Q1 2021 Ocular Therapeutix Inc Earnings Call

May 5, 2021

[music].

Operator: Good afternoon, ladies and gentlemen. Thank you for standing by, and welcome to the Ocular Therapeutix first quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct the 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,

Good afternoon, ladies and gentlemen, thank you for standing by and welcome to the ocular Therapeutics first quarter 2021 earnings conference call. At this time, all participants are in a listen only mode.

Later, we will conduct a question and answer session and instructions will follow at that time. It is now my pleasure to turn the call over to Donald <unk>, Chief Financial Officer of ocular Therapeutics. Please go ahead Sir.

Donald Notman: Thank you, Operator. Good afternoon, everyone, and thank you for joining us on our first quarter 2021 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 ended March 31, 2021. The press release can be accessed on the Investors portion of our website at investors.ocutx.com. Leading the call today will be Antony Mattessich, our President and Chief Executive Officer, who will provide a summary of our corporate development and an update on the commercial progress of Dextenza.

Thank you operator, good afternoon, everyone and thank you for joining us on our first quarter 2021 for the actual 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 ended March 31 2021.

The press release can be accessed on the investors portion of our website at investors <unk>, TX Dot com.

Leading the call today will be Anthony Mato pitch, our president and Chief Executive Officer, who will provide a summary of our corporate developments and an update on our commercial progress.

Panther.

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 first quarter before turning the call back over to Antony for a summary and questions. For Q&A, we will be joined by Scott Corning, our Senior Vice President, Commercial, and Chris White, our Senior Vice President, Business and Corporate Development.

Also speaking on the call today will be Dr. Michael Goldstein, our president Ophthalmology, and Chief Medical Officer, who will give an update on our clinical development from pipeline.

Boeing Michael's remarks, I will provide an overview of the financial highlights for the first quarter before turning the call back over to Anthony for.

For a summary on questions for.

Q&A, we will be joined by Scott Corning, Our senior Vice President commercial.

Chris White, our senior Vice President business and corporate development.

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 plans, 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 forecast, including those risks described in our most recent quarterly report on Form 10-Q filed this afternoon with the SEC. I will now turn the call over to Antony.

As a reminder, on today's call certain statements, we will be making maybe considered forward looking for the purposes of the private Securities Litigation Reform Act of 1995, Inc.

Particular any statements regarding our regulatory on product development plans as well as a REIT for the 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 include.

Including those risks described in our most recent quarterly report on form 10-Q filed this afternoon with the SEC.

I will now turn the call over to Anthony.

Antony Mattessich: Thank you, Donald, and welcome everyone to Ocular Therapeutix's first quarter 2021 earnings report. It's been a good start to the year, and we are pleased with our progress in the first quarter, both on the commercial front, as well as with advances in our pipeline of product candidates being developed to target several of the largest market opportunities in ophthalmology. Overall, total net product revenue for the quarter was $7.3 million. Beginning with Expensa, we achieved $6.7 million in net sales to our distributors for the first quarter.

Thank you Bob and welcome everyone to ocular Therapeutics first quarter 2021 earnings report.

There has been a good start to the year and we are pleased with our progress in the first quarter, both on the commercial front as well as with advances in our pipeline of product candidates being developed to target several of the largest market opportunities in ophthalmology.

Overall total net product revenue for the quarter was $7 3 million.

Beginning with DEXTENZA, we achieved $6 7 million in net sales to our distributors for the first quarter.

Antony Mattessich: Well, the net sales growth over the previous quarter is essentially flat. The picture in-market billable sales unit shows more clearly the development of extensive sales primarily because it isn't obscured by variations in distributor inventory levels. For the first quarter of this year, we achieved a record quarter for in-market sales in billable units of 16634, representing nearly 15% sequential quarterly growth. Billable units were just over 4,500 and 4,900 in January and February, respectively.

While the net sales growth over the previous quarter as essentially flat.

The picture in market billable sales unit shows more clearly the development of the extensive sales primarily because it is obscured by variations in distributor inventory levels.

For the first quarter of this year, we achieved a record quarter for end market sales in billable units of 16634, representing.

Representing nearly 15% sequential quarterly growth.

While building units were just over 4500 4900 in January and February respectively.

March total units grew strongly to over 7000 units our highest monthly total to date.

We believe March sales reflect both reopening and higher capacity utilization of Amc's on H O P D.

Antony Mattessich: March billable units grew strongly to over 7,000 units, our highest monthly total to date. We believe March sales reflect both reopenings and higher capacity utilization of ASDs and HOPDs. I'm also pleased to report that the March Momentum...

I'm also pleased to report that the March momentum has continued into April.

Sales of billable units to end customers in April are expected to exceed 8000 units and comfortably set a new monthly record.

For him.

This is especially gratifying in that April is the first month of a new quarter with end market sales are typically slower to buildup.

Antony Mattessich: The March momentum has continued into April.

Antony Mattessich: Sales of billable units to end customers in April are expected to exceed 8,000 units and comfortably set a new monthly record. This is especially gratifying since April is the first month of a new quarter when in-market sales are typically slow to build up.

We believe that this recent acceleration of end market demand reflects the continued growth on our share of total cataract volume and also returned to more normal levels of cataract surgeries being performed across the U S. We.

We expect these drivers to continue to propel growth throughout the year.

It is important to note that on our last quarterly earnings call. We indicated that we would no longer report on monthly end market sales of billable units. After the first quarter of this year and that we would restrict our disclosures to quarterly net sales for our specialty distributors.

Antony Mattessich: We believe that this recent acceleration of in-market demand reflects a continued growth in our share of total cataract volume and also a return to more normal levels of cataract surgeries being performed across the U.S. We expect these survivors to continue to propel growth throughout the year. It is important to note that in our last quarterly earnings call, we indicated that we would no longer report on monthly in-market sales of billable units after the first quarter of this year and that we would restrict our disclosures to quarterly net sales to our specialty distributors.

However for the changing market conditions that we experienced in the first quarter due to COVID-19, the continuing adjustments of inventory management by our distributors and the maturing of our gross to net calculation. We believe that it makes sense to continue to provide monthly end market sales in billable units at least through the second quarter of 2021.

Moving to our pipeline, we have for clinical programs each of which is geared to produce a highly differentiated ophthalmology specialty product that addresses the key unmet need and its respective disease state.

Antony Mattessich: However, with the changing market conditions that we experienced in the first quarter due to COVID-19, the continuing adjustments to inventory management by our distributors, and the maturing of our gross to net calculations, we believe that it makes sense to continue to provide monthly in-market sales in billable units at least through the second quarter of 2021.

In the aggregate the target disease States are estimated at over $20 billion in annual global sales.

We believe our pipeline remains a source of tremendous value for ocular and we are adequately capitalized on each of our four clinical programs for key phase II clinical trials, which we believe could market inflection point for us.

This week, we have six company presentations in one presentation from NII on a key at the 2021 Association for research in vision, and ophthalmology or ARVO virtual meeting.

To highlight a few of the key presentations, we presented updates to interim analyses of phase one data for both <unk> PKI for inter vitriol bio resorbable hydrogel based implant for the treatment of wet age related macular degeneration, and other retinal diseases, and <unk> GIC or inter camera travel <unk> hydrogel.

Antony Mattessich: Moving to our pipeline, we have four clinical programs, each of which is geared to produce a highly differentiated ophthalmology specialty product that addresses the key unmet need in its respective disease states. In the aggregate, the target disease states are estimated at over $20 billion in annual global sales. We believe our pipeline remains a source of tremendous value for Ocular, and we are adequately capitalized to fund each of our four clinical programs through key Phase II clinical trials, which we believe could mark an inflection point for us.

Based implant for the reduction of inter ocular pressure in patients with primary open angle glaucoma or ocular hypertension.

Both presentations provide updated data that are consistent with the development of potential products that could become the standard of care on these large markets.

We are also presenting preclinical data for our products targeting ocular surface disease.

We have posters presenting preclinical PK data of OTI CSI are cyclosporin containing INTERTAN molecular insert to increase share production in patients suffering from dry eye disease, and <unk> D. D. R dexamethasone containing inter canalicular into the short term treatment of signs and symptoms of dry eye disease.

Antony Mattessich: This week, we have six company presentations and one presentation from an IIT at the 2021 Association for Research in Vision and Optimology, or ARVO, virtual meeting. To highlight a few of the key presentations, we presented updates to interim analyses of phase one data for both OTX-TKI and an intravitreal bioresorbable hydrogel-based implant for the treatment of wet age-related macular degeneration and other retinal diseases. And OTX-TI, our intracameral, Travoprose, hydrogel-based implant for the reduction of intraocular pressure in patients with primary open-angled glaucoma or ocular hypertension.

Additionally, later this week at ARVO, we will be presenting data on DEXTENZA for the treatment of allergic conjunctivitis.

As many of you may know, we have submitted a supplemental new drug application to the FDA for the use of DEXTENZA in allergic conjunctivitis and have received a paducah target action date of October 18th of this share.

In this presentation evaluates the safety of the product candidate in a pooled post hoc analysis of the for clinical trials included in our regulatory filings.

I encourage you to take a look at these presentations, which can be accessed either at the ARVO website or on our corporate investor page.

Overall I am pleased with the year on all fronts and I'm confident for another productive year.

With that I would now like to handover the call to our president of Ophthalmology, and Chief Medical Officer, Dr. Michael Goldstein, who will provide an in depth look at our pipeline.

Thanks Anthony.

Let me begin with an update on our back of the eye program <unk> T K.

Antony Mattessich: Both presentations provide updated data that are consistent with the development of potential products that could become the standard of care in these large markets. We are also presenting pre-clinical data for our products targeting ocular surgery. We have posters presenting preclinical PK data of OTX-TSI, a cyclosporine-containing intercanellicular insert to increase tear production in patients suffering from dry eye disease, and OTX-DED, dexamethasone-containing intercanellicular inserts for the short-term treatment of signs and symptoms of dry eye disease.

We continue for the subjects in a multicenter open label dose escalation phase one clinical trial being conducted on Australia.

It is designed to assess the safety durability and Tolerability of O T X T AI as well as to assess preliminary biological activity in subjects by measuring anatomical and functional changes.

As Anthony mentioned, we presented income incremental interim data at ARVO. This update highlights data from the first.

Three fully enrolled cohorts cohort one 200 micrograms over two 400 micrograms in cohort three a 600 micrograms as well as from cohort three B 400, micrograms O T X T K.

Antony Mattessich: Later this week at Arvo, we will be presenting data on Dextenza for the treatment of allergic inductivitis. As many of you may know, we have submitted a supplemental New Drug application.

Used in combination with anti VEGF induction therapy, which is currently enrolling.

Antony Mattessich: I submitted a supplemental new drug application to the FDA for the use of Xtensa in allergic conjunctivitis and have received a PDUFA target action date of October 18th of this year. And this presentation evaluates the safety of the product candidate in a pooled post-talk analysis of the four clinical trials included in our regulatory silence. I encourage you to take a look at these presentations, which can be accessed either on the ARVO website or on our corporate investment website.

We continue to see signals of biological activity, including decreases in retinal fluid in some subjects as early as two months volume session in cohorts two and three eight. Additionally.

Additionally, we are seeing encouraging durability of six months or longer and all cohorts and durability out to 13, five months and one subjects in cohort two and nine months and one subjects in cohort three.

Oh, TX <unk> is generally well tolerated and it has been observed to have a favorable safety profile.

No ocular serious adverse events, including subjects with elevated intraocular pressure and subject to any steroids to treat ocular inflammation had been observed on a reported to date.

Antony Mattessich: Overall, I am pleased with the year on all fronts, and I'm confident of another productive year. With that, I would now like to hand over the call to our President of Ophthalmology and Chief Medical Officer, Dr. Michael Goldstein, who will provide an in-depth look at our pipeline. Thanks, Antony.

For the drug product profile is still emerging we are pleased with the interim data and O T X T has potential to reduce inter retinal <unk> sub retinal fluid and.

In terms of next steps, we plan to initiate a clinical trial in the United States starting in the middle of the year using a single 600 microgram Ots PKI implant along with anti VEGF induction therapy.

Unknown Attendee: Let me begin with an update on our back-of-the-eye program, OTX-TKI. We continue to recruit subjects in a multi-center, open-label, dose-escalation, phase-one clinical trial being conducted in Australia that is designed to assess the safety, durability, and tolerability of OTX-TKI, as well as to assess preliminary biological activity in subjects by measuring anatomical and functional changes. As Antony mentioned, we presented incremental interim data at ARVO.

Moving to our glaucoma program O T X T I see.

This study is a phase one prospective multicenter open label clinical trial enrolling subjects in the United States with primary open angle glaucoma or ocular hypertension to evaluate the safety of biological activity durability, and Tolerability of O T X T I C.

All four cohorts have been fully enrolled and interim data presented this week at ARVO generally showed a mean reduction in intraocular pressure or high pressure from baseline of 7% to 11 millimeters of Mercury that is comparable to current standard of care topical travoprost placed in the non study eyes.

Unknown Attendee: This update highlights data from the first 3 Fully Enrolled Cohorts, Cohort 1, 200 g, Cohort 2, 400 g, and Cohort 3A, 600 g, as well as from Cohort 3B, 400 g OTX TKI used in combination with anti-VEGF induction therapy, which is currently enrolling. We continue to see signals of biological activity, including decreases in retinal fluid in some subjects as early as Additionally, we are seeing encouraging durability of 6 months or longer in all cohorts, and durability out to 13.5 months in one subject in Cohort 2, and 9 months in one subject in Cohort 3A.

This data is consistent with the interim data we presented at the Glaucoma 360 conference in January.

Onset of action as early as two days after insertion.

Interim results suggest the durability of response consistent with decreases in eye pressure for six to nine months and many subjects in cohorts, one and two with one subject side pressure controlled for over 21 months for the single implant.

TICC 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 for bio resorbs and five to seven months in cohorts, one and two and three to five months in cohorts three and for.

We are seeing no clinically meaningful changes in Cornell for chemistry, or corneal endothelial cell counts overtime.

Unknown Attendee: OTX-PKI has generally been well tolerated and has been observed to have a favorable safety profile. No ocular serious adverse events, including subjects with elevated intraocular pressure and subjects needing steroids to treat ocular inflammation, have been observed or reported to date. However, the drug product profile is still emerging.

With the phase one study now fully enrolled our attention now turns to our planned phase two clinical trial, which we now expect to initiate in the fourth quarter of 2021.

This small delay in the start of the trial as a result of some additional optimization being done on the injector used to deliver at the Ot ex TICC implant.

We are also making significant progress with our ocular surface disease programs, which include product candidates for dry eye disease and allergic conjunctivitis.

Unknown Attendee: We are pleased with the interim data and OTx TKI's potential to reduce intraretinal and or subretinal fluid. In terms of next steps, we plan to initiate a clinical trial in the United States starting in the middle of the year using a single 600-microgram OTX TKI implant along with anti-VEGF induction therapy. Moving to our glaucoma program, OTX-TIC. 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.

In dry eye, we have two programs.

CSI, which is designed to increase <unk> production for the chronic treatment of patients with dry eye disease, and OTC D. E D, which is designed to target the short term treatment of the signs and symptoms of dry eye disease.

<unk> CSI is an intra handled ocular insert which combines two modalities to treat dry eye patients.

Local programs released of cyclosporine for approximately three to four months to the ocular surface along with punctual occlusion over the same time period.

By releasing low doses of preservative free cyclosporin over an extended duration of time.

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 eye disease, namely stinging and burning.

We're very excited about the potential for this physician administered hands free and preservative free option and helping drive patients receive the benefits of cyclosporin, but with potentially greater tolerability at a more rapid onset of action compared to therapies currently available on the market.

Unknown Attendee: All four cohorts have been fully enrolled, and interim data presented this week at Arvo generally showed a mean reduction in intraocular pressure, or eye pressure, from baseline of 7-11 mmHg that is comparable to the current standard of care, topical Trabecrost placed in the non-study eye. This data is consistent with the interim data we presented at the Glaucoma 360 conference in January. Theonset of action is as early as two days after insertion.

We are pleased to announce that we have recently completed enrollment of our U S based randomized masked phase II multicenter clinical trial.

This phase II clinical trial is evaluating two different formulations of OTI CSI compared with hydrogel vehicle insert and approximately 140 subjects will be followed for a period of 16 weeks.

Endpoints in this study include tier production as measured by the Schirmer 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 or Vas eye dryness severity score and eye dryness frequencies for.

Unknown Attendee: Interim results suggest a durability of response consistent with decreases in eye pressure for 6-9 months in many subjects in cohorts 1 and 2, 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 5-7 months in cohorts 1 and 2, and 3-5 months in cohorts 3 and 4.

As this trial is now fully enrolled consistent with our update last quarter, we expect top line data in the fourth quarter of 2021.

Our second product candidate in dry eye <unk> D E D as a low dose intra Cadillac dealer 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 are smaller in size.

Unknown Attendee: We have seen no clinically meaningful changes in corneal tachymetry or corneal endothelial cell counts over time. With the Phase I study now fully enrolled, our attention now turns to our planned Phase II clinical trial, which we now expect to initiate in the fourth quarter of 2021. This small delay in the start of the trial is a result of some additional optimization being done on the injector used to deliver the OTX-TIC implant. We are also making significant progress with our ocular surface disease programs, which include product candidates for dry eye disease and allergic conjunctivitis. In Dry Eye, we have two programs.

Many dry eye patients experience episodic players of their signs and symptoms, which we believe are likely related to inflammation.

Topical steroids have long been used off label for dry players and all commercially available topical steroid eye drops all.

Have reserves, which can result in ocular surface toxicity.

Chronic misuse of steroids may also lead to adverse events, such as elevated high pressure or cataract.

<unk> potentially offers these patients the opportunity to be treated with the physician administered preservative free enhance free steroid therapy that can't be over used by patients.

We are currently enrolling patients in a U S based randomized double masked vehicle controlled phase two multicenter clinical trial evaluating two different formulations of Oti's T E D compared with a hydrogel vehicle insert and approximately 150 subjects with dry eye disease.

Unknown Attendee: 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-CSI is an intracanalicular insert that combines two modalities to treat dry eye patients, local programmed release of cyclosporine for approximately 3-4 months to the ocular surface along with By releasing low doses of preservative-free cyclosporine over an extended duration of time, OTX-CFI 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 eye disease, namely stinging and burning.

The trial is designed to assess the safety and efficacy of <unk>. The EBIT for the short term treatment of signs and symptoms of dry eye disease by evaluating ballpark hunting type of hyperemia.

<unk> eye dryness frequency and severity scores and total corneal fluorescein staining.

And current enrollment continues to move at a consistent pace and we expect top line data for the first half of 2022.

Lastly.

For the extensive for the treatment of ocular itching associated with allergic conjunctivitis, we submitted an NDA at the end of 2020 and at pursuit received they could do for target action date of October 18th 2021.

Overall, we believe the data package highlights the compelling product profile targeting an unmet need that could potentially change the current standard of care for the.

A physician administered preservative free and free therapy for these patients.

This S. NDA if approved would represent our first in office indication for DEXTENZA.

Unknown Attendee: We are very excited about the potential for this physician-administered, hands-free, and preservative-free option in helping dry patients receive the benefits of cyclosporine but with potentially greater tolerability and a more rapid onset of action compared to therapies currently available on the market.

I would now like to turn the call back over to Donald to review, our first quarter financial results.

Thanks, Mike gross product revenue net of discounts rebates and returns, which the company refers to as total net product revenue was $7 $3 million for the three months ended March 31 2021.

Representing a greater than 175% increase over the first quarter of 2020.

Unknown Attendee: We are pleased to announce that we have recently completed enrollment in our U.S.-based randomized mask phase 2 multicenter clinical trial. This Phase 2 clinical trial is evaluating two different formulations of OTX-PSI compared with hydrogel vehicle insert in approximately 140 subjects will be followed for a period of 16 weeks. Endpoints in the study include tear production, as measured by the Schirmer's 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, or VAS, eye dryness severity score, and eye dryness frequency score.

Net product revenue of the extent in the first quarter was $6 $7 million versus $2 $1 million in the comparable quarter of.

2020, and reflects an approximately 220 per cent increase <unk>.

Total net product revenue for the first quarter also includes net product revenue of $6 million from a share sealant.

Research and development expenses for the first quarter were $10 9 million versus $6 $1 million for the comparable period in 2020, primarily driven by increased head count as well as increased clinical trial costs associated with the ongoing phase III clinical trial for <unk> CSI.

Commencement of the phase two clinical trial of <unk> and the ongoing phase one clinical trial of <unk> T Cai and Ot ex TICC.

Selling and marketing expenses in the quarter were $8 $1 million as compared to $7 $1 million for the same quarter in 2020.

<unk> increased personnel costs associated with the expansion on the sales force.

Finally general and administrative expenses were $7 $7 million for the first quarter.

Unknown Attendee: As this trial is now fully enrolled, consistent with our update last quarter, we expect top-line data in the fourth quarter of 2021. Our second product candidate for dry eye, OTX-DED, is a low-dose intercalicular insert of preservative-free dexamethasone. While it incorporates the same active drug as Dexpenza, this is a new product candidate with a lower dose of dexamethasone and a smaller insert size. Many dry eye patients experience episodic flares of their signs and symptoms, which we believe are likely related to inflammation.

$5 $2 million in the comparable quarter of 2020, the increase in expenses, primarily from increased personnel expenses and professional fees.

With respect for the financial results for the first quarter. The company reported net income of $3 $1 million for <unk> per share basic basis on a net loss of $20 8 million or a loss of 24 cents per share on a diluted basis.

This compares to a net loss of $21 $5 million for a loss of <unk> 41 per share on a basic and diluted basis for the same period in 2020.

As operating expenses increased quarter over quarter modest profit was driven by non cash gain of $25 million related to the change in fair value derivative liability associated with the company's convertible notes.

Change in fair value was due primarily to a decline in the company's common stock price during the quarter.

Noncash charges for stock based compensation and depreciation and amortization was $3 $7 million in the first quarter for.

Unknown Attendee: Topical steroids have long been used off-label for dry eye flares, and all commercially available topical steroid eye drops all 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.

$2 4 million for the same quarter in 2020.

As of May three 2021, the company had $76 2 million shares outstanding.

As of March 31, 2021, the company had $209 $4 million in cash and cash equivalents versus $228 1 million at December 31, 2020.

Unknown Attendee: OTX-DED potentially offers these patients the opportunity to be treated with a physician-administered, preservative-free, and hand-free steroid therapy that can't be overused by patients. We are currently enrolling patients in a U.S.-based, randomized, double-mask, vehicle-controlled, phase 2, multi-center clinical trial evaluating two different formulations of OTH-DED compared with The trial is designed to assess the safety and efficacy of OTX-DED for the short-term treatment of signs and symptoms of dry eye disease by evaluating bulbar conjunctival hyperemia, the VAS, eye dryness frequency and severity scores, and total corneal fluorescent staining. Enrollment continues to move at a consistent pace, and we expect top-line data for the first half of 2022.

Based on our current plans and related estimates from anticipated cash inflows from DEXTENZA and <unk> share of product sales and cash outflows from operating expenses.

The company believes that existing cash and cash equivalents as of March 31, 2021 will enable the company to fund.

<unk> operating expenses debt service obligations on capital expenditure requirements through 2023.

This cash guidance is subject to a number of assumptions, including those related to the severity and duration of the COVID-19 pandemic.

The revenues and expenses associated with the commercialization of DEXTENZA.

And the pace of research and clinical development programs and other aspects of the business.

This concludes my comments on our first quarter financial results and I would like to turn the call back to Anthony for some summary thoughts.

Thanks Donald.

Before opening the call up for questions. Let me do a quick summary.

We are pleased with continued progress on our pipeline and our growing presence at key medical meetings like <unk> that allow us to share our progress.

In wet AMD on phase one trial continues to support Otf's Teekay is differentiated product profile that could potentially set a new standard of care for durability.

Unknown Attendee: Forge Extensor for the Treatment of Ocular Itching Associated with Allergic Conjunctivitis, we submitted an SNDA 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 with a physician-administered, preservative-free, hands- This SNDA, if approved, would represent our first in-office indication for Dick Stenzel. I would now like to turn the call back over to Donald to review our first quarter financial results. Thanks, Mike.

We remain on plan to initiate a U S based phase <unk> clinical trial in the middle of 2021.

In glaucoma data from our phase one trial of Ot ex TICC continues to support a durable rapid onset 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 fourth quarter of 2021.

In dry eye disease, we initiated two phase two clinical trials, one for Ots CSI and one for OTI ex D D.

For <unk> CSI, we now expect top line data in the fourth quarter of this year for <unk>, We expect top line data in the first half of 2022.

Beyond dry eye disease, we submitted our NDA for DEXTENZA in allergic conjunctivitis in December 2020, and hope to do for target action date of October 18th 2021.

Donald Notman: Gross product revenue net of discounts, rebates, and returns, which the company refers to as total net product revenue, was $7.3 million for the three months ended March 31, 2021, representing a greater than 175% increase over the first quarter of 2020. Net product revenue of Vic Stenza in the first quarter was $6.7 million versus $2.1 million in the comparable quarter of 2020 and reflects an approximately 220% increase. The total Net Product Revenue for the first quarter also includes Net Product Revenue of $0.6 million from Reshure Sealant.

Finally fixed turns achieved a record quarter for end market available sales units and is off to a very strong start in Q2.

We look forward to a busy and productive 2021 and with that I will 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.

Jay Your question touched upon key please standby, while we compile the Q&A roster.

Our first question comes from Joe Catanzaro with Piper Sandler Your line is now open.

Hey, guys. Thanks for taking my questions here and congrats on all the progress on all fronts here. Anthony I was wondering if you can elaborate a little bit more on the dynamics that drove the april debt than the numbers that you're referencing and whether there are one off events there and relatedly are your expectations that may will grow off that 8000.

<unk> followed by a bump in June with the rebate effect and then what should we expect in July does it return back to that dynamic that you observed historically thanks.

Donald Notman: Research and development expenses for the first quarter were $10.9 million versus $6.1 million for the comparable period in 2020, primarily driven by increased headcount, as well as increased clinical trial costs associated with the ongoing Phase II clinical trial for OTX-CSI, the commencement of the Phase II clinical trial of OTX-DED, and the ongoing Phase I clinical trials of OTX-TKI and OTX-TIC. Selling and marketing expenses in the quarter were $8.1 million, as compared to $7.1 million for the same quarter of 2020, reflecting increased personnel costs associated with the expansion of sales. Finally, general and administrative expenses were $7.7 million for the first quarter versus $5.2 million in the comparable quarter of 2020. The increase in expenses stems primarily from increased personnel expenses and professional fees.

Great well thanks, Thanks for the question.

We expected the bump in in March.

We didn't expect to surpass March sales in April that was a bit of a surprise to us.

We have to remember that January and February were bad month, or bad months for COVID-19 never bad months for weather.

So the return of what what is somewhat normalcy for for March was very much for unexpected.

But typically our pattern has been that the first two months of the new quarter are below the last month of the previous quarter.

So whether it sets a new bar and you will continue to grow off this level and expect to have the.

Usual bump at the end of the quarter.

It's hard to predict but it's certainly from anecdotal reports from the field.

Really driven by the fact that debt surgery centers are back open.

Surgeons have been vaccinated the administrators have been vaccinated and more importantly, the patients have been vaccinated. So our universe is essentially getting back to normal and when youre gaining share in a growing market. It's a it really can accelerate yourselves. So yeah.

I'm not going to knock on just sort of go on record and say, where I expect to be next month and the month after but but but I would still expect net sort of saw tooth kind of growth given the popularity of our rebate program.

Donald Notman: With respect to the financial results for the first quarter, the company reported net income of $3.1 million, or $0.04 per share on a basic basis, and a net loss of $20.8 million, or a loss of $0.24 per share on a diluted basis. This compares to a net loss of $21.5 million, or a loss of 41 cents per share on a basic and diluted basis for the same period in 2020. As operating expenses increased quarter over quarter, the modest profit was driven by a non-cash gain of $25 million related to the change in the fair value of the derivative liability associated with the company's convertible notes. This change in fair value was due primarily to a decline in the company's common stock price during the quarter.

Okay got it that's helpful. And then maybe along the line of discussion could you can you provide some details around the gross to net debt youre seeing or saw on the quarter for DEXTENZA and maybe how much that fluctuate moving forward based on the extent of the rebate program usage.

Yeah, there wasn't a great fluctuation in the gross to net on the fluctuation was really in the debt.

The inventory at our three PL.

We finished last quarter around 30 days' worth of inventory. We finished this quarter about 22 days.

So that was the lion's share of the difference that you see in the end market versus the two market.

There were some adjustments clearly our rebate program is extremely popular so it does have an effect.

But.

The anomaly that youre seeing between two market sales mid market sales is almost <unk>.

Donald Notman: Non-cash charges for stock-based compensation and depreciation and amortization were $3.7 million in the first quarter versus $2.4 million for the same quarter in 2020. As of May 3, 2021, the company had 76.2 million shares outstanding. As of March 31, 2021, the company had $209.4 million in cash and cash equivalents versus $228.1 million at December 31, 2020.

Exclusively driven by that change in distributor holding.

And maybe if I could squeeze in one last one so as we think about the rebate program in surgical volumes seemingly picking up is there more room for that rebate program to have even a bigger impact than what you've solved for the last two or three quarters when that rebate program was put in place.

Absolutely I mean, you look at the size of the customers that we have when you look at on an surge or a nice out partners from some of these really large consortia.

We're just scratching the tip of the iceberg. So they are getting of course to the to.

The highest levels with the asc's they have on line.

Donald Notman: Based on our current plans and related estimates of anticipated cash inflows from Dextenza and Reshure product sales and cash outflows from operating expenses, the company believes that existing cash and cash equivalents, as of March 31, 2021, will enable the company to fund planned operating expenses, debt service obligations, and capital expenditure requirements through 2023. This cash guidance is subject to a number of assumptions, including those related to the severity and duration of the COVID-19 pandemic, the revenues and expenses associated with the commercialization of Dextenza, and the pace of research and clinical development programs and other aspects of the business. I have concluded my comments on our first quarter financial results, and I would like to turn the call back to Anthony for some summary thoughts. Thanks, Donald.

But the work at hand, now is to get more of their asce's participating.

So we fully expect that that rebate program will continue to drive volume.

On both and breath, but I think more importantly in depth.

Yeah.

Okay perfect. Thanks, Thanks for taking my questions here.

Thanks, Joe.

Thank you for our next question comes from Jonathan <unk> with JMP Securities. Your line is now open.

Hey, congrats and thanks for taking the question.

Just a couple for me on the pipeline.

You mentioned the new start for the <unk> study due to some changes in the injector I was hoping you could give us some more color on what they are trying to optimize for with these changes.

Yeah, Hi, John It's Mike speaking thanks. Thanks for the question. So, we obviously want to optimize the patient and physician experience.

And there are just some.

Some optimization work that needs to be done on the injector.

For the intra chemical delivery and that's caused a slight delay.

Antony Mattessich: So before opening the call up for questions, let me give you a quick summary. We are pleased with continued progress in our pipeline and our growing presence at key medical meetings like ARBO that allow us to share our progress. In WET-AMD, our Phase 1 trial continues to support OTX-TKI's differentiated product profile that could potentially set a new standard of care for durability, and we remain on plan to initiate a U.S.-based Phase I clinical trial in the middle of 2021.

Started the phase II program.

Okay, and then with ex U K.

Absolutely, we're seeing progress on wet AMD, but you've had kind of <unk> and RVO lift as potential opportunities wondering if you have any development plans in the works there or how are you thinking about the opportunities beyond wet AMD.

Yes, great question we.

We do think there is a big big opportunities beyond wet AMD and the two leading areas our day in RVO.

And we very much do have plans to pursue both of those opportunities.

In the future, but we haven't announced exactly when those trials would start, but clearly well well within our plans.

Okay, great. Thanks for taking the questions.

Antony Mattessich: In glaucoma, data from our Phase 1 trial of OTX-TIC continues to support a durable, rapid-onset product profile that could potentially set the standard of care for patient compliance. We plan to advance that program into a phase 2 clinical trial in the fourth quarter of 2021. In dry eye disease, we initiated two phase two clinical trials, one for OTX-CSI and one for OTX-DED. We now expect top-line data in the fourth quarter of this year. For OTSDED, we expect top-line data in the first half of 2022.

Thank you. Our next question comes from George any day now with Cowen and company. Your line is now open.

Hey, guys. Thank you so much for taking the questions and congratulations on the progress.

I do have a couple on the pipeline. It is clear for <unk> debt you have observed some striking responses. During the study do you believe that there is a biomarker that could help you identify those patients that would respond to treatment before initiating treatment.

And as a follow up on to that have you considered exploring higher doses given debt excellent safety profile and that you had not reached a maximum tolerated dose and then I do have a problem.

Yeah.

Great question, I think looking for Biomarkers to look for responders is sort of the Holy Grail for not just us for for many companies.

Antony Mattessich: Beyond dry eye disease, we submitted our SNDA for dexbenza and allergic conjunctivitis in December 2020 and have a PDUFA.

So I would love to tell you we've found what those biomarkers are to identify responders we have not.

Antony Mattessich: In 2020, and have a PDUFA target action date of October 18, 2021. Finally, Textenza achieved a record quarter for in-market billable sales units and is off to a very strong start in Q2. We look forward to a busy and productive 2021. And with that, I will turn the call over to you.

But we will keep looking.

And in terms of of a higher dose, yes, we are interested in exploring a higher dose.

We do we have shown an excellent safety profile stake up to 600 micrograms.

We are our immediate plans are to go forward with a single implant 600, microgram dose, which although it seems similar to the current dosing we have in Australia that dosing is three 200 microgram implants, but it turns out that you do get a higher flux right out of the <unk>.

Operator: 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 compile the Q&A roster. Our first question comes from Joe Catanzaro with Piper Sandler. Your line is now open.

<unk> per day, when you go to a single implant so that there will be.

People with dose escalation there.

That said we are.

Joseph Michael Catanzaro: Hey guys, thanks for taking my questions here, and congrats on passing.

We'll continue to pursue.

The opportunity to look at higher doses I think we're gonna be limited not by Tolerability, but really the ability to formulate and an implant that's a reasonable size.

Joseph Michael Catanzaro: My question is to you, and congratulations on all the progress on all fronts here. Antony, I was wondering if you could elaborate a little bit more on the dynamics that drove the April Dexenza numbers that you're referencing, and whether there are one-off events there, and relatedly, are your expectations that May will grow off that 8,000 number, followed by a bump in June with the rebate effect? And then, you know, what should we expect in July? Does it return to that dynamic that you observed historically?

And so I think that will end up being what will prevent us from going too high but we do have room to go higher than 600 micrograms.

Got it and just a related related on PKI, we didnt noticed debt.

On on the safety you have indicated that in the most recent update there has been named.

Moderate.

Have you disclosed the nature of that AE.

We have not.

Antony Mattessich: Thanks for the question. Well, we expected a bump in March, but we didn't expect to surpass March sales in April. That was a bit of a surprise. I mean, we have to remember that January and February were bad months. They're bad months for COVID, and they're

Alright, and then do you.

The last question is on the GIC program.

That's another very interesting program it presented some free.

Interesting early data could you remind us of the legacy <unk> cheek glaucoma program.

And the issues there with development and more differentiate this clearly superior GIC product.

Antony Mattessich: [inaudible] So whether this sets a new bar, and we'll continue to grow off this level and expect to have the usual bump at the end of the quarter is hard to predict, but it's certainly from anecdotal reports from the field that it's really driven by the fact that surgery centers are back open. Surgeons have been vaccinated, the administrators have been vaccinated, and, more importantly, the patients have been vaccinated.

Yeah, Great question. So both of the programs use travoprost, which is across the globe on them.

Analog and very commonly used in clinical practice doesn't eyedrop.

The <unk> TP program delivered for the prostaglandin through an inter canalicular delivery.

The O chicks T. I C program delivers the traveler cross through an intra camera on delivery.

So clearly.

Antony Mattessich: So our universe is essentially getting back to normal. And when you're gaining share in a growing market, it really can accelerate your sales. So I'm not going to sort of go on record and say where I expect to be next month and the month after, but I would still expect that sort of sawtooth kind of growth given the popularity of our rebate program.

Clearly when you when you go in for camera later, you get a higher dose.

The drug to the target tissue, which is inside the eye.

So.

As expected we are seeing much higher levels of net.

Tire ability to lower crusher.

With the O T X T IC product.

So over a longer period of time, so we're seeing approximately 7% to 11 millimeters.

Antony Mattessich: Okay, guys, that's helpful. And then maybe along this line of discussion, can you provide some details around the growth to net that you're seeing or saw in the quarter for Dextenza and maybe how much that fluctuates moving forward based on the extent of the rebate program usage?

IOP lowering and we've looked at for different formulations. So we're seeing anywhere from three to three to nine months of durability for the single implant.

So that compared to the O checks Tc the surface.

Inter kind of ocular delivery, where it was more like between two and four millimeters of delivery for approximately three months, so clearly much better efficacy.

Antony Mattessich: Yeah, there wasn't a great fluctuation in the gross net. The fluctuation was really in the inventory at our 3PL. We finished last quarter around 30 days worth of inventory. We finished this quarter about 22 days.

When you go to when we're going to the intra camera on delivery.

Yeah.

Great. Thank you. So much. This is this is super helpful. Thank you.

Thank you. Our next question comes then David Steinberg with Jefferies. Your line is now open.

Antony Mattessich: So that was the lion's share of the difference that you see in the in-market versus the to-market. There were some adjustments. Clearly, our rebate program is extremely popular, so it does have an effect. But the anomaly that you're seeing between to-market sales and in-market sales is almost exclusively driven by that change in distributor holdings.

Hi, it's actually Ed Chan on for Dave a quick question on the <unk>.

<unk> historically talked about.

5000 per month as a threshold.

For achieving breakeven on your commercial platform that was that before.

Or after your sales force expansion.

Yeah that was before our sales force expansion clearly, we've we've added a few people not not.

Joseph Michael Catanzaro: And maybe I could squeeze in one last one. So, as we think about the rebate program and surgical volumes,

A huge amount, but we're spending about 7 million now on our total.

Antony Mattessich: Absolutely. I mean, you look at the size of the customers that we have. You look at an AmSurg or an iSALP partner, some of these really large consortia. We're just scratching the tip of the iceberg, so they are getting, of course, to the highest levels with the ASCs they have online, but the work at hand now is to get more of their ASCs participating. So we fully expect that that rebate program will continue to drive volume in breadth, but I think more importantly in depth. Okay. Thanks for taking my questions here.

Marketing and sales effort. So yeah, we've ramped up a bit that number would be a bit higher.

So you know around the it would probably be closer to 770 500 units to get to breakeven.

Got it alright, great thanks and.

In terms of.

R&D spend I mean, how should we be thinking about the ramp as as these programs you know.

Go into phase two and obviously this is <unk>.

Going to cost you a little more than what.

And your ability to fund them.

You know into phase twos.

Well, we've stated that we have.

Sufficient cash cash equivalents to be able to fund all of the programs that we have through their phase III readouts.

Jonathan Patrick Wolleben: Thank you. Our next question comes from Jonathan Wolleben with J&P Securities. Your line is now open.

Jonathan Patrick Wolleben: Hey, congrats and thanks for taking the question. Just a couple for me on the pipeline.

So we are we're comfortable with a with obviously a countered set of an expectation for DEXTENZA sales.

Jonathan Patrick Wolleben: You mentioned the new start for the OCX-TIC study due to some changes in the injector. I was hoping you could give us some more color and what you're trying to optimize for with these changes. Hi, John. It's Mike speaking.

We're currently running ahead of our expectations on DEXTENZA sales. So we feel pretty comfortable that debt. We don't have a cash issue through those readouts.

But you are right I mean, we would be.

Unknown Attendee: Thanks for the question. So we obviously want to optimize the patient and physician experience, and there is just some optimization work that needs to be done on the injector for the intracameral delivery. And that's caused a slight delay in the start of the Phase II program.

What the costs would be increasing as we enter.

<unk>, two and a larger phase one study with.

With TK.

Got it.

Perfect. Thanks.

Yeah.

Thank you. Our next question comes from and neither do see on with band back. Your line is now open.

Jonathan Patrick Wolleben: Okay, and then with OTX-TKI, obviously we're seeing progress in wet AMD, but you've had DME and RVO listed as potential opportunities. I was wondering if you have any development plans in the works there, or how are you thinking about the opportunities beyond wet AMD? Yeah, great question.

Hi, Congrats on the progress and thanks for taking my question.

Just wanted to know if you could your line is the markdown for Cherokee in the acute versus chronic dry eye.

And also.

Nathan D D I assume it was approved for <unk>.

And I think I just wanted to know how.

Antony Mattessich: We do think there are big, big opportunities beyond what AMD is doing, and the two leading areas are DME and RBO. And we very much do have plans to pursue both of those opportunities in the future. We haven't announced exactly when those trials would start, but clearly, those are well within our plans.

Oh, Glenn Debbie D. K it comes on what cash.

And in my opinion that isn't going to be filling some gaps inc.

And the competition.

Yeah I'll take the first part of the question and then Mike Obviously is not only our CMO, but he is also a practicing ophthalmologists. So we can sort of let you know from an ophthalmologist standpoint, what they need.

Georgi Yordanov: Thank you. Our next question comes from Georgi Yordanov with Cowen & Company. Your line is now open.

I mean first of all Cala, we have to thank them for them.

Georgi Yordanov: Hey guys, thank you so much for taking the questions and congratulations on the progress. I do have a couple in the pipeline.

Actually creating the indication for short term treatment.

So it was very creative for them in very very good dialogue that they had with the FDA in order to be able to create that opportunity.

Georgi Yordanov: It is clear for LTX TKI that you have observed some striking responses during the study. Do you believe that there is a biomarker that could help you identify those patients that would respond to treatment before initiating treatment? And as a follow-up to that, have you considered exploring higher doses given the excellent safety profile and that you have not reached a maximum tolerated dose? And then I do have a question. Yeah, two great questions.

What the relative sizes for the short term market is relative to the to the chronic it's hard to say at this point because the short term market is so new.

I think it's pretty clear to say that.

<unk> market is comfortably larger and orders of magnitude larger than what the short term market would be.

So the sizes are considerable for both but we feel certainly the debt chronic market is for a larger.

Unknown Attendee: I think looking for biomarkers to look for responders is sort of the holy grail for not just us but for many companies. So I would love to tell you we've found what those biomarkers are to identify responders. We have not, but we will keep looking.

Considering the differences that are day program would bring on the short term treatment.

Relative to what you see with with what I see the ore with off label.

Steroids is that we would be obviously a physician administered.

Unknown Attendee: And in terms of a higher dose, yes, we are interested in exploring a higher dose. We have shown an excellent safety profile state up to 600 micrograms. Our immediate plans are to go forward with a single implant, 600 microgram dose, which although it seems similar to the current dosing we have in Australia, that dosing is three 200-microgram implants. So it turns out that you do get a higher flux rate out of the implant per day when you go to a single implant.

So there would be.

On a non abusable guilty.

Aspect to the products so that the doctor is putting it in it releases its product.

And then the insert buyer Resorbs and goes down and Thats on a lack from a dock for the patient is actually taken out of the equation and.

And overuse of steroids is one of the worries that doctors have when they when they treat either short term certainly wouldn't treat long term, but they they would treat short term.

Dry eye that they worry that patients would would like the the way they work so much that they would they would.

Unknown Attendee: So there will be, if you will, a dose escalation there. That said, we will continue to pursue the opportunity to look at higher doses. I think we're going to be limited not by tolerability but really the ability to formulate it in an implant that's of a reasonable size. And so I think that will end up being what will prevent us from going too high, but we do have room to go higher than 600 micrograms

They would find somebody else's drops and continue to use them and then they would develop elevated in ocular pressure and cataracts.

So we would have that advantage. We would also be a preservative free product. Currently there are no preservative free steroid is on the market.

Many patients do respond to preservative.

Particularly when you have a dry condition you have a compromised ocular surface, putting a preservative on compromise ocular surface surface is generally not advisable.

And finally, we of course would have a we're a buy and bill product that has a procedure code attached.

Unknown Attendee: And just related to TKI, we did notice that, on safety, you have indicated in the most recent update, there has been a moderate ocular AE. Have you disclosed the nature of that AE? We have not.

So the office environment, Alex economics would be substantially different in our part D product, where you're writing a script.

And the patient is going to the pharmacy to fill that script.

So they'd be very different products I think they would flow there's certainly a space for both of them.

Georgi Yordanov: Alright, and then the last question is on the TIC program. So that's another very interesting program. You've presented some pretty interesting early data. Could you remind us of the legacy OTX-TP glaucoma program and the issues there with development, and what differentiates this clearly superior TIC product? Yeah, great question.

And I think I assume he has got a really great future in front of it it's a fantastic product and Cala has done a fantastic job in creating this indication.

I don't know, Mike do you want to add some more to the to the overall answer.

That was pretty complete response.

And gentlemen, it sounds like an ophthalmologist.

I'll just I would just add I mean this is a.

A market that we as ophthalmologist.

Have access for a long time, so we know that steroids have been very effective for for treating patients with inflammatory players would put dry eye and it's pretty common and we've used off label low dose steroids for compounded steroids for a long time, so as Anthony mentioned.

Unknown Attendee: So both of the programs use Traviprost, which is a prostaglandin analog and is very commonly used in clinical practice as an eyedrop. The OTX-TP program delivers the prostaglandin through an intracanalicular route, and the OTX-TIC program delivers the trabecrosis through an intracameral route. And clearly, when you go intracamerally, you get a higher dose of the drug to the target tissue, which is inside the eye. As expected, we're seeing much higher levels of much higher ability to lower eye pressure with the OTX-TIC product over a longer period of time.

Setup to Cala and in particular for Chief Medical Officer, Kim Brazzell, who worked with FDA to actually get this as an approvable indication I think a lot of us day.

I think that was what happened so we've sort of looked at there.

What they've done we think this is a really really interesting opportunity I think the big clinical advantage. We offer is as he said is that we're not in eyedrops physician administered.

Unknown Attendee: So we're seeing, you know, approximately seven to 11 millimeters of IOP lowering. And, you know, we've looked at four different formulations, and we're seeing anywhere from three to nine months of durability with a single implant. So compared to the OTX-TP, the surface intercanalicular delivery, where it was, you know, more like between two and four millimeters of delivery for approximately three months. So clearly, much better efficacy when we're going to the intercanal delivery.

In the office that can't be abused by patients.

And therefore.

The concerns that we have as physicians about using steroids for dry eye, which are the patients will overuse them and developed adverse events like glaucoma.

Cataracts.

Off the table because patients can't be as a commodity placed by the physician. So we think I think that's the big clinical advantage that we offer here, but we're really excited about this as a potential indication.

Georgi Yordanov: Great. Thank you so much. This is super helpful.

David Steinberg: Thank you. Our next question comes from David Steinberg with Jefferies. Your line is now open.

Great that was very helpful. Thank you.

Thank you.

Thank you for a line that does.

Ask a question you will need to press star one on your telephone.

Ed Chung: Hi, it's actually Ed Chung on for Dave.

Our next question comes from Louise Chen with H C. Wainwright. Your line is now open.

Ed Chung: Question on the, you know, you historically talked about.

Hi, This is Bob Allen dialing in for <unk>. So if you could comment on your expectations for DEXTENZA adoption for the 2021.

Ed Chung: Historically, we talked about a 5,000 insert per month as a threshold for achieving break-even on your commercial platform. Now, was that before?

That's that would be appreciated on do you anticipate any potential roadblock as the country is coming out of COVID-19, with our impressive explanation right.

Antony Mattessich: or after your Salesforce expansion. Yeah, that was before our Salesforce expansion. Clearly, we've added a few people, not a huge amount, but we're spending about $7 million now on our total marketing and sales effort. So yeah, we've ramped up a bit. That number would be a bit higher. So it's probably closer to 7500 units to break even. Got it. All right, great. Thanks. And in terms of... R&D spend. I mean, how should we be thinking about, you know, the ramp as these programs go into it?

Yes, we have not given guidance for guidance about DEXTENZA.

The market is fast returning to a on.

Normal situation.

On where the COVID-19 is no longer seemingly affecting the our customers.

So our excuses for not giving guidance as are probably going away, but we have not given that and what we've done instead is we've given extraordinary.

Transparency into our in market sales in billable units, which really is a pretty granular level.

I will look into what our sales are.

We would at some point switch to giving guidance and then give also on the quarterly net sales, but until until we do that we won't give guidance.

Ed Chung: Your ability to fund them, you know, into phase two. Well, we stated that we had sufficient cash and cash equivalents to be able to fund all of the programs that we have through their phase two readout.

Alright understood could you comment on the phase II program for Ot ex D D D.

Ed Chung: So we're comfortable with, obviously, a counter-expectation for Dextensa sales. We're currently running ahead of our expectations for Dextensa sales. So we feel pretty comfortable that we don't have a cash issue through those readouts. But you are right, we would be, the cost would be increasing as we enter phase two and a larger phase one study with TKI. Got it.

What has been stated in your press release on what are the expectations from the trial and when can we hear about the interim findings.

Yes.

So the <unk> D E T phase two program is 150 subjects. It's two different formulations of the OTC ex D E D against day.

Vehicle.

In search.

Anita Ducant: Thank you. Our next question comes from Anita Ducant with Barenberg. Your line is now open.

The primary endpoint is looking at.

<unk> total redness at two weeks, but we're also looking at other.

Anita Ducant: Hi, congratulations on the progress, and thanks for taking my question. I just wanted to know if you could remind us the market opportunity for the acute versus chronic dry eye disease, and also, recently, the eye service was approved for the acute treatment, I think, and I just wanted to know how, when the DED candidate comes on the market. Is it going to be filling some gaps or displace the competition?

Signs and symptoms of dry eye disease.

The trial enrollment is going very well despite COVID-19 things have moved on much of that debt would be CSI trial.

And there is no interim look at the data.

We've disclosed that we will.

Released the topline data in the first half of next year.

Alright, one final question from me. So do you think DEXTENZA for allergic conjunctivitis there'll be price differentially.

Antony Mattessich: And Mike, obviously, is not only our CMO, but he's also a practicing ophthalmologist. So we can sort of let you know from an ophthalmologist's standpoint what they mean. I mean, first of all, Kala, we have to thank them for actually creating the indication for short-term treatment. So it was very creative of them and a very good dialogue that they had with the FDA in order to be able to create that opportunity. What the relative size of the short-term market is relative to the chronic market, it's hard to say at this point because the short-term market is so new.

No we can't price it differently. Its the same NDA so the price the price will be the same.

That's it from me thanks, so much on congrats.

Thanks, so much for the questions.

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

[music].

Antony Mattessich: I think it's pretty clear to say, though, that the chronic market is comfortably larger by orders of magnitude larger than what the short-term market would be. So the sizes are considerable for both, but we feel certainly that the chronic market is far larger. Considering the differences that our DED program would bring about in short-term treatment, Relative to what you see with isuvia or with off-label steroids, we would be, obviously, physician-administered, so there would be a non-abusability aspect to the product. So the doctor is putting it in, it releases its product, and then the insert bioresorbs and goes down the methylacrylamide duct.

Antony Mattessich: So the patient is actually taken out of the equation. And overuse of steroids is one of the worries that doctors have when they treat either short-term, they certainly wouldn't treat long-term, but they would treat short-term dry eye, that they worry that patients would like the way they work so much that they would find somebody else's drops and continue to use them, and then they would develop elevated interocular pressure and cataracts. So we would have that advantage. And we would also be a preservative-free product. Currently, there are no preservative-free steroids on the market.

Antony Mattessich: Many patients do respond to preservatives, particularly when you have a dry condition; you have a compromised ocular surface. However, putting a preservative on a compromised ocular surface is generally not advisable. And finally, we, of course, would have a buy and build product that has a procedure code attached. So the office environment, the office economics would be substantially different than a Part D product where you're writing a script. And the patient is going to the pharmacy to fill that script. So they'd be very different products. I think they would both; there's certainly room for both of them.

[music].

Antony Mattessich: And I think iSUVI has got a really great future in front of it. It's a fantastic product and Kala has done a fantastic job in creating this indication. I don't know, Mike, do you want to add some more to the overall response? That was a pretty complete response.

Unknown Attendee: We think this is a really, really interesting opportunity. I think the big clinical advantage we offer, as they said, is that we're not an eye drop. This is physician administered in the office. It can't be abused by patients. And therefore, the concerns that we have as physicians about using steroids for dry eye, which are that patients will overuse them and develop adverse events like glaucoma or cataracts, go off the table because the patients can't abuse them. It can only be prescribed by the physician. So, I think that's the big clinical advantage that we offer here. But we're really excited about this as a potential indication.

Anita Ducant: Great, that was very helpful. Thank you.

Yi Chen: Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. Our next question comes from Yi Chen on HC Wainwright. Your line is now open.

Bhubalan: Hi, this is Bhubalan dialing in for Yi Chen. So, if you could comment on your expectations for Dexpan's adoption for the year 2021, that would be appreciated, and do you anticipate any potential roadblocks as the country is coming out of COVID-19 with an impressive vaccination rate?

Antony Mattessich: Yeah, we've not given guidance, forward guidance about Dexantha, but the market.

Antony Mattessich: But the market is fast returning to a normal situation where COVID is no longer seemingly affecting our customers. So our excuses for not giving guidance are probably going away, but we have not given that. And what we've done instead is we've given extraordinary transparency into our in-market sales and billable units, which really is a pretty granular level of a look into what our sales are. We would switch to giving guidance and then give only quarterly net sales, but until we do that, we won't give guidance.

Bhubalan: All right, understood. Could you comment on the Phase II program for OTX-TDD, other than what has been stated in your press release? And what are your expectations from the trial, and when can we hear about the interim findings?

Bhubalan: The Phase II program is 150 subjects. It's two different formulations of the OTX-BED against a vehicle insert. The primary endpoint is looking at conjunctival redness at two weeks, but we're also looking at other signs and symptoms of dry disease. The trial enrollment is going very well despite COVID, and things have moved along much as they did with the CSI trial. And there is no interim look at the data, but we've disclosed that we will release the top-line data in the first half of next year.

Bhubalan: All right, one final question from me. So do you think the expense for allergic conjunctivitis will be priced differently?

Antony Mattessich: No, we can't price it differently. It's the same NDA, so the price will be the same.

Bhubalan: That's it from me. Thanks so much and congratulations. Okay, thanks so much for the questions. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

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unknown: A man is just a man. Dane Leone, Joseph Catanzaro, Donald Notman, Jonathan Wolleben, Tara Bancroft, Peter Kaiser, Colleen Kusy, Rabia Ozden, Steve Meyers, Unknown Attendee, Dingding Shi, Yi Chen, Antony Mattessich, Chaitanya Gollakota, Ocular Therapeutix Inc.

Operator: Good afternoon, ladies and gentlemen. Thank you for standing by, and welcome to the Ocular Therapeutix first quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. It is now my pleasure to turn the call over to Donald Notman, Chief Financial Officer of Ocular Therapeutix. Please go ahead

[music].

Donald Notman: Thank you, Operator. Good afternoon, everyone, and thank you for joining us on our first quarter 2021 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 ended March 31, 2021. Press release can be accessed on the Investors portion of our website at investors.ocutx.com. Leading the call today will be Antony Mattessich, our President and Chief Executive Officer, who will provide a summary of our corporate development and an update on the commercial progress of Dextenza.

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 first quarter before turning the call back over to Antony for a summary and questions. At the Q&A, we will be joined by Scott Corning, our Senior Vice President, Commercial, and Chris White, our Senior Vice President, Business and Corporate Development.

Antony Mattessich: Thank you, Donald, and welcome everyone to Ocular Therapeutix's first quarter 2021 earnings report. It's been a good start to the year, and we are pleased with our progress in the first quarter, both on the commercial front, as well as with advances in our pipeline of product candidates being developed to target several of the largest market opportunities in ophthalmology. Overall, total net product revenue for the quarter was $7.3 million. Beginning with Extensa, we achieved $6.7 million in net sales to our distributors for the first quarter. Well, the net sales growth over the previous quarter was essentially flat.

Antony Mattessich: The picture in Market Billable Sales Unit shows more clearly the development of the expense of sales primarily because it isn't obscured by variations in distributor inventory levels. For the first quarter of this year, we achieved a record quarter for in-market sales in billable units, 16,634, representing nearly 15% sequential quarterly growth. However, billable units were just over 4,500 and 4,900 in January and February, respectively.

Antony Mattessich: March billable units grew strongly to over 7,000 units, our highest monthly total to date. We believe March fails reflect both reopenings and higher capacity utilization of ASDs and HOPDs. I'm also pleased to report that the March momentum has continued into April. Sales of billable units to end customers in April are expected to exceed 8,000 units and comfortably set a new monthly record.

Antony Mattessich: This is especially gratifying since April is the first month of a new quarter when in-market sales are typically slow to build up. We believe that this recent acceleration of in-market demand reflects a continued growth in our share of total cataract volume and also a return to more normal levels of cataract surgeries being performed across the U.S. We expect these survivors to continue to propel growth throughout the year. It is important to note that in our last quarterly earnings call, we indicated that we would no longer report on monthly in-market sales of billable units after the first quarter of this year and that we would restrict our disclosures to quarterly net sales to our specialty distributors. However, the changing market conditions that we experienced in the first quarter due to COVID-19, the continuing adjustments of inventory management by our distributors, and the maturing of our gross net calculation.

[music].

Antony Mattessich: We believe that it makes sense to continue to provide monthly in-market sales in billable units at least through the second quarter of 2021. Moving to our pipeline, we have four clinical programs, each of which is geared to produce a highly differentiated ophthalmology specialty product that addresses the key unmet need in its respective disease states. In the aggregate, the target disease states are estimated to generate over 20 billion in annual global sales. We believe our pipeline remains a source of tremendous value for Ocular, and we are adequately capitalized to fund each of our four clinical programs through key Phase II clinical trials, which we believe could mark an inflection point for us.

Good afternoon, ladies and gentlemen, thank you for standing by and welcome to the ocular Therapeutics first quarter 'twenty or 'twenty One earnings conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time.

Antony Mattessich: This week, we have six company presentations and one presentation from an IIT at the 2021 Association for Research in Vision and Optimology, or ARVO, virtual meeting. To highlight a few of the key presentations, we presented updates to interim analyses of phase one data for both OTX-TKI, or an intervitreal bioresorbable hydrogel-based implant for the treatment of wet age-related macular degeneration and other retinal diseases, and

It is on my pleasure to turn the call over to Donald not men Chief Financial Officer of ocular Therapeutics. Please go ahead Sir.

Thank you operator, good afternoon, everyone and thank you for joining us on our first quarter 2021 for actual results and business update conference call.

The 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 ended March 31 2021.

Antony Mattessich: Our intracameral, travercrosed, hydrogel-based implant for the reduction of intraocular pressure in patients with primary open-angled glaucoma or ocular hypertension. Both presentations provide updated data that are consistent with the development of potential products that could become the standard of care in these large markets. We are also presenting preclinical data for our product-starting ocular surgery. We have posters presenting preclinical PK data for OTX-TSI, our cyclosporine-containing intercanellicular insert to increase tear production in patients suffering from dry eye disease, and OTX-DED, which are dexamethasone-containing intercanellicular insects with a short-term treatment of signs and symptoms of dry

The press release can be accessed on the investors portion of our website at investors day see you TX Dot com.

Leading the call today will be Anthony Mato pitch, our president and Chief Executive Officer, who will provide a summary of our corporate developments and an update on our commercial progress.

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Also speaking on the call today will be Dr. Michael Goldstein, our president Ophthalmology, and Chief Medical Officer, who will give an update on our clinical developments and pipeline.

Michael's remarks, I will provide an overview of the financial highlights for the first quarter before turning the call back over to Anthony for for a summary on questions for Q&A, we'll be joined by Scott Corning, Our senior Vice President commercial and Chris White, Our senior Vice President business and corporate development.

As a reminder, on today's call certain statements, we will be making maybe considered forward looking for the purposes of private Securities Litigation Reform Act of 1995.

Antony Mattessich: Additionally, later this week at Arvo, we will be presenting data on Dextenza for the treatment of allergic conjunctivitis. As many of you may know, we have submitted a supplemental new drug application to the FDA for the use of Xtensa in allergic conjunctivitis and have received a PDUFA target action date of October 18th this year. And this presentation evaluates the safety of the product candidate in a pooled post-hoc analysis of the four clinical trials included in our regulatory filing. I encourage you to take a look at these presentations, which can be accessed either on the ARBA website or on our corporate investment website.

In particular any statements regarding our regulatory and product development plans as well as on Richard 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 income.

Including those risks described in our most recent quarterly report on form 10-Q filed this afternoon with the SEC.

I will now turn the call over to Anthony.

Thank you Dawn and welcome everyone to ocular Therapeutics first quarter 2021 earnings report.

It's been a good start to the year and we are pleased with our progress in the first quarter, both on the commercial front as well as with advances in our pipeline of product candidates being developed to target several of the largest market opportunities in ophthalmology.

Overall total net product revenue for the quarter was $7 3 million.

Beginning with DEXTENZA, we achieved $6 7 million in net sales to our distributors for the first quarter.

Well the net sales growth over the previous quarter was essentially flat.

Unknown Attendee: Let me begin with an update on our back-of-the-eye program, OTX-TKI. We continue today's subjects in a multi-center, open-label, dose-escalation, phase 1 clinical trial being conducted in Australia that is designed to assess the safety, durability, and tolerability of OTX-TKI, as well as to assess preliminary biological activity in subjects by measuring anatomical and functional changes. As Antony mentioned, we presented incremental interim data at ARVO.

The picture in market billable sales unit shows more clearly the development of the expenses sales, primarily because it isn't obscured by variations in distributor inventory levels.

For the first quarter of this year, we achieved a record quarter for end market sales in billable units of 16634, representing.

Representing nearly 15% sequential quarterly growth.

While building units were just over 4500 4900 in January and February respectively.

March billable units grew strongly to over 7000 units our highest monthly total to date.

Unknown Attendee: This update highlights data from the first 3 Fully Enrolled Cohorts, Cohort 1, 200 g, Cohort 2, 400 g, and Cohort 3A, 600 g, as well as from Cohort 3B, 400 g OTX TKI used in combination with anti-VEGF induction therapy, which is currently enrolling. We continue to see signals of biological activity, including decreases in retinal fluid in some subjects as early as Additionally, we are seeing encouraging durability of 6 months or longer in all cohorts and durability out to 13.5 months in one subject in Cohort 2 and 9 months in one subject in Cohort 3A.

We believe March sales reflect both reopening and higher capacity utilization of Amc's on H O P D.

I'm also pleased to report that the margin momentum has continued into April.

It was a build of units to end customers in April are expected to exceed 8000 units and comfortably set a new monthly record.

For him.

This is especially gratifying in that April is the first month of a new quarter. We end market sales are typically slower to buildup.

We expect these drivers to continue to propel growth throughout the year.

It is important to note that on our last quarterly earnings call. We indicated that we would no longer report on monthly end market sales of billable units. After the first quarter of this year and then we would restrict our disclosures to quarterly net sales through our specialty distributors.

Unknown Attendee: OTX-TKI has generally been well tolerated and has been observed to have a favorable safety profile. No ocular serious adverse events, including subjects with elevated intraocular pressure and subjects needing steroids to treat ocular inflammation, have been observed or reported to date. However, the drug product profile is still emerging.

Unknown Attendee: We are pleased with the interim data and OTX TKI's potential to reduce intraretinal and or subretinal fluid. In terms of next steps, we plan to initiate a clinical trial in the United States starting in the middle of the year using a single 600-microgram OTX-PKI implant along with anti-VEGF induction therapy. Moving to our glaucoma program, OTX-TIC. 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.

In the aggregate the target disease States are estimated at over $20 billion in annual global sales.

This week, we have six company presentations in one presentation from NII key at the 2021 Association for research in vision, and ophthalmology or ARVO virtual meeting.

To highlight a few of the key presentations, we presented updates to interim analyses of phase one data for both <unk> teekay on.

For <unk> bio resorbable hydrogel based implant for the treatment of wet age related macular degeneration, and other retinal diseases, and <unk> GIC or inter camera travel <unk> hydrogel based implant for the reduction of inter ocular pressure in patients with primary open angle glaucoma or ocular hypertension.

Unknown Attendee: All four cohorts have been fully enrolled, and interim data presented this week at ARBO generally showed a mean reduction in intraocular pressure, or eye pressure, from baseline of 7-11 mmHg that is comparable to the current standard of care, topical Trabefrost placed in the non-study eye. This data is consistent with the interim data we presented at the Glaucoma 360 conference in January. Theonset of action is as early as two days after insertion.

Both presentations provide updated data that are consistent with the development of potential products that could become the standard of care on these large markets.

We are also presenting preclinical data for our products targeting ocular surface disease.

Unknown Attendee: Interim results suggest a durability of response consistent with decreases in eye pressure for six to nine months in many subjects in COVID-19, 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 5-7 months in cohorts 1 and 2 and 3-5 months in cohorts 3 and 4.

For the short term treatment of signs and symptoms of dry eye disease <unk>.

Additionally, later this week at ARVO, we will be presenting data on DEXTENZA for the treatment of allergic conjunctivitis.

As many of you may know, we have submitted a supplemental new drug application to the FDA for the use of extend for an allergic conjunctivitis and have received a paducah target action date of October 18th of this share.

In this presentation evaluates the safety of the product candidate in a pooled post hoc analysis of the for clinical trials included in our regulatory filings.

I encourage you to take a look at these presentations, which can be accessed either at the ARVO website or on our corporate investor page.

Overall I am pleased with the year on all fronts and I'm confident for another productive year.

With that I would now like to handover the call to our president of Ophthalmology, and Chief Medical Officer, Dr. Michael Goldstein, who will provide an in depth look at our pipeline.

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 now turns to our planned Phase II clinical trial, which we now expect to initiate in the fourth quarter of 2021. This small delay in the start of the trial is a result of some additional optimization being done on the injector used to deliver the OTX-TIC implant. We are also making significant progress with our ocular surface disease programs, which include product candidates for dry eye disease and allergic conjunctivitis. In Dry Eye, we have two programs.

Thanks Anthony.

Let me begin with an update on our back of the eye program <unk> T. G I.

We continue to dose subjects in a multicenter open label dose escalation phase one clinical trial being conducted on Australia.

It is designed to assess the safety durability and tolerability of <unk> as well as to assess preliminary biological activity in subjects by measuring anatomical and functional changes.

As Anthony mentioned, we presented income incremental interim data at ARVO. This update highlights data from the first.

Three fully enrolled cohorts cohort one 200 micrograms over two 400 micrograms in cohort three a 600 micrograms as well as from cohort three B 400, micrograms Otf's Teekay I used in combination with anti VEGF induction therapy, which is currently enrolling.

We continue to see signals of biological activity, including decreases in retinal fluid in some subjects as early as two months following insertion in cohorts two and three.

Oh, TX <unk> is generally well tolerated and its been observed to have a favorable safety profile.

No ocular serious adverse events, including subjects with elevated intraocular pressure.

Unknown Attendee: 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 eye disease, namely stinging and burning. We are very excited about the potential for this physician-administered, hands-free, and preservative-free option in helping dry patients receive the benefits of cyclosporine but with potentially greater tolerability and a more rapid onset of action compared to therapies currently available on the market.

Subject to any steroids to treat ocular inflammation.

Been observed or reported to date.

For the drug product profile is still emerging.

<unk> for the interim data and O T X T <unk> potential to reduce inter retinal <unk> sub retinal fluid.

Moving to our glaucoma program <unk> T I C.

Unknown Attendee: We are pleased to announce that we have recently completed enrollment in our U.S.-based randomized mask phase 2 multicenter clinical trial. This Phase II clinical trial is evaluating two different formulations of OTX-BSI compared with hydrogel vehicle insert in approximately 140 subjects will be followed for a period of 16 weeks. Endpoints in the study include tear production, as measured by the Schirmer's 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, or VAS, eye dryness severity score, and eye dryness frequency score.

This data is consistent with the interim data we presented at the Glaucoma 360 conference in January.

Onset of action as early as two days after insertion.

Ex TICC has generally been well tolerated and has been observed to have a favorable safety profile to date.

Unknown Attendee: As this trial is now fully enrolled, consistent with our update last quarter, we expect top-line data in the fourth quarter of 2021. Our second product candidate for dry eye, OTxDED, is a low-dose intercalicular insert of preservative-free dexamethasone. While it incorporates the same active drug as Dexfenza, this is a new product candidate with a lower dose of dexamethasone and a smaller insert size. Many dry eye patients experience episodic flares of their signs and symptoms, which we believe are likely related to inflammation.

We have not seen the implant move and it has been observed for bio resorbs and 5% to seven months in cohorts, one and two and three to five months in cohorts three and for.

We are seeing no clinically meaningful changes in Cornell for chemistry, or corneal endothelial cell counts over time.

For the Phase one study now fully enrolled our attention now turns to our planned phase two clinical trial, which we now expect to initiate in the fourth quarter of 2021.

This small delay in the start of the trial as a result of some additional optimization being done on the injector used to deliver at the Ot ex TICC implant.

We are also making significant progress with our ocular surface disease programs, which include product candidates for dry eye disease and allergic conjunctivitis.

In dry eye, we have two programs.

CSI, which is designed to increase <unk> production for the chronic treatment of patients with dry eye disease, and <unk> D. E D, which is designed to target the short term treatment of the signs and symptoms of dry eye disease.

Unknown Attendee: OTX-DED potentially offers these patients the opportunity to be treated with a physician-administered, preservative-free, and hands-free steroid therapy that can't be overused by patients. We are currently enrolling patients in a U.S.-based, randomized, double-mask, vehicle-controlled, phase 2, multi-sensor clinical trial evaluating two different formulations of OTX-TED compared with The trial is designed to assess the safety and efficacy of OTX-DED for the short-term treatment of signs and symptoms of dry eye disease by evaluating bulbar conjunctival hyperemia, the VAS, eye dryness frequency and severity scores, and total corneal fluorescent staining. Enrollment continues to move at a consistent pace, and we expect top-line data for the first half of 2022. Lastly, Borjig Spencer for the treatment of ocular itching associated with allergic conjunctivitis.

Ex CSI is an intra handled ocular insert which combines two modalities to treat dry eye patients.

Local programs released of cyclosporine for approximately three to four months to the ocular surface along with Punctiliar collusion over the same time period.

By releasing low doses of preservative free cyclosporin over an extended duration of time <unk>.

<unk> 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 eye disease, namely stinging and burning.

We're very excited about the potential for this physician administered hands free and preservative free option in helping dry patients receive the benefits of cyclosporin, but with potentially greater tolerability at a more rapid onset of action compared to therapies currently available on the market.

We are pleased to announce that we've recently completed enrollment of our U S based randomized masked phase II multicenter clinical trial.

This phase II clinical trial is evaluating two different formulations of Oti's CSI compared with hydrogel vehicle insert and approximately 140 subjects will be followed for a period of 16 weeks.

Unknown Attendee: We submitted an SNDA at the end of 2020 and 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 with a physician-administered, preservative-free, hands-free therapy for these patients. This SNDA, if approved, would represent our first in-office indication for Dick Senza. I would now like to turn the call back over to Donald to review our first quarter financial results. Thanks, Mike.

Endpoints in this study include tear production as measured by the Schirmer 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 or Vas hydrating, the severity score and eye dryness frequencies for.

As this trial is now fully enrolled consistent with our update last quarter, we expect top line data in the fourth quarter of 2021.

Our second product candidate in dry eye <unk> D E D. As a low dose <unk> insert a preservative free <unk> zone.

While it incorporates the same active drug as DEXTENZA. This is a new product candidate with a lower dose of dexamethasone and are smaller in size.

Many dry eye patients experienced episodic players 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 steroid eye drops.

Preservative, which can result in ocular surface toxicity.

Chronic misuse of steroids may also lead to adverse events, such as elevated high pressure or cataracts.

<unk> D E D. Potentially offers these patients the opportunity to be treated with a physician administered preservative free enhanced free steroid therapy that can be overused by patients.

We are currently enrolling patients in a U S based randomized double masked vehicle controlled phase II multicenter clinical trial evaluating two different formulations of Oti's D D compared with our hydrogel vehicle insert and approximately 150 subjects with dry eye disease.

Donald Notman: Research and development expenses for the first quarter were $10.9 million versus $6.1 million for the comparable period in 2020, primarily driven by increased headcount, as well as increased clinical trial costs associated with the ongoing Phase II clinical trial for OTX-CSI, the commencement of the Phase II clinical trial of OTX-DED, and the ongoing Phase I clinical trials of OTX-TKI and OTX-TIC. Selling and marketing expenses in the quarter were $8.1 million, as compared to $7.1 million for the same quarter of 2020, reflecting increased personnel costs associated with the expansion of the sales force. Finally, general and administrative expenses were $7.7 million for the first quarter versus $5.2 million in the comparable quarter of 2020. The increase in expenses stemmed primarily from increased personnel expenses and professional fees.

The trial is designed to assess the safety and efficacy of <unk>. The EBIT for the short term treatment of science incentives for dry disease by evaluating ballpark country type of hyperemia.

<unk> eye dryness frequency and severity scores and total corneal fluorescein staining.

And current enrollment continues to move at a consistent pace and we expect top line data for the first half of 2022.

Lastly.

For the extensive for the treatment of ocular itching associated with allergic conjunctivitis, we submitted an NDA at the end of 2020 and ever suite received it could do for target action date of October 18th 2021.

Overall, we believe the data package highlights the compelling product profile targeting an unmet need that could potentially change the current standard of care for the physician administered preservative free hands free therapy for these patients.

This NDA if approved would represent our first in office indication for DEXTENZA.

I would now like to turn the call back over to Donald to review, our first quarter financial results.

Thanks, Mike gross product revenue net of discounts rebates and returns, which the company refers to as total net product revenue was $7 $3 million for the three months ended March 31, 2021, representing a greater than 175% increase over the <unk>.

First quarter of 2020.

Net product revenue of the extent in the first quarter was $6 $7 million versus $2 $1 million in the comparable quarter of.

From 2020 and reflects an approximately 220% increase.

Total net product revenue for the first quarter also includes net product revenue of $6 million from share sealant.

Research and development expenses for the first quarter were $10 9 million.

Versus $6 $1 million for the comparable period in 2020, primarily driven by increased head count as well as increased clinical trial costs associated with the ongoing phase III clinical trial for <unk> CSI.

Commencement of the phase II clinical trial of <unk> and the ongoing phase one clinical trials of <unk> and Ot ex TICC.

Selling and marketing expenses in the quarter were $8 $1 million as compared to $7 $1 million for the same quarter in 2020.

<unk> increased personnel costs associated with the expansion of the sales force.

Finally general and administrative expenses were $7 $7 million for the first quarter versus $5 $2 million in the comparable quarter of 2020, the increase in expenses, primarily from increased personnel expenses and professional fees.

With respect for the financial results for the first quarter. The company reported net income of $3 1 million or.

For <unk> per share on a basic basis, and a net loss of $28 million or a loss of 24 cents per share on a diluted basis.

This compares to a net loss of $21 $5 million.

Loss of <unk> 41 per share on a basic and diluted basis for the same period in 2020.

As operating expenses increased quarter over quarter modest profit was driven by a noncash gain of $25 million related to the change in fair value derivative liability associated with the company's convertible notes.

Donald Notman: Based on our current plans and related estimates of anticipated cash inflows from Dextenda and Reshure product sales and cash outflows from operating expenses, the company believes that existing cash and cash equivalents, as of March 31, 2021, will enable the company to fund planned operating expenses, debt service obligations, and capital expenditure requirements through 2023. This CASH guidance is subject to a number of assumptions, including those related to the severity and duration of the COVID-19 pandemic.

Change in fair value was due primarily to a decline in the company's common stock price during the quarter.

Non cash charges for stock based compensation and depreciation and amortization was $3 $7 million in the first quarter versus $2 4 million for the same quarter in 2020.

As of May three 2021, the company had $76 2 million shares outstanding.

As of March 31, 2021, the company had $209 $4 million in cash and cash equivalents versus $228 1 million at December 31, 2020.

Based on our current plans and related estimates of anticipated cash inflows from DEXTENZA and share product sales and cash outflows from operating expenses. The company believes that existing cash and cash equivalents as of March 31, 2021 will enable the company to fund.

Donald Notman: The revenues and expenses associated with the commercialization of Dextenda, and the pace of research and clinical development programs and other aspects of the business. This concludes my comments on our first quarter financial results, and I would like to turn the call back to Anthony for some summary thoughts. Thanks, Donald.

<unk> operating expenses debt service obligations on capital expenditure requirements through 2023.

This cash guidance is subject to a number of assumptions, including those related to the severity and duration of the COVID-19 pandemic, the revenues and expenses associated with the commercialization of DEXTENZA.

On the pace of research and clinical development programs and other aspects of the business.

This concludes my comments on our first quarter financial results I would like to turn the call back to Anthony for some summary thoughts.

Thanks Donald.

So before opening the call up for questions. Let me do a quick summary.

We are pleased with continued progress on our pipeline and our growing presence at key medical meetings like ARVO that allow us to share our progress.

In wet AMD, our phase one trial continues to support Otf's Teekay is differentiated product profile that could potentially set a new standard of care for durability.

Antony Mattessich: In glaucoma, data from our Phase I trial of OTX-TIC continues to support a durable, rapid-onset product profile that could potentially set the standard of care for patient compliance. We plan to advance that program into a phase two clinical trial in the fourth quarter of 2021. In dry eye disease, we initiated two phase two 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.

Gain on plan to initiate a U S based phase <unk> clinical trial in the middle of 2021.

In glaucoma data from our phase one trial of Ot ex TICC continues to support a durable rapid onset product profile that could potentially set the standard of care for patient compliance.

Plan to advance that program into a phase II clinical trial in the fourth quarter of 2021.

In dry eye disease, we initiated two phase II clinical trials, one for <unk> CSI and one for OTI ex <unk> for.

For <unk> CSI, we now expect top line data in the fourth quarter of this year for <unk>, We expect top line data in the first half of 2022.

Antony Mattessich: For OTS-DEB, we expect top-line data in the first half of 2022. Additionally, beyond dry eye disease, we submitted our SNDA for dexbenza and allergic conjunctivitis in December 2020 and have a PDUFA target action date of October 18, 2021. Finally, Extensa achieved a record quarter for in-market billable sales units and is off to a very strong start in Q2. We look forward to a busy and productive 2021, and with that, I will turn the call over to questions.

Beyond dry eye disease, we submitted our NDA for DEXTENZA in allergic conjunctivitis in December 2020, and have up to <unk> target action date of October 18th 2021.

Finally, <unk> achieved a record quarter for end market available sales units and is off to a very strong start in Q2.

We look forward to a busy and productive 2021.

With that I will turn the call over for questions.

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 Joe Catanzaro with Piper Sandler. Your line is now open.

Thank you as a reminder to ask a question you will need to press star one on your telephone.

So let's try your question touched upon key please standby, while we compile the Q&A line there.

Our first question comes from Joe Catanzaro with Piper Sandler Your line is now open.

Joseph Michael Catanzaro: Hey guys, thanks for taking my questions here and congrats on all the answers.

Hey, guys. Thanks for taking my questions here and congrats on all the progress on all fronts here. Anthony I was wondering if you can elaborate a little bit more on the dynamics that drove the April debt than the numbers that you are referencing and whether there are one off events there and relatedly are your expectations that may will grow off that 8000 number.

Joseph Michael Catanzaro: Anthony, I was wondering if you could elaborate a little bit more on the dynamic that drove the April Dexenza numbers that you're referencing and whether there are one-off events there and, relatedly, are your expectations that May will grow off that 8,000 number followed by a bump in June with the rebate effect? And then, you know, what should we expect in July? Does it return back to that dynamic that you observed historically?

Load by a bump in June with the rebate effect and then what should we expect in July does it return back to that dynamic that you observed historically thanks.

Antony Mattessich: Thanks. Great. Well, thanks. Thanks for the question.

Great well thanks for the question.

Antony Mattessich: Well, we expected the bump in March, but we didn't expect to surpass March sales in April. That was a bit of a surprise.

We expected for the bump in in March.

We didn't expect to surpass March sales in April and that was a bit of a surprise to us.

Antony Mattessich: I mean, we have to remember that January and February were bad months. They were bad months for COVID, and they were bad months for weather. So the return to somewhat normalcy for March was very much well expected. But typically, our pattern has been that the first two months of the new quarter are below the last month of the previous quarter. So whether this sets a new bar, and we'll continue to grow off this level and expect to have the usual bump at the end of the quarter is hard to predict, but certainly from anecdotal reports from the field, it's really driven by the fact that surgery centers are back open.

We have to remember that January and February were bad months, they're bad months for COVID-19 and their bad months for weather.

So the return of.

What is somewhat normalcy for for March was very much what I expected.

But typically our pattern has been that the first two months of the new quarter are below the last month of the previous quarter.

So whether it sets a new bar and we will continue to grow off this level and expect to have the the usual bump at the end of the quarter.

It's hard to predict but it's certainly from anecdotal reports in from the field.

It's really driven by the fact that debt surgery centers are back open.

Antony Mattessich: Surgeons have been vaccinated, the administrators have been vaccinated, and, more importantly, the patients have been vaccinated. So our universe is essentially getting back to normal. And when you're gaining share in a growing market, it really can accelerate your sales. So I'm not going to sort of go on record and say where I expect to be next month and the month after, but I would still expect that sort of sawtooth kind of growth given the popularity of our rebate program.

Surgeons have been vaccinated the administrators have been vaccinated and more importantly, the patients have been vaccinated. So our universe is essentially getting back to normal.

And when you're gaining share in a growing market. It's a it really can accelerate yourselves so on.

I'm not going on.

I can just sort of go on record and say, where I expect to be next month and the month, after but but but I would still expect that sort of sawtooth kind of growth given the popularity of our rebate program.

Antony Mattessich: Okay, guys, that's helpful. And then, maybe, along this line of discussion, can you provide?

Okay. That's helpful. And then maybe along that line of discussion can you provide some details around the gross to net debt youre seeing or saw on the quarter for DEXTENZA and maybe how much that fluctuate moving forward based on the on the extent of the rebate program usage.

Joseph Michael Catanzaro: Can you provide some details around the growth to net that you're seeing or saw in the quarter for Dextenza and maybe how much that fluctuates moving forward based on the extent of the rebate program usage? Yeah, there wasn't a great fluctuation in the gross to net. The fluctuation was really in the inventory at our 3PL. We finished last quarter around 30 days worth of inventory. We finished this quarter about 22 days.

Yeah, there wasn't a great fluctuation on the gross to net on the fluctuation was really in the.

On the inventory at our three PL.

We finished last quarter around 30 days' worth of inventory. We finished this quarter about 22 days.

Joseph Michael Catanzaro: So that was the lion's share of the difference that you see in the in-market versus the to-market. There were some adjustments; clearly, our rebate program is extremely popular, so it does have an effect, but the anomaly that you're seeing between to-market sales and in-market sales is almost exclusively driven by that change in distributor holdings.

So that was the lion's share of the difference that you see in the end market versus the two market.

There were some adjustments clearly our rebate program is extremely popular so it does have an effect.

But.

The anomaly that youre seeing between two market sales mid market sales is almost <unk>.

This will be driven by.

By that change in distributor holding.

Antony Mattessich: Great. Maybe I could squeeze in one last one. So, as we think about...

Great and maybe if I could squeeze in one last one so as we think about the rebate program in surgical volumes seemingly picking up is there more room for that rebate program to have even a bigger impact than what you've solved for the last two or three quarters when that rebate program was put in place.

Joseph Michael Catanzaro: Surgical Volumes Seemingly Picking Up, is there more room for the rebate program to have even a bigger impact than what you saw over the last two or three quarters when that rebate program was put in place? Absolutely.

Yeah, absolutely I mean, you look at the size of the customers that we have you look at on am surge or and I thought partners on some of these really large consortia.

Antony Mattessich: I mean, look at the size of the customers that we have, look at an Amsurge or an ISOP partner, some of these really large consortia. We're just scratching the tip of the iceberg, so they are getting, of course, to the highest levels with the ASCs they have online. But the work at hand now is to get more of their ASCs participating. So, we fully expect that that rebate program will continue to drive volume, both in breadth but, more importantly, in depth.

We're just scratching the tip of the iceberg. So they they are getting of course to be the highest.

Levels with the ASC as they have on line.

But the work at hand, now is to get more of their asce's participating.

So we fully expect that that rebate program will continue to drive volume.

On both and breath, but I think more importantly in depth.

Joseph Michael Catanzaro: Okay, perfect. Thanks. Thanks for taking my questions here.

Yeah.

Okay perfect. Thanks, Thanks for taking my questions here.

Jonathan Patrick Wolleben: Thank you. Our next question comes from Jonathan Wolleben with J&P Securities. Your line is now open.

No.

Thank you. Our next question comes from Jonathan while abandoned with JMP Securities. Your line is now open.

Jonathan Patrick Wolleben: Hey, congrats and thanks for taking the question. Just a couple for me on the pipeline.

Hey, congrats and thanks for taking the question.

Just a couple for me on the pipeline.

Unknown Attendee: You mentioned the new start for the OCxPIC study due to some changes in the injector. I was hoping you could give us some more color and what you're trying to optimize for with these changes. Hi, John. It's Mike speaking.

You mentioned, the new start for the Ot ex <unk>.

That is due to some changes in the injector I was hoping you could give us some more color on what youre trying to optimize for with these changes.

Yeah, Hi, John It's Mike speaking thanks for the question. So, we obviously want to optimize the patient and physician experience.

Jonathan Patrick Wolleben: Thanks for the question. So we obviously want to optimize the patient and physician experience, and there is just some optimization work that needs to be done on the injector for the intracameral delivery. And that's caused a slight delay in the start of the Phase II program.

And there just from.

Some optimization work that needs to be done on the injector.

For the inter chemical delivery and that's caused a slight delay.

And the start of the Phase II program.

Antony Mattessich: Okay, and then with OTX TKI, obviously, we're seeing progress in wet AMD, but you've had DME and RVO listed as potential opportunities. I was wondering if you have any development plans in the works there, or how are you thinking about the opportunities beyond wet AMD? Yeah, great question.

Okay, and then with <unk>.

We're seeing progress on wet AMD, but you've had kind of deer on me in RVO list as potential opportunities wondering if you have any development plans in the works there or how are you thinking about the opportunities beyond wet AMD.

Yes, great question we.

Jonathan Patrick Wolleben: We do think there are big, big opportunities beyond what AMD is doing, and the two leading areas are DME and RBO. And we very much do have plans to pursue both of those opportunities in the future. We haven't announced exactly when those trials would start, but clearly, those are well within our plans.

We do think there is a big big opportunities beyond what AMD and the two leading areas our day in RVO.

And we very much do have plans to pursue both of those opportunities.

In the future, we haven't announced exactly when those trials would start but clearly well within our plans.

Okay, great. Thanks.

Georgi Yordanov: Thank you. Our next question comes from Georgi Yordanov with Cowen & Company. Your line is now open.

Thanks for taking the questions.

Thank you. Our next question comes from George <unk> with Cowen and company. Your line is now open.

Georgi Yordanov: Hey guys, thank you so much for taking the questions and congratulations on the progress. I do have a couple in the pipeline.

Hey, guys. Thank you so much for taking the questions and congratulations on the progress.

I do have a couple on the pipeline. It is clear for <unk> that you have observed some striking responses. During the study do you believe that there is a biomarker that could help you identify those patients that would respond to treatment before initiating treatment.

And as a follow up on to that have you considered exploring higher doses given debt excellent safety profile and that you had not reached a maximum tolerated dose and then I do have a problem.

Yeah, Great question, I think looking for Biomarkers to look for responders is sort of the Holy Grail for.

Unknown Attendee: I think looking for biomarkers to look for responders is sort of the holy grail for not just us but for many companies. So I would love to tell you we found out what those biomarkers are to identify responders. We have not, but we will keep looking.

We're not just us for for many companies.

So I would love to tell you we've found what those biomarkers are to identify responders, but we have not.

But we will keep looking.

Unknown Attendee: And in terms of a higher dose, yes, we are interested in exploring a higher dose. We have, and we have shown an excellent safety profile state up to 600 micrograms. We are, our immediate plans are to go forward with a single implant, 600 microgram dose, which although it seems similar to the current dosing we have in Australia, that dosing is three 200-microgram implants. So it turns out that you do get a higher flux rate out of the implant per day when you go to a single implant.

And in terms of of a higher dose, yes, we are interested in exploring a higher dose.

If we do if we have shown an excellent safety profile stake up to 600 micrograms.

We are our immediate plans are debt to go forward with a single implant 600, microgram dose, which although it seems similar to the current dosing we have in Australia that dosing is three 200 microgram implants that it turns out that you do get a higher flux right out of the <unk>.

Net per day, when you go to a single implant so that there will be.

People with dose escalation there.

That said we are.

We'll continue to pursue.

The opportunity to look at higher doses I think we're gonna be limited not by Tolerability, but really the ability to formulate and an implant that's a reasonable size.

And so I think that will end up being what will prevent us from going too high but we do have room to go higher than 600 micrograms.

Georgi Yordanov: And just related to TKI, we did notice that, on safety, you have indicated in the most recent update, there has been a moderate ocular AE. Have you disclosed the nature of that AE? No, we have not.

Got it and just a related related on PKI, we didn't notice debt.

On on the safety you have indicated that in the most recent update there has been named.

Moderate.

<unk> have you disclosed the nature of that AE.

We have not.

Georgi Yordanov: Alright, and then the last question is on the TIC program. So that's another very interesting program. You've presented some pretty interesting early data. Could you remind us of the legacy OTXDP glaucoma program and the issues there with development, and what differentiates this clearly superior TIC product? Yeah, great question.

Alright, and then.

The last question is on the CIC program.

That's another very interesting program presented some free.

Interesting early data could you remind us of the legacy <unk> keep cheap glaucoma program.

And the issues there with development and more differentiation this clearly superior GIC product.

Yeah, Great question. So both of the programs use travoprost, which is across the globe.

Unknown Attendee: So both of the programs use Traviprost, which is a prostaglandin analog and is very commonly used in clinical practice as an eye dropper. The OTX-TP program delivers the prostaglandin through an intracanalicular route, and the OTX-TIC program delivers the trabeprosthesis through an intracameral route. And clearly, when you go intracamerally, you get a higher dose of the drug to the target tissue, which is inside the eye. As expected, we're seeing much higher levels of much higher ability to lower eye pressure with the OTX-TIC product over a longer period of time.

<unk> and very commonly used in clinical practice doesn't eyedrop.

The <unk> T. P program delivered for the prostaglandin through an inter canalicular delivery.

The O chicks T. I C program delivers the travoprost through an intra camera on delivery.

So clearly.

Clearly when you when you go in for camera really you get a higher dose of the drug to the target tissue, which is on <unk>.

So.

As expected we are seeing much higher levels of <unk>.

Our ability to lower crusher.

With the OTA ex TICC product.

Unknown Attendee: So we're seeing, you know, approximately 7 to 11 millimeters of IOP lowering. And, you know, we've looked at four different formulations, and we're seeing anywhere from three to nine months of durability with a single implant. So compared to the OTX-TP, the surface intercanalicular delivery, where it was, you know, more like between two and four millimeters of delivery for approximately three months. So clearly, much better efficacy when we're going to the intracanal delivery.

That's over a longer period of time, so we're seeing approximately 7% to 11 millimeters.

IOP lowering and we've looked at for different formulations. So we're seeing anywhere from three to three to nine months of durability for the single implant.

So that compared to the O checks TP the surface.

Enter kind of ocular delivery, where it was more like between two and four millimeters of delivery for approximately three months, so clearly much better efficacy.

When you go to when we're going to the intra camera on delivery.

Georgi Yordanov: Great. Thank you so much. This is super helpful. Thank you.

Yeah.

Great. Thank you. So much. This is this is super helpful. Thank you.

David Steinberg: Thank you. Our next question comes from David Steinberg with Jefferies. Your line is now open.

Thank you. Our next question comes then David Steinberg with Jefferies. Your line is now open.

Ed Chung: Hi, it's actually Ed Chung on for Dave. A quick question on the, you know, you historically talked about a 5,000 insert per month as a threshold for achieving break-even on your commercial platform. Now, was that before or after your Salesforce expansion? Yeah, that was clearly before our Salesforce expansion. We've added a few people, not... A huge amount, but we're spending about $7 million now on our total marketing and sales effort. So yeah, we've ramped up a bit. That number would be a bit higher. So it's probably closer to 7500 units to break even.

Hi, it's actually Ed Chan on for Dave a quick question on the <unk>.

<unk> historically talked about.

5000 per month as a threshold for.

For achieving breakeven on your commercial platform that was that before.

Or after your sales force expansion.

Yeah that was before our sales force expansion clearly we've added a few people not not.

A huge amount, but we're spending about 7 million now on our total.

Marketing and sales effort. So yeah, we've ramped up a bit that number would be a bit higher.

So you know around that is probably be closer to 770 500 units to get to breakeven.

Ed Chung: Got it. All right, great. Thanks.

Got it alright, great thanks and.

Ed Chung: And in terms of R&D spend, I mean, how should we be thinking about, you know, the ramp as these programs go into phase two, and obviously, that's probably going to cost you a little more than what you know and your ability to fund them into phase two. Well, we stated that we have sufficient cash and cash equivalents to be able to fund all of the programs that we have through their phase two readout.

In terms of.

R&D spend I mean, how should we be thinking about.

On the ramp as as these programs.

Go into phase two and obviously that's it.

Probably going to cost you a little more than what <unk>.

And your ability to fund them.

You know into phase II.

Well, we've stated that we have.

Sufficient cash cash equivalents to be able to fund all of the programs that we have through their phase II readouts.

Ed Chung: Okay. So we're comfortable with, obviously, a counter-expectation for Dextensa sales. We're currently running ahead of our expectations for Dextensa sales. So we feel pretty comfortable that we don't have a cash issue through those readouts. But you are right, we would be, the cost would be increasing as we enter phase two and a larger phase one study with TKI. Got it.

So we are we're comfortable with a with obviously a counter set of an expectation for DEXTENZA sales were.

We're currently running ahead of our expectations on DEXTENZA sales, so we feel pretty comfortable that debt, where we don't have a cash issue through those readouts.

But you are right I mean, we would be the cost would be increasing as we enter.

Phase two and at a larger phase one study with <unk>.

Anita Ducan: Thank you. Our next question comes from Anita Ducan on Barenberg. Your line is now open.

PKI.

Got it perfect.

Perfect. Thanks.

Yeah.

Thank you on our next question comes from and neither do you see on with band back. Your line is now open.

Anita Ducan: Hi, congrats on the progress and thanks for taking my question. I just wanted to know if you could remind us of the market opportunity for acute versus chronic dry eye disease. And also, recently, the eye service was approved for acute treatment, I think, and I just wanted to know how, when the DED candidate comes on the market, it will fare in the market. Is it going to be filling some gaps or displacing the competition?

Hi, Congrats on the progress and thanks for taking my question.

Just wanted to know if you could remind us the market opportunity in the acute versus chronic dry eye disease and also.

<unk> I assume it was approved for taking.

I think I just wanted to know how.

When <unk> comes on what day.

And in my opinion debt isn't going to be filling some gaps.

Thanks.

The competition.

Antony Mattessich: I'll take the first one.

Yes, I'll take the first part of the question and then Mike Obviously is not only our CMO, but he is also a practicing ophthalmologists. So we can sort of let you know from an ophthalmologist standpoint, what they need.

Unknown Attendee: Mike, obviously, is not only our CMO, but he's also a practicing ophthalmologist. So we can sort of let you know from an ophthalmologist's standpoint what they mean. First of all, Carla, we have to thank them for actually creating the indication for short-term treatment. So it was very creative of them and very good dialogue that they had with the FDA in order to be able to create that opportunity.

First of all I'll call out we have to thank them for them.

Creating the indication for short term treatment.

So it was very creative for them in very very good dialogue that they had with the FDA in order to be able to create that opportunity.

What the relative sizes of the short term market is relative to the to the chronic it's hard to say at this point because the short term market is so new.

Antony Mattessich: What are the relative sizes of the short-term...

unknown: [inaudible]

I think it's pretty clear to say, though that the chronic market is comfortably larger and orders of magnitude larger than what the short term market would be.

Antony Mattessich: The Chronic Market is Comfortably Larger and Orders of Magnitude Larger Than What the Short-Term Market Would Be So the sizes are considerable for both, but we feel confident that the chronic market is far larger. Considering the differences that our DED program would bring to short-term treatment, relative to what you see with isuvia or with off-label steroids, we would be, obviously, physician-administered, so there would be a non-abusability aspect to the product.

So the sizes are considerable for both but we feel certainly that chronic market is far larger.

Centering the differences that are day program would bring on a short term treatment realm.

Relative to what you see with.

Sylvia or with off label.

Steroids is that we would be obviously a physician administered.

So there would be.

Non abusable <unk>.

<unk>.

Aspect to the products so that the doctor is putting it in it releases its product.

Antony Mattessich: So the doctor puts it in, it releases its product, and then the insert bioresorbs and goes down the mesolacrimal duct. So the patient is actually taken out of the equation. And overuse of steroids is one of the worries that doctors have when they treat either short-term, they certainly wouldn't treat long-term, but they would treat short-term dry eye. They worry that patients would like the way they work so much, that they would find somebody else's drops and continue to use them, and then they would develop elevated inoxcular pressure and cataracts. So we would have that advantage. We would also be a preservative-free product. Currently, there are no preservative-free steroids on the market.

And then the insert buyer Resorbs and goes down and that's a lot from a duck for the patient is actually taken out of the equation.

And overuse of steroids is one of the worries that doctors have when they when they treat either short, but they certainly wouldn't treat long term, but they they would create short term.

Dry eye that they worry that patients would would like the the way they work so much that they would they would.

They would find somebody else's drops and continue to use them and then they would develop the elevated in ocular pressure and cataracts.

So we would have that advantage. We would also be a preservative free product currently there are no preservative free steroid on the market.

Many patients do respond to preservative.

Particularly when you have a dry condition you have a compromised ocular surface, putting a preservative on compromise ocular service surfaces is generally not advisable.

And finally, we of course would have a <unk> product that has a procedure code attached.

So the office environment for the Argus economics would be substantially different than a part D product, where you're writing a script.

On the patient is going to the pharmacy to fill that script.

So they'd be very different products I think they would flow there's certainly a space for both of them.

I think I assume he has got a really great future in front of it it's a fantastic product and Cala has done a fantastic job in creating this indication.

I don't know, Mike do you want to add some more to the to the overall answer.

I hope that pretty complete response.

Gentlemen, sounds like an ophthalmologist.

Antony Mattessich: And I think iSUVI has got a really great future in front of it. It's a fantastic product, and Kala has done a fantastic job in creating this indication. I don't know, Mike, do you want to add some more to the overall response? That was a pretty complete response.

I'll just I would just add I mean this is a.

A market that we as ophthalmologist.

Have access for a long time, so we know that steroids have been very effective for for treating patients with inflammatory players with dry eye and it's pretty common and we've used off label low dose steroids for compounded steroids for a long time, so as Anthony mentioned.

Unknown Attendee: You almost sound like an ophthalmologist. I'll just, I would just add, I mean, this is a market that we as ophthalmologists have had access to for a long time. So we know that, you know, we've sort of looked at their [inaudible]. And therefore, the concerns that we have as physicians about using steroids for dry eye, which are that patients will overuse them and develop adverse events like glaucoma or cataracts, go off the table because the patients can't be used; they can only be prescribed by the physician. So I think that's the big clinical advantage that we offer here. But we're really excited about this as a potential indication.

Net out to Kala and in particular for Chief Medical Officer, Kim Brazzell, who works with F. D. A to actually get this as an approvable indication I think a lot of US don't actually think that was what happened. So we've sort of looked at there.

What they've done we think this is a really really interesting opportunity I think the big clinical advantage. We offer as Ajay said is that we're not on eyedrop as physician administered.

In the office they can't be abused by patients.

And therefore.

The concerns that we have as physicians about using steroids for dry eye, which are that patients will overuse them and developed adverse events like glaucoma or cataract throw off the table because patients can't abuse that can all be placed by the by the physician. So we think I think that's the big clinical advantage that we offer here, but we're really excited about.

This is a potential indication.

Anita Ducan: Great, that was very helpful. Thank you.

Yes.

Great that was very helpful. Thank you.

Yi Chen: Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. Our next question comes from Yi Chen on behalf of HC Lainwright. Your line is now open.

Thank you.

Yeah.

Thank you for airlines.

To ask a question you will need to press star one on your telephone.

Our next question comes from Louise Chen with H C. Wainwright. Your line is now open.

Bhubalan: Hi, this is Bhubalan dialing in for Yi Chen. So if you could comment on your expectations for Dextrans adoption for the year 2021, that would be appreciated. And do you anticipate any potential roadblocks as the country is coming out of COVID-19 with an impressive vaccination rate?

Hi, This is <unk> dialing in for <unk>. So if you could comment on your expectations for <unk> adoption certainly at 2021.

That would be appreciated on do you anticipate any potential roadblock.

The country is coming out of COVID-19, with our impressive explanation right.

Antony Mattessich: Yeah, we've not given forward guidance about Dexenza, but the market is fast returning to a normal situation where COVID is no longer seemingly affecting our customers. So our excuses for not giving guidance are probably going away, but we have not given that. And what we've done instead is we've given extraordinary transparency into our in-market sales and billable units, which really is a pretty granular level of a look into what our sales are. We would switch to giving guidance at some point.

Yes, we have not given guidance for guidance about DEXTENZA.

The market is fast returning to a normal situation where.

Where the COVID-19 is no longer seemingly affecting the our customers.

So our excuses for not giving guidance as are probably going away.

But we have not given that and what we've done instead is we've given extraordinary.

<unk> into our in market sales in billable units, which really is a pretty granular level.

Have a look into what our sales are.

We would at some point switch to giving guidance and then give also on the quarterly net sales, but until until we do that we won't give guidance.

Bhubalan: I also give only quarterly net sales, but until we do that, we won't give guidance. All right, understood.

Alright understood could you comment on the phase II program for Ot ex D. D D. Other than what has been stated in your press release on what are the expectations from the trial and when can we hear about the interim findings.

Bhubalan: All right, understood. Could you comment on the Phase II program for OTXDDD, other than what has been stated in your press release? And what are your expectations from the trial, and when can we hear about the interim findings?

So the <unk> D E T phase two program is 150 subjects, it's two different formulations of <unk> against a vehicle.

Bhubalan: 2 different formulations of the OTX-DED against a vehicle insert. The primary endpoint is looking at conjunctival redness at two weeks, but we're also looking at other signs and symptoms of dry disease. Um, trial enrollment is going very well despite COVID. Things have moved along much as they did with the CSI trial. And there is no interim look at the data, but we've disclosed that we will release the top-line data in the first half of next year.

In search.

The primary endpoint is looking at content type of redness at two weeks, but we're also looking at other.

Signs and symptoms of dry eye disease.

The trial enrollment is going very well despite COVID-19.

On much of that would be.

Sigh trial.

And there is no interim look at the data.

But we've disclosed that we will.

Or at least the topline data on the first half of next year.

Bhubalan: All right, one final question from me. So do you think the expense for allergic conjunctivitis will be priced differently?

Alright, one final question from me. So do you think DEXTENZA for allergic conjunctivitis there'll be price differentially.

Antony Mattessich: No, we can't price it differently. It's the same NDA. So the price will be the same.

No we can't price it differently. Its the same NDA so the price the price will be the same.

Bhubalan: That's it from me. Thanks so much and congratulations.

That's it from me thanks, so much and congrats.

Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

Okay. Thanks, so much for the question.

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

Q1 2021 Ocular Therapeutix Inc Earnings Call

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