Q4 2021 Aerie Pharmaceuticals Inc Earnings Call
Good afternoon, and thank you for standing by and welcome to the Aerie Pharmaceuticals fourth quarter and full year 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 today's conference will be recorded it is now.
Now my pleasure to turn the floor over to Hans.
Lifestyle partners areas Investor Relations firm. Please go ahead.
Thank you operator, good afternoon, and thank you for joining us with US today are Raj Kennan.
<unk> Executive officer.
Michele Santana head of clinical development and medical Affairs, and Jeff's caliber is <unk> principal accounting officer.
Today's call is also being webcast live on our website investors <unk> 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 we will make certain forward looking statements, including statements forecasts and observations regarding our future financial and operating performance and impacts of the COVID-19, pandemic and its variance, including our observations regarding ongoing operating expenses and net revenue per bottle.
These statements will include observations associated with our commercialization of Rhopressa and <unk> in the United States and our collaborations in Japan, Europe and other regions of the World. They will also include plans and expectations regarding the success timing and cost of our clinical trials.
Additionally, we will discuss progress regarding 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.
Finally, we will address our financial liquidity and other statements related to future events, including our financial outlook for 2022.
These statements are based on the beliefs and expectations of management as of today. Our actual results may differ materially from our expectations investors should read carefully the risks and uncertainties described in today's press release as well as the risk factors included in our filings with the SEC, we assume no obligation to <unk>.
<unk> or update forward looking statements, whether as a result of new information future events or otherwise. Please note that we will file our Form 10-K tomorrow.
In addition, during this call we will be discussing certain adjusted or non-GAAP financial measures for additional disclosures relating to these non-GAAP financial measures, including a reconciliation to the comparable GAAP measures. Please see today's press release, which is posted on the Investor Relations section of our website and with that.
I will now turn the call over to Raj Kannan, the CEO of Aerie Raj.
Thank you Han and good afternoon, everyone.
As you May know I joined Erie in December of 2021.
It has been an exhilarating couple of months for me and I'm, even more convinced that I made the right choice to join Aerie, given the significant potential upside from smartly, managing multiple levers and executing well for our shareholders.
I am very pleased to speak to you on Aerie version 2.0, and why we remain confident about our growth in 2022 and beyond.
During today's call I will provide you with a high level update on our performance in 2021.
Our outlook for 2022.
And an overview of our commercial business.
I'll ask Michelle to provide you with an update on our late stage clinical portfolio and in particular, our exciting prospects with <unk> one two and finally, Jeff will review the 2021 financials with you before I close with a few remarks.
2021 was a very productive year for Erie.
We delivered strong revenue growth for our first in class glaucoma franchise, which is comprised of our novel products Rhopressa and Rakuten.
We reported several positive endpoints in our phase <unk> top line results on a <unk> 102 for dry eye.
That provided us with a high level of confidence in advancing to phase III studies.
We reported the positive phase III top line results for Rhopressa in glaucoma in Japan.
We executed a second agreement with Fenton.
And we maintained a strong financial position coming out of 2021.
Taken together these achievements have set up for success in 2022 and beyond.
As I begin my third month at the company.
I wanted to share with you what I see as the three strategic pillars.
For our long term success.
Number one.
Driving sustainable growth of the commercial business.
Number two.
Making smart choices with our capital and advancing our pipeline.
And number three reducing our annual cash burn rate in maintaining a solid financial position.
Taking them one at a time.
Sustainable growth of the commercial business.
Looking forward to 2022, our full year guidance for <unk> and Rhopressa sales is $130 million to $140 million, which represents an increase of 16% to 25% compared to 2021.
I'll talk more on our commercial franchise in a few minutes.
The number two strategic pillar, making smart choices with our capital and advancing the pipeline.
You will note that we have made the difficult choices, we need to make within our pipeline.
Which will enable us to expedite the path to market for the programs.
That we believe have the highest likelihood of success and return.
And either pause and monetize the other programs where appropriate.
Today I wanted to focus on our <unk> 502 for dry eye.
11 O five for diabetic macular edema or <unk>.
And Ah 14, 034 for wet age related macular degeneration or wet AMD.
All three ranked high on our criteria for capital allocation, including partnering options in ex U S markets.
We believe that our <unk> for dry eye could be a critical value driver for aerie.
We have a heightened sense of excitement about this product candidate.
And believe that this asset if approved could have a very competitive profile in the dry eye market.
In addition to providing robust tier production as early as after the first dose.
<unk> two is poised to deliver rapid to leaf of multiple dry eye symptoms and quality of life improvements to significant needs that remain in the dry eye space.
Our goal is to initiate the phase III program in the second quarter of 2022.
In a few moments Michelle will provide further details on the relevant results from our phase <unk> clinical trial and why these results provide us with the confidence to proceed into a registrational trial for people with dry eye.
Our other phase III ready product candidate.
<unk> hundred five for DMA remains important to aerie.
<unk> <unk> hundred five has the potential to provide patients with a six month dosing interval with half the steroid use compared to the currently marketed product which is administered once every two months.
Importantly, our <unk>.
<unk> provides us with the opportunity to validate our print technology platform.
It also enables us to advance our novel product candidate with a unique delivery mechanism for retinal diseases.
We've been exploring a number of options for <unk> 11, O five taking into account strategic financial and regulatory factors.
We're encouraged by the feedback we've been receiving from potential third parties.
And we will continue to evaluate options to move this product candidate forward via partnering where appropriate with the right company.
Lastly, we're excited about targeting an IND submission for <unk> for later this year.
<unk> four could be a well differentiated product for wet AMD.
With a second generation highly potent tyrosine kinase inhibitor targeting vascular endothelial growth factors are bad jobs.
In addition, it could potentially offer the longest dosing interval compared to anti VEGF products on the market and in development today for wet AMD.
And number three reducing our annual burn rate in maintaining a strong financial position.
One of my top priorities when I came to aerie was to assess our cost structure and drive greater efficiencies in our ongoing operations to preserve cash.
Optimized capital allocation decisions.
We recognize that our burn rate is higher than where we would like it to be and we've made meaningful progress in making difficult choices in research and development and particularly in SG&A.
This area will be an ongoing priority and focus for me.
And the management team.
In continuing to bring our spend down and in driving efficiencies in our operations.
We expect to reduce our total net cash used by approximately 15% in 2022 versus 2021.
Despite increasing cost both in R&D driven by initiating three phase III studies for <unk> and in our ongoing operations.
We've made difficult choices and put on hold a number of pipeline candidates as previously reported so we can focus on those with the highest likelihood of success and return on investment.
We've cut expenses related to international markets. This is predominantly now partnered with Phantom.
We ended the year with cash cash equivalents and short term investments of approximately $140 million and subsequent to year end received $90 million related to the second Santana agreement.
In summary, given our targeted focus on the right areas that drive near to midterm value.
And our continuing progress in driving efficiencies in our operations.
We believe we are well positioned financially heading into 2022.
Now as I mentioned before let me provide you with relevant details on our glaucoma commercial franchise and why we remain confident in sustainable growth in 2022 and beyond.
In 2021 rocket <unk> and Rhopressa revenues in the fourth quarter increased by 32% over fourth quarter 2020, mainly driven by a strong growth in total prescription while the overall market was flat.
It was also driven by a meaningful increase in net revenues per bottle driven by product mix rationalization of our rebased and our distribution fees.
In 2022.
We want to continue driving earlier adoption of <unk> and Rhopressa.
We see three key drivers for the commercial growth story.
Number one.
We're excited to rollout our refreshed brand strategy that offers greater clarity and distinction between the brands, including the why and where to use them, which tested well with our prescribers and market research.
We've taken a page out of the very successful cholesterol marketing with the lower is better team in driving better efficacy right from the start as a primary reason for brand choice.
For people, who have glaucoma published evidence suggests that getting to a lower inter ocular pressure number or IOP is better.
Data suggest that for every one millimeter drop in IOP.
The risk of vision loss is reduced by 10%.
We intend to call attention to the fact that at Aerie, we have two powerful agents that use a novel mechanism of action, which is highly effective in lowering IOP.
Potentially getting patients to the lowest risk of vision loss right from the start.
<unk> offers unparalleled efficacy and dropping IOP.
Why not start with Rockwood tan to maximize the IOP drop.
Or make Raclette team the first go to switch brand.
Rhopressa on the other hand consistently lowers IOP by 20%.
Regardless of baseline pressure.
And offers the most powerful add on.
That's because of its unique effect on <unk> venous pressure or EVP, which as you know remains a constant and thus far no agent has been shown to act on Edp.
It is the powerful next option to consider regardless of background therapy or baseline pressure.
This is why rocket Pam and Rhopressa are increasingly well differentiated with prescribers and unparalleled in lowering IOP.
Given the encouraging feedback from high prescribers of Rockwood Tam and drove pressor.
We believe that the differentiated efficacy and good safety profiles of Rockwood tenant Rhopressa provide physicians with a clear reason to prescribe our two brands.
And we believe that this refreshed brand story could be the cornerstone to our commercial growth going forward.
Number two.
We expect to have better access to prescribers.
We are encouraged that more than 80% of physician visits are now face to face.
This suggests that we are starting to move to a new post pandemic normal assuming pandemic restrictions are further eased by the end of March.
And lastly, number three we have increased pull through opportunities.
Our broad formulary coverage paves the way for increased pull through opportunities to drive greater adoption for our brands.
In summary, I believe that the refreshed brand strategy.
With great greater clarity and positioning and refreshed messaging combined.
Combined with better access to prescribers and increased pull through opportunities on a broad formulary coverage.
Good positioning aerie to achieve our revenue targets in 2022 and beyond.
Fund our journey to the future.
Before I turn it over to Michelle to continue our story and building towards the future we want for Aerie.
I wanted to take a moment to speak about personnel changes.
As you know, Tom Mitro, and David Hollander will be departing aerie at the end of this month.
I want to thank them, both for their hard work and dedication.
I'm pleased also to announce areas, new Chief Medical Officer, Dr. Gary Sternberg, who will join US effective March one of 2022.
Gary is a board certified ophthalmologist and a well rounded biopharmaceutical executive with a breadth and depth of relevant experiences in clinical development Medical affairs strategy and business development that will be valuable to aerie.
Big welcome to Gary.
Before I turn it to Michele I also want to thank the <unk> team for their performance in 2021 and for their dedication and commitment to the company's goals.
Let me now turn the call over to Michelle our head of clinical development and medical Affairs to continue building on the reasons for our excitement about the future for aerie.
Michelle.
Thanks Ross.
Im going to focus my remarks on <unk>, our dry eye product candidate and then briefly mention the Rhopressa phase III clinical trial recently completed in Japan.
Also provide a brief update on our Facebook plan to continue strengthening the product profile for rock with him.
1512, or 512 is entering phase III development as a differentiated novel first in class product candidate for the treatment of the signs and symptoms of dry eye.
While there are a number of prescription and OTC products on the market for dry eye.
As previously mentioned, we believe there is significant unmet need for new therapies that can provide rapid onset of efficacy.
<unk> dosing and importantly, consistent improvements across a range of sign and symptoms and quality of life endpoints.
Mechanistically <unk> as a tip <unk> agonist that acts by stimulating the cold sensing receptors found on the nerve endings that innovate the cornea an island.
Ah stimulating these receptors 512 leads to natural tear production any cooling sensation across the surface of the eye that may lead to a reduction in dry eye symptoms.
You may recall that aerie release, the results of our robust phase two b trial named clinic, one in September of 2021.
While our primary endpoints were not achieved we showed statistically significant dose dependent improvements across multiple validated sign and symptoms and quality of life endpoint.
We were particularly excited to see a statistically significant and very robust increase in to production as early as day, one the magnitude of which stayed nearly identical at day 14.
For symptoms, a statistically significant improvement in favor of $5. Two was found as early as <unk> based on Sandy score.
We also saw statistically significant improvements in ocular discomfort.
And numerous measures in daily living activities.
And each of these endpoints <unk> separation from vehicle continue to increase over the 84 days steady.
Notably all positive results or based on the full intent to treat population and were consistent with <unk> mechanism.
Overall, there was a high degree of consistency across the data, which is atypical and dry eye.
<unk> was also found to be safe and very well tolerated.
Lastly, the centrality of the result solidified the critical design elements, we wanted to carry forward into phase III, including the dose of $5 10.
We are pleased to report that we have gained alignment with the FDA honor endpoint.
It will be day, 14, and <unk> Schirmer score and day 28 Sandy score.
Our proposed pivotal clinical program includes two phase III efficacy studies and a 12 month long term safety study.
Importantly, we are on track to have the first patient enrolled in our first pivotal phase III study in the second quarter of this year.
Moving to our glaucoma franchise I would like to note that we are finalizing the details of our phase four study in the U S.
This study is intended to demonstrate the powerful efficacy of <unk> as a first line therapy or the first doses, which brand we plan to kick this study off as well in the second quarter of this year.
Lastly, a brief update on the clinical results with Rhopressa in Japan.
<unk> told you in 2021, we reported the first phase III study of Rhopressa in Japan demonstrated superiority versus twice daily dosing of <unk>, which is a different rock inhibitor marketed in Japan.
A second confirmatory phase III study required for approval in Japan is underway.
Our partner San Tan is taking the lead on next steps and preparation for registration.
Lastly, before I close I would like to thank all the health care professionals Aerie personnel patients caregivers and families involved with our programs over the last year.
I would now like to turn the call over to Jeff.
Thanks Michelle.
I'll focus my comments on our financial results for the fourth quarter of 2021.
All numbers that I will review in this discussion will be approximate for easy sharing during the call for additional information regarding our fourth quarter annual and prior period comparisons. Please refer to today's earnings release, and our Form 10-K , which we'll file tomorrow.
Our combined Rhopressa and record net revenues in the fourth quarter of 2021 totaled $33 million or 32% increase over the comparable prior period. We also recognized licensing revenues of $82 million related to the second center in agreement announced in December of 2021, bringing the total fourth quarter net revenues to one one.
Third $15 million.
Our normalized gross margin for the U S glaucoma franchise for the fourth quarter of 2021 was 91% which is consistent with prior quarters. In addition included in cost of goods sold of $6 million is approximately $3 million of under utilized capacity costs for the Athlone Ireland plant.
Associated with the startup of commercial production, we expect the capacity utilization number to improve on an annual basis as we continue to drive increased volume through the Athlone plant.
Total costs and expenses also include $36 million of selling general and administrative expenses and $21 million of research and development expenses, reflecting steady investment in sales and marketing for our glaucoma franchise and continued investment in our clinical programs.
Our fourth quarter 2021, net income was $46 million or <unk> 96 per diluted share, which was driven by $82 million of licensing revenues related to the second certain agreement.
When excluding $6 million of stock based compensation expense. Our total adjusted net income was $52 million or $1 nine.
Diluted share.
As of December 31, 2021 shares outstanding were approximately $48 million.
For the fourth quarter of 2021, our net cash used in operating activities was $30 million, bringing our full year total of net cash used to just under $100 million.
As of December 31, 2021 we had $140 million in cash cash equivalents and short term investments. Additionally, we received $90 million from center in January of 2022.
As <unk> previously mentioned, our 2022 guidance includes an increase to $130 million to $140 million in glaucoma franchise net product revenues.
And a reduction in total net cash used by approximately 15% in 2022 versus 2021, despite increase in costs. Both in R&D driven by initiating three phase III studies for <unk> 501, two and in our ongoing operations.
We believe we are well positioned financially heading into 2022.
Now I'd like to turn the call back to Raj for a few closing remarks.
Thank you Jeff.
To conclude.
Im even more convinced than before that I've made the right choice in joining aerie and our 2021 achievements have set up for success in 2022 and beyond.
In 2022, we expect to deliver continued revenue growth in our glaucoma franchise.
We expect to advance <unk>, two pivotal phase III studies, which if positive could result in a compelling competitive product profile and.
And we expect to make continued headway and expense reductions to strengthen our balance sheet.
We're excited about building Aerie version, two point, though and I believe we have the right products the right plan and the right talent to be successful and growing aerie sustainably for the future.
Thank you all for taking time to join US today I look forward to the year ahead with confidence and and updating you on our progress along the way operator over to you for Q&A.
Thank you.
Minders ask a question you will need to press star one on your telephone to withdraw.
Sorry, Your question press the pound Keith please limit yourself to one question and one follow up.
Our first question comes from Francois <unk> as well.
Oppenheimer you may have.
Proceed with your question.
Hi, Thanks for taking the questions and congrats on the progress. So a couple of things. So I noticed that you mentioned the net revenue per bottle anymore is that something that will keep going we'll keep happening going forward and maybe just an explanation as to why not mentioned that and then.
They just do a quick back of the envelope is it fair to say that.
It makes sense based on the number of bottles that it was actually a little higher maybe around the 90 $596 per bottle and then I have a quick follow up thank you.
Hi funds this is raj.
The reason, we did not put it in our prepared remarks is as you. All know 2021 was the first year, where we reversed the decline.
In terms of the net revenue per bottle, but as we always say this is.
Sort of like a volatile number and we can't guarantee what that number will be there is always intense pressure from payers and we continue to squeeze margins both from.
Payers as well as wholesalers in terms of the fees and the rebates that we pay out so.
Suffice it to say in 2021, if you want the number nine average revenue per barrel was $90, so youre pretty close.
Those two what you did back of the envelope.
Okay, Great and then.
In terms of the.
Glaucoma market being fairly flat through the year and then seeing growth here or is this something when you look at the market as a whole is hopefully we kind of get over this never ending pandemic do you expect the market to keep growing or is this more of a.
Greater market share of any kind of stagnant market on the on the glaucoma side.
So a great great question.
I think when we look at Covid itself, obviously, the market declined overall market and it was flat in 2021.
But it would not be unreasonable to assume that we would get back to the pre COVID-19 market growth rate, which was roughly about 2% a year I hope that helps.
No Thats excuse me.
Sorry, if I can sneak a quick one just on in terms of the dry eye program, Taiwan to then a lot of challenges in terms of reimbursement, maybe being a little more difficult. These days.
Any thoughts on <unk>.
Reimbursement challenges and the dry market and why it might be something that we can work around here with Eric. Thank you.
Yes, great question, I think given sort of our experience on gross to net.
The intense pressure from payers, we are very cognizant about two things right. One is to come out with a very strong product profile as Michelle walked through her prepared remarks in terms of why we believe the both achieving sign and symptoms would be quite a differentiated product in this particular space.
And importantly, we are we've got eight at least two to three years before we start thinking about kind of getting into the market. So we are going to be working with payers in.
In collaborating with them to be able to generate relevant data that would be meaningful to them as well. So we would be well prepared coming in.
With our dry eye. Unlike Michelle said I think the company is quite excited.
This particular asset moving forward into phase III as quickly as we can.
Great. Thank you and congrats on the new position.
Thanks Francois.
Thank you. Our next question comes from Louise Chen Cantor You May proceed with your question.
Hi, Thank you for taking my questions.
First question is is the potential sale of the company still on the table I know prior management had mentioned that and then there have been quite a few management additions in the near term and how do you plan to do things differently than the prior management team. Thank you.
Okay.
Great Great questions. So let me talk about the sale.
Obviously, the way I would characterize it as we remain focused right at the management team and as employees of the company doing the right things that drive shareholder value and I know it sounds like motherhood, and Apple pie, but I strongly feel that the better we do this the better our share price will reflect the underlying value of the company.
When there is interest that reflect the two underlying value to our shareholders that are consistent with the board's perspective as well, we'll certainly update you but at this time we can.
And as you well know comment or discuss on any potential interest from companies on sale or are in M&A with the company itself.
Please was there a second question.
Yeah second question was that there have been some recent management additions and curious how you all plan to do things differently than the prior management team.
Okay. Good question Louise I think if you'd noticed theres been a trend recently that we're more focused now than we have been in the past right. So there's very clear focus on getting our commercial growth trajectory right for the short term.
We're advancing <unk> <unk> two is a significant which we believe we will get significant value driver for the organization for the midterm and Theres a clear acknowledgement.
For management at least.
Since I've come onboard.
Our costs need to be controlled and our balance sheet needs to be strengthened and so you saw the first meaningful reductions in our net cash burn to drive sustainable growth for the long term. So that's.
At least.
To start.
It's very different from from the airing for lack of a better analogy of version one point, though that was prior to sort of be taking on the other thing I would say is the employees when I met them all throughout aerie theyre quite re-energized, given the clarity of focus and the purpose and the potential promise.
<unk> future that we could all have built together as a company. So held regular town halls, we provided transparency on the direction and the choices we need to make we've set an operating model of collaboration between the executives and the functions and we've provided a pretty realistic path and connecting the dots from where our vision is to how we get.
There so I believe that area employees today are joined even more so together.
With a shared set of values and a common purpose and are excited to be part of a company that has the potential to meaningfully change the lives of patients for the better.
Thank you.
Okay.
Thank you. Our next question comes from Stacy <unk> with <unk>.
Cowen You May proceed with your question.
Good afternoon, Thanks for taking my questions and congratulations on the progress.
So my first question is a bit of a follow up on the first one I just want to push a little bit on that.
<unk> per prescription in the past the company has been able to exceed a $100.
Her.
Prescription a monthly prescription so long term what are your thoughts there.
And then the second question is around the potential value of our partnership with DNP program 11 O five what do you think Ricky.
Worthwhile for collaboration.
Yes.
Great great questions.
So when I look at <unk>.
The average revenue per bottle.
Sort of done the calculations since.
<unk> launched the products.
To your point I think in 2018 was 128% to 19. It was 103 and 2020 with 81, so we've been sort of actually on a declining net revenue per bottle and 2021 was the first year given the volumes and given a rationalization in terms of how we looked at rebates the company actually reverse that trend.
Whether we get to about 100, obviously theres always the intent and that's what we're working on but I want to be very clear that I'm not promising or guarantee anything at this point in time I think my focus really is to drive.
The underlying demand and really drive the prescriptions given sort of a refresh brand story that we had in our prepared remarks. So we're quite excited that there is greater clarity in the positioning of our brands and there is a clear refresh messaging that seems to be resonating at recent market research with our prescribers. So I think we're looking forward to the execution, we're looking forward to taking that story.
And.
Getting it out to the prescribers.
On the second question in terms of <unk>.
Think in quarter three there were in the transcripts I've noticed.
We had mentioned that the potential opportunity for <unk> with a steroid is much bigger in Europe than it has been added states. So obviously the value of a potential partnership for companies that are entrenched in Europe similar to what we did with <unk> with our existing food products is very similar to the thought process.
But that we could potentially monetize that and then further strengthen our balance sheet and refocus we're great at which is the U S market and continuing to develop our pipeline.
I hope that addresses your question.
Very helpful. Thank you.
Thank you. Our next question comes from Annabel <unk> with Stifel. You May proceed with your question.
Hi, Thanks for taking my question and congrats on the progress.
And also thank you for providing guidance for the first time in two years.
I appreciate it.
Just to press you on that a little bit.
Of course after pressing you on it.
Take the run rate for <unk> and pull it out for the year I mean your guidance.
It really implies little growth if youre looking at <unk> as a run rate.
It seems that this year.
Have as much headwind from Covid.
Implementing a marketing strategy. So can you kind of help us understand the pushes and pulls of that guidance.
And whether this is just your first line understanding you want to make sure that you get it right.
And then the second question is on the cost structure I understand that you are looking at.
The cost very carefully.
How do you square that with the increased marketing push that youre going to be doing or the marketing strategy that you have what are some of the levers that you can pull in terms of <unk>.
Do you think some of the costs and also I guess the rationale for conducting a phase four study in Rocklin 10, when it seems that you have.
Some pretty decent understanding of how that product works in the actual efficacy so.
I guess that's.
Got loaded question.
For costs. Thank you.
Yeah.
Oh.
Annabel let.
Let me just see if I can.
Address each one of these questions.
I think when you look at the fourth quarter traditionally speaking the fourth quarter is one of our strongest quarters. During the year. So extrapolating that I think would be a very simplistic way of saying what our revenues could be we look at prescription growth. We look at net net margins the revenue per bottle.
A number of factors that we look at and I think the target that we've set is is ambitious but however, like you said.
I want to make sure that whatever guidance that I provided we're comfortable that we can achieve that particular guidance that we provided to the street. So obviously there is a little bit of a mix of both of those factors that you mentioned.
In terms of cost I think we are becoming a very precise right. We've had three years of experience in terms of which prescribers have the intent to prescribe what their predictive attributes are so becoming very targeted in terms of where we want to dial up and the programs that seems to work in.
Programs that don't work and I think youll see a very.
Educated thoughtful approach in how we thought about reducing our SG&A without necessarily touching the footprint right in terms of the number of sales reps and the promotional effort that we have and then the last piece that you mentioned with the phase four obviously this was something that looking back we could have started that very early on right after approval.
And one of the things that has become better right over the over the years is the physician's perception of the product and the misconceptions. They may have had especially around hyperemia and I think what we wanted to do is to provide a phase four study that actually.
Is it in line with how we're thinking about promoting it which is raclette patent the first.
Initial preferred brand to go to versus whatever that <unk> been using and to actually demonstrate real world effectiveness and what we're saying so actually putting the data and how we're promoting it and thats what the phase four is meant for.
But I hope I captured all.
Rocco enhance study is almost like the assays for most study that you have for Rhopressa is that what I'm understanding.
Similar similar to that.
Our experience to change the perception about the product.
Correct, Okay. Okay, great. Thank you so much.
Thank you Annabel.
Thank you. Our next question comes from Serge Belanger with Needham <unk> Company. You May proceed with your question.
Hi, good afternoon.
Yeah.
I guess my first question is a follow up too yes.
I guess one of the prior questions on guidance should we expect the same kind of quarterly cadence that we have been accustomed to over the last couple of years.
The quarterly cadence in terms of providing an.
And update us.
I think we provided annual guidance I think the quarter leads will be pretty much in line with sort of how are trends has been like a just recently set fourth quarter tends to be the strongest one in quarter, one tends to be a little lower rate.
So as we see as we progress during the year quarter, two becomes better quarter three becomes better in quarter four is your strongest quarter in.
In the year, so that's the cadence that I would.
I would articulate.
Okay.
And on payer coverage.
As we move into 2022 is there are any changes too.
Coverage policies.
Is that an aspect of the business that you plan on improving.
As part of your growth strategy for the glaucoma franchise.
Great question. So as you know in our prepared remarks at the end of 2021 and in our Investor deck. The refresh investor deck. We provided we're actually quite pleased with the broad coverage and reimbursement that we have in the Medicare population, which is roughly about 60% of our of our business.
We have roughly in the mid Ninety's in terms of coverage and in the commercial book of business, which is roughly about 23, 24% of the total we've got roughly in the mid seventies right. So.
And throughout the year.
We constantly assess and calculate.
How do we rationalize rebates right. So there are plans or books of businesses with mid level of low level of control, where we could potentially.
Even consider being off formulary, because we do get the prescriptions through and Thats, the kind of back and forth that we continually monitor and Thats why you saw in 2021. The team has done a very nice job in figuring out how to rationalize those rebates across payers and across distributors and wholesalers.
Okay, and just the last one.
Based on the current cash balances.
On your efforts to reduce.
Operating cash burn.
Can you just comment on what Youre thinking in terms of cash runway.
With the cash.
Cash you have on that.
Got it he has though given my third month.
I wish I could answer that.
Nearly.
But I Wouldnt say theres right. There are a number of moving pieces right now.
There are a number of assumptions that we're making right in terms of the growth rate for the commercial franchise, we were thinking about monetizing certain aspects of our of our phase III pipeline programs.
So.
And then we're also continuously assessing our cost structure and reducing our cash burn so that those priorities. Let me, let me kind of get solidified in the company in terms of how those things are moving how does assumptions are coming through I know for now I can tell you that we are in a strong position to get through and execute on our short term plans for 2022, but hope.
Fully as the year progresses, we will have better visibility on how these assumptions are coming through and I'll be able to give you a better picture as to what that cash runway could look like.
Fair enough. Thank you.
Thank you.
Thank you. Our next question comes from economical movements with.
<unk> you May proceed with your question.
Hi, This is carly on for Yigal. Thank you for taking our questions.
A few on on the pipeline I guess on dry eye about how many patients do you expect to enroll in each of the planned phase III studies, and then related to that what's your expectation at this stage for how long those trials may take to complete enrollment.
Thank you Charlie great questions. So I think at this point.
No.
We know that we want to initiate phase III.
Our FBI in the second quarter.
Just to give you a rough estimate I think the total number of patients that we had in our phase II B, we're thinking about very similar numbers for our phase III two arms, but the details of those study design and the actual numbers will be rolled out as we finalize our protocol.
In terms of the timeline right where.
This is a 90 day study day 84 would be the endpoint, but we will do it through 90 days and I think clearly there is a model either from our phase <unk> or from others that you could easily drive the timeline in terms of saying when would that last patient readout and when would when would the company potentially be ready for a data readout from the phase III.
At this time, we didn't disclose it but I think you have enough to model.
What those time periods might look like.
Okay, Great. That's helpful. And then we just wanted to clarify on the development strategy for <unk>.
11 O five well.
Aerie move forward with investing in our phase III program independently or is it more likely that you'll look to partner to fund the phase III development I think the company had previously talked about initiating that study in the first half of.
2022, so just curious is that still.
On track or or if you're taking a pause while potential partnership discussion.
Thank you.
Yep. Thanks, Carley for that question I think a R. Lebanon five continues to remain a very important product and we're excited by it but I think to your question.
Straightforward answer would be the latter one which is more likely to partner in terms of getting the.
The partner to fund the development expenses for <unk>, five given especially given sort of the majority of the opportunity or the bulk of the opportunities outside the U S.
Okay got it thanks again.
Thank you Gary.
Thank you. Our next question comes from Jason <unk> with Bank of America. You May proceed with your question.
Alright, Thanks for taking my question.
On the guidance itself it so it sounds like.
There is somewhat uncertainty around pricing. So you don't want to guarantee sort of an outlook on the price dynamic.
So it's sort of the assumption then that the.
Our sales guidance is entirely driven by volume.
Keep that dynamic council internally youre not assuming any.
Incremental price benefit or is it mainly volume with a little bit of price disconnect. You can clarify the price volume dynamics. Thanks.
Yep.
Jason for that question.
I think if you look at 2021.
Roughly about 18% of the growth we grew 35% rate.
Dominant two drivers were prescription growth and the net price per bottle, so 18% or so was contributed by the increase in prescriptions and about 12% or so came from the net price per bottle.
I think for modeling purposes, Jason I would use the 90 that we left off with in terms of the average and then there is about 6%.
Contribution from incremental price that that's how we calculate it.
That went into the guidance that we provided to the street.
Got it okay. Thank you.
Thank you. Our next question comes from Greg Fraser with Truth. You May proceed with your question.
Good afternoon, and thanks for taking the questions.
How many prescribers are thereof, rhopressa and <unk> and how did that number change in 2021, I'm trying to get a sense for how much of the population of the sales force is calling on are already prescribers and if you can comment on the mix between weekly and monthly prescribers that would be helpful. Thank you.
Yes so.
I think the total targeted prescribers.
We go after is roughly a little over 10000 10500, or so and what was encouraging to see in 2021 was the increase in weekly prescribers. We got from 3500 to 5000. So it's roughly about 48% of our total target audience. We are starting to prescribe one prescription at least.
One prescription or more every week and that was an encouraging trend and so we see a potential opportunity there Greg in terms of continuing to grow the weekly prescribers in particular, because that drives the overall demand.
Got it thank you.
Thank you.
Thank you and our next question comes from Francois Griswold.
Oppenheimer you May proceed with your question.
Hi, sorry, just a quick follow up here when you were doing your research.
In terms of.
Working on the brand and refreshing the.
The messaging on Rockwell Tan in Rhopressa and gone Rocco sensors did you come across.
<unk>.
Our dogs prescribers not being aware of the reimbursement.
Improvements on the rock Tenn front.
Just from maybe a lack of face to face time or was the reimbursement level very clear amongst prescribers. When you. When you did your service. Thank you.
Yes, Great question Francois I think I would say that the two issues that we have been addressing and it has been declining and one of them is the payer coverage the awareness around payer coverage business.
An opportunity that I think in my prepared remarks, I had said that it's an opportunity for us in 2022 to get those pull through opportunities where we have.
Broad formulary coverage for our brands. So that is something that is an ongoing messaging that is integrated into the call with the physician itself. So we hope right.
The broad formulary coverage now translates into many of the pull through opportunities that the field force is working on in a coordinated fashion.
Okay.
Thank you.
This concludes today's conference call. Thank you for participating you may now disconnect.
Goodbye.
Okay.
Yes.
[music].
Yes.
[music].