Q2 2019 Earnings Call
Operator: Welcome to the Ocular Therapeutix 2nd Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. It is now my pleasure to turn the call over to Donald Notman, Chief Financial Officer of Ocular Therapeutix. Please go ahead, sir.
At this time all participants are in a listen only mode.
Later, we will conduct a question and answer session and instructions will follow at that time.
It is now my pleasure to turn the call over to Donald not men Chief Financial Officer Lucky with Therapeutics. Please go ahead Sir.
Thank you operator, good afternoon, everyone and thank you for joining us on our second quarter 2019 financial results and business update conference call.
Donald Notman: Thank you, operator. Good afternoon, everyone, and thank you for joining us on our second quarter 2019 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 June 30th, 2019. The press release can be accessed on the investors portion of our website at investors.ocutx.com. Leading the call today will be Antony Mattessich, our President and Chief Executive Officer, who will provide a summary of our corporate developments. Also speaking on the call today will be Scott Corning, our Senior Vice President, Commercial, to update everyone on the Extensa commercial launch, and Dr. Michael Goldstein, our Chief Medical Officer, who will give an update on our clinical developments and pipeline.
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 ended.
June Thirtyth 2019, the press release can be accessed on the investors portion of our website at investors Dot those Cu, TX dot com.
Leading the call today, we'll be Anthony mileage, our president and Chief Executive Officer, who will provide a summary of our corporate developments also speaking on the call today will be Scott Corning, Our senior Vice President commercial to update everyone on the DEXTENZA commercial launch and Dr., Michael Goldstein, Our Chief Medical Officer, who will give an update on our clinical developments in pipeline. Following Michael's remarks, I will provide an overview of the financial highlights for the second quarter 2019, before turning the call back over to Anthony for summary and questions.
Donald Notman: Following Michael's remarks, I will provide an overview of the financial highlights for the second quarter of 2019, before turning the call back over to Antony for a summary and questions. As a reminder, during today's call, we will be making certain forward-looking statements. Various remarks we make during this call about the company's future expectations, plans, and prospects constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. However, actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the risk factors section of our most recent quarterly report on Form 10-Q, which was filed with the SEC this afternoon, August In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, except as we are required to do so by law, even if our views change. I will now turn the call over to Antony.
As a reminder, during today's call, we will be making certain forward looking statements. Various remarks, we make during this call about the company's future expectations plans and prospects constitute forward looking statements for purposes of the Safe Harbor provisions under the private Securities Litigation Reform Act of 1995.
Actual results may differ materially from those indicated by these forward looking statements as a result of various important factors, including those discussed in the risk factors section of our most recent quarterly report on Form 10-Q , which was filed with the SEC. This afternoon August seven 2019.
In addition, any forward looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date.
While we may elect to update these forward looking statements at some point in the future. We specifically disclaim any obligation to do so except as we are required to do so by law, even if our views change I will now turn the call over to Anthony.
Thanks Dom.
Antony Mattessich: Thanks, Donald. This has been a very productive quarter for Ocular. Clearly, the highlight has been the start of our commercial launch of Dixenza, which marks the transition of Ocular into a fully integrated commercial-stage biopharmaceutical company. We are pleased to tell you that Dextenza is in full rollout. Commercial product is now at distributors. Our field force is trained and has been calling on accounts since May.
This has been a very productive quarter for ocular clearly the highlight has been the start of our commercial launch of DEXTENZA, which marks the transition of macular into a fully integrated commercial stage Biopharma company.
We are pleased to tell you that extends is in full rollout commercial product is now with the distributors. Our field force is trained and has been calling on accounts since may our DEXTENZA day sampling program has been well received by patients surgeons and their staff.
And the migration to commercial supply has begun.
We believe that we have put ourselves in the best position for a successful launch.
Two key events took place in the quarter that supports extends the launch one the early FDA approval of our SMB that broadens Dextenzas label to include the treatment of post surgical inflammation and pain.
Antony Mattessich: Our Dextenza Day sampling program has been well received by patients, surgeons, and their staff, and the migration to commercial supply has begun. We believe that we have put ourselves in the best position for a successful launch. Two key events took place in the quarter that supported the Extensa launch. One, the early FDA approval of our SNDA that broadens Extensa's label to include the treatment of post-surgical inflammation and pain. And two, CMS's issuance of a C-code for transitional pass-through payment status, which enables Extensa reimbursement for patients covered under Medicare Part B. After the quarter ended, CMS issued our unique and permanent HCPCS J code to become active on October 1st of this year.
And to CMS issuance of the C code for transitional pass through payment status, which enables extends the reimbursement for patients covered under Medicare part B.
After the quarter ended the CMS issued our unique and permanent fix J code to become active on October onest of this year.
It is important to note that for an extend the J code is of particular importance given our value proposition.
DEXTENZA. Unlike most products with pass through payment status is not only deployed into operatively, but can also be utilized in the office setting.
You have had a significant number of physicians, who have expressed interest in using DEXTENZA in the office setting so that patients can enjoy the benefits of dropless steroid treatment.
Well the timing surgery is fully optimized.
But the J code in place extends it can more easily deliver on this inherent flexibility.
For those who may be new to the onset of story Dextenzas, a buyer reservable inter candle filler insert the deliberate 0.44 milligram dose preservative free DEXA methods own for up to 30 days.
The extent is approved for the treatment of post surgical inflammation and pain.
The product is the first of a novel dosage form and route of administration.
It has the potential to become a transformative product for both patients and physicians.
For patients DEXTENZA will offer the convenience of a full course of steroid treatment and single preservative free insert.
Antony Mattessich: It is important to note that for Dextenza, the J code is of particular importance given our value proposition. The Extensa, unlike most products with pass-through payment status, is not only deployed interoperatively but can also be utilized in the office setting. We have had a significant number of physicians who have expressed interest in using Dextenza in the office setting so that patients can enjoy the benefits of droplet steroid treatment while the time and surgery are fully optimized. With the J-code in place, Xtenza can more easily deliver on this inherent flexibility.
This means of delivery can replace a complex eye drop regimen.
But under the current standard of care and required to 70 topical ocular steroid drops in aggregate delivered over a full month.
For physicians extends a pest control of the post surgical steroid regimen back in their hands by mitigating the risk of patient noncompliance.
The market opportunity for DEXTENZA subs in substantial and the U.S. alone there are approximately $8 million ocular steroid prescriptions written each year.
Our eventual goal is to compete for all of them.
DEXTENZA is a better way of delivering a stairway to the surface of the eye and through our lifecycle management programs, we intend to demonstrate that over time.
Given our current labeling and reimbursement focused on surgery. Our initial commercial efforts are focused on the 2 million cataract procedures performed annually under Medicare part B.
Antony Mattessich: For those who may be new to the ocular story, Dextend is a bioresorbable intracanalicular insert that delivers 0.4 mg of preservative-free dexamethasone for up to 30 days. Dextend is approved for the treatment of post-surgical inflammation and pain. The product is the first of a novel dosage form and route of administration that has the potential to become a transformative product for both patients and physicians. For patients, PXtenza will offer the convenience of a full course of steroid treatment and a single preservative-free insert. This means of delivery can replace a complex eyedrop regimen that, under the current standard of care, can require up to 70 topical ocular steroid drops in aggregate delivered over a full month.
It is also important to note that insertion of DEXTENZA or any other future drug eluding into kind of like color insert is associated with the CPT procedure code zero three fivesixty.
The expectation is to establish usage of this code and to gain more reliable payment over time.
Our launch strategy, which Scott Corning, our senior Vice President commercial will go into more depth on shortly is designed to maximize the positive early experiences with DEXTENZA, both clinically and administratively.
In the early stages, our key determinant success will not be the number of surgeons or ambulatory surgery centers that use DEXTENZA, but how many makes extensive part of their continuing counteract protocol.
I've personally observe surgery at a number of FSC since launch encouraged by the patient surgeon and staff enthusiasm for the product.
Making the extensive part of a standard surgical protocol requires that we surround the customer with the proper support and services and that we build deep and trusting relationships.
Well the launch of DEXTENZA will clearly be the near term value driver for ocular. It is important to remind everyone about our robust pipeline Dr., Michael Goldstein, our CMO will provide an update later in this call.
Antony Mattessich: For physicians, Xtenza puts control of the post-surgical steroid regimen back in their hands by mitigating the risk of patient noncompliance. The market opportunity for Dick's End is substantial. In the U.S. alone, there are approximately 8 million ocular steroid prescriptions written each year. Our eventual goal is to compete for all of them.
Finally, as we talk about all the good news associated with the launch of extends the in the development of our pipeline, we continue to build a top notch organization.
In this quarter, we announced two important senior management hires Patricia kitchen, as Chief operations officer to oversee our manufacturing quality programs and Chris White, the head of our business and corporate development efforts.
We're excited and encouraged that October was able to attract people the caliber of patrician Chris It speaks volumes for the team the culture and the potential the platform.
With that introduction I'd like to turn the call over to Scott Corning, Our senior Vice President commercial for more of our commercial launch of expenses.
Antony Mattessich: Scans are a better way of delivering the steroid to the surface of the eye, and through our life cycle management programs, we intend to demonstrate that over time. Given our current labeling and reimbursement focused on surgery, our initial commercial efforts are focused on the 2 million cataract procedures performed annually under Medicare Part. It is also important to note that insertion of Xtensa, or any future drug-eluting intercanalicular insert, is associated with the CPT procedure code 0356T. The expectation is to establish usage of this code and to gain more reliable payment over time.
Thanks Anthony.
As we have announced on prior quarterly calls we made the decision to launch DEXTENZA ourselves in the U.S. market with a direct sales force.
Going direct is an important aspect of our commercialization strategy based on our strong belief that this specialized sale essentially the surgical sale of a pharmaceutical product is a unique proposition best executed by a key account team with deep experience in ophthalmology, selling buy and build products and who are able to navigate the complexities of account based selling.
Today, we have in place a team of 21 key account managers that we referred to as camps, who are supported by five field reimbursement managers and five medical science liaisons all of whom are trained and in the field today actively calling on and assisting accounts with DEXTENZA.
We have a simple philosophy within the commercial team that I think captures our approach early on in the launch we want to identify and then invest the time at the right accounts across the multiple stakeholders at these accounts, both office and AMC in order to get customers, both clinically and reimbursement ready.
Antony Mattessich: Our launch strategy, which Scott Corning, our Senior Vice President of Commercial, will go into more depth on shortly, is designed to maximize the positive early experiences with Xtensa, both clinically and administratively. In the early stages, our key determinant of success will not be the number of surgeons or ambulatory surgery centers that use Extensa but how many make Extensa part of their continuing cataract protocol. I have personally observed surgery at a number of ASCs since launch and am encouraged by the patient, surgeon, and staff enthusiasm for the product. Making NXTENSE a part of a standard surgical protocol requires that we surround the customer with the proper support and services, and that we build deep and trusting relationships. While the launch of Expensa will clearly be the near-term value driver for Ocular, it is important to remind everyone about our robust pipeline.
This will enable them to adopt DEXTENZA into their practices successfully we believe this holistic approach will ensure long term success within these high volume centers, our camps have begun to execute a focused sampling program that we refer to as DEXTENZA days.
These sessions involve discussing best practices with a surgeon and his or her team and then trialing the product through a number of cataract surgeries with this hands on and personalized approach surgeons become comfortable with the insertion procedure as they clean best practices from both the clinical and reimbursement standpoint.
The goal is to ensure that both patients and surgeons have a positive experience patients are comfortable and pleased with the overall surgery, while surgeons are able to optimize process and insertion technique.
To date, almost 3000 patients have been treated by well over 200 surgeons in targeted geographies around the country.
What we are observing is that surgeons seem to get comfortable with the product quickly whether it be comments back from a physician about the ease of preparation and insertion quiet eyes or a clean ocular surface at the postop visits or comments from co managing optometrists excited about the outcomes overall feedback has been positive.
Antony Mattessich: Dr. Michael Goldstein, our CMO, will provide an update later in this call. Finally, as we talk about all the good news associated with the launch of Xtenza and the development of our pipeline, we continue to build a top-notch organization. In this quarter, we announced two important senior management hires, Patricia Kitchin as Chief Operations Officer to oversee our manufacturing and quality programs, and Chris White to head up our business and corporate development efforts. We are excited and encouraged that Ocular is able to attract people of the caliber of Patricia and Chris. It speaks volumes for the team, the culture, and the potential of the platform. With that introduction, I'd like to turn the call over to Scott Corning, our Senior Vice President, Commercial, for more on our commercial launch of TXPENSA.
We understand that for a new product with the new reimbursement pathway, we need to provide comprehensive reimbursement support for patients surgeons and surgery centers. As a result, we have established our reimbursement services hub called DEXTENZA 360.
With this we have taken a similar high touch approach to billing and reimbursement that we have applied to introducing DEXTENZA to surgeons and their staffs.
Our objective is to work closely with surgery center administrators and billing staff to ensure they are performed on the proper coding coverage and reimbursement of DEXTENZA.
This should facilitate successful billing of not only the product with our C code, but also best position the surgeon for reimbursement of the procedure with our unique CPT code.
In addition, as Anthony mentioned in his opening remarks, we have also received our J code, which becomes effective October 1st the J code will enable reimbursement in the office setting as well as in the surgical centers, providing increased flexibility to physicians on how they use the product. The J code also allows for more convenient and simplified reimbursement because J codes are more widely recognized by commercial insurance Medicare advantage as well as Medicare part B.
Scott Corning: Thanks, Antony. As we have announced on prior quarterly calls, we made the decision to launch Dextensa ourselves in the U.S. market with a direct sales force. Going direct is an important aspect of our commercialization strategy based on our strong belief that this specialized sale, essentially the surgical sale of a pharmaceutical product, is a unique proposition best executed by a key account team with deep experience in ophthalmology, selling buy-and-build products, and who are able to navigate the complexities of account-based selling. Today, we have in place a team of 21 key account managers that we refer to as All of whom are trained and in the field today, actively calling on and assisting accounts with Dextenza. We have a simple philosophy within the commercial team that I think captures our approach.
Simply put the permanent J code will further enhance patient access to DEXTENZA.
So while early in the launch we are pleased with the initial reception DEXTENZA is receiving and our strategy of establishing clinical and reimbursement readiness across multiple stakeholders account by account.
It's generating positive momentum in the market.
We look forward to providing additional updates on the launch of DEXTENZA in the future and I would now like to turn the call over to Michael Goldstein, Our Chief Medical officer to discuss progress on our pipeline.
Thanks Scott.
As you have heard from Anthony and Scott, We're thrilled with the recent commercial launch of fixed Denver.
DEXTENZA truly represents a franchise opportunity for the company with multiple lifecycle expansion opportunities and other and other indications where a product profile like fixed fenza has the potential to change the standard of care.
We have initiated an 80 subject pivotal phase three trial in allergic conjunctivitis.
Scott Corning: Early on in the launch, we want to identify and then invest the time at the right accounts across the multiple stakeholders at these accounts, both office and ASC, in order to get customers both clinically and reimbursement ready. This will enable them to adopt Dextenza into their practices successfully. We believe this holistic approach will ensure long-term success. For example, within these high-volume centers, our CAMs have begun to implement a focus sampling program that we refer to as Dextensis.
If successful we believe this trial will be part of an FDA submission to expand the potential indication of DEXTENZA to include non surgical indications.
We are also planning to start a clinical trial to evaluate evaluating the use of DEXTENZA in pediatric subjects veered a three years of age early in the fourth quarter of this year.
In addition, we have received great interest from the economic and Optometric communities in conducting investigator initiated trials and are starting several of these trials this year.
Moving to our pipeline, we remain very much focused on glaucoma.
Welcome is a large market in a disease that impacts an estimated 2.7 million people in the United States.
Scott Corning: These sessions involve discussing best practices with a surgeon and his or her team and then trialing the product through a number of cataract surgeries. With this hands-on and personalized approach, surgeons become comfortable with the insertion procedure as they glean best practices from both a clinical and reimbursement standpoint. The goal is to ensure that both patients and surgeons have a positive experience. Patients are comfortable and pleased with the overall surgery, while surgeons are able to optimize the process and insertion techniques. To date, almost 3,000 patients have been treated by well over 200 surgeons in targeted geographies around the country. What we are observing is that surgeons seem to get comfortable with the product quickly. Whether it be comments from a physician about the ease of preparation and insertion, quiet eyes, or a clean ocular surface at the post-op visits, or comments from co-managing optometrists excited about the outcomes, overall feedback has been positive.
The primary goal of Barack Obama treatment is to slow the progression of this chronic disease by reducing intraocular pressure.
Many different types of eye drops are approved to accomplish this however, given the current eye drop administration adherence to current topical glaucoma therapies is particularly for where the reported rates of non adherence ranging from 30% to 80%.
This low compliance rate, maybe maybe associated with disease progression and loss provision.
And maybe part of the reason that glaucoma is a significant cause of blindness in people over 60 years of age.
Prostate gland instead, the most commonly used class of medications to treat patients with glaucoma.
The products that we're developing are designed to address the issue of compliance by delivering a prostacyclin analogue formulated with our programs release hydro to lower in trucker pressure for several months within a single answer.
In May of this year, we announced topline results from our first phase III trial, Evault, TX TP for the treatment of glaucoma.
Well topline results did not achieved the primary endpoint. We are encouraged by the results, which showed statistically significant superiority in reduction of intraocular pressure for subjects, receiving OTI ex TP inserts compared with placebo at eight of nine diurnal time points.
The trial demonstrated TX TPS ability to lower intraocular pressure out to 12 weeks with a single insert using this novel dosage form.
When weighing the efficacy seen the trial with the durability and significantly higher rates of compliance with LTX TP relative to current standard of care. We continue to believe this product candidate represents a new opportunity for treating glaucoma patients that can overcome the burden of taking eyedrops, we plan to meet with the FDA later this year to discuss these results in a turret and determine appropriate steps forward.
Scott Corning: We understand that for a new product with a new reimbursement pathway, we need to provide comprehensive reimbursement support for patients, surgeons, and surgery centers. As a result, we have established our reimbursement services hub, called Dextensa 360. With this, we have taken a similar high-touch approach to billing and reimbursement that we have applied to introducing Dextensa to surgeons and their staff. Our objective is to work closely with surgery center administrators and billing staff to ensure they are informed on the proper coding, coverage, and reimbursement of dextrose. This should facilitate successful billing of not only the product with our C-code but also best position the surgeon for reimbursement of the procedure with our unique CPT code. In addition, as Antony mentioned in his opening remarks, we have also received our J-code, which becomes effective on October 1st.
OTI ex Trc is our second clinical stage glaucoma program.
The product is the buyer was overall travel cross containing hydrogel employment delivered via inter camel injections designed to deliver a higher level of I O P reduction.
We continue to enroll patients in a phase one perspective multicenter open label dose escalation clinical trial to evaluate the safety efficacy and durability and Tolerability of RPX T I see.
As this is an open label trial, we are able to assess early biological activity and safety and when we continue to be encouraged by the recent data.
With data on one patients now out to 13 months showing the ability to lower IP with a single insert equivalent to daily administration of Petrobras drop we're excited about the potential for T X T I see.
In addition, the hydrogen as designed has consistently biodegraded and approximately six to seven months.
The safety profile of OTI XT IC is being established and while there were no adverse changes to the cornea as measured by endothelial cell evaluation and qualification Trey.
Scott Corning: The J-Code will enable reimbursement in the office setting as well as in surgical centers, providing increased flexibility to physicians on how they use the product. The J-Code also allows for more convenient and simplified reimbursement because J-Codes are more widely recognized by commercial insurance, Medicare Advantage, as well as Medicare Part B. Simply put, the permanent J-code will further enhance patient access to Dextenza. So, while early in the launch, we are pleased with the initial reception Dextenza is receiving and our strategy of establishing clinical and reimbursement readiness across multiple stakeholders, account by account, generating positive momentum in the market. We look forward to providing additional updates on the launch of DexPens in the future, and I would now like to turn the call over to Michael Goldstein, our Chief Medical Officer, to discuss progress on our pipeline.
We did see several subjects with low grade inflammation, and peripheral and tears to make it.
We have developed two new formulations, so TX Trc and expect to start evaluating these formulations in the clinical trial in the near future.
Moving to the back of the eye, we continue to those subjects in a multicenter open label Phase one clinical trial for TX Teekay.
Okay X TK I have to buy our reservable hydrogen fiber implant, but anti antigenic properties delivered by Intravitreal injection being developed to treat patients with wet age related macular degeneration and other retinal diseases.
We believe OTI ex teekay carries the potential of being a next generation treatment for wet age related macular degeneration.
Given its ability to act upstream Avenger, and therefore may have broader anti angiogenic properties.
Preclinical data have demonstrated the ability to deliver an efficacious dose of teekay tied to the post here segment of the eye for the treatment of edge up induced retinal leakage or an extended duration of up to 12 months with a single injection.
The phase one trial is testing the safety durability and Tolerability of Otrexup Teekay.
In evaluating biological activity by following visual acuity overtime, and measuring retinal thickness using standard optical coherence tomography.
Michael Goldstein: Thanks, Scott. As you have heard from Antony and Scott, we are thrilled with the recent commercial launch of DXTENZA. Dextenza truly represents a franchise opportunity for the company with multiple life cycle expansion opportunities and other indications where a product profile like Dextenza has the potential to change the standard of care. We have initiated an 80-subject, pivotal Phase III trial in allergic conjunctivitis. If successful, we believe this trial will be part of an FDA submission to expand the potential indication of Dextenza to include non-surgical indications. We are also planning to start a clinical trial evaluating the use of Dextenza in pediatric subjects 0-3 years of age early in the fourth quarter of this year. In addition, we have received great interest from the economic and optometric communities in conducting investigator-initiated trials and are starting several of these trials this year.
The first quarter subject. So showed no safety concerns after meeting with the.
Data safety and monitoring committee, we have moved to the second.
Higher dose cohort and expected us our first subject in this cohort in the upcoming weeks.
I would now like to turn the call back over to Donald who will review our second quarter ended June 32019 financial results.
Thanks, Michael let me begin by summarizing our capitalization as of the quarter ended June 32019, we had $61.8 million in cash and cash equivalents versus $76.3 million at the end of the first quarter.
These cash mass excludes $6.8 million and $6.6 million, respectively of restricted cash as previously required.
By our existing senior debt facility and letters of credit for our property leases the cash balance benefited during the second quarter from $5 million in net proceeds generated from the sale of common stock under the company's 2019 sales agreement or ATM under which the company may offer and sell as common stock, having an aggregate proceeds of up to $50 million from time to time.
Offsetting the ATM and closed during the quarter were net losses of $24.5 million of which $4.9 million were noncash expenses and capital equipment investments of $1.2 million.
Michael Goldstein: Moving to our pipeline, we remain very much focused on glaucoma. Glaucoma is a large market and a disease that impacts an estimated 2.7 million people in the United States. The primary goal of glaucoma treatment is to slow the progression of this chronic disease by reducing intraocular pressure. Many different types of eyedrops are approved to accomplish this; however, given the current method of eyedrop administration, adherence to current topical glaucoma therapies is particularly poor, with reported rates of non-adherence ranging from 30 to 80%. This low compliance rate may be associated with disease progression and loss of vision and may be part of the reason that glaucoma is a significant cause of blindness in people over 60 years of age.
As disclosed in this afternoon's 10-Q filing and subsequent to the close of the second quarter. We have raised an additional $14.8 million in net proceeds under the ATM.
In addition, the company has also entered into an amendment with the lenders have its $25 million term loan facility to eliminate the liquidity covenant requiring that the company maintain.
$5 million in a restricted cash account.
The net impact is that cash and cash equivalents has increased nearly $20 million since the end of the second quarter.
Based on our current plans and forecasted expenses, we believe that existing cash cash equivalents will now fund operating expenses debt service obligations and capital expenditures in the third quarter of 2020, providing an additional quarter of cash runway since we last reported.
This is of course subject to a number of assumptions related to the revenue and expenses associated with the commercialization of DEXTENZA as well as the pace of our research and clinical development programs and other aspects of our business.
Research and development expenses for the second quarter were $9.4 million versus $8.7 million for the comparable period in 2018 and reflect an increase in unallocated costs, primarily costs associated with our pipeline programs as well as preclinical programs.
Michael Goldstein: Prostaglandins are the most commonly used class of medications to treat patients with glaucoma. The products that we are developing are designed to address the issue of compliance by delivering a prostaglandin analog formulated with our programmed release hydrogel to lower intraocular pressure for several months within a single insert. In May of this year, we announced top-line results from our first phase three trial of OTX-TP for the treatment of glaucoma. While these results did not achieve the primary endpoint, we are encouraged by the results, which showed statistically significant superiority in reduction of intraocular pressure for subjects receiving OTX-TP inserts compared with placebo at eight of nine diurnal time points. The trial demonstrated OTX-TP's ability to lower intraocular pressure out to 12 weeks with a single insert using this novel dosage form.
Selling and marketing expenses for the second quarter were $7.2 million as compared to $2.9 million for the same quarter in 2018.
This increase relates almost entirely to preparations for the commercial launch of DEXTENZA, driven primarily by the hiring of new members of the commercialization team, including camps field reimbursement managers and medical science liaisons as well as increased spending on consulting trade shows conferences and related costs.
Finally general and administrative expenses were $5.1 million for the second quarter versus $4.4 million in the comparable quarter of 2018.
The increase in expenses for the second quarter stemmed primarily from increased personnel professional and facilities fees.
Net revenues for the second quarter totaled $2.6 million in the aggregate and included both were sure and DEXTENZA revenues the aggregate revenues a point $6 million in the second quarter.
Compare $2.6 million in the same quarter in 2018.
As noted in the past we are not currently providing promotional support to assure and we do not expect product revenues to be material in 2019.
Michael Goldstein: When weighing the efficacy seen in the trial with the durability and significantly higher rates of compliance with OTX-TP relative to the current standard of care, we continue to believe this product candidate represents a new opportunity for treating glaucoma patients that can overcome the burden of taking eye drops. We plan to meet with the FDA later this year to discuss these results and determine appropriate steps forward.
With respect to the financial results for the second quarter, we reported a net loss of $24.5 million or a loss of 57 cents per share on a basic and diluted basis.
This compares to a net loss of $13.8 million or a loss of 37 cents per share on a basic and diluted fate.
Basis for the same period in 2018.
The net loss for the second quarter included $2.3 million in NAND non cash charges for stock based compensation and depreciation compared to $2.4 million for the same quarter in 2018.
Michael Goldstein: OTX-TIC is our second clinical stage glaucoma program. The product is a bioresorbable Travoprost-containing hydrogel implant delivered via an intracameral injection designed to deliver a higher level of IOP reduction. We continue to enroll patients in a Phase I prospective multi-center, open-label, dose-escalation clinical trial to evaluate the safety, efficacy, durability, and tolerability of OTX-TIC. As this is an open-label trial, we are able to assess early biological activity and safety, and we continue to be encouraged by recent data. With data on one patient now out to 13 months, showing the ability to lower IOP with a single insert, equivalent to daily administration of a travel cross-drop, we're excited about the potential for OTX-TIC. In addition, the hydrogel, as designed, has consistently biodegraded in approximately six to seven months.
The company had approximately 47.2 million shares issued in outstanding as of August 5th 2019.
This concludes my comments on our second quarter financial results I would like to turn the call back to Anthony for some summary thoughts.
Thanks Donald.
So before opening up the call for questions. Let me do a quick summary.
Extends is in full launch mode with positive initial feedback.
We received Arctic stem DEXTENZA label extension to include treatment of post surgical inflammation a quarter earlier than we expected.
We are currently the only dropless product indicated for the treatment of both post surgical inflammation and pain.
We received confirmation that our J code becomes effective on October Onest of this year also a full quarter earlier than we had expected. This is particularly important for extensive since we anticipate use in the ophthalmology office will become a major driver of our success and commercialization.
Our pipeline continues to advance and drop of Scotland treatment with the scheduling of a meeting with the FDA on the path forward for for OTI FCB.
With OTI X T. I see we now have one patient treated after 13 months with continued biological effect on a single dose.
Our back of the eye pipeline is also advancing and we are now moving to our second cohort in our phase one trial with OTI ex teekay in wet AMD.
The stringent financial control and opportunistic use of the ATM, we have extended our runway and now believe that we have cash and cash equivalents are sufficient to get us into the third quarter of 2020 based on current plans.
With that I will turn the call over for questions.
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Michael Goldstein: The safety profile of OTX-TIC is being established, and while there were no adverse changes to the cornea as measured by endothelial cell evaluation and corneal tachymetry, we did see several subjects with low-grade inflammation and peripheral anterior senechia. We have developed two new formulations of OTX-TIC and expect to start evaluating these formulations in the clinical trial in the near future. Moving to the back of the eye, we continue to those subjects in a multi-center, open-label, phase one clinical trial for OTX-TKI. OTX-TKI is a bioresorbable hydrogel fiber implant with anti-angiogenic properties delivered by intravitreal injection being developed to treat patients with wet, age-related macrodegeneration and other retinal diseases. We believe OTX-TKI carries the potential to be a next-generation treatment for wet, age-related macrodegeneration given its ability to act upstream of VEGF and, therefore, may have broader anti-angiogenic properties.
Our first question is from the line of Joe Cantor Fitzgerald with Jefferies. Your line is open.
Hi, This is Charles.
On for Joe.
From Piper.
Just looking for some additional commentary on whether quantitative or qualitative on the launch.
Think you had in the past there is approximately 900 high volume centers that you're prioritizing and maybe if you could just.
Provide some detail detail on how many centers you had contact with or what the pattern of ordering has been like center.
Yeah. Thanks, Thanks for the question I'm going to farm it out to Scott for some further detail, but we're we're not going to go into sort of very sort of a detailed numbers on the number of centers that we contacted as we mentioned, we're we're actually not really looking at a number of center, we're looking at the depth.
And we're actually incentivizing, our field force not on initial orders, but actually on.
Repeat orders.
And we're at a a situation now we're actually very pleased with the number of repeat orders.
It is getting close to about 50% of the number of of assay that have had have made initial orders.
So I said, we're looking for debt, we're not looking for breadth yet it is a very concentrated market as you as you mentioned.
So where we don't need to many centers to really have us part of their protocol before we start getting into a cash flow positive physician.
We expect to be able of course to be able to hit all of those over a period of time, certainly as we expand our commercialization efforts, but ill I don't know Scott. If you have anything else to add you want to sort of chime in here.
Yes. This is Scott Corning.
As reported we have distributed.
Or in news has been over well over 3000.
Michael Goldstein: Preclinical data have demonstrated the ability to deliver an efficacious dose of TKI to the posterior segment of the eye for the treatment of VEGF-induced retinal leakage for an extended duration of up to 12 months with a single injection. The Phase I trial is testing the safety, durability, and tolerability of OTX-TKI and evaluating biological activity by following visual acuity over time and measuring retinal thickness using standard optical coherence The first cohort of subjects showed no safety concerns. After meeting with the Data Safety and Monitoring Committee, we have moved to the second. Higher Dose Cohort and expected as our first subject in this cohort in the upcoming week. I would now like to turn the call back over to Donald, who will review our second quarter and the June 30, 2019 financial results.
Sample units and that's among a concentrated base of over 200 surgeons, but thats as Anthony pointed out a small number of assay, so and going deep our intention is not to go to one.
Surgeon car facility, but go to the high volume facilities that have a number of surgeons there.
Due to the time invested at each one of these centers so.
As we get further into the launch commercially we will be.
Providing more numbers, but at this point, what I can say.
Qualitatively is that people are very happy with the reception.
Our receiving the product extremely well, they're very excited to use it initially and they find it easy to use and afterwards are excited to get on board we've actually.
One thing we've been saying is go slow to go fast and by that we mean.
Amidst all the excitement we need to make sure that everyone is clinically and reimbursement ready before we want to go forward due to the time invested and the desire to get a repeat order. So we've been working hard.
Donald Notman: Thanks, Michael. Let me begin by summarizing our capitalization. As of the quarter ended June 30, 2019, we had $61.8 million in cash and cash equivalents versus $76.3 million at the end of the first quarter. These cash amounts exclude $6.8 million and $6.6 million, respectively, of restricted cash as previously required by our existing senior debt facility and letters of credit for our property lease. The cash balance benefited during the second quarter from $5 million in net proceeds generated from the sale of common stock under the company's 2019 sales agreement, or ATM, under which the company may offer and sell its common stock for aggregate proceeds of up to $50 million from time to time. Offsetting the ATM inflows during the quarter were net losses of $24.5 million, of which $4.9 million were non-cash expenses and capital equipment investments of $1.2 million.
In that way too.
Set ourselves up for long term success as we view this is very much a marathon not a sprint.
Thank you that's very helpful.
And I do appreciate that you probably don't want to provide any specific quantitative metrics at this point.
I want to ask about that 3000 patient number you cited and whether or not.
Any qualitative commentary on what the split there is like between commercial product versus samples.
And along the same line if you would be able to provide any sort of commentary on pre drug supply maybe.
What the current level of free drug supply from the sampling program is and whether or not you expect that to be a meaningful percentage of total drug supply going forward.
I'll jump in and take that up front I mean it is.
So the 3000 samples he talks about R&D samples not not not commercial product.
We're not going to want to talk about how much commercial product we have in the market at this moment.
But in terms of continuing supply we have a sampling program not a continued free supply program. So we have a limited number of samples that we provide her.
Health care professional or for first surgeon.
And we will once they reach that limit then they have to have commercial product going forward.
We are very very concerned about remaining compliant within the guidelines.
Donald Notman: As disclosed in this afternoon's 10-Q filing, and subsequent to the close of the second quarter, we have raised an additional $14.8 million in net proceeds under the ATM. In addition, the company has also entered into an amendment with the lenders of its $25 million term loan facility to eliminate the liquidity covenant requiring that the company maintain $5 million in a restricted cash account. The net impact is that cash and cash equivalents increased by nearly $20 million since the end of the second quarter. Based on our current plans and forecasted expenses, we believe that existing cash and cash equivalents will now fund operating expenses, debt service obligations, and capital expenditures into the third quarter of 2020, providing an additional quarter of cash runway since we last reported. This is, of course, subject to a number of assumptions related to the revenue and expenses associated with the commercialization of the extenda, as well as the pace of our research and clinical development programs. Research and development expenses for the second quarter were $9.4 million versus $8.7 million for the comparable period in 2018.
Yes.
Hey.
Hey, Charles its Donald not but I think we may have lost Anthony he's actually remote today as he is on vacation with his family but.
I think what he was going to finish off and say is that.
We've been very disciplined about maintaining.
The sample count with each surgeon so we are.
Really.
Truly compliant and it is a reasonable number that we are providing the surgeons that gives them enough to truly get comfortable and I'd say from a technique perspective.
Fairly expert with the product, but not so many that it would be kind of unreasonable from a commercial perspective, yes, and this is Scott I would add.
We only were met with product availability in mid May and so.
Through the rest of May and June constituting the second quarter, we didnt yet have an active reimbursement codes. So those were a 100% samples.
In the quarter and it's only been the last few weeks that we've had the opportunity to be in the commercial environment. So.
The majority of that number is samples.
Okay got it thanks for that detail and congrats again on all the progress.
Thanks Charles.
And once again, ladies and gentlemen, if you have a question at this time. Please press Star then the number one on your Touchtone telephone.
Our next question comes from the line of each and with H.C. Wainwright. Your line is open.
Donald Notman: reflect an increase in unallocated costs, primarily costs associated with our pipeline programs, as well as preclinical programs. Selling and marketing expenses for the second quarter were $7.2 million, as compared to $0.9 million for the same quarter in 2018. This increase relates almost entirely to preparations for the commercial launch of Dextensa, driven primarily by the hiring of new members of the commercialization team, including CAMs, field reimbursement managers, and medical science liaisons, as well as increased spending on consulting, trade shows, conferences, and. Finally, General and Administrative expenses were $5.1 million for the second quarter versus $4.4 million in the comparable quarter of 2018. The increase in expenses for the second quarter stemmed primarily from increased personnel, professional, and facility fees.
Hi, Thank you for taking my question.
My first question is after training how much time does that dr. need two things.
DEXTENZA.
Well, Scott you want to feel that.
Yes, I mean, I think what you can do.
You can I'll answer the question, but then I would invite you to go to you tube and you can see DEXTENZA videos.
Starting with the the preparation which is nothing more than opening the package and having the surgeon pick the DEXTENZA insert from the styrofoam holder.
The insertion itself literally takes a few seconds prior to that we do ask them or or suggest to them that they dilate the punctum.
So that several seconds as well so very clearly even in the very early going its been well under a minute and I've seen it go from well under a minute to about half of that and so you know what I'm, referring to is 45 seconds down to 20 and that could include the dilation and then being passed the forceps with the unit in it and then insertion of the DEXTENZA, but again.
Donald Notman: Net revenues for the second quarter totaled $0.6 million in the aggregate and included both Reshure and Extensa revenues. The aggregate revenues of $0.6 million in the second quarter compared to $.6 million in the same quarter in 2018. As noted in the past, we are not currently providing promotional support to Assure, and we do not expect product revenues to be material in 2019.
I would invite you to go to you tube as surgeons are posting their own videos.
Thank you I will check it out my second question is.
With C code or J code.
That's going to become effective.
So the 2 million.
Category.
Cataract procedures performed annually.
Their Medicaid Medicare part B.
I have 100% or 100% covered.
In terms of.
Thanks.
Donald Notman: With respect to the financial results for the second quarter, we reported a net loss of $24.5 million, or a loss of $0.57 per share on a basic and diluted basis. This compares to a net loss of $13.8 million, or a loss of 37 cents per share on a basic and diluted basis for the same period in 2018. The net loss for the second quarter included $2.3 million in non-cash charges for stock-based compensation and depreciation compared to $2.4 million for the same quarter in 2018. The company had approximately 47.2 million shares issued and outstanding as of August 5th, 2019. This concludes my comments on our second quarter financial results, and I would like to turn the call back to Antony for some summary thoughts.
That is correct and Thats why we are laser focused with the C code on Medicare part B for cataract surgery.
But I should note that our label is not limited to cataract surgery, but that's what we're targeting initially but cataract surgeons also do glaucoma refractive.
And corneal surgery, so that that will trickle down from there.
Okay, and so far it has any see being paid.
Under the CPT code 350 60.
Yes, yes.
Yeah, I can jump in that we've heard compromise.
Oh, hi, good being paid obviously, it's a category three code. So that payment is not is not universal and the amount.
Is is extremely variable.
You know our goal is over time to move this to a category one.
Where it will be ubiquitous we paid but also then at at a lower level than what we've seen but the good news is we do we do see payment and it is a it is a very positive movement.
Got it.
And my next question is starting from the surge quarter.
Antony Mattessich: Thanks Donald. So before opening up the call for questions, let me do a quick summary. Extend is in full launch mode with positive initial feedback. We received our Dexenza label extension to include treatment of post-surgical inflammation a quarter earlier than we expected. We are currently the only dropless product indicated for the treatment of both post-surgical inflammation and veins. We received confirmation that our J-code becomes effective on October 1st of this year, also a full quarter earlier than we had expected.
<unk> revenue from DEXTENZA.
Is it going to be the revenue that you ship based on DEXTENZA, you ship to the distributor or does the revenue truly reflect a physician demand.
We'll report revenue to the distributor I'm too to the the the specialty distributor.
Just as a matter of a sort of corporate reporting.
What we choose to to present in quarterly earnings.
May be different so clearly I'm I'm unconcerned with how much product, we shipped to distributor I'm much more concerned with how much product actually makes its way to patient.
So we'll we'll work on metrics that are that make sense or for real demand rather than then talk about what we're shipping into the distributor because I've certainly been environments before I've been burned by that.
Operator: This is particularly important for Dextenza since we anticipate use in the ophthalmology office will become a major driver of our success in commercialization. Our pipeline continues to advance and drop the scopoma treatment with the scheduling of a meeting with the FDA on the path forward for OTX-TP. With OTX-TIC, we now have one patient treated out to 13 months with continued biological effects on a single dose. Our back-of-the-eye pipeline is also advancing, and we are now moving to our second cohort in our Phase I trial with OTX TKI and wet AMD. Stringent financial control and opportunistic use of the ATM, we have extended our runway and now believe that we have cash and cash equivalents sufficient to get us into the third quarter of 2020 based on current plans. The data will turn the call over for questions.
And fold into a a false sense of security product is doing well and in fact.
The most important thing is we all know is is that it actually is being used and paid for.
By by patients and they see so that's that.
Going forward, our official reporting would be one thing, but we'll work on a set of metrics that we'll report on a regular basis on a regular basis. Once we have some rhythm in the a and the uptick.
Got it.
My last question is how should we look at the gross margin and operating expenses starting from the second quarter.
Well, our our gross margin as you know we have not to this is our own developments, we have no significant royalty.
And we have the other products that go into making the raw materials that go into making DEXTENZA or not to not overly expensive. So we have a very healthy growth market with this product.
Operator: Thank you. Ladies and gentlemen, if you have a question at this time, please press the star and then the number one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. To prevent any background noise, we ask that you please place your line on mute once your question has been stated. Our first question is from the line of Joe Catanzaro with Jeffries. Your line is open.
So you can you can assume that most of what we earn or Grace agreement portion of what you see in the revenue line is actually falling.
Through in the gross margin line.
In terms of expenses you can see that from this quarter.
We are at the the first school through our.
And what we feel like we can we can pack a fairly sizable portion of the market.
The the moving up the faster than we expected approval of the J code May in fact have us accelerate some of our decisions about how we move how we expand in our on our field force and commercialization efforts.
Antony Mattessich: Hi, this is Charles Frenchreb on behalf of Joe Catanzaro from Piper. Just looking for some additional commentary, whether quantitative or qualitative, on the DexPenzo launch. I think you said in the past there are approximately 900 high-volume centers that you're prioritizing. So maybe if you could just provide some detail on how many of those centers you've had contact with or what the pattern of ordering has been like at those centers.
Which could affect the amount of expenses that you see going down the line, but not in a dramatic fashion.
So I I pretty much take the quarter that you have and assume that that's about what we're going to be doing going forward.
Okay. Thank you.
Thank you and I'm not showing any further questions. This does conclude the program you may now disconnect everyone have a great day.
Yeah.
Scott Corning: Thanks for the question. I'm going to thumb it out to Scott for some further detail. But we're not going to go into very detailed numbers on the number of centers that we've contacted. As we mentioned, we're actually not really looking at the number of centers; we're looking at the depth. And we're actually incentivizing our field force, not on initial orders but actually on repeat orders. We're in a situation now where we're actually very pleased with the number of repeat orders is getting close to about 50% of the number of ASCs that have made initial orders. So, like I said, we're looking for depth. We're not looking for breadth yet. It is a very concentrated market, as you mentioned. So we don't need too many centers to really have us as part of their protocols before we start getting into a cashflow positive position. We expect to be able, of course, to hit all of those over a period of time, certainly as we expand our commercialization efforts. But I don't know, Scott, if you have anything else to add, would you wanna sort of chime in here?
Scott Corning: Yes, sure. This is Scott Corning.
Scott Corning: As reported, we have distributed, or are in use with, well over 3,000 sample units, and that's among a concentrated base of over 200 surgeons. But that's at, as Antony pointed out, a small number of ASCs. So in going deep, our intention is not to go to one surgeon per facility but to go to the high-volume facilities that have a number of surgeons there due to the time invested at each one of these centers. So as we get further into the launch commercially, we'll be providing more numbers. But at this point, what I can say qualitatively is that people are very happy with the reception, and are receiving the product extremely well. They're very excited to use it initially, and they find it easy to use, and then they are excited to get on board.
Scott Corning: We've actually, one thing we've been saying is, "go slow to go fast," and by that, we mean, amidst all the excitement, we need to make sure that everyone is clinically and reimbursement ready before we want to go forward, due to the time invested and the desire to get a repeat order. So we've been working hard in that way to set ourselves up for long-term success, as we view this as very much a marathon, not a sprint.
Antony Mattessich: Thank you, that's very helpful. And I do appreciate that you probably don't want to provide any specific quantitative metrics at this point. I want to ask about that 3,000 patient number you cited and whether or not you could provide any qualitative commentary on what the split there is like between commercial product versus samples. And on the same line, if you would be able to provide any sort of commentary on free drug supply, maybe what the current level of free drug supply from the sampling program is and whether or not you expect that to be a meaningful percentage of total drug supply going forward.
Donald Notman: I'll jump in and take that up front. I mean, it is See, the 3,000 samples he talks about are indeed samples, not commercial products. We're not going to talk about how much commercial product we have in the market at this moment. Unknown Speaker But in terms of continuing supply, I mean, we have a sampling program, not a continued free supply program. So we have a limited number of samples that we provide per healthcare professional or per surgeon. And we, once they reach that limit, then they have to have to use commercial products going forward. We are very, very concerned about remaining compliant with the OIG guidelines.
Donald Notman: Hey, Charles, it's Donald Notman. I think we may have lost Antony. He's actually remote today, as he's on vacation with his family.
Scott Corning: But I think what he was going to finish off and say is that we've been very disciplined about maintaining the sample count with each surgeon. So we are really, truly compliant. And it is a, you know, a reasonable number that we are providing the surgeons; it gives them enough to truly get comfortable. And I'd say from a technique perspective, fairly expert with the product, but not so many that it would be kind of unreasonable from a commercial perspective.
Scott Corning: Yeah, and this is Scott. I would add that we only had product availability in mid-May, and so... through the rest of May and June, constituting the second quarter, we didn't yet have an active reimbursement code. So those were 100% samples in the quarter. And it's only been the last few weeks that we've had the opportunity to be in the commercial environment, so the majority of that number is samples.
Scott Corning: Okay, I got it. Thanks for the detail, and congrats again on all the progress.
Operator: Thanks, Charles.
Yi Chen: And once again, ladies and gentlemen, if you have a question at this time, please press star and the number one on your touchtone telephone. Our next question comes from the line of Yi Chen with HC Wainwright. Your line is open. All right, thank you for taking my first question. After training, how much time does the doctor spend with you?
Scott Corning: Scott, you want to...
Scott Corning: [inaudible]
Scott Corning: Yeah, I mean, I think what you can do, you can, I'll answer the question, but then I would invite you to go to YouTube, and you can see Dextensa videos. Starting with the preparation, which is nothing more than opening the package and having the surgeon pick the Dextensa insert from the Styrofoam holder, the insertion itself literally takes a few seconds. Prior to that, we do ask them or suggest to them that they dilate the punctuation mark. So that's several seconds as well. So very clearly, even in the very early going, it's been well under a minute. And I've seen it go from well under a minute to about half of that. And so what I'm referring to is 45 seconds down to 20. And that could include the dilation, and then being passed by the forceps with the unit in it, and then insertion of the dextensa. But again, I would invite you to go to YouTube, as surgeons are posting their own videos.
Scott Corning: Thank you; I will check it out. My second question is, with the C code or the J code, is that going to become effective? So the two million cataract procedures performed annually under Medicare Part B have 100% coverage in terms of the usage of Dextensor. Is that correct?
Scott Corning: That is correct, and that's why we're laser-focused on the C-code on Medicare Part B for cataract surgery. But I should note that our label is not limited to cataract surgery, but that's what we're targeting initially. But cataract surgeons also do glaucoma, refractive, and corneal surgery, so that'll trickle down from there.
Scott Corning: Okay, and so far, has any ASC been paid under CPT code 0356T?
Scott Corning: Yes. Yeah.
Donald Notman: Yeah, I can jump in there and tell you we've had confirmation of being paid. Obviously, it's a Category 3 code, so the payment is not universal, and the amount is extremely variable. And you know, our goal is, over time, to move this to Category 1, where it will be ubiquitously paid, but also then at a lower level than what we've seen. But the good news is that we do see payments, and it is a very positive movement.
Yi Chen: My next question is, starting from the third quarter, when you report revenue from Dextensa, is that going to be the revenue that you ship, based on Dextensa, to the distributors?
Antony Mattessich: We'll report revenue to the distributor, to the specialty distributor, just as a matter of sort of corporate reporting. But what we choose to present in quarterly earnings may be different.
Antony Mattessich: So clearly, I'm not concerned with how much product we ship to the distributor. I'm much more concerned with how much product actually makes its way to patients. So we'll work on metrics that make sense for real demand rather than talk about what we're shipping to the distributor because I've certainly been in environments before where I was burned by that and fell into a false sense of security that the product was doing well, when, in fact, the most important thing, as we all know, is that it is actually being used and paid for by patients in ASCs. So going forward, our official reporting will be one thing, but we'll work on a set of metrics that we'll report on a regular basis once we have some rhythm in the uptake.
Antony Mattessich: Got it. My last question is, how should we look at the gross margin and operating expenses starting from the third quarter?
Antony Mattessich: Well, our gross margin is, you know, we have not, this is our own development. We have no significant royalty, and the products that go into making Nextenza are not overly expensive.
Antony Mattessich: So we have a very healthy gross margin on this product, so you can assume that most of what we earn or a very small portion of what you see in the revenue line is actually falling through the gross margin line. In terms of expenses, you can see that from this quarter on, we are at the first stage of our current... We feel like we can attack a fairly sizable portion of the market. The moving up, the faster than we expected approval of the J code may in fact have us accelerate some of our decisions about how we move, how we expand our field force, my commercialization efforts, which could affect the amount of expenses that you see going down the line, but not in So I pretty much take the quarter that you have and assume that that's about what we're going to be doing going forward.
Antony Mattessich: Okay, thank you. Thank you. And I'm not showing any further questions. So this does conclude the program. You may now disconnect. Everyone have a great day.
Operator: Unknown Executive, Unknown Attendee, Unknown Attendee, Unknown Attendee, Unknown Attendee, Unknown Attendee, Unknown Attendee, © BF-WATCH TV 2021, ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ???
Dane Leone, Joseph Catanzaro, Donald Notman, Jonathan Wolleben, Peter Kaiser, Colleen Kusy, Rabia Ozden, Steve Meyers, Antony Mattessich, Chaitanya Gollakota, Ocular Therapeutix Inc.