Q2 2021 Ocular Therapeutix Inc Earnings Call
[music].
Good afternoon, ladies and gentlemen, thank you for standing by and welcome to the ocular Therapeutics second quarter 2021 earnings Conference call.
Operator: Good afternoon, ladies and gentlemen. Thank you for standing by, and welcome to the Ocula Therapeutics Second 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 Ocula Therapeutics. Please go ahead,
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.
It is now my pleasure to turn the call over to Donald <unk>, Chief Financial Officer of Ocular Therapeutics. Please go ahead Sir.
Thank you operator, good afternoon, everyone and thank you for joining us on our second quarter 2021 financial results from business update conference call.
Donald Notman: Thank you, Operator. Good afternoon, everyone, and thank you for joining us on our second 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 June 30, 2021. The press release can be accessed on the Investors portion of our website at Investors. O-C-U-T-
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 June 32021.
Press release can be accessed on the investors portion of our website at investors <unk>, TX Dot com.
Donald Notman: Leading the call today will be Anthony Modisich, our President and Chief Executive Officer, who will provide a summary of our corporate developments and an update on the commercial progress of Dextenta. 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 second quarter before turning the call back over to Anthony for a summary, and the Q&A will be joined by Scott Corning, our senior vice president, commercial, and Chris White, our senior vice president, business and corporate development.
Leading the call today will be Anthony Martin <unk>, our President and Chief Executive Officer, who will provide a summary of our corporate developments and an update on our commercial progress of next day.
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.
Following Michael's remarks, I will provide an overview of the financial highlights for the second quarter before turning the call back over to Anthony for a summary and questions for Q&A, we'll be joined by Scott Corning, Our senior Vice President commercial and Chris <unk>, 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 forecasts, including those risks described in our most recent quarterly report on Form 10Q, filed this afternoon with the SEC. I will now turn the call over to Ante.
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 $19.95.
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 forecasted 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 Donald and welcome everyone to ocular Therapeutics second quarter 2021 earnings report.
Antony Mattessich: Thank you, Donald, and welcome everyone to Ocular Therapeutics' second quarter 2021 earnings. It's been a good first half of the year, and I'm proud of the team's efforts as we continue our efforts to build a leading ophthalmology company with therapeutics that have the potential to transform the way common eye diseases are treated. At Ocular, we begin with the end in mind. We first think about the size and dynamism of the disease state in ophthalmology and then consider the key unmet needs in that space.
Been a good first half of the year on I'm proud of the team's efforts as we continue our efforts to build a leading ophthalmology company with therapeutics that have the potential to transform the way common diseases are treated.
Net ocular we begin with the end in mind, we first think about the size and dynamism of disease state in ophthalmology, and then consider the key unmet need in that space.
Antony Mattessich: It is only then that we apply our technology to the opportunity and determine whether we may be able to build a therapeutic that can meet that key unmet need and become the standard of care. We believe that all of our development programs satisfy these requirements, from the largest opportunity in wet AMD, where we believe our TK, OTXTKI could become the most durable product on the market, to glaucoma, or OTIC could solve the problem of patient compliance, to dry eye disease, or OTXTSI, and OTXD could improve the patient experience relative to current therapy, And finally, to Dixenza, that we believe fulfills the patient and physician desires to have a more convenient drop-free solution for the treatment of post-surgical inflammation and pain.
It is only then that we apply our technologies the opportunity and determined whether we may be able to build a therapeutic that can meet that key unmet need and become the standard of care we.
We believe that all of our development program satisfy these requirements from.
From the largest opportunity in wet AMD, where we believe our teekay <unk> PKI can become the most durable product on the market to glaucoma for Ots GIC could solve the problem of patient compliance to dry eye disease for <unk> CSI and.
<unk> could improve the patient experience relative to current therapies.
And finally to the extent that we believe fulfills the patient and physician desires to have a more convenient drop free solution for the treatment of post surgical inflammation and pain.
Not only do the product candidates, we developed target key unmet clinical needs in their respective spaces.
But we have designed them with product characteristics that we believe will lend themselves to more efficient commercialization.
All of the therapeutics that ocular.
For designing new medical benefit volume build products with associated procedure codes.
Products with these characteristics are optimized or accounts selling approach accounts selling structures can be more targeted and reach and frequency models employed by companies that sell traditional prescription benefit medications.
Antony Mattessich: Not only do the product candidates we develop target key unmet clinical needs in their respective spaces, but we have designed them with product characteristics that we believe will lend themselves to more efficient commercialization. All of the therapeutics at Ocula are designed to be medical benefit, buy, and build products with associated procedure codes. Products with these characteristics are optimized through an account selling approach.
To extent that has been proof of principle, whereby we have been able to cover the entire U S. With a targeted commercial team of less than 50, Ftes and have been able to achieve a positive product contribution within a very short period of time.
Finally, as highly innovative and novel dosage forms the product candidates. We are developing have substantial intellectual property protection that are expected to maintain exclusivity well into the future.
Kansas patent protected at least until 2030 and all of our development product candidates have patent applications that are expected to provide protection until 2040 and beyond.
It all adds up to a portfolio of product candidates that we believe are highly differentiated clinically.
But by themselves through efficient commercialization and have long periods of exclusivity.
In keeping with the way we add programs for our portfolio, we see dry age related macular degeneration as the next great area of opportunity in ophthalmology like.
Antony Mattessich: Account-selling structures can be more targeted than reach and frequency models employed by companies that sell traditional prescription benefit medications. Fenza has been proof of principle, whereby we've been able to cover the entire U.S. with a targeted commercial team of less than 50 FTEs and have been able to achieve a positive product contribution within a very short period of time. Finally, as highly innovative and novel dosage forms, the product candidates we are developing have substantial intellectual property protection that is expected to maintain exclusivity well into the future, extending patent protection at least until 2030, and all of our development product candidates have patent applications that are expected to provide protection until 2040 and beyond.
Like wet AMD. We also believe the durability will be the key unmet need in the future.
In June we announced an exciting collaboration with mosaic Biosciences that marks an important step forward for our company and how we approach for discovery and development of therapeutics.
Working with mosaic, we hope to incorporate the discovery of new chemical entities with established mechanisms of action to identify novel Therapeutics with superior durability.
All innovations developed through a collaboration with mosaic will be wholly owned by ocular.
As we enter a new collaboration with mosaic, we're also saying goodbye to our long standing collaboration with Regeneron for this.
Collaboration was never a central driver of growth for ocular.
We learned a great deal about how to formulate our proprietary hydrogel with monoclonal antibodies and also about formulating medicines for administration to the Super Gorilla space.
Both of these are valuable learnings that will further benefit the key drivers of value on our business our.
Our wholly owned pipeline.
For the termination of this collaboration we are no longer restricted from independently developing anti VEGF agents for treatment of various retinal diseases. This is a multibillion dollar market opportunity, which we now have the opportunity to pursue on our own or through partnership with others.
We believe collaborations will be a central pillar of our strategy to become a leading ophthalmology company.
Yes.
Moving to the extend zone in the quarter, we achieved $11.1 million in net sales to our distributors for the quarter, representing nearly a 7700 per cent increase over the same quarter last year and approximately 56, 5% sequential increase over the first quarter of 2021.
Antony Mattessich: All that's up to a portfolio of product candidates that we believe are highly differentiated clinically, that bind themselves to efficient commercialization, and that have long periods of exclusivity. In keeping with the way we add programs to our portfolio, we see dry age-related macular degeneration as the next great area of opportunity in ophthalmology. Like wet AMD, we also believe that durability will be the key unmet need of the future.
For the second quarter in market sales set a record of nearly 25000 billable inserts and approximately 50% sequential increase over the first quarter of 2021.
We believe this growth reflects a strong increase in end user demand for extensive against the backdrop of a return to more normal cataract procedure volumes.
And the outpatient prospective payment system or O. P. P. S proposed rule issued by CMS in July It was proposed the DEXTENZA receive an extension of its pass through payment status, resulting in separate drug payment for the end of 2022.
Antony Mattessich: In June, we announced an exciting collaboration with Mosaic Biosciences that marks an important step forward for our company and how we approach the discovery and development of therapeutics. Working with Mosaic, we hope to incorporate the discovery of new chemical entities with established mechanisms of action to identify novel therapeutics with superior durability. All innovations developed through our collaboration with Mosaic will be wholly owned by OQ. As we enter a new phase of Mosaic, we are also saying goodbye to our longstanding collaboration with Regeneron. However, this collaboration was never a central driver of growth for Ocular.
If this decision it becomes final it allows us to build on our ongoing dialogue with CMS on DEXTENZA post pass through payment status into the next rulemaking cycle a year from now.
We continue to believe there are a number of viable pathways that CMS can employ whereby we can ensure patient access to the extensive.
And the Afcs H O P DS beyond the pass through period, and we will keep investors updated on any developments on this area.
The proposed Medicare physician fee schedule rule was also issued in July.
Draft rule proposed that our CPT procedural code zero $305.60 for the insertion of a drug eluting insert into the into the NASA lacrimal catalytic or calculus.
Will convert to a category 1 code in January of 2022, with a proposed payment of $31.91 in the facility and $37.61 in the physician's office for unilateral insertion.
We are very pleased that the category 1 code conversion for the procedure appears on track for the category 1 CPT codes typically benefit from broader coverage and payment on all types of payers.
Antony Mattessich: We learned a great deal about how to formulate our proprietary hydrogen gel with monoclon antibodies and also about formulating medicines for administration in the supercaroidal state. Both of these are valuable learnings that will further benefit the key drivers of value in our business, our wholly owned pipeline. With the termination of this collaboration, we are no longer restricted from independently developing anti-vege F agents for the treatment of various retinal diseases. This is a multi-billion-dollar market opportunity, which we now have the opportunity to pursue on our own or through partnership with others.
However, the work ahead for ocular and other interested party is to use the comment period to make the case of a reimbursement level that is more in line with similar procedures.
With regard to allergic conjunctivitis, we currently await October 18th could do for target action date for potential approval and expansion of that extends a label it.
It is estimated that up to 10 million people on the U S annually seek medical attention for the inflammatory response associated with allergic conjunctivitis caused by both seasonal and perennial allergens, representing a discrete and significant potential market for an extensive.
Most importantly, if approved the AC indication may signal the opportunity to transition extends administration for the office setting providing additional opportunities for expansion of the product.
Antony Mattessich: We believe collaborations will be a central pillar of our strategy to become a leading optomology company. Moving to Dextenza, in the quarter, we achieved $11.1 million in net sales to our distributors for the quarter, representing nearly a 700% increase over the same quarter last year and approximately 65% sequential increase over the first quarter of 2021. For the second quarter, in-market sales set a record of nearly 25,000 billable inserts, and an approximately 50% sequential increase over the first quarter of 2021.
Moving to our pipeline we have for.
For clinical programs each of which is geared to produce a highly differentiate ophthalmology specialty product candidate that addresses the key unmet needs in its respective disease state.
We believe our pipeline remains a source of tremendous value for ocular and we anticipate a number of key events over the course of the year.
Just recently, we announced the dosing of the first subject in our U S based trial of <unk> for the treatment of wet AMD.
T K I have the potential to be a new stand on a new sustained released administration of exits and it was 6 months or longer durability, and a potential new mechanism of action for the treatment of patients with wet AMD and other retinal diseases.
Antony Mattessich: We believe this growth reflects a strong increase in end-user demand for Extenza against a backdrop of a return to more normal cataract procedure volume under the proposed Outpatient Perspective Payment System, or OPPES, rule issued by CMS in July. It was proposed that the extensor receive an extension of its pass-through payment status, resulting in separate drug payment to the end of 2022. If this decision becomes final, it allows us to build on our ongoing dialogue with CMS on the extension of this post-passer payment status into the next rulemaking cycle a year from now.
A few weeks ago, we announced 8 company presentations and data from 5 investigator initiated trials at the <unk> annual meeting held in Las Vegas, the scope of our presence.
Interest in our clinical programs and the progress we continue to make advancing our pipeline.
The company sponsored presentations and posters are available under the investors section of our website.
Before turning the call over to Mike I want to highlight 2 compelling programs in dry eye disease.
Dry represents a large market that we believe continues to be underserved with products that have high rates of patient drop off to the slow onset of action and tolerability issues like burning and stinging upon administration.
<unk> CSI is our cyclosporin containing <unk> insert to increase tear production in patients suffering from dry eye disease.
Antony Mattessich: We continue to believe there are a number of viable pathways that CMS can employ, whereby we can ensure patient access to Dixenza in ASCs and HOPDs beyond the pass-through period, and we will keep investors updated on any developments in this area. The proposed Medicare physician fee schedule rule was also issued in July.
And <unk> is our dexamethasone containing inter canalicular.
For the short term treatment of signs and symptoms of dry eye disease.
Both programs are being developed to address the specific limitations of current treatment options to.
To date, we are encouraged by our progress in both programs have advanced faster than planned.
So it has been a very productive start to the year and we anticipate a number of important catalysts that will take place over the next 2 quarters.
Antony Mattessich: The draft rule proposes that our CPT procedural code 0356 for the insertion of a drug-diluting insert into the nasal laxomal cannoliculus will convert to a category one code in January of 2022 with a proposed payment of $31.91 in the facility and $37.61 in the physician's office for unilateral. We are very pleased that the Category 1 code conversion for the procedure appears on track since Category 1 CPT However, the work ahead for Ocular and other interested parties is to use the comment period to make the case for a reimbursement level that is more in line with similar procedures.
With that I would like to hand, the call over 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 Ots PKI assets.
Anthony noted we're pleased to have recently dosed, our first subject in the U S. Based multicenter prospective randomized controlled trial that is evaluating a single <unk> implant containing exiting the compared to a <unk> administered every 8 weeks and subjects previously treated with anti VEGF therapy.
The U S based on phase 1 clinical trial of <unk> is being conducted under an exploratory IMD application at 5 sites with a total of 20 randomized subject 15 subjects being treated with a single <unk> PKI implant containing 600 microgram dose of exiting them with an anti VEGF induction of debt injection.
And 5 subjects being treated at 8 week intervals for the flavors up.
Antony Mattessich: With regard to allergic conjunctivitis, we currently await October 18th, the Paducah Target Action Date, for potential approval and expansion of the Dixenzo label. It is estimated that up to 10 million people in the U.S. annually seek medical attention for the inflammatory response associated with allergic and ductivitis caused by both seasonal and perennial allergens, representing a discrete and significant potential market for Dixenza. Most importantly, if approved, the AC indication may signal the opportunity to transition administration to the office setting, providing additional opportunities for expansion of the process.
Trial 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.
Based on the early data that we have share to date from the ongoing phase 1 trial of <unk> in Australia, we continued to see signals of biological activity, including decreases in retinal fluid in some subjects as early as 2 months following implant administration.
Additionally, we are seeing encouraging durability of 6 months or longer across cohorts and durability beyond 1 year in some subjects.
TX <unk> has thus far been well tolerated and it has been observed to have a favorable safety profile.
No serious ocular adverse events have been observed are reported to date.
While the drug product profile is still emerging we are pleased with the interim data in <unk> potential to reduce inter retinal <unk> sub retinal fluid.
Antony Mattessich: Moving to our pipeline, we have four clinical programs, each of which is geared to produce a highly differentiated Optomology specialty product candidate that addresses the key unmet needs in its respective disease state. We believe our pipeline remains a source of tremendous value for Ocular, and we anticipate a number of key events over the course of the year. Just recently, we announced the dosing of the first subject in our U.S.-based trial of OTXTKI for the treatment of wet AMD.
Moving to our glaucoma program Ots TICC.
We have completed a U S based phase <unk> clinical trial evaluating the safety biological activity durability and Tolerability of <unk> in subjects with primary open angle glaucoma or ocular hypertension we've.
We presented interim data in May at ARVO and in July at Crs that showed a mean reduction in intraocular pressure from baseline of approximately 7 to 11 millimeters those comparable to current standard of care topical travoprost.
Antony Mattessich: OTXTKI has the potential to be a new sustained release administration of exitinib with six months or longer durability and a potential new mechanism of action for the treatment of patients with wet AMD and other retinal diseases. A few weeks ago, we announced eight company presentations and data from five investigator-initiated trials at the ASCRS annual meeting held in Las Vegas. The scope of our presence highlights the interest in our clinical programs and the progress we continue to make in advancing our pipeline. Company-sponsored presentations and posters are available under the Investors section of our website.
And sort of onset of action as early as 2 days after implant administration and the durability of response with decreases in eye pressure for 6 to 9 months and many subjects in cohorts, 1.2 and 4 to 6 months for us for subjects in cohorts 3 and for OTI.
<unk> has been generally well tolerated with a favorable safety profile to date.
We're targeting initiation of the phase III clinical trial in the fourth quarter of this year.
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 2 programs <unk> CSI for the chronic treatment of patients with dry eye disease, and Ots D. D for the short term treatment of the signs and symptoms of dry eye disease.
<unk> CSI is an entertaining regular answer which offers local programs release cyclosporine for approximately 3 to 4 months to the ocular surface along the punctual occlusion.
Antony Mattessich: Before turning the call over to Mike, I want to highlight two compelling programs and dry-eyed Drya represents a large market that we believe continues to be underserved with products that have high rates of patient drop-off due to the slow onset of action and tolerability issues like burning and stinging upon administration. OTXSI is our cyclosporin-containing intercanolicular insert to increase tier production in patients suffering from dry eye disease, and OTXD is our Dexamethosone-containing intercanolicular insert for the short-term treatment of signs and symptoms of dry eye disease. Both programs are being developed to address the specific limitations of current treatment options.
By releasing low doses of preservative free cyclosporin over an extended duration of time <unk> CSI has the potential to minimize some of the biggest patient complaints about commercially available products for the.
The chronic treatment of dry eye disease, namely ocular surface irritation stained and Bernie.
Very excited about the potential for this physician administered hands free and preservative free option in helping dry eye patients received the benefit for cyclosporin, but with potentially greater tolerability and more rapid onset of action compared with therapies currently available on the market.
We have completed enrollment of our U S based randomized masked phase II multi center clinical trial evaluating 2 different formulations of <unk> CSI compared with 2 different hydrogel vehicle inserts.
Approximately 140 subjects will be followed for a period of 16 weeks.
Endpoints in this study include increased tear production as measured by the Schirmer test other.
Other signs of dry eye disease as measured by corneal fluorescein staining and symptoms of dry eye disease as measured by the visual analog scale for Vas.
Antony Mattessich: To date, we are encouraged by our progress, and both programs have advanced faster than expected. So it has been a very productive start to the year, and we anticipate a number of important catalysts that will take place over the next two quarters. With that, I would like to hand the call over to our President of Optomology and Chief Medical Officer, Dr. Michael Goldstein, who will provide an in-depth look at our pipeline. Thanks, Anthony.
<unk> severity score and dry eye frequency score.
Consistent with our update last quarter, we expect topline data in the fourth quarter of 2021.
Our second product candidate and dry eye <unk> is a low dose <unk> and sort of preservative free dexamethasone Walden.
While it incorporates the same active drug is to extend the this is a new product candidate with a lower dose effects from episode and smaller in size.
Many dry patients experienced episodic players are there signs and symptoms, which we believe are likely related to inflammation.
Unknown Attendee: Let me begin with an update on our back of the eye program, OTX TKI. As Anthony noted, we are pleased to have recently dosed our first subject in the U.S.-based multi-center prospective randomized control trial that is evaluating a single OTX TKI implant containing exitinib compared to a phlybicep administered every eight weeks in subjects previously treated with anti-vegeist therapy. The U.S.-based phase one clinical trial of OTXTKI is being conducted under an exploratory I&D application at five sites with a total of 20 randomized subjects, 15 subjects being treated with a single OTXTKI implant containing 600 microgram dose of acetinib with an anti-vege F induction injection and five subjects being treated at eight-week intervals with a flibersep.
Optical steroids have long been used off label for dry eye players all commercially available topical steroid eye drops in the United States that preservatives, which can result in ocular surface toxicity.
Product misuse of steroids may also lead to adverse events, such as elevated high pressure or cataract.
<unk> essentially offers these patients the opportunity to be treated with a physician administered preservative free enhance free steroid option.
It can't be overused by patients.
We are currently enrolling patients on a U S based randomized double masked vehicle controlled phase III multicenter clinical trial evaluating 2 different doses of <unk> D E D.
Paired with our hydrogel vehicle insert and approximately 150 subjects for dry eye disease.
This trial is designed to assess the safety and efficacy of <unk> for the short term treatment of signs and symptoms of dry eye disease by evaluating ballpark conjunctiva hyperemia.
Unknown Attendee: The trial is designed to assess the safety, durability, and tolerability of OTX-TKI, as well as to assess preliminary biological activity and subjects by measuring anatomical and functional changes. Based on the early data that we have shared to date from the ongoing phase one trial of OTX TKI in Australia, we continue to see signals of biological activity, including decreases in retinal fluid in some subjects as early as two months following implant administration. Additionally, we are seeing encouraging durability of six months or longer across cohorts and durability beyond one year in some subjects.
I joined us frequency and severity scores and total corneal players total corneal fluorescein staining among other endpoints.
Enrollment has been faster than initially anticipated and we're tightening our guidance as we now expect top line data in the first quarter of 2022 versus our prior guidance of the first half for 2022.
Lastly for DEXTENZA for the treatment of ocular itching associated with allergic conjunctivitis, we submitted an NDA at the end of 2020 and have received that could do both target action date of October 18.2021.
Overall, we believe the data package highlights the compelling product profile targeting an unmet need that could potentially change the current standard of care with the physician administered preservative free and free therapy for these patients which can't be abused by patients.
Unknown Attendee: OTX-TKI has thus far been well tolerated and has been observed to have a favorable safety profile. No serious, ocular adverse events have been observed or reported to date. While the drug product profile is still emerging, we are pleased with the interim data and OTXTKI's potential to reduce intrametal and or subretimal fluid. Moving to our glaucoma program, OTXTIC. We have completed a U.S.-based phase one clinical trial evaluating the safety, biological activity, durability, and tolerability of OTXTIC in subjects with primary open-angle glaucoma or ocular hypertension.
Anthony mentioned if approved the first NDA would represent our first in office indication for DEXTENZA.
I would now like to turn the call back over to Donald to review, our second 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 $11.7 million and represented a 631% increase over the same period in 2020 net.
Net product revenue of DEXTENZA in the second quarter was $11.1 million versus $1.4 million in the comparable quarter of 2020, reflecting on nearly 7 times increase total net product revenue for the second quarter. In 2021 also included net product revenue of $6 million from a share ceiling.
Unknown Attendee: We presented interim data in May at Arvo and in July at ASDRS that showed a mean reduction in intractable pressure from baseline of approximately 7 to 11 millimeters that is comparable to the current standard of care topical travel process. We observed onset of action as early as two days after implant administration and durability of response with decreases in eye pressure for six to nine months in many subjects in cohorts 1 and 2, and 4 to 6 months for subjects in cohorts 3 and 4.
Research and development expenses for the second quarter were $13.9 million versus $8 million for the comparable period in 2020, driven primarily by increased head count as well as increased clinical trial costs associated with the initiation of the U S based phase 1 trial of <unk>.
TX PKI as well as the ongoing phase II clinical trials for <unk>, CSI and <unk> the ongoing phase 1 clinical trial with TX PKI in Australia, and the DEXTENZA post approval pediatric trial.
Selling and marketing expenses in the quarter were $8.4 million as compared to $6.2 million for.
Unknown Attendee: OTS-TIC has been generally well tolerated with a favorable safety profile to date. We're targeting initiation of the Phase 2 clinical trial in the fourth quarter of this year. We are also making significant progress with our Octave Surface Disease programs, which include product candidates for dry disease and allergic conjunctivitis. In DryEye, we have two programs, OTX, CFI for the chronic treatment of patients with dry eye disease, and OTXD for the short-term treatment of the signs and symptoms of dry disease. OCHPSI is an intercalinellicular insert that offers local programmed release of cyclosporum for approximately three to four months on the ocular surface along with punctual occlusion.
For the same quarter in 2020, reflecting increased personnel costs associated with expansion of our field force.
Finally general and administrative expenses were $8.6 million.
For the second quarter versus $5.1 million in the comparable quarter of 2020, the increase in expenses stemmed primarily from increased personnel expenses and professional fees.
With respect to the financial results for the second quarter. The company reported a net loss of $8.5 million for a loss of <unk> 11 per share on a basic and a loss of 25 per share on a diluted basis.
This compares to a net loss of $36.6 million for a loss of 64 cents per share on a basic and diluted basis for the same period in 2020.
Unknown Attendee: By releasing low doses of preservative-free cyclosporin over an extended duration of time, OTX-CSI has the potential to minimize some of the biggest patient complaints about commercially available products for the chronic treatment of dry disease, namely, ocular surface, irritation, sting, and burning. We're very excited about the potential for this physician-administered hands-free and preservative-free option in helping dry-eye patients receive the benefits of cyclosporine but with potentially greater tolerability and a more rapid onset of action compared with therapies currently available in the market.
The decrease loss was due primarily to a $34 million net.
Net change in the fair value of the derivative liability associated with our convertible notes driven by a decrease in the price of our common stock during the quarter.
Non cash charges for stock based compensation and depreciation and amortization.
Was the $4.9 million in the second quarter versus $2.5 million for the same quarter in 2020.
As of August 6.2021 on the company had $76.7 million shares outstanding.
As of June 32021, the company had $191.9 million in cash and cash equivalents versus $209.4 million at March 31.2021.
Unknown Attendee: We have completed enrollment in our U.S.-based, randomized masks, phase two multi-center clinical trial, evaluating two different formulations of OTX-CSI compared with two different hydrogel vehicle inserts in approximately 140 subjects will be followed for a period of 16 weeks. Endpoints in this study include increased tier production as measured by the Shermer's tests, other signs of dry disease as measured by corneal fluorescence staining, and symptoms of dry disease as measured by the visual analog scale, or vast, high dryness severity score, and dry eye frequency score.
Based on our current plans and related estimates of anticipated cash inflows from DEXTENZA at of assured product sales and.
Cash outflows from operating expenses the company believes that existing cash and cash cash equivalents as of June 32021 will enable the company to fund planned operating expenses debt service obligations and capital expenditure requirements through 2023. This.
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 expenses and reimbursement associated with DEXTENZA and the pace of research and clinical development programs. Among other aspects of the business. This concludes my comments on our second.
<unk> financial results and I would like to turn the call back to Anthony for some final thoughts.
Unknown Attendee: Consistent with our update last quarter, we expect top-line data in the fourth quarter of 2021. Our second product candidate in dry eye OTSD is a low-dose intercanolicular insert of preservative-free dexomethism. While it incorporates the same active drug as Extenza, this is a new product candidate with a lower dose of exomethyzone and a smaller insert size. Many dry eye patients experience episodic blare with their signs and symptoms, which we believe are likely related to inflammation.
Thanks Donald.
So before opening the call up for questions. Let me do a quick summary.
<unk> is enjoying fantastic performance in the quarter was $11.1 million in net sales growing nearly 65% over the previous quarter.
We are pleased with continued progress on our pipeline and our growing presence at key medical meetings like <unk> Crs that allow us to share our progress.
In wet AMD, we dosed the first patient with <unk> Teekay eye on our U S based clinical trial using a single 600 microgram in Sir.
In glaucoma data from our phase 1 trial of <unk> continues to support for durable rapid onset product profile that could potentially set the standard of care for patient compliance.
Unknown Attendee: Topical steroids have long been used off-label for dry eye flares. However, all commercially available topical steroid eye drops in the United States 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.
We remain in a position to advance that program into a phase II clinical trial in the fourth quarter of 2021.
In dry eye disease.
Conducting 2 phase II clinical trials, 1 for <unk> CSI and 1 for <unk>.
Planning to announce clinical data from <unk> CSI in the fourth quarter of this year and in the first quarter of 2022 for <unk>.
Unknown Attendee: O-TX-D potentially offers these patients the opportunity to be treated with a physician-administered, preservative-free, and hands-free steroid option that can't be overused by patients. We are currently enrolling patients in a U.S.-based, randomized, double-mask vehicle-controlled phase two multi-center clinical trial, evaluating two different doses of OTXD compared with a This trial is designed to assess the safety and efficacy of OTSD for the short-term treatment of signs and symptoms of dry disease by evaluating bulbar conjunctanival hyperemia, the vast eye dryness frequency and severity scores, and total corneal fluorosine staining, among other endpoints.
Beyond dry eye disease, we submitted our NDA for DEXTENZA in allergic conjunctivitis in December 2020, and having to do per target action date of October 18th 2021.
Finally, we announced an exciting collaboration with mosaic Biosciences. This marks an important step forward for our company and how we approach the discovery and development of ophthalmic products and serves and serves to enhance our current strategy, which includes a pipeline that we believe to be 1 of the most comprehensive ophthalmology pipelines in the industry today.
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, if you have a question at this time. Please press Star then 1 on your Touchtone telephone.
Our first question comes from the line of John Well, then with James.
JMP Securities. Your line is open. Please go ahead.
Hey, good afternoon, and congrats on the progress I appreciate you taking the questions.
Just 1 on <unk>.
To start can you discuss the gross to net in Q and then how that dynamic is shifting and then what you think the potential outcomes are for the.
Unknown Attendee: Enrollment has been faster than initially anticipated, and we are tightening our guidance as we now expect top-line data in the first quarter of 2022, versus our prior guidance of the first half of 2022. Lastly, for the treatment of actor itching associated with allergic conjunctivitis, we submitted an SNDDA at the end of 2020 and have received a CEDUFA 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 that can't be abused by patients. As Anthony mentioned, if approved, this SMA would represent our first in-office indication for Dick Stent. I would now like to turn the call back over to Donald to review our second quarter financial results. Thanks, Mike.
Proposed pricing and when we might get an update on what that final price it looks like.
Yeah, I'll just hand, it over to down on the second but as I mentioned last quarter and where we.
At a a growth that was somewhat slower than the end market growth.
I Wouldnt take too much credit for the somewhat over market in market growth for this quarter.
Definitely an element of stocking that helped us have a higher growth rate for the quarter than we had in an end market. So we're growing end market 50%.
Grew 2 markets, 65%, but there was some some adjustments within the gross to net net I'll, let Donald speak to you about.
John Thanks for the question, yes, so the gross to net did improve for us over the course for the quarter. There are 2 primary drivers of that 1 is is in the first quarter for the first time actually we took an accrual for the anticipated.
Rebate that is in the pipeline.
So that was kind of a bit of a 1 time hit and has begun to normalize.
So that was a smaller number.
Hum.
And.
The other aspect.
The rebate that.
This growth senescent improve towards other.
Product returns we have been now.
With that DEXTENZA in the market for over a year now of the data have a better understanding of what's returns will look like and theyre coming in much lower than originally anticipated. So we've begun to reduce debt debt reduction on the gross to net.
Donald Notman: Gross product revenue net of discounts, rebates, and returns, which the company refers to as total net product revenue, was $11.7 million and represented a 631% increase over the same period in 2020. Net product revenue of Dextenza in the second quarter was $11.1 million versus $1.4 million in a comparable quarter of 2020, reflecting a nearly seven times increase. Total net product revenue for the second quarter of 2021 also included net product revenue of $.6 million from the assure ceiling.
Where this will sort out over the next several quarters.
Probably finished basically in the mid 20% kind of discount.
Range.
And I would anticipate that we'd be more or less net range moving forward.
That will depend in terms of rebate levels et cetera, as we go forward.
Sorry, John you had a second question.
Yes, So I was hoping you could walk us through the process of the proposed reimbursement.
Reising and what those different outcomes might look like for DEXTENZA.
For long term growth.
Oh, that's a very complicated series Youre talking about the continued separate payment and the answers to hospitals correct.
I mean, there's a number of different avenues through which that can happen there's changes in the status indicators.
Now for permanent separate payment.
Clearly there is a at.
At least for the proposed rule there is the potential of continuing the opiate exclusion on sorry, the non opioid exclusion for you our product used in surgery do you have an indication in pain support and obviously on an indication in pain and you are used.
Donald Notman: Research and Development expenses for the second quarter were $13.9 million versus $8 million for the comparable period in 2020, driven primarily by increased headcount, as well as increased clinical trial costs associated with the initiation of the U.S.-based phase one trial of OTXTKI, as well as the ongoing phase two clinical trials for OTXSI and OTXD, the ongoing phase one clinical trial of OTXTKI in Australia, and that extend Selling and market expenses in the quarter where $8.4 million is compared to $6.2 million for the same quarter in 2020, reflecting increased personnel costs associated with the expansion of our field. Finally, general and administrative expenses were $8.6 million for the second quarter versus $5.1 million in the comparable quarter of 2020. The increase in expenses stems primarily from increased personnel expenses and professional services.
And your non opiate products does that have.
As an exception in the system that allows for continued separate payment you are happy to see on the proposed rule.
That was extended.
Not only from the ASC, but also on the <unk> settings, where there'd be the complete set of surgical settings that would be would give us access under that.
Non opioid exclusion.
There are also potential for the price of the drug to be paid out of the facility payments, depending on what APC class vs.
Eventually wind that wind up in.
The post pass through period. So there is a number of different avenues that could it could be taken that would allow for continued separate payment.
Okay.
If I could squeeze in a couple on <unk> CSI I am looking forward to that data in the fourth quarter can you remind us the different from the 2 formulations youre looking at and I know you are still blinded the data, but I was wondering if you could comment on the dropout rate youre seeing so far in the study. Thanks.
Yeah. Thanks, John This is Mike.
So there are 2 different formulations of <unk> CSI being looked at to vehicle formulations.
So the 2 CSI formulations have the same amount of drug that have slightly different hydrogel compositions, which lead to slightly different.
For at least on dissolution rates.
And the 2 different vehicle formulations, 1 matches very similar to the 2 CSI formulations and 1 is a rapidly degrading hydrogel.
So.
Donald Notman: With respect to the financial results for the second quarter, the company reported a net loss of $8.5 million or a loss of 11 cents per share on a basic and a loss of 25 cents per share on a diluted basis. This compares to a net loss of $36.6 million or a loss of 64 cents per share on a basic and diluted basis for the same period in 2020, decreased loss was due primarily to a $30.4 million net change in the fair value of the derivative liability associated with our convertible note, driven by a decrease in the price of our common stock during the quarter, non-cash charges for stock-based compensation and depreciation and emmeritization, was $4.9 million in the second quarter versus $2.5 million for the same quarter in 2020.
So we'll see what the results for the second part of your question was.
Alright.
Yes exceedingly low.
So we don't have the exact number but it's exceedingly low at this point.
That's helpful. Thanks, again for taking the questions guys.
Thank you Jonathan.
Thank you and on next question comes from the line of Joe Kim from <unk> with Piper Sandler. Your line is open. Please go ahead.
Hey, guys. Thanks for taking my questions here and congrats on all the progress maybe actually a similar line of questioning here I'm wondering if maybe you could speak to the extended selling trends that you saw on July and whether it reverted back to the Sawtooth pattern that you've historically seen in the first month of the quarter and just maybe more generally if you could provide just a little bit of guidance on expect.
Patients for the rest of the year.
Yes July did the quarter acted exactly as most of the quarter did before since we've had the rebate program, where you had a.
A bit of a sort of flat for 2 months of the quarter and then a very strong.
Final months for the quarter, we would expect that to continue going forward.
As we mentioned before we are considering.
On the possibility of giving guidance for <unk> sales going forward, but we have not done that yet or made the decision to do that yet.
Okay got it that's helpful and then with regards to the Medicare proposed fee schedule for <unk> are there any established fee schedules for.
Donald Notman: As of August 6, 2021, the company had 76.7 million shares outstanding. Additionally, as of June 30, 2021, the company had $191.9 million in cash and cash equivalence versus $209.4 million at March 31, 2021, based on our current plans and related estimates of anticipated cash inflows from Dextenza and reassured product sales and cash outflows from operating expenses. The company believes that its existing cash and cash equivalents as of June 30, 2021 will enable it to fund planned operating expenses, debt service obligations, and capital expenditure requirements through 2023.
Perhaps similar procedures that you could reference during the comment period, and I guess I'm thinking about the insertion of <unk>.
Basic silicones plug and where that falls.
Right I mean, there are 2 theres dilation, and then Theres an insertion of a non drug club and violation is is around the $65. Just just for dilation itself, which is part of the procedure for <unk> and then insertion of a non growth plug is closer to $150. So yeah those those as.
<unk> <unk>.
Procedures, certainly would suggest that there's upward movement, although the process doesn't it doesn't really.
Relate to similar procedures, you really have to do it within the logic of the way the rock actually calculated the payments.
I can add a little more color on how that works.
I was going to say, it's not as simple as you might think.
As I said, the most analogous procedure, but there are other procedure codes.
On where you can for example.
Probe and then irrigation as a lot from our system and Theres a whole series of Covid.
Donald Notman: 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, expenses, and reimbursement associated with it, and the pace of research and clinical development programs, among other aspects of the business. This concludes my comments on our second-quarter financial results, and I would like to turn the call back to Anthony for some final thoughts. Thanks, Donald.
There so.
As he mentioned.
It's an opportunity to compare this to a number of different procedures.
At a number of different levels.
Okay got it if I could just squeeze maybe 1 last 1 in around the termination of the Regeneron collaboration could you maybe speak to your view around how the preclinical work was progressing on.
On the program just to maybe help us get a sense of what contributed to regeneron for decision. Thanks.
Yes, we are very satisfied with the pace of the work as we mentioned before where we actually have been very fortunate to have been in these collaborations on our regeneron was the scientists at Regeneron were fantastic to work with <unk> is a great molecule, where we learned a lot about how to formulate that with our hydrogel. We also learn how to get into.
Antony Mattessich: So before opening the call up for questions, let me do a quick update: Extends enjoyed fantastic performance in the quarter with 11.1 million in net sales growing nearly 65% over the previous quarter. We are pleased with continued progress on our pipeline and our growing presence at key medical meetings like ASCRS that allow us to share our progress. In wet AMD, we dosed the first patient with OTX TKI in our US-based clinical trial using a single 600 microgram insert.
The Super Choroidal space, certainly in a preclinical model in that.
That could be a very important space for us going forward. So we're very excited to have been the collaboration.
But I truly believe that there is more opportunity now outside of the collaboration and there was inside of the collaboration.
And obviously, we'll sort of have to ask you to stay tuned on exactly what we do going forward with it.
Antony Mattessich: In glaucoma, data from our phase one trial of OTXTIC continues to support a durable, rapid-onset product profile that could potentially set the standard of care for patient compliance. We remain in a position to advance that program into a phase two clinical trial in the fourth quarter of 2021. In dry eye disease, we are conducting two phase two clinical trials, one for OTXSI and one for OTXD. We plan to announce clinical data from OTXSI in the fourth quarter of this year and in the first quarter of 2022 for OTXD.
As we look at a number of different possibilities given the opportunities that we see in the marketplace.
They are occurring all over.
Okay, Great. That's it from me thanks for taking my questions here.
Thank you Joe.
Thank you and our next question comes from the line of day Dane Leone with Raymond James Your line is open. Please go ahead.
Hey, guys you can sell it on for Dave Thanks for taking a question on the.
The proposed Medicare physician fee schedule for next.
And that is reimbursement rates are not revised higher how could this potentially impact utilization.
So you are talking about the CPT procedure code.
Right.
Antony Mattessich: Beyond Dry Eye Disease, we submitted our SNDDA for Dextenza and Allergic Conjunctivitis in December 2020, and we have a Padupa Target action date of October 18, 2021. Finally, we announced an exciting collaboration with Mosaic files. It marks an important step forward for our company and how we approach the discovery and development of ophthalmic products and deserves to enhance our current strategy, which includes a pipeline that we believe to be one of the most comprehensive ophthalmology pipelines in the industry today. We look forward to a busy and productive 2021. And with that, I will turn the call over to you for questions.
Yes.
We right now.
In the system.
T code that we have we're getting reimbursement rates across the macs that are ranging between $30 on the lowest Mac and $2.50, and the highest averaging out about 100.
We have not noticed a difference.
And penetration of total cataract volume among the Max So there's really no basis to suggest that that payment rate would need to be hiring in order to get better penetration. Although it certainly stands to reason that the higher they are the more.
More attractive.
Use of an interchange molecular drug delivery device would be.
Would be to the Doctor. So we think that from a fairness standpoint that should be reimbursed at a higher level and thats really what drives what we are doing less about the penetration that we would expect our drugs to get.
Got it from.
Thank you and our next question comes from the line of George <unk> with.
Cowen and company. Your line is open. Please go ahead.
Operator: Thank you. As a reminder, if you have a question at this time, please press star and then one on your touchtone telephones. Our first question comes from the line of John Willem with JMS. JMP Securities, your line is open. Please go ahead.
Hey, Thank you so much for taking our questions.
Yes, the PKI program congratulations on the initiation of the U S based trial.
Could you maybe discuss and I guess remind us of the decision to include a control group from the study.
Antony Mattessich: Hey, good afternoon, and congratulations on the progress. I appreciate you taking the questions. Just one on Dixenza to start: can you discuss the gross to net in Q and then how that dynamic is shifting? And then what you think the potential outcomes are for the proposed pricing, and perhaps one of them might get an update on what that final pricing looks like?
And how should we be interpreting the results from the trial and then related to debt do you plan to announce interim data and when should we expect initial efficacy data from this trial.
Yes, thanks for those questions.
The trial design is different than the Australia trial, and let me ask for those folks looking at a slightly different population.
So in the Australia and trial as you know, we're taking patients who have active fluid and we're asking the question can you get rid of that fluid, whether its intraregional food or sub retinal fluid and so there what we're seeing is a fluid there that is gone.
We're not and in the U S trial, we're actually looking at a different population of credit. So we're looking at those patients who have wet age related macular degeneration, moving previously treated with an anti VEGF drugs. So theyre starting without fluid and then we're giving them. The CCI. We're following on about and the question that you would ask without a control group as well if you didn't get.
Donald Notman: Yeah, I'll just hand it over to Donald in a second, but as I mentioned last quarter, where we had growth that was somewhat slower than the in-market growth, and I said I wouldn't take too much credit for the somewhat over-market, in-market growth for this quarter. There is definitely an element of stocking that helped us have a higher growth rate for the quarter than we had in the in-market. So we were growing in-market 50 percent, growing to market 65%, but there were some adjustments within the gross to net that Donald would speak to you about.
Anything what would they do.
So so we want to have a control group just to demonstrate tougher comparison in the trial.
It's designed to set it.
And for 3 to 1 randomization for.
For every 3 patients who get the CPI of 1 patient who oversaw.
<unk>.
We're targeting 20 patients as noted enrollment has already started.
There is not an interim analysis.
<unk> currently planned although we do have the option to take an interim look at some points on later.
Probably early next year, and we chose to do that.
Donald Notman: Hey, John, thank you for that question. Yeah, so the grossinettes did improve for us over the course of the quarter. There are two primary drivers of that. One is, in the first quarter, for the first time, we took an accrual for the anticipated rebate that is in the pipeline. So that was kind of a bit of a one-time hit, and it's begun to normalize. And the other question, of the rebate that, or not of the rebate that, the gross to net that improved was on product.
Got it and then.
On the glaucoma program.
Just if you could remind us.
Once the trial was initiated in Q4, when should we be expecting potential resilient results from this trial.
And what would be the plan for registration studies would you need to run 2 separate pivotal studies or phase II trial powered sufficiently to serve as 1 of 2 per the tool.
Yes.
Donald Notman: We have now, I think Ventexenza has been in the market for over a year, and now we have the data to have a better understanding of what the returns will look like, and they're coming in much lower than originally anticipated, so we've begun to reduce that deduction in the gross to net. You know, where this will sort out over the next several quarters, you know, we've probably finished basically in the mid-20% kind of discount range. And, you know, I would anticipate that we'd be more or less. in that range moving forward, but, you know, that will depend in terms of rebate levels, et cetera, as we go forward.
From a program called <unk> T. I C. As you said as you noted is initiating in Q4, we're targeting 3 different dose groups with 135 subjects.
We haven't yet given guidance on how long that trial take but obviously it takes longer to enroll that trial and as well for example.
The dry eye disease trials.
It is not powered for statistical significance.
So presumably we would then need to do 2 phase III trials after the phase II trials in place.
Got it thank you so much.
Thank you and our next question comes from the line of E. Chen with H C. Wainwright. Your line is open. Please go ahead.
Thank you. Thank you for taking my questions.
Antony Mattessich: So John, you had a second question.
First can you comment on the potential revenue contribution from the expense from the allergic conjunctivitis indication once approved.
Antony Mattessich: Yes, I was hoping you could walk us through the process of the proposed reimbursement pricing and what those different outcomes might look like for Dexenza and long-term growth. That's a very complicated series. You're talking about the continued separate payment in the ASEs and hospitals? Correct. I mean, there's a number of different avenues through which that can happen.
We've given no forward guidance on on what we expect that indication to be.
I mean, clearly it is a very strategic indication for us as we move into the office environment.
Antony Mattessich: There are changes in the status indicator that would allow for a permanent separate payment. Clearly, there is, at least for the proposed rule, the potential for continuing the opiate exclusion or the non-opiate exclusion where you are a product used in surgery, you have an indication for pain. It's important, obviously, you have an indication for pain, and you are used, and you're a non-opiate product that has an exception in the system that allows for continued separate payment.
But we have in may.
Made public a number clearly we have some internal forecast that are believed to be reasonably ambitious and we're very excited about the opportunity that AC gives us but were put on a number.
Got it and regarding the 2 hydrogel formulations using low Tx.
TX CSI is that the 2 seeing 2 different formulations used for ots TICC.
No.
So in short now so we have a number of different formulations that we look at the different combinations.
And every indication every program there the formulations are different depending on the application. So there's no overlap.
Antony Mattessich: We were happy to see in the proposed rule that that was extended, not only from the ASC but also in the HOPD settings, so there would be the complete set of surgical settings that would give us access under that non-opiate exclusion. There are also potentials for the price of the drug to be paid out of a facility payment, depending on what APC class we eventually wind up in the post-path-through period. So there are a number of different avenues that could be taken that would allow for continued separate payments.
Moving on any of the programs.
So the formulation is also different from the formulation using DEXTENZA.
Correct, I mean, Theyre all day.
The other tags, but the actual customer some of our debt.
Correct.
Okay. So.
With these different formulations do you expect a different.
And any impact, Inc, efficacy or safety or both.
It's really about durability.
So.
Unknown Attendee: Okay, and if I could squeeze in a couple on OTCCSI, I'm looking forward to that data in the fourth quarter. Can you remind us the difference between the two formulations you're looking at, and I know you're still blinded to the data, but was wondering if you'd comment on the dropout rate you're seeing so far in the study. Thanks. Yeah, thanks, John. This is Mike. So there are two different formulations of OTCSSI being looked at and two vehicle formulations.
In terms of safety I think we'd probably put every combination of peg both on the surface as well as in the ISO So we don't expect any safety differences.
Efficacy is really about range of delivery of the drug over a certain period of time for a particular indication. So so we target the Wii.
We create each drug independently so that we can match the desired durability with the indication we are looking at.
Got it thank you.
As a reminder, if you would like to ask a question. Please press Star then 1 our next question comes from the line of Anita.
Unknown Attendee: So the two CSI formulations have the same amount of drug but have slightly different hydrogel compositions, which lead to slightly different release and dissolution rates, and the two different vehicle formulations, one matches, you know, very closely to the two CSI formulations, and one is a rapidly degrading hydrogill.
Yes.
Krishnan with Battenberg. Your line is open. Please go ahead.
Hi, good afternoon, Thanks for taking my question.
Just wanted to get some clarity on the.
Unknown Attendee: So anyway, we'll see what the results of those are. And the second part of your question was, Oh, dropout. Yeah, exceedingly loud. So we don't have the whole exact number, but it's exceedingly loud at this point. That's helpful. Thanks again for taking the questions, guys.
S MBA for I D.
Hello <unk>.
Uh huh.
I mean, considering that the.
Needless for me.
Kicking from January <unk>.
Can you share.
To give you an idea on what percentage of.
Unknown Attendee: Thank you. And the next question comes from the line of Joe Cantezaro with Piper Sandler. Your line is open. Please go ahead.
Ah patients on <unk> also.
Candidates for Amy.
For years.
Just conjuncture right.
Yes, its not so much.
Antony Mattessich: Hey guys, thanks for taking my questions here, and congrats on all the progress. Maybe actually a similar line of questioning here. I'm wondering if maybe you could speak to the extensive selling trends that you saw in July and whether they reverted back to the sawtooth pattern that you've historically seen in the first month of the quarter, and maybe, more generally, if you could provide just a little bit of guidance around expectations for the rest of the year.
On the cataract patients that are candidates for for AC It's more of the doctors that treat cataract and how in their office environment, how often they see patients who have moved through the.
The step edits or the earlier treatments of anti Histamines and and the like in order to get into the office and need something additional for allergic conjunctivitis.
That overlap is extremely high.
So something like 90% of the doctors, who we see in the cataract World actually are high potential to also in the allergic conjunctivitis world.
Antony Mattessich: Yeah, July did. The quarter acted exactly as most of the quarters did before since we've had the rebate program, where you had a bit of a flat first two months of the quarter and then a very strong final month of the quarter.
On the allergic conjunctivitis opportunity is much broader so it doesn't it doesn't encompass all of that opportunity, it's actually for quite a small percentage on it.
Antony Mattessich: We would expect that to continue going forward. As we mentioned before, we are considering the possibility of giving guidance for extended sales going forward, but we have not done that yet or made the decisions to do that yet. Okay, got it, that's helpful. And then, with regard to the Medicare proposed fee schedule for 0356T, are there any established fee schedules for similar procedures that you could reference during the comment period? And I guess I'm thinking about the insertion of just a basic silicone plug and where that falls.
But there are 10 million patients a year, who present too.
Physicians.
Desire for something.
Better than what they are getting over the counter for for allergic conjunctivitis. So thats, a large number you're going to get a slice of the slice the opportunity can be can be fairly significant.
Thank you and this does conclude today's question and answer session as well on today's conference call, Ladies and gentlemen, Thank you for participating and you may now disconnect everyone have a great day.
Alright.
[music].
Antony Mattessich: Right, I mean, there's dilation, and then there's insertion of a non-drug plug, and dilation costs around $65 just for dilation itself, which is part of the procedure for 03560, and then insertion of a non-drug plug is closer to $150. So yeah, those as comparative procedures certainly would suggest that there's an upward movement, although the process doesn't really relate to similar procedures. You really have to do it within the logic of the way the Ruck actually calculated the payment.
Antony Mattessich: Mike can add a little more color on how that works. I was going to say it's not as simple as you might think and that it's the most, as Enzi said, the most analogous procedure, but there are other procedure codes where you can, you know, for example, probe and then irrigate the nasal acrimal system, and there's a whole series of codes that apply there.
Antony Mattessich: So, as Enzi mentioned, there's just an opportunity to compare this to a number of different procedures at a number of different levels. Okay, got it. If I could just squeeze maybe one last question in around the termination of the Regeneron collaboration, could you maybe speak to your view around how the preclinical work was progressing on the program just to maybe help us get a sense of what contributed to Regeneron's decision? Thanks.
Antony Mattessich: Yeah, we were very satisfied with the pace of the work. As we mentioned before, we actually were very fortunate to have been in this collaboration. Regeneron was the scientists who were fantastic to work with. The epilicep molecule is a great molecule where we learned a lot about how to formulate that with our hydrogel.
Antony Mattessich: We also learned how to get into the supercaroidal space, certainly in a preclinical model, and that could be a very important space for it going forward. So we were very excited to have been in the collaboration. But I truly believe that there's more opportunity now outside of the collaboration than there was inside of the collaboration. And obviously, we'll sort of have to ask you to stay tuned on exactly what we do going forward with it as we look at a number of different possibilities given the opportunities that we see in the marketplace that are occurring all over. Okay, great. That's it for me. Thanks for taking my questions here. Thank you, Joe.
[music].
Operator: Thank you. And our next question comes from the line of Dane Leon with Raymond James. Your line is open. Please go ahead.
Unknown Attendee: Hey guys, this is so on for Dane. Thanks for taking our question. On the proposed Medicare physician C schedule for Deksenza, if reimbursement rates are not revived higher, how could this potentially impact realization? So you're talking about the CPT
Unknown Attendee: So you're talking about the CPT procedure code, right?
Antony Mattessich: Right now, within the system that's within the T code that we have, we're getting reimbursement rates across the Macs that are ranging between $30 in the lowest Mac and 250 in the highest, averaging out about 100. We have not noticed a difference in penetration of total cataract volume among the max. So there's really no basis to suggest that that payment rate would need to be higher in order to get better penetration, although it certainly stands to reason that the higher they are, the more attractive the use of an intercanolicular drug delivery device would be to the doctor. So we think that from a fairness standpoint, that should be reimbursed at a higher level, and that's really what drives what we're doing, less about the penetration that we would expect our drugs to get.
Antony Mattessich: Thank you, and our next question comes from the line of George Jordanog with Kellan and Company. Your line is open. Please go ahead.
Operator: Okay, thank you so much for taking our questions. So you're asking the TKI program, congratulations on the initiation of the US-based trial.
Unknown Attendee: trial, could you please discuss and give me reminders of the decision to include a control group in the study and how we should be interpreting the results from the trial? And then, related to that, do you plan to announce interim data and when should we expect initial efficacy data from this trial? Yeah, thanks for those questions.
Unknown Attendee: So the trial design is different than the Australian trial, and we're both looking at a slightly different population. So in the Australian trial, as you know, we take patients who have active fluid, and we ask the question, can you get rid of that fluid, whether it's intrametal fluid or subretinal fluid? And so there, what we're seeing is the fluid is there, and then it's gone, or not. And in the US trial, we're actually looking at a different population. So we're looking at those patients who have wet age-related macongergeneration who have been previously treated with an anti-vege-up drug. So they're starting without fluid. And then we're giving them the TKI, and we're following.
Unknown Attendee: about it. And then On the glaucoma program, just if you could remind us, once the trial was initiated in Q4, when should we be expecting?
Unknown Attendee: When should we be expecting potential results from this trial? And what would be the plan for registrational studies? Would you need to run two separate pivotal studies, or is this phase two trial strong enough to serve as one of two pivotal studies? Yeah, so the glaucoma program called O-TIC, as you said, as you know, is initiating in Q4. We're targeting three different dose groups.
Operator: Thank you, and our next question comes from the line of U-Chin with H.C. Ringwright. Your line is open. Go ahead.
Unknown Attendee: Thank you. Thank you for taking my questions.
Unknown Attendee: First, can you comment on the potential revenue contribution from Dextenza?
Antony Mattessich: that extends from the allergic conjunctive virus indication.
Antony Mattessich: We've given no forward guidance on what we expect that indication to be; clearly, it is a very strategic indicator for us as we move into the office environment, but we haven't made public a number. Clearly, we have some internal forecasts that are, we believe, to be reasonably ambitious, and we're very excited about the opportunity that AC gives us, but we have to put out a number.
Unknown Attendee: Got it. And regarding the two hydrodial formulations used in OTXSI, are those the same different formulations used for OTXTIC? No. In short, no. So we have a number of different peg formulations that we look at. There are different combinations. And every indication, every program, the formulations are different depending on the indication. So, yeah, there's no overlap really between any of the programs.
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Unknown Attendee: So the formulation is also different from the formulation used in Dextensor.
Unknown Attendee: That's correct. I mean they're all based on similar pegs, but the actual composition is different.
Unknown Attendee: Okay, so with these different formulations, do you expect an impact on efficacy or safety or both? It's really about durability.
Unknown Attendee: With these different formulations, do you expect an impact on efficacy or safety or both? It is really about durability. So, you know, in terms of safety, I think we probably put every combination of pigs, both on the surface as well as in the eye, so we don't expect any safety differences. Efficacy is really about the rate of delivery of the drug over a certain period of time for particular education. So we target the, we create each drug independently so we can match the desired durability with the education we're looking at.
Operator: Got it. Thank you. As a reminder, if you would like to ask a question, please press star than one. Our next question comes from the line.
Operator: The question comes from the line of Anita Juschenin with Bergenberg. Your line is open. Please go ahead.
Unknown Attendee: Hi, good afternoon. Thanks for taking my question. I just wanted to get some clarification.
Unknown Attendee: on the S&A for the allergic conjunctive
Antony Mattessich: So, considering that the reimbursement will sort of kick in from January, can you sort of give an idea of, like, what percentage of patients that are undergoing cataract surgery are also candidates for the alleged conjunct?
Antony Mattessich: for the alleged conjuncturators. Yeah, it's not so much the cataract
Antony Mattessich: Yeah, it's not so much the cataract patients that are candidates for AC. It's more the doctors that treat cataracts and how, in their office environment, how often they see patients who have moved through the step edits or the earlier treatments of antihistamines and the like in order to get into the office and need something additional for allergic-contractivitis. That overlap is extremely high.
Antony Mattessich: So something like 90% of the doctors who we see in the cataract world actually are high potentials also in the allergic conjunctivitis world. But the allergic conjunctivitis opportunity is much broader, so it doesn't encompass all of that opportunity. It actually is quite a small percentage of it, but there are 10 million patients a year who present to physicians with a desire for something better than what they're getting over the counter for allergic conjunctivitis. So that's a large number. Even to get a slice of a pie, the opportunity can be fairly specific.
Operator: Thank you, and this does conclude today's question and answer session as well as today's conference call. Ladies and gentlemen, thank you for participating, and you may now disconnect. Everyone, have a great day. Thank you.
Unknown Attendee: I'm going to be, and and and and and and and. You and and and Thank you Thank you Thank you Thank you Thank you, and and Thank you, and so much. Thank you. Thank you. Thank you. Thank you. Thank you, and so on.
Unknown Attendee: Thank you. Thank you. Thank you. Thank you.
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