Aerie Pharmaceuticals, Inc.

Good afternoon. Thank you for standing by and welcome to the ARE Pharmaceuticals First Quarter 2022 Earnings Conference Call. At this time, all participants are in 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 Hans Wittstum of Lifestyle Partners, ARE's investor relations firm. Please go ahead.

Thank you, Operator. Good afternoon, and thank you for joining us. With us today are Raj Kannan, Chief Executive Officer, Peter Lang, Chief Financial Officer, and Gary Sternberg, Chief Medical Officer. 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, including our observations regarding ongoing operating expenses. These statements will include observations associated with our commercialization of Ropressa and Roclatan in the United States and our collaborations in Japan, Europe, and other regions of the world. It 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 future events, including our financial outlook for 2022. 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 will file our Form 10-Q 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 comparable GAAP measures, please see today's press release, which is posted on the Investor Relations section of our website. With that, I will now turn the call over to Raj Kanan, the CEO of ARRI.

Thank you, Hans, and good afternoon, everyone. I am pleased to speak with you on the excellent progress we've made in Advancing AIRI version 2.0 and why we remain confident about our growth in 2022 and beyond. During today's call, I will provide you with a high-level update on our first quarter commercial performance, our outlook for 2022, and an overview of our progress to date against the three strategic pillars I outlined previously. Then I'll ask Gary to provide you with an update on our late-stage clinical portfolio and, in particular, our exciting prospects with AR15512. And finally, Peter will review the first quarter 2022 financials with you before I close with a few remarks. We made significant progress across several fronts in the first quarter for ARRI. We continue to execute well on our three strategic pillars in building ARRI version 2.0. We delivered strong year-over-year revenue growth in line with our expectations for our first-in-class glaucoma franchise, comprised of the novel products Roclatan and Ropressa. We achieved alignment with the FDA on the Phase III program for our lead product candidate, AR15512, for dry eye disease. We initiated a Phase IV program supporting Roclatan, We continued to drive operational efficiencies to reduce net cash burn, and we strengthened our senior leadership team with the addition of Dr. Gary Sternberg, Chief Medical Officer, and Peter Lang, Chief Financial Officer, who are with us on this call. We believe these achievements taken together have set Aerie up for success in 2022 and beyond. During our February call, I introduced the three strategic pillars for our long-term success. First, driving sustainable growth of the commercial business. Two, making smart choices with our capital in advancing our pipeline. And three, reducing our net cash burn rate to maintain a solid financial position. These pillars are built on a foundation of attracting and retaining the right talent and leadership to support sustainable growth, which has been strengthened by the appointments of Gary and Peter. Now, taking them one at a time, sustainable growth of the commercial franchise, We reiterate our full-year guidance for ROCLA 10 and ROPRSA sales of $130 million to $140 million, which represents a 16% to 25% net revenue growth over 2021. I'll elaborate more on the commercial performance in a few minutes. Making smart choices with our capital in advancing the pipeline, we prioritize three programs based on our assessment of likelihood of approval, the potential value inflection in the near to midterms, and the speed to market, AR15512 for dry eye, AR1105 for diabetic macular edema or DME, and AR14034 for wet age-related macular degeneration or wet AMD. AR15512 is scheduled to commence phase three trials in the second quarter of 2022. We believe AR15512 could have a very competitive profile in the dry eye market. AR1105 could potentially replace the currently available steroid treatment for DME with a once every six-month dosing interval. And AR14034 is on track for an IND submission later this year with the potential of a 12-month dosing interval with a best-in-class tyrosine kinase inhibitor, Excedinib. And third, reducing our annual burn rate One of my ongoing priorities is to continue driving greater efficiencies in our ongoing operations to preserve cash and optimize capital allocation decisions. We've made meaningful progress in expense rationalization and ended the quarter with cash, cash equivalent and total investments of approximately $199 million. We continue to drive additional future efficiencies in our operations and are reiterating our guidance of an expected reduction in total net cash use of approximately 15% in 2022 versus 2021. Now, as I mentioned before, let me provide you with an overview of our glaucoma commercial franchise performance and why we remain confident in sustainable growth in 2022 and beyond. I am pleased to report that in the first quarter of 2022, ROCLA 10 and GrowPressR revenues grew by 30% over the first quarter of 2021, mainly driven by a strong growth in total prescriptions. These results are in line with our expectations and continue to bode well for the franchise growth. The continued strong growth in the future is mainly driven by two key factors. Number one, You'll recall that we introduced a refreshed brand strategy for our commercial glaucoma franchise in February of 2022 with a focus on the lower is better theme. This has generated encouraging early feedback from the customer-facing team calling on targeted prescribers who say the clarity on where to use Roqlatan aligns well with the medical need and the product profile. Our goal is to drive powerful efficacy right from the start. as a primary reason for brain choice. We are doing that by calling attention to the fact that Roqlatan is highly effective in lowering IOP, potentially getting patients to the lowest risk of vision loss right from the start. So why not start with the most powerful efficacy from the start or start with Roqlatan is our key message to prescribers. Ropressa, on the other hand, continues to be well-positioned on its novel mechanism of action and why that matters. Given the encouraging feedback from our customer-facing team on what they hear from their customers, we believe that the differentiated efficacy and good safety profiles provide physicians with a clear reason to prescribe these products. And we believe that this refreshed brand strategy could be the cornerstone to our commercial growth going forward. And number two, on the increased pull-through opportunities available to us today. Our broad formulary coverage, especially in the Medicare Book of Business, paved the way for increased pull-through opportunities to drive greater adoption for our brands. In summary, we're pleased with our first quarter commercial glaucoma franchise growth, and we believe that the updated brand strategy with greater clarity in positioning and refreshed messaging, and increased pull-through opportunities on our broad formulary coverage could position Aerie to achieve our revenue growth targets in 2022 and beyond, and importantly, fund our journey to a bright future. Before I move on, I want to take a moment to thank the entire Aerie team for their performance, dedication, and commitment to the company's goals throughout the first quarter of 2022. Let me now turn the call over to Gary, our Chief Medical Officer, to continue building on the reasons for our excitement about the future for AIRI. Gary?