Q1 2022 Oyster Point Pharma Inc Earnings Call
Good evening and welcome to Oyster point Pharma first quarter 2022 earnings conference call.
Name is Shannon.
Today.
After the Companys formal remarks, there will be a question and answer session.
At this time I would like to turn the call over to Mr. Ahmed.
Farmers VP Investor Relations. Please go ahead.
Thank you and good evening, everyone and welcome to Oyster point Pharma first quarter 2022 earnings conference call.
Evening, we issued a press release containing our financial results and recent business highlights for the first quarter ended March 31 2022.
In addition, our earnings press release and Form 10-Q, which were filed with the SEC. After the close of market today are available on our website under the investors and media section at Www Dot Oyster point Rx Dot com joining.
Joining us on our call today are Dr. Jeffrey NAU, President and Chief Executive Officer of Oyster point Pharma, Dan Lochner, Our Chief Financial Officer, and Jonathan <unk> Branco, our Chief commercial officer.
Following our prepared remarks, we will open up the line for questions.
Please note that during the call today, we will be making forward looking statements regarding potential future events, including statements on oyster point pharma potential future financial status and results of operations and our plans and potential for success relating to commercializing <unk> nasal spray.
These forward looking statements involve known and unknown risks uncertainties and other factors that may cause our actual results to differ materially from any future results performance or achievements expressed or implied by such statements.
For a description of these factors. Please see our quarterly report on Form 10-Q for the quarter ended March 31, 2022 filed with the SEC after the close of market today.
I will now turn the call over to Dr. Jeffrey now, our president and Chief Executive Officer.
Thank you Aarti good evening, everyone and thank you for joining us on the call today.
2022 continues to be very exciting for oyster point, we've had a great first quarter and I'm pleased to report strong quarterly results related to the sale to your buyer.
In November 2021, we launched here by the first and only FDA approved nasal spray for the treatment of signs and symptoms of dry eye disease.
Today I'll provide you with an update on our commercial progress during our first full quarter in the marketplace and perspectives on the significant opportunity ahead for us with tier by a nasal spray.
I'll, then review additional business highlights and our pipeline progress.
Dry eye disease, and ocular surface disease in general and historically been addressed by topical eye drop therapy.
Topical dry eye disease drops can stay in burn when administered to an already irritated ocular surface, often resulting in poor patient compliance compounding the problem of patient compliance and persistence is the fact that these products often takes such a long time to work for most patients.
<unk> nasal spray is an effective treatment option with a new innovative pathway to treating the signs and symptoms of dry eye disease for the estimated 38 million people impacted by dry eye disease in the United States.
Over the past few months I have spent a considerable amount of time in the field throughout the United States meeting with eyecare professionals and listening to their feedback I continue to see high levels of interest and.
And enthusiasm for tier buyer among the eye care community ophthalmologist and optometrists consistently tell me. They are excited to finally have an effective well tolerated treatment option with a new mechanism of action leveraging the biologically active natural tear film to treat dry eye patients.
Most importantly, though we are hearing significant positive feedback from dry eye disease patients on their satisfaction with tier buyer and continue to be encouraged by the stories from patients using tier buyer as their first prescription dry eye therapy as well as for those who have tried and failed many of the other existing prescription dry eye therapies.
In addition, I want to take a moment to congratulate the oyster point team for the amazing work that they're doing to significantly advance patient care in ophthalmology and optometry in my estimation, we truly have the best team in the eye care space.
In the first quarter of 2022, approximately 19000 tier buyer prescriptions were filled and these were written by over 4500 unique prescribers. The company recognized $2 7 million of net product revenue related to sales of tier buyout during the quarter.
Since our last earning call Oyster Point's market access team has made significant progress in establishing formulary coverage for tier buyer with top payer organization.
According to a third party syndicated source to your model now has commercial coverage for up to approximately 95 million lives or 52% of all U S. Commercial lives. Additionally, we have continued to support patients in getting access to tier buyer through our unique patient assistance program teams to your buyer John .
<unk> will shortly provide details regarding the commercial performance of tier buyer during the quarter.
Beyond the United States, we continue to engage with international partners with a goal of leveraging our product portfolio evaluating additional strategic opportunities and providing our shareholders with long term value. During 2021. The company entered into an exclusive licensing agreement with <unk> pharmaceuticals to develop and commercialize <unk>.
<unk> nasal sprays in China, where over 200 million people are impacted by dry eye disease on.
On March 21, 2022, <unk> announced regulatory clearance to conduct a phase III clinical trial of Oc <unk> nasal spray for the treatment of the signs and symptoms of dry eye disease in China. This progress demonstrates the potential for Oc <unk> nasal spray to be a disruptive therapy for dry eye disease in China.
We are excited to continue to partner with <unk> in their efforts to initiate this phase III clinical trial as we add to the clinical evidence supporting tier by a safety and effectiveness in the large population of patients of Asian descent.
Moving onto our pipeline, while we remain focused on continuing the successful execution of our commercial plan for tier buyer. Our R&D team is committed to developing breakthrough therapies that address critical unmet needs in eyecare.
We are excited about the potential for <unk> to play a role in treating stage, one neurotrophic care Compathy, which may represent as much as 15% of the $38 million dry eye disease patients mid states and can you overlap with other comorbidities such as late stage diabetes.
We believe.
That activating the natural tear film via the trigeminal nerve is an innovative approach to treating NK as currently available dry eye therapies, such as anti Inflammatories and immuno modulators do not address the underlying disease process. We continue to enroll patients in our Olympia phase III study of Oc <unk> nasal spray aimed.
Treating stage one in Kay we remain on track to expect results of this trial in the second half of this year.
Additionally, our lead asset from our enrich tear film gene therapy platform <unk> 101, an AAV vector encoding human nerve growth factor for the treatment of stage two and three NK has never been progressing in preclinical animal studies to support an IND filing.
Much like the promise of mrna technology harnessing the body's cellular machinery to address infectious diseases and cancer, we believe that injecting AAV into the lacrimal gland could change the way, we think about their pubic delivery of proteins peptides enzymes to treat diseases beyond killer surface.
Key milestones in these studies included the safety of the NGL lacrimal gland injection procedure as well as the production and secretion of nerve growth factor into the Tfl. We have now observed positive results across multiple animal studies with nerve growth factor secreted into the tear film as early as seven days post injection and continuing.
Through our last assessment of 42 days importantly, the interlock nimble gland injection has been safe and well tolerated in all studies, even in a safety study, where we administered repeated injections.
Topical nerve growth factor has already been shown to yield a corneal epithelium and improved corneal sensitivity in humans. However, current treatments are expensive and laborious involving topical drops applied as many as eight times per day over 56 days and meeting to be constantly refrigerated.
Our platform is to harness the body's own machinery in turn reducing cost increasing patient compliance and raising the quality of life for stage, two and three NK patients we plan to meet with the FDA in the second half of this year to progress this exciting therapy.
In summary, I am very.
Are you pleased with the Companys performance in the first quarter of this year I am encouraged by the strong commercial performance of <unk> in its first full quarter of sales post approval as well as the progress we are making on our exciting pipeline at Oyster point, we strive to deliver innovative and transformative therapies for ophthalmic diseases with unmet needs. This.
Vision guides, our work every day and it's reflected in the company's achievements so far in 2022.
I will now turn the call over to Johnson, <unk> Oyster Point's, Chief commercial officer to discuss our commercial activities related to tier buyer.
Thank you, Jeff and good evening everyone.
We're very excited about the progress we've made during the quarter.
I'm happy to report continued strong uptake of <unk> nasal spray six months post launch.
Our vision for <unk> has always been to transform and improve the lives of the estimated 38 million people in the U S alone who experienced dry eye.
As Jeff highlighted previously we are very pleased with the first quarter net product revenue of $2 7 million sales.
Salesforce has been meeting with and educating eyecare professionals or ecp's, including both optometrists and ophthalmologists.
In the first quarter of 2022, approximately 19000 prescriptions have been filled and were written by over 4500 unique ecp's.
This reflects the enthusiasm for <unk> and patients alike.
Tobias market position continued to strengthen as it increasingly considered an exciting and effective new treatment for the signs and symptoms of dry eye disease.
Additionally, our market access team has had continued success in securing coverage for <unk> with top payer organizations.
As mentioned during our last earnings call effective February 19, 2022 tier buyer was placed on express scripts national preferred basic and high performance formularies, which collectively make up around 26 million lives.
Since then we have successfully obtained coverage with additional payers.
According to a third party syndicated source to buy it and that has commercial coverage for up to approximately 95 million lives, which represents 52% of all U S commercial lives.
As we continue to gain commercial beverage, we expect an increase in the propensity of physicians to write prescriptions for <unk> buyouts.
We are pleased with the progress and commercial coverage of tier by us since launch and anticipate receiving coverage determinations for all major commercial payers in the U S by mid 2022.
In addition to commercial coverage, we expect Medicare coverage determinations in time for 2023.
During the first quarter, we continued to offer a patient support program known this team turbine.
By leveraging technology and experience. This program has helped patients get access to tier buyer with multiple benefits, including assistance and ensuring home delivery and support in the insurance process.
For more information on <unk>. Please visit the website www dot tier buyer dash pro Dot com.
In addition, we continue to observe strong retail rates for <unk> by <unk>.
Since launch approximately 65% of prescriptions have been refilled within 60 days, which is an indicator of a positive response for patients and confidence from ECP.
As expected a few months post launch there are ebbs and flows in the progression of new and total prescriptions written.
Given to your bias novel mechanism and right of action, many prescribers want to see the patients back four to eight weeks after starting treatment to evaluate response to tier buyer.
Despite strong progress in establishing commercial coverage and offering a best in class patient support program, we're consistently optimizing our approach to drive growth in prescriptions for.
For example, we are continually refining our sales rep direction and incentive comp to drive new prescribers and depth of prescriptions per prescriber.
Additionally, we are continuing to explore ways to maximize fill rates across our distribution network.
Also to further promote to Avaya, we just launched peer to peer speaker programs in April .
So with six months of launch learnings, we continue to fine tune, our tactics and optimize our approach to drive <unk> and Rx.
Our multifaceted marketing approach continues to be led by education and promotional efforts directed towards eye care professionals and patients.
This is supported by direct to patient digital campaigns that emphasize tier bias unique benefits, including the simpler nasal spray administration and unique mechanism of action.
Direct marketing efforts have been bolstered by leveraging the latest technology, including virtual detailing digital and social media activities and partnerships as well as best in class analytics.
Additionally, our use of digital pharmacy system has made the process of procuring tier buyer even simpler for patients.
We intend to continue using the latest technologies and most effective strategies to drive adoption and market share of tier buyer.
I remain very proud of our commercial teams continued efforts and success during the quarter.
I will now turn the call over to Dan Lochner, Oyster Point's, Chief Financial officer to discuss our first quarter financial results.
Thank you John I will now provide a brief overview of oyster point pharma as first quarter financial results additional details about our first quarter can be found in our Form 10-Q that was filed with the SEC. This evening.
For the first quarter of 2022, Oyster point pharma reported a net loss of $47 9 million compared to a net loss of $18 9 million for the same period in 2021 as of March 31, 2022, cash and cash equivalents were $143 4 million compared to 100.
$93 4 million as of December 31, 2021.
Net product revenues for the first quarter of 2022 were approximately $2 7 million following the commercial launch of tier VI in the U S. In November 2021, the company did not generate any revenues during the three months ended March 31 2021.
Cost of product revenue for the three months ended March 31, 2022 was <unk> 3 million and consisted of product royalty expenses third party manufacturing cost reserves for inventory obsolescence and material cost of <unk> 7 million. This was partially offset by a four.
4 million supplier credit recognized during the three months ended March 31 2022.
Inventory manufactured prior to the FDA approval of <unk> nasal spray was charged to R&D expense and as a result, the company expects the unit cost of product revenue will be lower until the company fully utilizes the product that was manufactured pre FDA approval. The company started expensing preapproval inventories in.
2020.
The company's sales and marketing expenses increased by $22 4 million. During the three months ended March 31, 2022 compared to the same period in 2021. The increase was primarily due to higher payroll related expenses of $11 6 million inclusive of an increase in stock based compensation.
<unk> 7 million as well as sales commission expense, which was driven by Onboarding a commercial field force in the second half of 2021. The company also incurred higher marketing expenses of $8 5 million in connection with advertising sample expense trade shows and other marketing efforts related to the U S.
Commercial launch of <unk> by the.
The company's general and administrative expenses increased by $4 4 million. During the three months ended March 31, 2022 compared to the same period in 2021. The increase was primarily driven by increased payroll related expenses of $2 6 million due to an increase in head count to support the company.
These business operations inclusive of an increase in stock based compensation of $7 million.
The company also incurred $1 3 million of other general and administrative expenses related to accounting legal and other professional services and insurance the increase in these other general and administrative expenses was driven by the company's transition from a clinical stage to a commercial stage company.
The company's research and development expenses decreased by $1 1 million. During the three months ended March 31, 2022 compared to the same period in 2021. The decrease was primarily due to lower expenses. After FDA approval of <unk> in October 2021.
The company incurred interest expense of $3 1 million during the three months ended March 31, 2022 related to the credit agreement with where we met <unk>.
Most expense included contractual interest of $2 1 million as well as noncash expense of $1 million related to the amortization of loan commitment fees and accretion of other long term debt related costs. The company had no interest expense during the three months ended March 31 2021.
With that overview of our financials I will now turn the call back over to the operator to open up the line for questions.
Thank you to ask a question you will need to press star one on your telephone.
Draw your question press the pound key.
Please standby, while we compile the Q&A roster.
Our first question comes from Ken Cacciatore with Cowen <unk> Company. Your line is open.
Hey team.
Good metrics here just wanted to tick through a few of them.
On the pricing it seems like you're actually driving that a little faster than we would have thought so.
The gross to net here about 75% of them seem like a per prescription value of about $140. Just wondering can you talk about the pacing through the balance of the year and then maybe that would dovetail to the consensus is around $30 million. It looks as kind of we peak at our model and some of these metrics youre nicely on track, but wondering if you would speak to.
To that and then also John gave some nice data points around the refill rate can you just talk about that in comparison to restasis and <unk>. So we have a little bit of a feel for where that compares thanks. So much.
Yes, thanks, and I'll jump in.
As we progressed through Q1, we clearly have a little bit more clarity on various gross to net items related to you folks on bridge or on commercially paid product.
So we're happy where we came in Q1, we would expect Q2 to be more or less.
Round, where Q1 is and then.
Prudent in the second half versus the first half.
And then related to the revenue outlook for 2022, while we havent at this point provided that guidance.
Of course, assuming continued growth in prescriptions, and Trs, which John will get a little bit more into.
We're comfortable with where consensus is that.
Hi, Ken Thanks for your question on repo rates, Yes, we are quite pleased with the initial.
Our repo rates that we're seeing kind of aggregate around 65% refilled over 60 days. The interesting stuff is that we've seen actually patients that were put onto your buyer in the early parts of launch in November December that are still on drug getting their sixth retail is now at six months and so in comparison, that's either Restasis I mean, we have.
Quite done the math to see what persistence will be but with these refill rates. We do feel that we are we're really performing a little bit above expectations on.
To your bias persistence rates. So we will we will get that number for you.
The year progresses, but overall, leading indicators are quite positive on the acceptance of <unk> by both patients as well as our prescriber base.
Tim and John maybe I'll sneak one more in on in terms of the prescribers can you talk about repeat prescribers kind of what percent you are seeing obviously, a nicely expanding the clinician base, but if you have that data point.
Yes in terms of unique writers we mentioned for Q1, we were close to 45 hundreds.
If im looking launch to date, we're now at 5500 and a good proportion of them do.
Repeat and right. We're currently running around 75% of those.
One thing we have fine tuned and our launches when we initially went out with trying to get breadth of prescriptions. We're now also doing a lot of follow up calls to make sure that the prescription the physicians that have already written a prescription actually continue to follow up with their patients and continue to right. So thats been a bit of a fine tuning in our approach and we're seeing kind of higher.
And higher repeat prescriptions based on that.
Okay. Thanks, so much I appreciate it and keep up the good work.
Thanks, Ken.
Our next question comes from Christopher <unk> with Jpmorgan. Your line is open.
Great. Thanks for taking my question.
Great. Thanks for taking the questions and congrats on the progress.
First one is on payer coverage just wanted a bit more color on the digital covered commercial lives you added.
What is where these patients kind of downstream from ESI or where there are additional kind of major payers that you've.
<unk> brought on board or.
Any additional color you could provide there would be helpful.
Yes, Thanks, Chris.
Yes, we did have some downstream.
Plans from ESI that continue to be added to the original national preferred formulary.
There is another big group the Unitedhealth group that that was added during the period.
Kaiser Tri care.
We're very pleased that were not be able to be providing cover drug to the VA as well. So those are kind of the top six.
Plans and payers that make up the majority of those <unk>.
95 million lines that we currently cover.
Great.
Great progress here and maybe just one.
Kind of tangential, but.
Related point, so as we think about kind of the expansion of coverage through the remainder of the year.
You guys have had the bridge program in place. So how effective has that been really for patients who are either facing script rejections or who don't currently have coverage how successful you've been in converting those patients over.
And making sure that actually do get scripts I notice oftentimes.
<unk>.
There can be some timing issues in there could be some question in getting them through the patient hub.
Maybe.
Some color there and then also should we expect that as you expand coverage that we're going to see some flow throughs in terms of the script trends.
Or should we think about that about that impact be more on pricing.
Yes, let me comment first on the <unk>.
Our progress with commercial payer listing so we do expect coverage determinations by mid year. This year with the other two large pbms that control.
The majority of commercial lives.
So while we're awaiting that coverage, we do encourage our physicians to enroll the patients into our teams here by a program.
They are deemed.
Insured, but not covered they automatically get enrolled into our bridge program and we've seen very very good.
Kind of fulfillment rates through our partner.
90% of those scripts that do get.
Processed gets shipped to the patient so very very <unk>.
Pleased with that partnership with our third party hub.
Provider and as we do get additional commercial listings onboard we expect to start to convert these patients to revenue patients over time.
We will keep that rich program going while there is still a need for the patient so.
We want to make sure that.
If an appropriate patient.
Is deemed to be prescribed <unk> and the physician feels that the patient was appropriate.
We want to make sure that that script gets to that patient.
Great. Thanks.
Provided.
Thank you as a reminder to ask a question at this time. Please press Star then one on your Touchstone telephone.
Next question comes from Patrick Dolezal with lifestyle capital Your line is open.
Hi, This is Corey on for Patrick Thanks for taking our questions.
Just a quick one from us so looking forward into 2022, how do you plan on or how is your commercial strategy looking to shift over the course of the year do you have any granularity.
When.
DTC focus might emerge and when that does occur.
Some of the implications.
On cash burn and runway of that campaign.
Yes, so I'll talk a little bit around the DTC effort right out of the gate, we launched a lot of digital efforts targeting both the patients as well as our position. So a lot of focus on social media.
On search on digital efforts came in very very targeted we don't plan to really go broad on DTC until we get good coverage not just commercially but in 2023, we do want to would you expect to get.
Medicare coverage only then we will start to consider kind of a broader DTC effort, we feel that the more targeted digital efforts that we started since launch have been have been working quite well for us.
Okay.
Got it and can you provide any additional guidance on where SG&A spend might net out going forward and thinking about cash runway.
Some of the near term payouts youre anticipating from the <unk> Sheng agreement and is this included in your guided cash runway.
Yeah.
Yes, so at the moment I would say that our op ex.
As reported in Q1 would likely remain pretty consistent on a quarterly basis going forward.
Throughout 2022, we've really built out all of the internal infrastructure to effectively market to your buyer, whether it's on the SG&A side as well as everything that we need provision on the on the R&D side. So.
Stopping short provided quarterly consensus I would say that we.
Still we feel comfortable with the current Opex run rate.
And then we will re look at that as we enter into 2023 of course, adding an additional buckets of capital as John alluded to on the on the <unk>.
Ben.
To date, we've been.
<unk>.
Adam.
I'm, taking a direct.
Two points to patient perspective, with digital and we've been spending a decent amount of capital.
On social media that chunk of kind of speak a little bit closer to.
But at the current cash runway, we are still seeing about 12 months forward on our current budget.
Excellent thanks for taking our questions.
Thank you I will now turn the call back to Dr. Now for closing comments.
Thank you operator, and thanks, all of you for joining the call today.
In closing, we hope you have a clear picture of the strong trajectory of tier buyer is a truly unique and innovative option for the treatment of dry eye disease, we're extremely.
Excited about the potential for significant growth ahead for tier buyer as well as our pipeline assets.
We endeavor to continue to bring transformational ophthalmic therapies to patients while delivering long term value to shareholders I want to thank everybody for joining the call today have a great evening.
This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
Yes.
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