Aerie Pharmaceuticals, Inc.

Good afternoon. Thank you for standing by and welcome to the Every Pharmaceuticals Fourth Quarter and Full Year 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. Any instructions will follow at that time. Today's conference call will be recorded. It is now my pleasure to turn the floor over to ARIES Director of Investor Relations, Ami Wawishi. Please go ahead, Ami.

Thank you, Jerome. Good afternoon, and thank you for joining us. With us today are Vincent Ito, ARIES Chairman and Chief Executive Officer, Tom Mitro, ARIES President and Chief Operating Officer, Rich Rubino, ARIES Chief Financial Officer, David Hollander, ARIES Chief Research and Development Officer, Casey Kopczynski, ARIES Chief Scientific Officer, and John LaRocca, ARIES General Counsel. Today's call is also being webcast live on our website, investors.arypharma.com, and it will be available for replay as indicated in our press release. Now for forward-looking statements and non-GAAP financial measures. On this call, we will make certain forward-looking statements, including statements, forecasts, and observations regarding our future financial and operating performance, impacts of the COVID-19 pandemic, including our observations regarding ongoing operating expenses and net revenue per bottle. These statements will include observations associated associated with our commercialization of Verpressa and Roclatan in the United States, our collaboration in Japan, and prospects for a potential collaboration in Europe. They will also include plans and expectations regarding the success, timing, and cost of our clinical trials. Additionally, we will discuss progress regarding maintaining, requesting, or obtaining approvals from regulatory agencies of our products and product candidates, including our strategies and plans with respect to a newly introduced preclinical pipeline candidate. Finally, we will address our manufacturing activities and capabilities, our financial liquidity, and other statements related to future events. These statements are based on the beliefs and expectations of management as of today. Our actual results may differ materially from our expectations. Investors should carefully read the risk and uncertainties described in today's press release, as well as the risk factors included in our filings with the SEC. We assume no obligation to revise or update forward-looking statements, whether as the result of new information, future events, or otherwise. Please note that we expect to file our 10-K tomorrow. In addition, during this call, we will be discussing certain adjusted or non-GAAP financial measures. For additional disclosures relating to these non-GAAP financial measures, including reconciliation to the most directly comparable GAAP measures, please see today's press release, which is posted on the investor relations section of our website. Lastly, as we indicated in our earnings release, we have posted to our website a new deck addressing our new preclinical sustained release retinal implant, AR14034, and Vince will be discussing this latest addition to our pipeline during his remarks. With that, I will turn the call over to Vince.

Thanks, Ami, and good afternoon, everybody, and thanks for joining us today. We have quite a bit of good news to cover today, including our strong fourth quarter results, a positive outlook across our global strategy, and excellent progress with our pipeline, including a brand-new preclinical implant that may once again demonstrate the value of our sustained release implant platform we call PRINT. Let me start with the fourth quarter performance. Our glaucoma franchise showed strong positive momentum in the fourth quarter, with unit sales in the wholesalers, as you know, that's really the ones that I look at the most, which are the basis of our recorded revenues increasing to 307,000 units in the fourth quarter. This represents an 18% increase over the 261,000 units in the third quarter of 2020, an increase of almost 50% from the fourth quarter of the prior year, 2019. Our full year 2020 net revenues of 83.1 million are up to shy of 20% over prior year, and our volume certainly helped with significant gains in pay year coverage in 2020, along with increased awareness of our product profile, and as I've mentioned before, stabilization of our net prices. The net revenues of $24.7 million for the fourth quarter increased nearly 23% compared to the $20.1 million in Q3 of last year as we further penetrated Our formulary contracts have garnered further increases in the number of regular prescribers we have for our products, and Tom will be discussing that a little bit later. On our third quarter earnings call last November, we called out our expectations regarding the future stability of our net revenue per bottle. In fact, fourth quarter net revenues per bottle was $80, $3 per bottle higher than in Q3, and and consistent with Medicare Part D share. As we discussed previously, our strategy to increase the net revenue per bottle over time, including renegotiating wholesaler agreements and refining some of our managed care formulary contracts, and along with modest price increases, would help us get to that stability and eventually start seeing a net price increase over time. At this point, the new wholesaler agreements are in place, and the price increases have been implemented, managed care formulary contracts have been refined, and we're going to continue to do that throughout 2021. And some of these contracts that we are reestablishing won't actually impact our revenues or our net price until 2022. As we've said, the revision of the wholesaler agreements would have the largest beneficial impact on our net revenue per bottle going forward. The benefits primarily started during the Q1 of 2021, and we expect a gain of about 5% or so to our net revenues per bottle for the full year of 2021. So, obviously, we're very happy with the fourth quarter of this last year with our net revenues, which exceeded expectations, and we are looking forward to potential continued volume gains and increases in net revenues per bottle, as I just mentioned. Now, looking forward, we do remain somewhat cautious regarding the COVID effects on eye care professional practices over the next few months, and certainly a And we see the majority of the states, the rates are declining and the incidences are declining. Offices appear to be doing well, but certainly we're not in full recovery yet. And it's a very difficult environment to predict. And as a result, we will not be providing specific 2021 guidance at this point. Now, on top of COVID, the recent winter weather issues have hampered our product shipments across the nation, not just for us, but for many pharmaceutical products. Well, this is obviously a temporary situation. We may have lost a week or more volumes thus far in 2021 as a result of what we were facing, especially in the central part of the United States. This week appears to be rebounding quite a bit, and our distributors are talking about relieving a lot of the back orders and things like that. So we're hoping to gain some stability this week or at least stabilization this week. and get back to normal thereafter. However, we can say that based on the volume growth we're experiencing in the fourth quarter, along with the net revenue per bottle trajectory we expect, we are comfortable with consensus analyst estimates for the year, which are approximately $112 million. You should not expect any significant increases in our operating expenses in 2021. The fact that our volumes have grown sequentially each quarter in 2020 through the pandemic certainly gives us optimism that we can continue to grow and ultimately grow even faster rate once the physician's offices are back up to pre-COVID patient volume levels. Now I'll turn over the call to Tom Mitro to provide a further update on the glaucoma franchise here in the U.S. And after that, I'll cover important highlights on our global and our pipeline fronts.