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?

Thanks, Raj. It is great to have joined and be part of the AIRI team. I am going to review the clinical pipeline and then briefly provide updates on ongoing global studies, our medical affairs program, and close with an update on some of our recent medical meeting presentations. AR15512 or 512 is entering phase three development as a differentiated novel first in class product candidate for the treatment of the signs and symptoms of dry eye. While there are a number of prescription and OTC products on the market for dry eye, we believe there is a significant unmet need for new therapies that can provide rapid onset of efficacy, convenient dosing, and importantly, consistent improvements across a range of sign, symptom, and quality of life endpoints. As you know, 512 is a TRPM8 agonist which acts as a cold thermoreceptor modulator to stimulate the cold sensing receptors found on the nerve endings that innervate the cornea and eyelids. By stimulating these receptors, 512 leads to natural tear production and a cooling sensation across the surface of the eye that may result in a reduction in dry eye symptoms. As background, I want to make two points about the results of our Phase 2b trial named COMET-1 that we reported in September 2021. First, while our chosen primary endpoints were not achieved, we showed statistically significant dose-dependent improvements on multiple validated sign, symptom, and quality of life endpoints across multiple time points. Importantly, we generally saw the difference between the 512 and the vehicle responses increase over time. pointing to a potential sustained meaningful treatment effect in dry eye signs and symptoms. Second, we also reported a good tolerability profile with no systemic or serious adverse events attributed to 512. In February, during our conference call regarding the fourth quarter financial results, we reported that we had gained alignment with the FDA on our phase three endpoints and overall program, which will consist of two identical phase three registrational efficacy studies on a 12-month long-term safety study. To mitigate the risk of variability from Phase II to Phase III results, many aspects of the clinical trial design from the Phase IIb Comet I study were kept consistent in the upcoming Phase III Comet II and Comet III studies. The first of the Phase III efficacy studies, Comet II, will be a multicenter, vehicle-controlled, double-masked, randomized study that will evaluate a single concentration of AR15512 at 0.003 percent compared to the 512 vehicle administered twice daily for 90 days. COMET-2 is expected to enroll about 460 participants at approximately 20 sites in the United States. The primary measure of the COMET-2 study will be assessed by the un-anesthetized SHRMA test at day 14, which as you will recall was statistically significant in the Phase IIb study. The key secondary outcome measure will be the Sandy Symptom Questionnaire Score at Day 28, which was also statistically significant in the Phase 2b study. In addition, numerous other signs, symptoms, and quality of life assessments will be performed throughout the 90-day study period. We expect to enroll the first subject in the second quarter of 2022, and we expect the trial to yield top-line results in the second half of 2023. Now, I would like to mention two other exciting pipeline programs AR1105 for diabetic macular edema, or DME, and AR14034 for wet age-related macular degeneration, or wet AMD. Let's start with AR1105. This was the first product candidate to use ARIES print delivery platform and the only bi-erodible dexamethasone retinal implant to demonstrate six months of efficacy in treating macular edema. These differentiated product features could enable reduced injection frequency, and potential to position AR1105 as a best-in-class molecule. We continue to evaluate options for Phase III development of AR1105 and have partnering discussions underway. Second, AR14034 is a pan-VEGF receptor inhibitor intended to block all VEGF receptor isoforms for the treatment of wet AMD. AR14034 also uses ARES print platform and is targeted to achieve an injection dosing frequency of up to once every 12 months. We expect to file an IND for AR14034 by the end of 2022. Moving to our glaucoma . I would like to spend a few minutes on our global studies and medical affairs initiatives. These studies are intended to continue strengthening the product profile and support the generation of meaningful clinical data to improve patient outcomes. Starting with our global studies, in February 2022, we reported that our partner, Santen, had initiated a second confirmatory phase three study with Repressa required for approval in Japan. As you know, Santen is taking the lead on next steps in preparation for registration. Based on Santen's disclosures, we expect Santen to complete phase three studies in 2023. Moving to medical affairs, I am pleased to note that AIRI continues to have a strong scientific presence at major congresses. We had recent strong showings at the American Glaucoma Society, or AGS, American Society of Cataract and Refractive Surgery, or ASCRS, and most recently at the Association for Research and Vision and Ophthalmology, or ARVO. All of the abstracts from these meetings are posted to our website once they are published. At ASCRS two weeks ago, they represented two abstracts related to a clinical study evaluating the use of rapese and fuchs corneal discrepancy, and detailing the clinical data from the Phase IIb AR15512 study in dry eye. In addition, in May, 10 abstracts related to the glaucoma franchise were presented at ARVO. These abstracts helped to elaborate on the clinical utility of ROPRESA in glaucoma management and the potential of ROPRESA in other ocular indications. Additionally at ARVO, ERIE presented abstracts related to AR15512 dry eye program as well as a preclinical abstract related to our novel Rockster's Ocular Anti-inflammatory Program. We are gratified with the ophthalmology community's active interest in our pipeline. Lastly, I am pleased to inform you that we have initiated a phase four study with RoqLatan in the U.S., called the Multi-Center Open Label RoqLatan Evaluation, or MORE study. The study was designed to further demonstrate the powerful efficacy of RoqLatan as a single therapy relative to the use of latanoprastolone while the TANF has plus additionally one or two individual agents. The first subject in this planned 180-subject 12-week dosing study was enrolled in March, and we expect top-line data to be available in the first half of 2023. I would now like to turn the call over to Peter.

Thanks, Gary. As you expressed before, I'm also excited to be part of the ARRI family. I'll focus my comments on our financial results for the first quarter of 2022. All numbers that I will review in this discussion will be approximate for easy sharing during the call. For additional information regarding our first quarter results and prior period comparisons, please refer to today's earnings release in our Form 10-Q, which we will file tomorrow. Combined, Ropressa and Rakuten net revenues in the first quarter of 2022 totaled $29.8 million, a 30% increase over the first quarter of 2021. Total costs and expenses include cost of goods sold of $6.8 million, $31.5 million of selling, general, and administrative expenses, and $25.2 million of research and development expenses. Our cost of goods sold was essentially flat compared to the first quarter of 2021. Our gross margins improved to 77.3%. from 70.8% in the prior year period, mainly driven by increased utilization during the quarter. SG&A expenses reflect an investment in sales and marketing for our glaucoma franchise. Overall, we expect SG&A to decrease for the remainder of 2022. R&D expenses include continued investment in our clinical programs, plus an $8 million milestone payment, made in the first quarter of 2022 related to 512. As discussed earlier, we expect to start a Phase III clinical trial for 512 in the second quarter, with additional trials commencing in the second half of 2022. Therefore, we expect an increase in R&D costs through the end of the year. Our first quarter of 2022 net loss was $35.9 million, or $0.76 per diluted share. Total stock-based compensation expense was $4.6 million, of which $0.2 million was included in cost of goods sold, $3.1 million in SG&A, and $1.3 million in R&D. When excluding stock-based compensation expense, our total adjusted net loss was $31.3 million, or $0.66 per diluted share. Over the quarter, the weighted average shares outstanding was $47.5 million, As of March 31st, 2022, shares outstanding were approximately $48.6 million. For the first quarter of 2022, our net cash provided by operating activities was $61.9 million, which includes $90 million received from Santon relating to the December 2021 Santon licensing agreement. As of March 31st, 2022, we had $199.2 million in cash cash equivalents, and total investments. As Raj mentioned, we are reiterating our previously provided 2022 financial guidance. 2022 net product revenues for the Glaucoma franchise are expected to be between $130 and $140 million. Net cash used is expected to be about 15% below 2021. We believe we are well positioned financially to fund our current business plans. Now, I would like to turn the call back to Raj for a few closing remarks before Q&A.

Thank you, Peter. To conclude, I believe we are off to an excellent start in 2022 for ARRI. In 2022, we expect to deliver continued revenue growth in our glaucoma franchise. We expect to advance AR-15-512 to the Phase III Registrational Studies, as was outlined by Gary. and we continue to make headway in expense reductions to strengthen our balance sheet. We're excited about building ARRI version 2.0, and I believe we have the right products, the right plan, and the right talent to be successful in growing ARRI sustainably for the future. Thank you all for taking the time to join us today. I look forward to the year ahead with confidence and in updating you on our progress along the way. Joining us for our Q&A will be Casey Kopczynski, our Chief Innovation Officer and Head of Research and External Innovation, and Jeff Calabrese, our Principal Accounting Officer. Operator, over to you for Q&A.

Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. Again, that is star 1 to ask a question. To withdraw a question, just press the PAN key. Please limit yourselves to one question and one follow-up. Please stand by while we compile the Q&A roster. Your first question comes from the line of Louise Chan from Kenner. Your line is now open.

Hi, thank you for taking my questions here. So first question I have for you is do you expect any of these macro headwinds like inflation, supply chain issues to impact your business for the remainder of 2022? And then the follow-up question I have is what is your cash runway and what are the pushes and pulls on your cash balance? Thank you.

Hi, Louise. Thanks for your question. This is Raj. In terms of the macro, right now, in terms of inflation, you know, from a production standpoint, we are seeing some increases on our energy costs, for example. But at this time, we haven't seen any material impact, but we continue to monitor that. And on the supply chain, again, at this time, we are monitoring all of those, including our backups, to make sure that we don't run into a supply chain problem. But it's kind of hard to predict what what it's going to be as the year progresses. But at this time, I can tell you that nothing has impacted anything materially from a business perspective. In terms of the cash runway, you know, we didn't give guidance before, but I can tell you that based on the cash balance that we had, we basically had provided guidance in terms of our net cash flow, which is around 15% less than 2021, around 85% to, $86 million this year. Given the revenue increase that we're going to see, given the increasing focus that we have in reducing our net cash burn, and the potential monetization that we could have in ex-U.S. markets with our assets, I have said this before, that we have no plans to raise cash from a capital markets perspective. So we are very comfortable supporting our current operations, and That's the best I can answer that question, Louise, instead of providing you an actual cash guidance.

Thank you.

Your next question comes from the line of Sergi Belanger from Needham & Company. Your line is now open.

Hi, good afternoon. That's my first question regarding Repressa and Roflitan. You really reiterated your... sales guidance of $130 to $140 million. Is that based on just script growth, or do you expect any improvement in net prices for the products? And then secondly, I think you also reiterated one of your pillars was reducing the cash burn rate. Just curious what is currently on the table to address that, especially on the SGA side. Thank you.

Hi, Serge. This is Raj. Thanks for your questions. We continue to reaffirm that guidance on 130 to 140 million. And if you recall, that represented about a 16 to 25% increase over 2021. And if you look at the first quarter 2022, we had a growth of about 30% over a similar period in 2021. So we continue to be confident and it is predominantly driven by prescription growth. In fact, the 1Q 2022 growth was predominantly from prescription growth. In terms of, I think I didn't get the other question, Serge.

Yes, the third pillar of reducing your burn rate for 2022 and what options are on the table to achieve that goal.

Yeah, so if you look at our first quarter net cash burn, obviously the first quarter tends to be much higher in terms of the cadence of spend. So when you look at the one-time milestone payment that we had to make for Avis or Rex going into phase three, you've got bonus and some severance payments in there. We're quite comfortable with the guidance that we have provided in terms of reducing our net cash burn from 2021. which is the guidance was around the $85 to $87 million in net cash flow this year. So we remain confident on that guidance search.

Your next question comes from the line of Annabelle Samimi from Stifel. Your line is now open.

Hi. Thanks for taking my question. Congratulations on an easy start to the year, I guess, relative to everybody else who sees a lot more seasonality. Maybe you can talk about the marketing message a little bit. So you did touch on how the lower is better is resonating with people. But how much of it is the marketing message that's working versus just increased experience with a drug? And are you starting to see additional prescribers increasing? or is it more that you're going deeper into the practices? So maybe you can actually talk about the prescriber growth that you have. There used to be metrics shared about, you know, you have 10,000 targets, there's this many weekly prescribers, these are the adopters, et cetera, et cetera. So do you have any metrics like that to help us understand whether the message is bringing on new prescribers?

Yep. Hi, Annabelle. Thank you for that message, and thank you for the comment on our Wednesday performance. In terms of the marketing message, I believe it's a little too early to indicate whether that is what has driven prescription growth in 1Q, especially for the results that we provided. Recall that we rolled out that marketing message in early March. The reps got claimed at the end of February. But I can say it's a combination of many things, right? The experience that physicians are continuing to have, the positive feedback that patients who remain on Rocto-10 and Ropressa I think these are all factors in why we see continued strong growth in our franchise. When you look at, you know, other indicators, right, we had incrementally more number of prescribers in the first quarter of 2020 versus the fourth quarter in 2021. And we continue to expand both on the breadth of prescribers both monthly and weekly. So when you look at the overall target of ophthalmologists that we call on, which is about the top 50 to 60 percent of the highest potential ophthalmologists, we continue to see an increasing breadth of prescription use and increasing depth. So, again, it's a little too early, but our message, like I said in the press release and in my prepared remarks, the initial feedback from prescribers from our field force has been quite encouraging, which is, a very distinct positioning for Rock with Hand, asking for first line or first switch business, and positioning Ropressa from an MOA perspective and potentially as an adjunct, but really asking for the business with Rock with Hand. And that's what we see in terms of at least the initial growth in first year 2022. Okay, if I can ask one more question.

How should we think about EU sales progress? I know that it's more of a stage rollout. And now that you have the Phase 3, I guess, agreement on design for 1105, can we see any partnership progress in the near future? Was the Phase 3 design a getting factor?

Yeah, so we are having conversations. We're not at a point where I could – actually update the market in a meaningful way. But we are getting an interest and there are parties in the data room. But at some point I hope to update the market because we remain excited about 1105. It is a proof of principle in terms of a print platform, getting a product with an extended dosing delivery versus the current standard of care with the steroid in DME. And more importantly, I think, you know, this has potential to potentially replace that, right? So we remain excited about that product, and we continue to have robust conversations with interested parties who could develop it and take it to market.

And in terms of the EU rollout for the Glaucoma franchise?

Yeah. Right now, I think we had said publicly, Annabelle, that we are committed to supplying San10. So we, I think at this point in time, expect to have the launch in early 2023. So I think we'll update you if it happens earlier. But all our efforts are to make sure that they have commercial supply available. for the launch to start strongly in early 2023.

Okay, thank you.

Thank you. Your next question comes from the line of Stacy Koo from Cowan & Company. Your line is now open.

Hi, good afternoon. Thanks for taking our questions, and congrats on the progress. So our first question is, with this improved managed care experience, is part of that Salesforce new strategy increasing clinician awareness that there is seamless access? Is there still any friction left over there? So what has been kind of that experience so far? As well as any commentary about that first-line use of repressin or aquatain that you spoke about in your prepared remarks. So that's the first question. The second is if you could discuss the broader glaucoma market dynamics With the introduction of generic compagin, would there be any implications to manage care as we're seeing these really strong net pricing? Thank you.

Thank you, Stacey, for your comments and for your question. I think when you look at our Medicare coverage, we have very strong formulary coverage for Ropressa and especially Rocket10 in the mid-70s. And I think, and Ropra says in the mid-90s. So I think we have very good coverage in which to position ourselves for pull-through opportunities, especially in the Medicare population, which, as you know, represents about 60%, right? So in that, we're very focused right now with our field force to pull through on that particular business. And I think the first line, our label is quite broad. So from a payer perspective, we did not see anything pushback in terms of that positioning and physicians do like to hear that message in terms of a crystal clear positioning for Roqlatan, especially given that we're trying to talk about why not use the most efficacious product right from the start. So we're continuing to see an improved positive perception of Roqlatan in first line and if that first line doesn't happen, remember the biggest bulk of the business lies in patients who are on latanoprost and we're then asking for the first switch, right? Hopefully, our bet is that our messaging is right, our strategy is right, and that should continue to grow the Rakuten prescription and grow the franchise overall. In terms of the genericization of Combigan, what we've seen to date is that it has basically taken share from the branded molecule. It hasn't really impacted from a crossover perspective on any other brand, so the data so far only tells us that Combined has gone generic, but it hasn't really impacted any other brand, including our franchise. And from a payer perspective, I don't think this would necessarily cause any re-engagement on rebates. I think we are on the high side in terms of where our formulary coverage is, and hopefully that should be the right level that we plan to maintain for the rest of the year. I hope that answers your question, Stacey.

It does. Thanks a lot.

Your next question comes from the line of Francois Brisbois from Oppenheimer. Your line is open.

Hi, thanks for taking the questions. Just a couple here. So on the WAMD side, it's a pretty competitive field more and more in terms of clinical trials. So I was just wondering, can you just help us understand maybe the delivery platform and how it's validated and maybe the differentiation here with your product?

Thank you, Francois. I assume you're talking about 1105, right, from the print technology platform, which is the product that we have at Phase 2 or Phase 3 ready?

Yes. I'm also wondering on the wet AMD side maybe what's differentiating and maybe duration-wise what you're trying to attain.

Great. So on the wet AMD side, we certainly have animal studies that point to the confidence that we have. in why we are aiming for a target product profile of up to 12 months. I'll let Casey speak more to the print technology and what has been done to date and why we remain confident about that particular product in wet AMD. Casey?

Thank you, Raj. Yeah, the print platform has really allowed us to create formulations that are distinct from the other competitors in this space. That is, those who are trying to deliver small molecule products to the back of the eye. We have proprietary polymers that we can use along with other polymers that have previously been used in the back of the eye to get optimal drug elution rate profiles. And that's what we've managed to accomplish with the AR14034 small molecule anti-VEGF implant is a profile that looks to be able to maintain drug elution through about 12 months in our preclinical studies. And I can say that our preclinical work for the AR1105 steroid implant allowed us to accurately predict the duration of that implant in our follow-up human clinical trials. So we feel pretty confident that it is potentially achievable to get a once-per-year injection from the Exfitinib or AR14034 implant. Okay. That's extremely helpful.

In terms of the brand strategy, obviously, Roklatan first, but I was just wondering, any pushback or any feedback maybe from docs, maybe not being aware that reimbursement has come a long way on the Roklatan front?

Yep. This is Raj. Good question. That is one of the focus in terms of messages for physicians that may have had a perception initially where they've run into familiar issues. That is why we're very, very focused in making sure that we target those physicians where we feel their predominant plans that cover their patients is where we focus on a multiple opportunity. So that is part of the messaging to make sure that they understand that Roqlatan is covered, the label is broad, and there's really nothing that they cannot use that's worth finding.

Okay, and if I could just sneak a quick one here lastly. I was just wondering, I know you guys aren't sharing the net price per bottle anymore, but if we just track scripts and, you know, volume and bottles that we see from our side, is it fair to say that from the fourth quarter to the first quarter there might have been a little drop in the net price or anything there that might be, you know, that might happen again in the future? I...

I think we have always said that we would maintain our net price per bottle. The only reason we did not give any guidance on that, as you know, is that it tends to vary and it can be quite uncertain. But that being said, I think, you know, from a TRX perspective, the slight dip that we saw, which is around about that 1% from a TRX perspective for the franchise, potentially reflected, in our opinion, the annual basis deductibles, right, that in one queue it depresses the refills. So we continue to remain confident in the growth rate that we saw, and even from a revenue perspective, given that our guidance was 16 to 25 and our one queue was at 30%, we remain confident about the guidance that we created earlier for 2022.

That makes a lot of sense, and as Annabelle mentioned, the lack of seasonality here is pretty nice compared to other companies. So That's it for me. Thank you. Thank you.

Your next question comes to the line of Yigal Nachomovitz from Citigroup. Your line is now open.

Great. Hi, this is Carly on for Yigal. Thanks so much for taking our questions. First, we just wanted to ask if you're comfortable with the current size of the Salesforce you have now or if that's something you think can be optimized as well as you roll out the refreshed marketing strategy.

Hi, Carly. Great question. We continue to monitor two things, right? One is the breadth of the target calls from each rep and how many calls can they make in a day and how do you increase the sales effectiveness. And then we also monitor how are we competitive in the target prescribed base that we choose to provide the option in each position. And from both those regards, at this time, we're quite comfortable in the share of voice that we have invested in, in terms of driving the flow for our content and professor.

Okay, perfect. That's helpful. And then we just had one quick clarification question on the Dry Eye Registrational Program. Will you wait for Comet 2 to read out in the second half of next year before

you start the second phase three that would be required for approval or do you expect to start a second phase three this year as well so we plan to start all three studies comet two comet three and comet four which is the safety study required safety study from the fda perspective all three studies this year uh they're slightly staggered and what we've publicly said that we are definitely on track in getting Comet 2 off the ground with first patient enrollment this quarter.

Okay, perfect. Thanks so much for taking the questions.

Thanks, Carly. Your next question comes from the line of Jason Gerberry from Bank of America. Your line is now open.

Hi, this is Perry on the line for Jason. Thanks for taking my question. To this first, I was curious to get your thoughts on uh, vouchers or recent, uh, phase three, uh, data for noble green, dry eye and your thoughts, um, of that program as a potential competitor. And then second, I'm curious about, uh, the extent of, uh, COVID still impacting the, um, marketing efforts for RockPen Repressa. Um, thanks.

Okay. Hi, Barry. If I can get the first question totally, I got the second question in terms of the COVID impact on our franchise. I can answer the second question, and maybe if you could repeat the first question, I can address that as well. But let me answer the second one that I heard clearly. On the COVID impact, we see actually an improving trend from the first quarter towards the end of the quarter. We actually saw improving trends in terms of access. That's probably occurring industry-wide in terms of the access to physicians, face-to-face, in-person details, which we continue to believe are critical, along with the other channels that we have in engaging with our customers. But more importantly, I think in 2021, I think we did a pretty nice job in continuing to grow our franchise in spite of the access difficulties that we had in seeing acquisitions. So it hasn't impacted us as much as what I tend to see how much it has affected other products. And we tend to remain confident that hopefully as the markets return back to normal, that we will continue to see an increased growth in adoption and utilization for our franchise. Could you please repeat that first question on phase three on dry eye that you asked?

Okay, sure, and thanks for that. Yeah, sorry if I'm breaking up a little bit. So it was related to Bausch's recent phase three data for NOVO3 in dry eye. Just curious on your thoughts on that and that program as a potential competitor.

Yeah, I think Gary, are you on the line? And Casey, are you on the line? So could you address the NOVA III Phase III program data that we saw?

Yeah, this is Gary. I'll address that. So without speaking directly to a competitor, obviously the data is the data. We're very comfortable with the target product profile of 15512 program. And I'll just point out a few points of differentiation of our dry eye program compared to others. First, we have a very unique mechanism of action, TRP-M8, which is a cold-sensing receptor. The mechanism of action itself leads to increased tearing and a cooling sensation on the eye. So it's on target for mechanism of action of dry eye to relieve dry eye. As well, we ran a large Phase IIb study of 369 patients, and although we didn't hit our primary endpoint, when you look at all the signs and symptoms that were hit, the significance, and we are very comfortable to be able to hit signs and symptoms, multiple signs and symptoms, including the unanesthetized Shermer's test, which was highly statistically significant in the Phase IIb study, as well as staining and redness that hit significance at day 84, as well as three symptoms, the Sandy score, the dryness score, and the discomfort score that hit significance, the Sandy score from day 14, and the dryness and discomfort score at day 84 as well. we're very comfortable that our drug, not only based on a mechanistic action, but based on the large Phase IIb data that we have can hit on multiple signs and symptoms. As well, we also ran quality of life metrics, seven measures including reading, driving, well-being, and others. These hit significance at day 14 and increased for the remainder of the study. And this was a common finding in the study on both signs, symptoms, and quality of life that the delta between our drug and the vehicle increased over time, giving us confidence that this is something that can be maintained over the long period of time of chronic dry eye. Finally, our inclusion criteria for Phase III will be very, very similar, virtually identical to the Phase IIb data, the Phase IIb study. All of these gives us confidence that we'll be well differentiated in the dry eye market from other competitors, whether it be the Bausch & Lomb product or others.

Got it. Thank you.

Your next question comes from the line of Oren Livnat from H.C. Wainwright. Your line is now open.

Thanks. I have a couple. To get back to the notion of where Roqlatan is fitting in lines of therapy and your efforts to, you know, get first line if possible but switch patients from the obvious latanoprost bucket, you know, if that fails. Can you just talk about, I guess, the volume of patients that are on polypharmacy or combination therapy already? You know, I remember before this product launched, you know, one of the sort of obvious pitches was that you've got patients on two, sometimes three, sometimes even four sets of eye drops paying co-pays on all of them, and that, you know, even with, you know, a tier three co-pay perhaps for roclatan, you'd come out ahead paying one copay and get the same or better efficacy, maybe with even better tolerability. And I don't think we've heard that talked about in a long time, so I'm wondering if you could speak to that. And then I have a follow-up on Comet, too. Thanks.

Hi, Oren. Thank you for that question. You're correct. I think the way the market is split up, and it's quite dynamic, at any given point in time, roughly about 45% to 50% are on the therapy, on the tonoprocess, And then about a half of these patients are on multiple therapies, some two, some three, and some even four agents. And yes, the initial message was always about the convenience and the one co-pay, which resonated quite well. But we believe that the message that resonates with physicians is on efficacy. And the reason why we switched our messaging from the convenience, one co-pay, which is still a relevant message, but it's a secondary message now. The primary message is really driven towards efficacy, which is the primary driver of brand choice. So what we're saying is if you're choosing, even Litanoprox is chosen not just because it's generic, but also in the physician's mind, it's a very efficacious product. And so we are saying there is really nothing that surpasses Rock With Hands efficacy, and why not start with the most efficacious agent that you have that could potentially reduce efficacy the progression towards vision loss, which aligns very nicely with the medical reason why they prescribe pharmacological agents for patients with primary angle glaucoma.

Okay. And then on comment two, did I hear correctly that you're saying the primary endpoint is going to be just the unanesthetized Shermer and that the Sandy symptom endpoint is going to be a key secondary. If so, is that sufficient to get a sign and symptom label, and would COMET2 be the same ordering or flip-flopping endpoints? What's the approach here, and what kind of label are you trying to get? Thanks.

Yeah, so let me just maybe comment on the label, and then, Gary, maybe you could jump in on the COMET2 endpoints. So the label is for both signs and symptoms, right, for patients who have dry eye disease. So that is the label that we aim to target with our current clinical designs. And then comment two in particular, and also comment three, we decided to go with one endpoint because that's all that was needed from an approval perspective, but we remain confident, as Gary said in his previous comments, that we should be able to get both signs and the strong results on symptoms and be a very differentiated product. Gary, do you want to add anything that I may have missed?

Yeah, I'll just reiterate that our primary endpoint is unanesthetized Shermer testing at day 14. That's our only primary. And our first secondary endpoint is the Sandy symptom score at day 28. So if we hit our primary, that's enough for approval, as Rasha had indicated, and then we would move to our secondary endpoints on symptoms, and the target is to get signs and symptoms not only in the label but in the clinical trial section so it can be promoted based on improvement of symptoms.

Okay, and is that something that actually one gets in the indication statement, signs or signs and symptoms? Pardon me if that's a dumb question.

No, that's correct. You get symptoms in the label.

Okay.

Thank you.

Thank you for your participation this afternoon. This concludes today's call.