Q4 2020 Kala Pharmaceuticals Inc Earnings Call

Good morning, and welcome to the California Suite of course fourth quarter and full year 2020 financial results Conference call. At this time all participants are in a listen only mode. Following management's prepared remark.

The Q&A session will be held as a reminder of this call is being recorded.

I would now like to turn the call over to the Runch income sworn senior Vice President of strategy for Kala Pharmaceuticals. Please proceed.

Thank you operator, and thank you all for participating in today's call joining.

Joining me from the company are Mark <unk>, Chairman, President and Chief Executive Officer, Todd days, more Chief operating Officer, Kim Brazzell, Chief Medical Officer, Mary remit, the Chief Financial Officer, and hung Min Chen Chief Scientific Officer.

Today's call is being webcast live the webcast link can be found in the investors section of our website at www Dot Kala ex stock comp.

During this call we will be referring to non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles of reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in our press release issued today, which can also be found on our website.

On this call, we will make certain comments about call it future expectations plans and prospects that are forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.

These statements will include day.

Shipments regarding the potential market and commercial launch plans for our service.

Observed <unk> associated with our commercialization of ICU vision in deltas.

<unk> regarding our preclinical development programs and the sufficiency of our cash resources.

These and other forward looking statements are based on the beliefs and expectations of management as of this conference calls our actual results may differ materially from our expectations. The company undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances that occur. After this conference call, except as required by law.

Investors should carefully read the risks and uncertainties described in today's press release as well as the risk factors, which identify specific factors that may cause actual results or events to differ materially from those described in our forward looking statements included in the company's annual report on form 10-K, and other filings we make with the SEC.

The form 10-K will be filed with the SEC later today and will be available on our website.

I will now turn the call over to Kala CEO Mark.

Thanks, Niranjan and good morning, everyone. Thank you for joining us today to review <unk> fourth quarter and full year financial results and business highlights.

This is a very exciting time for Kala, we build a portfolio of innovative therapies, including two marketed products and established a commercial organization with deep experience working across the ophthalmology.

And optometry markets, and bringing new treatment options to eye care professionals and patients.

As we look to the future our goals are clear we aim to establish the service as the market leader for the short term treatment of dry eye disease and to grow and belt us to treat more patients with post operative ocular inflammation and pain, while strategically investing.

And the development of our internal pipeline of proprietary new chemical entities.

For the treatment of a range of front and back of the eye diseases.

Before turning the call over to Todd and Kim to provide an update on our commercial and R&D efforts I'd like to spend a few moments to reflect on 2020 and our recent accomplishments.

Last year was a pivotal year for Kala in October we received FDA approval for <unk> is the first medicine, specifically developed to treat the short term signs and symptoms of dry eye disease.

This approval was based on the results from four clinical trials the demonstrated the differentiated efficacy rapid onset.

Safety and Tolerability of <unk>.

Immediately following approval of our team turned its full attention to finalizing commercial preparations and in January we successfully commenced promoting <unk> in the United States.

We are very encouraged by the early launch and feedback from both doctors and patients.

It's clear that our commercial team is making strong progress with eye care professionals. So they can quickly gained experience with <unk> and their dry eye patients.

Additionally, despite the challenges of COVID-19, and more specifically the pandemic impact on ocular surgeries and belt. This continued to have a meaningful place in the market as the <unk>.

Vaccine rollout progresses, and the pandemic begins to subside. We believe we'll continue to see ocular surgeries of resuming and in Belton prescriptions growing.

Finally, we are advancing our next wave of therapeutic candidates a suite of proprietary and wholly owned new chemical entities for both front and back of the eye diseases.

Kim will explain shortly we believe these preclinical development programs have the potential to fuel our long term growth providing meaningful impact of millions of people worldwide.

As we work towards establishing a commercial leadership in eyecare with ICU vis and belt as we are excited to invest in our early stage pipeline, where our novel platform capabilities and scientific knowhow enable us to design and develop differentiated therapies from major unmet medical needs.

With our existing cash resources, we believe we have sufficient capital to fund our operations into at least the fourth quarter of 'twenty 'twenty, two and expect the anticipated revenue from my service to provide additional runway.

With that I'd like to turn the call over to Todd to go through the updates for <unk> and in deltas.

Thank you Mark.

I'll begin today with the launch update for Ais service.

The early response from eye care professionals and patients has been exceedingly positive and our team has done a great job quickly executing the launch and just three months post approval.

As a reminder, dry eye disease affects approximately 38 million people in the U S alone of more than $17 million of these individuals have been diagnosed.

Currently under the care of an ophthalmologist and optometrist.

Based on our research an estimated 75% of patients have never tried the prescription therapy and the only approximately 10 percentage of patients are currently on a prescription chronic dry eye medication.

Across multiple large quantitative market research studies, approximately 80% of dry eye disease patients reported that they suffer from episodic flares, which translates to approximately $14 million of the diagnosed dry eye patient population in the U S.

Prior to the launch of <unk>, there were no FDA approved prescription treatment options with the clinical profile of targeted to treat episodic symptoms of dry eye disease.

Our market research indicates that the availability of a rapid acting short term prescription therapy to treat episodic players has the potential to become the preferred first line prescription therapy to treat model of the modern dry eye disease, which represents the majority of diagnosed patients.

Redesigned our launch priorities with the focus on three key objectives.

First educate eye care professionals on the episodic nature of dry eye disease.

The established <unk> as the preferred first line prescription therapy for the short term treatment of dry eye flares and third ensure optimal access and broad payer coverage.

The commercial team has been executing against all of these priorities.

<unk> already begun to see the early results of their hard work.

Last week, we were pleased to announce that I see this was added to express scripts national preferred basic and high performance formularies.

Three of our success in securing coverage price service at ESI, just one month into launch indicates the payer anticipation of significant demand for Ais service.

Gaining market access coverage of commercial payers as a core part of our launch strategy in 2021.

Commercial payers make up the largest proportion of dry eye prescriptions and patients with mild to moderate dry eye disease are typically younger and are more likely to have commercial health insurance.

We believe commercial payer coverage for our service will be a key driver of prescription growth. We expect our commercial formulary coverage to continue to expand in the coming weeks and months.

We're also seeing promising week over week growth from prescription demand since launch.

For the week ending February 12, only six weeks into our launch an aggregate of more than 2200, Ais service prescriptions have been filled and we have had over 550 eyecare professionals already prescribed by service.

These figures reflect the data from book Symphony Health and the <unk> service I save program Collins patient hub.

We are also encouraged by the initial feedback we are receiving from eyecare professionals the.

The feedback speaks to the efficacy of by service further confirming the results from our clinical trials for.

For example, doctors of share that patients are experiencing of rapid onset of action.

Patients of also given the feedback that I services, a very comfortable I dropped to administer.

We believe the early positive experiences by doctors and patients will help us establish the service is the preferred first line prescription therapy for dry eye disease.

All in all we are very pleased with the launch to date and I look forward to updating you on our progress in the months of head.

I'll now provide an update on adult us our twice daily post surgical ocular steroid.

In the fourth quarter, there were approximately 41000 prescriptions of <unk> reported by Symphony Health, which represents an increase of 8% compared to the third quarter of 2020.

This was driven primarily as a result of increased sales effort and fewer COVID-19 related restrictions on elective procedures, including ocular surgeries in Q4 compared to Q3.

Despite the challenges the pandemic presented throughout the year, we achieved solid prescription growth for <unk> in 2020.

For the full year 2020, there were approximately 143000 prescriptions of <unk> reported by Symphony Health.

This is an increase of approximately 11% compared to 2019.

We continue to have strong commercial coverage for <unk> with more than 80% of commercial lives covered.

We believe that <unk> prescriptions and revenues will grow over time. However, we remain unable to project the specific timing or quantify the potential impact on future revenues given the continued uncertainty around the impact and duration of the COVID-19 pandemic on elective procedures.

While we believe net revenues from delta's could continue to be negatively impacted in 2021, we remain optimistic about the future growth potential from dealt us.

And with that I'd like to turn the call over to Ken now to go through all of our pipeline.

Thank you Todd.

I'm excited to update our early stage pipeline, which as Mark mentioned the includes multiple proprietary preclinical candidates targeting the diseases, both front and back of the <unk>.

We're currently evaluating three internal preclinical program.

Like the glucocorticoid receptor modulator or spectrum.

Selective small molecule tyrosine kinase inhibitor targeting the EGF and then ocular surface targeted steroids.

We are particularly excited about the potential of our spectrum program as it could provide novel therapies for both front and back of the App.

As you are aware of traditional corticosteroids work the activation of the glucocorticoid receptor.

Which stimulates gene expression of along two pathways the transfer of pressure pathway and the trans activation pathway.

The mounting evidence that the trends were pressured pathway of loan may be sufficient for anti inflammatory and immuno modular toy of activity with the trans activation pathway being primarily responsible for the untoward effects, often seen with ocular and systemic corticosteroids such as the elevated in truck.

Of the pressure of hypertension osteoporosis with.

With our second program, we have designed a novel class of compounds that can selectively activate the transfer of parish of pathway to maximize the anti inflammatory activity, while limiting activation of the trans activation pathway to minimize the untoward effects.

We believe that this approach has the potential to deliver anti inflammatory activity comparable to the head of current corticosteroids without the associated side effects. We further believe the the safe and effective several of them compound would have significant utility in the treatment of diseases of the front of the eye.

Such as dry eye disease of other ocular surface inflammatory diseases as well as a variety of retinal diseases, where inflammation is a critical component.

We're targeting of identification of the development candidate for our second program by the end of this year.

And our tyrosine kinase inhibitor program, we have developed a proprietary highly selective and potent lead compound which has demonstrated some animal work in vitro potency against the Verde Jeff.

Chapter two kinase and good selectivity against many of the of target receptor effects.

We have demonstrated compelling preclinical pharmacokinetics and efficacy data in relevant animal models and are exploring both comparable.

And from virtual delivery approaches.

We believe that are of tyrosine kinase inhibitor program can provide new and exciting therapies for retinal diseases.

Cheers, AMD and diabetic eye disease our.

Our team is excited by the possibility that these programs provide for new and exciting therapies. We're continually we're continuing to progress and evaluate each program as part of our portfolio assessment and anticipate providing an update on these programs of the coming months.

I'd like to now pass the call to Mary to go over the financial results.

Thanks Kim.

During this discussion of our financial results I will reference certain non-GAAP financial measures. These non-GAAP financial measures exclude stock based compensation non cash interest expense and depreciation and amortization for a full reconciliation of our GAAP to non-GAAP financial measures. Please refer to today's press release, which is available on our website.

Our cash position as of December 31, 2020, with $153 $5 million compared to $85 4 million as of December 31, 2019.

This increase reflects net proceeds of approximately $158 6 million received from our underwritten public offering of common stock in March 2020, as well as sales of common stock under our ATM offering program in 2020, partially offset by cash used in operations.

We anticipate that our cash resources as of December 31, 2020, together with anticipated and felt this revenue and the $18 2 million in net proceeds we raised in January of 2021 under our ATM offering program will enable us to fund our operations into at least the fourth quarter of 2022.

We also expect that anticipated revenue generated from sales of ICU beds will provide additional cash runway.

For the fourth quarter of 2020, we reported net product revenues of $2 2 million, which is comprised of $1 9 million of net revenues from adult day sales and 300000 of net revenue from the sale.

As a reminder, we recognize revenue when product is shipped to wholesalers.

Our fourth quarter 2020, net revenues of $2 2 million as compared to $1 2 million from the belt. This in the fourth quarter of 2019 or an increase of $1 million from the same period last year.

Cost of product revenues for the fourth quarter of 2020 with $1 4 million compared to 700000 for the same period in 2019.

Included in cost of product revenues and due to COVID-19, with the reserve of 500000 for excess and felt the inventory.

Non-GAAP cost of product revenues was $1 3 million for the fourth quarter of 2020 compared to 600000 per the same period in 2019.

SG&A expenses for the fourth quarter of 2020 were $26 5 million compared to $14 5 million for the same period in 2019.

The increase was primarily due to an increase in costs related to preparing for the launch of ICU beds, including the expansion of the sales force and increased stock based compensation costs.

Non-GAAP SG&A expenses were $23 1 million for the fourth quarter of 2020 compared to $12 7 million for the same period in 2019.

R&D expenses for the fourth quarter of 2020 were $3 4 million compared to $6 1 million for the same period in 2019.

This decrease was primarily due to a decrease in external spend on our phase III clinical trial of ICU beds.

Non-GAAP R&D expenses were $2 5 million for the fourth quarter of 2020 compared to $5 5 million for the same period in 2019.

Loss from operations for the fourth quarter of 2020 was 29 million compared to $20 2 million for the same period in 2019.

Non-GAAP operating loss was $24 7 million for the fourth quarter of 2020 compared to $17 6 million for the same period in 2019.

Net loss for the fourth quarter of 2020 was $31 1 million or 55 cents per share compared to a net loss of $22 million or 63 cents per share for the same period in 2019.

Non-GAAP net loss was $26 5 million for the fourth quarter of 2020 compared to $19 2 million for the same period in 2019.

Please refer to today's press release for the weighted average number of shares used in the calculation of our net loss per share for each of the quarterly and yearly periods discussed.

That concludes our prepared remarks for today I will now pass the call over to the operator for questions.

Ladies and gentlemen, thank you of a question of our comment at this time. Please press. The Star then the one key on your Touchtone telephone. If your question has been answered or you wish to move yourself from the queue. Please press the pound key.

Our first question comes from Christopher New York with JP Morgan.

Yes.

Good morning, and congrats on the express scripts contract first.

First question's on a series of payer contracting kind of just talked about the potential for adding the formulary coverage in the coming weeks and months acknowledging that these are ongoing negotiations can you speak to what gives you confidence and additional contracts and what aspects of ICU business profile appears found attractive and initial discussions.

I'll start and then I'll have one follow up.

Hey, Chris Good morning, It's Todd base more.

So to your first question.

What I would say is that we are deep into those discussions and negotiations with other large commercial payers were quite happy of where those discussions currently are very optimistic.

And that will be successful and get additional ads.

And also with the ESI contract that also gives us access to all of their custom clients. So there are a number of additional lives under the ASI umbrella that have the ability to access the contract that we have in place, which will continue to help of skilled coverage in the coming weeks and months ahead. So we just saw.

Really good about where we are in all of those discussions and expect to continue to improve commercial access here in 2021.

Great that's helpful.

The second question's on the I see the Salesforce of what impact are you seeing from COVID-19 on the initial product launch and specifically are there any limitations on face to face marketing.

It seems like you might be seeing the benefit from the early vaccination of physicians.

A physician office staffs of.

Perhaps maybe any color on what impact that may be having.

Yeah look we've been really really pleased with the response to our sales force of the launch of my service as you know we have set ourselves up to be able to do both of them in person face to face of promotion as well as a full suite of virtual promotional tactics of available that hasnt been said six weeks from to launch.

90% of our sales interactions are face to face with eye care professionals. So we're seeing really really great receptivity, we're getting in to see most of our customers face to face.

It means we're able to deliver a sales presentation and make sure they have a super samples.

So we're just really happy with 40 of that is calling and we can expect it to only to continue doing true to your point is more of as more and more of the MS population becomes vaccinated.

That's great. Thanks for the questions.

Okay. Thank you.

Our next question comes from Andreas <unk> with Wedbush Securities.

Good morning, everyone.

For taking our question I'm on for Leon in the surface.

Good question regarding the.

The previous question was on the formulary access the congrats by the way and could you maybe just talk about what factors.

Went in to that.

And how do you now anticipate.

The ramp of the launch.

Kind of changing as a result, and then I had one more follow up.

Sure. Good morning, Andreas good questions. What I can tell you of has got in all of our clinical presentations to the payers that we have met with today.

The good recognition of the clinical differentiation of ice service in the marketplace.

Based one on its indication right you make indication as the army a rapid acting short term treatment approved for the signs of surplus of dry eye disease, and then obviously because of the clinical data. The supported approval of the fact that we show a very rapid onset of action great resolution of signs and symptoms.

The only big years for two weeks. So that's being recognized is unique by payers.

We are actually having great success with payers actually carving out a unique.

Place in their formularies for Ais service as the only short term acute dry eye medication that's available.

And those conversations are just gone really well.

And it sounds like you may have a follow up question.

Yes, sorry, I was on mute.

Okay, and just looking looking ahead of the pipeline and the wet AMD program in particular.

Two.

You mentioned that there may be there are two routes that you may go topical and which are vitriol.

Topical <unk> of had some setbacks in the past.

What is it about.

It can be one of the the ample of Pfizer Guernsey, but what have you seen specifically the gives you confidence on.

The topical is the viable route.

The administration and how do you see.

A topical treatment, whether it's a couple of times of day.

Being a sort of an issue via compliance.

Or not thank.

Thank you.

Yes. This is Kim brazzell.

Ill try my best to answer your question first of all we've done a great deal of the.

The pharmacokinetic and preclinical efficacy evaluations.

Of our topical Teekay huh.

And as the start the.

The compound was designed specifically for use in the eye by scientists at Kala, we've shown with topical administration, we get concentrations.

But we're well above that that's needed for efficacy by the IC 50, but interestingly also with similar or higher concentrations that have been shown in animal studies.

With the current inserts that are delivered intra viscerally into the yard.

So we think that we have robust preclinical data.

We're continuing to generate data and analyze this and also look at the option of doing.

And then sort of as well, but we think both products would.

Have a significant place in the treatment arm and arm of the Terry of topical product would allow sort of maintenance therapy for patients.

Net.

Don't want to or can't.

Get the frequent electric vitriol injections that are required.

For maintaining the diseases, such as the AMD and so forth.

The logistical.

The issues and so forth makes it difficult for some patients. It also could have applicability.

And patients that have significant A&D in one eye and are developing.

Wet AMD and the other to slow the progression of that so we see significant opportunities.

With this product and still have work to do to get it to the next step of going.

Moving into full development.

Great. Thank you for taking my questions and congrats on the quarter and progress in many of you. Thank you.

Thank you.

Our next question comes from Frank <unk> with Oppenheimer.

Alright, thanks for taking the questions I was just wondering you guys mentioned the 550 eye care professionals that have prescribed already.

Can you discuss that's 550 out of how many are you targeting again and and how concentrated is it is there a couple of that there're a couple of the prescribed quite a bit more than others or how much granularity there.

In that number and then I'll have a follow up.

Hi, Frank Good morning, it's Todd.

Most of your first question, we are targeting required 91 represent of that was about 12000 eyecare professionals right now.

It's pretty evenly mixed between ophthalmologists and optometrists.

So the 550 prescribers that have come on board already.

I would describe that as we've got good broad prescribing across the overall group.

So were try I think with this initial group as they're seeing patients that are suffering players.

The guidance using not only prescribing, but also we've put a lot of samples into the market. So we're getting a lot of clinical experience from the samples that we've put out there as well.

Of the feedback has been overwhelmingly positive.

With our patient starter kits, we had of feedback mechanism that one there was at the patient. The early experience kits will provided the patients doctors were able to collect clinical feedback from the patient as to how they were doing and.

The two most common themes of patients have reported back from those early experience programs is that the experienced a very rapid onset of action of the drug worked very quickly to relieve their symptoms and then it's a very comfortable eye drop that theyre not experiencing any tolerability issues with burning or stinging the blurred vision.

So just really really positive feedback that's been reinforcing Utah.

Utilization of my service with the eye care professionals.

Okay, Okay, great and then on the reimbursement side Congrats on express scripts obviously.

That seems is that kind of quicker than expectations. It seems pretty quick into launch and.

What other big players are there out there how much of express scripts kind of cover in terms of commercial side of the percentage there and then if you can just remind us again.

If you compare it to the generic or generic steroids that arent necessarily the cheapest either can you just talk about the co pay that.

The necessary with the coverage here compared to generic steroids and and basically you know year of programs that maybe help with the co pay and how much debt.

Penalize you I guess, so just more on the reimbursement side.

Sure. So to your first question, yes, we feel like this initial.

I see this coverage came very quickly only 30 days after the launch it is very common for new product launches with the three large pbms to not be reviewed for the first six months of it on the market quite often.

The Pbms will pick sort of the six month, new to market block, where they don't even consider adding new from formulary.

That has not been the case, we are deep into discussions with all three of the major Pbms ESI, Cvs Caremark and often the United and we're very pleased with the way those discussions are progressing and are optimistic as I said that we're going to continue to grow our access here in the <unk>.

Coming weeks and months.

So we feel really good about that.

The second part of your question Frank could you remind me what it was.

Yeah, just in terms of the co pay just to help us.

For some of it might be higher but you don't have a program to help with the co pay so just remind us when you compare it to the generic steroids in the market.

Yes.

Believers the ESI contract again, it depends on the patient specific health plan the benefit design within that plan, but the range of potential copays could be anywhere from 25 to $75, but as you know we have a co pay program that we've put out there for commercial patients.

Were they never have to pay more than $40. We can buy the co pay down to 40.

The net effect of that means essentially that most of those patients should end up with the co pay somewhere in the 25% to $40 range again, depending on their health plan in.

The feedback we've gotten from speaking with eye care professionals is that's a very reasonable, particularly considering that I share versus an acute medications used in the short term basis and most patients may only need two or three prescriptions per year.

Unlike chronic medications, where they have to refill the prescription of every month and incur the co pay cost or expense every single month.

Okay, Okay, great that's very helpful.

I can I'll sneak in a real quick one here you guys mentioned the you know we can track the scripts through Symphony.

It seems like there's obviously some scripts not only symphony that especially with the patient hub, especially early in the launch.

Is it fair to say it seems like most scripts, though are through our reported through symphony at this point or I'm, just trying to gauge the percentage that it's still hard for us the track because of the patient hub.

Yeah really good question and we did launch of a patient that's the <unk> program, which is our internal patient home most of the most of the scripts are getting captured by Symphony of there are some scripts that get filled directly through the hub. The do not report after the symphony.

And then I think the other thing to keep the monitors that hub the set up sort of that doctors can send the prescriptions to the hub of it may not that may require rather of a prior authorization approval.

That patients particular health plan, there is not yet covering a service and so in addition to the 2200 prescriptions that you've seen reported from Symphony of already there is another 200 prescriptions that have been sent to a patient hub that are somewhere in the process of working through prior authorization approval. So that we can free secure.

Insurance coverage for those patients and they can go and get their prescriptions filled.

The local retail pharmacy.

When you think about the script Youre seeing reported through symphony that had been filled thank all of them probably another 50% volume on top of that of demand. That's been prescribed that's working somewhere through the prior off process at our patient hub.

Okay. That's extremely helpful. Thank you.

Sure. Thank you Brent.

Our next question comes from Byron the men with Jefferies.

Yeah, Hi, guys. Thanks for taking my questions, maybe could you comment on the prescribers that have written for service.

Service and just your outreach there and.

Yeah, you know I guess their incentive and writing price service or are these mainly high prescribers in dry eye disease.

Anything you could provide in terms of color.

In terms of the the prescribing base currently thanks.

Yeah sure happy to do so and good morning.

So a couple of things at this point, we're still really early in March. So we have still had gotten to a little less than half of our target of Jai positions that we've had a chance to get at least one sales call on.

And most of them, we got the opportunity of the jobs samples that have called on have also received the sample.

So we're really happy with the early uptake considering that we still have half of our targeted physicians to get true here in the second half of the first quarter.

With those of it started prescribing the 550 of the prescribed to date that split is about 55% optometrist and 45% ophthalmologist. So we are seeing.

Optometrist really sort of stepping forward as early adopters were not surprised by that right. Because we've always said in the past that optometrist tend to treat of higher volume of patients with more mild to moderate dry eye disease that are more likely to present with more episodic manifestation of their symptoms and our probably I'd.

Oh candidates for short term treatment growth of a drug like I'm sure. There's a few times of year.

Certainly that's what we're seeing in terms of sort of the mix of prescribing. We definitely are seeing the higher decile think of what it does all of seven to 10 doctors being the ones that are coming on first.

Actually Trialing our service, but is the Salesforce gets further reach and starts calling on doctors in the lower to mid day cycles.

Expect to have the start prescribing as well, it's just a matter of needing more time in territory. So we can reach more of our targeted physicians.

And then with regards to the hub you mentioned previously that about 50% or of.

Of the 2200 of scripts you have another I think 1200 scripts that are in the hub of waiting for reimbursement to come through with prior often such typically how long does it take.

To navigate through that and I guess and then another question is.

All of the scripts written so far has primarily been Ah patients.

On private insurance.

And I guess, if you could give us the split between private insurance versus government insurance.

Yes really good questions.

The prior off process, we're finding can take anywhere from a week to true.

Depending on the the patients health plan from times also it could depend on how quickly the doctor's office gets back if there's additional information of what they have to provide to the insurance plan for that patient in order to secure approval.

So.

You could probably reasonable to assume it can take up to a couple of weeks to work through that process.

In terms of the early split it is skewing predominantly to commercial.

I think the early on at least for the prescriptions are getting filled upwards of 70 per cent of those prescriptions of from commercial payers.

Okay and then maybe just one last question from me I know.

The company is probably not going to provide annual sales guidance.

But how should we think about the.

The service launch currently if I look at consensus total sales of 37 million across both of the service in <unk> and if we assume nine of $10 million per envelop. The is that kind of suggests that I sort of if consensus is around $27 million to $28 million, so given where you're at with the first six weeks.

Do you think we're thinking about the I service launched the right way with the consensus of about 27 of $28 million.

Hey, Brian it's Mark Thanks for the question.

We're really excited by the the early uptake and in particular the feedback it was great to get the Esa ESI contract as well.

So I feel like we're on a good track it certainly will be great if the.

The pandemic starts to subside or the vaccinations really take hold and.

We are hoping that the surgery of market will rebound a bit in delta's performance has been robust, but the market is.

It's still significantly down and also has an impact on on launching I assume it's obviously as procedures within the offices are altered versus the normal interactions at the sales professionals can have so.

We believe that we're seeing all of the right signs and hopeful that we'll be able to have a strong year.

Great. Thanks, Thanks for taking my questions.

Thank you. The next question. Our next question comes from reaching with H C. Wainwright.

Thank you for taking my questions. First question is when do you plan to increase the sales team for the soup is is it in any way related to.

Increasing formulary access.

Hey, good morning, it's Todd.

We're conducting those assessments right now we haven't determined the final timing of expanding the sales force that second wave of expansion to get to approximately 125 reps.

I'd say the two major determinants of the timing of that one is what you say of great, which is securing additional payer access and we're very pleased with that payer coverage looks like it's coming quicker than what we had even initially anticipated and then secondly would be where we stand with the pandemic and the <unk>.

<unk> of its having on patient flows into the office and the.

As we continue to assess those two things in the and feel like we're in a good position. We know that we can very quickly pull the trigger of the began the expansion to.

To grow the sales force.

But more to come on the specific timing.

Got it and could you. Please comment on the trend of ocular surgeries in the past two months.

Yes, the death.

The only has been negatively impacted by the the increases that we've seen I think we've sort of seen two additional spikes in COVID-19 cases across the country post the holidays right. There was sort of net post Thanksgiving holiday break Spike and then another one that occurred after the Christmas holidays.

<unk> has definitely created some headwinds because of the number of surgical procedures those continued to be down.

As Mark said, a little bit earlier, we're really happy with and delta's performance within the market.

At around 11 in the half percent branded new prescription market share.

So with near of our sort of all time high in Rx market share for adult us, but that's the market share in a currently declined market because of the COVID-19 impact on the number of electric procedures that are occurring but that's also why we're really optimistic because of the belt. This has performed so well.

Once we get a significant portion of the population vaccinated in surgical volume returns to the pre COVID-19 levels, we're very optimistic about adult as potential growth in the future.

Got it last question the with respect to the Teekay candidate in the pipeline for wet AMD is it going to be a long acting treatment.

Hello.

As we've said.

Said earlier, we're really right now looking at the two options one big that of topical treatment that would be given all of the daily basis of the other would be.

And then for victory of sustained release delivery, which we would target for six to nine months or even longer. So we're currently evaluating both approaches we think both have.

Have the advantages and would have a unique position in the marketplace.

Thank you.

Our next question comes from Tim Chiang with Northland Securities.

I think.

Mark could you just comment on the sampling program or all of the prescriptions that youre seeing so far all coming from samples or are you seeing prescriptions being written.

From some of your high prescribing eye care professionals.

Even without the samples.

Some of it.

Hey, Tim This is Todd I'm happy to comment on that.

One just to be clear of the prescription you were seeing reported by Symphony our actual prescriptions. So that's not free product that's been given away.

Bring up a really good point there had been prior launches within the dry eye category.

Where the prescriptions that were generated certainly in the.

First couple of quarters of launch was a lot of free product that was being giveaway at the pharmacy that is not what we're doing here. So these are actual prescriptions that are being written and filled at the.

The pharmacy for these patients.

As to whether or not.

The prescriptions of being written with or without of sample being handled the hull.

We think theres a lot of sampling going on right now we've made sure we've put a lot of samples into the marketplace. Because we think in the early days of launch while we're securing broad market access coverage, we want to make sure. The doctors have samples that they can get the patients to start developing that clinical experience and that does include that sometimes the patient.

And sort of being given the sample and the prescriptions being written.

So that they can use the sample from the first few days because of our sample size of simple bottle size is smaller than the trade bottle size.

And then going to fill that prescription so they can continue the tree.

The rest of the duration of that from there.

Oh interesting Todd.

Maybe just one follow up then you know how how many of the face to face meetings that your sales force is having with eye care professionals are leading to.

The immediate.

Leading to an immediate impact I E prescriptions being filled literally that day or that week.

Are you guys tracking that and I was just wondering how many of your prescriptions are you actually seeing through virtual.

Marketing efforts.

Yes.

Tim We haven't commented specifically on that.

We're just trying to get that as well.

How quickly after sales presentations of delivered.

Prescription start being generated and I think.

The easy answer to that would be it sort of depends right. If you've got good coverage within that practice, particularly now with the ESI formulary win then there's an opportunity of the prescribed more quickly if it's an area where maybe the.

Of the coverage still isn't where we expect it to be here in the coming months than what may be happening as the doctor may be giving out samples. So that they can start using the product right away and their patients.

I think it all and all of what we're really happy with is the early response and the feedback from both eye care professionals and patients whether it was the prescription that was written or samples that were given out the clinical response has been overwhelmingly positive.

We think in highly symptomatic conditions like dry eye is going to be really important for generating additional use of prescribing in the future.

Just one last question and then Todd I mean price isn't coming back you're not coming back with feedback from physicians. The thing that price is an issue here then for IC with is that right.

Look we have as I said earlier.

Our contracted position ESI and use of our co pay card the vast majority of patients co pay should be somewhere between 25% and $40 and that's been received as being.

The people find that the bureau of acceptable.

And as I said earlier, particularly when you consider this as an acute medication the patients only have to fill probably two or three prescriptions per year.

That's considered very reasonable comparing them out.

Very good thanks Todd.

Okay.

Again, ladies and gentlemen, a couple of question or comment at this time. Please press. The Star then the one key on your Touchtone telephone.

The next question is a follow up questions from the Frank brisk voice with uptime.

Yes.

Hey, just a quick follow up here can you compare and contrast, the gross to net expectations between service and and all of this thanks.

Yeah, Frank I'm happy to jump in and we're not giving specific gross to net numbers.

As we have guided in the past, we do not expect by the service to face some of the same gross to net pressures that have both the stated during launch.

Because the market dynamics are just very different in the post surgical market versus the July market, which was much more of the traditional retail market.

Largely driven by commercial insurance, whereas in the surgical market.

It's much more impacted by Medicare and in the <unk> market. The type of programs, we run out of rollout for patient access, particularly from the Medicare patients that are having cataract surgery put a lot more pressure on the gross to nets.

So we do expect that the gross to naturally service will be more favorable than what we saw during the end of this launch.

Great. Thanks.

Sure.

And I'm not showing any further questions at this time I'd like to turn the call back over to Mark.

Thank you very much operator, we appreciate everyone. Joining this morning, the past 12 months as Mark many milestones for Kala and we're really looking forward to a strong 2021, we're focused on driving the uptake of the service and are pleased with the early launch trends. So thank you very much and we look forward the.

Updating everyone soon.

Hello, Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

Okay.