Q1 2022 Ocular Therapeutix Inc Earnings Call

May 9, 2022

Operator: Good afternoon, ladies and gentlemen. Thank you for standing by. And welcome to the Ocular Therapeutix first quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode.

Good afternoon, ladies and gentlemen, thank you for standing by and welcome to the ocular Therapeutics first quarter 2022 earnings conference call at.

At this time all participants are in a listen only mode.

Operator: Later, we'll conduct a question and answer session, and instructions will follow at that time. It is now my pleasure to introduce Donald Notman, Chief Financial Officer of Ocular Therapeutix. Please go ahead.

Later, we will conduct a question and answer session and instructions will follow at that time.

It is now my pleasure to introduce Donald <unk>, Chief Financial Officer of <unk>.

<unk> Therapeutics. Please go ahead Sir.

Donald Notman: Thank you, operator. Good afternoon, everyone, and thank you for joining us on our first quarter 2022 financial results and business update conference call. This afternoon after the close, we issued a press release providing an update on the company's product development programs and details of the company's financial results for the quarter ended March 31, 2022. The press release can be accessed on the Investors portion of our website at investors.ocutx.com.

Thank you.

Greater good afternoon, everyone and thank you for joining us on our first quarter 2022 financial results and business update conference call. This afternoon. After the close we issued a press release, providing an update on the company's product development programs and details of the company's financial results for the quarter ended March 31 2020 to.

The press release can be accessed on the investors portion of our website at investors <unk>, TX Dot com.

Donald Notman: Leading the call today will be Antony Mattessich, our President and Chief Executive Officer, who will provide an update on the course of progress at Dextenva and a summary of our corporate development. Also speaking on the call today will be Dr. Michael Goldstein, our President, Ophthalmology, and Chief Medical Officer, who will give an update on our clinical developments and pipeline. Following Michael's remarks, I will provide an overview of the financial highlights for the quarter before turning the call back over to Anthony for a summary and question. For Q&A, we'll be joined by Chris White, our Chief Business Officer, and Scott Corning, our Senior Vice President.

Leading the call today will be Anthony Mato <unk>, our president and Chief Executive Officer, who will provide an update on the commercial progress of DEXTENZA and a summary of our corporate developments also speaking on the call today will be Dr. Michael Goldstein, our president Ophthalmology, and Chief Medical Officer, who will give an update on our clinical developments and pipeline.

Following Michael's remarks, I will provide an overview of the financial highlights for the quarter before turning the call back over to Anthony for a summary and questions for Q&A, we'll be joined by Chris.

Chief Business Officer, and Scott Corning, our senior Vice President commercial.

Donald Notman: As a reminder, on today's call, certain statements we will be making may be considered forward-looking for the purposes of the Private Securities Litigation Reform Act of 1995. In particular, any statements regarding our regulatory and product development plans, as well as our research activities and our financial projections, our forward-looking statements. These statements are subject to a variety of risks and uncertainties that may cause actual results to differ from those forecast, including those risks described in our most recent quarterly report filed this afternoon with the SEC and our annual report on Form 10-K filed on February 28. I will now turn the call over to...

As a reminder, on today's call certain statements, we will be making may be considered forward looking.

The purposes of the private Securities Litigation Reform Act of $19 95.

In particular any statements regarding our regulatory and product development plans as well as our research activities.

All projections are forward looking statements. These.

These statements are subject to a variety of risks and uncertainties.

May cause actual results to differ from those forecasted including those risks described in our most recent quarterly report filed this afternoon with the SEC and our annual report on Form 10-K filed on February 28, with the SEC.

I'll now turn the call over to Anthony.

Antony Mattessich: Thank you, Donald, and welcome, everyone, to the Ocular Therapeutix First Quarter 2022 Earnings Report. It has been a quick turnaround following our year-end call held a little more than two months ago. We continue to make good progress executing on our commercial efforts and with the development of our leading ophthalmology pipeline. Beginning with Extensa, we achieved $12.5 million in net product revenues and 87% growth over the comparable quarter in 2021. Extensa's performance was impacted in the quarter by the surge in COVID Omicron variant and its sub-variant, AB.2, for their work on the slow cataract procedures and challenged ASC and HOPD staffing primarily in the month of January. Sales of in-market billable units rebounded starting in February, and in March we recorded approximately 10,500 inserts sold to ASCs and HOPDs in the calendar month, easily surpassing the old record of 9,976 set last November.

Thank you Paul and welcome everyone to the ocular Therapeutics first quarter 2022 earnings report.

And there's been a quick turnaround following our year end call held a little more than two months ago. We continue to make good progress executing on our commercial efforts and with the development of our leading ophthalmology pipeline.

Beginning with DEXTENZA, we achieved $12 5 million in net product revenues and 87% growth over the comparable quarter in 2021.

Thanks, Tien just performance was impacted during the quarter by the surge in Covid Omicron Varian and its sub variant AED two.

Slow cataract procedures and challenged ASE and <unk> staffing primarily in the month of January .

Sales of in market billable units rebounded starting in February and in March we recorded approximately 10500 insert sold ASE and <unk> and the calendar months easily surpassing the old record of 9976 set last November .

Antony Mattessich: Despite the ongoing staffing challenges, we are expecting a generally improving environment for the growth of DexVenza in 2022. First, we are anticipating a tailwind from increased cataract surgery volumes as the backlog of delayed surgeries begins to enter the market. We think about it this way.

Despite the ongoing staffing challenges, we are expecting a generally improving environment for the growth of <unk> in 2022.

Antony Mattessich: There were approximately 4.2 million cataract procedures in 2019 forecasted to grow at a rate of between 3 to 5% annually, according to MarketScope research. This number dropped to approximately 3.6 million in 2020 at the height of COVID. While MarketScope estimated that volumes did bounce back in 2021 to an estimated 4.4 million cataract procedures, we believe the data still suggests the potential goals of at least 800,000 backlog procedures. We anticipate that this volume will work its way back into ASCs and HOPDs over the coming few quarters and contribute to Dextenza's growth.

First we are anticipating a tailwind from increased cataract surgery volumes as the backlog of delayed surgeries begins to enter the market we.

We think about it this way there were approximately $4 2 million cataract procedures in 2019 forecasted to grow at a rate of between 3% to 5% annually. According to market scope research.

This number dropped to approximately $3 6 million in 2020 at the height of Covid.

While market scope estimated volume did bounce back in 2021 to an estimated $4 4 million cataract procedures. We believe the data still suggests the potential bowls of at least 800000 backlog procedures.

We anticipate that this volume of work its way back into ASE and <unk> over the coming few quarters and contribute to the extensive growth.

Antony Mattessich: Second, we are entering 2022 with greater clarity on DexGenza's reimbursement with pass-through payment status through 2022, and then, very importantly, eligibility for separate payment, beginning in 2023 and potentially beyond in ASCs through the Non-Opioid Pain Management Supply Provision. In addition, physician reimbursement for the insertion of Dexfenza is now available under our Category 1 code, became effective January 1, 2022, ensuring more reliable payment to physicians for dextenza placement across all payer types and in all settings of care.

Second we are entering 2022 with greater clarity on DEXTENZA reimbursement with pass through payment status through 2022, and then very importantly eligibility for separate payment.

Beginning in 2023 and potentially beyond an ASC with a non opioid pain management supply provisions.

In addition physician reimbursement for the insertion of DEXTENZA is now available under our category one code.

It became effective January one 2022, ensuring more reliable payment to physicians for DEXTENZA placement across all payer types and in all settings settings of care.

Antony Mattessich: We believe the easier we can make it for physicians to provide the extent of their patients, the better we will do in growing that extensive franchise. Simplifying and ensuring reimbursement is key to accomplishing this and having this clarity is a huge advantage for Ocular of the Day. Third, in 2022, we are expanding our commercialization of Dextenza into the office setting. I have long stated that a key strategic goal of a company is to expand our presence into ophthalmology and optometric offices by providing customers with numerous innovative buy and build products, including those developed internally and potentially those licensed from other companies in the future.

We believe the easier we can make it for physicians to provide the extended or their patients the better we will do in growing that extend the franchise.

Simplifying ensuring reimbursement is key to accomplishing this and having this clarity is a huge advantage for ocular today.

Third in 2022, we are expanding our commercialization of DEXTENZA into the office setting.

Long stated that a key strategic goal of the company is to expand our presence in the ophthalmology and optometry offices by providing customers with numerous innovative buy and bill products, including those developed internally and potentially those licensed from other companies in the future.

Antony Mattessich: The FDA's approval of Dextenza for the treatment of ocular itching associated with allergic conjunctivitis, an indication that it is treated in the ophthalmology and optometric office environment. It gives us the opportunity to take the first step in doing that.

The fda's approval of DEXTENZA for the treatment of ocular itching soda with origin associated with allergic conjunctivitis and indication that is treated in the ophthalmology and optometry office environments gives us the opportunity to take the first step in doing that.

Antony Mattessich: While the strategic potential of the office environment is exciting, it represents a new space for ocular therapeutics with a unique set of challenges and opportunities. You have been able to learn a lot from the launch of Xtend in a surgical setting and found that the primary barriers of entry were the logistics associated with ASC and HOPD administration. We believe launching into the ophthalmology and optometric offices will be analogous but with different drivers that require bespoke solutions.

While the strategic potential of the August environment is exciting and represents a new space for ocular therapeutics with a unique set of challenges and opportunities.

<unk> been able to learn a lot from the launch of DEXTENZA in the surgical setting and found that the primary barriers of entry where the logistics associated with ASC and <unk> administration.

We believe launching into the ophthalmology and optometry offices will be analogous, but with different drivers that required bespoke solutions.

Antony Mattessich: We recently hired a VP of sales with over 20 years' experience successfully selling buy-and-build products to office-based physicians to lead this initiative. We have established a separate office-based business unit consisting initially of four new key account managers supported by the field reimbursement team who will be tasked exclusively with selling into the office setting.

We recently hired a VP of sales with over 20 Years' experience successfully selling Brian build products for office based physicians to lead this initiative.

We have established a separate office based business unit, consisting initially of four new key account managers.

Courted by the field reimbursement team, who will be tasked exclusively with selling into the office setting.

Antony Mattessich: We anticipate these efforts will have some impact in 2022, but more materially in 2023 and beyond. Shifting to our pipeline, we have four clinical programs. OTX-TKI for wet AMD and other retinal diseases, OTX-TIC for glaucoma, and OTX-DED and OTX-CSI for the treatment of dry eye disease.

We anticipate these offers these efforts will have some impact in 2022, but more materially in 2023 and beyond.

Shifting to our pipeline, we have four clinical programs.

PKI for wet AMD and other retinal diseases.

For glaucoma, and <unk>, <unk> and <unk> CSI for the treatment of dry eye disease.

Antony Mattessich: Each of these programs is being developed to produce a highly differentiated, buy-and-bill, ophthalmology specialty product with associated procedure code that addresses key unmet needs in their respective disease states. In the quarter, we took major steps forward with OTX-TKI, where we completed enrollment in a Phase I study in the U.S., and with OTX-TIC, where we began dosing patients in our Phase II program. We anticipate having interim data for the OTX-TKI U.S. trial in the third quarter of this year. We are also happy to report that our collaboration with Mazak Bios.., has yielded a lead compound for our complement inhibitor program for the treatment of dry AMD.

Each of these programs is being developed to produce a highly differentiated buy and bill ophthalmology specialty product with associated procedure code that addresses key unmet needs in their respective disease states.

In the quarter, we took major steps forward with <unk> PKI, where we completed enrollment in our phase one study in the U S with Ots GIC, we began dosing patients in our phase II program.

We anticipate having interim data for the <unk> PKI U S trial in the third quarter of this year.

We're also happy to report that our collaboration with <unk> Biosciences has yielded a lead compound for a complement inhibitor program for the treatment of dry AMD.

Antony Mattessich: We believe that this compound has the potential to be best in class in the complement space with targeted dosing every three to four months. Our collaboration with Affymed Therapeutix has also advanced during the first and second quarters of this year. In January, Affymed dosed its first patient in a real-world-setting study being conducted at the Boao Super Hospital in Hainan Province, China. The trial is designed to evaluate the safety and efficacy of Dextenza for the treatment of ocular inflammation and pain following cataract surgery, and is intended to support and potentially accelerate efforts to register Dextenza in China. More recently, Alphabet announced in April that Dexenza was approved in Macau, China.

We believe that this compound has the potential to be best in class in the complement space with targeted dosing every three to four months.

Our collaboration with <unk> Therapeutics has also advanced during the first and second quarters of this year.

In January <unk> dosed, its first patient in a real world setting study being conducted at the Bowl all Super Hospital in Hainan Province, China.

Trial is designed to evaluate the safety and efficacy of DEXTENZA for the treatment of ocular inflammation and pain. Following cataract surgery and is intended to support and potentially accelerate efforts through registered extends in China.

More recently <unk> announced in April the DEXTENZA was approved in Macau China.

Antony Mattessich: To date, Ocular has earned a total of $3 million in milestone and clinical support payments under the AFSCMENT agreement. In the quarter, we also shared updates on our programs at a number of medical, at this year's American Society of Cataract and Refractive Surgery Annual Meeting held on April 22 through 24. We shared 15 presentations, including seven company-sponsored studies and eight investigator-initiated clinical trials of Dextenza as well as OTX-BED. These presentations included real-world data evaluating the demographics and safety profile of the first 10,000 Dextenza inserts placed.

To date ocular has earned a total of $3 million in milestone and clinical support payments under the estimate agreement.

In the quarter, we also shared updates on our programs at a number of medical meetings.

At this year's American Society of Cataract and refractive surgery annual meeting held on April 22 through 24.

Shared 15 presentations, including seven company sponsored studies.

Investigator initiated clinical trials of DEXTENZA as well as OTI at CEB.

These president presentations included real World data evaluating the demographics and safety profile of the first 10000 DEXTENZA inserts plates.

Antony Mattessich: This was the largest scientific presence we have ever had at a major medical meeting, and I believe it highlights the medical community's significant interest in our Ocular Surface Program. We also had a large presence at this year's Association for Research in Vision and Ophthalmology annual meeting held. May 1st through 4th, 2022.

This was the largest scientific presence we've ever had at a major medical meeting and I believe it highlights the medical community is significant interest in our ocular surface programs.

We also had a large presence at this year's association for research in vision and Ophthalmology annual meeting held.

May <unk> 2022.

Antony Mattessich: This is one of the major ophthalmic research conferences and Ocular made multiple presentations highlighting exciting pipeline, preclinical, and clinical data. Looking ahead into 2022, we plan to provide an important interim update for our U.S.-based clinical trial of OTX-TKI for the treatment of wet AMD in the third quarter. WebAMD represents a potentially large market opportunity for Ocular and OTX-TKI offers a new mechanism of action with compelling durability data.

This is one of the one of the major ophthalmic research conferences, and ocular made multiple presentations highlighting exciting pipeline preclinical and clinical data.

Looking ahead into 2022, we plan to provide an important interim update for our U S based clinical trial of <unk> for the treatment of wet AMD in the third quarter.

<unk> represents a potentially large market opportunity for ocular and <unk> PKI offers a new mechanism of action with compelling durability data.

Antony Mattessich: Lastly, before turning the call over to Mike to discuss our pipeline in more detail, I wanted to take the opportunity to share, for the first time, annual revenue guidance for 2022. We have historically not provided guidance due to the unpredictable impact of the COVID pandemic on elective surgery volumes. To remind you, nearly all of our sales to date have come from cataract surgeries, which are considered elective surgeries in the ASC and HOPD setting.

Lastly, before turning the call over to Mike to discuss our pipeline in more detail I wanted to take the opportunity to share for the first time annual revenue guidance for 2022.

We have historically not provided guidance due to the unpredictable impact of the Covid pandemic on elective surgery volumes.

To remind you nearly all of our sales to date have come from cataract surgeries, which are considered elective surgeries and the ASC and <unk> setting.

Antony Mattessich: We experienced a near total shutdown in those cataract surgeries in the second quarter of 2020 due to the initial surge in COVID cases. And more recently, we experienced a significant disruption in December of last year and January of this year due to the Omicron.

We experienced a near total shutdown in those cataract surgeries in the second quarter of 2020 due to the initial surge in Covid cases, and more recently, we experienced a significant disruption in December of last year and January of this year due to the <unk> search.

Antony Mattessich: Going forward, we are assuming that closures of ASCs and HOPDs to elective surgeries will no longer be as significant a risk. However, we expect the indirect effects of COVID will be felt for at least the remainder of 2022, as the labor shortage has left ASCs and HOPDs short-staffed. Time when demand for surgeries is rising. Our challenge in growing Dextenza to its full potential in a surgical setting is to go deeper into established accounts by driving adoptions by more surgeons and moving into new payer types, as we also set up new accounts in ASDs and HOPDs where Dextenza is not currently available.

Going forward, we are assuming the closures of ASC HOV DS to elective surgeries will no longer be as significant for risks.

However, we expect the indirect effects of Covid will be felt for at least the remainder of 2022 at the labor shortage has left ASE and <unk> short staffed.

At a time when demand for surgeries is rising.

Our challenge in growing DEXTENZA to its full potential in the surgical setting to go deeper into established accounts by driving adoptions by more surgeons and moving into new payer types.

As we also set up new accounts in <unk>, and <unk>, where DEXTENZA is not currently available.

Antony Mattessich: All of these growth levers, and the required ocular personnel, to work closely with administrative and surgical support staff to help them institute new policies, procedures, and protocols to allow for the use of Dexemba. With a deep understanding of the market environment and an expectation of gradual resolution to the macroeconomic effects of COVID, we believe we have adequate line of sight to project forward sales which extends it in the surgical environment. Accordingly, we are now guiding total annual net product revenue of $55 to $60 million for 2022. This guidance represents anticipated annual growth of between 26% to 38%.

All of these growth levers required ocular personnel.

To work closely with administrative and surgical support staff to help them instituting new policies procedures procedures and protocols to allow for the use of DEXTENZA.

With a deep understanding of the market environment, and an expectation of gradual resolution to the macroeconomic effects of Covid. We believe we have adequate line of sight to project forward sales of DEXTENZA in the surgical environment.

Accordingly, we are now guiding total annual net product revenue of $55 million to $60 million for 2022.

This guidance represents anticipated annual growth of between 26% to 38%.

Antony Mattessich: Importantly, this guidance assumes growth will be almost entirely driven by sales of Dixenza in the surgical setting, and therefore excludes any material contribution from sales of Dixenza in the office setting. We believe the office setting represents a significant source of long-term... Given the early stages of this initiative, we have excluded any material contribution in this guidance.

Importantly, this guidance assumes growth will be almost entirely driven by sales of extended in the surgical setting and therefore excludes any material contribution from sales of DEXTENZA in the office setting.

We believe the office setting represents a significant source of long term upside.

But given the early stages of this initiative, we have excluded any material contribution in this guidance.

Dr. Michael Goldstein: With that, I'd now like to hand the call over to our President of Ophthalmology and Chief Medical Officer, Dr. Michael Goldstein, who will provide an in-depth look at our pipeline. Thanks, Antony. Let me begin with an update on our back-of-the-eye program, OTX-TKI. In February, we presented an update from the ongoing Australian-based Phase 1 trial of OTX-TKI for the treatment of wet AMD at the Angiogenesis, Exudation, and Degeneration 2022 meeting. As background, this study was designed to assess the safety and tolerability of OTX-TKI and assess preliminary biological activity. Our goal for this study was to answer the question, can a tyrosine kinase inhibitor administered intravitrally as a monotherapy show biological activity in wet AMD?

With that I'd now like to hand, the call over to our president of Ophthalmology and Chief Medical Officer, Dr. Michael Goldstein, who will provide an in depth look at our pipeline.

Dr. Michael Goldstein: We believe the best way to show this is to start with patients with active subretinal and or intraretinal fluid and follow them to see if OTx TKI can eliminate that fluid. This is the population that was enrolled in this Australian study. The data we shared on angiogenesis has been encouraging, and we found a clinically meaningful decrease in intraretinal and or subretinal fluid in many subjects and in some subjects, all the fluid being treated.

Thanks, Anthony let me begin with an update on our back of the eye program <unk> PKI.

Dr. Michael Goldstein: In addition, extended duration of activity of six months or more was observed in over 60% of subjects across all cohorts and over 80% of subjects in Cohort 3A, the 600-microgram cohort, which we believe could represent a compelling drug product profile. We are also currently running a U.S.-based Phase I clinical trial that is now fully enrolled. This is a U.S.-based, multi-center, prospective, randomized controlled trial that is evaluating a 600-microgram OTX-TKI dose in a single implant containing exitinib compared to a flibrizep administered every eight weeks in subjects previously treated with anti-VEGF therapy.

In February we presented an update from the ongoing Australia based phase one trial of <unk> for the treatment of wet AMD.

At the angiogenesis Exudation and degeneration 2022 meeting.

As background. The study was designed to assess the safety and Tolerability.

PKI.

First preliminary biological activity our goal for this study was to answer the question.

<unk> tyrosine kinase inhibitor.

Administered intramuscularly as a monotherapy show biological activity in wet AMD.

We believe the best way to show this is to start with patients with active sub retinal <unk> inter retinal fluid and follow them to CFO , TX <unk> I can eliminate that fluid.

This is the population that was enrolled in this Australian study.

Data, we shared at angiogenesis has been encouraging and we found a clinically meaningful decrease in inter retinal <unk> sub retinal fluid and many subjects and in some subjects all of the fluid being treated.

In addition extended duration of activity of six months or more was observed in over 60% of subjects across all cohorts and over 80% of subjects in cohort three the 600 microgram cohort, which we believe could represent a compelling drug product profile.

We are also currently running a U S based phase one clinical trial that is now fully enrolled.

A U S based multicenter prospective randomized controlled trial is evaluating a 600 microgram <unk> PKI dose and a single implant containing exit NIM compared to our flavors that administered every eight weeks and subjects previously treated with anti VEGF therapy.

Dr. Michael Goldstein: The clinical trial is being conducted under an exploratory IND application at five sites targeting a total of 20 randomized subjects with a three-to-one randomization weighted toward OTX-TKI-treated subjects. This trial is designed to assess the safety, durability, and tolerability of OTX-TKI and to assess preliminary biological activity in subjects by measuring anatomical and functional changes of the retina.

The clinical trial is being conducted under an exploratory IMD application at five sites targeting a total of 20 randomized subjects for the three to one randomization weighted towards <unk> treated subjects.

This trial is designed to assess the safety durability and tolerability of <unk> PKI and to assess preliminary biological activity in subjects by measuring anatomical and functional changes of the retina.

Dr. Michael Goldstein: Our goal in this trial is to answer the question of how long can a single 600 microgram OTX TKI implant containing Exit Nib keep subjects dry without the need for retreatment? We look forward to reporting interim six-month data in the third quarter of this year. We believe achieving a similar response rate and durability to that seen in the Australian-based study would represent a compelling drug product profile. Moving to our glaucoma program, OTX-TIC, we recently presented data from the completed U.S.-based phase one clinical trial evaluating the safety, biological activity, durability, and tolerability of OTX-TIC in subjects with primary open-angle glaucoma or ocular hypertension at the Glaucoma 360 meeting held on February 11th.

This trial is to answer the question of how long kind of singles to cover microgram, <unk> implant containing exiting them keep subjects dry without the need for re treatment.

We look forward to reporting interim six month data in the third quarter of this year.

We believe achieving a similar response rate and durability to that seen in the Australian based study would represent a compelling drug product profile.

Moving to our glaucoma program <unk>, we recently presented data from the completed U S. Based phase one clinical trial evaluating the safety biological activity durability and Tolerability of <unk> in subjects with primary open angle glaucoma or ocular hypertension glaucoma 360 meeting held on February 11th.

Dr. Michael Goldstein: We believe the phase one data presented highlights OTX-TIC's ability to provide a clinically meaningful decrease in interocular pressure, or IOP, comparable to Travacrost as early as two days following administration and for as long as six or more months with a single implant while preserving corneal health, representing its potential for a unique and differentiated drug product profile. With this data in hand, we've initiated and are actively dosing subjects in a U.S.-based Phase II clinical trial.

We believe the phase one data presented highlights <unk> ability to provide a clinically meaningful decrease in inter ocular pressure or IOP.

Terrible to travel as early as two days following administration and for as long as 616 or more months with a single implant, while preserving corneal health representing its potential for our unique and differentiated drug product profile.

With this data in hand, we have initiated and are actively dosing subjects in a U S. Based phase II clinical trial. This trial is a prospective multicenter randomized controlled trial evaluating the safety tolerability and efficacy of <unk> for the treatment of patients with primary open angle glaucoma.

Dr. Michael Goldstein: This trial is a prospective, multicenter, randomized-controlled trial evaluating the safety, tolerability, and efficacy of OTX-TIC for the treatment of patients with primary open-angle glaucoma or ocular hypertension. The trial will enroll approximately 105 subjects in three different arms, 35 subjects per arm, randomized one to one to one, in which subjects will receive a single OTX-TIC implant containing a 5-microgram or 26-microgram dose of Travacrost compared with an implant of Durista. The 5-microgram arm is utilizing a fast-degrading implant, while the 26-microgram arm is utilizing a standard implant.

Or ocular hypertension.

The trial will enroll approximately 105 subjects in three different arms 35 subjects per arm randomized one to one to one.

Which subjects will receive a single <unk> TICC implant.

Turning a five microgram or 'twenty, six microgram dose of travoprost compared to compared with an implant of duress.

Five microgram arm is utilizing a fast integrating implied 26 microgram arm is utilizing a standard implants.

Dr. Michael Goldstein: The trial will observe the change in diurnal IOP changes from baseline at 8 a.m., 10 a.m., and 4 p.m. at 2, 6, and 12 weeks and follow duration of IOP response over time. Regarding our ocular surface disease programs, we remain committed to the development of our two dry eye programs. OTX-DED, a low-dose intercalicular insert of preservative-free dexamethasone for the short-term treatment of the signs and symptoms of dry eye disease, and OTX-CSI for the chronic treatment of patients with dry eye disease.

Trial, we observed the change in dire at all Iot changes from baseline at eight am 10 am and four PM at two six and 12 weeks and file duration of IOP response over time.

Dr. Michael Goldstein: For OTX-DED, we're developing an optimized clinical regulatory and manufacturing plan. This plan is expected to include some additional improvements to the product's formulation and the development of an improved vehicle comparator. For OTX-CSI, we're doing some reformulation work to improve retention and are also developing an appropriate placebo comparator. I would now like to turn the call back over to Donald to review our first quarter financial results. Thanks, Mike. Net revenue, which includes both gross product revenue, net of discounts, rebates, and returns, which the company refers to as Total Net Product Revenue.

Regarding our ocular surface disease programs, we remain committed to the development of our two dry eye programs Otf's DVD low dose <unk> molecular and sort of preservative free dexamethasone for the short term treatment of the signs and symptoms of dry eye disease, and <unk> CFO for the chronic treatment of patients with dry.

<unk>.

<unk>, we are developing an optimized clinical regulatory and manufacturing plan. This plan is expected to include some additional improvements to the product formulation.

And the development of an improved vehicle comparator.

For <unk> CSI, we are doing some reformulation work to improve improve retention and are also developing an appropriate placebo comparator.

I would now like to turn the call back over to Donald to review, our first quarter financial results.

Thanks, Mike.

Net revenue, which includes both gross product revenue net of discounts rebates and returns, which the company refers to as total net product revenue.

Donald Notman: Combined with collaboration, with $13.2 million for the first quarter and represented an 81% increase over the same period in 2021. Net product revenue of Dextenza in the first quarter of 2022 was $12.5 million versus $6.7 million in the comparable quarter of 2021, reflecting an approximate 87% increase. Total net revenue for the first quarter also included collaboration revenue of $0.7 million from a clinical support payment under our licensing agreement with Abbott. Research and development expenses for the first quarter were $13.1 million versus $10.9 million for the comparable period in 2021, driven primarily by an increase in unallocated expenses, predominantly unallocated personality costs, increased clinical trial costs.

Bind with collaboration revenue was $13 2 million for the first quarter and represented 81% increase over the same period in 2021.

Net product revenue of DEXTENZA in the first quarter of 2022 was $12 5 million versus $6 7 million.

In the comparable quarter of 2021.

Reflecting an approximate 87% increase.

Total net revenue for the first quarter also included collaboration revenue.

$7 million from our clinical support payment under our licensing agreement with that permit.

Research and development expenses for the first quarter were $13 1 million versus $10 9 million for the comparable period in 2021.

Driven primarily by an increase in unallocated expenses predominantly unallocated personnel costs and increased clinical trial costs.

Donald Notman: Selling and marketing expenses in the quarter were $9.1 million, as compared to $8.1 million for the same quarter in 2021, reflecting increased personnel costs associated primarily with an expansion of the commercial field. General and administrative expenses were $7.6 million for the first quarter versus $7.7 million in the comparable quarter of 2021. The company reported a net loss of $12.5 million, or a loss of $0.16 per share on a basic basis, and a loss of 22 cents per share on a diluted basis for the three months ended March 31, 2022.

Selling and marketing expenses in the quarter were $9 1 million as compared to $8 1 million.

Same quarter in 2021.

Reflecting increased personnel costs associated primarily with an expansion of the commercial field force.

General and administrative expenses were $7 6 million for the first quarter versus $7 $7 million in the comparable quarter of 2021.

The company reported a net loss of $12 5 million or.

Or a loss of <unk> 16 per share on a basic basis and a loss of <unk> <unk> per share on a diluted basis for the three months ended March 31 2022 is.

Donald Notman: This compares to net income of $3.1 million, or income of $0.04 per share on a basic basis and a loss of $0.24 per share on a diluted basis for the same period in 2021. Net loss in the first quarter of 2022 included a $7 million non-cash gain in the fair value of the derivative liability.

This compares to net income of $3 1 million for income of <unk> <unk> per share on a basic basis and a loss of 24 per share on a diluted basis for the same period in 2021.

Net loss in the first quarter of 2022 included a $7 million non cash gain in the fair value of the derivative liability associated with the company's convertible notes driven by a decrease in the price of its common stock during the quarter.

Donald Notman: Associated with the company's convertible network, driven by a decrease in the price of its common stock during the quarter, non-cash charges for stock-based compensation and depreciation and amortization were $4.8 million in the first quarter versus $3.7 million for the comparable quarter in 2021. As of May 6, 2022, the company had approximately 76.8 million shares outstanding. As of March 31, 2022, the company had $145.4 million in cash and cash equivalents, versus $164.2 million at December 31, 2021.

Noncash charges for stock based compensation and depreciation and amortization were $4 8 million in the first quarter versus $3 7 million for the comparable for the comparable quarter in 2021.

As of May six 2022, the company had approximately $76 8 million shares outstanding.

As of March 31, 2022, the company had $145 $4 million in cash and cash equivalents.

Versus $164 2 million at December 31, 2021.

Donald Notman: Based on current plans and related estimates of anticipated cash inflows from Dextenza and anticipated cash outflows from operating expenses, the company believes that cash and cash equivalents will enable the company to fund planned operating expenses, debt service obligations, and capital expenditure requirements through 2023. This CASH guidance is subject to a number of assumptions, including those related to the impact from the ongoing COVID-19 pandemic. The revenues, expenses, and reimbursement associated with Dextenza, and the pace of research and clinical development programs, among other aspects of this. I would now like to turn the call back over to Antony for some final thoughts. Thanks, Donald.

Based on current plans and related estimates of anticipated cash inflows from DEXTENZA and.

And anticipated cash outflows from operating expenses. The company believes the cash and cash equivalents will enable the company to fund planned operating expenses debt service obligations.

Capital expenditure requirements through 2023.

This cash guidance is subject to a number of assumptions, including those related to the impact from the ongoing COVID-19 pandemic, the revenues expenses and reimbursements associated with DEXTENZA.

And the pace of research and clinical development programs.

Other aspects of the business.

I'd now like to turn the call back over to Anthony for some final thoughts.

Thanks, Tom.

Antony Mattessich: So before opening the call up for questions, let me do a quick summary. The company demonstrated solid commercial performance, growing total net product revenue for Dexenza 87% over the comparable quarter of 2021. We are guiding net revenue for 2022 between $55 million to $60 million, representing approximately 26% to 38% growth year-over-year, driven predominantly by sales of Dextenza in the surgical setting. We are expanding our commercial team to address the opportunity for dextenza in the office setting as we launch our recently approved indication for itching associated with allergic conductivitis. With the November 2021 OPPS final rule, CMS has laid out a path for the continued separate payment for Dextenza in the ASC environment after the pass-through expiration.

So before opening the call up for questions. Let me do a quick summary.

The company demonstrated solid commercial performance growing total net product revenue for an extend the 80% 87% over the comparable quarter of 2021.

We are guiding net revenue for 2022 between $55 million to $60 million, representing approximately 26% to 38% growth year over year, driven predominantly by sales of DEXTENZA in the surgical setting.

We are expanding our commercial team to address the opportunity predictions in the office setting as we launch our recently approved indication for itching associated with allergic conjunctivitis.

With the November 2021, Oh, PPS final rule CMS has laid out a path for the continued separate payment predict stent in the ASC environment after the pass through exploration.

Antony Mattessich: This would allow us to maintain and strengthen our surgical business as we build a new source of growth in the office environment. The U.S.-based trial of OTX-TKI, evaluating a single 600-microgram implant plus anti-VEGF injection versus standard of care every eight-week ILEA, is now fully enrolled and we expect to announce six-month interim data in the third quarter of 2022. We recently dosed subjects on our Phase II clinical trial of OTX-TIC for the treatment of glaucoma, which triggered a $2 million clinical support payment from our partner Asimit Therapeutix.

This would allow us to maintain and strengthen our surgical business as we build a new source of growth in the office environment.

The U S based trial of OTI PKI evaluating a single 600 micrograms implant plus.

Plus anti VEGF injection versus standard of care every eight week Eylea is now fully enrolled and we expect to announce six month interim data in the third quarter of 2022.

We recently dosed subjects in our phase II clinical trial of <unk> for the treatment of glaucoma, which triggered a $2 million clinical support payment from our partner Azimut therapeutics.

Antony Mattessich: We are also happy to report that our collaboration with Mosaic Biosciences has yielded a lead compound for our complement inhibitor program for the treatment of dry AMD. We believe this compound has best-in-class potential in the complement space, with targeted dosing every three to four months. Finally, the company ended the quarter with $145.4 million in cash on the balance sheet as of March 31st, with a continued expected cash runway through 2023.

We are also happy to report that our collaboration with mosaic Biosciences has yielded a lead compound for our complement inhibitor program for the treatment of dry AMD we.

We believe this compound has best in class potential in the complement space with targeted dosing every three to four months.

Finally, the company ended the quarter with $145 $4 million in cash on the balance sheet as of March 31.

With the continued expected cash runway through 2023.

Operator: We look forward to a strong 2022, and with that, I'll turn the call over. Thank you. Ladies and gentlemen, if you have a question at this time, please press star, then one on your telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key.

We look forward to a strong 2022 and with that I'll turn the call over for questions.

Thank you ladies and gentlemen, if you have a question at this time. Please press Star then one on your telephone.

Your question has been answered or you wish to remove yourself from the queue. Please press the pound key.

Joe Cantanzaro: Our first question comes from the line of Joe Cantanzaro with Piper Sandler. Great. Thanks for taking my questions, guys, and thanks for the Dextenza guidance. And maybe I could start there.

Our first question comes from the line of Joe <unk> with Piper Sandler.

Great. Thanks for taking my questions guys and thanks for the DEXTENZA guidance and maybe I could start there. So so the growth you are projecting for DEXTENZA in 2022 in the surgical setting can you maybe quantify how much is that it is coming from increased penetration that you alluded to versus expectations.

Antony Mattessich: So the growth you're projecting for Dextenza in 2022 in the surgical setting, can you maybe quantify how much of that is coming from increased penetration that you alluded to versus expectations for increased volumes and working through that estimated backlog? And maybe relatedly, it seems like we were off in the contribution from in-office usage this year. I guess at this point, and I realize it's early, what's been the learning there thus far? And what do you see as the biggest gating factor for this opportunity?

For increased volumes in working through that estimated backlog and maybe relatedly. It seems like we were off in the contribution from in office usage. This year I guess at this point and I realize it's early what's been the learning there thus far and what do you see as the biggest gating factor for this opportunity and what might be some.

Those bespoke solutions that Anthony you've mentioned.

Maybe I have a quick follow up.

Antony Mattessich: And what might be some of those bespoke solutions that, Antony, you... Thanks, and maybe have a quick follow-up. Thanks for the question, Joe. I think on the first point, we really haven't quantified exactly where that growth is going to come from, but I think implicit in the growth number that we have, it's really going to come from existing accounts and from additional cataract surgeries in those accounts. As we mentioned, we have a nice tailwind when it comes to the increased number of surgeries but a fairly stiff headwind when it comes to the chronic underemployment or understaffing of the ASCs in hospitals.

Great. Thanks for the question John .

I think on the first point, we really haven't quantified exactly where that growth is going to come from but I think implicit in the gross number that we have.

It's really going to come from existing accounts and from additional cataract surgeries in those accounts.

As we mentioned we have a nice tailwind when it comes to the increased number of surgeries, but it's fairly stiff headwind when it comes to the.

Chronic underemployment or under Understaffing of the season hospitals as.

Antony Mattessich: As I mentioned in the call, really the work that it takes to grow the number of accounts requires an extra effort with the staff inside the AAC and hospital. And the willingness of the people in those places to do additional work at this moment is not particularly high.

As I mentioned in the call really the work that it takes to grow the number of accounts requires.

Xtra and extra effort with that with the.

The SaaS inside the ASC and hospital.

And the willingness of those of those.

The people in those places to do additional work at this moment is not particularly high we think thats going to resolve gradually and we think certainly as we look into 2023 is going to be.

Antony Mattessich: We think that's going to resolve gradually, and we think certainly as we look into 2023, that that's going to be, it's going to reverse itself, so we'll have two tailwinds. But yeah, that very much is in the growth number that we have now, is that expectation that that situation is not going to resolve itself anytime soon. Um, in terms of the second question on the, the, uh, um.., the receptivity on the office side.

It's going to reverse itself. So we will have two tailwind.

That very much is in the growth number that we have now.

Expectation that that situations not resolve itself anytime soon.

In terms of the second question on the.

The receptivity on the office side.

Antony Mattessich: We have not yet launched the team that is now in place to really drum up business in that sector. So it's not like we've discovered a lot of things actually on the ground with the launch in the office environment. What we do get is a lot of very eager optometrists, eager general ophthalmology practices that are looking at ways to medicalize their business and to offer something more for patients that have itching associated with allergic conjunctivitis.

We have not yet launched.

The team that is.

It is now in place to really drum up business in that sector. So it's not like we've discovered a lot of things.

On the ground with the launch in the office environment.

We do get is a lot of very eager optometrist eager general ophthalmology practices.

That are looking at ways to medicalize their business and to offer something more for for.

Patients that have itching associated with allergic conjunctivitis.

Antony Mattessich: So as you can see, we've been very conservative with what we think we're going to get for the rest of the year. I hope next quarter I'll be able to report at least qualitatively what we've been able to see and maybe even quantitatively being able to demonstrate the penetration that we're starting to see. But it's really too early right now.

So as you can see we've been very conservative with what we think we're going to get to the rest of the year.

I hope next quarter I'll be able to report at least qualitatively, what what we've been able to see in and maybe even quantitatively being able to demonstrate the penetration that we're starting to start starting to see but it's really too early right now Unfortunately, omicron kind of the latest getting out into the market.

Antony Mattessich: Unfortunately, Omicron kind of delayed us getting out into the market at a time we really would have preferred to. But given that allergy season is starting just now, it's a good time to be getting into the office. Great, thanks. That's really helpful. And I could just squeeze in a couple on TKI.

At the time, we really would've preferred to but given that allergy season is starting just now it's a good time to be getting into the offices.

Joe Cantanzaro: I know you just presented the six-month NHP GLP data at ARVO. If I recall correctly, I think that was one of the big gating factors to filing a full IND. I'm just wondering if having these data now changes anything, or is the plan still to let the U.S. Phase I run its course? And I know the Australian study is enrolling a single implant cohort. Is it possible we see any data there first ahead of the U.S. study, or is the U.S. study the next data update we should expect? Thanks. Yeah, thanks, Joe. It's Mike.

Great. Thanks, that's really helpful and I can just squeeze in a couple on on PKI. I know you just did the six month and HP GOP data at ARVO, if I recall correctly I think that was one of the big gain.

Gating factors to filing a full and im just wondering if having these data and out changes anything or is the plan still to let the U S. Phase one run its course and I know the Australian study is enrolling a single implant cohort is it possible that we see any data. There first ahead of the U S study or is the U S study the next data up.

We should expect thanks.

Dr. Michael Goldstein: So, in terms of your first question, yes, in terms of converting the exploratory IND to the IMD, we needed to have the GLP tox data. So, that's the six-month data. We actually have data further out than that. So, the plan would be to submit that data to the FDA and convert the exploratory IND to an IND, which should happen later this summer. At the same time, you know, as you'd note, we've got the U.S. TKI trial, which is fully enrolled, and we look forward to having data from that trial in the third quarter of this year.

Thanks, Joe its Mike.

So in terms of your first question, yes in terms of converting exploratory R&D to the IMT, we needed to have the GOP tox data. So that's the six month data, we actually have data.

Further out of that.

Plan would be to submit that data to the FDA and convert exploratory R&D into an IMD, which should happen later this summer.

At the same time as.

As you would note.

The U S T J I trial, which is fully enrolled and we look forward to having data from that trial in the third quarter of this year.

Dr. Michael Goldstein: And to your last question about the Australian data, as you correctly note, we do have a group going with a single implant 600-microgram group in Australia. And, you know, I think what we've always said is when we have something meaningful to say, we would say it.

Your last question about the Australia data as you correctly note, we do have a group going with a single.

Implant 600 Microgram group in Australia.

And I think what we've always said is when we have something meaningful to say we would say.

Dr. Michael Goldstein: I think the timing of that would be somewhere.., probably after the U.S. data, I would guess, where we actually have enough patients that are far enough along. So I think the next readout on that would be the U.S. trial data. Okay, got it.

I think the timing of that would be somewhere.

Probably after the U S data I would guess.

Actually have enough patients that are far enough along so I think the next readout on that would be the U S trial data.

Joe Cantanzaro: Thanks. That's all helpful. Thanks for taking my questions. Thank you. And our next question comes from the line of Dane Leon with Raymond James. Hi.

Okay got it. Thanks, that's all that's all helpful. Thanks for taking my question.

Yes.

Thank you.

Next question comes from the line of Dane Leone with Raymond James.

Dane Leon: Thank you for taking the question. Congratulations on the progress. I think it would be helpful to maybe just go through some expectation setting on the OTX TKI readout at the six-month mark in the U.S. study. Based upon your knowledge of the patients at baseline that are being enrolled into the study and feedback from some of your PIs, what are you looking for in the six-month outcome when comparing to the active aflipricept arm?

Hi, Thank you for taking my question and congratulations on the progress.

I think it would be helpful. So maybe you can just go through those.

The expectation setting on the <unk> PKI readout at.

At the pigment market in the U S study.

Based upon your knowledge of the patient.

Baseline that are being enrolled into the study.

And feedback from some of your pie.

What are you looking for in the six month outcome when compared to the the active <unk>.

Dane Leon: Are you looking for actual resolution of intraretinal fluid? Are you looking for maintenance of patients that had minimal fluid at baseline or, you know, just a pure comparison in terms of the amount of standard care or rescue injections in the active arm or in the OTX TKI arm? Anything on that would be super helpful.

Are you looking for actual resolution major retinal fluid are you looking for.

Maintenance.

Ah patients.

Minimal fluid at baseline or.

Just the pure comparison in terms of the amount of.

Standard of care or rescue injections in the active arm.

D var.

On that would be super helpful. Thank you.

Sure.

Dr. Michael Goldstein: Thank you. Hey, Dan, thanks for the question. So a great question, as always.

Hey, guys. Thanks for the question. So yeah, great question as always.

Dr. Michael Goldstein: So it's really important to keep in mind that the population we're looking at in the US is different than the population we looked at in Australia. So the Australian population came in, they could have been previously treated or naive, but they had to come in with a fair amount of fluid to get in the trial. And we were really trying to see if with a TKI, could we get rid of that fluid? So not could we stabilize it?

It had to come in with a fair amount of fluid in the trial and we are really trying to see where the TGI could we get rid of that fluid so not because we stabilize or could we actually get rid of that fluid.

Dr. Michael Goldstein: But could we actually get rid of that fluid? And I think what we found is with an intravitreal injection, we could get rid of that fluid. And in some cases, we could completely get rid of that fluid and we could do that durably, or in many patients, six months or longer. And we didn't have any safety signals that we were concerned about. So with that, we went into the U.S. trial, and that trial is looking at a different population. I think most KOLs would say it's an easier population.

But I think what we found is with an intramuscular injection, we could get rid of that fluid.

And in some cases, we can completely get rid of that fluid and we can do that durably or many patients six months or longer.

And we didn't have any safety signals that we're concerned about.

With that we went into the U S trial and that trial is looking at a different population I think we would I think most kols are facing easier population. So it's a group of patients that have previously been treated.

Dr. Michael Goldstein: So it's a group of patients that have previously been treated and are coming in in a relatively dry state. And we're asking a different question, which is, if you have patients who come in who don't have a lot of fluid, can you maintain them in that dry state? And we did, so that trial is, another difference is that trial is a mass trial and it was randomized three to one to TKI versus the Afl-Recep group, which was every eight weeks. And so what we would expect is with the Oplevrsep group, we would expect those subjects would remain dry. We would expect vision to be stable and that the OCPTs would remain without fluid.

And are coming in in a relatively dry space.

And we're asking a different question, which is if you have patients who come in.

Don't have a lot of fluid can you maintain them in that state.

And we did that so that trial is another difference is that Charles.

As a mass trial and it was randomized three to one ti versus flavor subgroup, which is every eight weeks.

And so what we would expect this will give cover subgroup you would expect us as opposed to <unk>.

So we remain dry.

<unk> vision to be stable.

<unk> will remain with our fluids and likewise with the CGI group, we would expect that those patients as well as maintain their vision and also.

Dr. Michael Goldstein: And likewise, with the TKI group, we would expect that those patients will maintain their vision and also be maintained without fluid. So that's the data we will have, you know, in the third quarter of this year. And again, if you compare that data to the Australian population, we believe this is a lower bar to hit.

Maintained.

So that's the data we will have.

In the third quarter of this year.

And again, if you compare that data to the Australian population. We believe this is a lower bar.

Dr. Michael Goldstein: If you already have the fluid removed, we think maintaining that is a lower bar than trying to actually get rid of the fluid with the TKI. Great. And if I could ask just one follow-up on that. And this is a question that just comes up, you know, across a couple of your programs now, I think, given the results that we had with OTX-TSI. Could you maybe just take us through your level of confidence that the formulation with OTX-TKI is effective as a single dose and you will not run in or show issues with the formulation of the product that have been an issue in some of the other programs? Thank you. Yeah, I mean, every program is different.

Do you have a fluid removed, we think maintaining that as a lower bar than trying to actually get rid of affluent.

Great and if I could ask just one follow up on that and this is a question that comes up.

Across a couple of your programs now.

I think given the results that we had with <unk>.

CSI.

Could you maybe just take us through your level of confidence that the formulation with ots PKI.

As effective as a single dose and you will not run in or so issues with that.

Formulation of the product that has been our issue and some of the other programs.

Yes.

Yes, I mean every program is different so they all use.

Dane Leon: So they all use different hydrogels, different pegs, and they're all specific to each program. And also, the place that we're placing the inserts or implants is different. So in the case of CSI with intercalicular, and here, when we're talking about an intervitreal injection, it's obviously inside the eye. We know that there's more consistency with hydrogels and breakdown when they're in fluid-filled spaces. So when you put something in the eye, whether it's intercameral or intervitreal, we know that's more consistent than it is when you place it into the canalicula. It's virtually only exposed to fluid at sort of the top end, if you will.

Different hydrogel eggs.

And they are all specific to each program and also the placement, replacing the <unk> implant the difference.

So in the case of CSI.

And here when we're talking.

Talking about an interim Rachel injection.

It's obviously inside the eye.

No that there is more consistency with hydrogel breakdown when they're in fluid filled the space. So when you put something in the eye, whether it's inter camera all our interim vitriol.

We know thats more consistent.

So that's the calculus virtually only exposed to Florida.

And if you will.

Dr. Michael Goldstein: So I don't think there's any read-through from CSI to TKI. I think based on the Australian data, we're very confident about what we'll see in the US trial. Is there more work we could do with formulation? Yeah, there always is, and there's always tweaks that we can make, and I expect we would do that. In terms of CSI, I'll just, you know, from a brief word.

So so I don't think theres any read through from CSI to Ti I think based on the Australia data, we're very confident about what we'll see in the U S. Trial is there more work we can do with formulation, yes, there always is and there's always tweaks that we can make.

We would do that.

In terms of CSI.

All of us.

Dr. Michael Goldstein: So, we actually, you know, the issue is pretty straightforward with CSI. There was a certain excipient that was placed in to help with the mixing of the drug, just because there's some unique properties with the drug. And we think that made for lower retention in the canaliculus. And we think that we have other ways of mixing the drug. We can get rid of that excipient.

Great parts, so we actually.

The issue is pretty straightforward with CSI.

There was a certain excipient that was placed in to help with the mixing up the drug just because there are some unique properties of the drug and we think that made or lower retention.

We kind of look to us and we think that.

We have other ways of Mexican the drug we can get rid of that excipient and by doing that we can actually improve retention.

Dr. Michael Goldstein: And by doing that, we can actually improve retention for CSI. So, I don't think there's any read-through to the TKI. And I also think, you know, CSI, we have a good way to get it back on track. Excellent. Thank you very much.

For CSI. So so I don't think theres any read through to to the CCI and I also think CSI. We are a good way to get it back on track.

Excellent. Thank you very much I appreciate the additional commentary on CSI. Thank you.

Thanks Beth.

Dane Leon: I appreciate the additional commentary on CSI. Thank you. Thank you. And our next question comes from the line of John Wolleben with JMP Security. Thanks for the updates and taking the questions. One on Dextenza and then a couple on the pipeline, if I may. You mentioned the strong quarter in March in terms of billable inserts. I'm wondering if you could provide any comments on how April early may have looked, or are we going to continue to see the last month of the quarter be the strongest and then parlay that end-of-month demand with the backlog and just kind of think about the demand throughout the quarter?

Thank you and our next question comes from the line of John Walsh with JMP Securities.

John Wolleben: Well, April may have been entirely consistent with the guidance that we've given, so there's certainly no reason to believe that we'd be falling behind that guidance. I think there is good reason to expect that the last month of each quarter is going to be, it's going to definitely help the majority of the units in the quarter. So I don't think there would be many reasons to change that going forward. Okay, and I might have missed this in the prepared remarks, but do you have a timeline on when we could get an update on CSI and DEB in terms of, you know, next trial initiations? Hey, John.

Thanks for the update and taking the questions one on DEXTENZA and then a couple on the pipeline if I may.

You mentioned the strong quarter in March in terms of global answers I'm wondering if you could provide any comments on how April early may it looked or we're going to continue to see the last month of the quarter being the strongest and then partly that.

And above demand with.

Backlog.

Think about.

The demand throughout the quarter.

While April and May are entirely consistent with the guidance that we've given so there's certainly no reason to believe that we would be now.

Following behind that guidance I think there is good reason to expect that the last month of each quarter is going to be.

And it's going to definitely have a majority of the units in the quarter.

I don't think that would be there'd be any reason to change that going forward.

Okay.

I might've missed this in the prepared remarks, but do you have a timeline and work again update on CSI Indeed in terms of.

Next trial initiations.

Antony Mattessich: Thanks, Mike, again. So you didn't miss it. We haven't given an update on the timeline. What I can tell you is, just to mention today's question, for CSI, the issue is the reformulation work on the active, and that's active work that's going on. For both programs, there's work that needs to go on in terms of the comparator.

Hey, Jonathan Thanks, Mike again so.

You Didnt Miss it we haven't given an update on the timeline.

I can tell you.

I mentioned today in these questions for CSI the issue.

Summary formulation work on the <unk>.

Active work that's going on.

Dr. Michael Goldstein: As we've discussed before, the comparator for both these trials is an intracanalicular insert with the hydrogel, and what we know is that the hydrogel is a very effective way to block the canaliculitis, and this is a treatment that we use for dry eye disease. So it's no surprise, then, that you actually have not a placebo comparator here, but an active comparator. So we are working on other appropriate placebos, which will play a role for both the CSI and the DED.

For both programs there is work that needs to go in terms of a comparator.

As we've discussed before.

The comparator appropriate for both of these trials.

Enter kind of ocular and start with the hydrogel.

What we know is that the hydrogel is a very effective way to block the calculus of Mississippi.

A treatment that we use.

For dry eye disease.

Dr. Michael Goldstein: We plan to bring both back into Phase 2 programs, but we haven't revealed a timeline of when that will happen yet. Okay, and last one for me, I saw the data coming to ASGCT. How are you thinking about, you know, delivery of AAV vectors via your hydrogel, you know, I guess at a high, high level strategic perspective? And then also what are the potential benefits of, you know, sustained delivery of a gene therapy to the eye? Yeah, great question.

So no surprise that you actually have a placebo comparator, but an active comparator.

So we are working on other appropriate placebo as we spoke by overall for both the CSI.

We plan to bring Gulf.

Back into phase II programs, but we have a real the timeline of when that will happen yes.

Okay.

Last one for me I saw that data coming at as GCT.

How are you thinking about.

<unk> delivery of AAV vectors via your hydrogel I guess at a high high level strategic perspective, and then also what are the potential benefits of sustained delivery of a gene therapy to the eye.

Yes.

John Wolleben: So I think there are two fundamental problems that we can address, with the Hydrogel. The first is that all gene therapy programs, the dirty secret in gene therapy is that all gene therapy programs have issues with inflammation, and it's dose-dependent inflammation. And we believe that by delivering the viral vectors using a hydrogel, we can deliver higher concentrations or a higher number of viral vectors without inducing as much inflammation. So that's that's one big opportunity. The second is location.

Yes, great question.

So I think there are two fundamental problems that we can address.

The hydrogel. The first is that all gene therapy programs. The Dirty secret of gene therapy is that all gene therapy programs have issues of inflammation.

It is dose dependent inflammation.

And we believe that by delivering.

The viral vectors using a hydrogel, we can deliver high higher concentrations or a higher number of viral vectors.

That is using as much inflation.

So that's one big opportunity.

Second is location. So when you do gene therapy, particularly when youre doing sub retinal delivery.

Dr. Michael Goldstein: So when you do gene therapy, particularly when you're doing subretinal delivery, You make a subretinal bleb with the viral vectors, and you hope that it goes where you want it to go, but sometimes it does and sometimes it doesn't, and what's done now is you just put more in if it's not going in the direction that you want, and so you end up with a very large bleb, and a lot of that then goes back through the retinotomy. So there is the potential to.., exactly place in a very customized way.

You May go up a level.

<unk>.

With the viral vectors and you hope that it goes where you wanted to go.

Sometimes it doesn't.

Rose.

What it's done now as you just put more.

If the stock going in the direction of megawatts until you end up with a very large blood, but a lot of that then goes back to the right and automate.

So there is the potential too.

Exactly place a very customized way.

Dr. Michael Goldstein: The Viral Vectors in the area you want it, if you put them in, if you can imagine like a sheet of hydrogel, you can place that exactly where, So those are the two big benefits that we could get. And as you said, we have data now on this in animal models. The first presentation of that data will be at the SGCT conference coming up. Exciting stuff.

The viral vectors in the area you want it if you put them in if you can imagine like a sheets of hydrogel you can place that exactly.

Exactly under the cells that you want to.

And therefore, it got better location. So so we think.

The opportunity in terms of decreasing inflammation or delivering more of our vectors and we think there's an opportunity to deliver.

More appropriate locations I think those are the two big.

Got it.

And as you said, we have data now on this animal model.

The first presentation of that data will be at the FCC conference coming up.

Exciting stuff, thanks, again for taking the questions.

Okay.

John Wolleben: Thanks again for taking the questions. Thank you. And our next question comes from the line of Yi Chen with H.C. Wainwright.

Thank you.

Question comes from the line of <unk> with HC Wainwright.

Yi Chen: Thank you for taking my questions. At this point, could you comment on whether the momentum you observed in March sort of persisted into the current quarter? I remember what I mentioned before, that what we've seen in April and May is entirely consistent with the guidance that we've given. So that is definitely, we're seeing a return in the market, but we certainly have a great deal of confidence we'll be able to satisfy our guidance going forward. Do you expect any revenue generated from AC at all during this period? Yes, we do.

Thank you for taking my questions.

At this point could you comment on whether the momentum you observed in March.

Sort of persisted into the current quarter.

I'm going to what I mentioned before is that the what we've seen in April and May is entirely consistent with the guidance that we've given.

That is.

It is.

Definitely we are seeing a return in the market.

But we certainly have great a great deal of confidence that we'll be able to satisfy our guidance going forward.

Got it do you expect any revenue generated from AC at all during this year.

Antony Mattessich: We just don't expect it to be material relative to the surgical setting. And it's now part of your guidance. That's not part of the guidance, right? And do you anticipate to pay down any part of your current outstanding debt during... We don't at this point. Now that, you know, we'll stick to the initial payment schedule for that. Okay, thank you.

Yes, we do we just don't expect it to be material relative to the surgical center.

And it's not part of your guidance range.

That's not part of the guidance range.

Got it okay.

And do you anticipate to pay them.

Any part of your current steady.

2022.

We don't at this point.

Stacey.

The initial.

Payment schedule for that.

Yes.

Okay. Thank you.

Yes.

Yi Chen: Thank you. And our next question comes from the line of Anita Dushyant with Barenburg Capital. Hi, good afternoon.

Thank you and our next question comes from the line of Anita Dushyanth with Banbury capital.

Hi, good afternoon, Thanks for taking my question.

Anita Dushyant: Thank you for taking my question. I just wanted to clarify one more thing related to the guidance on revenues that you're giving for 2022. Would that be like the lower end of the number that you're expecting this year, considering, you know, like you mentioned, labor shortages continue to persist? And obviously, that is quite a bit of a headwind, combined with, you know, the backlogs that are continuing to build for the year. You're absolutely correct.

Just wanted to clarify one last thing for me.

From Robert W. Baird.

Could that be.

The lower end.

Remember that there are questions.

Like I mentioned, we'll be shocking.

Continuing with Paul.

On April .

Quite a bit of Hong Kong.

Combined.

<unk> set up.

Yes.

Yes, that's absolutely correct, there is quite a bit of headwind from the understaffing, which in some ways is exacerbated by the.

The debt.

The return of a lot of cataract surgeries that were delayed during the Covid period, because you have a basically 80% staffing in that staff in the ASC and hospital is typically less experience than pre COVID-19 you layer on top of that an increase in demand.

It makes it harder to.

To install new new accounts or to go into existing accounts into different payer types into existing accounts.

I said as we as we go through the year. We would expect this to result, but it is a macroeconomic issue that will resolve I think with the entire.

Entire economy, not just <unk> and hospitals.

Okay. Thank you.

And lastly.

In terms of.

Launching in China.

I'm, sorry, if I may.

Is there any timeline.

Hi.

So and even though this is Chris White I oversee the Ahmed relationship no what we referenced.

Relative to our partnership with <unk> is that the product has been approved in Macau and is now actually has been launched in Macau.

Our partner <unk> continuing to pursue.

The registration of DEXTENZA in China.

Well thanks.

That's helpful.

Thank you.

Ladies and gentlemen, this concludes today's conference call.

You for participating and you may now disconnect.

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Antony Mattessich: There is quite a bit of headwind from the understaffing, which in some ways is exacerbated by the return of a lot of cataract surgeries that were delayed during the COVID period. Because you have a basically 80% staffing and that staff in the ASDN hospital is typically less experienced than pre-COVID. You layer on top of that an increase in demand, it makes it harder to install new accounts or to go into existing accounts into different payer types into existing accounts.

Good afternoon, ladies and gentlemen, thank you for standing by and welcome to the ocular Therapeutics first quarter 2022 earnings conference call.

Antony Mattessich: Like I said, as we go through the year, we would expect this to resolve, but it is a macroeconomic issue that will resolve, I think, with the entire economy, not just ASPs and hospitals. Okay, thank you. That's helpful. And then lastly, in terms of launching in China, I'm sorry if I missed it. Was there any timelines communicated that prior? So, Anita, this is Chris White.

Chris White: I oversee the AFMED relationship. Know what we reference. Relative to our partnership with APHMED is that the product has been approved in Macau and is now actually has been launched in Macau. Our partner APHMED is continuing to pursue the registration of Dexzenza in China. Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect. Good afternoon, ladies and gentlemen. Thank you for standing by. And welcome to the Ocular Therapeutix first quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode.

At this time all participants are in a listen only mode.

Operator: Later, we'll conduct a question and answer session and instructions will follow at that time. It is now my pleasure to introduce Donald Notman, Chief Financial Officer of Ocular Therapeutix. Please go ahead.

Later, we will conduct a question and answer session and instructions will follow at that time.

It is now my pleasure to introduce Donald.

<unk> financial officer of ocular Therapeutics. Please go ahead Sir.

Thank you operator, good afternoon, everyone and thank you for joining us on our first quarter 2022 financial results and business update conference call. This afternoon. After the close we issued a press release providing enough.

And the company's product development programs and details of the company's financial results for the quarter ended March 31 2022.

Press release can be accessed on the investors portion of our website at investors <unk>, TX Dot com.

Leading the call today will be Anthony Mato <unk>, our president and Chief Executive Officer, who will provide an update on the commercial progress of DEXTENZA and a summary of our corporate development also speaking on the call today will be Dr. Michael Goldstein, our president Ophthalmology, and Chief Medical Officer, who will give an update on our clinical development pipeline.

Right.

Business Officer, and Scott Corning, our senior Vice President commercial.

Donald Notman: As a reminder, on today's call, certain statements we will be making may be considered forward-looking for the purposes of the Private Securities Litigation Reform Act of 1995. In particular, any statements regarding our regulatory and product development plans, as well as our research activities and our financial projections, our forward-looking statements. These statements are subject to a variety of risks and uncertainties that may cause actual results to differ from those foreshadowed, including those risks described in our most recent quarterly report filed this afternoon with the SEC and our annual report on Form 10-K filed on February 28. I will now turn the call over to...

As a reminder, on today's call certain statements, we will be making may be considered forward looking for the purposes of the private Securities Litigation Reform Act of $19 95.

In particular any statements regarding our regulatory and product development plans as well as our research activities.

Financial projections are forward looking statements. These statements are subject to a variety of risks and uncertainties that may cause actual results to differ from those forecasted including those risks described in our most recent quarterly report filed this afternoon with the SEC and our annual report on form 10.

K filed on February 28, with the SEC.

I will now turn the call over to Anthony.

Thank you Dawn and welcome everyone to the ocular Therapeutics first quarter 2022 earnings report.

And it's been a quick turnaround following our year end call held a little more than two months ago. We continue to make good progress executing on our commercial efforts and with the development of our leading ophthalmology pipeline.

Beginning with DEXTENZA, we achieved $12 5 million in net product revenues and 87% growth over the comparable quarter in 2021.

<unk> performance was impacted during the quarter by the surge in Covid Omicron, Varian and its sub variant <unk> too.

Antony Mattessich: Slow Cataract Procedures, and Challenged ASC and HOPD Staffing, primarily in the month of January. Sales of in-market billable units rebounded starting in February, and in March we recorded approximately 10,500 inserts sold to ASCs and HOPDs in the calendar month, easily surpassing the old record of 9,976 set last November.

The slow cataract procedures and challenged ASE and <unk> staffing primarily in the month of January .

Sales of end market billable units rebounded starting in February and in March we recorded approximately 10500 insert sold <unk> and <unk> and the calendar months.

Usually surpassing the old record of 9976 set last November .

Antony Mattessich: Despite the ongoing staffing challenges, we are expecting a generally improving environment for the growth of Dextenza in 2022. First, we are anticipating a tailwind from increased cataract surgery volumes as the backlog of delayed surgeries begins to enter the market. We think about it this way.

Despite the ongoing staffing challenges, we are expecting a generally improving environment for the growth of VIX tends in 2022.

First we are anticipating a tailwind from increased cataract surgery volumes as the backlog of delayed surgeries begins to enter the market.

We think about it this way there were approximately $4 2 million cataract procedures in 2019 forecasted to grow at a rate of between 3% to 5% annually. According to market scope research.

This number dropped to approximately $3 6 million in 2020 at the height of Covid.

While marketscope estimated that volumes did bounce back in 2021 to an estimated $4 4 million cataract procedures. We believe the data still suggests the potential bolus of at least 800000 backlog procedures.

We anticipate that this volume of work its way back into <unk> and <unk> over the coming few quarters and contribute to the extent this growth.

Antony Mattessich: Second, we are entering 2022 with greater clarity on DexGen's reimbursement with pass-through payment status through 2022, and then, very importantly, eligibility for separate payments, beginning in 2023 and potentially beyond in ASCs through the Non-Opioid Pain Management Supply Provision. In addition, physician reimbursement for the insertion of Vexpenza is now available under our Category 1 code, became effective January 1, 2022, ensuring more reliable payment to physicians for dextenza placement across all payer types and in all settings of care.

Second we are entering 2022 with greater clarity on DEXTENZA reimbursement with pass through payment status through 2022, and then very importantly eligibility for separate payment.

Beginning in 2023 and potentially beyond an ASC with a non opioid pain management supply provisions.

In addition physician reimbursement for the insertion of DEXTENZA is now available under a category one code.

Became effective January one 2022, ensuring more reliable payment to physicians for DEXTENZA placement across all payer types and in all settings settings of care.

Antony Mattessich: We believe the easier we can make it for physicians to provide the extensive of their patients, the better we will do in growing that extensive franchise. Simplifying and ensuring reimbursement is key to accomplishing this, and having this clarity is a huge advantage for Ocular today. Third, in 2022, we are expanding our commercialization of Dexbenza into the office setting. I have long stated that a key strategic goal of the company is to expand our presence into ophthalmology and optometric offices by providing customers with numerous innovative buy and build products, including those developed internally and potentially those licensed from other companies in the future.

We believe the easier we can make it for physicians to provide the extended or their patients. The better we will do in growing that extends the franchise.

Simplifying ensuring reimbursement is key to accomplishing this and having this clarity is a huge advantage for ocular today.

Third in 2022, we are expanding our commercialization of DEXTENZA into the office setting.

The fda's approval of DEXTENZA for the treatment of ocular itching or sort of with origin associated with allergic conjunctivitis and indication that is treated in the ophthalmology and optometry office environments gives us the opportunity to take the first step in doing that.

Antony Mattessich: While the strategic potential of the office environment is exciting, it represents a new space for ocular therapeutics with a unique set of challenges and opportunities. We've been able to learn a lot from the launch of Xtensa in a surgical setting and found that the primary barriers of entry were the logistics associated with AFC and HOPD administration. We believe launching into the ophthalmology and optometric offices will be analogous but with different drivers that require bespoke solutions.

While the strategic potential of the office environment is exciting and represents a new space for ocular therapeutics with a unique set of challenges and opportunities.

<unk> been able to learn a lot from the launch of DEXTENZA in the surgical setting and found that the primary barriers of entry where the logistics associated with ASC and <unk> administration.

We believe launching into the ophthalmology and optometry offices will be analogous, but with different drivers that required bespoke solutions we.

Antony Mattessich: We recently hired a VP of sales with over 20 years experience successfully selling buy-and-build products to office-based physicians to lead this initiative. We have established a separate office-based business unit consisting initially of four new key account managers supported by the field reimbursement team who will be tasked exclusively with selling into the office setting.

We recently hired a VP of sales with over 20 Years' experience successfully selling Brian build products to office based physicians to lead this initiative.

We have established a separate office based business unit, consisting initially of four new key account managers.

Courted by the field reimbursement team, who will be tasked exclusively with selling into the office setting.

Antony Mattessich: We anticipate these efforts will have some impact in 2022, but more materially in 2023 and beyond. Shifting to our pipeline, we have four clinical programs. OCX-TKI for wet AMD and other retinal diseases, OCX-TIC for glaucoma, and OCX-DED and OCX-CSI for the treatment of dry eye disease.

We anticipate these offers these efforts will have some impact in 2022, but more materially in 2023 and beyond.

Shifting to our pipeline, we have four clinical programs.

PKI for wet AMD and other retinal diseases.

For glaucoma, and <unk>, DDB and <unk> CSI for the treatment of dry eye disease.

Antony Mattessich: Each of these programs is being developed to produce a highly differentiated, buy-and-bill, ophthalmology specialty product with associated procedure code that addresses key unmet needs in their respective disease states. In the quarter, we took major steps forward with OTX-TKI, where we completed enrollment in a Phase I study in the U.S. and with OTX-TIC, where we began dosing patients in our Phase II program. We anticipate having interim data for the OTX-TKI U.S. trial in the third quarter of this year. We are also happy to report that our collaboration with Mazak Bios, has yielded a lead compound for our complement inhibitor program for the treatment of dry AMD.

Each of these programs is being developed to produce a highly differentiate it buy and bill ophthalmology specialty product with associated procedure code that addresses key unmet needs in their respective disease states.

In the quarter, we took major steps forward with Ots, PKI, where we completed enrollment in our phase one study in the U S with Ots GIC, we began dosing patients in our phase II program.

We anticipate having interim data for the <unk> PKI U S trial in the third quarter of this year.

We're also happy to report that our collaboration with <unk> Biosciences has yielded a lead compound for a complement inhibitor program for the treatment of dry AMD.

Antony Mattessich: We believe that this compound has the potential to be best in class in the complement space with targeted dosing every three to four months. Our collaboration with Affymed Therapeutix has also advanced during the first and second quarters of this year. In January, Affymed dosed its first patient in a real-world-setting study being conducted at the Bolao Super Hospital in Hainan Province, China. The trial is designed to evaluate the safety and efficacy of Dextenza for the treatment of ocular inflammation and pain following cataract surgery, and is intended to support and potentially accelerate efforts to register Dextenza in China. More recently, Alphabet announced in April that Dexenza was approved in Macau, China.

We believe that this compound has the potential to be best in class in the complement space with targeted dosing every three to four months.

Our collaboration with <unk> Therapeutics has also advanced during the first and second quarters of this year.

In January at that dose gets first patient in a real world setting study being conducted at the Bowl all Super Hospital in Hainan Province, China.

More recently <unk> announced in April the DEXTENZA was approved in Macau China.

Antony Mattessich: To date, Ocular has earned a total of $3 million in milestone and clinical support payments under the AFSCMET agreement. In the quarter, we also shared updates on our programs at a number of medical, at this year's American Society of Cataract and Refractive Surgery Annual Meeting held on April 22-24. We shared 15 presentations, including seven company-sponsored studies and eight investigator-initiated clinical trials of Dextenza as well as OTX-BED. These presentations included real-world data evaluating the demographics and safety profile of the first 10,000 Dexenza inserts placed.

To date ocular has earned a total of $3 million in milestone and clinical support payments under the estimate agreement.

In the quarter, we also share updates on our programs at a number of medical meetings.

At this year's American Society of Cataract and refractive surgery annual meeting held on April 22 through 24.

We shared 15 presentations, including seven company sponsored studies and eight.

Investigator initiated clinical trials in <unk>.

As well as the Ots CEB.

These president presentations included real World data evaluating the demographics and safety profile of the first 10000 VIX tend to enter its clients.

Antony Mattessich: This was the largest scientific presence we've ever had at a major medical meeting, and I believe it highlights the medical community's significant interest in our ocular surface program. We also had a large presence at this year's Association for Research in Vision and Ophthalmology annual meeting held. May 1st through 4th, 2022.

This was the largest scientific presence we've ever had at a major medical meeting and I believe it highlights the medical community is significant interest in our ocular surface programs.

We also had a large presence at this year's association for research in vision and Ophthalmology annual meeting held.

May <unk> 2022.

Antony Mattessich: This is one of the major ophthalmic research conferences, and Ocular made multiple presentations highlighting exciting pipeline, preclinical, and clinical data. Looking ahead into 2022, we plan to provide an important interim update for our U.S.-based clinical trial of OTX-TKI for the treatment of wet AMD in the third quarter. WET-AMD represents a potentially large market opportunity for ocular and OTX-TKI offers a new mechanism of action with compelling durability data.

This is one of the one of the major ophthalmic research conferences, and ocular made multiple presentations highlighting exciting pipeline preclinical and clinical data.

Looking ahead into 2022, we plan to provide an important interim update for our U S based clinical trial of <unk> for the treatment of wet AMD in the third quarter.

<unk> represents a potentially large market opportunity for ocular and Ots PKI offers a new mechanism of action with compelling durability data.

Lastly, before turning the call over to Mike to discuss our pipeline in more detail I wanted to take the opportunity to share for the first time annual revenue guidance for 2022.

We have historically not provided guidance due to the unpredictable impact of the Covid pandemic on elective surgery volumes.

To remind you nearly all of our sales to date have come from cataract surgeries, which are considered elective surgeries and the <unk>.

<unk> and <unk> setting.

Antony Mattessich: Going forward, we are assuming that closures of ASCs and HOPDs to elective surgeries will no longer be as significant a risk. However, we expect the indirect effects of COVID will be felt for at least the remainder of 2022, as the labor shortage has left ASCs and HOPDs short-staffed, time when demand for surgeries is rising. Our challenge in growing Dextenza to its full potential in a surgical setting is to go deeper into established accounts by driving adoptions by more surgeons and moving into new payer types, as we also set up new accounts in ASCs and HOPDs where Dextenza is not currently available.

Going forward, we are assuming the closures of ASC hltv's collective surgeries would no longer be as significant for risks.

However, we expect the indirect effects of Covid will be felt for at least the remainder of 2022 at the labor shortage has left asp's in H O P. DS short staffed it.

At a time when demand for surgeries is rising.

Our challenge in growing the extends it to its full potential in the surgical setting is to go deeper into established accounts by driving adoptions by more surgeons and moving into new payer types.

We also set up new accounts in Asp's in Hpt's, where DEXTENZA is not currently available.

Antony Mattessich: All of these growth levers, and the required ocular personnel, to work closely with administrative and surgical support staff to help them institute new policies, procedures, and protocols to allow for the use of Dexemba. With a deep understanding of the market environment and an expectation of gradual resolution to the macroeconomic effects of COVID, we believe we have adequate line of sight to project forward sales of Dixzenza in the surgical environment. Accordingly, we are now guiding total annual net product revenue of $55 to $60 million for 2022. This guidance represents anticipated annual growth of between 26% to 38%.

All of these growth levers required ocular personnel.

Worked closely with administrative and surgical support staff to help them Institute, new policies procedures procedures and protocols to allow for the use of DEXTENZA.

Accordingly, we are now guiding total annual net product revenue of $55 million to $60 million for 2022.

This guidance represents anticipated annual growth of between 26% to 38%.

Antony Mattessich: Importantly, this guidance assumes growth will be almost entirely driven by sales of Dextenza in the surgical setting and therefore excludes any material contribution from sales of Dextenza in the office setting. We believe the office setting represents a significant source of long-term ups... Given the early stages of this initiative, we have excluded any material contribution in this guidance.

We believe the office setting represents a significant source of long term upside.

But given the early stages of this initiative, we have excluded any material contribution in that guidance.

With that I'd now like to hand, the call over to our president of Ophthalmology and Chief Medical Officer, Dr. Michael Goldstein, who will provide an in depth look at our pipeline.

Dr. Michael Goldstein: We believe the best way to show this is to start with patients with active subretinal and or intraretinal fluid and follow them to see if OTX TKI can eliminate that fluid. This is the population that was enrolled in this Australian study. The data we shared on angiogenesis has been encouraging, and we found a clinically meaningful decrease in intraretinal and or subretinal fluid in many subjects and in some subjects, all the fluid being treated.

Thanks, Anthony let me begin with an update on our back of the eye program <unk> PKI.

Dr. Michael Goldstein: In addition, extended duration of activity of six months or more was observed in over 60% of subjects across all cohorts and over 80% of subjects in Cohort 3A, the 600-microgram cohort, which we believe could represent a compelling drug product profile. We are also currently running a U.S.-based Phase I clinical trial that is now fully enrolled. This is a U.S.-based, multi-center, prospective, randomized controlled trial that is evaluating a 600-microgram OTX-TKI dose in a single implant containing exitinib compared to a Flibercept administered every eight weeks in subjects previously treated with anti-VEGF therapy.

In February we presented an update from the ongoing Australian based phase one trial of <unk> for the treatment of wet AMD.

At the angiogenesis Exudation and degeneration 2022 meeting.

As background. The study was designed to assess the safety and Tolerability of <unk>.

PKI and assess preliminary biological activity our goal for this study was to answer the question, Ken a tyrosine kinase inhibitor administered intramuscularly as a monotherapy so biological.

Activity in wet AMD.

We believe the best way to show this is to start with patients with active sub retinal <unk> inter retinal fluid and follow them to see if OTI ti can eliminate that fluid.

This is the population that was enrolled in this Australian study the data we shared at angiogenesis has been encouraging and we found a clinically meaningful decrease in inter retinal <unk> sub retinal fluid and many subjects and in some subjects all the fluid being treated.

Addition, extended duration of activity of six months or more was observed in over 60% of subjects across all cohorts and over 80% of subjects in cohort three the 600 microgram cohort, which we believe could represent a compelling drug product profile.

We are also currently running a U S based phase one clinical trial that is now fully enrolled.

This is a U S based multicenter prospective randomized controlled trial is evaluating a 600 microgram <unk> PKI dose and a single implant containing exit NIM compared to our flavors that administered every eight weeks and subjects previously treated with anti VEGF therapy.

Nickel trial is being conducted under an exploratory R&D application at five sites.

Getting a total of 20 randomized subjects for the three to one randomization weighted towards <unk> treated subjects.

Dr. Michael Goldstein: Our goal in this trial is to answer the question of how long can a single 600-mcg OTX TKI implant containing Exit Nib keep subjects dry without the need for re-treatment? We look forward to reporting interim six-month data in the third quarter of this year. We believe achieving a similar response rate and durability to that seen in the Australian-based study would represent a compelling drug product profile. Moving to our glaucoma program, OTX-TIC, we recently presented data from the completed U.S.-based phase one clinical trial evaluating the safety, biological activity, durability, and tolerability of OTX-TIC in subjects with primary open-angle glaucoma or ocular hypertension at the Glaucoma 360 meeting held on February 11th.

And this trial is to answer the question of how long can a single 600, microgram ots PKI implant containing exiting them keeps subjects dry without the need for re treatment.

We look forward to reporting interim six month data in the third quarter of this year we.

We believe achieving a similar response rate and durability to that seen in the Australian based study would represent a compelling drug product profile.

Moving to our glaucoma program <unk>, we recently presented data from the completed U S based phase <unk> clinical trial evaluating the safety biological activity durability and Tolerability of <unk> in subjects with primary open angle glaucoma or ocular hypertension glaucoma 360 meeting held on February 11th.

Dr. Michael Goldstein: We believe the Phase 1 data presented highlights OTX-TIC's ability to provide a clinically meaningful decrease in interocular pressure, or IOP, comparable to Trabecroft as early as two days following administration and for as long as six or more months with a single implant while preserving corneal health, representing its potential for a unique and differentiated drug product profile. With this data in hand, we've initiated and are actively dosing subjects in a U.S.-based Phase II clinical trial.

We believe the phase one data presented highlights <unk> ability to provide a clinically meaningful decrease in entire code pressure or IOP.

Terrible to travel cost as early as two days following administration and for as long as six months six or more months with a single implant, while preserving corneal health representing its potential for our unique and differentiated drug product profile.

Dr. Michael Goldstein: This trial is a prospective, multicenter, randomized-controlled trial evaluating the safety, tolerability, and efficacy of OTX-TIC for the treatment of patients with primary open-angle glaucoma or ocular hypertension. The trial will enroll approximately 105 subjects in three different arms, 35 subjects per arm, randomized one-to-one-to-one, in which subjects will receive a single OTX-TIC implant containing a 5-microgram or 26-microgram dose of Travacrost compared with an implant of Durista. The 5-microgram arm is utilizing a fast-degrading implant, while the 26-microgram arm is utilizing a standard implant.

Or ocular hypertension.

Trial will enroll approximately 105 subjects in three different arms 35 subjects per arm randomized one to one to one in which subjects will receive a single <unk> implant.

Turning a five microgram or 'twenty, six microgram dose of travoprost compared to compared with an implant of duress.

The five microgram arm is utilizing a fast integrating implant while the 26 microgram arm is utilizing a standard implants.

Dr. Michael Goldstein: The trial will observe the change in diurnal IOP changes from baseline at 8 a.m., 10 a.m., and 4 p.m. at 2, 6, and 12 weeks and follow duration of IOP response over time. Regarding our ocular surface disease programs, we remain committed to the development of our two dry eye programs. OTX-DED, a low-dose intercanalicular insert of preservative-free dexamethasone for the short-term treatment of the signs and symptoms of dry eye disease, and OTX-CSI for the chronic treatment of patients with dry eye disease.

Trial, we observed the change in dire at all Iot changes from baseline at eight am 10 am and four PM at two six and 12 weeks and fall duration of IOP response over time.

Dr. Michael Goldstein: For OTX-DED, we are developing an optimized clinical regulatory and manufacturing plan. This plan is expected to include some additional improvements to the product's formulation and the development of an improved vehicle comparator. For OTX-CSI, we're doing some reformulation work to improve retention and are also developing an appropriate placebo comparator. I would now like to turn the call back over to Donald to review our first quarter financial results. Thanks Mike. Net revenue, which includes both gross product revenue, net of discounts, rebates, and returns, which the company refers to as Total Net Product Revenue, combined with collaboration revenue, with $13.2 million for the first quarter and represented an 81% increase over the same period in 2021.

Regarding our ocular surface disease programs, we remain committed to the development of our two dry eye programs <unk> low dose <unk> molecular and sort of preservative free dexamethasone for the short term treatment of the signs and symptoms of dry eye disease, and <unk> CSI for the chronic treatment of patients with <unk>.

<unk> disease.

<unk>, we are developing an optimized clinical regulatory and manufacturing plan. This plan is expected to include some additional improvements to the product formulation.

And the development of an improved vehicle comparator.

For <unk> CSI, we are doing some reformulation work to improve improve retention and are also developing an appropriate placebo comparator.

Donald Notman: Net product revenue of Dextenza in the first quarter of 2022 was $12.5 million versus $6.7 million in the comparable quarter of 2021, reflecting an approximate 87% increase. Total net revenue for the first quarter also included collaboration revenue of $.7 million from a clinical support payment under our licensing agreement with Abbott. Research and Development Expenses for the first quarter were $13.1 million versus $10.9 million for the comparable period in 2021, driven primarily by an increase in unallocated expenses, predominantly unallocated personality costs.

I would now like to turn the call back over to Donald to review, our first quarter financial results.

Thanks, Mike.

Net revenue, which includes both gross product revenue net of discounts rebates and returns, which the company refers to as total net product revenue.

Bind with collaboration revenue was $13 2 million for the first quarter and represented 81% increase over the same period in 2021.

Net product revenue of DEXTENZA in the first quarter of 2022 was $12 5 million versus $6 7 million.

In the comparable quarter of 2021.

Collecting an approximate 87% increase.

Net revenue for the first quarter.

Also included collaboration revenue of <unk>.

$7 million from our clinical support payment under our licensing agreement with Avnet.

Research and development expenses for the first quarter were $13 1 million versus $10 9 million for the comparable period in 2021.

Driven primarily by an increase in unallocated expenses predominantly unallocated personnel costs and increased clinical trial costs.

Donald Notman: Increased Clinical Trial Cost, Selling and marketing expenses in the quarter were $9.1 million, as compared to $8.1 million for the same quarter in 2021, reflecting increased personnel costs associated primarily with an expansion of the commercial field. General and administrative expenses were $7.6 million for the first quarter versus $7.7 million in the comparable quarter of 2021. The company reported a net loss of $12.5 million, or a loss of $0.16 per share on a basic basis, and a loss of 22 cents per share on a diluted basis for the three months ended March 31, 2022.

Selling and marketing expenses in the quarter were $9 1 million as compared to $8 1 million.

Quarter in 2021.

Reflecting increased personnel costs associated primarily with an expansion of the commercial field force.

General and administrative expenses were $7 6 million for the first quarter versus $7 $7 million in the comparable quarter of 2021.

The company reported a net loss of $12 5 million.

Or a loss of <unk> 16 per share on a basic basis and a loss of <unk> <unk> per share on a diluted basis for the three months ended March 31 2022.

This compares to net income of $3 1 million.

For income of <unk> <unk> per share on a basic basis and a loss of 24 per share on a diluted basis for the same period in 2021.

Donald Notman: Associated with the company's convertible network, driven by a decrease in the price of its common stock during a quarter, non-cash charges for stock-based compensation and depreciation and amortization were $4.8 million in the first quarter versus $3.7 million for the comparable quarter in 2021. As of May 6, 2022, the company had approximately 76.8 million shares outstanding. As of March 31, 2022, the company had $145.4 million in cash and cash equivalents, versus $164.2 million at December 31, 2021.

Noncash charges for stock based compensation and depreciation and amortization were $4 8 million in the first quarter versus $3 7 million for the comparable for the comparable quarter in 2021.

As of May six 2022, the company had approximately $76 8 million shares outstanding.

As of March 31, 2022, the company had $145 $4 million in cash and cash equivalents.

$164 2 million at.

At December 31, 2021.

Donald Notman: Based on current plans and related estimates of anticipated cash inflows from Dextensa and anticipated cash outflows from operating expenses, the company believes that cash and cash equivalents will enable the company to fund planned operating expenses, debt service obligations, and capital expenditure requirements through 2023. This CASH guidance is subject to a number of assumptions, including those related to the impact from the ongoing COVID-19 pandemic. The revenues, expenses, and reimbursement associated with Dextenza, and the PACE of Research and Clinical Development Programs, among other aspects of the program. I would now like to turn the call back over to Antony for some final thoughts. Thanks, Donald.

Based on current plans and related estimates of anticipated cash inflows from DEXTENZA.

And anticipated cash outflows from operating expenses the company believes that cash and cash equivalents will enable the company to fund planned operating expenses debt service obligations and capital expenditure requirements through 2023.

This cash guidance is subject to a number of assumptions, including those related to the impact from the ongoing COVID-19 pandemic, the revenues expenses and reimbursements associated with DEXTENZA.

And the pace of research and clinical development programs among other aspects of the business.

I'd now like to turn the call back over to Anthony for some final thoughts.

Thanks, Tom.

Antony Mattessich: So before opening the call up for questions, let me do a quick summary. The company demonstrated solid commercial performance, growing total net product revenue for Dexpensa 87% over the comparable quarter of 2021. We are guiding net revenue for 2022 of between $55 million to $60 million, representing approximately 26 to 38 percent growth year over year, driven predominantly by sales of Dexenza in the surgical setting. We are expanding our commercial team to address the opportunity for dextenza in the office setting as we launch our recently approved indication for itching associated with allergic conductive itis. With the November 2021 OPPS final rule, CMS has laid out a path for the continued separate payment for Dextenza in the ASE environment after the pass-through expiration.

So before opening the call up for questions. Let me do a quick summary.

The company demonstrated solid commercial performance growing total net product revenue for an extend the 80% 87% over the comparable quarter of 2021.

We are guiding net revenue for 2022 between $55 million to $60 million, representing approximately 26% to 38% growth year over year, driven predominantly by sales of DEXTENZA in the surgical setting.

We are expanding our commercial team to address the opportunity predictions in the office setting as we launch our recently approved indication for itching associated with allergic conjunctivitis.

With the November 2021, Oh, PPS final rule CMS has laid out a path for the continued separate payment predict stands in the ASC environment after the pass through exploration.

Antony Mattessich: This would allow us to maintain and strengthen our surgical business as we build a new source of growth in the office environment. The U.S.-based trial of OTX-PKI, evaluating a single 600-microgram implant plus anti-VEGF injection versus standard of care every eight-week ILEA, is now fully enrolled and we expect to announce six-month interim data in the third quarter of 2022. We recently dosed subjects on our Phase II clinical trial of OTX-TIC for the treatment of glaucoma, which triggered a $2 million clinical support payment from our partner Acimet Therapeutix.

This would allow us to maintain and strengthen our surgical business as we build a new source of growth in the office environment.

The U S based trial of OTI PKI evaluating a single 600 micrograms implant plus.

Plus anti VEGF injection versus standard of care every eight week Eylea is now fully enrolled and we expect to announce six month interim data in the third quarter of 2022.

We recently dosed subjects in our phase II clinical trial of <unk> for the treatment of glaucoma, which triggered a $2 million clinical support payment from our partner Azimut therapeutics.

Antony Mattessich: We are also happy to report that our collaboration with Mosaic Biosciences has yielded a lead compound for our complement inhibitor program for the treatment of dry AMD. We believe this compound has best-in-class potential in the complement space, with targeted dosing every three to four months. Finally, the company ended the quarter with $145.4 million in cash on the balance sheet as of March 31, with a continued expected cash runway through 2023.

We are also happy to report that our collaboration with mosaic Biosciences has yielded a lead compound for our complement inhibitor program for the treatment of dry AMD we.

We believe this compound has best in class potential in the complement space with targeted dosing every three to four months.

Finally, the company ended the quarter with $145 4 million in cash on the balance sheet as of March 31.

With the continued expected cash runway through 2023.

We look forward to a strong 2022 and with that I'll turn the call over for questions.

Thank you ladies and gentlemen, if you have a question at this time. Please press Star then one on your telephone.

Your question has been answered or you wish to remove yourself from the queue. Please press the pound key.

Our first question comes from the line of Joe <unk> with Piper Sandler.

Great. Thanks for taking my questions guys and thanks for the DEXTENZA guidance and maybe I could start there. So so the growth you're projecting for DEXTENZA in 2022 in the surgical setting can you maybe quantify how much is that it is coming from increased penetration that you alluded to versus expectations.

For increased volumes in working through that estimated backlog and maybe relatedly. It seemed like we were off in the contribution from in office usage. This year I guess at this point and I realize it's early what's been the learning there thus far and what do you see as the biggest gating factor for this opportunity and what might be some.

Those bespoke solutions that Anthony you've mentioned.

Maybe I have a quick follow up.

Antony Mattessich: And what might be some of those bespoke solutions that, Antony, you... Thanks, and maybe have a quick follow-up. Thanks for the question, Joe. I think on the first point, we really haven't quantified exactly where that growth is going to come from, but I think implicit in the growth number that we have, it's really going to come from existing accounts and from additional cataract surgeries in those accounts. As we mentioned, we have a nice tailwind when it comes to the increased number of surgeries, but a fairly stiff headwind when it comes to the chronic underemployment or understaffing of the ASCs in hospitals.

Great. Thanks for the question John .

I think on the first point, we really haven't quantified exactly where that growth is going to come from but I think implicit in the gross number that we have.

It's really going to come from existing accounts and from additional cataract surgeries in those accounts as.

As we mentioned we have a nice tailwind when it comes to the increased number of surgeries, but it's fairly stiff headwind when it comes to the.

Chronic underemployment or under Understaffing of the afcs in hospitals as.

As I mentioned in the call really the work that it takes to grow the number of accounts requires.

Xtra and extra effort with that was.

The SaaS inside the ASC and hospital.

And the willingness of those of those.

The people in those places to do additional work at this moment is not particularly high we think thats going to resolve gradually and we think certainly as we look into 2023 is thats going to be.

Antony Mattessich: We think that's going to resolve gradually, and we think certainly as we look into 2023, that's going to be, it's going to reverse itself, so we'll have two tailwinds. But yeah, that very much is in the growth number that we have now, is that expectation that that situation is not going to resolve itself anytime soon. Um, in terms of the second question on the, the, uh, um.., the receptivity on the office side.

It's going to reverse itself. So we will have two tailwind.

Yes, that's very much is in the growth number that we have now.

Expectation that that situation is not going to resolve itself anytime soon.

In terms of the second question on the.

The receptivity on the office side.

We have not yet launched.

The team that is.

Now in place to really drum up business in that sector. So it's not like we've discovered a lot of things.

On the ground with the launch in the office environment.

We do get is a lot of very eager optometrist eager general ophthalmology practices.

That are looking at ways to medicalize their business and to offer something more for <unk>.

Patients that have itching associated with allergic conjunctivitis.

So as you can see we've been very conservative with what we think we're going to get to the rest of the year.

I hope next quarter I'll be able to report at least qualitatively, what what we've been able to see in <unk> and maybe even quantitatively being able to demonstrate the penetration that we're starting to start starting to see but it's really too early right now Unfortunately, <unk> kind of the latest getting out into the market.

Joe Cantanzaro: Unfortunately, Omicron kind of delayed us getting out into the market at a time we really would have preferred to. But given that allergy season is starting just now, it's a good time to be getting into the office. Great, thanks. That's really helpful. And I could just squeeze in a couple on TKI.

At the time, we really would've preferred to but given that allergy season is starting just now it's a good time to be getting into the offices.

Great. Thanks, that's really helpful and I can just squeeze in a couple on on TK. I know you just presented the six month and HPE GOP data at ARVO, if I recall correctly I think that was one of the big.

Dr. Michael Goldstein: I know you just presented the six-month NHP GLP data at Arvo. If I recall correctly, I think that was one of the big gating factors to filing a full IND. I'm just wondering if having these data now changes anything, or is the plan still to let the U.S. Phase I run its course?

Gating factors to filing a full and im just wondering if having these data and out changes anything or is the plan still to let you.

<unk> phase one run its course and I know the Australian studies enrolling a single implant cohort is it possible that we see any data. There first ahead of the U S study or is the U S study. The next data update we should expect thanks.

Dr. Michael Goldstein: And I know the Australian study is enrolling a single implant cohort. Is it possible we see any data there first ahead of the U.S. study, or is the U.S. study the next data update we should expect? Thanks. Yeah, thanks, Joe. It's Mike.

Dr. Michael Goldstein: So in terms of your first question, yes. In terms of converting the exploratory IND to the IMD, we needed to have the GLP tox data. So that's the six-month data. We actually have data further out than that. So our plan would be to submit that data to the FDA and convert the exploratory IND to an IND, which should happen later this summer. At the same time, as you'd note, we've got the U.S. TKI trial, which is fully enrolled, and we look forward to having data from that trial in the third quarter of this year.

Yeah, Thanks, Joe its Mike.

So in terms of your first question, yes in terms of converting exploratory RMB to the IMT, we needed to have the GOP tox data. So that's the six month data, we actually have data.

Further out of that so the plan would be to submit that data to the FDA and convert exploratory R&D to R&D, which should happen later this summer.

At the same time.

As you would note.

The U S. <unk> trial, which is fully enrolled and we look forward to having data from that trial in the third quarter of this year.

Dr. Michael Goldstein: To your last question about the Australian data, as you correctly note, we do have a group going with a single implant 600-microgram group in Australia. And I think what we've always said is when we have something meaningful to say, we would say it.

Your last question about the Australian data as you correctly note, we do have a group going with a single.

<unk> 600 Microgram group in Australia.

And I think what we've always said is when we have something meaningful to say we would say.

I think the timing of that would be somewhere.

Probably after the U S data I would guess, where we actually have enough patients that are far enough along so I think the next readout on that would be the U S trial data.

Joe Cantanzaro: Thanks. That's all helpful. Thanks for taking my questions. Thank you. Thank you. And our next question comes from the line of Dane Leon with Raymond James. Hi.

Okay got it. Thanks, that's all that's all helpful. Thanks for taking my question.

Yes.

Thank you.

Our next question comes from the line of Dane Leone with Raymond James.

Hi, Thank you for taking my questions and congratulations on the progress.

I think it would be helpful. So maybe you can just go through some.

Asia setting on the <unk> PKI readouts.

The tech market in the U S study.

Based upon your knowledge of the patient.

Baseline that are being enrolled into the study.

And feedback from some of your pie.

What are you looking for in the six month outcome when compared to the active a flip of a step down.

Are you looking for actual resolution vitro retinal fluid are you looking for.

Maintenance.

Ah patients at the <unk>.

Minimal fluid at baseline or.

Yes, just the pure comparison in terms of the amount of.

Standard of care or a rescue injections in the active arm.

D var.

That would be super helpful. Thank you.

Dr. Michael Goldstein: Thank you. Hey, Dan, thanks for the question. So a great question, as always. So it's really important to keep in mind that the population we're looking at in the US is different than the population we looked at in Australia.

Sure.

Hey, guys. Thanks for the question. So yeah, great question as always.

So it's really important to keep in mind that the population. We're looking at in the U S is different than the population we looked at Australia. So the Australian population came in they could have been previously treated or not but they had to come in with a fair amount of fluid in the trial. So we are really trying to see if we're the PCI could we get rid of that fluid.

Dr. Michael Goldstein: So the Australian population came in, they could have been previously treated or naive, but they had to come in with a fair amount of fluid to get in the trial. And we were really trying to see if with a TKI, could we get rid of that fluid? So not could we stabilize it?

Now can we stabilize or could we actually get rid of that fluid.

But I think what we found is with an interim ritual injection, we could get rid of that fluid.

And in some cases, we can completely get rid of that fluid and we can do that durably or and many patients six months or longer.

And we didn't have any safety signals that we're concerned about.

So with that we went into the U S trial and that trial is looking at a different population I think we would I think most kols, let's say, it's an easier population. So it's a group of patients that have previously been treated.

Dr. Michael Goldstein: So it's a group of patients that have previously been treated and are coming in in a relatively dry state. And we're asking a different question, which is, if you have patients who come in who don't have a lot of fluid, can you maintain them in that dry state? And we did, so that trial is, another difference is that trial is a mass trial, and it was randomized 3 to 1 to TKI versus the Epileptoceph group, which was every eight weeks. And so what we would expect is with the aflivercept group, we would expect those subjects would remain dry. We expect vision to be stable and that the OCTs would remain without fluid.

And are coming in in a relatively dry space.

And we're asking a different question, which is if you have patients who come in.

Don't have a lot of fluid can you maintain them in that state.

And we did that so that trial is another difference is that trials.

As a mass trial and it was randomized three to one TGI versus flavor subgroup, which is every eight weeks.

And so what we would expect this will give cover subgroup you would expect us as opposed to <unk>.

So we remain dry.

<unk> vision to be stable.

Poct's or to remain with our fluids and likewise with the CGI group, we would expect that those patients as well as maintain their vision and also.

Dr. Michael Goldstein: And likewise with the TKI group, we would expect that those patients will maintain their vision and also be maintained without fluid. So that's the data we will have, you know, in the third quarter of this year. And again, if you compare that data to the Australian population, we believe this is a lower bar to hit.

Mantega outflow.

That's the data we will have.

In the third quarter of this year.

And again, if you compare that data to the Australia populations. We believe this is a lower bar.

Dr. Michael Goldstein: If you've already had the fluid removed, we think maintaining that is a lower bar than trying to actually get rid of the fluid with the TKI. Great. And if I could ask just one follow-up on that. And this is a question that just comes up, you know, across a couple of your programs now, I think, given the results that we had with OTX-TSI. Could you maybe just take us through your level of confidence that the formulation with OTX-PKI is effective as a single dose and you will not run in or show issues with the formulation of the product that has been an issue in some of the other programs? Thank you. Yeah, I mean, every program is different.

Cabot fluid removed, we think maintaining that as a lower bar than trying to actually get rid of affluent.

Great and if I could ask just one follow up on that and this is a question that comes up.

Across a couple of your programs now.

I think given the results that we had with <unk>.

CSI.

Could you maybe just take us through your level of confidence that the formulation with Ots PKI is.

Is the effective as a single dose and you will not run in or so issues with that.

Formulation of the product that has been our issue and some of the other programs.

Yes.

Yes, I mean every program is different and they all use.

Different hydrogel is different.

And they're all specific to each program and also the place that we're placing the <unk> implant the difference.

So in the case of CSI with molecular in here when we're talking about an interatrial injection.

It's obviously inside the eye.

We know that there is more consistency with hydro gels and breakdown when they're in fluid filled the space. So when you put something in the eye, whether it's inter camera all our interim vitriol.

Dr. Michael Goldstein: So when you put something in the eye, whether it's intercameral or intervitreal, we know that's more consistent than it is when you place it into the canaliculates, where it's really only exposed to fluid at sort of the top end, if you will. So I don't think there's any read-through from CFI to TKI. I think based on the Australian data, we're very confident about what we'll see in the US trial. Is there more work we could do with formulation?

We know thats more consistent than it has been.

So that's the kind of way so that's virtually only exposed to Florida sort of a top end if you will.

So so I don't think theres any read through from CSI to Ti I think based on the Australia data, we're very confident about what we'll see in the U S trial.

Is there more work we can do with formulations, yes, there always is and there's always tweaks that we can make and I expect we would do that.

Dr. Michael Goldstein: Yeah, there always is, and there's always tweaks that we can make, and I expect we would do that. In terms of CFI, I'll just, you know, from a brief word. So we actually, you know, the issue is pretty straightforward with CFI. There was a certain excipient that was placed in to help with the mixing of the drug, just because there's some unique properties with the drug.

In terms of CSI.

All of us.

Great parts, so we actually.

The issue is pretty straightforward with CSI.

There was a certain excipient that was placed in to help with the mixing up the drug.

Because there are some unique properties of the drug and we think that maybe or lower retention.

Dr. Michael Goldstein: And we think that made for lower retention in the canaliculus. And we think that we have other ways of mixing the drug. We can get rid of that excipient.

The calculus, and we think that we have other ways of Mexican the drug we can get rid of that excipient and by doing that we can actually improve retention.

Dr. Michael Goldstein: And by doing that, we can actually improve retention for CFI. So I don't think there's any read-through to the TKI. And I also think, you know, CFI, we have a good way to get it back on track. Excellent. Thank you very much. I appreciate the additional commentary on CSI.

For CSI. So so I don't think theres any read through to to the CCI and I also think.

CSI, we are a good way to get it back on track.

Excellent. Thank you very much I appreciate the additional commentary on CSI. Thank you. Thanks.

Thanks, Matt.

Dane Leon: Thank you. Thank you. And our next question comes from the line of John Wolleben with JMP Security. Thanks for the updates and taking the questions. One on Dextenza and then a couple on the pipeline, if I may.

Thank you and our next question comes from the line of John Walsh with JMP Securities.

Yeah.

Thanks for the update and taking the questions one on DEXTENZA and then.

On the pipeline if I may.

John Wolleben: You mentioned the strong quarter in March in terms of billable inserts. Wondering if you could provide any comments on how April early may have looked, or are we going to continue to see, you know, the last month of the quarter be the strongest and then, you know, parlay that end-of-month demand with, you know, the backlog? Just kind of think about the demand throughout the quarter. Well, April may have been entirely consistent with the guidance that we've given, so there's certainly no reason to believe that we'd be falling behind that guidance. I think there is good reason to expect that the last month of each quarter is going to be, it's going to definitely have the majority of the units in the quarter.

You mentioned the strong quarter in March in terms of global answers I'm wondering if you could provide any comments on how April early may it looked or we're going to continue to see.

Last month of the quarter be the strongest and then parlay that.

At above demand with.

Backlog.

Think about.

The demand throughout the quarter.

While April and May are entirely consistent with the guidance that we've given so there's certainly no reason to believe that we'd be falling behind.

And that guidance I think.

There is good reason to expect that the last month of each quarter is going to be.

It's going to definitely have assessed the majority of the units in the quarter.

So I don't I don't think that would be there'd be any reason to change that going forward.

Antony Mattessich: So I don't think that would be, there are many reasons to change that going forward. Okay, and I might have missed this in prepared remarks, but do you have a timeline on when we could get an update on CSI and DEB in terms of, you know, next trial initiations? Hey, John. Thanks. It's Mike again.

Okay.

I might've missed this in the prepared remarks, but do you have a timeline and work again update on CSI and <unk> in terms of.

Next trial initiations.

Dr. Michael Goldstein: So you didn't miss it. We haven't given an update on the timeline. What I can tell you is, just to mention to Dane's question, for CSI, the issue is some reformulation work on the active, and that's active work that's going on. For both programs, there's work that needs to go on in terms of the comparator. As we've discussed before, the comparator for both these trials is an intracanalicular insert with the hydrogel, and what we know is that the hydrogel is a very effective way to block the canaliculitis, and this is a treatment that we use for dry eye disease.

Hey, John Thanks, Mike.

You Didnt Miss it we haven't given an update on the timeline.

What I can tell you.

I mentioned today is question for CSI the issue.

Summary formulation work on the <unk>.

Active work that's going on.

For both programs there is work that needs to go in terms of a comparator.

As we've discussed before.

The comparator appropriate for both of these trials is.

Enter kind of ocular and start with the hydrogel.

And what we know is that the hydrogel is a very effective way to block the canaliculus and this isn't a treatment that we use.

For dry eye disease.

Dr. Michael Goldstein: So it's no surprise, then, that you actually have not a placebo comparator here, but an active comparator. So we are working on other appropriate placebos, which will play a role for both the CSI and the DED. We plan to bring both back into Phase II programs, but we haven't revealed a timeline of when that will happen yet. Okay, and last one for me.

So no surprise that you actually have a placebo comparator here, but are active comparator.

So we are working on other appropriate placebos, which will play a role for both CSI.

We plan to bring Gulf.

Back into phase II programs, but we have heard all the timeline of when that will happen yes.

John Wolleben: I saw the data coming to ASGCT. How are you thinking about, you know, delivery of AAV vectors via your hydrogel, you know, I guess at a high level strategic perspective? And then also, what are the potential benefits of, you know, sustained delivery of a gene therapy to the eye?

Okay.

Last one for me I saw that data coming at as GCT.

How are you thinking about.

<unk> delivery of AAV vectors via your hydrogel I guess at a high high level strategic perspective, and then also what are the potential benefits of sustained delivery of a gene therapy to the eye.

Yes.

Dr. Michael Goldstein: Yeah, great question. So I think there are two fundamental problems that we can address, with the hydrogel. The first is that all gene therapy programs, the dirty secret of gene therapy is that all gene therapy programs have issues with inflammation, and it's dose-dependent inflammation. And we believe that by delivering the viral vectors using a hydrogel, we can deliver higher concentrations or a higher number of viral vectors without inducing as much inflammation.

Yes, great question.

No.

There are two fundamental problems that we can address with the hydrogel. The first is that all gene therapy programs. The dirty secret of gene therapy is that all gene therapy programs have issues of inflammation.

It is dose dependent inflammation.

Yes.

We believe that by delivering.

The viral vectors using a hydrogel, we can deliver higher higher concentrations or a higher number of viral vectors without inducing as much inflation.

So that's one big opportunity.

Dr. Michael Goldstein: So that's one big opportunity. The second is location. So when you do gene therapy, particularly when you're doing subretinal delivery, You make a subretinal bleb with the viral vectors, and you hope that it goes where you want it to go, but sometimes it does and sometimes it doesn't, and what's done now is you just put more in if it's not going in the direction that you want, and so you end up with a very large bleb, and a lot of that then goes back through the retinotomy.

Second is location. So when you do gene therapy, particularly when Youre doing sub retinal delivery you.

You May go up a level.

<unk>.

The viral vectors and you hope that it goes where he wanted to go.

Sometimes it doesn't.

It does.

What's done now as you just put more of it.

If the stock going in the direction that it was.

So you end up with a very large bill out, but a lot of that then goes back to the right and all of it. So there is the potential too.

Dr. Michael Goldstein: So there is the potential to, exactly place in a very customized way. The Viral Vector is in the area you want it. If you put them in, if you can imagine, like a sheet of hydrogel, you can place that exactly where.

Exactly place a very customized way.

The viral vectors in the area of water. If you put them in if you can imagine like a sheets.

Hydrogel, you can place that exactly.

Exactly under the cells that you want to chime in.

Therefore, it got better location. So so we think that the opportunity in terms of decreasing inflammation or delivering more of our vectors, we think theres an opportunity to deliver.

With more appropriate locations I think those are the two big.

Got it.

As you said, we have data now on this animal model. The first presentation of that data will be at the FCC conference coming up.

John Wolleben: Coming up. Exciting stuff. Thanks again for taking the questions. Thank you. And our next question comes from the line of Yi Chen with H.C. Wainwright.

Exciting stuff, thanks, again for taking the questions.

Okay.

Thank you.

Next question comes from the line of <unk>, Chen with H C. Wainwright.

Yes.

Thank you for taking my questions.

At this point could you comment on whether the momentum you observed in March.

Persisted into the current quarter.

What I mentioned before is that the what we've seen in April and May is entirely consistent with the guidance that we've given so that is.

That is definitely we are seeing a return in the market.

But we certainly have great a great deal of confidence, we'll be able to satisfy our guidance going forward.

Got it do you expect any revenue generated from AC at all during this year.

Yes, we do we just don't expect it to be material relative to the surgical center.

And it's not part of your guidance range.

That's not part of the guidance range.

Got it okay.

And do you anticipate to pay them.

Any part of your current outstanding debt during 2022.

We don't at this point.

We will stage.

The initial.

Payment schedule for that.

Yes.

Okay. Thank you.

Yes.

Antony Mattessich: And it's now part of your plan. That's not part of the guidance, right? And do you anticipate to pay down any part of your current outstanding debt during... We don't at this point. Now that, you know, we'll stick to the initial payment schedule for that. Okay, thank you. Thank you. And our next question comes from the line of Anita Dushyant with Varenburg Capital. Hi, good afternoon.

Thank you and our next question comes from the line of Anita Dushyanth with Banbury capital.

Hi, good afternoon, Thanks for taking my question.

Yi Chen: Thank you for taking my question. I just wanted to clarify one more thing related to the guidance on revenues that you're giving for 2022. Would that be like the lower end of the number that you're expecting this year, considering, you know, like you mentioned, labor shortages continue to persist? And obviously, that is quite a bit of a headwind, combined with, you know, the backlogs that are continuing to build through the year.

Just wanted to clarify one last thing for me.

<unk> from Robert Baird.

Sure.

Duffy.

Lower end.

Okay.

Good morning.

Hello, Roger mentioned.

Vishal.

Paul.

On April .

Quite a bit of Hong Kong.

Combining Europe being out of the backlog.

Okay.

Yi Chen: You're absolutely correct. There is quite a bit of headwind from the understaffing, which in some ways is exacerbated by the return of a lot of cataract surgeries that were delayed during the COVID period, because you have a basically 80% staffing, and that staff in the ASDN hospital is typically less experienced than pre-COVID. You layer on top of that an increase in demand, it makes it harder to install new accounts or to go into existing accounts into different payer types into existing accounts.

Yes, that's absolutely correct, there is quite a bit of headwind from the understaffing, which in some ways is exacerbated by.

The debt.

The return of a lot of cataract surgeries that were delayed during the Covid period, because you have a basically 80% staffing and that staff in the ASC and hospital is typically less experience than pre COVID-19 you layer on top of that an increase in demand.

It makes it harder to.

To install new new accounts or to go into existing accounts and the different payer types into existing accounts.

Anita Dushyant: Like I said, as we go through the year, we would expect this to resolve, but it is a macroeconomic issue that will resolve, I think, with the entire economy, not just ASPs and hospitals. Okay, thank you. That's helpful. And then, lastly, in terms of launching in China, I'm sorry if I missed it. Was there any timelines communicated that prior? So, Anita, this is Chris White.

As we as we go through the year, we would expect this to result, but it is a macroeconomic issue that will resolve I think with the entire entire economy, not just <unk> and hospitals.

Okay. Thank you.

And then.

Okay.

In terms of.

One thing in China.

Hi, Paul.

Timeline telephone problem.

So anita.

Chris White: I oversee the AFMED relationship. No, what we referenced... Relative to our partnership with APHMED is that the product has been approved in Macau and is now actually has been launched in Macau. Our partner APHMED is continuing to pursue the registration of Dexzenza in China.

This is Chris White I hope to see the Ahmed relationship no what we referenced.

And relative to our partnership with <unk> is that the product has been approved in Macau and is now actually has been launched in Macau.

Our partner <unk> is continuing to pursue.

The registration of <unk> in China.

Operator: Thank you for your time. Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect.

Okay.

That's helpful.

Okay.

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

Q1 2022 Ocular Therapeutix Inc Earnings Call

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