Q2 2021 Aerie Pharmaceuticals Inc Earnings Call
Today's conference call will be here requires it.
And it's now my pleasure to turn the floor over to average director of Investor Relations and Youbet fishing. Please go ahead and.
Thank you operator, good afternoon, and thank you for joining us with US today are Vince and Ido Aerie is chairman and Chief Executive Officer, Tom myself, and as President and Chief Operating Officer, David Hollander, as Chief Research and development Officer, Casey Kopczynski <unk>, Chief Scientific Officer, John and I say as general Counsel and Christine <unk> interim Chief Financial Officer.
Today's call is also being webcast live on our website investors that aerie pharma dot com and it will be available for replay as indicated in our press release now for forward looking statements and non-GAAP financial measures on this call and we'll make certain forward looking statements, including statements forecasts and observations regarding our future financial and operating performance and pass of the COVID-19 pandemic, including our.
And as regarding ongoing operating expenses and net revenue per bottle. These statements will include observations associate and associated with our commercialization of Rhopressa and <unk> and the United States, our collaboration and Japan and prospects for potential collaboration to Europe. They will also include plans and expectations regarding the success timing and cost of our clinical trials and Additionally, we will discuss progress regard.
And maintaining requesting or obtaining approvals from regulatory agencies of our products and product candidates along with the associated business strategies regarding these products and product candidates and finally, we will address our financial liquidity and other statements related to prevent these statements are based on the beliefs and expectations of management as of today, our actual results may differ materially from OXXO.
Investors should carefully read the risks and uncertainties described in today's press release as long as the risk factors included in our filings with the SEC, we assume no obligation to revise or update forward looking statements, whether as a result of new information future events or otherwise. Please note that we expect to file our 10-Q Tomorrow and in addition during this call we will discuss certain adjusted or non-GAAP financial and.
For additional disclosures relating to these non-GAAP financial measures, including a reconciliation to the most directly comparable GAAP measures. Please see today's press release, which is posted on the Investor Relations section of our website with that I will turn the call over to Vince Hi, Thanks, Al and me and good afternoon, everybody. Thanks for joining US today, we have a number of things and where to cover today, including our second quarter.
Our results continue to progress with our growing pipeline and additional perspective on our global strategy before we start however, I do want to welcome Chris State and.
Who has been named our interim CFO, Chris has been with the company since 2015 as our VP of finance work very very closely with with Rich Rubino, who you may remember his last day was just at the end of July and so we do welcome Chris to the call.
Coma franchise unit sales and our wholesalers, which are the basis for our reported revenues amounted to 306000 units and Q2 of 'twenty..1 is represented 31% increase over second quarter of 2020. It is important to note that our wholesaler volumes in Q2 'twenty 1 are consistent with what we generated and the fourth quarter of 2000 and.
'twenty.
Have you. This is very solid performance for Q2, considering the fourth quarter of last year was a record and and the fourth quarter is typically our strongest quarter of the year and despite the impact of Covid, we're not compare Q2 of 'twenty, 1 versus Q2 and 20, we had 23%.
Growth and the glaucoma franchise and in terms of my market prescriptions, and United States and the market itself only grew at 2.8% again, we think that that is very very solid performance as we move forward through the COVID-19 environment.
And I understand that there is frustration and when you look at the weekly numbers and and certainly its kind of toffee and when you add them up to get to the kind of growth rates that I. Just described unfortunately, the weekly prescriptions gave you an incomplete picture in terms of what's really happening and that's why.
We publish our shipments out from wholesale to retail and why we provide you with information like we just did and our and our slide.
Slide decks, and our corporate slide decks, where we look at the entire market over a longer period of time, which again provides a much more complete picture.
When comparing Q2 'twenty 1 through the first quarter of 'twenty, 1 our wholesaler volumes increased by 19%, we expect volumes and the second half of the year to continue to increase over the first half provided the impact of COVID-19 on the industry continues to decline.
And Tom Mitra will discuss in a few minutes. Our recent volume in terms of sales out to pharmacies and accuse me of prescriptions continue to trend very positively.
Our second quarter 'twenty, 1 net revenues of $27.2 million are up 51% over last year and up 18 per share compared to Q1 of this year.
Our June 30 year to date revenues of $50.2 million.
Our up 31% over the comparable period of 2020.
With half the year behind US you can see why we remain comfortable with the analysts' consensus for full year 2021. However, we are still not providing any specific 2020.1 guidance. While we see continued signs of recovery remains a difficult environment to predict as the COVID-19 situation remains not only dynamic, but really unpredictable, especially at the state level.
And you saw in our earnings release net revenue per bottle remained stable at $89 for the second quarter of 2021.
This compares quite favorably to the 78 net revenue per bottle, we experienced in Q2 of last year and represents almost a 15% growth year over year. We've previously talked about our expectations regarding the stability of our net revenue per bottle aside from negotiating wholesale agreement and modest price increases we continue.
And to refine our rebate agreements to preserve our net revenue per bottle as well and maintain and grow the volumes of our glaucoma franchise.
As we stated in our press release commercial coverage shows a decline due to the unemployment remaining higher than the pre pandemic levels as well as commercial payers seeking as they've always done as many money savings opportunities. So as an example, moving to generic only formulary configurations.
And it is important to note that our commercial business accounted for 20% or 24% of our total revenues for Q2 and is consistently decrease since we've launched our products. Our strategy continues to remain the same as far as refining a rebate agreements minimize the rebate burden, while optimizing our net revenues Thomas.
Speak further about how our team has mitigated decline and commercial coverage and where our coverage stands and the glaucoma franchise as a whole.
And we look ahead and the rest of 2021, we expect a continued increase and selling and G&A expenses did pre COVID-19 and 9.
19 levels due to an increase in sales and marketing expenses as well as travel expenses. However, as we said previously we do not expect an increase and spending.
To have and material impact on net cash used in operations and Chris will cover that a little bit more detail during his prepared remarks.
Now I'll turn the call over to Tom to provide further update on the U S glaucoma franchise and after that I'll cover the highlights on the pipeline and the global fronts, Tom well.
Thank you Vince we're just as we reported and our previous calls our glaucoma franchise continued to far outperformed the glaucoma market and all other branded glaucoma products. Our second quarter 2021 total prescriptions for our franchise based on ex U via data were up 23% or 31000 prescriptions over the second quarter of 2021.
Glaucoma market was up just 2.4 and 8% or 230000 prescriptions for the same period.
And our new prescriptions for our franchise were up an impressive 41% and the second quarter of 2021 compared to the second quarter of 2020 far outpacing the market growth of 11%.
And robust growth and new prescription speaks well for the future growth of our franchise and makes sense, we'll need to get their prescriptions, obviously, we felt.
And I'm looking at the last 12 months ending June of 2021, so to be clear that is July of 2020 through June of 2021, and our franchise grew by 119000 prescriptions were 23%.
And that glaucoma market declined by 2.6% of our 911 sales or prescriptions when compared to the previous 12 months.
But before I go on and talking about performance I wanted to mentioned a short note on the prescription data. So as Vince mentioned some of you may get frustrated when you're trying to match the weekly and accumulate data with a monthly that QE and data now and the primary confusion stems from the monthly start and stop dates for example, looking at June June 1st was a Wednesday, So Monday and Tuesday.
The event.
Where many prescriptions with the rest of the week, obviously being June prescriptions at this call and split week and it's a common occurrence for the first and last week and nearly all months.
But the weekly data always ends on a Friday.
So the weekend, both May and June prescriptions, and so that's the primary reason why adding up the weekly data usually does not match with the monthly data.
Okay now back to the performance.
Our sales out data, which as a reminder, reports bottles of our products that are shipped from wholesalers and pharmacies was also very positive our second quarter 2021 sales out units were up more than 33% or 77000 units compared to the same quarter a year ago with units and the month of June 2021 alone.
Exceeding 112000 bottles are sales out and the month of June were up more than 38% compared to June of 2020, indicating another strong sign of recovery.
And that's a big rebound from where we were this time last year and this quarter's numbers are more than 30% higher than our pre COVID-19 levels and the first quarter of 2020.
Our sales team like the physicians are eager to return to pre Covid normalcy is COVID-19 and continues to decline our call activity continues to increase with our year to date June 2021 call volume up 97% compared to the same period last year. The primary driver of our continued growth is the increasing number of offices that are open.
But the vast majority of physicians offices now open and were.
We're also pleased to see that ophthalmic medical meetings and started to return to in person settings and the past few months, we've had the opportunity to connect with physicians at both the Hawaiian eye meeting and the American Society of cataract and refractive surgeons meeting, which just wrapped up last week and Las Vegas.
<unk> at these meetings were very eager to engage in discussions and they get back to pre COVID-19 normal behavior and we'll look forward to meeting you again in November at the American Academy of Ophthalmology meeting and New Orleans.
Our sales force strategy continues to remain unchanged with our aerie sales team, calling on the approximately 10005 hundred highest prescribers of glaucoma products last July our contract sales force began calling on the next 500 highest prescribers and the tele sales team, which we added in June and began calling and the next 4100 highest prescribers.
Now some of you may notice that these numbers changed the law from our previous calls as some physicians were moved from 1 audience to another for various reasons.
Consistent with our previous reports our market share has continued to grow and each of these 3 audiences.
Our total prescriber count now exceeds 18600, we currently have nearly 10000 and physicians, who prescribed and aerie glaucoma product routinely each month and approximately half of those monthly prescribers have been writing on a weekly basis.
The highest prescribers of our glaucoma products, which as a reminder, we call it ourselves and 9 and 10 prescribers have maintained their prescribing frequency writing more than 30 prescriptions per month.
And our Rhopressa commercial coverage represents 77% of covered lives by Rockwood and commercial coverage represents 75% of commercial lives as Vince mentioned, our commercial coverage shows a decline due to the unemployment remaining higher and pre pandemic levels as well as payers seeking money saving opportunities like moving to.
Generic formulary configurations.
And proactively addressing the situation we had our sales force identify and work closely with the plants specific prescribers to ensure they understood and we're prepared to address the situation with the effective plan with tools like prior authorization forms and additional copay cards early results. So very high approval rates for our prior authorizations ranging from 84 to 9.
And 3% now.
Now shifting to Medicare part D coverage Rhopressa coverage is at 92%, while Rocco Tan is at 84% when the low income subsidy or last patients of approximately 10% are included.
These numbers include recent additional Medicare part D coverage gains for both products.
So once again our franchise prescriptions volume grew significantly looking at both the second quarter of this year and the last 12 months and we continue to significantly out performed the broader glaucoma market. So in summary, and before I turn the call back over to Vince We continue to capitalize on the momentum we established prior to Covid.
<unk> products are increasingly being prescribed but many eye care practitioners and with our current managed care coverage levels, our strategy to move mostly prescribers to weekly prescribers, our share of voice initiatives and our improvement and net revenue per bottle, we continue to see the associated benefits.
Vince back to you.
Thanks, Tom now moving to our R&D efforts last October we initiated a phase <unk> trial for our dry eye product candidate and a 15.5 and 1.2 we announced in April of this year that that particular trial, which we call comment 1 was fully enrolled with 369 patients which is if not the law.
<unk> certainly among the largest trials ever done and a phase 2 b for dry eye and you said before that this trial was powered as a phase III and test 2 different concentrations of our product candidate compared to vehicle and primary endpoint or ocular discomfort, which is a symptom and tear production assign and both of those at 4 weeks.
We also added multiple secondary endpoints as well as time point to the trial.
So that we can learn as much as possible about the drug's performance.
A comment 1 trial is for 90 days and duration with the primary endpoint for signs and symptoms at day 28 day timeframe, which shows the greatest separation through the 90 day measurement period will ultimately help us design and any future phase III trials and then.
The measure of success for the comment 1 will be statistically significant difference and signs compared to vehicle as well as a statistical significant difference and symptoms compared to vehicle.
There's been an awful lot of interest and speculation and projections about what will be needed for to call. This trial and success. It is simply statistical significance of 1 of the concentrations over vehicle, it's not specific numbers or measures is just purely stat Sig as we've.
Said before safety and efficacy, we will need to be demonstrated and at least 2 well controlled trials efficacy for signs and symptoms do not need to be shown in the same trial, but both must be shown and multiple trials. As a reminder, our comment 1 trial is powered as a phase III. So if successful it will count as a pivotal trial.
And we will expect to report topline results for comment 1 later this quarter and many of you have asked how we will release the data.
As we did with Rhopressa and Rocco and trials and the early days of our company. We will host a conference call with slides to review the data and do not plan on waiting for a medical meeting to release the results now turning to our retina pipeline. We've continued to have our discussions with both the U S and European regulatory authorities to finalize the most efficient and effective phase.
3 pathway for our dexamethasone and <unk>.
Day and release implant known as a <unk> 11 O 5 and expect to start the phase III trials by the end of this year.
Last July we released the phase 2.
Steady topline data for 411, O 5 which indicated up to 6 months of sustained efficacy and retinal vein occlusion.
This is a very different profile in terms of efficacy period and.
Some of the other injectable steroids and the markets such as <unk> ex generates about $400 million and revenues and the U S and Europe combined.
Just on the current market dynamics, the commercial potential for 11 O 5 will be greater and Europe that and the U S with Europe being threefold the U S base and the U S based on current market data.
And may recall that we originally expected to present the data from this phase II study at the ophthalmology meeting at and Ophthalmology meeting last fall. However, the presentations were canceled due to Covid. We are pleased at the abstract has recently been accepted for presentation at the American Society of retina specialists.
Meeting, which will be held in October of this year and San Antonio Texas.
We've previously discussed the advantages of our print technology platforms as it relates to our red and our pipeline candidates. As a reminder, this is a platform that provides predictability and flexibility and allows us to customize drug elution rates and create various blends of pollo bio rotable polymers.
This allows for longer treatment duration as well as reduce injection frequency, which were reflected in the phase II results of 11 O 5.
And we do have a number of other programs that are and there are pipeline, which continue to make progress we're not going to be talking about those today, but certainly you've seen as reported on those over the last few calls with very and as well as various press releases Ellis.
Now, let's shift to our globalization and activities first our Santana and collaboration and Japan continues to progress forward, we announced in June that the first phase III trial, and Japan is now fully enrolled with 245 patients. This trial is expected to be completed by the end of 2021. The topline results are expected to be reported.
Shortly thereafter as a reminder, aries conducting this first phase III trial and has been supported by Santander.
Following the top line readout of this trial and 10 will oversee the rest of the development of Rhopressa in Japan.
And with regulatory approval of our glaucoma franchise in Europe, we continue to have discussions with potential collaborators and that region and you have said before some have expressed interest beyond Europe and.
And it includes other parts of the world, such as China, and the Middle East and even some south American countries. We still believe that we will be able to complete it by collaboration agreement before the end of this calendar year.
We believe the volumes from Europe, where the glaucoma market and the top 5 European Nations alone totaled 98 million bottles sold in 2020 compare obviously pretty favorably as far greater and the $55 million.
Models that are.
<unk> had been used and the U S. During the same period of time.
Does it represent an excellent opportunity to further utilize our Irish and <unk>.
<unk> and S loan, which is already growing and volumes due to the production from the U S market and we ultimately anticipate producing from the for the Japanese market from there as well.
Now I'd like to turn the call over to Chris to cover the financials.
Thanks, Vince as Vince discussed our combined Rhopressa and Rockwell 10, net revenues and the second quarter 2021 totaled $27.2 million, our normalized gross margin for the second quarter was 92%, which is consistent with previous quarters. In addition, layered on top of cost of sales is approximately.
$3.9 million and asphalt plant overhead associated with start up commercial production.
Since we are and the early stages of production that idle capacity number will fluctuate quarterly depending on the number of batches produced and a quarter whether for commercial or clinical supply, but we expect it to trend downward on an annual basis as we continue to add volumes to the ethylene and plan or.
Our second quarter 2021, GAAP net loss was $38.7 million were <unk> 84 per share when excluding the $8 million of stock based compensation expense. Our total adjusted net loss was $30.7 million or <unk> 67 per share.
For the second quarter 2021, adjusted cost of goods sold was $5.7 million and adjusted total operating expenses were $44.9 million with.
<unk> selling general and administrative expenses of $28.9 million and adjusted research and development expenses of $16 million.
For the second quarter of 2021, our net cash use and operating activities was $20.1 million.
And we had $188.3 million and cash cash equivalents and investments as of June 32021.
The net cash used in operating activities of $20.1 million and the second quarter of 2021 is further improved from the second quarter of 2020 for which we reported $22.9 million and net cash use.
This improvement is a reflection of revenue growth and continued expense controls.
Shares outstanding at quarter and totaled 47 zero million.
For additional information regarding our first quarter and prior period comparisons. Please refer to today's earnings release, and our form 10-Q, which we expect to file tomorrow and.
And now I would like to turn the call over to the operator questions operator.
Thank you and at this time I would like to remind everyone in order to ask a question. Please press star 1 on your telephone keypad, if you'd like to withdraw your question. Please press the pound.
We will be having our first question coming from the line of Annabel <unk>.
And you at the Stifel. Your line is open.
Hi, everyone. Thanks for taking my question and congratulations on.
Recovery.
I just want to clarify with you a couple of points first on the commercial versus Medicare coverage. So.
Can you just review those once again, you said them really fast and I would just.
I gather that you.
Increase your Medicare coverage for <unk>, and maybe I heard that mist and <unk>.
Correctly, but it seems like it's now up to 84% and I just wanted to confirm.
And that is true.
And what plan joint and clearly it doesn't seem like it's having impact on your on your net price. So that's the first question.
The second question has to do with.
They are 15512, so if I got that number right.
The comet trial.
Just to be clear for your study to be considered pivotal.
Do you need statistical significance for both signs and symptoms or just 1 of them and.
And if that's the case if you only need.
Statistical significance for 1 and client how many additional trials would you have to.
2.
Conduct I apologize if I'm a little confused there, but again I just want to make sure that we understand that thank you.
Alright so.
I'm going to go ahead and cover the $5..2 question and then Tom I'll turn it over to you to just give the highlights on the commercial versus Medicare components.
So on <unk>, 2 we're using ocular discomfort as our symptom and.
And to your production and as our Shine and.
So we can hit if we hit both of those statistically significant results.
At week, 4 which is not only these are the primary endpoints, but also the primary time point and this trial will count.
In all likelihood as a phase III trial will have to talk to the FDA about it but we had pre determined that endpoint to be and those time points to be again ocular discomfort as well as to your production at week 4 for this trial. So if we hit those then all we really need to do is 1.
More trial that covers both.
Sign and a symptom and if we hit hit it the second time and then we're done with the development of the program other than having to complete.
<unk> now it could happen that maybe we hit 1 versus the other and then we get additional information and maybe he says it instead of a week for the <unk>.
1 of the other improves and continues to improve and and there is a better separation at day 90, and so then we will see sort of where we stand there and so we will have to do yet another trial at the 90 day time point, so theres, an awful lot of variability.
And various options that we built into the design of 512 and <unk>.
So when we released the data.
Walk everybody through exactly what we found and what the path forward is but again you have to hit stat Sig on both the sign and the symptom.
And some.
Some time point in order to get the drug approved.
So hope that helps Annabel and then I'm going to turn it over to Tom for your question on commercial and Medicare.
Sure. Thank you for the.
Question, Annabel, Here's where we are now rhopressa commercial coverage coverage, 77% of our lives while <unk> is at 75%. So the way we look at that with net debt to about 76% of all lives.
As you go into part D. Rhopressa coverage is 92% and <unk> is at 84% so that net to about 88%.
Of all covered lives and by the way that's Youre right that is an improvement over our.
Our last call by about 8% and the part D area. So we're really happy with that we did get a couple of new accounts I won't say what those names are just for competitive reasons, we try to keep that.
Obviously, a lot of the competitive hands, but yes, we did crack a couple more accounts and we're very happy with our coverage at this point.
And you don't expect obviously, if you accepted the Medicare accounts.
Youre not expecting it at a hit here net price now.
And I had a significant hit or a material ahead now we've got a number of things that will help and.
And so we don't think it's going to drop that will be the primary reason why our net.
Net dollars per bottle would drop no.
Great. Thank you.
And our next question will be coming from the line of Suraj Melon and <unk> with Needham and company. Your line is open.
Hey, good afternoon, and thanks for taking my questions.
I guess, the first 1 for Vince or Tom.
Can you just talk about your outlook for the second half of 2.
2021 here, where we are coming out and second quarter, and if theres any pent up demand.
How does the glaucoma patient population that could.
Accelerate sales growth for Rhopressa and Rakuten.
But we think that the.
The continued rebound that we've seen post COVID-19 and hopefully will continue and we won't see any further lockdowns and things like that that could impact.
Patient access to the.
To the doctors now we do see is as we noted that the market either has decrease as Tom mentioned for.
The entire sort of 1 year period.
Or a quarter to quarter. The market has only grown a couple of percentage points here and there, whereas we've been up 20 and 30% across the board and so we like the prospects for the way that the products are moving.
We do like the fact that as long as.
The doctors are they're seeing patients that our reps are getting in and and.
And we find that the noise level associated with what Tom and his team are doing is certainly, helping us, especially and environment, where some of the other competitors or maybe scaling back a little bit or not seen success. We do publish and we'll publish again are slight corporate slide deck, and you will see who the winners and losers are.
Relative to the market and you'll see some pretty good sized franchises that are continuing to lose market share and this environment, where we're gaining so we do expect that whole trend to continue.
Okay and.
And on the improving net price per bottle and I think you expect some additional incremental improvements for the remainder of 2021, just curious if there'll be other.
Other opportunities for improvements.
When we get into 2020.2.
So the answer is yes, we do expect that we'll continue to do to execute on the plans that we put in place that are paying off.
Relative to both looking at the wholesaler fees as well as looking at every plan that comes due for renewal and making sure that we're getting out of those contracts, where we really need. This is a reminder, what we talked about is and we got to the roughly $80.990 net bottle.
With a lot of the work coming or at a lot of that coming from the wholesale renegotiations that we did on their fees.
A big chunk of that was Frontloaded started at the beginning of the year has continued and will and shall we expect some level of stability it would be plus or minus a few bucks here and there off of the $89 for Q3.
But we do expect.
And <unk>.
Rest of the wholesaler fee reductions to kick in mainly in Q4.
So hopefully we'll see some.
Upward trending of pricing as we go in through Q4.
As a result of that.
But again every contract that we have as soon as we get a chance to renegotiate and we do we take a hard look at that and see whether it makes sense to continue giving up the rebates at the level that we're giving them up and when it doesn't make sense, we pulled back.
And likewise with the wholesaler fees the bigger the product gets the more.
The more we can influence the fee structures.
Okay. Thank you.
And you.
Hum.
And our next question will be coming from the line of Louise Chen with Cantor Fitzgerald. Your line is open.
Alright, thanks, so much for taking our questions. This is jen Kim on for Louise.
I wanted to follow up on the previous question. So I guess is it correct to say that it could go below $89 per bottle in the next quarter.
But then you expect it jumped up and Q4 and then also in the fourth quarter I guess the last time, we saw a big jump from the wholesaler impact and improvement was fairly substantially I think it went from like $80 per bottle to $89 per bottle could we see something to that level of improvement in the fourth quarter and.
And then my second question is just on getting an update on your progress in finding and EU collaborator for your franchise I think last quarter. You gave a lot of helpful color on what factors you are considering since then have you sort of refined and made decisions around those factors or are there any key considerations that you're still thinking of.
Bert.
Thanks.
Alright.
I'll try to remember all that so I've got it down to 3 questions..1 of them is on the.
The stability of prices and in the third quarter, we will see sort of bouncing around and region, we hedge a little bit is only because.
Again, we see unemployment rates continue to be Sky high you saw the.
Some of the hiring reports today, we're about half of what was expected and things like that the commercial part of the business is usually where we get our highest price and so whenever.
There is a little bit of instability there. It gives us some reason for pause, but again, we don't think its going to be hugely dramatic but it could bounce around just a little bit.
And Q3, we think that the.
The further impact we will see and Q4 from the additional reduction and the wholesaler fees certainly will provide not only the bounce back if we need to but also maybe a little bit upward pressure on the price which is always nice.
So, but it won't be to the same level that we saw at the beginning of the year.
Again, like we said when we reported Q1 that was a pretty dramatic jump and that was mainly because we got all the benefit from 1 of the top 3 wholesalers right out of the gate and then the other ones sort of trickled in and parts and we will get the balance of that trickle in and then in Q4, so it won't be as dramatic.
Relative to the EU contract I think we're in pretty good shape relative to understanding what we're looking for from a partner.
1 of the big challenges here and.
And is not only do we have to get the agreement done once.
Get everything taken care of but we're looking at launches.
And with 1 of the potential partners in multiple countries not only in Europe, but around the world and.
And as part of the agreements. We also have to negotiate towards how theyre going to go into those markets and the impact of those markets and how are we going to be able to.
Support their efforts and things like that and so while.
It's not it's basically blocking and tackling from a commercial point of view just getting all of that on paper takes quite a while and so we think that thats really the reason why we're just simply saying we think it's going to be done by the end of the calendar year.
Okay Super helpful and just 1 quick follow up on the EU collaboration.
That deal will get done near the end of day here is it fair to say that I guess commercialization of those products are more of a 'twenty 'twenty 2 event.
So we're staggering sort of.
The emphasis and were putting on what we want.
So that we can actually get.
Especially in Europe, because that's the ones that it's more and more relevant.
We're trying to get it set up so that we launch.
The those products sometime in the second half of 2022.
Because wherever it is we pay a cash flow training your sales force and we've got to provide.
<unk> and <unk>.
And with the right labels for the country's et cetera, et cetera et cetera. So we think that thats a second half of next year event.
Okay. That's very helpful. Thanks, everyone and congrats again.
And thank you.
And our next question will be coming from the line of geology and Giordano with Cowen Your line is open.
Hey, Thank you so much and taking our questions and.
Congratulations and all the progress.
First.
And on our and will be up with the greater coverage around <unk> 10.
Do we expect the sales reps are starting to or going to start to push and switching from rhopressa and <unk>.
And then.
Kind of related to that and the reimbursements could you discuss your current patient affordability programs.
And whether a machine is taking any additional optimization of dose given.
The higher coverage and you're having.
Yeah before I have Tom answer it just wanted to remind you that we don't really care, which drug the doctor users right as long as the Rhopressa rocket and and in some cases, it's a lot easier for them to simply to add rhopressa to whatever it is they are using and then once they get to that point and they find a home for not only that but also find a home for Rockwell.
And because they can get everything that day, 1 out of 1 eye drop and so with that said, let me just have Tom answer a little bit more specifically your question, yes sure. The coverage just let you know the last day that we saw indicated that only about 7% of Rhopressa as business went to rock with yet.
Alright, so thats all it was cannibalized and we don't see that changing a lot certainly.
Physicians are interested and highly interest in both products now, especially because we have such good coverage and sort of remove that.
A barrier to them using it so that's been so theres pretty pretty nice spacing between the 2 products for how they are both used and the practice and many of our physicians are using both of them for various reasons. So that's how I'd answer the second part about affordability.
And we have horses are co pay cards, which we have as a reminder.
Those are only usable by commercial patients and what that does is just it just helps quote buy down a little bit on the copay.
Co pay for the patient is too high or if the patient doesn't have any insurance at all and those are administered through our co pay card and the at the pharmacy level.
Great and just 1 and the pipeline.
And just remind us of what are the.
The remaining gating items for the dexamethasone trial.
And in terms of you and discussions with regulatory agencies.
Right. So we've had an opportunity to meet both of the EMA as well as the FDA and not surprisingly they have very different requirements and so what we're trying to do is come up with a protocol that sort of bridges. The 2 and it's very possible that will happen and what may end up happening in fact likely.
I ended up happening is we'll have to make some choices about how best to do that we do have David Hollander on the call who is.
Our vice president of clinical as well as the.
The research side. So let me just have him give you a little bit more color on what how.
How we're thinking about bridging that gap.
Thank you Vince I, yes, we have and it did opex.
And ladies and meet the regulatory.
Regulatory bodies were looking at.
No protocol that probably has a different statistical plan that would mean.
And they requirements as well as the different plans that meet the FDA requirements.
A lot of it just comes down to the timing of endpoints.
As long as the endpoint itself will collect all the data.
The 2 regulatory agencies have some puts and thoughts on what theyre looking for and Monday and want us yet, but we should be able to have a harmonized program for <unk> for.
And for both regions.
Okay.
That's great. Thank you so much for the.
Answers and congratulations and non progress.
Thank you.
Our next question will be coming from the line of Brad <unk> with Oppenheimer. Your line is open.
Alright, thanks for taking the questions not to dwell too much on this again, but just to double and triple check can you have on the dry ice side can you have 1 endpoint, whether let's say sign hit at 90 days and another end point hit at 4 weeks and would that be okay with the FDA or does it have to be to sign the same timeframe.
And for both sign and symptom.
Yes, it can be different and.
And if that were to happen, let's say like the example that I gave where we had let's say symptoms we hit a week 4 and and then for the Syn R. T.
And your production we hit at day 90, let's say that that were to occur what would happen is we could use this particular trial in all likelihood as a.
As a pivotal for the symptom because we called that out and.
And then.
And would happen at week 4 but for the sign we would miss on that co primary endpoint that we establish because we said it would be weak forward and instead, it's going to be a week 90. So then we would have to just duplicate the study and set it up so that we.
We get the symptom improvement at week, 4 and that would be the primary but the signs of improvement.
Would become the primary the co primary but it would be at day 90, and the Fda's perfectly okay with that they don't really care what the.
What the timelines are the time points are they just needed to make sure it's repeatable.
Okay excellent and in terms of.
I guess do you need both to get approval or if you just got 1 is it that you just need to hit on 1 of them a lot more than if you hit on both signs and symptoms.
Yes. So if you if you've missed the stat Sig on both and the FDA has all sorts of other barriers to approval and so if you only want to get assigned let's say.
And with the tier production and you got to hit a certain.
Amount of tearing our increase and touring over vehicle and things like that that you have to hit or you can use central cornea staining and you have to get the complete clearance and so it is pretty onerous. If you only go after just to get a symptom.
As opposed to just simply stat Sig. So it is doable, but then it also limits your label to only that function and so that's why we think given the mechanism.
We have a pretty good chance of doing both signs and symptoms.
Okay, and then just I guess last 1 on the dry side.
Based on the data so far there's not that much that's been shared but it seems that maybe signs that there is greater and number less of a kind of a post talk to that.
So it seemed like size might be easier is it fair to say that in general and.
It would be very rare to hit symptoms and not hit sign is that fair.
Well, we all have.
Certainly in the history of development of dry eye products, they hit signs more often because of the mechanism.
And.
And they don't really improve the patient outcome and.
And the symptoms, but let me just have David.
Give you his perspective on our mechanism and why we think.
And then we've got a pretty darn good shot at hitting the symptom improvement as well as the sign.
Yes, it certainly is a.
And called Thermo receptor.
We believe we will.
<unk> patients experience that cooling sensation, which is why we have ocular discomfort as a symptom.
As you say in the past, there's only a single products et cetera.
Signs and symptoms and that was that actually over multiple studies.
And we also have a mechanism that improves basal tear production that we do from a mechanism mechanism of action perspective believe and both the system and the sign and the nice thing about hitting the syndrome, which we actually.
Our eyes.
Our optimistic about just based on the MLA you only need Scott.
On the sign whereas others have had to you know it seems.
Different endpoints on time.
Based on there and not hitting symptom.
We remain confident based on that and my way of both signs and symptoms.
Understood and then on.
And the E R 11110 size.
Is there is there any thought of I know youre looking at EMA, and FDA and Theres other complexities there.
And unifying them in terms of the endpoints, but is there any.
Any thoughts here are you, possibly just waiting to start that to see what happens with dry eye or is this really completely independent.
So 2 things number 1 back a couple years ago, when we started off and developing the pipeline. We told you that we were going to wait.
For all development, regardless of when we got the data for any continuation of that until we had all of the assets reading out. So that we can then make choices about what to move forward and how fast and.
So this isn't anything new it just so happens and as these discussions with the agencies relative to 11 O 5 have taken a little bit longer and alike and so.
And we're going to wait until the end of the year.
At least we could do it as the end of the year, but we called that out front and so it shouldn't come as a surprise that.
We're waiting until.
By the time of any of these studies start we will have read them all out and we will have Matt made choices based on what the outcomes were.
Okay, Great makes a lot of strength. Thank you very much.
Thank you Frank.
Yeah.
Our next question will be coming from the line of Greg Fraser with Truest Securities. Your line is open.
Good afternoon folks thanks for taking the questions.
I wanted to just follow up on the net sales per bottle and how much more room for improvement is there just from negotiating lower wholesaler fees as the business gets larger over time.
Yeah.
I think people were surprised that we were able to get the reductions that we got and it was pretty significant and so like I said, we haven't seen the bulk of our we haven't seen the total of that yet and so.
So you'll.
And you'll see that as the year finishes.
Do think that again, when we look at when we talked to you guys and we look at the size of our business. We look at it from a net sales perspective, the wholesalers are looking at it from a gross sales perspective and.
And so it's a significantly bigger number as a result, and so we think that as we theres all sorts of not only distribution services, we get from them, but all sorts of other things and so as we think about.
And as continuing to grow and and again from a gross sales and net sales point of view, we become a bigger chunk of their totals.
And then we will just continue pressing the envelope as much as we possibly can because.
Again, we still have I think if you look at May.
Major companies they are down too.
Probably low single digits in terms of their wholesaler fees and so ultimately as we get bigger and Thats our target.
There is still ways to go.
Yeah got it okay.
Average number of bottles per prescription is still increasing and if so where do you see that average going to over time.
You know it.
It's kind of interesting so we had a great bump when we exited.
And sorry, when Covid hit and we started moving more towards 90 day prescriptions and so.
We see a little bit of discrepancy between the.
The number of prescriptions I'm, sorry, a number of bottles per script for rocket and which is around 146 or $1.47 per script and rhopressa as a little bit lighter than that.
And so.
But again both of them are up.
Quite a bit from where the pre.
Pre COVID-19 numbers, and so I think once people get to that.
Get used to getting the.
And their drugs and the Mayo versus going down and at a local pharmacy and kind of like that so.
And the industry averages.
Coma is probably and that 1.
4.
5 to 1.5 range somewhere in there so with Rockwell and we're already there Rhopressa has got a little bit ways to go but on a blended basis.
We're sort of now almost average where before a year ago, we were below that and so it's a good thing.
Got it Okay and then.
Last question and just thoughts on the net between commercial and Medicare and in terms of revenue how do you see the mix evolving over time or and what do you get sort of a steady state.
Okay.
You want to call do you want to tell me, what you think about the unemployment rate.
Yes.
And that's really going to swing it right. So whenever we can get back folks back on to work again and they start going back on commercial plans.
Maybe it will slow a little bit of that erosion rate down.
But until that happens, it's kind of hard to make that call. So all we can do is what we're doing which is probably pretty hard for every prescription.
It's commercial we've got a number of other tools that we can use to help defray the.
To help the patients.
Access to them.
But.
It's just too hard to call at this point.
Yeah, Okay. Thank you.
Mhm.
Next question will be coming from the lineup Yigal <unk> with Citi. Your line is open.
Hi, This is carly on for Yigal, Thanks for taking our questions.
Good luck.
Net expansion in Medicare part D coverage for Ralph Mccann, and when did that increase going to attack and what's your expectation at this point for Sherwin, Rockland and part D coverage.
And up to the 90% plus level that you've achieved sorry revenue.
Alright.
And currently I'm going to have you repeat the second half of your question and just a second but for the first half I'm going to have Chris state and actually give you the answer to that yes.
On the Medicare part D. The new coverage was effective June 1.
Okay, Great. That's helpful and the second part with just sort of how you see that percentage trending over time, and when and when Rockwell 10 part D coverage.
And 90% plus level.
Keith.
Yeah.
1 of the shifts that we ended up making and are thinking about doing managed care contracting was that we quit trying to hit numbers in terms of percent coverage, where we wanted to do was make.
Decisions around what were the profitable contracts, we needed to reach because again given up a lot of <unk> and rebates and bringing net net price down and certainly didn't get us to where we wanted to go and we certainly getting started getting.
The wind at our back as soon as we started taking a little tougher stance and in.
In terms of how we negotiated those contracts so I don't really have a.
Our plan in place to get to not to say, 90% Medicare part D coverage, because we will get there if we can sign the contracts and a way that make the most sense to us without destroying our net price and so if we get there because we're able to do that and we put enough pressure on the system using.
Prior authorizations and things like that and encouraging.
And what kind of utilization and that brings some of these plans to the table like we did and I and I've talked about it a year ago. When we got the largest plan and the country took us 2 years, but we got the contract and but again, we're in no rush to get to any particular coverage number and it's all going to be based on what makes the most sense from a.
Profitability.
City point for us.
Okay got it that's helpful. Thank you and then.
And you have a number of programs and the pipeline as well as some additional IND filings expected next year or so was curious if you could comment on your level of interest in partnering or out licensing some of these assets and depending about what we and the question of development you see.
And at the optimal time.
Alright.
So traditionally the partnering activities start somewhere around phase 2.
Depending on sort of what the product is and the market and all those other kinds of things.
Certainly we are open to partnering.
And certainly we are doing that for Europe, as well as we've already done and for Japan.
If we get excited about the dry eye data and and as we talk to folks about it there's a.
And some rationale for us to do that whether it's a geographic deal or a broader deal the net and we certainly.
<unk> have to be open to that and just like we have to be open to.
As we start going down the path.
Doing the retina trials.
And there is a lot of folks that are interested and retina. So we may.
Find ourselves in a situation, where we get approached by partnering there. So we are open and we view that as a good way of continuing to build a pipeline and utilize our resources and the best possible manner.
And the nice thing about that all is it also add cash to the balance sheet, which is not a bad thing either so we are so bottom line is we are open.
It's not necessarily a putting out assign it says wide open to give these things away, but selectively we'll do that.
Okay, great. Thank you so much.
Yes ma'am.
And our last question will be coming from the line of Lisa Yang with Mizuho Securities. Your line is open.
Yes, Hi, Dan.
And Dan Clark on for <unk>.
For the <unk> readout.
Good how are you.
Just 2 questions for US 1 we see weak 1 data from the trial and then of the secondary endpoints that were added to the study are there any ones in particular that you believe have the most commercial relevance.
So.
And.
We will give you like we did with Rhopressa and Rocco and I tried.
I'm going to answer the first part of that.
And then I'm going to have David talk a little bit more about sort of the mechanism and and what are some of the other endpoints.
There could be attractive but.
Just like we did on Rhopressa and Rakuten and where we showed you all the time points.
We will be sharing that data because for example, 1 of the things that could happen is.
And we get the greatest degree of separation between 1 or the concentrations and the vehicle at week, 1 and so that certainly would make it. The next study for that particular endpoint pretty short.
Because all we have to do is duplicate that right.
And so we plan on sharing all of that.
When we released the data.
So David.
On the second part.
Yeah, just to add to that number.
A number of secondary endpoints that people will find of interest.
And for ocular discomfort and we're also looking at ocular pain rates for similar reasons to the MLA may prove interesting Sandy which was the primary at the rainy.
Goodbye and visit will also be higher.
And part of the secondary endpoints, we're looking at.
Ultimately we.
Tested both environmental condition as well as.
Do you think and controlled adverse environment or the dry ice chambers, and we will be looking at changes both outside the chamber and with them. So we will have a number of other.
Other endpoints in addition to the standard endpoints and everyone's used to no standard.
And gaining into breakup time et cetera.
Hopefully that answers your questions.
It does thank you.
Alright, and I would now like to turn the call over to Vince and Nieto Aerie.
And as chairman and CEO for final remarks.
Thank you I want to thank everybody for joining us call I know that Europe, you've got a very very busy week in front of you and I do hope that you share the enthusiasm that we have for what we've been able to accomplish despite of the COVID-19 environment and certainly from a commercial point of view we think.
We're doing some great things, there and Tom and the sales and commercial team are doing a terrific job and making sure that we continue growing despite all the challenges that we've been facing and certainly.
And for David and Casey, we built a great pipeline and and now we're moving that forward into the clinic and we were very excited.
Excited about the readout, that's coming up here.
And just the balance towards the back end of this quarter. So that'll be the next time, we get a chance to talk to each other so again, thank you for joining us and have a good evening.
And with that and goodbye.
This concludes today's conference call. Thank you everyone for your participation and you may now disconnect.
Okay.
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