Utica delivering thousands of implants, the patient size over the years with an excellent safety profile.

We believe that combining our bio erodible, doris or with the anti VEGF rolling it a molecule that it's been tested through phase two trials in humans as an oral therapy and has demonstrated an efficacy signal in wet AMD D represents an exciting product candidate I point.

And we were also very pleased to welcome Dr. Jay do.

Or tortilla strategic scientific officer to lead the strategic advancement of E. Wiping nights, you know one boutique 50 as well as our other research and development and new pipeline expansion opportunities under evaluation.

Dr. Nuclear is a well we're now leader in the retinal disease space and ophthalmology drug development entrepreneur and previously served as a member of our board of director since 2016.

We were honored to welcome him toward internal team to provide his expertise on the important growth areas of our pipeline.

I will now turn the call over to Dr. Duker with additional commentary on our pipeline products Jay.

Thank you Nancy and good morning to all.

I joined <unk> Board of directors back in 2016, because I believed in the broad therapeutic potential of the validated to research technology for the delivery of medications to the.

Nancy and the team of since built an integrated promotional in clinical development organization that is well positioned for future growth driven by daycare dress shirt technology as well servicing technology, which is used index see Q.

Sure sure. It is designed to deliver a variety of potential medications and it can treat sustained release fashion to the post your segment of the eye.

<unk> has brought application across a wide variety of retinal disease indications, including wedding indeed.

Welcome to use a progressive debilitating disease and despite separately after your point medications remains a leading caution blindness.

This is primarily due to the relatively short duration of action of these anti VEGF class of medications, which therefore necessitates a long term burden on patients families providers in the health care system.

As an exciting potential alternative Eattwenty night, you know one uses our established Jewish or technology, which is in the delivery system for FY <unk> ft approves sustained release Uptown products, including around you cheek and has the potential to provide six months sustained delivery of doing it and anti VEGF Teekay <unk>.

Youre tyrosine kinase inhibitor molecule anyway, P. night, you know one.

When it has established efficacy signals observed in two prior human trials in wet AMD D action newly delivered agent.

Data from the phase two trial of mailing for Olin is conducted by Toromocho next for the treatment of wedding and de were recently published in the British Journal of Ophthalmology, and demonstrated noninferiority and visual acuity compared to placebo.

The three eylea rolling it dose levels studied also demonstrated decreased intravitreal anti Vince you have to injection burden and a longer time to first treatment as compared to placebo.

A small portion of patients in each for rolling It dosing group did not require another anti VEGF injection after initiation of therapy.

I'll note that this trial was prematurely stop due to gastrointestinal and battle Billy Erie toxicity signals. However, no significant ocular adverse events were observed during the trial.

We believe that placing the rolling it you know biodegradable durasert technology to locally delivers a drug to the post your segment fee is your order kinetics can be comparable or even implant results observe for the daily delivery of rolling it without the systemic toxicities associated with family anti VEGF treatments.

<unk> also demonstrated its safety in thousands of patients in the bio erodible construct has no new excipients from the not a ratable construct.

Preclinical studies will be why do you think you know what administered into the I have shown promising anti VEGF activity with no serious safety issues observed to date.

We believe that tourist shirt regulatory and clinical history as a critically important differentiator for you might be nice you know, one which may substantially reduced the risk of this development program.

We anticipate filing an investigational new drug application, where I, indeed, with the U.S. food and drug administration later this year with a phase one clinical trial to follow shortly afterwards.

When empty market represents our first disease area and the commercial prospects for you might be night, you know one are compelling as we believe it has potential to be a disruptive in beneficial product option for both patients and physicians.

He might be nice you know one also has potential indications for the treatment of diabetic retinopathy diabetic macular edema, and retinal vein obstruction that we anticipate pursuing in the future.

In parallel to this exciting development program I look forward to working with the dedicated team, but I point to bring you keep 50 into the clinic can assess additional pipeline expansion opportunities through arcturus certain various some technologies along with potential product and technology in licensing.

We look forward to keeping you updated on these items as we progress them forward and into the clinic.

Now I'll turn the call over to Scott Jones for the commercial update Scott.

Thank you Jay and welcome aboard.

As Nancy mentioned at the beginning of the call. We're very pleased to announce or new commercial lines for the George promotion of to execute.

The implement team shares our excitement in strong belief in the potential to execute we're delighted to have their team help accelerate product growth in adoption infamous will market to execute as a top priority product and we'll focus its attention and resources on converting customers previously purchasing Tri moxi.

They will begin deploying their experience sales specialist and inside sales team immediately while the I point team retains responsibility for sales and marketing teams pricing manufacturing and contracting this complimentary combination positions to execute for accelerated growth bring its many benefits more physicians and patients.

Together, we hope to transition to cataract market from Tri Moxi today execute and further grow to replace the burdensome steroid I dropped regimen.

[noise] infamous will be driven buyer shirt success and is entitled to receive the commission on the incremental DEXA Q cells that exceed Predefine volumes, we look forward to working with improvements with the him from his team for the advancement of execute.

No for our own progress during the second quarter, we were pleased to see Reopenings and the resumption of operations at agencies and you'd be out, especially since what regions across the country.

Most are not yet operating at full capacity many are back to enhance capacity during the quarter public health authorities and government agencies, including CMS The center for Medicare and Medicaid services.

Issued recommendations for the reopening of health care systems, and the resumption of non essential elective surgeries, including cataract surgery in areas with lower stable incidence of cobot 19.

While reopening schedules varied by state our key account managers were able to resume in person visits in the region subject to more advanced opening sizes.

We do not know how patients and physicians and clinics will respond to the resurgence cobot 19 that has now occurring that we have not yet seen an appreciable decline in orders.

Customer demand for decks acute representatives units purchased by agencies from the country's distributors was down approximately 40% over Q1 with 2096 units in Q2 June. However represented the second highest customer demand volume month of 2020 for to execute with 1500 92 units ordered.

And that month alone the execution has been particularly appreciated during the coven 19 pandemic as it delivers an extended duration therapeutic treatment for missing injection, thus, reducing the frequency of in person position follow up visits and limiting contact with the patient spacing on.

This compares to steroid our drug treatment regimens, which can result in poor compliance frequencies touching and ultimately need for in person because it is important to note that the majority of patients having cataract surgery or an older age and are considered to be at high risk recovered 19.

So dropless treatment option is becoming more of your priority.

Data from our ongoing retrospective study of real world use and execute that were presented a as they as Crs virtual meeting echoed this feedback with the physician surveyed giving the product high marks and products satisfaction ease of use an efficacy compared to topical steroids and patient satisfaction.

We will also continue to execute our goals securing additional volume based agreements with agencies and integrated healthcare networks to expand access for patients. These conversations are now being conducted virtually and in person and we hope to continue to drive these conversations forward in the coming months.

Turning to you take for chronic noninfectious anterior uveitis affecting the posters segment of VR.

While some you'd be audits and retina specialists office remain partially open during the code. The 19 restrictions beginning in March we did see an increase in overall office reopenings beginning in May.

Customer demand for you to represented as units purchased by physicians from the company's distributors was down approximately 20% versus Q1 with 428 units in Q2.

Options driven by decrease patient office visits due to covert 19 restrictions.

Physicians and patients continue to provide positive feedback on the product, especially during the cold with 19 pandemic due to its ability to deliver a consistent sustained marker dose of steroid 24 hours a day for up to three years.

He can potentially reduce the frequency of patient offices during the course of treatment a real benefit during the cold. The 19 pandemic. In addition to provide steady and consistent anti inflammatory control.

Are you see commercial efforts of consisted of in person and virtual engagements to continue to educate the greater you'd be artists' community on the advantages of you'd see our medical affairs team continues to seek opportunities to highlight you take at medical meetings, which have altered virtual including in service and our though these presentations of focused on supportive.

Results from the first phase three study of you take and reinforce its long term anti inflammatory advocacy.

To close while we are encouraged by the improving customer demand during the quarter for both products continued growth will depend on the continued easing of restrictions in place around and Coca 19 pandemic in various regions and the return of patients for these procedures.

Unknown Executive: 2020 Financial Results Conference Call. There will be a question and answer session to follow at the completion of the prepared remarks. Please be advised that this call is being recorded at the company's request. I would now like to turn the call over to George Elston.

We are actively monitoring the situation and continue to applaud comply with all associated public health recommendations to ensure the safety of our patients employees physicians and other health care providers, given the unclear trajectory of the pandemic and governmental response, it's difficult for Jack product demand in revenue from coming periods, we will.

George O. Elston: Chief Financial Officer of EyePoint Pharmacy. Thank you and thank you all for joining us on today's conference call to discuss EyePoint Pharmaceuticals' second quarter 2020 financial results and recent corporate developments. With me today is Nancy Lurker, President and Chief Executive Officer, Dr. Jay Duker, Chief Strategic Scientific Officer, and Scott Jones, Chief Commercial Officer.

George O. Elston: Nancy will begin with a review of recent corporate updates, including our new commercial alliance with ImprimisRx that we announced yesterday. Dr. Duker will then discuss pipeline developments for EYP 1901 and UTEQ-50, our six-month treatment for posterior segment uveitis. Then Scott will comment on recent progress made in our commercial activity, and I will close with commentary on the second quarter 2020 financial results. We will then open up the call for your questions, where we will be joined by Dr. Dario Padrino, Senior Vice President and Chief Medical Officer. Earlier this morning, we issued a press release detailing our financial results, as well as our commercial and operational developments. A copy of the release can be found under the Investor Relations tab on the corporate website www.eyepointpharma.com.

Continue to move our efforts forward virtually and in person when able to bring our products to patients in need.

And our exciting new implements partnership promoting to execute should help to grow customer awareness and demand for this highly innovative and much needed cataract surgery products I'd like to recognize and thank our commercial organization for their dedication and efforts through this daily changing market I'll now turn call over to George for review of the second quarter front.

This is George.

Thank you Scott throughout this pandemic, we have focused on preserving our capital and we will continue to monitor the impact of covert 19 on our business I will now turn to the financial results included in the press release that was issued this morning.

For the three months ended June Thirtyth 2020, total net revenue was 4.1 million compared to 7.2 million for the three months ended June Thirtyth 2019.

Net product revenue for the three months ended June Thirtyth Twentytwenty was 3.7 million with 2.9 million for Utica and 800004 to execute compared to net product revenue for three months ended June Thirtyth 2019 of 6.7 million generated by Utica.

George O. Elston: Before we begin our formal comments, I'll remind you that various remarks we will make today constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These include statements about our future expectations, clinical developments, regulatory matters, and timelines, the potential success of our products and product candidates, financial projections, and our plans and prospects. 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 our most recent annual report on Form 10-K, which is on file with the SEC, and in other filings that we may make with the SEC in the future.

Net product revenue reported in our financial represents product purchase by I points distributors, whereas customer demand represents purchases of product by physician practices and ambulatory surgery centers from my point is distributors.

Net revenue from royalties and collaborations for the three months ended June Thirtyth 2020, total of 416000 compared to 505000 and the corresponding quarter in 2019.

Operating expenses for the three months ended June Thirtyth 2020 decreased to 15.3 million from 17.4 million in the prior year period, due primarily to decrease sales and marketing costs from our previously announced restructuring as well as lower R&D costs and overall spending management.

George O. Elston: Any forward-looking statements represent our views as of today only. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our views change. Therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today. I'll now turn the call over to Nancy Lurker, President and Chief Executive Officer of EyePoint Pharmacy. Thank you, George.

Non operating expense net for the three months ended June Thirtyth 2020 totaled 1.8 million of net interest expense.

Net loss for the three months ended June Thirtyth, 2020 was 13 million or 10 cents per share compared to a net loss of 11.5 million or 11 cents per share for the prior year quarter.

Nancy S. Lurker: Good morning, everyone, and thank you for joining us. Our team has done a great job managing the business and balance sheet during the COVID-19 pandemic. We continue to put the safety of patients, physicians, and our employees as a top priority while we produce our innovative drugs, Dexacue and Utique, move our R&D pipeline forward, and continue to call on physicians. I'm very proud of what we've been able to accomplish and the high level of commitment, professionalism, and productivity that our EyePoint colleagues have delivered despite the pandemic. While COVID-19 regulations and changes to normal operations have altered our approach to engaging with the ocular disease community, we were encouraged to see the resumption of operations at ambulatory surgical centers, or ASCs, and uveitis specialist offices during the quarter in those U.S. regions where stay-at-home orders have been eased. As a result, we reported total net revenues of $4.1 million, of which net product revenue was $3.7 million, $2.9 million for Utique, and $800,000 for Dexacube for the second quarter, supported by improving customer demand for both products beginning in late May, as cataract surgeries resumed and physician office visits increased.

Cash and cash equivalents at June Thirtyth, 2020 totaled 22.8 million compared to $22.2 million at December 30, Onest 2019.

We expect that our cash on hand, and projected cash inflows from anticipated Utica index acute product sales licensing and research collaboration transaction along with additional anticipated financing activities can fund the company's operating plant into 2021, given our current FX assumptions for the extent of the Koeppen 19 related.

Closures in various regions across the U.S.

Our careful management of cash should enable us to achieve some important catalyst, namely completion of the GLP Tox study for you IP 19, Oman and this positive filing of the high end the with the FDA.

We continue to evaluate and pursue non dilutive sources of capital such as additional ex us out licensing opportunities for our commercial products and delivery technologies I will now turn the call over to the operator for questions.

Thank you.

As there might be a question needs press star woman and telephone chartered question press the pound keep see standby, we composite kuni roster.

Our first question comes from Yale Jen really long ago. You May proceed with two question.

Nancy S. Lurker: These results are encouraging, and we continue to actively monitor COVID-19 cases across the U.S. to ensure we are complying with health and safety guidelines while continuing to call on our valued customers and providing much-needed access to our ocular products. While we cannot predict how patients, physicians, and ASCs will respond to COVID-19 case trends in the coming months, we were pleased to see an increasing return of customer demand month over month for both products during Q2, compared to the significant declines in demand we experienced in late Q1 through early Q2. Yesterday, we announced an exciting new commercial alliance with Imprimis RX for the joint promotion of Dexa-Q in the United States. Imprimathorax is a well-established company in the cataract surgery market.

Hey, good morning, and thanks for taking the questions. A couple of quick ones here. The first is in terms that you have a congrats on the deal what in permit so how should we look at the P. and now in terms of are you guys booking the revenue and.

How would we consider the.

The caught for them to the other product will you.

Hi, This is Nancy thank you for the question.

Let me first answer the question around the cost to now let George talk about the piano. So from a cost standpoint, our responsibility is to supply didn't with MACI selling materials, but all other costs are being borne by then we'll also manage continue to manage the contracting that.

Nancy S. Lurker: This alliance will substantially expand the reach of this important and innovative product using the InfamousRx commercial organization in addition to our efforts at EyePoint. We believe InfamousRx is the ideal partner to expand the commercialization of DexEQ as we are able to leverage their existing infrastructure and relationships with ophthalmologists, hospitals, and ASCs. InfamousRx will initially focus on converting their established customers that are currently using Trimoxy, a combination injectable product that contains triamcinolone acetonide, a well-known steroid, plus moxifloxacin, another known antibiotic, to DexyQ.

Is currently being done.

And all aspects of of marketing now we'll continue to also the field our own a field force, but they will be responsible for all the costs related to their field force in any internal cost if they manage we just will provide the training and the marketing materials and continue to manage the up obviously that just.

So you shouldn't tracking to the PNM I'll turn that over to George.

Hi, Alan Good morning, Thanks, Thanks for dialing.

Yeah, I think the way the way to think about this is going forward. So obviously, we just signed this agreement. So there's there's obviously theres no impact in Q2.

Nancy S. Lurker: These surgery centers and physicians already have experience using injectable steroids post-cataract surgery as an alternative to some of the eye drops they would otherwise prescribe for their patients. We believe these customers may be especially well-positioned to move toward an FDA-approved injectable treatment like DexyQ, with its ease of use, solid efficacy, and established safety profile. In addition, the FDA recently published a Notice of Intent, which could impact the availability of several bulk compounded products, such as Catorlac, a non-steroidal anti-inflammatory often used for pain and edema post-cataract surgery, and moxifloxacin, an antibiotic often used to prevent infections post-cataract surgery, from the list of approved drugs to be used in BOLT compounding. As a result, We believe that this partnership with InfamousRx will be mutually beneficial for both companies, and Scott Jones, our Chief Commercial Officer, will provide further color on this important alliance and our commercial performance later in the call. Finally, we remain focused on managing our balance sheet.

It's something we'll expect to come in later this year, but the way to think about it is.

We still own the products. So we will we will book in record revenue that's really unchanged.

And any cost associated with.

The impairments activities will come in as a commission expenses sales and marketing so the top to top line and gross margin.

Well, we will be reflected by our.

Okay, Great. That's very helpful and my next question is about peak.

Given the uncertainties the going forward, but if you look at back to second quarter.

Geographically could you sort of potentially breakdown in terms of.

Most of the cells in the region, which is already open up more or less infection versus the region die.

Some spike so.

Potentially to use that as a way to.

That said the potential sort of cells or usage in the total United States for the next two quarters.

Yeah, I may have a scotty answer that but let me just make one comment.

Look it's so difficult to projects right now what's going to happen with the coded pandemic and we're not going to be in the business are trying to project, what's going to happen by region with that pandemic. So obviously right now we're we're not seeing additional elective surgery shut does I think maybe southern California.

Nancy S. Lurker: With the structural changes we announced in April and significant cost reductions we have implemented, as well as our current expectations for our commercial business and possible transactions or anticipated financing activities, we believe our current cash runway can fund our operating plan into 2021. In regard to our pipeline development, our preclinical good laboratory practice, or GLP, toxicology study for EYP 1901 remains on schedule. EYP 1901 combines our bio-erodible Duracert technology with Virolinib, an anti-vascular endothelial growth factor, or anti-VEGF molecule, and is being advanced as a potential six-month sustained treatment for wet age-related macular degeneration, or wet AMD, with potential expansion into other retinal diseases that are very attractive market opportunities, with approximately $18 billion in retinal disease global sales and over $6 billion in the U.S. alone.

I might have recently, but it's just too hard to predict and we're not going to get in the business are trying to predict by region, what could happen. So Scott you want to comment.

Sure and thanks for question you know.

I think what we've seen two separate aspects one is relative to how how much of an impact there has been related to kogut outbreaks in certain areas, obviously in the Sun belt and to an extent on the west coast.

We're seeing that now and that certainly is impacting the willingness of patients to go into practices and how many patients practices are able to see.

The second aspect is related to the difference between teaching hospitals and private practice.

Nancy S. Lurker: We are excited about the potential for EYP 1901 as there is a significant need for extended treatments for patients to avoid frequent, often monthly, eye injections for the rest of their lives. However, providing extended delivery treatments for ocular diseases presents very difficult challenges, including migration and inflammation. And many drug candidates have failed in the clinic due to problems with their drug delivery technology.

You know in the United sector, many of our you'd be ought to specialists are in teaching hospitals and.

Teaching hospitals aren't completely back to the same kind of patient volume as they work before obviously they are being you know much more conservative in terms of the allowance of patient volume and and how they're managing that so that is playing a.

Jay S. Duker: Our non-erodible DuraCert technology has a proven track record with four FDA-approved products, including Utique, delivering thousands of implants to patients' eyes over the years with an excellent safety profile. We believe that combining our bio-erodible DuraCert with the anti-VEGF Virolineb, a molecule that has been tested through Phase II trials in humans as an oral therapy, and has demonstrated an efficacy And we were also very pleased to welcome Dr. Jay Duker as our team's strategic scientific officer to lead the strategic advancement of EYP-1901, UTIC-50, as well as our other research and development and new pipeline expansion opportunities under evaluation. Dr. Duker is a well-renowned leader in the retinal disease space, an ophthalmology drug development entrepreneur, and previously served as a member of our Board of Directors since 2016. We were honored to welcome him to our internal team to provide his expertise on the important growth areas of our pipeline. I will now turn the call over to Dr. Duker for additional commentary on our pipeline products. Thank you, Nancy, and good morning to all.

<unk> role as well in terms of the number if you got his patients are being seen in treated at this point.

Okay, great. They can you comment, though let me just add that being said.

We did not see the reduction in sales if you take obviously that we sell a decks acute because you'll be audits and by the way. Let me do it's like correction there yeah. It doesn't the elective surgeries don't impact.

You take lucky Doug executing so up but because you take is.

Treating a disease that is so serious you just don't see quite the reduction in treatment procedures that you certainly seen the cataracts space.

Okay, Great that's helpful and maybe that plus if there is that the impairment or.

Could you give us nothing.

In terms of there.

Yes, sorry.

Welcome to raise that well you have car reach in Q.

Oh.

He saw August okay.

Yes, and other.

Yes, so they have 30.

Sales representatives that will be deployed to promote gets to Q in a burst position and then they also had inside sales and we're not going to disclose that exact number.

Jay S. Duker: I joined EyePoint's Board of Directors back in 2016 because I believed in the broad therapeutic potential of the validated DuraCert technology for the delivery of medications to the eye. Nancy and the team have since built an integrated commercial and clinical development organization that is well-positioned for future growth driven by both our DuraCert technology as well as our Verisome technology, which is used in DexEQ. Duracert is designed to deliver a variety of potential medications in a controlled, sustained release fashion to the posterior segment of the eye.

So that is the current field force that they're going to be deploying and then as we said in our press release.

Tri Moxi is the main product, they're going to begin to work to convert and they have about 250000 units of Tri Moxi that they sell annually now again, we do not expect or are we at all implying that that will all get converted nor are we projecting the percent that will get converted but that is based.

Jay S. Duker: DuraCert has broad application across a wide variety of retinal disease indications, including wet AMD. WET-AMD is a progressive debilitating disease and, despite several FDA-approved medications, remains a leading cause of blindness. This is primarily due to the relatively short duration of action of these anti-VEGF classes of medications, which therefore necessitates a long-term burden on patients, families, providers, and the health care system. As an exciting potential alternative, EYP 1901 uses our established Duracert technology, which is in the delivery system for four FDA-approved sustained-release ophthalmic products, including our own Utique, and has the potential to provide Vorolinib has established efficacy signals observed in two prior human trials in wet AMD as an orally delivered agent.

No that they will be targeting to execute for the nice thing about it is that these tri moxi physicians are used to injecting.

Hey, steroids Remoxy is triumphant alone a steroids.

Plus moxifloxacin any antibiotic there used to injecting a steroids drugs post cataract surgery as opposed to using steroids eye drops. So these doctors and seeds are already familiar with injecting these drugs and getting patients that option, which we continue to bleed is it.

Very good option for patients to have and especially in this pandemic.

Okay, Great that's very helpful and.

Congrats on having to deal and.

See more updates on.

No.

Thank you.

Thank you and as a reminder, taski question, you'll need to press star one on your telephone. Our next question comes from Yi Chen with HC Wainwright you May proceed with your question.

Jay S. Duker: Data from the Phase II trial of oral virulonib conducted by Taracinex for the treatment of wet AMD were recently published in the British Journal of Ophthalmology and demonstrated non-inferiority in visual acuity compared to oral placebo. The three oral virulent dose levels studied also demonstrated a decreased intravitreal anti-VEGF injection burden and a longer time to first treatment as compared to placebo. A small portion of patients in each fluoroabdosing group did not require another anti-VEGF injection after initiation of oral therapy. However, I'll note that this trial was prematurely stopped due to gastrointestinal and biliary toxicity signals. However, no significant ocular adverse events were observed during the trial.

Thank you for taking my questions good morning.

First question is have you observed any changes in you between level, the sub Utica and to execute distributors.

I'm going to ask Scott to answer that question.

But generally we.

We're not giving distributor inventory levels, that's not our policy. However.

We do I'd now as you notice are starting to disclose our customer demand levels. So that should give you a good sense for what's the underlying demand for these products and then obviously our reported GAAP revenues Scott you want to add anything.

Thank you Nancy I.

Jay S. Duker: We believe that placing Vorolinib in our bio-erodible Duracert technology to locally deliver the drug to the posterior segment via zero-order kinetics can be comparable to or even improve results observed for the oral delivery of Vorolinib without the systemic toxicities associated with oral anti-VEGF treatment. DuraCert has also demonstrated its safety in thousands of patients, and the bio-erodible construct has no new excipients from Preclinical studies of EYP1901 administered into the eye have shown promising anti-VEGF activity with no serious safety issues observed to date. We believe that DuraCert's regulatory and clinical history is a critically important differentiator for EYP1901, which may substantially reduce the risk of this development program. We anticipate filing an Investigational New Drug Application, or IND, with the U.S. Food and Drug Administration later this year, with a Phase I clinical trial to follow shortly afterwards. The wet AMD market represents our first disease area, and the commercial prospects for EYP-1901 are compelling, as we believe it has the potential to be a disruptive and beneficial product option for both patients and physicians. EYP1901 also has potential indications for the treatment of diabetic retinopathy, diabetic macular edema, and retinal vein obstruction, which we anticipate pursuing in the future.

I think what we're seeing with the the distributors is that they're managing their inventory based on their normal inventory management and our contractual levels, we haven't seen.

Really a break from that during code that obviously now you know through the month of June where we've started to see an uptick in the customer demand and that's certainly driving additional inventory and inventory management, but typically the distributors are managing their inventory level.

Just a pretty similar to how they were before based on certain number of days of inventory.

Okay. Thank you second question is could you comment no what percentage of normal procedure balding or the agencies currently operating at and how many more sees can improvements helped to execute reach.

Scott I'll, let you answer that.

So it's you it's a great question and I'm not sure that I can give you a blanket answer as it relates to the cataract market. It really depends on the region of Khan of the country, we see some of the accounts.

Our back to 80, 90% of their pre cope with volume and then we see others that are sunbelt regions. For example that are still at this 50% volume those are increasing but there are not back to kind of pretty cold. Good luck.

Scott Jones: In parallel to this exciting development program, I look forward to working with the dedicated team at EyePoint to bring UTEQ-50 into the clinic and assess additional pipeline expansion opportunities through our DuraCert and Verisome technologies, along with potential product and technology in-licensing. We look forward to keeping you updated on these items as we progress them forward and into the clinic. I'll now turn the call over to Scott Jones for the commercial update. Scott?

So at this point so it really depends.

On the particular account.

Policies and procedures they have in place as well as the region of country that they are in.

And then the question about in per month, and what we expect they could do so again, let me reiterate we know we've not.

Scott Jones: Thank you, Jay, and welcome aboard. As Nancy mentioned at the beginning of the call, we're very pleased to announce our new commercial alliance for the joint promotion of DexyQ. The Implements team shares our excitement and strong belief in the potential of DexyQ, and we're delighted to have their team help accelerate product growth and adoption. Imprimis will market Dexa-Q as a top priority product and will focus its attention and resources on converting customers previously purchasing Trimoxx. They will begin deploying their experienced sales specialists and inside sales team immediately, while the EyePoint team retains responsibility for our sales and marketing teams, pricing, manufacturing, and contracting. This complementary combination positions DEXA-Q for accelerated growth, bringing its many benefits to more physicians and patients.

Penetrated even 50% of the agency market and particularly as you know when we downsized or DECT acute field force in April because of the pandemic the ability of infamous to come in and go after there.

The large number of ambulatory surgery accounts, we do believe we'll be very helpful. And let me just add again, so combined between our field force in there as we will have 40.

Cans, we have 10, and they have 30, plus or adding in their inside salesforce as well. So we are hopeful that when you add that kind of firepower that we'll see some impact on to execute sales.

Got it. Thank you my last question is related to the gross margin, which improved during the second quarter could you. Please comment at all the trend going forward.

Scott Jones: Together, we hope to transition the cataract market from Trimoxy to Dexa-Q and further grow to replace the burdensome steroid eyedrop regimen. IMPROMIS will be driven by our shared success and is entitled to receive a commission on the incremental DEXA-Q sales that exceed predefined volumes. We look forward to working with the IMPROMIS team for the advancement of DEXA-Q. Now for our own progress during the second quarter, we were pleased to see reopenings and the resumption of operations at ASCs and uveitis specialists in select regions across the country. While most are not yet operating at full capacity, many are back to over half capacity. During the quarter, public health authorities and government agencies, including CMS, the Center for Medicare and Medicaid Services, issued recommendations for the reopening of healthcare systems and the resumption of non-essential elective surgeries, including cataract surgery in areas with a low or stable incidence of COVID-19. While reopening schedules varied by state, our key account managers were able to resume in-person visits in regions subject to more advanced opening phases.

Yeah, that's that's George.

Yes. So I you know the gross margin is obviously weighted by to execute.

I'm, sorry by UTI, which is a pretty strong performer certainly in Q2.

And it's going to its going to carry a higher margin I think that will certainly be higher weighted.

For the rest of this year as well.

Okay. Thank you.

Thank you. Our next question comes from Andrew Dsilva with B. Riley <unk> before we proceed with your question.

Yeah. Good morning, Thanks for taking my question to Chicago quick ones I'm, just I'm collaboration with Taro.

How should we think about your execute gross margins going forward as well as the icon royalty and what will the if any will there be an operating margin impact here I'm, just really I'm just trying to understand some of their bev wreck and that finer nuances because I.

Scott Jones: We do not know how patients, physicians, and clinics will respond to the resurgence of COVID-19 that is now occurring, though we have not yet seen an appreciable decline in workloads. However, customer demand for DEXA-Q, represented as units purchased by ASCs from the company's distributors, was down approximately 40% over Q1, with 2,096 units in Q2. June, however, represented the second highest customer demand volume month of 2020 for DEXA-Q, with 1,592 units ordered in that month alone. Dexi-Q has been particularly appreciated during the COVID-19 pandemic as it delivers an extended-duration therapeutic treatment from a single injection, thus reducing the frequency of in-person physician follow-up visits and limiting contact with the patient's face and eyes. This compares to steroid eyedrop treatment regimens, which can result in poor compliance, frequent face touching, and ultimately a need for in-person visits. It is important to note that the majority of patients having cataract surgery are of an older age and are considered to be at higher risk for COVID-19.

I know right now you're you're not recognizing things faster than on a net basis, but if they're taking over sales would you be a recognizing gross sales or net sales.

Jordan and take that this is George good morning.

Good question so.

The short version is I point still controls that product and so it's we will we will book all revenues and it will be shipped through our distributors that remains unchanged.

Herro is our partner in the field and.

As Nancy pointed out we're working with their specific customer. So the orders will come into our distributors, where we will recognize revenue as we have historically and margin percentage for the next few franchise should remain largely unchanged. We unchanged. We can should we still we still control pricing bundling et cetera.

And so.

Where you'll see the expense for for Harris participation will be under us selling and marketing costs, because it'll it'll be recorded by us as a commission.

Scott Jones: So a droplets treatment option is becoming more of a priority. Data from our ongoing retrospective study of real-world use of Dexacube that was presented at the ASCRS virtual meeting echoed this feedback, with the physician survey giving the product high marks in product satisfaction, ease of use, and efficacy compared to topical steroids and patient satisfaction. We will also continue to execute on our goal of securing additional volume-based agreements with ASCs and integrated healthcare networks to expand access to these conversations are now being conducted virtually and in person, and we hope to continue to drive these conversations forward in the coming months. Turning to you, we take for chronic non-infectious uveitis affecting the posterior segment of the eye.

Okay, and can you give us a kind of a a range of what that could look like so that we can be more accurately model that.

The we haven't disclosed that yet and we have not sure it's going to be in the agreement, but if you look at your typical.

Co promotion agreements across the space you know these are anywhere from 20% to 40% sharing depending on the molecule and and were somewhere in that range, but not we haven't guided on that specific we may come back an update that but for now.

We're seeing.

It's not public yet.

Okay fair enough and.

Can you discuss just the overlap that you have a with ambulatory surgery centers are physicians I think.

Scott Jones: While some uveitis and retina specialist offices remained partially open during the COVID-19 restrictions beginning in March, we did see an increase in overall office reopenings beginning in May. Customer demand for UT, represented as units purchased by physicians from the company's distributors, was down approximately 20% versus Q1 with 428 units in Q2. The reduction was driven by decreased patient office visits due to COVID-19 restrictions.

And permits touched somewhere around 9000 physicians fairly recently, how close was your legacy team to that number and then from a regional standpoint, but what was the overlap a crossover like between between the two organizations.

Yes, Andy work, that's that information, we're not at Liberty to disclose and but let me say. This again you can imagine that they've got broader reach than we do they've been on the market a lot longer they've got to more established field force and they've got a much larger base of business and we do so.

Scott Jones: Physicians and patients continue to provide positive feedback on the product, especially during the COVID-19 pandemic, due to its ability to deliver a consistent, sustained microdose of steroid, 24 hours a day, for up to three years. This can potentially reduce the frequency of patient office visits during the course of treatment, a real benefit during the COVID-19 pandemic, in addition to providing steady and consistent anti-inflammatory control. Our UTEEC commercial efforts have consisted of in-person and virtual engagements to continue to educate the greater uveitis community on the advantages of UTEEC. Our medical affairs team continues to seek opportunities to highlight UTEEC at medical meetings, which have all turned virtual, including ASRS and ARVO. These presentations focused on supportive results from the first phase three study of UTEEC and reinforced its long-term anti-inflammatory efficacy.

So suffice it to say that we know that their reach and the number of accounts. They have is larger than what we have and the percent that we overlap we're not going to disclose that.

Okay and.

Can you give and just an update on your thoughts on pass through status, obviously, a lot of disruption taking place at the pandemic or would you be fair to assume there should be an extension.

Scott Jones: To conclude, while we are encouraged by the improving customer demand during the quarter for both products, continued growth will depend on the continued easing of restrictions in place surrounding the COVID-19 pandemic in various regions and the return of patience for these procedures. We're actively monitoring the situation and continue to comply with all associated public health recommendations to ensure the safety of our patients, employees, physicians, and other health care providers. Given the unclear trajectory of the pandemic and governmental response, it's difficult to project product demand and revenue for the coming periods.

And I know what the whole thing with to place a maybe a couple of years back. They got that moved five years is there are still talks with that you're getting that two year extension on top of it.

So I'm going to let Scott answer that question, but let me also just say that.

Scott has been leading an effort on our side and in fact quite frankly, leading in terms of most of the ophthalmology industry, taking a real leadership role here in terms of working around the the we are active in working with.

Potential pass through extension and Scott's been taken a very active role in that so Scott you want to add anything.

Sure. Thanks for question and so really there's three separate projects going on right now the first is relating to extending what's called the tolling period on a for the public health emergency basically that means during the public health emergency just stop the the time clock in terms of a pass through.

George O. Elston: We will continue to move our efforts forward virtually and in person, when able, to bring our products to patients in need. And our exciting new partnership, Promoting Dexacue, should help to grow customer awareness and demand for this highly innovative and much needed cataract surgery product. I'd like to recognize and thank our commercial organization for their dedication and efforts in this daily changing market. I will now turn the call over to George for a review of the second quarter financials.

So there is legislation. That's currently been introduced that we believe will be part of the potentially part of the next stimulus package.

Secondly, we're still working on a longer.

A long term extension you know similar to the asking for the extension go from three to five years, that's something we're still working on and then again, we're still seeking along with many of the other others in the ophthalmology community still seeking.

George O. Elston: Thank you, Scott. Throughout this pandemic, we have focused on preserving our capital, and we will continue to monitor the impact of COVID-19 on our business. I will now turn to the financial results included in the press release that was issued this morning. For the three months ended June 30th, 2020, total net revenue was $4.1 million compared to $7.2 million for the three months ended June 30th, 2019. Net product revenue for the three months ended June 30, 2020, was $3.7 million, with $2.9 million for Utique and $800,000 for Dexter, compared to net product revenue for the three months ended June 30, 2019 of $6.7 million generated by UT. Net product revenue reported in our financials represents product purchased by EyePoint's distributors, whereas customer demand represents purchases of product by physician practices and ambulatory surgery centers from EyePoint.

George O. Elston: Net revenue from royalties and collaborations for the three months ended June 30, 2020 totaled $416,000 compared to $505,000 in the corresponding quarter in 2019. Operating expenses for the three months ended June 30, 2020 decreased to $15.3 million from $17.4 million in the prior year period, due primarily to decreased sales and marketing costs from our previously announced restructuring, as well as lower R&D costs and overall spending management. Non-operating expense net for the three months ended June 30, 2020 totaled $1.8 million of net interest expense.

A different kind of payment mechanism for these drugs. So those are longer term projects, but again the kind of the most the most pressing is related to extension because of the the pass through or excuse me because of the public health emergency and so I think we will know how that is.

Unknown Executive: The net loss for the three months ended June 30, 2020 was $13 million, or $0.10 per share, compared to a net loss of $11.5 million, or $0.11 per share for the prior year quarter. Cash and cash equivalents at June 30, 2020 totaled $22.8 million, compared to $22.2 million at December 31, 2019. We expect that our cash on hand and projected cash inflows from anticipated UTEQ and DEXAQ product sales, licensing, and research collaboration transaction, along with additional anticipated financing activities, can fund the company's operating plan into 2021, given our current assumptions for the extent of the COVID-19-related closures in various regions across the U.S. Our careful management of cash should enable us to achieve some important catalysts, namely completion of the GLP To I will now turn the call over to the operator for questions. Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key.

Moving pretty quickly as as we believe again it may be part of the stimulus package.

Okay, Great and just last question for me just as it relates to 90, no one and I get this question from investors.

It is the largest benefit.

With the candidate in your opinion relative to the anti VEGF mabs, it or antibody fragment that out in the market. Just just adherents or is there actually an efficacy signal or benefit you're expecting is a well outside of just benefits that would come through adherence.

Okay for that question I'm going to have Dr. Duker answer I'd are as you know our new Chief scientific strategy officer, So Jay.

Well, it's certainly possible that teekay ice may have an efficacy benefit over the fabs, but we don't anticipate that being our benefit.

I think there are two issues here that we can deliver on the first is this your order kinetics I think it it's certainly possible that by delivering an anti VEGF medication over long period of time at a set level, especially when you're walking a receptor as opposed to brought walking away.

Again that there should be at least equal efficacy with potentially more but of course efficacies a funny thing to measure and these VEGF mediated diseases.

Visual acuity is what the patient cares about and ultimately, but the doctor curious about the most and if you will go through the venture interventions studies, the visual acuity data, it's often very similar between classes of medications for wedding empty.

But what we also care about is side effects and length of time that a single injection will work and that's really where the sweet spot is for US is is we think we can deliver.

Hey, efficacious amount of drug.

For six months with a single injection and so while we're not anticipating improved visual acuity data. We think we can do at least as well we think our length of time of action will be superior to what's on the market now.

Interesting yeah. It makes me kind of I think about the the new day clinical trials that to your partner Allen marriage doing with ILUVIEN right now a relative tightly yet, but that'd be another conversation I'll take that offline good luck going forward.

Unknown Executive: Please stand by while we compile the Q&A. Our first question comes from Yale Jen with Leilanko. You may proceed with your question. Hey, good morning, and thanks for taking the questions. A couple of quick ones.

Thank you.

Thank you Andy.

Thank you. Our next question comes from Dana Flanders with Guggenheim You May proceed with your question.

Great. Thank you very much the questions and joining the call late so apologies. If these have been asked are you addressed them in the prepared remarks, but I'm just curious.

Nancy S. Lurker: First, in terms of the deal with the imperialists, so how should we look at the P&L in terms of are you guys booking revenue, and how would we consider, I guess, the cost for them? [inaudible] Hi Yi, this is Nancy.

Two questions on decks Q.

How we should expect the impact from the in from a sales force you know just timing on that how much time as you're going to take to get them up and running and trained on the product and when you would expect to start to see a positive impact from the marketing the drug.

Nancy S. Lurker: Thank you for the question. Let me first answer the question about cost, and then I'll let George talk about P&L. So from a cost standpoint, our responsibility is to supply them with selling materials, but all other costs are being borne by them.

And then my second question I know, there's a lot of kind of moving pieces to the launch this year with you know co bid and now the premise co promote and you've certainly gained experience.

Nancy S. Lurker: We'll also manage, continue to manage the contracting that is currently being done in all aspects of marketing. Now we'll also continue to field our own field force, but they will be responsible for all the costs related to their field force and any internal costs that they manage. We will just provide the training and the marketing materials and continue to manage the obviously the distance. Distribution, Tractors. For the P&L, I'll turn that over to George. Hi Alan. Good morning.

With the launch.

Nancy just.

How's your view on the potential of Ducs you changed at all over the over the medium term or are you still confident in kind of the sales growth for next Q into 2021 and 2022. Thank you.

Yeah, Hi, Dana and thanks for joining so let me.

Hi, we may have lost Nancy.

Everyone else Noah.

Yes.

George O. Elston: Thanks. Thanks for dialing. Yeah, I think the way to think about this is, you know, going forward, so obviously, we just signed this agreement, so there's no impact in Q2, it's something we'll expect to come in later this year, but the way to think about it is, we still own the products that we will. We will book and record revenue that's really unchanged, and any costs associated. The impermissive activities will come in as a...

Yes, we're still here.

So we'll give her a moment to come back.

But Scott what while we wait for Nancy maybe you can talk to the point on.

The time to get the.

Imprimis team up to speed and you know.

I can that the onboarding of a new rep I might be helpful.

Yeah, absolutely. So we actually kicked off the kind of the initiation of this project yesterday, and we're already starting to put together training programs and different ways.

George O. Elston: So the top, the top line in gross margin will be reflected by us. Okay, great. That's very helpful. And my next question is about, Given there's uncertainties going forward, but as you look back, quarter, geographically, could you sort of potentially break down in terms of most of the cells are in the region which is already opened up more or has less infections versus the region that has some spikes.

Obviously, it's a little different than training a brand new reps because they have extensive background in the counteract space. So really the focus is going to be on making sure that they're completely up to speed on all aspects of desks in Q and the in the the insertion of DEXA Q.

So.

While it's hard to give you a an exact answer on whether it's going to take one month or two quarters. It will definitely be somewhere in that range.

I do expect that they will be fully trained in the next month and certainly be out promoting the product and we'll see an impact based on that in the coming months.

Nancy S. Lurker: So potentially, use that as a way to assess the potential sort of cells or use in the total United States for the next, I guess, two quarters. Yeah, I'm going to have Scott answer that, but let me just make one comment. Look, it's so difficult to project right now what's going to happen with the COVID pandemic, and we're not going to be in the business of trying to project what's going to happen by region with that pandemic. So obviously, right now, we're not seeing additional elective surgery shutdowns. I think maybe Southern California might have had one recently, but it's just too hard to predict.

Hi, just confirming of Nancy's back.

Okay, what we'll get so to Dana This is George on your question regarding decks accused of just when we when we made the decision in April to restructure the commercial organization because of covenant to me to manage our burn.

It was really with an eye toward making to execute a.

A franchise this begins to produce.

Cash for the organization and so part of that was making this more focused sales force.

Nancy S. Lurker: And we're not going to get in the business of trying to predict by region what could happen. So Scott, do you want to comment? Sure, and thanks for the question, Yael. I think what we've seen are two separate aspects. One is relative to how much of an impact there has been related to COVID outbreaks in certain areas. Teaching hospitals aren't completely back to the same kind of patient volume as they were before. Obviously, they're being much more conservative in terms of the allowance of patient volume and how they're managing that. So that is playing a role as well in terms of the number of uveitis patients that are being seen and treated at this point. Okay, great.

To drive this business, which we think is very nicely boys, especially on the other side of coven, because it does have that opportunity to keep patients.

Distance from.

Office visits pharmacies, etcetera, and so what's really nice about these collaborations.

Within premise is we are rapidly massively expanding our footprint from.

Our 10 to 30, plus salespeople and so we're covering a lot more ground with them and as importantly for high point, we're not investing in that infrastructure early is really coming with.

With an established capability and customer base that you know, it's it's a it's a nice upside deal for both companies and so.

We haven't guided on specific to execute revenue we talked early in the call that the country is still opening up in different places and we're not sure what is going to happing, if theres a resurgence of the virus and so.

We're taking a wait and see approach, except we did we did see decent.

Demand in June.

I'm sorry folks obviously, that's the it's the beauty of this sub virtual world. So my call completely dropped but I'm back on now.

All right I think when asked and answered it Nancy but Dan if you haven't.

With a helpful.

Nancy S. Lurker: Thank you. So, let me just add that being said, we did not see the reduction in sales with UTEQ, obviously, that we saw with Dexa-Q because UVI, and by the way, let me do a slight correction there, it doesn't, the elective surgeries don't impact UTEQ like they do Dexa-Q, so, but because UTEQ is... When you're treating a disease that is so serious, you just don't see quite the reduction in treatment procedures that you certainly see in the cataract space. Okay, great. That's very helpful.

Yeah, I know that that that was very helpful. Thank you.

Yeah.

Thank you.

Nothing else Dan.

Okay great. Thank thank you appreciate the call.

And I'm not showing any further questions at this time I would now like turn call back over to Nancy Lurker for any closing remarks.

So thank you everyone for joining the call today, we remain very enthused and excited about our partnership with Imprimis Rx and our current trajectory of where we see thing headed up barring any further impact from the pandemic. However, again, we're pleased with the progress that we've made.

Nancy S. Lurker: And maybe the last question here is that, Permit me, could you guys give us a little bit of an idea of, in terms of their, sort of, rep size, rep size, particularly in the ocular space as well as their current reach to the various targets, in particular, and others? Yes, so they have 30 sales representatives that will be deployed to promote DexEQ in the first instance. And then they also have inside sales, and we're not going to disclose that exact number. So that is the current field force that they're going to be deploying. And then, as we said in our press release, Trimoxy is the main product they're going to begin to work to convert, and they have about 250,000 units of Trimoxy that they sell annually.

The team has been working very hard and we'll continue to do so on behalf of investors. Thank you and enjoy your day.

Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.

[music].

Nancy S. Lurker: Now again, we do not expect nor are we at all implying that that will all get converted, nor are we projecting the percent that will get converted, but that is the base business that they will be targeting Dexa-Q for. The nice thing about it is that these Trimoxy physicians are used to injecting a steroid. Trimoxy is triamcinolone, a steroid, plus moxifloxacin, an antibiotic.

Nancy S. Lurker: They're used to injecting a steroid drug post-cataract surgery, as opposed to using steroid eye drops. So these doctors and ASCs are already familiar with injecting these drugs and giving patients that option, which we continue to believe is a very good option for patients to have, especially in this pandemic. Okay, great. That's very helpful.

Unknown Executive: And congratulations on having the deal and thank you. Thank you, and as a reminder, to ask a question, you'll need to press star 1 on your telephone. Our next question comes from Yi Chen with H.C. Wainwright.

Unknown Executive: You may proceed with your question. Thank you for taking my questions. Good morning.

Nancy S. Lurker: The first question is, have you observed any changes in the inventory levels of New Teak and TexaCue at distributors? I'm going to ask Scott to answer that question, but generally, we... We're not giving distributor inventory levels. That's not our policy. However, we do now, as you notice, are starting to disclose our customer demand levels. So that should give you a good sense for what's the underlying demand for these products and, obviously, our reported gap revenues. Scott, do you wanna add anything?

Scott Jones: Thank you, Nancy. I think what we're seeing with the distributors is that they're managing their inventory based on their normal inventory management. And our contractual levels, we haven't really seen a break from that during COVID. Obviously, now, you know, through the month of June, when we've started to see an uptick in customer demand. And that's certainly driving additional inventory and inventory management. But typically, distributors are managing their inventory levels just pretty similar to how they were before based on a certain number of days of inventory.

Scott Jones: Okay, thank you. The second question is, could you comment on what percentage of normal procedure volume the ASCs are currently operating at? And how many more ASCs can in-premise help to execute?

Scott Jones: Scott, I'll let you answer that. So it's, it's, it's a great question. And I'm not sure that I can give you a blanket answer. As it relates to the cataract market, it really depends on the region of the country. We see some accounts that are back to 80 to 90% of their pre-COVID volume. And then we see others that are, you know, Sunbelt regions, for example, that are still at 50% volume. Those are increasing, but they're not back to kind of pre-COVID levels at this point. So it really depends on the particular account, the policies and procedures they have in place, as well as the region of the country that they're in.

Nancy S. Lurker: And then the question about the imprimis and what we expect them to do. So again, let me reiterate, we know we've not penetrated even 50% of the ASC market. And particularly, as you know, when we downsized our DEC-2Q field force in April because of the pandemic, the ability of imprimis to come in and go after their, the large number of ambulatory surgery accounts, we do believe will be very helpful. And let me just add again, so combined between our field force and theirs, we will have 40 CAMs. We have 10, and they have 30, plus they're adding their inside sales force as well. So, you know, we are hopeful that when you add that kind of firepower, we'll see some impact on DEC-2Q sales. I got it.

Nancy S. Lurker: Thank you. My last question is related to gross margin, which improved in the second quarter. Could you please comment on the trend going forward? Yeah, that's George.

George O. Elston: Yeah, so I, you know, the gross margin is obviously weighted by DEXA and, I'm sorry, by Utique, which is a pretty strong performer, certainly in Q2. It's going to carry a higher margin. I think that will certainly..., for the rest, Okay. Thank you. Our next question comes from Andrew DeSilva with B Reilly FBR. You may proceed with your question. Yeah, good morning.

Unknown Executive: Just in collaboration with HARO, how should we think about your Dexa Key gross margins going forward as well as the ICON royalty? And will there, if any, be an operating margin impact here? I guess, really, I'm just trying to understand some of the rhetoric and finer nuances because I know right now you're not recognizing things necessarily on a net basis, but if they're taking over sales, would you be recognizing gross sales or net sales? Jory.

George O. Elston: George, good morning. Good question. So the short version is EyePoint still controls that product, and so we will book all revenues. Harold is our partner in the field, and, as Nancy pointed out, we're working with our specific customers. So the orders will come in to our distributors. We will recognize revenue as we have historically, and the margin percentage for the Dexecu franchise should remain largely unchanged.

George O. Elston: Unchanged we can we still we still control pricing. So where you'll see the expense for Haro's participation will be under selling and marketing. It'll it'll be recorded by us as a, Okay, and can you give us a kind of a range of what that could look like so that we can more accurately model that? We haven't disclosed that yet, and I'm not sure it's going to be in the agreement, but if you look at your typical... Co-Promotion Agreements across the space, you know, these are anywhere from 20 to 40% share depending on the molecule, and we're somewhere in that. We may come back and update that, but for now... Okay, fair enough. And can you discuss just the overlap that you have with ambulatory surgery centers or physicians?

Nancy S. Lurker: I think Imprimis touched somewhere around 9,000 physicians fairly recently. How close was your legacy team to that number, and then from a regional standpoint, what was the overlap or crossover like between the two organizations? Yeah, Andy, that's information we're not at liberty to disclose. But let me say this.

Nancy S. Lurker: Again, you can imagine that they've got a wider reach than we do. They've been on the market a lot longer, they've got a more established field force, and they've got a much larger base of business than we do.

Nancy S. Lurker: So suffice it to say that we know that their reach and the number of accounts they have is larger than what we have. And the percent that we overlap, we're not going to disclose that. Okay. And can you give us just an update on your thoughts on pass-through status? Obviously, a lot of disruption is taking place with the pandemic. Would it be fair to assume there should be an extension? And I know with the whole thing that took place at Omidyar a couple of years ago; they got that moved five years later.

Nancy S. Lurker: Is there still talk with you getting that two-year extension on top of it? So I'm going to let Scott answer that question, but let me also just say that Scott has been leading an effort on our side, and, in fact, quite frankly, leading in terms of most of the ophthalmology industry, taking a real leadership role here in terms of working around the, we are active in working with, Potential Pass-Through Extension, and Scott's been taking a very active role in that. So, Scott, do you want to add anything?

Scott Jones: Sure. Thanks for the question, Andy. So really, there are three separate projects going on right now. The first is relating to extending what's called the tolling period for the public health emergency. Basically, that means during a public health emergency, just stop the time clock in terms of pass-through.

Scott Jones: So there is legislation that's currently been introduced that we believe will be potentially part of the next stimulus package. Secondly, you know, we're still working on a longer, a long-term extension, similar to the asking for the extension to go from three to five years. That's something we're still working on. And then again, you know, we're still seeking, along with many others in the ophthalmology community, a different kind of payment mechanism for these drugs. So those are longer-term projects. But again, the kind of the most pressing is related to extension because of the past, or excuse me, because of the public health emergency.

Scott Jones: And so I think, you know, we will know how that is moving pretty quickly as, as we believe, again, it may be part of the stimulus package. Okay, great. And just one last question for me, just as it relates to 1901, and then I get this question from investors.

Nancy S. Lurker: Is the largest benefit with the candidate, in your opinion, relative to the anti-VEGF MABs or antibody fragments that are on the market just adherence, or is there actually an efficacy signal or benefit you're expecting as well outside of just benefits that would come through adherence? Okay, for that question, I'm going to have Dr. Duker answer, our new Chief Scientific Strategy Officer. So Jay?

Jay S. Duker: Well, it's certainly possible that TKIs may have an efficacy benefit over FABs, but we don't anticipate that being our benefit. I think there are two issues here that we can deliver on. The first is zero-order kinetics.

Jay S. Duker: I think it's certainly possible that by delivering an anti-VEGF medication over a long period of time at a set level, especially when you're blocking a receptor as opposed to blocking a ligand, there should be at least equal efficacy, with potentially more. But of course, efficacy is a funny thing to measure in these VEGF-mediated diseases. Visual acuity is what the patient cares about and ultimately what the doctor cares about the most. And if you go through the anti-VEGF studies, the visual acuity data is often very similar between classes of medications for wet AMD.

Jay S. Duker: But what we also care about is side effects and the length of time that a single injection will work. And that's really where the sweet spot is for us, because we think we can deliver an effective amount of drug for six months with a single injection. And so while we're not anticipating improved visual acuity data, we think we can do at least as well. We think our length of time of action will be superior to what's on the market now. Interesting. Yeah, it makes me kind of think about the New Day clinical trial that your partner Alamir is doing with Alluvian right now, relative to ILEA. But that'll be another conversation I'll have offline.

Unknown Executive: Good luck going forward. Thank you. Thank you, Andy.

Unknown Executive: Thank you. The next question comes from Dana Flanders with Guggenheim. You may proceed to the next question. Great. Thank you very much for the questions. And I'm joining the call late, so apologies if these have already been asked or you've addressed them in the prepared remarks. But just curious, you know, two questions on DexQ. How should we expect, you know, the impact from the impromptu sales force? You know, just timing on that. How much time is it going to take to get them up and running and trained on the product? And when would you expect to start to see a positive impact from the marketing of the drug?

Unknown Executive: And then my second question, you know, I know there's a lot of kind of moving pieces to the launch this year with, you know, COVID and now the impromptu co-promote, and you've certainly gained experience with the launch. Has your view on the potential of DexEQ changed at all over the medium term? Or are you still confident in the kind of sales growth for DexEQ into 2021 and 2022? Thank you. Yeah, hi Dana. And thanks for joining us. So let me tell you, we may have lost Nancy. Is everyone else still on? Yes,

Scott Jones: Yep, we're still here, so we'll give her a moment to come back. But Scott, while we wait for Nancy, maybe you can talk to the point on, like, and that's the onboarding of a new rep. Yeah, absolutely. So we actually kicked off the kind of initiation of this project yesterday. And we're already starting to put together training programs and different ways. Obviously, it's a little different than training a brand new rep because they have extensive backgrounds in the cataract space.

Scott Jones: So really, the focus is going to be on making sure that they're completely up to speed on all aspects of DEXA-Q and the insertion of DEXA-Q. So, you know, while it's hard to give you an exact answer on whether it's going to take one month or two quarters, it will definitely be somewhere in that range. We do expect that they will be fully trained in the next month and certainly be out promoting the product, and we'll see an impact based on that in the coming months. I'm just confirming that Nancy's back. Okay, so Dana, this is George. Regarding your question regarding DEXA-Q, so just, you know, when we made the decision in April to restructure the commercial organization because of COVID and to manage our, It was really with an eye toward... Franchise that begins to produce. So, you know, part of that was a more focused sales force to drive this business, which we think is very nicely poised, especially on the other side of Distance from, Office Visits, and Pharmacies.

George O. Elston: And so what's really nice about the collaboration with Imprimis is that we are rapidly and massively expanding our footprint, have 10 to 30 plus salespeople, and so we're covering a lot more ground with them, and importantly for EyePoint, we're not investing in that infrastructure early; it's really with an established capability and customer base that, a nice upside deal for both. So, you know, we haven't guided.

George O. Elston: We talked earlier in the call that the country is still opening up in different places. We're not sure what's going to happen if there's a resurgence of the virus. And so we're taking a wait-and-see approach, except we did see decent demand. I'm sorry, folks. Obviously, it's the beauty of this virtual world.

Nancy S. Lurker: So my call completely dropped, but I'm back. I think we answered it, Nancy, but Dana, do you have a... Yeah, no, that, that was very helpful. Thank you. Thank you. [inaudible] Thank you. And I'm not asking any further questions at this time.

Nancy S. Lurker: I would now like to turn the call back over to Nancy Lurker for any further questions. So thank you, everyone, for joining the call today. We remain very enthused and excited about our partnership with IMPROMIS-RX and our current trajectory of where we see things headed, barring any further impact from the pandemic. However, again, we're pleased with the progress that we've made. The team has been working very hard and will continue to do so on behalf of investors.

Nancy S. Lurker: Thank you, and enjoy your day. Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating. You may now disconnect. (inaudible)