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Operator
Good day ladies and gentlemen and welcome to Inovia's third quarter of 2023 earnings conference call. At this time all participants are in listen only mode. A question and answer session will follow the formal presentation. As a reminder this conference is being recorded. I will now turn the call over to Glenn Garment. Please go ahead sir.
Glenn Garment
Thank you Judith. Good afternoon and welcome everybody to Inovia's third quarter 2023 earnings conference call and audio webcast. With me today are Inovia's chief executive officer Michael Rowe, chief financial officer John Gandolfo, and chief operating officer Bren Kern. This afternoon we issued a press release announcing financial results for the three months ended September 30th 2023. We encourage everybody to read today's press release as well as Inovia's quarterly report on form 10Q for the quarter ended September 30th 2023 which will be filed with the SEC tomorrow November 14th and our most recently filed form 10K. The company's press release and annual report are also available on our website at .inovia.com. In addition this conference call is being webcast to the company's website and will be archived there for future reference. Please note that on today's call we will be discussing product, product concepts and candidates some of which have yet to receive FDA approval. Please also note that certain information discussed on the call today is covered under the safe harbor provision of the private securities litigation reform act. We caution listeners that during the call Inovia's management will be making forward-looking statements. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business. These forward-looking statements are subject to a number of risks which are described in more detail in our annual report on form 10K. This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast November 13th 2023. Inovia undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call except as may be required by applicable securities law. And with that said I'd like to turn the call over to Mike Rowe, Inovia's chief executive officer.
Mike Rowe
Michael. Thank you Glenn and welcome everyone to our third quarter 2023 financial results conference call. Inovia had a highly productive third quarter both in terms of tangible results as well as approved fixed combination of two popular pupil dilation drugs and the first electromechanical spray platform using the OptiJet. Earlier this month we were thrilled to announce that our contract manufacturer Coastline International was approved by the FDA for midcombi commercial manufacturing. Production has already begun at Coastline and we expect to receive finished product into our warehouse in January 2024. In addition to manufacturing midcombi we are also continuing to prepare the market and raise awareness about the product and the OptiJet technology. Last week we sponsored a course during the International Joint Commission on Allied Health Personnel and Ophthalmology's 51st annual continuing education program. The course was offered to ophthalmic technicians and provided hands-on experience with our OptiJet dispensing technology and the use of midcombi. We also had a significant exhibition booth at the American Academy of Ophthalmology and collected many leads and product requests from doctors who believe that technology addresses a significant unmet need in their practice. Last month we presented data at the American Academy of Optometry annual meeting demonstrating the OptiJet's ability to maintain sterility even when exposed to a high microbial load. This presentation was particularly timely given all the recent news about contaminated -the-counter eye drops being pulled off the shelves of major drug store chains and retailers due to the risk of serious eye infection and even blindness. In conditions that far exceed the microbial load that the OptiJet would be exposed to in actual daily use, the device demonstrated its ability to maintain product sterility. We are now in the process of validating the OptiJet's ability to deliver topical medication without preservatives for an extended period of time. Our activities at these professional meetings have been a great avenue to continue socializing midcombi to ophthalmologists, optometrists, and technicians and positions us well for a broader commercial launch of midcombi early next year. The current US market for pupil dilation is valued at approximately 250 million dollars and we feel we are poised to take a good portion of that market share over the coming years, especially when we move to our next generation device. More information including ordering instructions and customer reaction to this unique product will appear shortly on midcombi.com. In 2024 we not only anticipate midcombi generating revenue for us, but we are looking forward to the potential FDA approval of APP-13007 in early March 2024. We recently announced an agreement with Formosa Pharmaceuticals to acquire the exclusive US rights to distribute and sell APP-13007 or clobidazole-pripionate ophthalmic solution. APP-13007 is a potent steroid with a highly desirable safety and efficacy profile. It is currently under FDA review for post-ocular surgery inflammation and pain. Unlike almost all alternatives, this product is intended to be dosed twice daily without titration, which is significantly more convenient than the four times a day dosing regimens with titration for existing treatments. There are approximately 7 million ocular surgeries annually and almost all of these procedures utilize topical steroids during the recovery process. This is potentially a significant market for us and we expect to leverage our planned 10-person sales force for both midcombi and APP-13007 and add significant value to optometry and ophthalmology offices and surgical centers. In addition to providing near-term revenue, APP-13007 has the potential for additional indications in the optogen, including dry eye, a multi-billion dollar market opportunity. Following the potential approval for the post-surgical indication on March 4th of next year, we look forward to working with Formosa and the FDA to determine the most efficient path forward for this new product. We continue to explore additional partnering opportunities that we believe will benefit our company and our shareholders, specifically in glaucoma and dry eye, and we will provide you with updates on these developments when appropriate. I'll provide a brief regulatory update now. We have always believed that the OptiJet, due to its ergonomic design that eliminates the need for head tilting and handling small eyedropper bottles, would be easier to use in many populations than currently available topical options. In our own market research that we shared with you in the past, consumers and patients reported using eyedrops was among the most difficult ways to use medication that they experienced. With that in mind, we recently held a successful meeting with the FDA to ask how we might demonstrate this benefit. We confirmed with the agency that there is a path forward to include language in our labeling that covers patients who have difficulty or cannot reliably use eyedrops as long as we provide evidence of a clinical benefit, either in efficacy or safety, of the OptiJet product compared to the eyedrop product. We believe such labeling would not only help prescribers select our future products in classes such as glaucoma or dry eye, but this difference could lead to better formula recovery for OptiJet products as they would be the only products to provide an option for patients who have a challenging time with eyedrops. Now turning to Apasur, our proprietary topical on-demand pilocarpine-based therapeutic candidate that we are developing for the temporary improvement in near vision associated with presbyopia. Apasur is being designed with our more advanced Gen2 OptiJet device, which has been optimized for in-home use. These will be manufactured in our Redwood City facility, which is currently prioritizing manufacturing the Gen2 device to supply our partners Bausch & Lomb and Arctic Vision with product for use in their pediatric myopia studies at the beginning of 2024. As a reminder, we are paid by our partners for reducing the supply, and that income helps cover a portion of our overhead for that facility. Because of this, we have moved the manufacture of registration batches for Apasur into the first quarter of 2024. We do not believe this change will materially impact the eventual timing of the Apasur launch as the market for topical presbyopia treatments continues to evolve and mature as evidenced by the performance to date of the only presbyopia eyedrop currently on the market. Finally, for a corporate update, we are pleased to announce the appointment of Mr. Michael Geltziler to our Board of Directors as an independent director and chair of our audit committee. Mike comes to us with more than 35 years of senior financial leadership experience, including as former Chief Financial Officer of ADT Corporation, New York Stock Exchange Euronext, Reader's Digest Association, and AC Nielsen. Mike previously served on the boards of Cypress Creek Renewables and the Euronext Supervisory Board and is currently a board member for Madison Square Boys and Girls Club and University of Delaware. We are excited to have Mike on board and look forward to his guidance and insights. At this point, I'd like to turn the call over to our Chief Operating Officer, Bren Kern, for our manufacturing update. Bren?
Bren Kern
Thank you, Michael. We have made significant progress in the third quarter as we continue to build up our manufacturing capabilities to support Newcombe, our OptiJet platform and the Gen 2 configuration, the registration batches for Apasur. As Michael mentioned, we're delighted that the FDA approved the use of additional manufacturing site, Coastline International, to support the McCombie launch. Coastline has always already commenced manufacturing of commercial products in support of a broader commercial launch of McCombie in the first quarter of 2024. As our Redwood City facility is currently under review with the FDA as an additional commercial manufacturing site for McCombie with a PDUFA date in February of 2024. Our Redwood City facility is also working towards qualifying our Gen 2 fill and finish lines for both the clinical trial supplier of Micropine and registration batches for Apasur. As Michael mentioned, we're targeting the delivery of batches for our partners and the initiation of Apasur registration batches in the quarter of 2024. Additionally, our Reno facility continues to make significant progress in establishing base and ejector manufacturing. Recall, in our last earnings call, we indicated that we had installed the manufacturing equipment. Since then, the manufacturing team has been optimizing the operation of equipment, including generating qualification protocols, and we are targeting the commencement of prototype execution before the end of the year. We continue to make significant progress in increasing our manufacturing capacity. I remain confident that we'll be well positioned to meet the product-based products in clinical developments. I would now like to turn the call over to our Chief Financial Officer, John Caldolfo, to provide a financial update. John?
John Caldolfo
John Caldolfo, Chief Financial Officer, Reno City, California, USA Thank you, Brian. For the third quarter of 2023, net loss was approximately $7.3 million or 18 cents per share compared to a net loss of approximately $7.3 million or 21 cents per share for the third quarter of 2022. The third quarter of 2023 includes approximately $400,000 of non-recovery expenses associated with the rework or replacement of certain clinical trial GEM1 devices which were found to be defective after shipment to a licensee. The rework or replacement is not expected to have any impact on the enrollment or timing of Boushey-Chaperon study. Research and development expenses totaled approximately $3.6 million for the third quarter of 2023 as compared to $3.9 million for the third quarter of 2022. For the third quarter of 2023, GNA expenses were approximately $2.9 million compared to $3.4 million for the third quarter of 2022. Total operating expenses of GNA and GNA are approximately $6.5 million compared to $7.2 million for the third quarter of 2022. As of September 30, 2023, the company's cash and cash equivalents were approximately $20.7 million compared to $22.9 million as of December 31, 2022. For a brief update on our licensing revenues, in addition to the cash balance noted above, we have receivables from our licensed partners of approximately $400,000 as of September 30, 2023. And in addition, we expect a product development milestone payment of approximately $1.8 million from Arctic Vision that we anticipate in the first quarter of 2024. I'll now provide an update on our existing licensing programs with shells for micropene in the U.S. and Canada and Arctic Vision for all three of our products in China and South Korea. Bachelon is continuing to enroll in the ongoing Phase III chaperone trial of micropene, a proprietary atropine formulation for the reduction of pediatric myopia progression. It has been shown in clinical studies to slow myopia progression by 60% or more. There are currently no FDA approved drug therapies for this indication, and if left untreated, this can result in retinal detachment, myopic retinopathy, and vision loss. Our agreement with Arctic Vision covers greater China and South Korea and covers micropene, microline, and midcombi, and provides us sales royalties in addition to development milestones. Micropene in particular is a significant opportunity in China for pediatric myopia. If approved, micropene could be a significant source of non-delivered funding for our company over the long term. To date, our license agreements have generated approximately $16 million in license fees and with the potential to earn an additional $60 million in net license and development milestones and reimbursable expenses over the next four years. If our products are approved upon commercialization, Inobia is also eligible to earn significant sales royalties. We are continuing to assess potential pipeline expansion opportunities similar to our foremost agreement, and we will continue to leverage the OptiJet technology to address unmet needs and additional large ophthalmic indications. In conclusion, we are very pleased with our performance in the third quarter of 2023. And to summarize our key highlights today, we acquired exclusive U.S. commercial rights to APP 13007 as a potential treatment for post-surgical ocular pain and inflammation from from most of pharmaceuticals. We achieved our first commercial sale of midcombi in August 2023 and continue to carry out our targeted launch. Gen 2 OptiJet production continues to advance and we're continuing to build out our manufacturing capabilities to support midcombi production with Coastline Manufacturing now in production and a Redwood City facility anticipated to come online early 2024. And our licensing agreements with Arctic Vision and Bausch & Lomb are progressing well and remain a promising avenue for significant development and regulatory milestones as well as the potential for additional sales royalties. This concludes our prepared remarks. We would now like to like to open and call the questions. Operator.
Operator
Thank you, sir. Ladies and gentlemen, we will not be conducting a question and answer session. If you would like to ask a question, please press start in one on your telephone keypad. Confirmation turn will indicate that your line is in the question queue. You may press start too to leave the question queue. For participants making use of speaker equipment, it may be necessary to pick up the handset before pressing the star keys. Of those questions comes from Tim Lugo of William Blair. Please go ahead.
Tim Lugo
This is John. I'm for Tim. Thanks so much for taking our question. So I was wondering if you could give us any color on what, if any, gating factors you have remaining to getting 13007 into the clinic for dry eye disease or are you just waiting for the BDUFA before moving forward? And as a follow-up, just wondering if you could provide any early thoughts on the trial design study indication.
Mike Rowe
Thanks. We are waiting for the BDUFA because once that is done, then we can reference that file for all of the preclinical and safety information. It saves us a lot of time. So the idea would be with the product, we could go directly into phase three. We've spoken with the FDA. It would be two relatively short-term phase three studies because the initial indication would be in acute dry eye. So this would be used as an adjunct for flare-ups, for example, which is common because the current dry eye products don't do a particularly good job at solving the issue. So we've had the discussions. We know what the design would be and we're waiting at this point for the approval because to go forward, we would want to reference the approved drug. Very helpful. Thanks so much.
Operator
Our next question comes from Matt Kaplan of Leidenberg-Tulman. Please go ahead.
Matt Kaplan
Oh, hi. This is Raymond in for Matt. Thanks for taking our questions and congrats on all the progress. Just wanted to ask about, you know, perhaps the drivers and moving parts for mid-commy revenue as the launch is near term. And I was wondering, is it state licenses, sales force rollout, any additional call would be helpful? And I just have one more follow-up question.
Mike Rowe
Thanks. Sure. Thanks for calling. The state licenses are falling into place. So at this point, it's manufacturing, which is underway. So we need to get the product into the warehouse in January. The two sales force leaders have been hired. They're now going to hire the remainder of the sales force and that's time for when the product actually is available. So at this point, everything is moving the way we would expect it. And I would anticipate first sales the end of January.
Matt Kaplan
Appreciate that. Yeah. And I guess I mentioned in prepared remarks, the Gen2 device, the FDA mentioned clinical efficacy. Is that more superiority or non-inferiority over eye drops?
Mike Rowe
Well, I'll give you an example and I'll use safety as an example. We know that the OptiJet delivers one fourth or one fifth the dose, for example, of conventional eye drops. So if you use beta blockers as an example, if you take a beta blocker as an eye drop, and this is in the literature, it actually slows your heart rate by one or two beats per minute as a systemic side effect because the majority of that beta blocker you're going to end up drinking because you're overdosing the eye. If you use the OptiJet, you will have significantly less available systemically. And if it's likely that we would be able to show that you don't have that impact, that safety impact, because you are getting the lower dose, that's the kind of thing that could end up in the label to differentiate the product.
Matt Kaplan
Appreciate that, Kyle. And I'll hop back in the queue.
Mike Rowe
Thanks. Thank you.
Operator
Our next question comes from Lynn Yaffe of stock.com news. Please come ahead.
Lynn Yaffe
Thank you very much. Hi, Mike. I want to ask you a question about APP-13 bond. And I was wondering, I was very excited to hear you talk about the dry eye application because that's seemingly a very large market. Could you discuss to the extent you have data in the US, the size of that market, how much of it is xydrin or stasis versus -the-counter? Drops. And you mentioned initially, you'll be competing in the acute dry eye segment. How big of the total dry eye market is that? And it seems like this would be a perfect drug to be put in the Gen 2 OptiJet device. How much more do you think that could potentially expand the use of the drug given that you'd have it available in OptiJet? Thanks so much.
Mike Rowe
Thank you, Lynn. And I think I'm going to steal that AP-13 bond from now on. It's easier to say. We think it's a tremendous opportunity. And let me start with why in the OptiJet. And I'll go back to when we talked to the FDA about differentiating the OptiJet from an eye drop. One of the issues with steroids as a class is that historically, when you use them for an extended period of time, they can cause something called an IOP spike, which is a transient intraocular pressure increase, which you don't want to see in patients who are sensitive, like patients who have glaucoma. So the FDA is very concerned about that. Now, clobethazol, the formulation we have in clinical trials, we only saw that in one patient out of 180, which is basically the same as you would see in the general population without drug. So we think this is a particularly good drug for dry eye patients because you don't see the IOP spike to begin with. But the benefit of using the OptiJet is because you're delivering one quarter to one fifth of the dose, is that if these IOP spikes are related to dosing, you should see it even less, which would be the additional benefit while still getting the dry eye pain and inflammation relief. So that's why we want to put it into the OptiJet to get that additional benefit. As for the market opportunity, for people who are on cyclosporine or rastasis or on lefetagrass, many of you know that that's not enough and you're still using artificial tears and you're still having problems. So this would be a product, if approved, that you would use for those times where it's getting just a little bit too much and you need something for 14 weeks to calm down the ocular surface. In terms of market size, it doesn't really compete with the other drugs. It's used in addition to them from time to time. There are millions and millions of patients out there. So this could easily be a multi-billion dollar opportunity for the right drug. And we think we have something that is really special with a P13 bond. Thank you.
Lynn Yaffe
Okay. And secondly, could you comment on when the micropine studies would be complete either by boushe or arctic so the drug could be ready for filing given that that market, especially post-pandemic and younger folks spending so much time on their cell phones, either texting or playing video games, so the incidence of progressive myopia is increasing, it seems like it's a very large market.
Mike Rowe
Yeah, I can't speak for either of those companies that are operating their own studies. I can tell you that in previous conversations, I know that they would like to finish their enrollment in 2024. So assuming that's the case, it's three years to an efficacy endpoint after that, which would take you to the end of 2027. So I think any kind of filing would probably be in 2028.
Lynn Yaffe
Great. And when you refer to it as bond, I'll take a
Mike Rowe
fair enough. Thank you.
Operator
Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. I will now hand over to Michael Roe for closing remarks.
Mike Rowe
Thank you, operator, and thank all of you for joining us today. And that concludes today's call. We are very pleased with the year we have had so far, and we are excited to close out 2023 with strong momentum. So thank you again for joining us. We look forward to our full fiscal year update in March or April of next year.
Operator
Thank you. Ladies and gentlemen, that concludes today's event. Thank you for joining us. And you may now disconnect your lines.
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