Aerie Pharmaceuticals, Inc.

Thank you, Operator. Good afternoon, and thank you for joining us. With us today are Vince Inito, ARI's Chairman and Chief Executive Officer, Tom Mitro, ARI's President and Chief Operating Officer, David Hollander, ARI's Chief Research and Development Officer, Casey Kopczynski, ARI's Chief Scientific Officer, John LaRocca, ARI's General Counsel, and Chris Dayton, ARI's Interim Chief Financial Officer. Today's call is also being webcast live on our website, investors.aripharma.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 with our commercialization of Repressa and Miraclatant in the United States, our collaboration in Japan, and prospects for 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, along with the associated business strategies regarding these products and product candidates. Finally, we will address our financial liquidity and other statements related to these 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 risks 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-Q tomorrow. In addition, during this call, we will discuss certain adjusted or non-GAAP financial measures. For additional disclosures relating to these non-GAAP financial measures, including a 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. With that, I will turn the call over to Vince.

Hi, thanks, Elmi, and good afternoon, everybody. Thanks for joining us today. We have a number of things that we're going to cover today, including our second quarter results, continued progress with our growing pipeline, and additional perspective on our global strategy. Before we start, however, I do want to welcome Chris Dayton, who has been named our interim CFO. Chris has been with the company since 2015 as our VP of Finance. I work very, very closely with Rich Rubino, who you may remember his last day was at the end of July. And so we do welcome Chris to the call. Our Garcoma franchise unit sales into wholesalers, which are the basis of our recorded revenues, amounted to 306,000 units in Q2 of 2021. This represents a 31% increase over the second quarter of 2020. It is important to note that our wholesaler volumes in Q2 of 2021 are consistent with what we generated in the fourth quarter of 2020. Now, I view this as very solid performance for Q2, considering that the fourth quarter of last year was a record increase And in the fourth quarter is typically our strongest quarter of the year. Now, despite the impact of COVID, when I compare Q2 of 21 versus Q2 in 20, we had 23% growth in the Garcoma franchise in terms of market prescriptions in the United States. And the market itself only grew a 2.8%. Again, we think that that's very, very solid performance as we move forward through the COVID environment. Now, I understand that there's frustration when you look at the weekly numbers, and certainly it's kind of tough even when you add them up to get to the kind of growth rates that I just described. Unfortunately, the weekly prescriptions give you an incomplete picture in terms of what's really happening, and that's why we publish our shipments out from wholesaler retail and why we provide you with information like we just did in our slide decks, in our corporate slide decks, where we look at the entire market over a longer period of time, which, again, provides a much more complete picture. In comparing Q2 of 21 to the first quarter of 21, our wholesaler volumes increased by 19%. We expect volumes in the second half of the year to continue to increase over the first half, provided the impact of COVID-19 on the industry continues to decline. As Tom Mitra will discuss in a few minutes, our recent volumes in terms of sales out to pharmacies and IQV prescriptions continue to trend very positively. Our second quarter 21 net revenues of $27.2 million are up 51% over last year and up 18% compared to Q1 of this year. Our June 30th year-to-date revenues of $50.2 million are up 31% over the comparable period of 2020. With half the year behind us, you can see why we remain comfortable with the analyst consensus for full year 2021. However, we're still not providing any specific 2021 guidance. While we see continued signs of recovery, it remains a difficult environment to predict as the COVID situation remains not only dynamic but really unpredictable, especially at the state level. As you saw in our earnings release, net revenue per bottle remained stable at $89 for the second quarter of 2021. This compares quite favorably to the 78 net revenue per bottle we experienced in Q2 last of last year and represents almost a 15 percent growth year-over-year. We have previously talked about our expectations regarding the stability of our net revenue per bottle. Aside from negotiating wholesale agreements and modest price increases, we continue to refine our rebate agreements to preserve our net revenue per bottle as well as maintain and grow the volumes of our glaucoma franchise. As we stated in our press release, Commercial coverage shows a decline due to the unemployment remaining higher than the pre-pandemic levels, as well as commercial payers seeking, as they've always done, as many money savings opportunities, so as an example, moving to generic only formulary configurations. It is important to note that our commercial business accounted for 24% of our total revenues for Q2 and has consistently decreased since we've launched our products. Our strategy continues to remain the same as far as refining our rebate agreements. Minimize the rebate burden while optimizing our net revenues. Tom will speak further about how our team has mitigated the decline in commercial coverage and where our coverage stands for the Glaucoma franchise as a whole. As we look ahead at the rest of 2021, we expect a continued increase in selling at G&A expenses to pre-COVID-19 levels. due to an increase in sales and marketing expenses as well as travel expenses. However, as we said previously, we do not expect an increase in spending to have a material impact on net cash used in operations. And Chris will cover that in a little bit more detail during his prepared remarks. Now I'll turn the call over to Tom to provide a further update on the U.S. glaucoma franchise, and after that I'll cover the highlights on the pipeline and the global fronts. Tom?

Well, thank you, Vince. Well, just as we reported in our previous calls, our glaucoma franchise continued to far outperform the glaucoma market and all other branded glaucoma products. Our second quarter 2021 total prescriptions for our franchise, based on IQVIA data, were up 23% or 31,000 prescriptions over the second quarter of 2020, while the glaucoma market was up just 2.8% or 230,000 prescriptions for the same period. Now, new prescriptions for our franchise were up an impressive 41%. in the second quarter of 2021 compared to the second quarter of 2020, far outpacing the market growth of 11%. The robust growth in new prescriptions speaks well for the future growth of our franchise. Patients will need to get their prescriptions obviously refilled. I'm looking at the last 12 months ending June of 2021, so to be clear, that's July of 2020 through June of 2021. Our franchise grew by 119,000 prescriptions, or 23%. with that glaucoma market declined by 2.6% or 911,000 prescriptions when compared to the previous 12 months. But before I go on talking about performance, I wanted to mention a short note on the prescription data. So as Vince mentioned, some of you may get frustrated when you try to match the weekly IQVIA data with the monthly IQVIA data. Now, the primary confusion stems from the monthly start and stop dates. For example, looking at June, June 1st was a Wednesday. So Monday and Tuesday of that week were May prescriptions, with the rest of the week obviously being June prescriptions. This is called a split week, and it's a common occurrence for the first and last week in nearly all months. But the weekly data always ends on a Friday. So the week had both May and June prescriptions. Now, that's the primary reason why adding up the weekly data usually does not match with the monthly data. Okay, now back to performance. Our sales out data, which is a reminder, reports bottles of our products that are shipped from wholesalers into pharmacies was also very positive. Our second quarter 2021 sales out units were up more than 33% or 77,000 units compared to the same quarter a year ago, with units in the month of June 2021 alone exceeding 112,000 bottles. Our sales out in the month of June 2021 we're up more than 38% compared to June of 2020, indicating another strong sign of recovery. Now, that's a big rebound from where we were this time last year, and this quarter's numbers are more than 30% higher than our pre-COVID levels in the first quarter of 2020. Our sales team, like the physicians, are eager to return to pre-COVID normalcy. As COVID continues to decline, our call activity continues to increase. With our year-to-date June 2021 call volume up 97% compared to the same period last year. The primary driver of our continued growth is the increasing number of offices that are open, with the vast majority of physicians' offices now open. Now, we're also pleased to see that ophthalmic medical meetings have started to return to in-person settings. In the past few months, we've had the opportunity to connect with physicians at both the Hawaii meeting and the American Society of Cataract and Refractive Surgeons meeting, which just wrapped up last week in Las Vegas. Physicians at these meetings were very eager to engage in discussions and to get back to pre-COVID normal behavior, and we look forward to meeting again in November at the American Academy of Ophthalmology meeting in New Orleans. Our Salesforce strategy continues to remain unchanged, with our Aerie sales team calling on the approximately 10,500 highest prescribers of glaucoma products. Last July, our contract sales force began calling on the next 1,500 highest prescribers, and the telesales team, which we added in June, began calling on the next 4,100 highest prescribers. Now, some of you may notice that these numbers changed a little from our previous calls as some physicians were moved from one audience to another for various reasons. Now, consistent with our previous reports, our market share has continued to grow in each of these three audiences. Our total prescriber count now exceeds 18,600. We currently have nearly 10,000 physicians who prescribe an area glaucoma product routinely each month, and approximately half of those monthly prescribers have been writing on a weekly basis. The highest prescribers of our glaucoma products, which is a reminder of what we call docile 9 and 10 prescribers, have maintained their prescribing frequency, writing more than 30 prescriptions per month. Now, Ropressa commercial coverage represents 77% of covered lives, while Roquatant commercial coverage represents 75% of commercial lives. As Vince mentioned, our commercial coverage shows a decline due to the unemployment remaining higher on pre-pandemic levels, as well as payers seeking money-saving opportunities like moving to generic only formulary configurations. In proactively addressing the situation, we had our sales force identify and work closely with the plan's specific prescribers to ensure they understood and were prepared to address the situation with the effective plan with tools like prior authorization forms and additional copay cards. Early results saw very high approval rates for our prior authorizations, ranging from 84% to 93%. Now shifting to Medicare Part D coverage, where Presto's coverage is at 92% while Roklatan is at 84% when the low-income subsidy or LIS patients of approximately 10% are included. These numbers include recent additional Medicare Part D coverage gains for both products. So once again, our franchise prescriptions volumes grew significantly looking at both the second quarter of this year and the last 12 months, and we continue to significantly outperform the broader glaucoma market. So in summary, and before I turn the call back over to Vince, We continue to capitalize on the momentum we established prior to COVID. Our glaucoma products are increasingly being prescribed by many eye care practitioners, and with our current managed care coverage levels, our strategy to move monthly prescribers to weekly prescribers, our share of voice initiatives, and our improvement in net revenue per bottle, we continue to see the associated benefits. Vince, back to you.