Aerie Pharmaceuticals, Inc.

Good afternoon. Thank you for standing by, and welcome to the Aerie Pharmaceuticals' second quarter 2022 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 will be recorded. It is now my pleasure to turn the floor over to Hans Wittstum of LifeSciPartners, Aerie's investor relations firm. Please go ahead.

Thank you, operator. Good afternoon, and thank you for joining us. With us today are Raj Cannon, 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 Rakuten and Ropressa in the United States and our collaborations in Europe, Japan, and other regions of the world. They will also include plans and expectations regarding the success, timing, and cost of our clinical trials including the status and expected enrollment in such 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 and beyond. 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 including 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 Kannan, CEO of Aerie Pharmaceuticals.

Thank you and good afternoon, everyone. I'm pleased to share with you why I'm so proud of AIRI's performance this quarter. During the call, I will speak about the excellent progress across our three strategic pillars of growth and explain why we remain confident about AIRI's continued growth through the rest of 2022 and beyond. I'll start by providing you with a high-level update on our strong second quarter commercial performance our outlook for 2022, and an overview of our excellent progress to date. Then I'll ask Gary to provide you with an update on our pipeline, especially the exciting prospects with AR15512 in the dry ice space. And finally, Peter will review the second quarter 2022 financials with you before I close with a few remarks. We made significant progress across several key areas that are expected to drive sustainable growth for 2022 and beyond. 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 our novel products, Roclatan and Ropressa. We received early positive feedback from target prescribers on our refreshed branding strategy for Roclitane and Ropressa. We initiated two of the phase three registration efficacy studies for our lead product candidate, AR15512, for dry eye disease. And we continue to identify operational efficiencies and reduce net cash burn. We believe these achievements taken together have set AREA up for success. During my first investor call back in February of this year, I outlined what we see as the three strategic pillars for ARIES long-term success. Number one, driving sustainable growth of the commercial business. Number two, making smart choices with our capital in advancing our pipeline. And number three, reducing our annual cash burn rate to maintain a solid financial position. Let me first address strategic pillars number two and three before I provide you with more detail on how we plan to drive sustainable growth in our commercial business. On strategic pillar number two, we've taken a deliberate and thoughtful approach to investing in our pipeline. We prioritize three programs based on our assessment of the likelihood of approval and commercial success, the potential value to drive value inflection in the near to midterm, and the speed to market. First, the phase three registration program for our lead product candidate, AR15512, has strong momentum. As you will hear today, we're increasingly excited about the prospects for AR15512. And with the recent start of enrollment in the Comet 2 and Comet 3 efficacy studies, followed by the Comet 4 safety study, scheduled to enroll the first subject in the fourth quarter of 2022. We believe that if approved, AR15512 could have a very competitive and compelling profile in the dry eye market. Assuming clinical success, We plan to file an NDA in 2024. I want to note that AIRI is planning to host a key opinion leader discussion of AR15512 in the fall. We look forward to talking more about this event as it gets closer. Our second late stage program, AR1105, which is targeting diabetic macular edema, or DME, is phase three ready today. We believe it could replace currently available steroid treatments for DME with a once-every-six-month dosing interval. We continue to evaluate efficient options for phase II development of AR1105, and partnering discussions are underway. Our third program, AR14034, has the potential to be a best-in-class product candidate for wet age-related macular degeneration, or wet AMD. It is on track for an IND submission in the fourth quarter with the potential of a 12-month dosing interval based on the combination of Aries print delivery platform and one of the most potent and well-characterized tyrosine kinase inhibitors, Excedinib. On strategic pillar number three, maintaining a strong financial position, one of my ongoing priorities is to continue to drive greater operating efficiencies to preserve cash and optimize capital allocation decisions. We've made substantial progress in expense rationalization while continuing to grow revenue and advance our pipeline. We ended the quarter with cash, cash equivalents and investments of $184.4 million. Net cash used in operating activities was $13.2 million, and total change in cash, cash equivalents and investments, or total net cash used in this quarter was $14.9 million. We continue to proactively analyze our capital structure to optimize our cost of capital and provide the financial flexibility to execute on our strategic plan. Looking ahead, we expect net cash used for the rest of 2022 to be less than $20 million per quarter on average. Our goal is to continue to drive growth in our Glaucoma franchise, improve our operating efficiencies, and turn cash flow breakeven during 2024. Now, I would like to provide you with an overview of strategic pillar number one, and tell you why we remain confident in the continued and sustainable future growth of our commercial franchise. I'm pleased to report that in the second quarter of 2022, Roklatan and Ropressa revenues grew by 23% over the second quarter of 2021. driven mainly by strong growth in total prescriptions of 15.6%, which is well above the glaucoma market growth of 2.7% during the same period. In addition, as of June 2022, we continue to gain share, and our franchise market share has increased to 2.3%. These results are in line with our expectations and continue to bode well for the franchise growth in 2022 and beyond. We expect continued strong growth in the future primarily driven by two key factors. Number one, you'll recall that we introduced a refreshed brand strategy for our commercial glaucoma franchise in February 2022 with a focus on the lower is better theme. Our market research indicates that our strategy is positively resonating with target prescribers. For Roqlatan, Our goal is to move the drug earlier in the adoption continuum. Our lead detail is now Roqlatan, where we highlight the highly effective lowering of intraocular pressure, or IOP, and that early adoption of Roqlatan may offer the lowest risk of vision loss to patients with glaucoma. Our key message to prescribers is why not start with the most powerful efficacy right from the start? Start with Roqlatan. Turning to Ropressor, the drug continues to be well-positioned because of its novel mechanism of action and its powerful and consistent lowering of IOP, especially in patients who are inappropriate for prostaglanding analogs. In addition, physicians who are reticent to prescribe combination products see Ropressor as one of the most effective add-ons at almost any stage of the treatment paradigm. Given the encouraging feedback our customer-facing team has received from target prescribers of Roctofen and Dropresa, we believe that the differentiated efficacy and favorable safety profiles of these products provide physicians with a clear and compelling reason to prescribe them. Overall, we feel confident that this revised brand strategy rollout could be the cornerstone to our commercial growth going forward. Number two, Our broad formulary coverage, especially in the Medicare Book of Business, paves the way for increased pull-through opportunities to drive greater adoption for our brands. With a targeted approach on the largest Part B and commercial payer opportunities, our shares for both Waclatan and Ropresa continue to grow month over month, driving overall brand share and increased confidence with the providers. In summary, we're pleased with our second quarter commercial glaucoma franchise growth. The updated brand strategy with greater clarity on positioning and refreshed messaging and increased pull-through opportunities on our broad formulary coverage could position Aerie to achieve our revenue growth targets and importantly, could potentially fund our journey to a bright future. I also want to highlight our significant efforts to manage the business efficiently with a focus on controlling costs at all levels. We implemented a reinvigorated capital stewardship philosophy across the company. The second quarter financial results reflect these continued efforts. Before I move on, I want to recognize the performance, dedication, and the commitment of the entire ARRI team on a strong quarter and in setting the company up for success. Let me now turn the call over to Gary, our Chief Medical Officer, to continue building on the reasons for our confidence and excitement about the future for ARRI. Gary?