Q4 2020 Ocular Therapeutix Inc Earnings Call
Thank you.
Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Ocular Therapeutix 4th Quarter and Year-End 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question and answer session, and instructions will follow at that time. It is now my pleasure to turn the call over to Donald Notman, Chief Financial Officer of Ocular Therapeutix. Please go ahead, sir.
And welcome everyone ocular Therapeutics fourth quarter and year-end earnings report on all accounts. It was a as a great quarter capping a notable year for ocular despite the challenges due to the global package ocular made tremendous progress with the commercial uptake of dextenza as well as advancing our pipeline of product candidates being developed Target several of the largest market opportunities and Ophthalmology off for all of our success this past year. I would like to thank our dedicated employees are patients in clinical investigators, the hundreds of individuals involved in our clinical trials and our investors. Thank you all month beginning with extensive this past quarter. We have seen dextenza net sales rise to six point nine million dollars for the fourth quarter 2020 which represents more than 25% growth off the previous quarter and the more than 330% increase year-over-year comparison.
Donald Notman: Thank you, Valerie. Good afternoon, everyone, and thank you for joining us on our fourth quarter and year-end 2020 financial results and business update conference call. This afternoon, after the close, we issued a press release providing an update on the company's product development programs and details of the company's financial results for the quarter and year-ended December 31, 2020. Press release can be accessed on the investors portion of our website at investors.ocutx.com. Leading the call today will be Antony Mattessich, our Chief Executive Officer, who will provide a summary of our corporate developments and an update on the commercial progress of Dextensa.
Going forward we expect dextenza to be an increasingly significant net contributor to the company's cash position.
Donald Notman: Also speaking on the call today will be Dr. Michael Goldstein, our President of Ophthalmology and Chief Medical Officer, who will give an update on our clinical developments and pipeline. Following Michael's remarks, I will provide an overview of the financial highlights for the fourth quarter before turning the call back over to Antony for a summary and questions. For Q&A, we will also be joined by Patricia Kitchen, our Chief Operating Officer, and Scott Corning, our Senior Vice President of Commercial.
Well, we have no hard data to determine cataract volumes in the US. We are aware of a number of closures in slow downs in Kia SCS and particular h o p d s in response to the recent Spike and COVID-19 KO the bulk of these actions took place in January and February of this year. Fortunately the extends in market sales that is sales from Distributors to ASCS. And these were bought a billable units near $9,500 for the first two months of the year representing a greater than 10% increase over the first two months of the fourth quarter and nearly a 230% increase over a year.
Donald Notman: As a reminder, on today's call, certain statements we will be making may be considered forward-looking for the purposes of the Private Securities Litigation Reform Act of 1995. In particular, any statements regarding our regulatory and product development plan, as well as our research activities, are forward-looking statements. These statements are subject to a variety of risks and uncertainties that may cause actual results to differ from those forecasted.
Clearly despite the pandemic extenders increasing share of cataract volume continues to drive impressive growth in the final three quarters of the year. We expect what was a headwind incorrect volumes to become a Tailwind as the backlog of the late procedures get scheduled into the market in addition to the normal flow of procedures contributing to the growth of extended our two key factors.
Antony Mattessich: , including those described in our most recent annual report on Form 10-K, filed this afternoon with the FDA. I will now turn the call over to, Thank you, Donald, and welcome, everyone, to Ocular Therapeutix's fourth quarter and year-end earnings. On all accounts, it was a great quarter, capping a notable year for Ocular, despite the challenges due to the global pandemic.
First and most importantly extends is a highly differentiated to differentiate it specialty Ophthalmology product that relieves the daily steroid drop burden in the treatment of inflammation and pain following up with the awareness and appreciation of the products benefits continues to grow both within the physician and patient communities. Your product is simply performing as we had hoped secondly extensive also becoming easier to use for a s c h o p d we have had tremendous success partnering with administrators and working through issues related to reimbursement of both the product dextenza and the Associated Press your code 03560 in particular. We've been able to work with the max in standardizing payment 4035 $60, and I'm now pleased to let you know now have coverage in all 7 max representing one hundred percent of the country.
Antony Mattessich: Ocular made tremendous progress with the commercial uptake of Dextenza, as well as advancing our pipeline of product candidates being developed to target several of the largest market opportunities in ophthalmology. For all of our success this past year, I would like to thank our dedicated employees, our patients and clinical investigators, the hundreds of individuals involved in our clinical trials, and our investors. Thank you all.
Antony Mattessich: Beginning with Dextenza, this past quarter, we have seen Dextenza net sales rise to $6.9 million for the fourth quarter of 2020, which represents more than 25% growth over the previous quarter and more than 330% increase year-over-year. Going forward, we expect Extensa to be an increasingly significant net contributor to the company's cash revenue. While we have no hard data to determine cataract volumes in the U.S., we are aware of a number of closures and slowdowns in key ASCs, in particular HOPDs, in response to the recent spike in COVID cases. The bulk of these actions took place in January and February of this year.
Additionally in November we announced the receipt of a permanent category 1 CPT code for the placement of drug-eluting inserts. And then as well. Formal calculus, it is scheduled to become effective in January of 2022 month. This new code is expected to replace the existing code 0356 T and facilitate the coding and payment across all sites of service longer-term the category one status for the wager of instituting inserting a drug-eluting insert into the national animal kennel Nicholas. So there was immediate potential benefits for dextenza, but also for our to dry programs. Roof which used the same route of administration and any other programs that we may develop which use and intracanalicular root of delivery.
Antony Mattessich: Unfortunately, it extends to in-market sales, that is, sales from distributors to ASCs and HOPDs were brisk. Billable units were nearly 9,500 for the first two months of the year, representing a greater than 10% increase over the first two months of the fourth quarter and nearly a 230% increase over the prior year. Clearly, despite the pandemic, Extend's increasing share of cataract volume continues to drive impressive growth. In the final three quarters of the year, we expect what was a headwind in cataract volumes to become a tailwind as the backlog of delayed procedures gets scheduled into the market in addition to the normal flow of procedures. Contributing to the growth of Dick's Tendon are two key factors.
I should also note here that.
Getting in the second quarter this year. We plan to continue reporting our quarterly net sales to Distributors for dextenza, but expect to no longer report on our monthly in-market sales and billable units. It's a way of season each opd's we realized during the launch. We needed to provide an extraordinary level of detail to our investors. So included this monthly in-market figure in billable units to give a better sense of performance while Distributors adjusted inventories to ensure product availability. Now that our sales volume is reached is current level sales from ocular to a specialty distribution and sales from specialty Distributors to the end-customer closely parallel each other to avoid confusion and protect our competitively sensitive data. We plan to return to the industry standard of proportion only on net sales to our specialty distributors.
Antony Mattessich: First, and most importantly, it is a highly differentiated specialty ophthalmology product that relieves the daily steroid drop burden in the treatment of inflammation and pain following ophthalmic surgery. The awareness and appreciation of the product's benefits continue to grow, both within the physician and patient communities. The product is simply performing as we had hoped. Secondly, Xtensa is also becoming easier to use for ASCs and HOPDs.
Beyond extends that we continue to make excellent progress advancing our pipeline at the start of the year we presented at angiogenesis and glaucoma 360 reporting promising interim Phase 1 data off both otx tki for the treatment of wet age-related macular degeneration and other retinal diseases and otx t i c for the reduction of intraocular pressure in patients with primary open-angle glaucoma or ocular hypertension on the dry eye front. We announced Phase 1 results in otx ESI for the treatment of dry eye disease in September and we subsequently dose. The first patient wage is to trial in September for OTS DED. We design designed for short-term treatment of signs and symptoms of dry eye disease. We successfully filed a phase to enable a i n d at the end of December and have just announced dosing of the first patient at the end of February.
Antony Mattessich: We have had tremendous success partnering with administrators and working through issues related to reimbursement for both the product, Dextensa, and the associated procedure code, 0356T. In particular... We've been able to work with the MAs in standardizing payment for 0356T. And I'm now pleased to let you know that we now have coverage in all seven MACs, representing 100% of the country. Additionally, in November, we announced the receipt of a permanent Category 1 CPT code for the placement of drug-eluting inserts in the nasolacrimal canaliculus that is scheduled to become effective in January of 2022.
Antony Mattessich: This new code is expected to replace the existing code, 03560, and facilitate the coding and payment across all sites of service. Longer-term, Category 1 status for the procedure of inserting a drug-eluting insert into the nasolacrimal canaliculus delivers immediate potential benefits for Dextenza, but also for our two dry eye programs. If approved, which use the same route of administration, and any other programs that we may develop, which use an intercalcular route of delivery. I should also note here that, beginning in the second quarter this year, we plan to continue reporting our quarterly net sales to distributors for Dextensa but expect to no longer report on our monthly in-market.
Each of our four clinical programs represent highly differentiated opthamology Specialty Products candidates that address key unmet needs in their respective disease states that address the key segments of Global Market wage, but in aggregate are estimated it over 20 billion in annual sales.
Financially the company is in a strong financial position. We have completed an oversubscribed public offering in December that raised approximately $86 in net proceeds more recently. We took the initial upfront payment of $12 related to the collaboration. We entered into with a cement in the fourth quarter 2020 Beyond The Twelve million and upfront payments. We also have the potential to receive $99 million in future aggregate milestones and payments as well as Tier double digit royalties on future sales.
Antony Mattessich: In-market sales in billable units to...
Antony Mattessich: to ASCs and HOPDs. We realized during the launch period... Now that our sales volume has reached its current level, sales from Ocular to its specialty distributors and sales from specialty distributors to the end customer closely parallel each other. To avoid confusion and protect our competitively sensitive data, we plan to return to the industry standard of reporting only on net sales to our specialty distributors.
All of this strengthens our balance sheet are cash and cash equivalents along with our forecasted revenues from net sales of dextenza and restore sealant are protected to provide sufficient cash to fund planned operations Debt Service and capital expenditures through 2023. Most importantly, we believe our balance sheet is now sufficient to fund each of our for clinical programs to and through key is to clinical trials, which we believe could Mark and inflection point for us clearly. We're thrilled with our progress on all fronts, and we look forward to another productive year.
Antony Mattessich: Beyond Xtenza, we continue to make excellent progress advancing our pipeline. At the start of this year, we presented angiogenesis and glaucoma 360, reporting promising interim phase 1 data for both OTX-TKI for the treatment of wet, age-related macular degeneration and other retinal diseases, and OTX-TIC for the reduction of intraocular pressure in patients with primary open-angle glaucoma or o On the dry eye front, we announced phase 1 results for OTX-CSI for the treatment of dry eye disease in September.
Update on where we are.
Product candidates I will hand it over to our president of Ophthalmology and chief medical officer Dr. Michael Goldstein.
Thanks Anthony. Let me begin with an update on our back of the I program otx tki we continue to those subjects in a multicenter open-label dose escalation Phase 1 clinical trial being conducted in Australia that it's that it's designed to assess the safety and tolerability of otx tki as well as to assess preliminary biological activity in subjects by the anatomical and functional changes last month's we present it interim data from the study at the angiogenesis oxidation and degeneration 2021 virtual meeting with highlighting data from all three cohorts the first three cohorts cohort one 200 microgram cohort to 400 micrograms and cohort three hundred six hundred micrograms have now been fully enroll my cohort three be 400 micrograms of otx tki used in combination with anti-vegf induction therapy continued to enroll
Antony Mattessich: We subsequently dosed the first patient in a phase 2 trial in September for OTxDED, which we designed for short-term treatment of signs and symptoms of dry eye disease. We successfully filed a Phase II-enabling IND at the end of December and have just announced dosing of the first patient at the end of February. Each of our four clinical programs represents highly differentiated ophthalmology specialty product candidates that address key unmet needs in their respective disease states and address the key segments of global markets that, in aggregate, are estimated at over $20 billion in annual sales. Financially, the company is in a strong financial position.
Antony Mattessich: We completed an oversubscribed public offering in December that raised approximately $86 million in net proceeds. More recently, we received the initial upfront payment of $12 million related to the collaboration we entered into with AFMED in the fourth quarter of 2020. Beyond the $12 million in upfront payments, we also have the potential to receive $91 million in future aggregate milestones and payments, as well as tiered double-digit royalties on future sales. All of this strengthens our balance sheet.
We are seeing early signs of biological activity including decreases in retinal fluid in some subjects as early as two months following assertions in cohorts two and three. I additionally we are seeing a courage and durability of six months or longer in all cohorts and durability out to 13 and 1/2 months in one subject in court to
Otx TTI has generally been well tolerated with a favorable safety profile. No popular serious adverse event. No subjects with elevated intraocular pressure and no subjects need to treat ocular inflammation have been observed or reported to date while the drug product profile is still emerging. We were pleased with the interim data and otx TK is potential to return a rental and or subretinal fluid in terms of next steps. We now have an exploratory IND in place in the United States and we plan to initiate a randomized controlled clinical trial starting in the middle of the Year using a single six hundred micrograms otx tki implant along with anti-vegf induction therapy.
Antony Mattessich: Our cash and cash equivalents, along with our forecasted revenues from net sales of Dextensa and Reshore Steel, are projected to provide sufficient cash to fund our planned operations, debt service, and capital expenditures through 2023. Most importantly, we believe our balance sheet is now sufficient to fund each of our four clinical programs to and through key Phase II clinical trials, which we believe could mark an inflection point for us. Clearly, we're thrilled with our progress on all fronts, and we look forward to another productive year. For an update on where we are on these product candidates, I will hand it over to our President of Ophthalmology and Chief Medical Officer, Dr. Michael Goldstein. Thanks, Antony.
Moving to our glaucoma program otx T. I see in January. We presented interim Topline data from The Phase 1 clinical trial at the glaucoma 360 New Horizons Forum. The study is a phase one perspective multicenter open-label clinical trial enrolling subjects in the United States the primary open-angle glaucoma or ocular hypertension to evaluate the same biological activity durability and tolerability of otx t i c.
Unknown Attendee: Let me begin with an update on our back-of-the-eye program, OTX-TKI. We continue to treat those subjects in a multi-center, open-label, dose-escalation phase one clinical trial being conducted in Australia that is designed to assess the safety and tolerability of OTX-TKI, as well as to assess preliminary biological activity in subjects by measuring anatomical and functional changes. Last month, we presented interim data from the study at the Angiogenesis, Exudation, and Degeneration 2021 virtual meeting, highlighting data from all three cohorts.
Interim data from all four fully enrolled cohorts generally showed a mean reduction in intraocular pressure or from Baseline of seven to eleven that is comparable to offer standard of care topical travel across place in the non study. I onset of action is as early as two days after insertion interim results suggest durability of response consistent with decrease in high pressure out six to nine months in many subjects with one subject high pressure controlled 4/21 months with a single implant.
Unknown Attendee: The first three cohorts, Cohort 1, 200 micrograms, Cohort 2, 400 micrograms, and Cohort 3A, 600 micrograms, have now been fully enrolled, while Cohort 3B, 400 micrograms of OTX-TKI, used in combination with anti-VEGF induction therapy, continue to enroll. We are seeing early signs of biological activity, including decreases in retinal fluid in some subjects as early as two months, following Additionally, we are seeing encouraging durability of six months or longer in all cohorts, and durability of up to 13 and a half months in one subject in Cohort 2.
Otx T. I see it's
Generally been well tolerated and it's been observed have a favorable safety profile today. We have not seen the implant moved and it has been observed to buy a resort and five to seven months in cohorts one and two thousand and three to five months in cohorts three and four we've seen no clinically meaningful changes and corneal the chemistry or corneal endothelial cell counts overtime with the phase one study now fully enroll our attention turns to our plan Phase 2 clinical trial which we expect to initiate in the middle of 2021.
You're also making significant progress in our ocular surface disease programs which include product candidates for dried these and allergic conjunctivitis and dry eye. We have two programs otx SI, which is designed to increase tear production for The Chronic treatment of patients with dry eye disease and otx d e d which is designed to Target the short-term treatment of the signs and symptoms of diabetes.
Unknown Attendee: OTx TKI has generally been well tolerated with a favorable safety profile. No ocular serious adverse events, no subjects with elevated intraocular pressure, and no subjects needing steroids to treat ocular inflammation have been observed or reported to date. While the drug product profile is still emerging, we are pleased with the interim data and OTX-TKI's potential to reduce inter-retinal and or sub-retinal fluids. In terms of next steps, we now have an exploratory IND in place in the United States, and we plan to initiate a randomized controlled clinical trial starting in the middle of the year using a single 600-microgram OTX TKI implant along with anti-VEGF induction therapy.
Otx TSI is an intracanalicular insert which combines two modalities to treat dry eye patients. Loco programmed release of cyclosporine for approximately 3 to 4 months to the ocular surface thoughts along with inclusion over the same time. By releasing low doses of preservative-free cyclosporine over an extended duration of time otx. ESI has the potential to minimum of what we believe are some of the biggest patient complaints about commercially available products for The Chronic treatment of dry eye disease namely staying and burning we are very excited about the potential for this position administered hands free and preservative-free option and helping dry eye patients receive the benefits of cyclosporine, but with potentially greater tolerability and desired or more rapid onset of action compared to therapies currently available on the market.
Unknown Attendee: Moving on to our glaucoma program, OTX-TIC. In January, we presented interim top-line data from the Phase I clinical trial at the Glaucoma 360 New Horizons Forum. This study is a phase one, prospective, multi-center, open-label clinical trial enrolling subjects in the United States with primary open-angle glaucoma or ocular hypertension to evaluate the safety, biological activity, durability, and tolerability of OTX-TIC. Interim data from all four fully enrolled coverts generally showed a mean reduction in intraocular pressure, or IOP, from baseline of 7 to 11 millimeters that is comparable to current standard of care topical travel thrust placed in the non-study eye.
Calling the successful completion of a phase 1 clinical study, which we announced last quarter. We initiated a randomized multi-center clinical trial evaluating two different formulations of otx. ESI compared with hydrogel vehicle insert and approximately 140 subjects will be followed for a period of Sixteen weeks off and points in this study include tear production as measured by the server test signs of dry eye disease as measured by coil florestine standing and symptoms of dry eye disease as measured by the visual a scale. I drive the severity score and frequencies for
Unknown Attendee: Onset of action is as early as two days after insertion, and interim results suggest durability of response consistent with decrease in eye pressure out six to nine months in many subjects, with one subject's eye pressure controlled for over 21 months with a single implant. OTX-TIC has generally been well tolerated and has been observed to have a favorable safety profile to date. We have not seen the implant move, and it has been observed to bioresorb in five to seven months in cohorts one and two and in three to five months in cohorts three and four.
Ghosting enrollment has been going well and we were pleased to report that this study is progressing ahead of the initially planned schedule.
We now expect Topline data in the fourth quarter of 2021 ahead of the previous guidance of first half of 2022.
Or second product candidate and dry otx d e d is a low-dose intracanalicular insert a preservative free dexamethasone. Well incorporates the same active drug drug, it's extends off. This is a new product candidate with a lower dose of dexamethasone and smaller insert size many dry patients experienced episodic players of their signs and symptoms, which we believed are likely related to inflammation topical steroids have long been used off-label for dry players and all commercially available topical steroids have preservatives which can receive an ocular surface toxicity chronic misuse of steroids may also lead to Adverse Events such as elevated high pressure or cataracts.
Unknown Attendee: We have seen no clinically meaningful changes in corneal pachymetry or corneal endothelial cell counts over time. With the Phase I study now fully enrolled, our attention turns to our planned Phase II clinical trial, which we expect to initiate in the middle of 2021. We are also making significant progress in our ocular surface disease programs, which include product candidates for dry eye disease and allergic conjunctivitis. For dry eye, we have two programs, OTX-CSI, which is designed to increase tear production for the chronic treatment of patients with dry eye disease, and OTX-DED, which is designed to target the short-term treatment of the signs and symptoms of dry eye disease.
otx d e
The potentially offers these patients the opportunity to be treated with a physician administered preservative-free and hands-free steroid therapy. We recently announced that we had our first patient in a US based randomize double Mass vehicle controlled phase II multi-center clinical trial evaluating two different formulations of otx be compared with a hydrogel vehicle insert in approximately 150 subjects with dry a disease. This trial is designed to assess the safety and efficacy of otx d e d for the short-term treatment of signs symptoms of dry eye disease by evaluating full bar conjunctival hyperemia. I trying to score and frequency using a visual analog scale and total corneal fluorescein stain expect Topline data in the first half of 2022.
Unknown Attendee: OTX-CSI is an intracanalicular insert that combines two modalities to treat dry eye patients, local programmed release of cyclosporine for approximately 3-4 months on the ocular surface along with punctal occlusion over the same time period. By releasing low doses of preservative-free cyclosporine over an extended duration of time, OTX-CSI has the potential to minimize what we believe are some of the biggest patient complaints about commercially available products for the chronic treatment of dry disease, namely stinging and burning.
Lastly for dextenza for the treatment of ocular kitching associated with allergic conjunctivitis. We submitted a supplementary MD a governmental NDA at the end of twenty and have received a Paducah Target action date of October 18th, 2021. Overall. We believe that data package highlights a compelling product profile targeting an unmet need that could potentially change the current standard of care for the physician administered preservative-free and therapy for these patients this snda if approved represent our first in office indication for dextenza, I would now like to turn the call back over to Donald to review our fourth quarter and year-end Financial results.
Unknown Attendee: We are very excited about the potential for this physician-administered, hands-free, and preservative-free option in helping dry eye patients receive the benefits of cyclosporine but with potentially greater tolerability and desire for a more rapid onset of action compared to therapies currently available on the market. Following the successful completion of a Phase I clinical study, which we announced last quarter, we initiated a U.S.-based randomized mass, Phase II multi-sensor clinical trial evaluating two different formulations of OTX-DSI compared with hydrogel vehicle insert in approximately 140 subjects will be followed for a period of 16 weeks.
Unknown Attendee: Endpoints in this study include tear production, as measured by the Shermer test, signs of dry eye disease, as measured by corneal fluorescein staining, and symptoms of dry eye disease, as measured by the Visual Analog Scale Eye Dryness Severity Score and Frequency Score.
Thanks, Mike Gross product Revenue net of discounts rebates and returns which the company refers to as total net product. Revenue was approximately seven point four million dollars for the 3 months ended December Thirty 12020 reflecting a roughly 25% sequential increase over the third quarter of 2020 and a 226% increase over the fourth quarter of 2019 the product revenue of the extended in the fourth quarter of 2020 with 6.9 million dollars versus Five Point four million dollars in the third quarter and reflects an approximate 28% sequential increase total net product revenue for the fourth quarter of 2020 also includes net product revenue of point five million dollars from our Shores sealant overall net product revenue for the year was seventeen point four million dollars versus 4.2 million dollars for 2019 and primarily reflects a strong uptake in dextenza sales during the second half of 2025.
Unknown Attendee: Dosing and enrollment has been going well, and we are pleased to report that this study is progressing ahead of the initially planned schedule. We now expect top-line data in the fourth quarter of 2021 ahead of the previous guidance of the first half of 2022. Our second product candidate for dry eye, OTX-DED, is a low-dose intracanalicular insert of preservative-free dexamethasone. While it incorporates the same active drug as Dextenza, this is a new product candidate with a lower dose of dexamethasone and a smaller insert size.
Unknown Attendee: Many dry eye patients experience empathetic flares of their signs and symptoms, which we believe are likely related to inflammation. Topical Steroids have long been used off-label for dry eye flares, and all commercially available topical steroids have preservatives, which can result in ocular surface toxicity. Chronic misuse of steroids may also lead to adverse events such as elevated eye pressure or cataracts.
Research and development expenses for the fourth quarter worth 7.69 dollars versus 10.1 million dollars for the comparable period in 2019 and primarily reflect a decrease in New Jersey located cost driven largely by the reduction-in-force executed in the fourth quarter of 2019 and reduce clinical trial costs associated with the phase three dextenza allergic to latex trial and the phase 3 otx TP trial offset by increases in the cost associated with the phase 1 clinical trials of otx t k i e x t i c n otx CSI as well as the commencement of the phase 2 clinical trial of otx ESI overall R&D expenses for the full year round twelve point four million dollars to twenty eight point seven million from forty eight dollars from 41.1 billion dollars and twenty nineteen reflecting the decrease in an allocated costs money.
Unknown Attendee: OTX-DED potentially offers these patients the opportunity to be treated with a physician-administered, preservative-free, and hands-free steroid therapy. We recently announced that we have dosed our first patients in a U.S.-based, randomized, double-masked, vehicle-controlled, phase two, multicenter clinical trial, evaluating two different formulations of OTX-DED compared with a This trial is designed to assess the safety and efficacy of OTX-DED for the short-term treatment of signs and symptoms of dry disease by evaluating bulbar conjunctival hyperemia, eye dryness score, and frequency using a visual analog scale and total corneal fluorescein staining.
And the trends in clinical trial expenses.
Mentioned above selling and marketing expenses for the fourth quarter were six point eight million dollars as compared to seven point 1 million for the same quarter in 2019 with a modest decrease relates to reduce Consulting fees and travel-related costs offset by increased Personnel costs overall selling and marketing expenses for the full year increased to twenty six point six million dollars from 24.59 dollars and 2019 driven primarily by increased Personnel costs offset by reduced spending on Consulting conferences and related expenses.
Unknown Attendee: We expect top-line data in the first half of 2022. Lastly, for Dick Stenza for the treatment of ocular itching associated with allergic conjunctivitis, we submitted a supplementary NDA, supplementary NDA, at the end of 2020, and have received a PDUFA target action date of October 18, 2021. Overall, we believe the data package highlights a compelling product profile targeting an unmet need that could potentially change the current standard of care for physician-administered, preservative-free, hands-free therapy for these patients. This SNDA, if approved, would represent our first in-office indication for Dexzenza. I would now like to turn the call back over to Donald to review our fourth quarter and year-end financial results. Thanks, Mike.
Finally General and administrative expenses were six point six million dollars for the fourth quarter versus 5.6 million dollars in the comparable quarter of 2019 the increase in expenses them primarily from an increase Personnel costs and Consulting fees overall G&A expenses for the full year increased point eight million dollars to 22.9 million dollars from 22.1 million dollars a month 19 again reflecting primarily increased personnel and consultancy.
Which respected Financial results for the fourth quarter the company reported a net loss of eighty five point six million dollars or a loss of a dollar Twenty One cents per share on a basic wage basis this compares to a net loss of $26 or a loss of $0.54 per share on a basic in diluted basis for the same period in 2019. Rating expenses were modestly down quarter-over-quarter. The significant increase in Los was driven almost exclusively by a non-cash charge of 69.5 million dollars related to the change in the fair value of the derivative liability associated with the company's convertible notes.
Donald Notman: Gross product revenue net of discounts, rebates, and returns, which the company refers to as total net product revenue, was approximately $7.4 million for the three months ended December 31, 2020, reflecting a roughly 25% sequential increase over the third quarter of 2020 and a 226% increase over the fourth quarter of 2019. Net product revenue of the extended in the fourth quarter of 2020 was $6.9 million versus $5.4 million in the third quarter, and reflects an approximate 28% sequential increase.
This change in fair value is due primarily to 172% increase in the company's common stock price during the fourth quarter of 2020 the net loss for the fourth quarter of also includes two point eight million dollars in non-cash charges for stock-based compensation and depreciation compared to two point six million dollars for the same quarter in 2019. Overall. The company reported net loss of 155.6 million dollars or a loss of $2.56 per share on a basic and diluted basis for the full year and month December 3120 versus the Net loss of eighty six point four million dollars or a loss of a dollar and $9.91 per share on a basic and diluted basis 2019.
Donald Notman: Total net product revenue for the fourth quarter of 2020 also includes net product revenue of $0.5 million from Reshure Sealant. Overall, net product revenue for the year was $17.4 million versus $4.2 million for 2019, and primarily reflects a strong uptake of index stenza sales during the second half of 2020.
As of March 2nd 2021 the company had seventy six point 1 million shares outstanding.
Donald Notman: Research and development expenses for the fourth quarter were $7.6 million versus $10.1 million for the comparable period in 2019, and primarily reflect a decrease in unallocated costs, driven largely by the reduction in force executed in the fourth quarter of 2019, and reduced clinical trial costs associated with the phase three dextenza allergic conjunctivitis trial and the phase three OTX-TP trial, offset by increases in the cost associated with the phase one clinical trials of Overall, R&D expenses for the full year decreased $12.4 million to $28.7 million from $41.1 million in 2019, reflecting the decrease in unallocated costs and the trends in clinical trial expenses mentioned above.
As of the full year ended December Thirty One twenty twenty. We had two hundred twenty eight point 1 million dollars in cash and cash equivalents versus fifty four point four million dollars at the end of 2019. These cash amounts exclude restricted cash of 1.8 million dollars the cash balance benefited during the fourth quarter from a hundred sixty one point seven million dollars in net product from to secondary Equity offerings one in October for seventy five point four million dollars of net proceeds and one in December for $80 6.3 million dollars in that proceeds.
fourth-quarter cash
Also benefited from proceeds at 12 million dollars in upfront payments from the recently Netflix the agreement with half Med for the full year ended December Thirty $120 cash balances benefit from total net proceeds from financing activities of $228, including a 48.3 million dollars in net proceeds from a secondary offering in May fourteen point four million in that proceeds from sales of common stock under our 2019 sales agreement or ATM early in earlier in the year.
Donald Notman: Selling and marketing expenses for the fourth quarter were $6.8 million, as compared to $7.1 million for the same quarter of 2019. The modest decrease relates to reduced consulting fees and travel-related costs offset by increased personnel costs.
The May October and December Equity offerings were executed at share prices of $5.50 and $9.75 and $21.50 respectively based on our current plans and related estimates of anticipated cash inflows from the extent that ensures products sales and cash outflows from operating Thursday. We believe that exist in cash and cash equivalents. As of December Thirty One hundred twenty will enable the company to fund planned operating expenses that service obligation capital expenditure requirements through 2023 is cache guidance is of course subject to a number of assumptions including those related to the severity and duration of the COVID-19 pandemic the revenues expenses associated with the commercialization of dextenza and the pace of research and clinical development programs and other aspects of our business.
Donald Notman: Overall, selling and marketing expenses for the full year increased to $26.6 million from $24.5 million in 2019, driven primarily by increased personnel costs, offset by reduced spending on consulting conferences and related expenses. Finally, general and administrative expenses were $6.6 million for the fourth quarter versus $5.6 million in the comparable quarter of 2019. The increase in expenses stemmed primarily from increased personnel costs and consulting. Overall, G&A expenses for the full year increased $0.8 million to $22.9 million from $22.1 million in 2019, again reflecting primarily increased personnel and consulting.
This concludes my comments on the fourth quarter and year-end Financial results, and I would like to turn the call back to Anthony for summary thoughts.
Donald Notman: With respective financial results for the fourth quarter, the company reported a net loss of $85.6 million, or a loss of $1.21 per share on a basic and diluted basis. This compares to a net loss of $26 million, or a loss of $0.54 per share on a basic and diluted basis for the same period in 2019. As operating expenses were modestly down quarter over quarter, the significant increase in loss was driven almost exclusively by a non-cash charge of $69.5 million related to the change in the fair value of the derivative liability associated with the company's convertible note.
Thanks, Donald. So before opening up the call for questions, let me do a quick summary with successful Capital raises a new licensing agreement and momentum in dextenza sales. We believe we have a good sources to fully fund. Our for clinical-stage pipeline assets through completion of their plan phase II programs in disease States within large Ophthalmology markets estimated to account for over twenty million in the Aggregate and annual Global sales.
And wet AMD the performance of otx tki and our Phase 1 trial continues to support a product profile that could potentially set a new standard of care for durability. You plan to initiate the perspective randomized trial by the middle of 2021.
Donald Notman: This change in fair value is due primarily to a 172% increase in the company's common stock price during the fourth quarter of 2020. The net loss for the fourth quarter also includes $2.8 million in non-cash charges or stock-based compensation and depreciation, compared to $2.6 million for the same quarter in 2019. Overall, the company reported a net loss of $155.6 million, or a loss of $2.56 per share on a basic and diluted basis, for the full year ended December 31, 2020, versus a net loss of $86.4 million, or a loss of $1.91 per share on a basic and diluted basis, in 2019.
And glaucoma otx t i c continues to support a product profile that could potentially set the standard of care for patient compliance. You plan to advance that program into a phase 2 clinical trial in the middle of 2021 month in dry eye disease. We initiated to phase two clinical trials one for otx ESI and 1/4 otx d e d for otx ESI. We now expect top line in the fourth quarter of this year for otx d e v we expect Topline data in the first half of 2022.
Beyond disease we submitted our snda for dextenza and allergic conjunctivitis in December 2020 and have a Purdue fat Target action date of October 18th, 2021.
look for
To a busy productive twenty Twenty-One and with that I turn the call over 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. Please stand by while we compare the queue and a roster life question comes from Damien with rjf. Your line is not open.
Donald Notman: As of March 2, 2021, the company had 76.1 million shares at standard. For the full year ended December 31, 2020, we had $228.1 million in cash and cash equivalents versus $54.4 million at the end of 2019. Cash amounts exclude restricted cash of $1.8 million.
Hi, congratulations on twenty-twenty and the updates today. Thank you for taking the questions. So I guess the the first one for me would be going back to Michael's comments around uh, the study for otx Ki KI in the US that's expected that it start mid-year thought maybe you guys could just elaborate a little bit on the study design, you know, just in terms of how you're thinking about what you want to get out of that first study and found is that set the stage for later-stage studies? Um, obviously, uh another company in the space, um earlier this week just had data with a product that didn't seem to be appear of of yours or a competitor that data looks horrendous and you know, I think the general consensus in might not be a viable.
Donald Notman: Cash Bounce benefited during the fourth quarter from $161.7 million in net proceeds from two secondary equity offers, one in October for $75.4 million in net proceeds, and one in December for $86.3 million in net proceeds. Fourth quarter cash also benefited from proceeds of $12 million in upfront payments from the recently enacted lightspeed agreement with AffoMed. For the full year ended December 31, 2020, cash balances benefited from total net proceeds from financing activities of $228 million, including $48.3 million in net proceeds from a secondary offering in May and $14.4 million in net proceeds from sales of common stock under our 2019 sales agreement or ATM earlier in the year. The May, October, and December equity offerings were executed at share prices of $5.50, $9.75, and $21.50, respectively.
Product for very specific reasons to them but that said, you know, does that inform anything in terms of how you guys are thinking about later-stage development or you know, just kind of any thoughts around that would be appreciated. Thanks.
I didn't think thanks for the question. This is Michael Goldstein. So the study that you're referring to the otx tki study is is home study that were planning on starting mid year this year. It's being conducted under the exploratory IND pass by so it's we're looking to enroll subjects with a 321 randomization and patiently to be randomized to receive the otx Ki KI drug at the a single impact of six hundred micrograms along with an anti-drug for induction and that'll be compared to an aflibercept group that will receive a slip recept every eight weeks off and we will follow those page since out and we will be looking for changes in vision and we will be looking at right well Madam, he's looking using the oct.
Antony Mattessich: Based on our current plans and related estimates of anticipated cash inflows from Dexden's and Reshir's products, sales, and cash outflows from operating expenses, we believe that existing cash and cash equivalents, as of December 31, 2020, will enable the company to fund planned operating expenses, debt service obligations, and capital expenditure requirements through 2023. Cash guidance is, of course, subject to a number of assumptions, including those related to the severity and duration of the COVID-19 pandemic.
Antony Mattessich: The revenues and expenses associated with the commercialization of Dextenda and the pace of research and clinical development programs and other aspects of our business. This concludes my comments on the fourth quarter and year-end financial results, and I would like to turn the call back to Antony for his summary thoughts. Thanks, Donald.
Patience to get into that trial will have been patients previously treated so they'll be wet AMD patients will start started out in a dry State wage. And what we'd be looking for is can we maintain them in that dry state with the single implant to the 600 microgram obviously looking at safety, but also looking at durability of effect, you know, you had mentioned the other company, we believe that the data that you saw from that other company was really related to a different delivery system. And we believe that with our delivery system where the drug is delivered with a single implant into the Victorious there really is not the opportunity to see the migration wage up that was reported in that study. But obviously we'll be looking at safety in our study as well.
Antony Mattessich: So before opening up the call for questions, let me give you a quick summary. With successful capital raises, a new licensing agreement, and momentum in Dextensa sales, we believe we have the resources to fully fund our four clinical stage pipeline assets through completion of their planned phase two programs in disease states within large ophthalmology markets estimated to account for over $20 billion in aggregate and annual global sales. In wet AMD, the performance of OTX-PKI in our Phase I trial continues to support a product profile that could potentially set a new standard of care for durability.
Antony Mattessich: We plan to initiate a prospective, randomized, U.S.-based trial by the middle of 2021. For glaucoma, OTX-TIC continues to support a product profile that could potentially set the standard of care for patient compliance. We plan to advance that program into a Phase II clinical trial in the middle of 2021. For dry eye disease, we initiated two Phase II clinical trials, one for OTX-CSI and one for OTX-DED. For OTX-CSI, we now expect top-line data in the fourth quarter of this year.
Great, and and sorry.
the duration of the study
so we'll be following patients out for a year.
Okay, and just in terms of thinking about study design in later stages, you do have a choice not a direct, uh, you know, but some of the gene therapy companies are starting to do later stage Federal studies. Do you see any parallel in terms of how you would approach your studies at a later stage or is it still kind of TVD to see what you know, the result is from this exploratory study? Yeah. I mean, I would say we haven't made final decisions for a later stage studies, but there are a number of options on the table. Okay, great. I'll get back to you. Thank God I think saying thank you. Next question comes from David Steinberg with Jesse's your line is not open.
Antony Mattessich: For OTX-DED, we expect top-line data in the first half of 2022. Beyond dry eye disease, we submitted our SNDA for Dextenza and Allergic Conjunctivitis in December 2020 and have a PDUFA target action date of October 18, 2021. We look forward to a busy, productive 2021. And with that, I turn the call over to questions.
Okay. Thanks. I had a couple of questions first. Yeah on your long-term. You said your October producer for what is conjunctivitis? I know your your reps aren't really calling on in the doctor office that I was just curious, are there any is there any off-label use you think right now in that indication secondly. Do you have a sense of what percent of the business predict standards for Medicare page? This is commercial insurance, and then I have a couple of other follow-ups. Thanks.
Operator: Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Dane Leone with RJF. Your line is now open.
Dane Vincent Leone: Hi. Congratulations on 2020 and the updates today. Thank you for taking the questions. So I guess the first one for me would be going back to Michael's comments around the study for OTX-PKI in the U.S. that's expected to start mid-year. Maybe you guys could just elaborate a little bit on the study design, you know, just in terms of how you're thinking about what you want to get out of that first US study and how that sets the stage for later stage studies? Obviously, another company in the space earlier this week just had data on a product that didn't seem to be a peer of yours or a competitor. That data looked horrendous.
I think we can answer both the questions from the same same answer which is that we have launched with an extraordinary focus on Medicare Part B patients in ASCS office. So that being said we we have we expect very little off-label for allergic conjunctivitis clearly when we get the indication, we will start moving into the Ophthalmology office environment both in the surgical sphere and in the the um, for for ocular surface disease, but given our approach and given the the idea that we really are advising the people that we go see not playing outside the lines so they don't have bad experiences with with the product from a reimbursement standpoint. The vast majority of our usage is in is in hospitals and in Medicare Part B.
Dane Vincent Leone: And, you know, I think the general consensus is it might not be a viable product for very specific reasons. But that said, you know, does that inform anything in terms of how you guys are thinking about later stage development? Or, you know, just kind of any thoughts around that would be appreciated. Thanks. Hey Dane.
Unknown Attendee: Thanks for the question. This is Michael Goldstein. So the study that you're referring to, the OTX-PKI study, is a U.S. study that we're planning on starting mid-year this year. It's being conducted under the Exploratory IND Pathway So we're looking to enroll 20 subjects with a three-to-one randomization, and patients will either be randomized to receive the OTX-PKI drug at a single implant of 600 micrograms, along with an anti-VEGF drug for induction, and that will be compared to a Flivr subgroup or receive Flivercept every eight weeks.
Got it, and then just a couple of minutes of questions. So you received the $12 up front but didn't book it on the p&l. What's the accounting treatment going to use for for this up front? And then they're about ninety million plus in future aggregate Milestones. Are you running the program? So they being run by a dog that and when would the next trash of payments from them? It's a p&l.
Hey David, it's Donald. Thanks for the question. So with regard to the accounting around it, you'll see the $12 million recorded as as deferred revenue on the balance sheet and when we may begin to deliver the clinical and or commercial product, we will begin to ratchet that down and recognize the the revenue in the future and maybe I turn it over back to to Anthony on the the alphabet question with regard to the US in addition to that.
Unknown Attendee: And we will follow those patients out, and we will be looking for changes in vision, and we will be looking at retinal anatomy using the OCT. Patients to get into that trial will have been patients previously treated, so they'll be wet AMD patients who will be started out. [inaudible] and what we'll be looking for is whether we can maintain them in that dry state with the single implant of the 600-microgram, obviously looking at safety, but also looking at durability of effect.
Yeah, they they will be dry week. We handle the regulatory issues within within China and and they will be doing the clinical trials. So they they're drive or whatever clinical work may need to be still have confirming that I'm sorry Patricia here on the line didn't realize do you have the ad from a regulatory standpoint about how it works in China Wok know Anthony, so I think you've had a spot on so I'll go Therapeutics will actually be the holder for the Mah in China. So once wage form the submission and actually get positive feedback from the Chinese authorities additional Milestones would take place after them.
Unknown Attendee: You know, you mentioned the other company. We believe that the data that you saw from that other company was really related to a different delivery system. And we believe that with our delivery system, where the drug is delivered with a single implant into the vitreous, there really is not the opportunity to see the migration that was reported in that study.
Dane Vincent Leone: But obviously, we'll be looking at safety in our study as well. Great. And sorry, what's the duration of the study? We'll be following patients out.
Okay. Thanks a lot.
Thank you. And next question comes from joke with purpose and lower your line is now open. Hey guys, thanks so much for taking my questions and congrats at all the progress here. I am wondering if I could follow up on the exploratory IND 440 Ki I think you guys had previously spoken about the opportunity for that trial to potentially expand be beyond the initial patients. At what point do you think you could have that that conversation with the FDA and what triggers that is it just the additional data from the ongoing phase one or will you need some data from patients actually treated within within the US trial?
Dane Vincent Leone: Okay. And just in terms of thinking about study design in later stages, you do actually not have a direct, you know, competition, but some of the gene therapy companies are starting to do later stage studies. Do you see any, you know, parallel in terms of how you would approach your studies at a later stage, or is it still kind of TBD to see what the result is from this exploratory study? Yeah, I mean, I would say we haven't made final decisions about later stage studies, but there are a number of options on the table. Okay, great. I'll get back to you. Thank you.
David Steinberg: Our next question comes from David Steinberg with Jeffries. Your line is now open.
So ja, this is Patricia. I thank you for the question. So we do intend to have a meeting with the FDA to talk about the month plans for transition from an exploratory. I'm due to a traditional IMD there is data that we need to compile in order to be able to do this. So we're hoping to have additional information and birth plan set later this year.
David Steinberg: OK, thanks. I had a couple of questions. First, um... Yeah, on your... In terms of your October PDUFA for conjunctivitis, I know your reps aren't really calling on in the doctor office setting, but just curious, is there any off-label use you think right now in that indication? Secondly, if you haven't said what percent of the business is for the extenders from Medicare Patients versus commercial insurance. And then I have a couple other follow-ups. Thanks.
Okay, got it. And I'm wondering if you could when we should expect the next update out of the phase one trial for otx tki and what we should expect to see there versus what we saw back back in February.
Hi Jones, it's Mike again. So I think what we've been pretty consistent that we would give data updates, you know, when when we had something meaningful to say off on the Cadence has been about every three or four months. That's sad, you know, look look for something around the arvo meeting which is in early my
Antony Mattessich: Yeah, I think we can answer both questions with the same answer, which is that we have launched with an extraordinary focus on Medicare Part B patients in ASCs and hospitals. So that being said, we expect very little off-label usage for allergic conjunctivitis. Clearly, when we get the indication, we will start moving into the ophthalmology office environment, both in the surgical sphere and for ocular surface disease. But given our approach and given the idea that we really are advising the people that we go see not to paint outside the lines so they don't have bad experiences with the product from a reimbursement standpoint, the vast majority of our usage is in hospitals and in Medicare Part B.
Okay. If I could just squeeze one last one in on otx CSI. Are there any expectations there that that phase two trial could potentially serve as as as one of the registration Thursdays and and is it powered like a phase 3?
So great question. It is not powered like a phase-3. It's powered like the phase two study. So we we are in we're planning on rolling approximately 140 subjects off if it was a phase three the general size of that study is is more like five hundred patients. So so that that said the primary endpoint is looking at a tear production in order to get regulatory approval. Generally, you need to show Improvement in signs and symptoms and to adequate and well-controlled trials. What exceptions is that? You can show an increased here production of ten millimeters in in certain percentage of subjects greater than than the vehicle control and in such a case, you don't need wage also show symptomatic data, so
David Steinberg: And then just a couple of financial questions. So you received the $12 million up front, but didn't book it on the P&L. What's the accounting treatment you're going to use for this money up front?
David Steinberg: And then there are about nine more.
David Steinberg: About 90 million plus in future aggregate milestones.
David Steinberg: Are you running the programs? Are they being run by AFMED? And when will the next tranche of payments from them hit the P&L?
We would go the answer. Your question is it's possible that you could see if the deceased have been Improvement, but it's not powered to show that in this trial.
Donald Notman: Hey, David, it's Donald. Thanks for the question. So with regard to the accounting around it, you'll see the 12 million recorded as deferred revenue on the balance sheet. And when we begin to deliver either the clinical or commercial product, we will begin to ratchet that down and recognize the revenue in the future. And maybe I'll turn it over to Antony on the AFMED question with regard to the UAS. In addition to that, yeah, they will be dry.
Okay. Got it. That's that's really helpful. Thanks for taking my question.
Thank you.
Thank you. And next question comes from John wall oven with the JMP Securities. Your line is not open. Hey, good afternoon and congrats and all the progress on some of the otx TGI questions. Um, you mentioned that you're going to be moving to a single six hundred milligram insert in the next study and I was hoping you could kind of walk us through your thoughts on how that might change as you saw with three two hundred milligram inserts in in the current study.
Antony Mattessich: We handle the regulatory issues within China, and they will be doing the clinical trials, so they're driving whatever clinical work may need to be done to determine that. I'm sorry, Patricia, you're on the line. I didn't realize. Do you have anything to add from a regulatory standpoint about how it works in China? No, Antony, so I think...
Yeah, that's a great question. Thanks for asking John. So as we've in the current trial design, we have a 600 microgram Group which is cohort 3 to do that. We actually use three two hundred micrograms implants that are that are all essentially administered at the same time and but moving forward and including the US trial was going to a single implant 600 micrograms do switch and the primary driver for that was that age, you know, just we think that's a better commercial product obviously having having one implant better than three, but it turns out there's a secondary benefit which is that by having a higher concentration of drug in the implant. There's a larger concentration gradient for the drug to diffuse out of and that means that the release rate of the drug per day is actually higher.
Antony Mattessich: No, Antony, so I think you've hit the spot. So Ocular Therapeutix will actually be the holder of the MAH in China. So once we perform the submission and actually get positive feedback from the Chinese authorities, additional milestones will take place after that. Okay, thanks a lot. Thank you. Our next question comes from Joe Catanzaro with Piper Sandler. Your line is now open.
Joseph Michael Catanzaro: Hey guys, thanks so much for taking my questions and congrats on all the progress here. I'm wondering if I could follow up on the exploratory IND for TTI. I think you guys have previously spoken about the opportunity for that trial to potentially expand beyond the initial 20 patients. At what point do you think you could have that conversation with the FDA, and what triggers that? Is it just additional data from the ongoing Phase 1, or will you need some data from patients actually treated within the U.S. trial?
So going from the three 200mg implants to the single 600 micrograms implant from a dose delivery per day perspective is that this escalation team and I think you know that that is a lot of potential upside for us.
Unknown Attendee: So Joe, this is Patricia. Thank you for the question. So we do intend to have a meeting with the FDA to talk about the plans for transitioning from an exploratory IND to a traditional IND. There is data that we need to compile in order to be able to do this. So we're hoping to have additional information and a plan set later this year.
That's interesting. And then I was hoping you could discuss the opportunity and allergic conjunctivitis and how you're thinking about it. Obviously, you're going to be changing the Paradigm of treatment wage extensive available. So I was hoping you can talk about how you think about the opportunity any incremental investment to realize that and then as far as big picture what it means for ocular Therapeutics to moving back to the office setting. All right. Well, you know start with the business side of the person in my can I get some talk about the the the main aspects for it, you know, clearly there's a massive population with those are connected by to sand and an even sort of large slice of that slice that that seeks secondary wage medical attention for for they're allergic divided. So there's a large bowls of patience out there, but we have to expect that. There's going to be some reticence among payers to to have a job.
Joseph Michael Catanzaro: Okay, got it. And I'm wondering if you could give us the next update on the phase one trial for OTX TKI and what we should expect to see there versus what we saw back in February. Unknown Speaker Hi, Joe, it's Mike again.
Unknown Attendee: So I think we've been pretty consistent that we would give data updates, you know, when we have something meaningful to say, and the cadence has been about every three or four months. That said, you know, look for something around the ARVO meeting, which is in early May. Okay, got it. If I could just squeeze one last one in on OTX-CSI.
Unknown Attendee: Are there any expectations there that that phase two trial could potentially serve as one of the registrational studies and is it powered like a phase three? So, great question. It is not powered like a phase three study. It's powered like a phase two study. So we were planning on enrolling approximately 140 subjects. However, if it was phase three, the general size of that study would be more like 500. So, with that said, the primary end point here is looking at tear production in order to get regulatory approval.
Widespread use of a product like dextenza for the treatment of your garden-variety allergic don't bite was rejected by this patient. So the way we're planning on going about it at first is to do with the the the targets where we are already seeing positions where there's a greater than 90% overlap, um for anterior segment surgeons and and opthamologist who treats allergic conjunctivitis or you know, refractory allergic conjunctivitis. So in that overlap, we we will be in both the office and in the ASC an office environment with a with a with a a portion of those those positions, so that won't require immediately, uh, an increase in our promotional expenses, What we'll do in that environment to start building out platforms with payers where where the allergic device will be reimbursed from the good news is that we've had discussions with payers and it's important to note that down.
Unknown Attendee: Generally, you need to show an improvement in signs and symptoms in two adequate and well-controlled trials. One of the exceptions is that you can show an increased tear production of 10 millimeters in a certain percentage of subjects greater than the vehicle control, and in such a case, you don't need to also show symptomatic data.
Unknown Attendee: We would, so to answer your question as. [inaudible] Okay, got it. That's really helpful. Thanks for taking my question.
The type of the part of the bureaucracy that pays for medical benefit is different than the part of the bureaucracy within within payers that pay for Part D type products or or farmer benefit products and and the approvers of the payers who approve the medical benefits actually see very very expensive drugs. Sometimes upwards of ten ten fifteen thousand dollars. So we we haven't actually had push back on price which we which we expect to be the same in the allergic conjunctivitis sector sector as it is in the hospital sector, but they do they do expect us to to filter out patients. So that appropriate patients with appropriate Physicians will be getting allergic Tobias. Once we get a foothold will build out and as we build out probably will need to add to our promotional resources in order to to more broadly reach the office environment. But initially, we'll we'll be looking at that Venn diagram Confluence where where we have both are Surgical.
Jonathan Patrick Wolleben: Thank you. Our next question comes from John Wolleben with JMP Securities. Your line is now open.
Jonathan Patrick Wolleben: Hey, good afternoon, and congrats on all the progress. Um, piggybacking on some of the OTX TKI questions, you mentioned that you're going to be moving to a single 600 milligram insert in the next study, and I was hoping you could kind of walk us through your thoughts on how that might change the observations you saw with three 200 milligram inserts in the current study. That's a great question. Thanks for asking, John.
Unknown Attendee: So, in the current trial design, we have a 600-microgram group, which is Cohort 3. To do that, we actually use three 200-microgram implants that are all essentially administered at a similar time. But moving forward, including in the U.S. trial, we're going to a single implant with a 600 microgram dose, which, and the primary driver for that was that, you know, just we think that's a better commercial product; obviously, having one implant is better than three.
Target's and the AC Targets in the same in the same practice. So I don't know if you want to add something to that.
Lat there I'll just say, you know, clinically we we do use steroids for allergic conjunctivitis in the office. It does work exceedingly. Well, we don't do it more commonly because wage of abuse meaning patient gets if it works. Well, they take it home and keep using it and you end up with some of the Adverse Events related to Chronic use of steroids. So, you know, I think clinically as you you, you know, most of the current popular allergies therapies antihistamine, my cell stabilizers of now gone over the counter. So we think patients would be, you know, try those over the counter those weren't adequately come into the office. We'd ordinarily give them topical steroids. And that's where we're dextenza could fit in with this position to administer an approach patient couldn't reuse. It also has the extra advantage of being preservative-free and there are no preservative free commercially available steroids. So we think there's a pretty significant wage.
Unknown Attendee: But it turns out there's a secondary benefit, which is that by having a higher concentration of drug in the implant, there's a larger concentration gradient for the drug to diffuse out of, and that means that the release rate of the drug per day is actually higher. So going from the three 200-microgram implants to the single 600-microgram implant from a dose delivery per day perspective is a dose escalation. And I think, you know, that has a lot of potential upside for us. That's interesting.
Antony Mattessich: And then I was hoping you could discuss the opportunity and allergic conjunctivitis and how you're thinking about it. Obviously, you're going to be changing the paradigm of treatment with the extensive available. So I was hoping you could talk about how you think about the opportunity and the incremental investment to realize it. And then, as far as the big picture is concerned, what it means for ocular therapeutics to move into the office setting. All right, well, you know the start. Go ahead. I'll talk about the business side of it first, and then Mike, I guess, can talk about the medical aspects of it.
proposition actually here
It's very helpful. Thanks again for taking the questions. Thanks, John ruskey.
Thank you. And next question comes from Georgia yordanov with Cowen and Company your line is not open.
Thank you so much for taking the questions and congratulations on all the progress. So starting with a broader question even with the Next Generation and type vegf, which is Roaches for a snap and Colby ghi 301 up to ten fifteen even twenty percent of patients require very frequent injections once every month once every other month. Do you anticipate that money could be actually used in combination or I guess in the background of the therapies and then have a clue.
Antony Mattessich: There's a massive population with allergic conjunctivitis, and an even sort of large slice of that slice that seeks secondary medical attention for their allergic conjunctivitis. So there's a large bolus of patients out there. But we have to expect that there's going to be some reticence among payers to have widespread use of a product like Dextenza for the treatment of your garden-variety allergic conjunctivitis So the way we're planning on going about it at first is to go with the targets where we are already seeing positions where there's a greater than 90% overlap for anterior segment surgeons and ophthalmologists who treat allergic conjunctivitis or refractory allergic conjunctivitis.
Yes, great question. We've seen a very strong safety profile to to date and is that holds up as we enroll board where subjects and and learn more about this drug gives us a lot of flexibility. One of the really nice things about the otx tki is is administered in the office using the same techniques as we do with life up there apee.
Antony Mattessich: So in that overlap, we will be in both the office and in the ASC and hospital environment with a portion of those physicians. So that won't require an increase in our promotional expenses immediately. But what we'll do in that environment is start building out platforms with payers where allergic conjunctivitis will be reimbursed. The good news is that we've had discussions with payers, and it's important to note that the type of, or the part of the bureaucracy within payers that pay for a medical benefit is different than the part of the bureaucracy within payers that pay for Part D-type products or pharmacy benefit And the payers who approve medical benefits actually see very, very expensive drugs, sometimes upwards of $10,000, $15,000 per dose.
That's a
Antony Mattessich: So we haven't actually had pushback on the price, which we expect to be the same in the allergic inoculator virus sector as it is in the hospital sector. But they do expect us to filter out patients so that appropriate patients with appropriate will be getting the allergic inoculator virus. Once we get a foothold, we'll build out.
Got it, that's helpful. And and then I guess a question on the two subjects, which you mentioned home straight. There will be up to 13 months. Do you know what a driving this response? Are you worried that the implant has not been fully degraded and could this be an issue regarding a week dosing?
Unknown Attendee: And as we build out, we probably will need to add to our promotional resources in order to more broadly reach the office environment. But initially, we'll be looking at that Venn diagram confluence where we have both our surgical targets and the AC targets in the same practice. So I don't know, Mike, do you want to add something to that?
So another great question. So with a single implant we see durability of of about 9 to 10 and 1/2 months when we put in more than welcome plant one of the the effects I mentioned earlier, you know applies, which is that that one implants does have an effect on the other implant and its degradation and Thursday. We we are seeing the implants last a little bit longer in some patients. And so that possibly could be could be an explanation. It could also be that you know, once you've got patient to age to a dry State you've sort of eliminated the need for additional therapy for a period of time. So we need to see more patients. We do see how that plays out. But but again as we go to a single implanted, we really expect a durability of about nine to ten months.
Unknown Attendee: I'll just say, you know, clinically, we do use steroids for allergic conductivitis in the office. And it does work. [inaudible] So, you know, I think clinically, as you know, most of the current ocular allergy therapies, antihistamines, mast cell stabilizers, have now gone over the counter. So we think patients would be, you know, try those over the counter. Those weren't adequate, they'd come into the office, and we'd ordinarily give them topical steroids, and that's where Dextenza could fit in with a physician-administered approach that the patient couldn't reuse. It also has the extra advantage of being preservative-free, and there are no preservative-free commercially available steroids. So, we think there's a pretty significant value proposition potentially here.
Is helpful and then lastly on the road, program. What is this your decision to perform a head-to-head against the risk rather than eye drops and against the major commercials that for the rest was that it wasn't indicated for redosing based on your conversations with the FDA. What would you need to show for the label to allow reducing? I got something you plan to do kind of have with the initial submission. Obviously if everything is successful or would that be a supplement some sometimes down the road?
Jonathan Patrick Wolleben: That's very helpful. Thanks again for taking the questions.
Georgi Yordanov: Thank you. Our next question comes from Georgi Yordanov with Cowen & Company. Your line is now open.
Georgi Yordanov: Thank you so much for taking the question.
Georgi Yordanov: Questions and congratulations on all the progress.
Georgi Yordanov: So I guess, starting with a broader question,
Georgi Yordanov: Even with the next-generation anti-VEGFs, such as Roche's, Furosinab, and Kodiak's TSI 301, up to 10, 15, even 20% of patients require very frequent injections, once every month, once every other month. Do you anticipate that OTX-PKI could be used in combination, or I guess in the background of such things?
Yeah, quick question. So there's actually two active comparators in the phase 2 trial so subjects are randomized as you said to one of the two doses of old t i c order in one eye but the other I receive a topical prostaglandin so you'll have both an eye drops comparator as well as the direct comparator in the trial as you also note their label is limited to a single implant. We we believe that's related to affect sandwich to see Liam, um to date with our single implant. We have not seen any meaningful changes in the corneal epithelium as measured by direct cell counts functional life. It's like the chemistry or for drugs observation would put the salt lamp. So we we not in the phase two, but we we will do repeat those things obviously and we will have you know, yep.
Unknown Attendee: Transcribed by https://otter.ai
Unknown Attendee: Yeah, it's a great question. We've seen a very strong safety profile to date. And if that holds up, as we enroll more and more subjects and learn more about this drug, it gives us a lot of flexibility. One of the really nice things about OTX-TKI is that it's administered in the office using the same techniques as we do with anti-VEGF therapy and does not displace much volume in the vitreous. All that means, you know, to your question is that if you get a great response with OTX-TKI, that's great. If you needed to use anti-VEGF for some breakthrough, that wouldn't be a problem.
Unknown Attendee: And then I guess a question on the Cohort 2 subject, which you mentioned has demonstrated their willingness to participate.
Russian additional discussions with FDA just to see what we need to show in order to be able to get repeat those so
Unknown Attendee: [inaudible] Another great question, so with a single implant, we see durability of about nine to ten and a half months. When we put in more than one implant, one of the effects I mentioned earlier applies, which is that one implant does have an effect on the other implant in its degradation. And we are seeing the implants last a little bit longer in some patients, and so that possibly could be an explanation.
Thank you so much. Dr. Goldstein moving super helpful. Thank you. Thanks.
Thank you, as a reminder to ask a question. You would need to press star one on your telephone. Our next question comes from I need your line is not open.
Unknown Attendee: It could also be that, you know, once you've got the patient to a dry state, you've sort of eliminated the need for additional therapy for a period of time. So we need to see more patients. We need to see how that plays out. But again, as we go to a single implant, we really expect a durability of about nine to ten and a half years.
Hi, good afternoon congrats on the progress and thank you for taking my questions just have a few here regarding the dry eye disease candidate volte SI and di di just wanted to know in terms of the design. I know CSI with it's probably designed to last for twelve weeks off. You just remind it how the d d candidate is the design for for the acute condition and also in terms of the population size. We sort of expect the acute conditions patience to be sort of the same size as the chronic conditions and also one more regarding the acute dry eye condition patients. Do you think that might be pushed back in terms of patients may be dead?
Unknown Attendee: And then lastly, on the glaucoma program, what influenced your decision to perform a head-to-head against Dorista rather than eye drops? And I guess the major commercial setback for Dorista was
Unknown Attendee: [inaudible]
Unknown Attendee: And is that something you plan to kind of have with the initial ending?
Unknown Attendee: And that's all I have with the initial NDA submission. Obviously, if everything is successful, or would that be a supplement sometime down the road? Yeah, great question.
Unknown Attendee: So, there are actually two active comparators in the Phase 2 trial. So, subjects are randomized, as you said, to one of the two doses of OTX, TIC, or Durista in one eye, but the other eye will receive a topical prostaglandin. So, you'll have both an eyedrop comparator as well as the Durista comparator in the trial. But, as you also note, their label is limited to a single implant. We believe that it's related to effects on the corneal endothelium. To date, with our single implant, we have not seen any meaningful changes in the corneal endothelium as measured by direct cell counts, functional measurements like chemistry, or direct observation with the cell.
being happy with
The eye drops and not having to have an implant.
Okay, lots of questions there as you know, we have to drive programs. So when it's otx ESI, which is really designed for chronic treatment of dry eye disease with a a cyclosporine product that last three to four months and then otx DD which is a low-dose dexamethasone designed to release dexamethasone 4 to 6 weeks for the acute treatment of try I um, I will say clinically there are we sort of think about dry eyes as a chronic disease, but we also for you know know that there's a cute players and these are pretty common, you know happening anywhere between one or two or three times a year for for many dry eye patience. And for years, we've treated these drugs these patients with topical low dose steroids top level, as you know, there's now an approved product which has gone through the regulatory path and it'll be interesting.
Unknown Attendee: So we're not in phase two, but we will do repeat dosing, obviously, and we will have, you know, discussions, additional discussions with FDA to see what we need to show in order to be able to get repeat dosing. Thank you so much, Dr. Goldstein. This has been super helpful. Thank you. Thank you.
Operator: Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. Our next question comes from Anita Dushyant on Barenbrook.
See how that that product plays out in that in this space. We think the opportunity for otx d e d is that you know as mentioned as I mentioned with dextenza some wage right here. The risk of steroids is not that they won't work. They they do work probably one of the most effective ways we can treat try that the risk is really with abuse with chronic therapy. And so by having a physician administered product. It's it's in the physician's hands the patient can't um, if you repeat dosing in addition that the steroids are also is delivered. It's a preservative free fashion. Um, we have two different formulations of the otx DD one is designed to release for two weeks and one is designed to release phone number three weeks the other Advantage huge advantage of both products supposed to CSI in the DED is that the hydrogel component basically performs punctual exclusion in one month?
Anita Dushyant: Shantha, with Barenberg Capital Market. Your line is now open.
Anita Dushyant: Hi, good afternoon, congratulations on the progress, and thank you for taking my questions. I just have a few here regarding the...
Anita Dushyant: Dry Eye Disease, Candidate
Unknown Attendee: CSI and DED. I just wanted to know in terms of the design; I know CSI was the one designed to last for 12 weeks. Could you just remind us how the DED candidate is designed for the acute condition?
Anita Dushyant: and also in terms of the...
Anita Dushyant: [inaudible]
Anita Dushyant: And also one more.
Anita Dushyant: Regarding the acute dry eye condition patients
Anita Dushyant: Do you think there might be a pushback in terms of how many patients may be required...
The main treatments that we currently use for dry eye disease is to include the punctum with a punk the plug so you're essentially getting the benefit that both of these products of a drug released thousands upon to inclusion. So your question about whether we push back yeah there there may be some pushback for some patients. But many many of them will have been used to having punctual exclusion as part of their Drive Therapeutics. And so I think that it'll be you know, those patients will obviously be very easy to accept
Unknown Attendee: I am happy with the eye drops and not having to have an implant.
Unknown Attendee: Okay, there are lots of questions there. So, as you know, we have two dry eye programs. The one is OTX-BSI, which is really designed for the chronic treatment of dry eye disease with a cyclosporine product that lasts three to four months, and an OTX-DEV, which is a low-dose dexamethasone designed to release dexamethasone for two to three weeks for the acute treatment of dry eye. I will say clinically, we sort of think about dry eyes as a chronic disease, but we also know that there are acute flares, and these are pretty common, you know, happening anywhere between one or two or three times a year for many dry eye patients.
Thank you. That was helpful and didn't just one more question disregarding the the Milestone payment that you were raised from a fluid. Sorry if I missed that is that breakdown between Milestones that would be received as part of the development versus the launch Milestone or something. You could discuss.
Yeah, we want to go ahead.
Unknown Attendee: And for years, we've treated these drugs, these patients with topical low-dose steroids off-label. As you know, there's now an approved product which has gone through the regulatory path, and it will be interesting to see how that product plays out in this space. We think the opportunity for OTX-DED is that, you know, as I mentioned with Xtendza, similar things apply here. The risk of steroids is not that they won't work, but that they do work.
No, I think that was Patricia Patricia. You can feel that one you go ahead. Sure. So for the Milestone payments are several miles from payments that have to do with regulatory approvals in the different market and then there are four other programs milestones for clinical development and the success and and execution of clinical programs. So that's really where the different Milestones lies both regulatory as well as clinical Milestones feeds in in the office significant royalties getting into the team.
Unknown Attendee: It's probably one of the most effective ways we can treat your II, because the risk is really for abuse with chronic therapy. And so by having a physician-administered product, Unknown Speaker. It's in the physician's hand. The patient can't do repeat dosing. In addition, the steroid here is also delivered in a preservative-free fashion. We have two different formulations of OTX-DED. One is designed to release for two weeks, and one is designed to release for three weeks.
Great. Thank you. That'll be for me.
Thank you. And next question comes from you 10 with HC Wainwright your line is open.
Thank you for taking my questions. My first question is with respect to the 40% sequential growth in dextenza units. How much of it was driven by wage covering up surgical volume and how much it was driven by your accounts. I think none of it was driven by recovery and surgical volume and that the the the surgeries are still down the latest data we've seen is that in in twenty-twenty. There's probably about three point two million cataract surgeries performed that's against an average of about 4.1 the day I have seen that was projecting that in 2021. There will probably about five million cataract surgeries to be performed. So the rebound is yet to happen. I'm clearly we we've seen in Iraq and certainly in January and February of this year a number of ASCS either slowing down or closing. I'm clearly we're still experiencing double-digit growth in market. So the share game
Unknown Attendee: The other huge advantage of both products, both the CSI and the DED, is that the hydrogel component basically performs punctal occlusion. And one of the main treatments that we currently use for dry eye disease is to occlude the punctum with a punctal plug. So you're essentially getting the benefit with both of these products of a drug release and punctal occlusion. So your question about whether there will be pushback is, "Will there be pushback?" Yeah, there may be some pushback from some patients, but many, many of them will have been used to having punctal occlusion as part of their dry eye therapy. And so I think that it'll be, you know, those patients will obviously be very easy to accept.
Anita Dushyant: Great. Thank you. That was helpful. And then there is just one more question.
Anita Dushyant: Just one more question regarding the milestone payments that you will receive from Alphamed. Sorry if I missed that. Is there a breakdown between milestones that would be received as part of the development versus the launch milestone? Is there something you could discuss?
Has has been accelerating even though the total total number of cataracts is it is still in a bit of the malaise, although we're starting to see the country wake up and and and starting to get some of those those surgeries back now, but only really in March.
Anita Dushyant: Yeah, we laid out and...
Donald Notman: Want to go ahead, Donald?
Unknown Attendee: No, I think that was Patricia. Patricia, you can field that one. Patricia, you go ahead.
Okay, and what coin would you consider providing some Revenue guidance?
Unknown Attendee: Thank you. You go ahead.
Consideration. I mean the concept should be that after the second quarter that we we will probably run out of excuses not to give guidance going forward, but we always reserve the right to not do that clearly in this first quarter I think is where we're will be unless there's something that life that happens in COVID-19. That's unforeseen. We would expect a normalization going forward and and and then we should be able to to give some guidance on what we see our quarterly net same moving toward.
Unknown Attendee: So for the milestone payments, there are several milestone payments that have to do with regulatory approvals in the different markets. And then there are, for other programs, milestones for clinical development and the success and execution of clinical programs. So that's really where the different milestones lie, both regulatory as well as clinical.
Unknown Attendee: All in all, there are in excess of 90,000 milestones and significant royalties getting into the team.
Anita Dushyant: That would be great. Thank you.
Got it.
And so question otx d d s o t s d the trial enrolling patients as far as guys otx ESI trial and is there a chance to report data the data by the end of 2021?
Yi Chen: Thank you. Our next question comes from Yi Chen with HC Wainwright. Your line is now open.
Yi Chen: Thank you for taking my questions. My first question is, with respect to the 40% sequential growth in dextensive beta-Bi-units,
How you doing? This is Mike again. So the otx ESI trial started enrolling patients in September and the Cadence has been faster than I expected. And and that's why we're able to change guidance otx DED started enrolling patients last week and you know so far things are going well, but I think it's too early for us to be able to change guidance on that. So right now we're saying first half of 2022, obviously the things in role quickly the way otx ESI wage here is the opportunity to move that earlier and just to remind you the CSI trial is four months. We qualifications for four months after they've been randomized in the in the office trial too sort of trial the primary endpoints at two weeks, and we follow patients for two months after randomization. So it is a shorter trial and so so we will see we will we will know much more over the next
Yi Chen: How much of it was driven by recovery of surgical volume, and how much of it was...
Yi Chen: And how much of it was driven by new accountants.
Antony Mattessich: I think none of it was driven by recovery and surgical volume. Surgeries are still down. The latest data we've seen is that in 2020, there will probably be about 3.2 million cataract surgeries performed. That's against an average of about 4.1.
Antony Mattessich: The data that we've seen now is projecting that in 2021, there will probably be about 5 million cataract surgeries performed. So, the rebound is yet to happen. Clearly, we've seen in, certainly in January and February of this year, a number of ASCs either slowing down or closing. However, clearly, we're still experiencing double-digit growth in the market. So, the share gain has been accelerating, even though the total number of cataracts is still in a bit of a malaise, although we're starting to see the country wake up and start to get some of those surgeries back, but only really in March.
46 weeks
got it. And my last question is with respect to otx tki for that to be become a commercially successful successful product off your view. What's the lowest percentage of what's the lowest number in terms of percentage of patients that remain rescue free for a month or six months?
Yi Chen: Okay, at what point would you consider providing some revenue guidance?
Antony Mattessich: We're still back...
Antony Mattessich: The concept should be that after the second quarter, we will probably run out of excuses not to give guidance going forward, but we always reserve the right to not do that. Clearly, this first quarter is where we'll be, unless there's something that happens in COVID that's unforeseen. We would expect a normalization going forward, and then we should be able to give some guidance on what we see our quarterly net sales moving toward.
Yeah, it's a complex. It's a simple question with a lot of nuance to it, you know and and and it's the nuances around. What is Rescue Bots mean what is rescued mean with the with an extended release drug and a number of other things what I would say is our Target and we believe what would be a really exciting drug half the patients get evidence of biological activity and to be sustained to six months or longer. I think so, I think that's our Target. I think a product that the shorter I think and and obviously if we see a higher response rate that's even better. But I think if we can show half the patients out to 6 months or or longer that that becomes a a really big dog.
Yi Chen: And so, question on OTX-DED. Is the OTX-DED trial enrolling patients as fast as the OTX-CSI trial? And is there a chance to report beta DED data by the end of 2021? Hi, this is Mike again.
Unknown Attendee: So the OTX-CSI trial started enrolling patients in September, and the pace has been faster than we expected, and that's why we were able to change guidance. OTX-DED started enrolling patients last week, and, you know, so far, things are going well.
Got it. Thank you.
Thank you, ladies and gentlemen, ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may not disconnect.
Georgia, Georgia
Unknown Attendee: But I think it's too early for us to be able to change guidance on that. So, right now, we're saying first half of 2022. Obviously, if things enroll quickly the way OTX-CSI did, there is the opportunity to move that earlier. And just to remind you, the CSI trial is four months. We follow patients for four months after they've been randomized. In the DED trial, it's a shorter trial. The primary endpoint is at two weeks, and we follow patients for two months after randomization.
Unknown Attendee: So, it is a shorter trial. And so, we will see. We will know much more over the next four to six weeks. Got it. And my last question is, with respect to OTX TKI, for that to become a commercially successful product, in your view, what's the lowest percentage of patients that remain rescue-free, for at least? Yeah, it's a complex, it's a simple question with a lot of nuance to it.
Unknown Attendee: What I would say is our target, and we believe it would be a really exciting drug, is if half the patients respond. But I think, and obviously if we see a higher response rate, that's even better. But I think if we can show half the patients after six months or longer, that becomes a really big product.
Yi Chen: Got it. Thank you. Thank you.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.