Q4 2021 Kala Pharmaceuticals Inc Earnings Call
Good morning, and welcome to Kala Pharmaceuticals Conference call to review its fourth quarter and full year 2021 financial result at.
At this time, all participants are in listen only mode.
Following management's prepared remarks, and Q&A session will be held as a reminder, this call is being recorded.
I'd like to turn the call over to Jill Stier Executive Director Investor Relations and corporate Communications a call.
Pharmaceuticals. Please proceed.
Thank you operator, thank you all for participating in today's call. Joining me on the company are Mark <unk>, Chairman and Chief Executive Officer.
Sage Moore, President and Chief operating Officer.
Kim Brazzell head of R&D, and Chief Medical Officer, Mary <unk>, Chief Financial Officer, and Darius Karami, Our Chief business Officer will also be joining us for the Q&A portion of today's call.
Today's call is being webcast slides the webcast link can be found in the investors section of our website at www dot call our ex stock comp.
During this call we will be referring to non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial measures to the most direct comparable.
GAAP measures is available in our press release issued today, which can also be found on our website.
This call, we will make certain comments about college future expectations plans and prospects that are forward looking statements within the meaning of the private Securities Litigation Reform Act of matching that they bought.
These statements will include statements regarding our commercialization of <unk>.
Yes.
Regarding the development programs.
The market potential for K P. I owe one two and updates on our preclinical program.
And the sufficiency of our cash resources.
Another look forward looking statements are based on the beliefs and expectations of management as of this conference call. Our actual results may differ materially from our expectations. The company undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances that occur.
This conference call, except as required by law.
Investors should carefully read the risks and uncertainties described in today's press release.
Well for risk factors, which identify specific risk and other factors that may cause actual results or events to differ materially.
The scribe to hustle.
Certain statements included in the Companys annual report on Form 10-K , and other filings we make with the SEC.
Form 10-K will be filed with the SEC later today and will be available on our website.
I will now turn the call over to Carlos <unk> CEO Mark <unk>.
Good morning, everyone and thank you for joining us today to review, our fourth quarter and full year 2021 financial results and recent business highlights.
Our mission of color, we can provide patients in eyecare professionals with a portfolio of innovative medicines that can better treat diseases that affect the front and back of the yard.
As we move into 2022, we've seen continued progress across our commercial portfolio and the expansion of our clinical pipeline with <unk> <unk> two a phase three ready asset.
We are developing to treat a devastating condition.
Together, we believe that our commercial and clinical programs have the opportunity to deliver tremendous value to the eye care community.
Let me now turn to our recent performance beginning with I assume they are approved medicine for the short term treatment of dry eye disease.
Spoken about our efforts to expand payer coverage and establish I assume this is the preferred first line therapy for the treatment of dry eye disease, including dry eye flares.
Following a number of commercial and Medicare wins in the fourth quarter in recent months as.
As well as the launch of our first direct to consumer marketing campaign, we are seeing persistent upward trends and I assume the scripts.
In the fourth quarter of 2021, and we recorded a <unk> prescription growth.
21% over the third quarter and we've seen this trend continue through the early months of 2022.
We continue to receive positive feedback from both eye care professionals and patients and we're confident this momentum will continue to build as we implement a number of targeted strategies aimed at patients with the goal of providing them the information and resources necessary to proactively discuss their dry eye disease and players with her.
Doctors.
In parallel we continue to advance our development portfolio, including our most advanced product candidate <unk> <unk> two.
<unk> investigational secrets home therapy, as a reminder, Casey I owe one two is a clinical stage asset <unk>.
Italy and development persistent corneal epithelium defect.
CEB, a rare disease associated with vision, threatening morbidity and <unk>, which we acquired in late 2021, we're.
We're looking forward to presenting clinical data from the completed phase one b trial of GPI one two at the upcoming ARVO annual meeting in May and subject to regulatory clearance and plan to initiate our phase three clinical trial in patients with TCE in the fourth quarter of 2022.
In addition, as we mentioned at the time of the acquisition. We believe <unk> has the potential to become a pipeline in a product which could benefit patients with an array of serious ocular diseases.
To that end, we are actively evaluating other rare disease indications for <unk> and look forward to providing an update on potential further development plans later this year.
From a corporate perspective, we are taking steps to reduce our expenses.
Target of approximately $25 million in 2022 to extend our cash runway beyond Q2 2023.
I will now turn the call over to Todd to review, our commercial progress with ICU beds and the deltas.
Thank you Mark for.
For the fourth quarter of 2021 Symphony Health reported 22460, <unk> prescriptions, representing an increase of 21% over the third quarter.
We are encouraged by the continued acceleration in growth and in particular by the uptick in Q4 prescriptions that is carried over into the first quarter of 2022.
Since the product first launched in January 2021, a total of approximately 87000 prescriptions or by service, including over 14500 refill prescriptions.
Written by more than 7400 unique prescribers through March 18, 2022.
This is particularly noteworthy as this uptick again prior to the recent payer wins and we believe that this momentum is likely to be supported by significant tailwind in the months ahead.
Turning to execution on our market access efforts.
Alluded to we've made significant progress toward our goal of growing coverage with key commercial and Medicare part D payers and we now have coverage for more than 125 million lives.
Specifically in March 2022, we secured coverage under United Healthcare, one of the largest commercial health plans in the United States, which covers approximately 13 million lives.
This brings our total commercial coverage to approximately 118 million lives or 70% of all commercial lives in the U S.
In addition in February we secured coverage under Cigna, Medicare, which covers about one 9 million lives, bringing a service total Medicare coverage to approximately $7 1 million lives or 15% of all Medicare lives.
We are very pleased with this continued growth in payer coverage, particularly since we expect it will translate into higher prescription fulfillment rates for a service and further accelerate our growth trends.
We will continue to vigorously pursue additional payer coverage and expect to secure additional wins in the first half of 2022.
In addition to growing a service payer coverage there remains a significant opportunity to address the unmet need in the treatment of dry eye flares, which is driven in large part by a disconnect between patients and their physicians.
We know from market research that patients are in need of a product to rapidly treat their dry eye flares.
Many have not proactively had a discussion about China I players with their doctors larger.
Largely because prior to <unk> there were no FDA approved rapid acting short term treatment options.
We believe that we have an opportunity to bridge the communication gap with a direct to consumer digital campaign that.
And that helps patients understand that our solution to their dry players does exist.
And with growing payer coverage. We believe now is the time to invest in consumer efforts in an efficient and targeted manner.
As a result, we have recently launched our digital DTC campaign, which incorporates an office point of care videos and educational materials consumer email campaigns digital media and social media education to encourage proactive discussions between patients and eye care.
<unk> around dry eye flares and the availability of I assume this is the only FDA approved rapid acting short term treatment option.
We are pleased with the recent performance and believe improving payer coverage and our DTC efforts are key catalysts to accelerating growth even further.
Recent ICU risk performance reflects a notable acceleration in prescription growth and significant improvement in payer coverage.
The team is executing against our strategic priorities and we believe our ongoing efforts will generate significantly increased demand.
We look forward to updating you on progress on future calls.
Turning now to an adult us in the fourth quarter of 2021, there were approximately 36700 prescriptions reported by Symphony health compared to 37410 prescriptions reported in the third quarter of 2021.
We believe that <unk> prescriptions and revenues will return to growth as the number of ocular surgeries returned to pre COVID-19 levels and as Medicare part D coverage for the product increases.
As we've previously stated our commercial efforts for <unk> are completely synergistic with my service as 100% of the <unk> targets are also dry eye targets for which <unk> is the primary focus and adult doses in the second position sales call.
I will now turn the call over to Kim to discuss our pipeline programs.
Thanks Scott.
We're really excited about the <unk> two program and the progress we've made over the last few months as we previously discussed <unk>. Two is a novel biologic clinical stage asset that we acquired as part of <unk> in November of last year.
This has been a great addition to our pipeline and to our strategy to develop novel therapies for unmet.
Unmet needs in ophthalmology.
This promising therapy as an application of novel technology evolving that utilization of street retail, which for <unk> two are harvested from human bone marrow derived mesenchymal stem cells.
Secret Tomer approach allows us to produce they all free therapy comprised.
Comprised of the central bio molecules secreted by the restroom camel stem cells, such as growth factors protease inhibitors matrix proteins in Euro trophic factors that has the potential for multiple therapeutic applications being cell free the synchrotron will approach provides many of the benefits itself.
RFP without the need for the administration of intact sales, which can have unexpected toward effects.
<unk> is currently in clinical development for the treatment of persistent corneal epithelium defects or PCE. These as we call them.
Which are defined as non healing corneal wound or defects that are refractory to conventional treatments PCE.
<unk> can be the result of numerous etiologies, including but not limited to Texas Keratitis retrofit keratitis.
Core and non surgical trauma sjogren syndrome, severe drought and others. If left untreated. These persistent defect can lead to significant morbidity, including infection cornea perforation scarring and ultimately vision loss.
<unk> is a rare disease with an estimated incidence of approximately 100000 patients per year in the U S and 230.
238000 patients per year in the U S EU and Japan combined.
<unk> has received orphan drug designation from the FDA for the treatment of PCE.
We're exploring potential submissions for fast track and breakthrough designation.
N P C E D. The corneal healing process is impaired due to an imbalance of key bio molecules that orchestrates the normal healing process.
We believe that <unk> can be an effective treatment of PCB across its various etiology.
It has a multifactorial mechanism of action with the potential to address the varying underlying biological issues that can lead to impaired corneal Healy.
Z <unk>.
<unk> has been shown to have significant wound healing activity in preclinical models and in our phase <unk> clinical trial in <unk> patients.
And this initial clinical trial significant improvement with sales and seven of the eight <unk> patients treated with complete healing in six or eight of those spaces.
In many cases within one to two weeks of initiation of twice daily dosing.
These results were presented at the upcoming ARVO annual meeting in May.
From a development perspective, we are on track to submit an investigational new drug application for the FDA later this year.
Subject to regulatory clearance.
The phase two slides three clinical trial in the fourth quarter of 2022.
This will be a randomized placebo controlled trial to evaluate safety and efficacy of.
Various dosing regimens of <unk> in patients diagnosed with PCE varying etiologies.
The results of this phase III trial are positive and subject to discussions with regulatory authorities. We believe the trial could serve as the first of two required pivotal trials for the PCB in the case.
If so we would plan to conduct the.
Additional phase III pivotal trial in <unk> patients to support the potential submission of the BLA to the FDA.
While our initial focus is on developing <unk> for the treatment of PCB as Mark mentioned earlier, we believe the multifactorial mechanism of action of <unk> also makes it a pipeline in a product.
We are evaluating potential expansion to front of the eye indications such as limbo stem cell deficiency chemical Burns.
<unk> syndrome, as well as select back of the eye indications such as retinitis pigmentosa in optic neuritis.
Youre right.
These are all rare indications with limited treatment options, we plan to provide an update of which new indications. We will pursue later this year.
With respect to our tyrosine kinase inhibitor program. We are currently conducting preclinical studies to evaluate pharmacokinetics and efficacy over six months following a super Colorado injection of the Teekay to evaluate the potential to provide sustained delivery and inhibition of VEGF induced path.
LNG.
We believe that the safe and effective tyrosine kinase inhibitor with sustained that JAK inhibition could be a valuable advancement in the treatment of sight threatening retinal diseases, such as age related macular degeneration, and diabetic macular edema with the potential to increase patient compliance and reduce treatment burden.
Patients suffering from these diseases wed.
We look forward to providing updates on this program in the coming months.
Now I'd like to pass the call to Mary to go over our financial results.
Thanks Kim.
During this discussion of our financial results I will reference certain non-GAAP financial measures. These non-GAAP financial measures exclude stock based compensation noncash interest depreciation and amortization loss on extinguishment of debt acquired in process research and development gain on fair value remeasurement of deferred purchase consideration.
Transaction costs related to the acquisition of <unk> and the impact of the termination of the lease of the Companys former corporate headquarters.
For a full reconciliation of our GAAP to non-GAAP financial measures. Please refer today's press release, which is available on our website.
Turning to a recap of the fourth quarter of 2021, our cash position as of December 31 was $92 $1 million compared to $124 5 million as at September 32021.
The decrease primarily reflects cash used in operations as well as the 5 million paid upfront consideration for the acquisition of convey NGL, which closed in the fourth quarter of 2021 our.
Our year end cash position does not include an additional 4 million received in 2022 related to the termination of the lease on our former corporate headquarters.
Based on our current plans, we anticipate that our cash resources as of December 31, 2021, together with anticipated revenue from ice and in Delta will enable us to fund operations into the second quarter of 2023.
As we look ahead, we continue to focus on extending our cash runway.
Our development pipeline and executing on our commercialization efforts.
To achieve this in 2022, we are targeting an approximate $25 million reduction in expenses compared to 2021, which we plan to achieve through improved operating efficiencies and a reduction in lease expense as well as the elimination of onetime expenses related to the launch of ICU beds.
For the fourth quarter of 2021, we reported net product revenues of $1 9 million compared to $3 1 million in the third quarter of 2021.
Byproduct this $1 9 million of net revenue consistent $1 2 million from sales of <unk> compared to $1 8 million in the third quarter and 700000 from sales of <unk> compared to $1 2 million in the third quarter.
Symphony Health reported that prescriptions, if I see this in the fourth quarter of 2021 increased by 21% over the previous quarter and shipments to distributors on which we recognize revenue also increased.
The impact on our net revenue is the result of a significant percentage of our business coming from our patient assistance program as.
As we have gained additional market access coverage, we expect our patient assistance program has had less of an impact on average selling price and thus net revenue in the future.
With respect to <unk>. The decrease in net revenue was driven by increased reserves for product returns during the fourth quarter of 2021.
SG&A expenses were 24 million for the fourth quarter of 2021 or a decrease of 5% from the previous quarter R&D expenses of $2 4 million also reflect a decrease from the third quarter of 2021.
For the fourth quarter of 2021, we've reported acquired in process research and development expenses for IP R&D at $26 6 million.
Acquired IP R&D includes cost associated with the acquisition of can be NGO, which closed in November of 2021.
Acquired IP R&D is excluded from our non-GAAP financial results.
That concludes our prepared remarks for today I will now pass the call over to the operator for questions.
If you'd like to ask a question. Please press Star then one if your question has been answered and you'd like to leave yourself from the queue press the pound key.
Yeah.
Our first question.
Comes from Andreas.
Our garage with Wedbush Your line is open.
Yes.
Thank you and good morning.
Just a couple of questions to start.
While you haven't provided guidance for our service.
Revenues, but can you can you provide some color on how you anticipate expanded coverage.
May translate to two.
Greater revenue.
Year, and then currently what percentage of scripts are being rejected due to a lack of coverage and then lastly for kpis to eight seven what data can we expect to see when you provided in the coming months.
So you can take those first two and then Ken.
Happy here so good morning, Andreas so.
On the coverage front, we think.
We're growing coverage.
Revenues in our multiple multiple ways right. One is having more of the demand that we're generating resulting in filled prescriptions, which gets to the second part of your question. We know they're currently about 50% of commercial prescriptions are not getting filled and 70% of Medicare part D prescriptions are not getting filled.
Right. So that's an opportunity to increase our prescription volume on a weekly basis by more than <unk> with growing our managed care coverage. The other area that has kind of helped significantly as with improving our gross to nets.
Continued in the fourth quarter to be heavily reliant on our copay assistance programs.
And in particular for those patients that don't have a benefit.
Thats being applied to their prescription or by supers by their health plan that buy down for that patient is from the WAC of $485 down to the $60 acquisition fee.
So that puts a lot of pressure on the gross to net once those patients have a benefit coverage for our service to their health plan. Those scripts are covered and paid for by that patient's insurance. So the combination of increasing prescription volume as well as improving gross to nets as we become less dependent on the other.
Co pay programs in the future are going to be the key drivers for revenue this year.
And then I'll hand, it over to Kim to answer the clinical questions.
Yes, good morning libraries.
For the <unk> hundred 87, we're currently conducting a series of preclinical studies evaluating the pharmacokinetics and efficacy.
That's the standard that Jeff Challenge model.
We're doing both short term and long term when I say long term six months study.
And.
Many of these are on the way so we anticipate over the coming months to be providing updates only of Harvard coking adequately efficacy really focused on durability and efficacy over multiple months.
And we're hoping to provide that data over the next few months.
Great. Thank you.
Our next question comes from Chris <unk> with J P. Morgan Your line is open.
Great. Thanks for taking the questions first one on kind of inventory dynamics and gross to net price series in the quarter.
Steve just reported sales of $1 2 million, which were down meaningfully quarter over quarter.
Reported pre.
Prescription growth of roughly 21%. So is there any way you could help US bridge the difference between the two how much of that was patient assistance or whether any inventory dynamics that you would highlight I'll start with the first question.
Yeah, Chris This is Todd I'm happy to jump in and answer there. So both are.
Demand prescription volume as well as our ex factory volume were up in Q4 to your point revenues were down quarter over quarter. So that was completely an impact on gross to nets.
The biggest impact there is definitely from the copay assistance program.
Earlier.
Both prescription demand and ex factory shipments of products are up.
We did have.
Xtra.
Impacts on gross to net because of the Copay assistance program and as I said as we get more managed care coverage and fewer scripts filled with that program. It will result in significant improvements in our gross to net.
Understood that's helpful and.
Kind of on the on the another question on where the payer coverage side.
He is currently standing at 70% commercial coverage about 15%.
<unk> coverage.
What are the things you'd highlight on the last on the last call was the lack of payer coverage really being a headwind for the <unk> service launch.
This recent United helps when do you feel like you're in a good enough place where.
Some of those pay your recoveries concerns or ameliorated.
And what.
What can we expect for additional coverage both on the commercial side and then on the Medicare part D side through 2022.
Yeah really good question. So on the commercial side, we certainly feel like we're in a position of strength now having secured United healthcare and being at 70% coverage. The last big plan to fall on the commercial side now it will be Cvs caremark.
Those.
Submitted and we're deep in discussions there in securing Cvs caremark and the first half of this year, we would grow our commercial coverage to 85% and put our commercial coverage on par to Restasis and <unk>. So we feel really good about where we are on the commercial front and we expect.
To gain even further coverage in the first half of 2022.
Medicare front with the recent addition of Cigna, we are now at 15% we have submitted all of our Medicare bids. The three large Medicare claims as you know our humana.
Caremark silver script and United is AARP.
Securing those three plans with grow our Medicare coverage to greater than 80%.
We expect to learn about Medicare throughout the course of 2022.
We are hopeful that we can actually see some wins also within the first half of this year, which would be really important.
As I stated earlier, our current Medicare rejection rate is about 70%. So we've been winning one or two of those big Medicare plans would help a prescription fulfillment rates.
Great. Thanks for taking my questions.
Sure.
Our next question comes from Frank <unk> with Oppenheimer. Your line is open.
Alright, Thanks for taking my question. So just just to hit on sorry.
<unk> had been touched on but.
On the gross to net side I understand the patient assistant program, but.
It seems like based on the scripts and the revenues and what you mentioned there in terms of the whack gross to net discounts.
What happened in the fourth quarter that maybe made it.
I understand that wins on the commercial side and the Medicare side will help but why is there a reason that it got worse in the fourth quarter in terms of the gross to net versus the third quarter or second quarter.
One of them.
I'll provide a little bit of color on the Copay assistance program, then perhaps Mary can jump in.
With some additional insight but Frank.
The issues were.
The co pay program is that as we're securing more coverage that's great is allowing more scripts to get filled.
For the health plans that we don't have coverage.
In the fourth quarter, we science on larger number of prescriptions and we.
To patients.
No benefit from their health insurance, which means that those buy downs on our co pay program, where higher rate those are patients that were buying down from $485 WAC.
Two a 60 dollar acquisition fee and so it was that represented a larger percentage of prescriptions filled in the fourth quarter that provided that put more pressure on the gross to net.
Hence why it's so important that we've seen the growing coverage that we have.
In the first quarter.
Which will allow going forward more of those scripts to be covered by the patient's insurance and fewer of those scripts have to go through our copay assistance program.
So that's on the copay card.
Hand, it over to you.
Just any additional color you want to provide.
Around rebates or anything else.
That's exactly right Todd it moved.
Both the increase in the number of units going to the copay card and a higher percentage.
I'd say overall prescriptions that were filled in that manner, which is really what's driving that Frank.
Okay, but if we just look at the 22460 scripts that you mentioned and $1 2 million just a quick back of the envelope.
That's around $53 I am just wondering is it like almost all.
Scripts were filled with the co pay assistant programs.
It's the largest portion of that business. So I wouldn't say, it's almost all but the largest portion of that business.
Okay understood and then on the I guess, just lastly on that side as these things are going up is how important is the Medicare wins for the gross to net.
Or is commercial here, if we can get Cvs caremark soon and that's pretty much where we want to ultimately be or just just trying to get a better feel of the timing as to when.
These gross to net issues kind of yes.
Play themselves out.
Sure.
On the Medicare front.
I would think of Medicare is more about opening up.
Additional demand fulfillment for the product because their patients from a Medicare they are not eligible to use our copay assistance program. So Medicare is really about allowing more prescriptions to be written rote and filled written and filled rather for Medicare patient population the improvements in gross and net will come onto commercial <unk>.
Syed and has regained more health plans like the one we just had with United those patients now have a benefit through their insurance that will pay for sugar. So if they do use the co pay card. It may be the buyer co pay down from say $50 to $40. So it has a lot less of an impact on our gross to net.
So think of growing.
<unk> coverage helps to reduce the gross to net pressure from the copay card growing Medicare coverage.
More about doctors being able to write prescriptions filled for Medicare patients.
Perfect that's helpful and then.
Just to make sure here in terms of the duration of one script can you just remind us how long that can last a patient.
Many flares that can cover.
Yes.
Patients are probably successfully treating at least a couple of players with a single prescription.
Totally we hear feedback that our user I service for a few days of October we could treat a player then the reserve the rest of the medication in the volatile for the next time that they have a full year.
Okay, great. Thank you.
Our next question comes from Chris Howerton with Jefferies. Your line is open.
Hi, Good morning, Thanks again for taking another question is pretty rich discussion, thus far particularly on the commercial side.
I guess just to follow up on those previous line of questioning with respect to that.
Can you give us some sense in terms of how long a patient is on the co pay assistance program.
Have you been successful in converting.
Patients or I guess, maybe what is the success rate of converting those patients to paying customers at this point.
If you could answer that and then the second question I would have would be for K P. I owe one too.
Just curious if you could give us some more information on what those pre IMD activities are in terms of gating procedures, whether it's with respect to toxicology or CMC. Thank you.
Chris I'll answer your questions about the patient assistance program, and then hand, it over to Ken to talk about the <unk>.
CPI one two preclinical work so.
Remember this is an acute therapy, that's used to treat jai for worse for the most part.
It's not a situation with <unk>.
Patients are typically refilling a prescription every month.
And therefore once their insurance covers the product from.
From one month from co pay assistance to next month under the patient's insurance.
That hasn't been said if a patient goes back for a refill and I think we've stated before that we think most patients will probably go on average about two prescriptions a year.
In the case of United Health Care for example.
Script fulfilled in the fourth quarter.
And when we were not on formulary and there was another benefit for that patient.
As of March of this year.
And going forward of that patient goes back and now to get a refill.
United patient goes back to get a refilling our surface that will be covered by the patient's insurance and the burden of the copay assistance program will be a lot less so it will improve as we said over time it does.
As required patients to be going back into the refill if they are already on therapy.
Like we said, we expect that could be about to prescription fills per calendar year.
I'll hand, it over to you to answer the questions on <unk>.
Sure.
On the development program for <unk> one to.
The activities, we're doing now are fairly straightforward.
Optimizing the manufacturing process demonstrating its reproducibility.
Optimizing the analytical techniques to control the product, but I will say at the secret total stage in its final product stage.
We'll soon be initiating a GOP toxicology study.
Topco ocular study to look at.
A number of doses of <unk> two to provide the safety.
Coverage for our phase.
Two three slash phase II III trial, we're finalizing the.
The protocol for that trial working with numerous key opinion leaders that are experts in this field.
So everything is moving along.
<unk>.
We had planned we haven't run into.
Any major issues.
Moving forward towards the 90, hopefully the third quarter of this year.
Okay.
If I if I may be able to just go back to I see this I appreciate the answers so far thank you very much but just going back to I see this really briefly maybe another way to ask the question is.
Are you seeing repeat prescription behavior affected by the lack of fills in other words, how are you messaging to physicians, Hey, I know that 50% of your scripts aren't getting filled now, but keep writing them because it will get better I guess, that's like my concern.
Yes, good question, Chris and so the Salesforce has targeting tools so they know exactly.
What.
At a physician level, what's the mix of insurance within that practice and so we can start now being very targeted for example, unitedhealthcare whammy and go through practices.
Have a lot of patients enrolled within United healthcare to positively message. This new win in addition to their formulary just like we can do with ESI and other major health plans, where we have been added to formulary. So I would say think of the physician messaging about being very targeted in those practices, where we know we've got.
Good coverage.
Where they have.
A high percentage of the health plans for which we have good coverage. So we can assure that a lot of those scripts get filled in and those other practices.
Maybe there's less coverage.
We obviously have our co pay assistance program that we're using to try and make sure that those doctors can get their patients on <unk>.
Okay, all right well I really appreciate that follow up thanks again.
Sure.
Our next question comes from <unk>, Chen with H C. Wainwright Your line is open.
Thank you for taking my question.
<unk> is driven by multiple etiologies.
Does the up.
Coming phase II slash the trial to recruit patients only from.
From a group of patients with similar etiologies.
Good morning, this is Kim.
Yes, our clinical trial has been designed really focusing on pte. These from in the underlying.
Etiology.
As he said there are a variety of them. So it's really as we sometimes call a trial for all covers so the primary.
Entry criteria will be the presence of a persistent corneal epithelium defect and then we will.
Include information from the clinician and all the case report forms in terms of what the underlying etiology ads.
Is that for you.
Yeah. So you believe the multifactorial mechanism of action of the Kennedy should be able to address all of the underlying ideology.
Yes, yes, we do that that's our working hypothesis and we've shown in a variety of different animal models that it works from different salts and because of the nature of the product being a secret <unk> carries with it a number of different biologic.
Molecules that have a lot of different effects. So in general we're attacking this problem from multiple directions, we fail.
We should be able to treat the vast majority of these pieces.
PCE data, regardless of their ideology and the key for us will be on.
Making sure we exclude those patients that can't pay or no matter what.
And we've worked a lot with kols, so a certain group of patients.
Yeah.
They are cornerstones of worn out.
You can't break it back, but besides that I think we feel very confident we can treat the majority of these patients.
Got it.
And do you still expect to report preclinical data from the Teekay I candidate.
Very soon.
Well.
These studies are ongoing they take a little bit of time and what we've said publicly is we.
We will be reporting probably throughout the year as we get.
Essential data. So we're hoping this year to be able to report a couple of sets of data as they come off.
Out of the.
Out of the studies.
Okay. Thank you.
As a reminder to ask a question. Please press Star then one.
Our next question comes from Tim Chiang with Northland Securities. Your line is open.
Oh, Thanks, Hey, Mark Hey, Todd.
It seems like you're definitely.
Feeling the effects of the.
The Couponing program and then a lot of these insurance companies clamping down.
As well as Youre waiting for Cvs Caremark to add you to the formulary on I assume is and I'm sort of wondering.
Is there a is there a triggering point in terms of when you think I assume this net sales are actually going to start to rise meaningfully this year.
That was my first question and then.
I think with this this.
I had a quick follow up question for Kim on Kpis.
But one too.
Tim I'll answer your first question and then let you ask your second question of Kim.
We expect meaningful growth in service revenues to begin in the first half of this year. So you're getting this United healthcare win was really really important that gets us well on our path.
To not only accelerating prescription growth with net revenue growth as well.
We anticipate also learning about Cvs caremark in the first half of the year, which would be another really important win.
And then as I said earlier, we expect our Medicare part D wins to come throughout the year. So we expect impact from the first half of this year.
To see further accelerations in both volume as well as net revenue.
Maybe just a follow up to that I mean, how much of an impacted COVID-19 have on your launch.
Of a soup is because obviously I guess there are now face to face.
Interactions with your sales force.
And the physician base.
Do you think that will matter this.
This year.
Yeah, I think it will help a lot now that most of our interactions are face to face.
<unk> had an impact on.
Almost every launched his occurred over the last two years.
Paper published on this high acuity looked at I believe it was in the ballpark of about 48 drug launches that occurred during the pandemic and there were significant impact on almost every one of those launches now that.
Hopefully the worst is behind us and practices are open and patients are returning in most of our sales interactions or face to face. We also expect that will be a positive catalyst this year.
Okay.
Okay and Tim.
My question on.
K P I O <unk>.
Obviously, there's been what seven or eight patients dosed and what sort of side effects to these patients experience.
Post dosing.
Yes.
The first clinical trial, there were no really significant adverse events one patient.
Claimed.
Some irritation or discomfort and you have to remember these patients have.
In many cases, the denuded cornea, so you might expect but they missed the initial trial, we didn't see any really worrisome side effects will of course be looking at that in the upcoming trials, but we don't see any liabilities in terms of tolerability.
I haven't seen any anything that would look like.
Toward effect, that's being seen in these patients.
And thats not to be unexpected you know where it is.
As human bio molecules that are being applied to a human so.
There is nothing there.
It has not been exposed to at one point.
Sure.
Okay, great. Thanks Kim.
At this time I'm showing no more questions in the queue, Mr. Ricky I'll turn the call back to you.
Well, thank you very much and thanks, everyone for joining us this morning.
We continue to progress our in line products and are very excited about that.
Pipeline and the studies that we have ongoing right now with our TK I as well as our expectation to be able to start.
Late stage clinical trial for <unk> two.
By the end of the year and we look forward to updating everyone. As we continue to make progress. Thanks again for your time this morning.
Okay.
This concludes the program you may now disconnect everyone have a great day.
Yes.
Yes.
Yes.
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Thank you.
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