Aerie Pharmaceuticals, Inc.

Good afternoon, thank you for standing by, and welcome to the AIRI Pharmaceuticals 3rd Quarter 2021 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. Today's conference call will be recorded. It is now my pleasure to turn the floor over to AIRI's General Counsel, John LaRocca. Please go ahead, sir.

Thank you, Chris. Good afternoon, and thank you for joining us. With us today are Ben McGraw, ARIES Interim Executive Chairman, Tom Mitro, ARIES President and Chief Operating Officer, David Hollander, ARIES Chief Research and Development Officer, Casey Kopchinsky, ARIES Chief Scientific Officer, and Jeff Calabrese, ARIES Vice President of Finance and Principal Accounting Officer. Today's call is also being webcast live on our website, investors.arifarma.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 and 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 Roquitane 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, product candidates, and implants, along with the associated business strategies regarding these products, product candidates, and implants. Finally, we will address 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 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 10Q 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 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 Ben.

Thanks, John. Good afternoon to everyone. Thanks for joining us today. We had a very good quarter, and we have a number of specific items to address today. These include our third quarter results, continued progress with our growing pipeline, and additional perspective on our global strategy. I want to begin by making five very important points. First, we have good commercial performance. You'll hear that in Tom Mitro's reporting of the results for the quarter. Our two commercial products are gaining market share and are consistently hitting analysts' revenue projections. Second, we are leveraging our products via ex-U.S. partnerships. It's our expectation these partnerships will enhance our balance sheet and I'll provide further comment on that one. Third, we have two clearly differentiated Phase III ready products in development and a strong pipeline behind them. You'll hear that from David Hollander. Fourth, we have a well-functioning manufacturing operation in Athlon, Ireland, and I'll comment on that. Fifth, we're in a good financial position, and Jeff Calabrese will cover that. I know some of you are concerned about the two departures from our senior management team. The management team we have is strong, and we're making good progress and filling those vacancies. As we've previously reported, we have a search open for a CEO, and we're now interviewing well-qualified candidates. The board takes its fiduciary responsibility very seriously and will take the time necessary to find the person best suited to execute the responsibilities of the job. In addition, we have an active search for a CFO, and we are interviewing very good candidates for that position right now. Now I'll turn the call over to Tom to provide an update on the U.S. glaucoma franchise, after which David will provide an update on the pipeline. I'll address our global activities, and Jeff Calabrese will wrap up with the financials. Okay, Tom.

Thank you, Ben. Our third quarter 2021 net revenues of $29.3 million are up 46% year-over-year and up 8% compared to the second quarter of 2021. Our September year-to-date revenues of $79.5 million are up 36% over the comparable period of 2020. With two months left in 2021, we continue to remain comfortable with the analyst consensus for the full year 21 net revenue. Now, as you saw in our earnings release, our net revenue per bottle remained stable at $89 for the third quarter of 2021. This compares quite favorably to the $77 net revenue per bottle we experienced in the third quarter of last year and represents approximately 16% growth year over year. Our glaucoma franchise unit sales into wholesalers, which of course are the basis for our recorded revenues, amounted to 328,000 units in the third quarter of 2021. This represents a 26% increase over the third quarter of 2020. Comparing third quarter of 2021 to second quarter of 2021, our wholesaler volumes increased by over 7%. Assuming that the overall impact of COVID-19 on the industry continues to decline, we expect volumes in the balance of 2021 to continue to increase versus the first half of the year. Now, as you remember, sales out data represent bottles of our products that are shipped from the wholesalers and the pharmacies. This metric also continues to show strong growth. Our third quarter 2021 sales out units of 323,000 were up more than 25% or 65,000 units compared to the third quarter of 2020, with the last five months all exceeding 100,000 units. This continues to show a significant increase from where we were at this time last year, and this quarter's numbers are more than 37% higher than our pre-COVID levels of the first quarter of 2020 providing proof that we powered through the pandemic. Now, just as we reported in our previous calls, our glaucoma franchise continued to far outperform the glaucoma market and all other branded glaucoma products. Based on Acuvia data, the third quarter 2021 total prescriptions for our franchise rose 19%, or 28,000 prescriptions over third quarter of 2020, while the glaucoma market was up just 2% for the same period. New prescriptions for our franchise increased 20% in the third quarter of 2021 compared to the third quarter of 2020, all facing the market growth of 1%. We believe that the continued growth in new prescriptions speaks very well for the future growth of our franchise. Now, looking at the last 12 months ending September of 2021, so to be clear, that's October of 2020 through September of 2021, our franchise grew by 110,000 prescriptions, or 20%. but the glaucoma market declined by 1% or 430,000 prescriptions over the same period. So once again, our franchise prescription violence grew significantly, looking at both the third quarter of this year and the last 12 months, and we continue to significantly outperform the broader glaucoma market. Now, our sales representatives' call activity continues to increase, with year-to-date September 2021 call volume of 52% compared to the same period last year, With the vast majority of physician offices now open, 90% of our physician visits are now face-to-face. The primary driver of our continued growth is the increase in number of offices that are open. Our Salesforce strategy remains unchanged. Our sales team is calling on the approximately 10,500 highest prescribers of glaucoma products. In July of 2020, our contract Salesforce began calling on the next 1,500 highest prescribers, and the telesales team, which we added in June of 2020, began calling on the next 4,000 highest prescribers. As we've mentioned previously, these numbers may change a little from our previous calls as some physicians are moved from one audience to another for various reasons. But all in all, the Acuvia data show that our market share continues to grow in each of these three audiences. Our total prescriber count now exceeds 19,500. We currently have nearly 10,000 physicians who prescribe an airy glaucoma product routinely each month, and approximately half of those monthly prescribers have been writing on a weekly basis. The highest prescribers of glaucoma products, which is a reminder of the decile 10 and 9 prescribers, have maintained their prescribing frequency, writing more than 30 prescriptions per month. Ropress and Roccatan's commercial coverage both represent 76% of covered lives. Shifting to Medicare Part D coverage, Ropress's coverage is at 96%, including the low-income subsidy, or LIS patients, of approximately 4%. Roqlatan is at 84%, including the low-income subsidy, or LIS patients, of approximately 10%. As we've previously mentioned, in addition to renegotiating 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. We've previously talked about our expectations regarding the stability of our net revenue per bottle, and our strategy remains the same. to minimize the rebate burden while optimizing our net revenues. As we look ahead to closing out 2021, we continue to expect an increase in selling general and administrative expenses to the pre-COVID-19 levels due to increase in sales and marketing costs as well as travel expenses. However, we have also indicated previously we do not expect an increase in spending to have a material impact on net cash used in our operations. So in summary, we continue to capitalize on the momentum we established prior to COVID. Our glaucoma products are increasingly being prescribed by many eye care practitioners. With our current managed care coverage levels, our strategy to move monthly prescribers to weekly prescribers, and our share of voice initiatives, and improvement in our net revenue per bottle, we continue to see the associated benefits. So now Ben would like to make a comment before David covers the RD program. Ben? Ben?

Thanks, Tom. Before David starts, I'd like to clear up a point, and I think that would be beneficial to everybody. Just before I took over as interim executive chairman, the company announced the results of the Phase IIb clinical trial in dry eye. I know that some were disappointed with the results of the trial. However, others, specifically those inside the company that were involved in the trial, viewed it as a terrific study with results that were better. than any they'd seen in their many years of doing dry eye studies. When I joined the management team, I spent a lot of time working with David and others to understand the divergent views. Here's what I discovered. The company specified primary endpoints for the 2B trial. The hope was if the products hit those endpoints, the trial could serve as a pivotal efficacy trial, and that would save the company time, and money in the development of the product. The choice of primary endpoints for the Phase IIb trial was based on the results of a small one-month Phase IIa study done by Visarex Pharma in Spain, which was later bought by Area. In their trial, they used a formulation that would not be acceptable to regulatory agencies. For the Phase IIb trial, Aerie developed and tested a new formulation that would be acceptable to regulators. The small size of the Spanish trial and the change in the formulation made projection of what would be the most appropriate endpoints very difficult. Because of the uncertainty associated with the choice of primary endpoints, the company built in multiple other endpoints that would allow it to assess what would be the most reproducible endpoints for the Phase III program because that's exactly what a Phase II trial is for. The bottom line is that although there was uncertainty about hitting the primary endpoints, the team had pre-specified a full array of other endpoints to hedge against the failure against primaries. In the much larger three-month study run by ARRI, the product did fail to achieve statistical significance on those primary endpoints that had been chosen. Because of that, I was left wondering why those involved in the study called this some of the best dry eye results they'd ever seen. It turned out the team was pleased because they had achieved reproducible data showing a significant effect on the endpoints that the drug would be expected to change based on its mechanism of action. In addition, they noted that the drug actually had a significant effect on a broad array of validated sign and symptom endpoints. In this case, validated means endpoints that have either served as the basis of approval for other drugs or have been confirmed by regulatory agencies as acceptable Phase III endpoints. In the end, the drug had shown efficacy against pre-specified validated sign and symptom endpoints, and it showed this efficacy the first time it was measured, which was at week two, meaning it had a rapid onset of action, and that efficacy continued through the three months of the study. I'll let David give you the rest of the story, but it was at this point that the divergence and assessment of study results between the insiders and those on the outside made sense. Okay, David.

Thanks, Ben. So shifting our efforts to R&D in September, as Ben noted, we reported positive top-line results of our Phase IIb clinical study Common 1 for 512, our trypamate agonist for dry eyes. As you may be aware, the 2021 Nobel Prize in Medicine was awarded for seminal work on the TRPM8 receptor, the receptor upon which 512 acts. The trial was designed as a dose-ranging, Phase IIb dose-finding study to select a concentration to advance to Phase III and to determine the endpoints for future FDA pivotal studies by testing this novel MOA against a number of well-established signs and symptoms. As reported, the high-dose 0.003% concentration demonstrated statistically significant efficacy across multiple validated, pre-specified sign and symptom endpoints. In addition, 512 also demonstrated a rapid onset of action. Efficacy was observed in both signs and symptoms as early as day 14 and showed continued improvement in symptoms through day 84. Based on these results, we have defined tier production and Sandy score as the co-primary signs and symptoms endpoints for the phase three trials. These endpoints are consistent with what would be expected from a drug with this mechanism of action. Confirmation of the common one results in our phase three trials would clearly differentiate 512 from other topical products. We intend to initiate phase three trials in the first half of 2022. We're planning to conduct two Phase III efficacy studies and a 12-month safety study for 512. We will confirm the regulatory path with FDA in an end-of-Phase II meeting in the first quarter of next year. Now, shifting our attention to the retina pipeline, we've completed our discussions with the U.S. and European regulatory agencies regarding clinical and regulatory pathways for Phase III clinical trials for AR1105, our dexamethasone sustain-release implants. We now expect to start the first Phase III clinical trial for 1105 in the first half of 2022. This date was moved into 2022 because of supply chain issues that developed through the implant applicator. As a reminder, in July of 2020, we released the Phase II top-line data for 1105, which demonstrated up to six months of sustained efficacy in improving vision in patients with long-standing retinal edema secondary to retinal vein occlusions. This is a very prolonged efficacy profile compared to other injectable steroids in the market, such as Ozerdex, which generate today about $400 million in revenues in the U.S. and Europe combined. Last month, the Phase II data was presented by Dr. Michael Singer at the ASRS Annual Meeting in San Antonio. Now, it is important to understand that the patients in this first in-human study with 1105 had longstanding disease of almost three years, and has been treated with five to seven anti-VEGF injections prior to receiving 1105. In general, increased severity and longer duration of disease, as well as a greater number of prior treatments, all mean that a patient is less likely to achieve a good visual outcome. That is why comparing retina studies is always challenging. Nevertheless, even in this very difficult to treat patient population, patients improved on average eight to nine ETDRS letters. More importantly, this eight-letter gain in vision was still observed at six months following a single treatment with 1105 and correlated with a reduction of over 200 microns of retinal fluid that also persisted through month six. This sustained magnitude of treatment effect lasting for at least six months is what promises to make 1105 a standout from other products on the market. 1105 was developed using our proprietary print technology platform which provides predictability and flexibility in manufacturing. This allows us to customize drug elution rates and create various blends of bioerodible polymers and allows for both longer treatment duration and reduced injection frequency, which were reflected in the Phase II results for 1105. Now, shifting to our globalization activities, a few weeks ago we announced positive top-line results for our Phase III clinical trial in Japan, evaluating nitarsadil versus rupasadil, a rokinase inhibitor that has roughly 5% share in the Japanese market. The results showed that nitarsadil once daily was superior to rupasadil twice daily in lowering intraocular pressure at week four, which was the primary endpoint for the study. We are pleased to see that in addition to its once daily dosing and strong safety profile, Natarsadil achieved impressive IOP lowering efficacy in a population with low baseline intraocular pressure. We believe that the statistical superiority shown may suggest a bright future for Natarsadil in the Japanese market and fulfill an unmet need for this population. We are very pleased with the results of the trial, which was completed a quarter ahead of schedule. These positive results in the low IOP population confirm our prior results, indicating that nitarsadil has a unique effect in this patient population. As a reminder, ARI conducted its first phase 3 trial as part of the collaboration agreement signed in 2020. Now, Santon will oversee the rest of the development in Japan, which consists of one additional one-month efficacy study and a 12-month safety study. And now I'd like to turn the call back over to Ben.

Okay, thanks, David. Shifting to Europe, we expect to announce a collaboration agreement on our marketed glaucoma products for Europe and other regions in the world before the end of 21. Given that the glaucoma market in the top five European nations alone totaled 98 million bottles in 2020 compared to 55 million in the U.S., a partnership in this region would be really important for Aerie on multiple levels. First, it would be a further external validation of the commercial potential of Ropressa and Roctatan globally. Secondly, we believe that adding a partner to drive the sales volume from Europe would represent an excellent opportunity to increase capacity utilization at our Ireland plant. So production through the Athlone plant has increased with U.S. sales growth. The current cost burden of this underutilized capacity there is at least $14 million annually. When combined with the potential volumes from our Japanese partnership, a European commercial partnership would position the company to expand our capacity utilization and improve our manufacturing margins. I'm happy to have with me today Jeff Calabrese, who is our VP of Finance and the Principal Accounting Officer to cover financials. Jeff has played a critical role in the excellent performance of our financial team over the last few years. Jeff?

Thank you, Ben. As Tom discussed, our combined Repressa and Roccaton net revenues in the third quarter of 2021 totaled $29.3 million. Our normalized gross margin for the third quarter was 92%, which is consistent with previous quarters. In addition, layered on top of cost of sales is approximately $5.4 million in overhead for the Athlon Ireland plant associated with startup commercial production. we expect that idle capacity number to trend downward on an annual basis as we continue to add volumes to the ethylene plant. Our third quarter 2021 gap net loss was $39.7 million, or 86 cents per share. When excluding the 6.6 million of stock-based compensation expense, our total adjusted net loss was $33.1 million, or 72 cents per share. For the third quarter of 2021, adjusted cost of goods sold with $7.6 million, and adjusted total operating expenses were $47.5 million, with adjusted selling general and administrative expenses of $30.3 million, and adjusted research and development expenses of $17.2 million. For the third quarter of 2021, our net cash used in operating activities was $18.9 million, and we had $167.6 million in cash equivalents and investments as of September 30, 2021. The net cash used in operating activities of $18.9 million in the third quarter of 2021 is further improved from the third quarter of 2020, for which we reported $22.9 million in cash used. This reflects continued revenue growth and continued expense controls. Shares outstanding at the quarter end totaled $47.2 million. For additional information regarding our third quarter and prior period comparisons, Please refer to today's earnings release and our Form 10-Q, which we expect to file tomorrow. And now I'd like to turn the call over to the operator for questions. Operator?

Thank you. To ask a question, you will need to press star 1 on your telephone. To withdraw your question, please press the pound key. Our first question comes from Annabelle Samimi of Stiefel. Your line is open.

Hi. Thanks for taking my question. I have a couple, one I guess on the current performance and one on the pipeline. First, any thought to – I know you commented on being comfortable with where consensus is, but any thought to actually setting guidance at some point given that ophthalmology practices are open, business is getting back to normal? I just want to think about what we can expect in the coming months and into 2022. And if you can provide any sense of the growth going into 22 in this normalized environment, that would be great. And then for AR15512, I know that you spoke on the symptom score, the Sandy score, for the Phase 3. I missed the signs. Is it going to be the same as the Phase 2? And are you comfortable with having chosen the right endpoints at this point for the signs? And then finally... I guess we've been waiting for an EU partnership for about a year now, so what makes you comfortable that this could be done by the end of the year, and is it going to include only the glaucoma franchise or potentially the other retinal disease products? Thank you.

Okay. Guidance. Our goal is to provide you with guidance for the next year and the next quarterly call. With regard to 512, it's the signs un-esthetized Shermer. And with regard to the partnership, I can just tell you that we're very confident that this is coming. With regard to what it will include, it's around the glaucoma products.

Okay.

Did that capture anything, Annabelle?

In not so much description, sure. Maybe just one more question if I can. I think one of the big concerns that people have is that you're still working towards growing your franchise and investing in SG&A, R&D, getting your pipeline advanced. I guess the question always is around cash and how comfortable are you that you can get this business profitable Without any further raise, do you feel that that EU partnership could get you there? Thank you.

The EU partnership, well, so, you know, Jeff just told you we're at 168 or so million. Now the EU partnership takes us up by 50 to 100 more. That takes away any short-term pressure. We have two phase three ready products that can be sources of additional cash to the balance sheet. We're, you know, What I can say right now is we're just under no pressure to do anything now at all.

Okay. Great. I'll get back to you. Thanks.

Okay.

Thank you. Next, we have Ken Ketchitor of Cohen & Company. Your line is open.

Hey, Ben. Thanks for the presentation. I'm just wondering, as we look at the company and we have a really good understanding of these products, their efficacy, their tolerability. The growth trajectory is fairly well known, although there's two products. It's basically a single product company. So with excessive spending, without much leverage, and respectfully, I'm going to disagree with your characterization of the pipeline. I think it's far away and not nearly as valuable as you do. And you haven't yet licensed Europe, so you still hold consolidated rights. I'm just wondering why this isn't a candidate to sell now. It just strikes us as an ideal time. Still don't fully understand why the disagreement between you all and the previous CEO, but it just seems as if to get these products in the most patients, they're great products, it would be better served to be with another organization. Can you talk about that and how you're thinking as you go through a CEO search whether we should engage in a sale process now versus stay standalone. Thanks so much.

Okay, Ken, thanks for your direct comment. We will disagree to disagree on the prospects of the product. So with regard to the CEO, there's no disagreement there. Again, we're very clear that he had – told us that it was time for him to move on. We put off and put off and put off timing for that and just finally picked a time and moved forward. That's it. With regard to what's the best path for the company, I understand what you're saying completely. I'll revert back to a point I made in the comments there. The board takes its fiduciary responsibility very seriously. They really do. If someone were to come with an appropriate offer, we would absolutely look at it and give it the diligence that it would deserve. That's just all I can say at this point. All right, Ben, I appreciate it. Thanks so much. Okay, Ken.

Thank you. And next up, Louise Chen of Kantor. Your line is open.

Hi, thanks for taking my questions here. So I had a few to follow up on what my colleagues have asked here. So there have been some management changes, obviously. So as a standalone company, then, how does the board think about ARI's strategic vision? You've got a lot of important things coming up here. And then secondly, how will you or what will you do to accelerate the growth for Rockletan or Repressa? I think people have been waiting for it to really take off, and it's done well, but just we're thinking it's going to be bigger than it is by this point in its launch. And then just back on cash, how would you characterize your cash runway based on what you know today? Thank you.

Okay, thanks, Louise. So I'll comment on the question about the board because I was the lead director and I'll be the chairman after this. I can't add anything other than, well, actually, okay, so I'll answer the question directly, which is we believe the prospects for the company, we as a board believe the prospects for the company are quite good. We believe in the products that are on the market where they think they have good potential. And we like the portfolio. We have two phase three ready products. You just don't have many. I mean, that's terrific for a company at this stage. So we have a good, well-functioning commercial operation, a good functioning manufacturing operation in the specialty space of ophthalmology with two phase three ready products. You've got to admit, that's pretty good. With regard to acceleration of growth on Repressa and Rochlatan, you know, I'll toss that to Tom. I'll let Tom talk about it, and then I'll just end up on the cash. Again, I'd come back to where I was before. With the cash that would come from the EU deal... we're just not under pressure to do anything from a financing standpoint. And then we have additional sources of cash going forward based around the products that we already have that are phase three ready. So we just, you know, financing is just not something we're looking at it now at all. Okay. Tom, do you want to comment about growth? trajectory for Ropressin-Roclatan?

Sure. Thanks for the question, Luis. Well, I'd say two things about the growth trajectory for our glaucoma franchise. First, obviously, we got to get rid of COVID, right? And as everybody knows, we certainly are here. The numbers are far lower than they have been in quite a while, which is a great thing because physicians can finally, once again, focus on getting the right treatment to the right patients instead of having their mind clouded with, my gosh, is my staff okay? Are my patients okay? Is my practice okay? all those sorts of things. So that's great. The cloud just keeps moving away and away and away. The other big obstacle that we've always had since launch, of course, is managed care coverage. And as you can see from the report that we gave, our managed care coverage is in very good shape now at this point. So I think combining those two, that we've got very good coverage and COVID is going away, puts us in a situation to do very, very well from a growth standpoint. I will say one other thing that sort of ties in that managed care part If you look back at the number of prior authorizations that have been submitted for our franchise, it's well over 200,000. So that just shows you, well, first off, that managed care was a real issue, but secondly, it shows you that physicians are highly interested in these products because that number, I think, is frankly unparalleled from a medication standpoint in ophthalmology. So that's why I look at it, Louise. I look at it as managed care, coverage improving, continuing to improve, putting us in a good position, and, of course, COVID. continue to decline.

Okay, thank you.

Thank you. Up next, Jason Dewberry of Bank of America. Your line is open.

Hi, this is Ash. I'm on for Jason. I have two. So one is on Japan. You have positive phase three, which was the first trial. So congrats on that. Just curious, what's the status of the program going forward? Would it also include Roklatan? I think you mentioned that Santon would be doing some of these studies. So is there any kind of milestone payment associated with that? That's the first one. And the second one is more around gross margin. When can we expect that to normalize?

Okay. Tim Stenzel- In terms of milestones, yes. If you're asking about the Japanese partnership with Santan, yes, they are carrying the products through the remainder of the regulatory process. I think we've already stated previously that we'll achieve royalty payments the transfer price from manufacturing and Athlon to them for the Japanese market. Then beyond that, I'm tossing it over to Jeff.

Yeah, so I think your second part to that question was around normal as gross margin. So as I stated in the prepared remarks, we're at 92%. It's very consistent where we've been each quarter of this year. And I would expect that to be consistent as we finish out 2021. Thanks.

Thank you. Next, we have Aswar Bispoi of Oppenheimer. Your line is open.

Thanks for taking the questions. And it's been fun to listen to how direct the questions and answers have been here. Just a quick question. I think this was an answer to Annabelle. You mentioned 50 to 100 potential out of a partnership. Is that with kind of milestones at all, or are we speaking the 50 to 100? Is that more of an upfront kind of characterization?

Pure cash, upfront. Okay. Yeah, milestones, royalties, et cetera, would all be on top of that.

On top, okay. Great. And then, you know, I think Tom had mentioned the, in terms of the managed care and the wins, can you just help us understand here, as you say, it's getting better, maybe the comments on this call versus prior quarters, you know, the changes that have happened here, or is it pretty steady and we're just hoping that the steadiness keeps going here?

No, I think it is, well, thanks for the question, by the way. I think it is, has been pretty steady and through time now, and we're pretty much, you know, normalized where we are so that physicians don't view our products as being hindered by managed care any longer. So I think just making sure that they understand that, but you've got to repeat that message over and over again so that they continue to remember about your products. And so, again, I think we're in good shape, and I think it has been pretty consistent over the last call or two, and now we've just got to make sure that physicians really understand that and have a chance to focus on that. Like I said, instead of focusing before on you know, what influence does COVID have on everything that they were doing?

Yep, no, absolutely. And so I thought in the past maybe we'd mention that there'd be some potential variability in terms of the net price per bottle, kind of up and down, but overall probably kind of an uptrend. Is that still the common, or are we pretty clear here on stability at 89? Where do we stand?

Well, we're still negotiating with especially managed care entities, and, you know, I really can't comment on where we are at this point, but Let me put it this way. I like our prospects looking forward to the future to continue to reduce the amount of rebates that we're paying. So I think we'll be in pretty good shape, and I think that we'll see some more progression next year. I don't want to say how much at this point or when, but like I said, I think I like our chances for success in this area, and we'll be telling you more about that as next year progresses.

Okay, great. And then I'll just sneak in a last one, not to – repeat too much what has been said, but this is related to cash, but differently asked, I guess. In 2022, you got the start of a lot of programs, dry eye, pretty big trials, two if not three trials here with the safety. Are any of these trials done in parallel, or can you just comment on maybe the potential ramp on expenses? How much would these trials cost here? So basically, are you expecting the net, you know, the cash burn from up based on higher revenues to not change much. It's been around that $20 million a quarter, or should, you know, based on the expenses of some of these trials, that to actually, you know, start costing more here.

That sounds like guidance to me. So, yes, we are starting trials. Yes, they'll be staggered. Yes, there's, you know, long ones and short ones involved in the program.

Yeah, I would only add to that, Ben, that right without giving guidance, and we certainly don't do that on cash burn, but I think logically as we have these phase threes beginning the first half of 2022, it's only logical that that burn rate will incrementally increase.

Okay. All right. Thank you very much.

Thank you. And again, to ask a question, you'll need to press star 1 on your telephone. We now have Greg Frazier of Truist Securities. Your line is open.

Good afternoon, folks, and thanks for taking the questions. I want to follow up on the EE partnership. Is the timing there simply a matter of the negotiation process, or are there other considerations like pricing discussions in Germany or other countries that would make a difference?

No, it's just pure negotiation. And yeah, that's all. Just so you know, though, I mean, everybody looks at this, I've made this point before, as just a straight license. It's more than that. I mean, when you see the deal, you'll see it's quite a bit more complicated than just what you're thinking of as a straight license. But Going beyond that, I'd have to get into the details of the deal, which I can't do yet. So just wait a little bit, and you'll see. Okay.

We can wait. And then on AR-1105, are you inviting discussions with potential partners to help fund development to that product, or is the plan to go it alone and then consider partnerships once you have the Phase 3 data?

So the plan – All along has been to do all the studies ourselves, but taking a step back. I'm the new guy in town. When I came in, I asked everybody to just step back, drop your assumptions. Let's take another look at what's best for the shareholders overall in everything. And we're working on that, trying to figure out what's going to be best for shareholders. I've not even had a board meeting since I came in. I mean, one of our regular board meetings since I came in to the job, so we've not had a chance to discuss any of this with the board. We'll be doing that. We'll be – you know, informing you as soon as we, if we make any changes in our strategy. Got it. Thank you.

Thank you. And I see further questions in the queue. I will turn the conference over back to Ben McGraw for closing comments.

Okay. Thanks. I'd like to end by reiterating the five points I made at the beginning. First, we have good commercial performance. Our two commercial products are now gaining market share and consistently hitting the revenue projections. Second, we're leveraging our products via ex-U.S. partnerships, and that will enhance our balance sheet. Third, we have two clearly differentiated phase three ready products in development, a strong pipeline behind them. Fourth, we have a well-functioning manufacturing operation in Athlon, Ireland. Fifth, We're in a good financial position and have adequate resources to execute our business plan. We want to thank all of you for joining the call today.

This concludes today's conference call.

Thank you all for participating.

You may now disconnect and have a pleasant day.