Q1 2021 EyePoint Pharmaceuticals Inc Earnings Call

Good day, and thank you for standing by and welcome to the I 0.1st quarter 2021 financial results Conference call. At this time, all participants are in a listen only mode on.

After the speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone. Please be advised that today's conference is being recorded if you require any further assistance. Please press star Zero I would now like day on the conference over to your Speaker today George.

Then chief Financial Officer. Please go ahead.

Thank you.

Thank you all for joining us on today's conference call to discuss I point Pharmaceuticals first quarter, two 2021 financial results and recent corporate developments with me today is Nancy Lurker, President and Chief Executive Officer.

Jay Duker, Chief Strategic Scientific Officer, Scott Jones, Chief Commercial Officer Nancy.

Nancy will begin with a review of recent corporate updates Dr. <unk> will then discuss pipeline developments for E Y P 19 on one and Scott will comment on our commercial business performance.

We'll close with commentary on the first quarter 2021 financial results and we will then open the call up for your questions.

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

Copy of the release can be found in the Investor Relations tab on the corporate website www dot points pharma Dot com.

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

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

Including those discussed in the risk factor section on our most recent annual report on form 10-K, which was filed on.

On file with the SEC and in other filings that we may make with the SEC in the future.

Any forward looking statements represent our views as of today only while we may elect to update these forward looking statements at some point in the future. We specifically disclaim any obligation to do so even if our views change. Therefore, you should not rely on these forward looking statements as representing our views as of any date subsequent to today.

I'll now turn the call over to Nancy Lurker, President and Chief Executive Officer of on my point Pharmaceuticals.

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

We are incredibly pleased with our progress this quarter with both our paradigm changing pipeline and our commercial products that are delivering innovation to parent patients with serious ophthalmic diseases.

Before turning the call over to my colleagues I will briefly review our recent achievements as we continue to make terrific progress on our clinical and commercial plans.

On the clinical front in January we initiated our phase one davi O trial for our lead pipeline asset E Y P 19 O. One a potential twice yearly treatment for wet age related macular degeneration or wet AMD and we remain on track with this trial.

As a reminder, E. P 19 O one leverages, a bio erodible formulation of our proprietary <unk> sustained release technology with Paroling at an anti VEGF tyrosine kinase inhibitor.

We are very much looking forward to providing further updates with preliminary data from the Derby on study expected in the fourth quarter of this year.

In February we continued to strengthen our balance sheet. After the successful completion of an oversubscribed $115 1 million follow on offering. This financing provides us with significant capital to continue to grow our organization efficiently and purposefully, including plans to expand our pipeline.

By initiating studies in additional indications for E Y P 19 O one in diabetic retinopathy.

And retinal vein occlusion as well as advancing U T. Five oh from posterior segment uveitis right now we hope to begin these studies sometime in late 2021 or early 'twenty 'twenty two our improved balance sheet provided us the opportunity to work with our debt partner C or G on improving our.

Our revenue Covenant I'm happy to say that we were able to obtain a reduction in the 2021 revenue covenant with C or G to $25 million at no cost.

Turning to our commercial business. Despite the challenges of the COVID-19 pandemic. We are pleased to report a strong first quarter of 2021 with net product revenues of $6 8 million, a 45% increase over Q1 of 2020 as.

As Scott will discuss in more detail later on although historically demand is slowest in the first calendar quarter across all commercial products. We were pleased with the continued return of customer demand.

Also this quarter, we introduced a new siliconized needle for your T, which we will believe will provide an enhanced experience for patients and physicians in administering duty to patients.

Lastly, our Asia partner Aki mentioned Therapeutics recently received approval for a review of a new drug application from the National Medical products administration or N M. P. A in China for O T. Four O one which is named boutique in the U S. This is an exciting milestone for U T is it represents a state.

Effective treatment option for patients in China, and our future royalty stream for I point.

I point ended the quarter in a strong position and we are focused on carrying our very positive momentum into the second quarter of 2021 and beyond. Additionally, as we look to provide preliminary data for I E. White P 19 on one phase one trial in the fourth quarter of this year. We are now focused on.

On one expanding our product pipeline to driving growth for our commercial products with the goal of execute to achieve.

Leading franchise profitability by year end and three continue to maintain a strong balance sheet through disciplined spending.

I'll now turn the call over to Dr. Jay Duker, our chief strategic scientific officer to provide an update on our lead program E Y P 19 O one as well as other pipeline initiatives Jay.

Thank you Nancy and good morning.

As you know we are very pleased with the progress so far on our E. P 19 O. One program for the potential treatment of patients with wet AMD.

Despite the challenges of the COVID-19 pandemic enrollment is on target for phase one clinical study the <unk> trial and we are pleased to report that our study remains on track to read out initial data in the fourth quarter of 2021.

We are grateful for the effort by our team and our external partners for their extraordinary work as we progressed the trial forward.

<unk> one trial was an open label dose escalation study of three ascending doses with a total of 13 patients.

As a refresher wet AMD is a chronic progressive and potentially devastating disorder presents with blurred vision that can result in a permanent central blind spot in the eye.

The hallmark of wet AMD as the development of abnormal blood vessels that leak fluid in blood into the macula the center of the retina.

It is the leading cause of vision loss in people over 65 years of age both in the United States and in other developed countries.

Although there are safe and effective FDA approved medications on the market there was a significant opportunity for longer lasting therapies that could replace the shorter duration of action of the current medications on the market.

R&D pipeline asset <unk> hundred one is a bio erodible anti VEGF formulation of our <unk> technology combined with <unk> the active drug a small molecule tyrosine kinase inhibitor.

As a reminder, Berlin hyp showed strong efficacy and to human clinical trials with positive clinical signals and no significant adverse ocular events.

<unk> has a reliable long term sustained release delivery system currently found in for FDA approved products.

With a single introvert truly injection duressor implant can be designed to provide continuous stable release of medications to the eye from anywhere from six months to three years.

In addition to the established prior clinical success of <unk> and the efficacy of rolling it in wet AMD, a crucial aspect of <unk> 19 O ones potential success is that it features euro order kinetic medication release.

This feature means a constant sustained micro dose throughout the planned lifetime of the insert free.

Preclinical and clinical studies show that your order kinetics can deliver excellent efficacy with a relatively lower doses and we believe the combination of zero order kinetics of research and rolling It positions you IP 19 to want to be a potential blockbuster drug for wet AMD and other indications.

For these reasons, we remain excited by the potential of you might be 19, no one's application to other severe eye disorders, including diabetic retinopathy and retinal vein occlusion. We are actively exploring paths to initiate these clinical trials in tandem with a potential phase two trial with <unk> 19 O one in wet AMD.

Turning to our pipeline initiatives, we are actively exploring new applications for our <unk> technology, along with potential product and technology in licensing.

Additionally, we plan to initiate a phase III 45 to 60 person six month clinical trial for Utica 50, a potential twice yearly sustained delivery treatment for chronic non infectious uveitis affecting the post your segment of the eye later this year with results expected in 2022, Utica 50 will use this.

Same non erodible, <unk> formulation and corticosteroids as in Utica.

Your cheek fifties design offers an <unk> insert with a shorter duration of action that provides physicians with the flexibility to dose over shorter intervals compared to the three year interval that <unk> currently provides.

We have identified a potential clinical pathway with the FDA Force S. NDA filing and we are currently evaluating the timeline and investment requirements for trial completion.

We look forward to providing an update on <unk> 19, O one as well as our other pipeline initiatives over the upcoming quarters.

I will now turn the call over to Scott Jones, Chief Commercial officer for the commercial update Scott.

Thank you Jay before I begin as you know I points revenue was negatively impacted by the COVID-19 pandemic in 2020.

However throughout this quarter, we continued to see strong growth and to execute customer demand and as expected slightly lower first quarter demand for Youtube as first quarter calendars or historically softer in this category.

We're pleased as well with the customer transition to the new you take needle is going well.

Despite the first quarter being historically weaker from a commercial product revenues. Our Q1 net product revenue of $6 8 million represents a 45% increase from the first quarter of 2020, where our net product revenue totaled $4 7 million.

Net product revenue for the first quarter was $3 million and $3 8 million for Utica and execute respectively customer demand was approximately 7000 units so to execute on 400 for U T compared to approximately 6200 units and 500 units respectively for Q4 2020 customer demand.

Demand predicts acute on the first quarter of the year increase as a result of the growing positive impact from our commercial alliance partner Imprimis Rx and the growing impact of our recently saw on contracts Imprimis Rx experienced cataract surgery field force is bringing significant momentum to demand. We're also beginning to see patients feel more comfortable coming to the Dr.

Actors offers on the vaccine continues to roll out across the country. We're also continuing to execute on several strategies to extend or create permanent pass through from execute which is currently set to expire at the end of March 2022. We're currently working on both the regulatory and legislative strategy to extend the payment for <unk> moving forward.

Turning to U T.

Demand levels remained strong as a result of the expansion of our sales and marketing efforts in the rental market as well as the increased patient access, particularly in large.

Hospitable environment this quarter, we rolled out a new siliconized needle for you take and we're extremely excited about the opportunity to provide a better patient experience over the coming months as we continue to improve options for patients on ophthalmologist treating poster on <unk> given the pandemic. We were pleased with our current commercial trajectory on we're looking forward to grow throughout the.

Rest of the year.

As we look at the commercial your head while it is difficult to judge customer demand. We are optimistic that we will continue to see increased growth on sales and marketing for you to conduct acute increases.

Based on current commercial numbers.

Our goal is to reach profitability or breakeven free execute on Youtube by the end of this year.

Both products will continue to provide a unique value proposition of sustained delivery on fewer doctor visits which remains attractive to doctors and patients. Both during the pandemic can be on I'd also like to thank each and every team member and our many physicians for their continued support during the first quarter on the quarters to come on.

I'd now like to turn the call over to George to review the financials George.

Thank you Scott as.

As the financial results for the three months ended March 31, 2021 were included in the press release issued this morning, My comments will be focused on a high level review for the quarter as.

As Nancy mentioned, we've begun 2021 with a strong balance sheet driven by a $115 1 million follow on offering that follows important fourth quarter transactions, where we reduced our obligation to <unk> by $15 million and close the $15 $7 million equity investment by our Asia partner Ark, you mentioned.

This improved position combined with a continued return of our commercial business has allowed us to reduce the 2021 revenue covenant with CRD services to $25 million at no additional cost.

For the three months ended March 31, 2021 total net revenue was $7 3 million compared to $7 5 million for the three months ended March 31 2020.

This includes net product revenue for the first quarter of $6 8 million compared to net product revenues for the first quarter ended March 31, 2020 of $4 7 million net.

Net revenue from royalties on collaborations for the first quarter ended March 31, 2021 totaled <unk> 5 million compared to $2.8 million in the corresponding period in 2020.

This decrease was driven by the monetization of our ILUVIEN royalty in December 2020, and a one time $2 million license payment received in Q1 of 2020.

Operating expenses for the first quarter ended March 31, 2021 totaled $18 3 million versus $18 $9 million on the prior year period.

This decrease was primarily due to a $2 $4 million decrease in sales and marketing expense offset by a point $8 million increase in G&A point $6 million increase in R&D expense and a point 4 million increase in cost of sales.

Non operating expense net totaled $1 3 million and net loss was $12 3 million or <unk> 50 per share compared to a net loss of $13 2 million or $1 14 per share from the prior year period cash.

Cash and cash equivalents at March 31, 2021 totaled $138 6 million compared to $44 $9 million on December 31, 2020.

We expect cash on hand at March 31, 2020, and expected net cash inflows from our product sales will enable us to fund our current and planned operations through the end of 2022.

In conclusion, we are thrilled with <unk> progress in the first quarter of 2021 and are very well capitalized to advance our product pipeline to key value inflection points. Thank.

Thank you all very much for listening this morning, and I'll now turn the call over to the operator for questions.

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 standby, while we compile the Q&A roster.

Our first question comes from the line of <unk> Giordano from Cowen. Your line is now open.

Hi, Thank you so much for taking my question.

So I guess, maybe to start with a broader question for Dr. Duke or how do you see the wet AMD space evolve over the next five to 10 years give.

Given that in that time will be seeing the launch of generic items.

And there'll be other programs on the market and given the issues that we have.

Seen recently from some of the gene therapy companies with serious Aes <unk>.

Do you consider those less of a threat to a product like.

<unk> five.

19 O arm.

Hi, George This is Nancy I'll take that question Dr. Duker, Unfortunately, couldnt make the Q&A today.

Yes.

Let me answer the wet AMD space over the next five years is going to continue to grow.

Just because of the aging baby boomers and nothing in across the world. So the demand is going to continue to increase and let me also state that this is such a large market in these diseases are unfortunately.

Prevalent that theres going to be the need for continuing a lots of different treatment options. We don't see a big impact due to generics I mean, clearly that always has an impact on demand of new products, but if your new products add significant value.

And improving outcomes and in treatment options. There is always a place for new innovative drugs and that's what we believe is the case for you by P 19 O one certainly.

When you look at what's been going on with some of the gene therapy companies you know on let me just first state debt.

It's always.

Difficult and and sad when you see some of these data reads out because patients need these alternative medic medication. However.

Just further emphasizes the point that we've been making is this is not easy to do it's not easy to deliver drugs into the ocular space, particularly in the back of the yard.

Posterior segment of the eye, so we like our odds.

In 19 O one because as we've said many times the <unk> technology is very well proven as you know we've got.

We've had four FDA approvals on the line I excuse me approved by the FDA that are on the market.

We'd had a remarkable safety track record the implant does not break apart.

Days, where it's injected once it drifts to use it to the bottom of the vitreous.

And overall it and it shows very good sustained zero order kinetics. So when you put all that together.

We believe it could offer substantial improvement to patient, we think theres going to be a very large market for these drugs that are in development and we think that we stand a good chance of being successful because of our Dora start technology.

Does that answer your question the Georgia. Yeah. This is very helpful. And then maybe as a follow up you had indicated that your plans to go into other indications.

So maybe could you remind us of the opportunities there and do you think that having a broader am always searches at Teekay I might provide added benefit compared to the current standard of care, especially for refractory patients.

And do you have any guidance as to the percentage of patient population debt those refractory patients might represent in these other indications.

Okay. So lets see you asked three questions there so.

Two our other indications yes, we are currently evaluating.

Doing from small studies in diabetic retinopathy on retinal vein occlusion.

And we're hopeful that we can start those studies.

On potentially early next year. So we are.

Planning mode for those two additional study.

On those.

If you look at all those areas those were main again large area diabetic retinopathy as you know is a very very large area.

It's a large number of patients who suffer from that.

Tends to be quicker.

Precursor to what AMD, Oh, excuse me gloomy on cloud.

Most any patients have had or have diabetic retinopathy.

But it's a way to potential on pumps, those earlier and treat them.

That's for refractory patients I believe your question was how how low.

Yes.

Effective what we think that might be I believe that was your question hard to see at this point, obviously you know the data early data on <unk>.

Not just with umbrella, which is the tyrosine kinase inhibitor, we're using but also if you look at the other tyrosine kinase inhibitors in development.

It tends to show that these are such a drug.

We're gonna have to see the data come through more though and we do believe as the potential exist because the tyrosine kinase inhibitor that you mentioned.

Hit.

A broader array of receptors. So they operate at the receptor level not at the lie GAAP and as a result, which is what the large anti bodies do and as a result, the potential is there that they could potentially be more effective but we have to see the data.

No. This is this is great and then just a housekeeping.

Question just in terms of the.

Will they be willing to provide any sort of spending guidance for this year and I'm just not just thinking about Q1 in terms of spending is that sort of a good run rate for the rest of the year or should we expect our spending in SG&A to kind of pick up pretty good on that yet.

Sure.

Yeah, George will take that question.

I think from a run rate perspective, Q1 is probably a good place to start I think as we get later in the year.

We're as you know we're in the middle of the Phase one study with 19 O one and we did update our cash guidance on the call. This morning.

Indicating that we have cash through the end of next year.

This is perfect. Thank you so much.

Thank you. Our next question comes from line of Jennifer <unk> from Cantor Fitzgerald. Your line is now open.

Hi, Thanks, so much for taking our questions and congrats on the productive quarter.

A few questions. The first one is just is it fair to say that we should expect an enrollment update sometime this week. This month or next month just to keep you on track for the six months.

Around six month prelim data in the fourth quarter and then also.

Since I started and you talked about the update with DRG have you been in discussions with them regarding the 2022 financial covenants and what was the thinking of that update for 2021, and the extent of the update for the year.

And then my last question is you already talked about spending guidance for the year. I was just wondering did anything impact gross margins and how should we think about gross margins for the year and going forward. Thanks, so much.

Okay, Jennifer I'll take the enrollment update and then George will take the financial related questions. Yes, you can expect that we would give a update on the walnut certainly by this month or next month. So that debt is something we fully expect to do George.

Okay.

Yeah, Thanks, and good morning, Jennifer.

Yeah. So on the on the debt Covenant perspective, so we have a we've had a great relationship with C. R. G they've been incredibly.

On a strong partners for us as we went through a difficult 2020, as we all know and.

Really the background of the change in revenue Covenant. This year is just to put it into it.

Reachable range I think because we've improved our balance sheet because it.

Q1 was strong certainly versus last year and so we wanted to put it in a range that was attainable as we climb out of COVID-19 and so they've continued to be a good partner.

If you look at the history on the covenants, we tended to address them a year at a time and I think as you as we look out at 2022.

We anticipate that not being an issue on when that time comes on what other through the debt itself or through the covenant. So.

We're very comfortable where we sit with CRE today.

And obviously the other piece of that as we were able to pay down $15 million of our obligation to them last year. So the revenue covenant really became less of an overhang to them.

And we wanted to make sure it was something easily reachable this year.

On gross margin I think a lot of it is driven by product mix to execute.

It was a bigger piece of revenues in Q1.

Does carry a lower margin on your cheek.

And that that was that was a big driver for us.

For that as well.

Alright, thanks, so much that exhibit that I get all of your questions. Yeah, I think you've got all of that links okay. Thank you again.

Thank you. Our next question comes from the line of Dana Flanders from Guggenheim Partners. Your line is now open.

Hi, This is Kevin on for Dana Ah Congrats.

Congrats on the commercial and clinical progress I have a couple of questions. We saw the 10-Q update today.

Regarding the SEC accounting investigation with no enforcement against the company just could you elaborate on their specific findings and maybe.

Clarify whether you expect any further action.

From the FCC or does this kind of conclude the investigation.

George.

Yeah. Thanks for that question, yeah, so the debt.

At.

This goes back to actually Q2 of 2020, we disclosed in our 10-Q that we had received the SEC subpoena.

We have been fully compliant with and.

It.

And it's taken up to this point in time, but in the short version is we were very cooperative.

Cooperated with cooperative with the SEC and in their review, we were very pleased to get the memo from them yesterday.

Simply stated that they have concluded their investigation and they have no intent they do not intend to recommend an enforcement action.

I think if you look at our disclosures we've always maintained that we were confident in our accounting and we're glad that this is now resolved and behind US we don't expect.

Anything additional so it was a it was a nice lever to get yesterday.

We updated that in our Q this morning.

Okay, Great and then on on the commercial side of things.

You may be give a little bit more color on what youre seeing in terms of retinal specialists trends and as these are they are they generally back to normal patient flow are you still seeing kind of depressed levels persisting with uneven geographic recoveries in the U S.

Yeah. So I'll have Scott answer that question go ahead Scott.

Sure.

And thanks for the question so in terms of the ASC market, especially for cataracts.

Most seem to be getting back to normal there are still areas of the country, where I would say bigger or less than 100%, but in general we're seeing a good return in the cataract space on the.

The Utica side.

I think the private practice retinal physicians seem to be back to a normal schedule for the most part we do still see a little bit of.

Unevenness in the.

I think more of the academic center teaching center environment, where there's still some in places there are still some restrictions on.

Patient flow.

Certainly our ability to access physicians, especially in that environment is much less.

Low bolt on and kind of the general private practice.

We are pleased to see things starting to return to a much more normal pace of patient flow.

Yeah.

Okay, Great and then my last one.

Just on the developmental side I know you've mentioned previously depending on the Eve IP 19, net one phase one data you could potentially have progressed into a phase two or even a pivotal trial. So is this dependent on the strength of the data or is there any clear delineating factors like that.

There's a dose response or a dose selection that are needed to move straight into a regulatory trial versus a phase II.

Yeah, we're not going to get into that level of detail on this but you are correct. It is going to be dependent on the from corporate data.

Well clearly we want to first and foremost and make sure that the drug is safe, which we do expect so that's going to be important and then obviously showing good efficacy.

Moving to a pivotal trial, obviously that carry higher risk than moving into a normal to be trial.

But we'll assess all of that as we as the data starts to come in on suffice It to say, we're planning for all outcomes.

Okay, great. Thank you very much.

Youre welcome.

Thank you on next question comes from the line of Nee Chan from H C. Wainwright. Your line is now open.

Sure.

Yeah.

Alright, Thank you for taking my questions.

First question is the sales of Utica in the first quarter.

Was it subject to a severe impact of the COVID-19, pandemic, which peaked in January.

We he I'll take that question.

Yes.

We didn't see as much with execute but we definitely did see a drop off in boutique and the other issue with your teachers.

Theres a disproportionate number.

University offices that treat uveitis patients as compared to community based offices and they have opened up more slowly than community based offices now we are starting to see them open back up.

Certainly we had two factors going on in first quarter, one of your traditional normal slowdown as Scott mentioned and you'll always see in pharmaceutical products, especially specialty drugs like Utica, but then the second thing is the universities, which are a large part of our.

Utilization.

Typically it's been slower opening from community based offices, but again, we're starting to see them start to open up more and more.

Got it got it.

So for.

For you to gain China, So as <unk> mentioned and indicated that when an NPA could.

Possibly potentially approve the drug.

Yeah very good question.

It wouldn't be right for me to comment on behalf of box you mentioned, but as you probably know they have already filed.

And they did that in record time, they were able also to file it under a new system and Theres a first drug my understanding to be able to file under this where they can use from real world data plus.

N D day and.

And as a result on we're.

We're quite impressed with the progress that they've made so hopefully we'll see on approval coming through potentially sometime this year, but that's up to them to comment on specifics.

Can you remind us the potential milestones and royalties on.

When can we see from a convention yeah, George do you want to comment on that.

Sure so.

As a reminder, we actually as part of our expansion.

Into southeast Asia, where you take last year without Q mentioned, we received.

On a payment for that but they also prepaid the remaining milestone payments and so what we have forward with them as a royalty stream.

Which we haven't disclosed specifically, but it's in the high single low double digit range.

Got it.

Thank you.

Thank you our next question.

Thank you. Our next question comes from the line of Andrew de Silva from B Riley Securities. Your line is now open.

Hey, Thank you good morning, and thanks for taking my questions just to start I have a couple of quick bookkeeping ones as it relates to Utica.

End user demand fairly aligned with the distributor ordering patterns and then.

It was your PPP loans forgiven, yet I just wasn't sure where we were on that.

George will take that question.

Okay.

Yes.

Sure so the bits on you.

There's always a disconnect I think what we've certainly talked about in the past Andy on demand and revenues.

<unk> are different I think they are starting to track closer, but there is still a bit of a difference in demand.

And and.

And stocking by distributors, which is where we recognize our revenue.

And in the quarter, we also had some exchanges as well.

For the Utica needle not real consequence, but it affected it a little bit on the distributor side.

And.

It's fairly it's getting closer, but there's still a disconnect and we don't really want to guide on those specifics because it's it's a lot of reconciliation.

Doesn't really help.

On the on the PPP front, we have as we've disclosed in our Qs submitted our forgiveness application, we're very comfortable in our.

Forgiveness application, but we are still waiting for the SBA to act on that.

Provided all the necessary documentation I think as you know our long was above the $2 million threshold.

It's subject to additional review by SBA, and we're just waiting for that process to work itself through but we.

We do continue to expect a complete forgiveness of debt loans.

Okay. Okay, great. Thank you just was looking for an update there.

And then as it relates to execute.

I recall I believe it was last year.

On one of your earnings calls you mentioned you were.

Potentially looking for pass through.

<unk> extended the Ru and inclusion in an omnibus spending bill.

Was that originally expected to be part of the consolidated Appropriations Act of 2021.

<unk> was recently signed into law or were.

Were you looking at other bills or another path to extension.

Any color there would be useful.

Yeah, I'll answer that and then ill actually ask Scott to comment if he wants to add anything further because he and I actually been pretty involved with that so yeah.

I can tell you that we obviously were hoping it would be part of the omnibus Bill on on <unk>.

Fortunately.

We didn't put any drug related legislation.

And the omnibus spending bill so, but we have other we have.

Additional avenues that we are pursuing continue.

Continue on the legislator front and we continue to have support in Congress I. Some members for this.

Second thing is is that we're also pursuing this at the former level on.

On the regulatory front we're.

We're not going to go into a lot of detail on this but we certainly are.

But optimistic that we should at a minimum debt or extension of pass or tied to the public health emergency.

Because they've already CNS authority extended that to medical devices on a few other category and it makes sense because this drug.

When you calculate what the new bundled prices in total.

Look back over the last couple of years in terms of the utilization on obviously the utilization across all of these drugs used in the surgical suite have been severely depressed due.

The COVID-19, but very hard for them to do what I would consider to be a fair a bundled.

Bundled price given that dynamic so we do expect our hopeful I shouldn't say that came out as well.

We provide for an extension on par or tied to the length of time of the public health emergency which by the way.

Will not be on Westwood still ongoing Scott do you want to add anything to that.

Nancy I think that was well sort of I was just going to add on I think you covered it slightly but.

<unk>.

It's not when we say the strategy for extension of its not one strategy. It's multiple tactics that were employed both for.

Dealing with the <unk>.

Shutdown in extending the tolling period on our pass through for that as well as looking at long term.

Hum.

<unk> two to continue payment for pass through type products, especially policy packaged products. So again, we have both regulatory and legislative strategies that were currently implementing and we do so.

That we'll see something in the in the <unk>.

On many weeks or months relative to.

Those strategies that we're employing today.

Okay could you just refresh my memory with Omidria when it got its extension was that through.

Legislative or congressional support.

Vs are going down perhaps that regulatory CMS Bath I, just I think it was an omnibus, but I I don't remember for sure on how they all it does.

Yes.

Andy It was both day first got an extension through a piece of regulation that was put into an omnibus spending bill but that had again a time period tied to it and so then they actually lost reimbursement when that expired and then they were able to get CMS to <unk>.

Give them permanent reimbursement due to the fact that they've done a small study showing a reduction in opioid use associated with Omidria and I would just say that obviously unfortunately.

Appeal, a crisis continues, particularly now with the pandemic has accelerated and so there is a.

Large impetus at CMS to ensure that opioid alternatives are being made available to patients and that's hard to do when you're a drug is being bundled in with an overall cataract bundle.

And there were on that so certainly that is.

I've said before and I'll say this year that we certainly are looking debt at that path as well.

So dexamethasone had it has is there any just.

Generally data out there for the U S. The upselling like conditions, but debt dexamethasone has been shown to reduce.

The need for painkillers, or opioids and thing like that yeah, well debt net debt.

Episode is not debt with you that's the message so on its just a generic injectable sell that to my knowledge no Nobody's done a study on dexamethasone per se execute with dexamethasone and our various on technology with extended delivery. So we'll just leave it at that because I don't want to comment any further but you know we are as sky.

<unk> said, we are looking at a number of shots on goal.

Okay, that's actually very interesting I didn't realize that.

And then.

As it relates to the Derby is trial outside of.

Sustained release.

Net loss from.

For six months, which should help with patient adherence and compliance.

Are you expecting any.

Or should we be thinking about at least any efficacy benefits or you might be 19 on one relative to anti VEGF maps that are already in the market Eylea Lucentis bamboo.

Or are.

Have there been any small molecule anti VEGF that had been able to mimic or show improved efficacy relative to approve biologics at least from an anecdotal standpoint I just.

Limited head to head studies out there I'm just kind of curious on.

On any anecdotal or your thoughts on better efficacy.

Yeah. So first of all let me just say that.

Simply showing equal as opposed.

To the current.

Large molecules that are on the market.

The standard deliveries.

A huge win.

And again and I'll I'll answer your question about after the call in just a moment, but again I just I can't stress this enough.

Pay zone with the current therapy, you have to come on every month or every other month.

And in the case of they had to do.

Like every three months, but enterprise and check with the rest of their lives.

Out of a burden.

To put on patients on offices I might add and so what happens is there.

Preponderance of real World data flow.

On Europe as well as the U S debt shows overtime I need a large large databases with published studies.

That has shown over time with current therapies patients continue to deteriorate on.

The reason.

More than likely again this is correlation not positive.

That these patients just don't comply actually I'll pick that back they have shown that they just don't come in on.

Get their items I think as you can see that from the claims data at the rate that goes through it.

Because it's hard and frankly, but what's your core items that go to every month every other month every month for the rest of their lives. So it's the other.

Equally real difficult problem and that's why you see a number out.

On drugs in development to go up even further out and injection time total and then by by comparison of course, if you don't have to come in as frequently but you get the same efficacy youre not going to stop your doses as much. So theoretically you should end up with better overall outcomes, meaning revision gardens.

Deteriorated much now them, that's going to take long term studies to prove that.

But you can infer it when I want to be clear here you can infer it from these large databases.

Looking at the current drugs on the real on the real World data that says that the Eisai continues to deteriorate. So let me just stress again, we absolutely believe that being able to extend out to potentially six to nine months.

All you have to get your eye injected again as a game changer.

Okay perfect useful context. Thank you very much best of luck going forward.

Okay.

Thank you. Our next question comes from the line of Yale Jen from Laidlaw and company. Your line is now open.

Good morning, and thanks for taking the questions and congrats on the progress.

My first question sure on my first question.

That's the Q.

For this quarter.

The fourth quarter of last year, the revenue would have jumped quite significantly.

But to my understanding the unit may not be that much different I mean, there's different but they're not to the level of the revenues. So is there a price increase both debt to kill or how jewelry you Rick.

Consign the differences here.

Yeah actually George why don't you take that and then Scott can comment as well.

So from on the revenue versus going on.

Sure Hi, yeah good.

Good morning, Yeah, as I pointed out earlier remember, they're there they will continue to be a disconnect between underlying customer demand, which is customers buying from distributors.

And our our sales which is ours.

On purchases from us by the distributors and so there's always there's always going to be some disconnect there and so what we've tried to do in our disclosures is we recognize revenue under GAAP and that's what's reported and that's the the sales to distributors and then the underlying customer demand we disclosed separately.

Which gives a.

A track on what what the what the customers are buying from the distributors and unfortunately, there's always going to be a disconnect in where.

At least for now not go on and not in a position to provide that reconciliation, but I just think it complicates it.

And we have we have not put a price increase and execute on your other questions Scott.

Scott.

Yeah go ahead Scott.

Yeah.

No I think George covered I was just going to add that there has not been a price increase but we've seen nice pickup in customer demand from Q4 to Q1 as we continue to pull out of the pandemic and again I mentioned earlier that we're seeing strength from our corporate alliance with them from <unk> and then also from some of the contracts.

We've recently signed so <unk>.

Including adding in the layer of the rebound from COVID-19, we're seeing nice demand pick up.

Yes.

Sure way extrapolate it may be a little bit in terms of the increase of revenue I mean the cells.

Implies that the implant ex has more optimistic in terms of purchasing more products prepare Florida inventory preparing for the future or that's not necessarily the case.

So could you just goes I am not quite following your question are you, saying that.

We continue to see an uptick in demand data digitally.

Co promotion with <unk>.

Just.

In terms of debt.

Quite a large increase of the purchase price.

The distributors are would that would that suggest the day I'm more optimistic on the future.

Growth all demands and that's why they have they've got a bigger purchase versus before.

Before.

Yeah. So let me answer it this way as you know we don't give forward guidance.

So I want to put large caveats around this.

It's always hard to predict what's going to happen and that's due to the pandemic not 100% Oliver though we've made enormous progress.

But it's not over yet I will state, though however, as Scott said we.

Assuming that the pandemic doesn't get worse the offices continue to open up patients continue to show the momentum to come in as they are right now that and we are continuing to see and we expect to see continued growth with <unk> with a great product.

It always takes time to get a transition going meaning from drops to your technology, which is executed which is delivered at the very end of surgery. That's one injection.

And as we've seen this physicians more and more.

Ambulatory surgery centers are getting comfortable using debt from Q. In addition, as Scott said.

From its Rx is really starting to kick into gear now it always takes time.

Typically six months on average for a rep to get fully productive out in the field and that's exactly what we're seeing with Imprimis Rx We signed our agreement in August and now we're starting to see some very nice momentum from their team and we're very appreciative our co promotion agreement with them is just going terrific.

Okay, Great. That's very helpful and just two quick ones.

First one is that in your prepared remarks, I think you mentioned potentially.

Licensing.

Based on the products just.

Curious what will you consider as the idea of product in debt.

Uh huh.

But that pursuit.

Yeah. Good question business development is a part of Georgia area for George Why don't you take that question.

Sure.

Yeah. So yeah I think on the other side of this financing and we've really.

As you know we we focused on execution. We are very proud of the fact that we got 19 on one into the clinic and moving forward and Nancy highlighted a couple of additional indications for that program.

[noise] pardon me and since really since our financing in.

In February we have now started to strategically look at okay. What what are the next programs.

In wet AMD in I'm, sorry that we're duress or in particular can have an application.

And diseases of the eye and so we're in the middle of a strategic process for that now and I would say stay tuned we will look to update areas of approach.

Perhaps as early as later this year as we identify additional molecules that we would like to move into development.

Being very deliberate.

But because of that.

I think the other key item here.

As we've seen.

It's not simple to deliver in the other we think we've got a real competitive advantage with <unk>.

And we have a number of areas of focus and unmet need where we can we think we can have a real make a real difference.

With existing molecules and endorser and we'll come back on update hopefully later this year on where we're going with that.

Okay, Great. That's very helpful on maybe the last one here.

This is a very forward looking kind of situations, which is that the 19 O one which will be deliver twice.

Twice every years.

But you do have the technology you can deliver it took almost four three years.

So the question is that going for a wasteful where woods would be was there a consideration that you might you know delivers a drug from <unk>.

And what am deal others.

For even.

For the infrequent dosing.

Compared with net one.

Okay.

Nancy you want to take that you might be muted.

Oh I apologize I was on mute because I want to minimize background noise when others are speaking so yes.

There's no doubt that.

We are looking at other ways to extend the duration of treatment and injection, mostly for other indications, which are like diabetic retinopathy, which are probably better suited to a longer treatment because they are less severe diseases as well.

Wet AMD, that's not something we're going to evaluate right now certainly it's something down the road if we're successful.

Successful and we'd look like where we're well until the phase III potentially approved we'll evaluate if the market would want that right now I can tell you that what we've consistently seen in market research data that we've done over the years is the sweet spot for some of these serious diseases like wet AMD.

And all I can say other diseases like.

Certainly upi to diabetic macular edema as examples doctors consistently state that they do like to have treatment options and six months is a nice sweet spot uveitis typically can go out to three years, because it's an unpredictable disease and you don't know when they're going to flow, but they still want that.

Treatment option, which is why we're developing new take five Boe.

So right now we don't have plans to do another dose duration for wet AMD, but that's certainly all these things are going to be evaluated should we be successful with the phase one and going into a phase two study.

Okay, great. Thanks, a lot again, congrats on the quarter.

Oh, thank you.

Thank you at this time I am showing no further questions I would like to turn the call back over to Nancy Lurker CEO for closing remarks.

Thank you everyone for your time. Thank you also for the Great question.

Going to updating you next quarter and we're very excited about our current progress. Thank you very much.

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

Yeah.

[music].

Okay.

[music].

Yes.

[music].

Yeah.

[music].

Yeah.

Yeah.

[music].

Right.

[music].

Okay.

Okay.

Okay.

Okay.

[music].