8/5/2021

speaker
Operator
Conference Operator

Today's conference is scheduled to begin shortly. Please continue to stand by. Thank you. Thank you.

speaker
Conference Call Host
Moderator

Good morning and welcome to College Pharmaceutical's second quarter 2021 financial results conference call. At this time, our participants are in a listen-only mode. Following management's prepared remarks, a Q&A session will be held. As a reminder, this call is being recorded. I would like to turn the conference over to Naranjan Kimiswaran, Senior Vice President of Strategy of College Pharmaceutical. Please proceed.

speaker
Naranjan Kimiswaran
Senior Vice President of Strategy

Thank you, Operator, and thank you all for participating in today's call. Joining me from the company are Mark Iwiki, Chairman, President, and Chief Executive Officer, Todd Baysmore, Chief Operating Officer, Mary Remoth, Chief Financial Officer, and Kim Brazel, our Chief Medical Officer, will also be joining us for the Q&A portion of today's call. Today's call is being webcast live. The webcast link can be found in the Investors and Media section of our website at www.kalaRx.com. During this call, we will be referring to non-GAAP financial measures which are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in our press release issued today, which can also be found on our website. On this call, we will make certain comments about CALA's future expectations, plans, and prospects that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements will include statements regarding the potential market and commercial launch plans for ISUVIS, observations associated with our commercialization of ISUVIS and INBELTIS, and the sufficiency of our cash resources. These and other forward-looking statements are based on the beliefs and expectations of management as of this conference call. Our actual results may differ materially from our expectations. The company undertakes no obligation to revise or update any forward-looking statement to reflect events or circumstances that occur after this conference call except as required by law. Investors should carefully read the risks and uncertainties described in today's press release as well as the risk factors which identify specific factors that may cause actual results or events to differ materially from those described in our forward-looking statements included in the company's quarterly report on Form 10-Q and other filings we make with the SEC. Form 10-Q will be filed with the SEC later today and will be available on our website. I will now turn the call over to Cala's CEO, Mark Iwicki.

speaker
Mark Iwicki
Chairman, President, and Chief Executive Officer

Thanks, Naranjan, and good morning, everyone. Thank you for joining us today to review Cala's second quarter 2021 financial results and recent business highlights. Since our inception, Kala has been committed to advancing innovative treatments for eye diseases. We continue to execute on all fronts and benefit from a uniquely positioned portfolio that offers both near-term and long-term growth opportunities. We now have two FDA-approved products based on our proprietary Amplify technology and are making good progress toward advancing our pipeline of innovative NCE development programs, which have the potential to treat both front and back of the eye diseases. As we have described before, a key area of focus for COLA in 2021 is setting up by SUVIS for long-term commercial success, and we are encouraged by our progress year to date. We saw immediate effects from our initial Salesforce expansion and have significantly broadened payer coverage to include some of the largest commercial PBMs in the United States. We also recently secured our first Medicare plan coverage and are working diligently to obtain additional access for Medicare patients. As Todd will describe shortly, we believe this creates a tremendous foundation for future growth, and we're excited to continue offering Misuvis as the first and only prescription therapy, specifically for the short-term treatment of dry eye disease, which includes dry eye flares. We are encouraged by recent trends on Inveltus, suggesting that elective ocular surgeries are continuing to return to pre-COVID levels as vaccines are becoming more readily available. We continue to believe that Invelta's prescriptions and revenues will grow over time. Importantly, as we enter the second half of 2021, we continue to operate from a strong financial position with the capital to continue executing against our strategic priorities while maintaining balance sheet flexibility. We anticipate that our cash together with anticipated revenue from ISUVIS and Invelta's will enable us to fund our operations for at least two years as we continue to invest in building out our ISUVIS, commercial efforts, and advance our pipeline. With that, I will now turn the call over to Todd to review our commercial progress with ISUVIS and in BELTIS.

speaker
Todd Baysmore
Chief Operating Officer

Thank you, Mark. I'll begin this morning with a progress update on the ISUVIS launch. There remains a massive unmet need in dry eye disease. there are an estimated 38 million dry eye disease patients in the U.S. Over 17 million of these patients have been diagnosed and are under the care of eye care professionals. We estimate that about 75 percent of the total addressable market, or approximately 13 million diagnosed patients, are currently not treated with a prescription dry eye therapy. Of those patients who have received a prescription medication, nearly 80 percent discontinued their medication within the first four months. Multiple patient market research studies indicate that approximately 80 percent of dry eye disease patients suffer from dry eye flares, and that these flares occur on average four to six times per year. As the only FDA-approved product for the short-term treatment of dry eye disease, we believe ISUVIS has the potential to become the preferred first-line prescription therapy. We are committed to continuing to educate eye care professionals about the underserved acute dry eye market and over time changed the treatment paradigm for the millions of patients who would benefit from the short-term treatment of their dry eye disease. In the second quarter of 2021, Symphony Health and our patient hub reported 15,632 isuvus prescriptions, representing an increase of 93% over Q1. As of the week ended July 23, 2021, data from Symphony Health and our patient hub indicated more than 28,000 prescriptions for Isevus have been filled since the launch in January, including over 2,500 refill prescriptions. More than 3,800 unique eye care professionals have prescribed Isevus since the launch. We are also encouraged to report that 62 percent of prescriptions in the second quarter were written for patients entirely new to prescription dry eye therapy, indicating first-line use and meaningful progress toward our goal of becoming the preferred first-line prescription therapy for the short-term treatment of dry eye disease, which includes dry eye flares. Of note, we are seeing that optometrists who often see patients earlier in the dry eye disease cycle have written 55 percent of ISUVIS prescriptions to date. ISUVIS has grown in new to therapy prescription share, a measure of the number of patients newly initiating prescription dry eye therapy and now sits at approximately 6 percent market share, having surpassed CEQA to become the third most prescribed dry eye product for new to prescription therapy patients. We conducted a survey of over 200 eye care professionals between late May and the end of June, and the feedback was exceedingly positive. Seventy-two percent of the ECPs reported prescribing Isobus in the past 30 days. Approximately 83 percent of the ECPs indicate they expect to increase their prescribing of Isevus based on the education provided by their COLA sales representative. Our promotional messaging was rated the most effective relative to other dry eye therapies and highly recalled by ECPs. These findings are very encouraging. We believe indicate that our current strategy is yielding results and supports continued future growth. In order to support the progress that we have made in building demand for Isevus, We have increased our sales force from 91 reps at the time of launch to 105 sales reps today, which covers an additional 2,300 targeted ECPs, bringing our total called-on universe to more than 14,000 eye care professionals. We are also encouraged by our progress in broadening our payer coverage. During the quarter, we announced that OptumRx, one of the largest pharmacy benefit managers in the U.S., has added iServis as a covered brand under its commercial formularies. As of the end of the second quarter, we have secured coverage for approximately 56 percent of commercial lives, representing approximately 96 million total lives. In addition, as of July 1, we now have Medicare Part D coverage for 7 percent of the Medicare population, representing an additional 3.2 million covered lives. Consistent with the customary annual Medicare Part D bid cycle, Contract negotiations for 2022 coverage are ongoing with additional decisions anticipated by the end of 2021. We are pleased with this continued growth in payer coverage, particularly since we believe it is translating into higher prescription fill rates for ISUVIS. We look forward to further growing our market access coverage, which will be a key driver of continued prescription growth. Now turning to Indultus. As we have previously shared over the past, the pandemic has negatively impacted the ocular surgery market, resulting in fewer surgical procedures. As surgical volume has started to recover, we believe we will see indelitus prescriptions returning to quarterly growth. In the second quarter of 2021, there were more than 41,000 prescriptions of indelitus reported by Symphony Health, compared to 37,000 prescriptions reported in the first quarter of 2021, representing an 11% increase quarter over quarter. Despite the uncertainties the pandemic continues to present, we believe that Invelta's prescriptions and revenues will grow over time. However, we remain unable to project the specific timing or quantify the potential impact on future revenues due to the potential disruptions of these continued uncertainties on elective ocular procedures. Overall, we are encouraged with the progress we are making and the quarter-over-quarter growth in prescriptions achieved with both Isuvus and Invelta's. We are making significant headway towards securing broad payer access, and our goal of establishing iSUVIS is the first-line prescription therapy for the short-term treatment of GI disease. The team is executing against our strategic launch priorities, and our ongoing efforts to engage with and educate the ophthalmology and optometry communities on iSUVIS is generating prescription demand. We look forward to updating you on our progress on future calls. Now I'd like to turn the call over to Mary to review our financial results.

speaker
Mary Remoth
Chief Financial Officer

Thanks, Todd. During this discussion of our financial results, I will reference certain non-GAAP financial measures. These non-GAAP financial measures exclude stock-based compensation, loss on extinguishment of debt, non-cash interest expense, and depreciation and amortization. For a full reconciliation of our GAAP to non-GAAP financial measures, please refer to today's press release, which is available on our website. Turning to a recap of the second quarter of 2021, our cash position as of June 30th, 2021 was $149.6 million compared to 153.5 million as of December 31st, 2020. This decrease reflects cash used in operations largely offset by net proceeds of 40.7 million received from sales of common stock under our at the market or ATM offering program in the six months ended June 30th, 2021 as well as the release of 10 million from restricted cash in connection with the refinancing of our credit facility in May. ISUVIS revenue increased to 1.7 million in the second quarter from 1.6 million in the first quarter of 2021. While prescriptions were up 93% during the second quarter relative to the first quarter, units shipped to our distributors on which we recognize revenue were down as a result of stocking during the launch in the first quarter of this year. Overall, we are pleased with the increase in the number of prescriptions written and filled during the second quarter. For the second quarter of 2021, we reported net product revenues of $3.1 million. This is comprised of $1.7 million of net revenue from ISUVA sales and $1.4 million of net revenue from Invelta sales, compared to net revenue of $800,000 from Invelta sales in the second quarter of 2020. In Beltis net revenues in the second quarter of 2021 decreased by $200,000 as compared to the first quarter of 2021. This decrease was driven by a reserve for In Beltis product returns of $500,000 that we believe is largely due to the COVID pandemic, which resulted in restrictions on elective surgical procedures. SG&A expenses for the second quarter of 2021 were $28 million compared to $15.3 million for the same period in 2020. The increase was primarily due to an increase in cost as a result of the launch of ISUVIS, including the expansion of the sales force and increased stock-based compensation costs. Non-GAAP SG&A expenses were 24.1 for the second quarter of 2021 compared to 13.2 million for the same period in 2020. R&D expenses for the second quarter of 2021 were 3.1 million compared to 6.1 million for the same period in 2020. The decrease was primarily due to costs incurred on stride three, call this phase three clinical trial of ISUVIS, during the second quarter of 2020, which were not incurred during the same period in 2021, partially offset by increased spending on pipeline programs. Non-GAAP R&D expenses were 2.1 million for the second quarter of 2021, compared to 5.3 million for the same period in 2020. Loss from operations for the second quarter of 2021 was 29 million, compared to 21.3 million for the same period in 2020. Non-GAAP operating loss was 24.1 million for the second quarter of 2021, compared to 18.4 million for the same period in 2020. Net loss for the second quarter of 2021 was 36.5 million, or 57 cents per share, compared to a net loss of $23.3 million, or 42 cents per share, for the same period in 2020. Non-GAAP net loss was $25.8 million for the second quarter of 2021, compared to $20.2 million for the same period in 2020. Please refer to today's press release for the weighted average number of shares used in the calculation of our net loss per share for each of the quarterly periods discussed. That includes our prepared remarks for today. I will now pass the call over to the operator for questions.

speaker
Operator
Conference Operator

If you'd like to ask a question at this time, please press the star, then the number one key on your touchtone telephone. To withdraw your question, press the pound key. Again, that is star, then one if you'd like to ask a question at this time. Our first question comes from Chris Nair with J.P. Morgan.

speaker
Chris Nair
Analyst, J.P. Morgan

Morning. Thanks for the questions. So first one's on recent isovius script trends. So based on symphony health scripts, we've seen a flattening of isovius growth over the last two months. And when we look at the slowdown, this has come despite the recent formulary additions for Cigna and OptumRx earlier in May. So looking forwards, what are the key requirements to see a reacceleration of isovius growth from here? I'll start there.

speaker
Todd Baysmore
Chief Operating Officer

Hey, Chris, it's Todd. I'm happy to take that question, and good morning. So, actually, if we look at most recent four weeks compared to the prior four weeks, I assume this is the only dry eye product that is growing. You know, the summer months are typically slower for the dry eye market. Script volume is less versus the high months, which really start to come in the fall and going into the winter. If you look at most recent four weeks versus prior four weeks, the overall dry eye market is flat. In fact, Zydra is down about a point and a half or two percentage points. And iService is growing at about 6%, nearly 6% for the most recent four weeks versus prior four weeks. So we think, you know, during the summer months, things are typically a little bit slower. You have holidays and vacation, but are encouraged by the fact that iService is generating the strongest growth rate of any dry eye product during that period of time.

speaker
Chris Nair
Analyst, J.P. Morgan

That's helpful. And second question, so unreported 2Q ISUVIS sales. So we saw 1.7 million of sales, which are largely flat quarter over quarter, while we had ISUVIS prescription growth of 93% quarter over quarter from 1Q21. So can you help us bridge the reported sales versus the underlying script trends? And I realize you guys don't provide forward guidance on gross to net, but any comments on kind of second half 21 gross to net versus first half 21? I think that would be helpful.

speaker
Todd Baysmore
Chief Operating Officer

Yeah, sure. Really good question. So, you know, the big driver of, you know, revenues being up just slightly versus first quarter, well, significantly. was us just working through the initial trade load launch or launch load, I should say. So working through those initial inventories that we put out as part of the launch in the first quarter. And as you know, we recognize revenue when product is shipped to the wholesaler. So we feel like we did a really great job in the second quarter of working through those initial trade launch and inventory levels are starting to normalize. As Mary said, we actually shipped less product in the second quarter to wholesalers than in the first quarter. yet had slightly higher revenues, indicating improvements in gross to net. So we do expect gross nets, as we have said, to continue to improve over time, particularly as our market access continues to improve. And, you know, we have less scripts going through patient assistance programs and copay reduction programs and more of the scripts getting filled traditionally through payer contracts.

speaker
Chris Nair
Analyst, J.P. Morgan

that makes sense. And then, um, kind of the, the last one for me, I think just like taking a step back, um, it seems extreme expectations are for a pretty steep acceleration of growth in the second half of this year. Um, so I think you have basically scripts, uh, more than doubling, uh, in three Q and then, uh, further script growth in four Q. Uh, do you think there should be a reset at expectations here or is there, um, Are there any key catalysts you see to just reaccelerate growth kind of in the second half? I think you mentioned the seasonality of the dry eye market. Looking into fall, do you think you're going to see kind of a re-pickup in growth for ICU prescripts? Thanks so much.

speaker
Todd Baysmore
Chief Operating Officer

Yeah, sure, Chris. Look, we expect prescriptions to continue to grow, as we've always said, particularly as our market access continues to improve. We think that's going to be one of the most important drivers. We know that demand is much higher than the scripts that are actually being reported by Symphony. And, you know, there are a lot of scripts that are being written that are not getting filled because of a lack of insurance for that patient, for those patients, rather. And so as we continue to improve our market access, we expect our prescription fill rates to improve and demand to continue to grow. And then the other thing I would just remind is that, you know, we're creating a market that did not previously exist, right? The acute dry eye market is something that was not promoted on previously, and very rarely were steroids used in dry eye. As you know, we've shared with you in the past that less than 3% of diagnosed dry eye patients would receive a prescription for an off-label steroid historically prior to the eye service approval and launch. And for the past 20 years, eye care professionals have been told that dry eye is a chronic progressive disease. And so for the first time, we are creating this new acute market, and we're really encouraged by the progress we're making, the receptivity from eye care professionals has been extremely positive, both to the idea of diagnosing and treating acute dry eye symptoms with a short-term treatment, and then probably more importantly, the feedback that we get from those eye care professionals once they've had a chance to prescribe eye service for their patients. They're consistently reporting that patients are getting a very rapid onset of action, quick relief from their symptoms, and that ice sewers is a very comfortable and well-tolerated eye drop. So we think these are all really great positive indicators for continued growth in the second half of this year. Thanks. Yeah, thank you, Chris.

speaker
Operator
Conference Operator

Our next question comes from Francois Brabois with Oppenheimer.

speaker
Francois Brabois
Analyst, Oppenheimer

Hey, thanks for taking the question. So just to be clear, this is not, you know, from Symphony to – this is more of a Kind of a backlog here. This is not a question of, you know, like an 80% discount on ISUVIS and a 90% discount around there on INVELTIS. Is that fair?

speaker
Todd Baysmore
Chief Operating Officer

Yeah, Frank, it's Todd. No, that's the – what we're dealing with with ISUVIS and what we saw within the quarter is that we actually had less X-factory shipments as we worked through the initial inventories that we put out with the launch in the first quarter. Yet with lower X factory shipments, net revenues were up slightly quarter over quarter, which would indicate improving goes to nets.

speaker
Francois Brabois
Analyst, Oppenheimer

Okay. All right, great. And on the envelop this front, how do you – what exactly was – I think Mary touched on some of it. What's the reasoning there for the revenues to come down despite the Scripps doing what they're doing?

speaker
Todd Baysmore
Chief Operating Officer

Yeah, why don't I have Mary take that?

speaker
Mary Remoth
Chief Financial Officer

Sure, Frank. So, the reason for that for In Beltis is really the half million dollar reserve for returns that we booked in the second quarter. So, we've seen some units return to us expired and we believe that that is related to COVID and the restrictions on the surgical procedures that we've seen. So we believe that those units have basically sat on the shelf and come back to us unused and expired. And that was the reason for that reserve in the second quarter.

speaker
Francois Brabois
Analyst, Oppenheimer

Okay, great. And then just in terms of ISUVIS and INVELTUS, I guess, one after the other, when can we expect, you know, is this INVELTUS thing kind of a one-time thing of the reserves? And then on the ISUVIS front, when can we start seeing, you know, a better correlation between Symphony and the scripts, and the actual revenues.

speaker
Mary Remoth
Chief Financial Officer

Yeah, so on the Invelta front, yes, that was related to units that we've seen returned, and we do believe that that's related to COVID. So we believe that half-million-dollar reserve should cover us for related returns going forward. And then I'll let Todd touch on the question about ISUVIS.

speaker
Todd Baysmore
Chief Operating Officer

Yeah, I think on the ISU front, you know, we've done a really good job working through those initial inventories that were put out in the first quarter, and our inventory levels are starting to normalize, and we expect we'll continue to do so throughout the third quarter. So, you know, we don't give specific guidance, Frank, as you know, so I'm trying to be careful there, but we just say that we feel good about where our inventory levels are right now.

speaker
Francois Brabois
Analyst, Oppenheimer

Okay, great. And when you talked about the – the large volume of prescriptions that are written but still not filled based on reimbursement. Do you quantify at all what percentage of scripts are still written but not filled? Is that very much correlated to the reimbursement levels now or not quite?

speaker
Todd Baysmore
Chief Operating Officer

Really good question. Not quite. There are third-party data that are put out there by MMIT and Business One that looks at across all categories, scripts, rejection rates, reversal rates, paid claims rates. And so when you look at reversals and rejections, I assume it's still greater than 60% of the prescriptions that are showing up at the pharmacy that are not getting filled. So, again, we think that points to demand that's more than double the scripts that are getting filled in any given week in those scripts as we continue to improve our market access. will result in higher paid claim rates and more scripts filled on a weekly basis.

speaker
Francois Brabois
Analyst, Oppenheimer

Okay, great. And on the reimbursement side, the Medicare win, is there any impact there in terms of the gross to net where it could be tougher on the gross to net if it's Medicare versus commercial?

speaker
Todd Baysmore
Chief Operating Officer

We feel good about the contracts that we have in place and the level of rebates to get the access. It's our first win. It's a meaningful win. It was with ESI and their Medicare book of business, and we expect that to continue to grow. We believe the most important thing is to get those Medicare contracts in place to open up that part of the market. As you know, it's about 40% of all tri-I prescriptions are reimbursed by Medicare Part D payers, and we look forward to continuing to grow our Medicare access in the second half of the year.

speaker
Francois Brabois
Analyst, Oppenheimer

Okay, great. And sorry, if I could sneak in a last one here. Can you just remind us what you mentioned on CEQA there and just maybe remind us what exactly the CEQA sales have been and where you passed them in your prepared comments?

speaker
Todd Baysmore
Chief Operating Officer

Yeah, really good question. So I was referring specifically to what's known as NBRX share. Sometimes it's called nudibrand share or nudotherapy patient starts. And I think that's a really important indicator, particularly for newly launched products, right? At this time of the year and any given week in the dry eye market, there's about 17,000 new patient starts. And that's defined as a patient that's getting their first ever prescription dry eye medication or at least has not been on a prescription dry eye medication for the prior 12 months. And so we look at that NBRX or new to market share to see how we're performing as a newly launched product. and we're currently sitting at about a 6% new to therapy market share and surpassed secret in the quarter, which we think is really indicative of us getting more first-line use. As I said in the prepared marks, about 62% of our prescriptions in the quarter were written for new to therapy patients, indicating that we're getting a lot of first-line use. When you look at the new to therapy starts, You know, obviously, Restasis is the market leader. They get about 69% of those 17,000 new patients that are starting therapy every week. Zyger gets about 22%. We're up to 6% now. And Seeker is about 3% of those new therapy starts on a weekly basis.

speaker
Mark Iwicki
Chairman, President, and Chief Executive Officer

Hey, Frank, it's Mark. Just going a little bit farther. If you actually look at the last month, and, you know, we have to remember there's a couple of holidays in this period where the scripts were a bit flatter. It's not only the low season, but there's holidays, and that affects new products a lot more, and especially products without a lot of refill prescriptions get impacted quite a bit more when there's a holiday period. But if you look at those NVRXs and the share, we're up quite a bit in the past month, around 4.5%. And You know, for example, product like Zydra is down 4%. So, you know, when we look at these leading indicators and including all the prescriptions that are being written, although not all filled as Todd described in the market research, we feel like, you know, the upcoming month should be really strong.

speaker
Francois Brabois
Analyst, Oppenheimer

Okay, great. I appreciate all the clarity. Thank you.

speaker
Operator
Conference Operator

Our next question comes from Tazin Ahmad with Bank of America.

speaker
Tazin Ahmad
Analyst, Bank of America

Hi, good morning, guys. Thanks for taking my questions. As it relates to payer mix, over time, what would you say you would expect your split between commercial and Medicare usage to be? And do you have any comps from, let's say, Restasis or Zydra that could also help us out to figure out what that mix would be? And then I have a couple more follow-ups.

speaker
Todd Baysmore
Chief Operating Officer

Sure. So good morning, by the way, it's Todd. We haven't given exact guidance on what we think the payer mix is going to look like in the future. I can tell you that right now, more than 75% of our prescriptions that are getting filled are for commercial patients. If you look at the market and what that looks like overall, it really varies greatly by product. You know, a product like Restasis that has very good Medicare coverage, Actually, the majority of their prescriptions that are filled, greater than 50% of their prescriptions are coming from Medicare patients, whereas they're at about 40% within commercial. So they're almost sort of the opposite of what the overall market looks like, which is about 40% Medicare, 50% commercial. You know, if we look at a product like Zyger, right, that's been on the market now for, I guess, it's the fifth year that's been on the market now. And About 65% of their prescriptions are coming through commercial and about 25% through Medicare and sequence still sort of fairly new to launch within the last couple of years or around 50% on commercial and around 30 to 35% on Medicare. So I think it's reasonable to assume that we'll start to head in the direction of where Zyger and Sequel are. Those are products that have been on the market for a few years. But I do expect over the next couple of years that most of our scripts will continue to come through commercial payers.

speaker
Tazin Ahmad
Analyst, Bank of America

Okay. And then can you give us an idea of what percent of these new scripts have been given with the patient assistance program attached?

speaker
Todd Baysmore
Chief Operating Officer

You know, I don't have that number off the top of my head. You know, we have a couple of different ways that the patients can get access to. If we look at all programs, I think the easier way to say is our historical run rate for the full year since launch is probably about half of our prescriptions, maybe a little bit more than half of our prescriptions were getting filled with some type of copay assistance program. You know, because most of our scripts are commercial, it's safe to assume that that split is very similar for the commercial book of business.

speaker
Tazin Ahmad
Analyst, Bank of America

Okay. And then when you talk about, I guess, Todd, lots of scripts being written but not necessarily yet being executed on or dispensed, is there a range that you can give us to give us a better sense of what percent of those scripts are not being filled yet and whether that trend has been improving?

speaker
Todd Baysmore
Chief Operating Officer

Yeah, really good question. The trend absolutely has been improving. During the first quarter of launch, which is very typical with new product launches, the rejection and reversal rates were in the mid-70%, and we have seen those numbers consistently improve. I think we have data through the month of May at this point. There's always a little bit more of a lag for payer data to be reported out. And I believe in the most recent month, if you combine rejections and reversals, those numbers were in the low 60%. So definitely seeing improvements. Remember, a lot of our payer coverage, as you know, didn't really start to come online until the middle or second half of Q2. And so it always takes a few months for that payer coverage, once it comes in line, to really start to have an effect. But really encouraged by the improvement we saw in the month of May, and we're looking forward to seeing the June data.

speaker
Tazin Ahmad
Analyst, Bank of America

Okay, great.

speaker
Operator
Conference Operator

Thank you.

speaker
Todd Baysmore
Chief Operating Officer

Yeah, thank you.

speaker
Operator
Conference Operator

Our next question comes from Chris Howerton with Jefferies. Excellent.

speaker
Chris Howerton
Analyst, Jefferies

Thank you so much for taking the questions. I think a lot of really excellent questions were asked already, so maybe just two from me. One is that you noted the impact of your expanded sales force. I guess I was just helping or wondering if you could help us quantify that impact that you've been observing for the expanded sales force. And then the second question that I had, and I know I am relatively new to the story, but what is the stability for Imbeltus, and I guess what are your protocols to be able to manage inventory at the surgical locations moving forward to make sure that the same impact won't happen again in terms of expiry? Thank you.

speaker
Todd Baysmore
Chief Operating Officer

Yeah, I'm happy to take the question. So, you know, the new expansion or the new representatives we've hired are just coming online now. So we hired those folks and they really just began in the beginning of July. They've been going through sales training in the month of July. We got the first group of representatives that were trained out in the territory just last week. There was a few additional sales representatives that were trained this week and will be in territory next week. So, Too early to say what the impact of that is, but we're really encouraged by the quality of the sales representatives we hired. Very experienced group, a lot of ophthalmology and GI experience in the new representatives and are looking forward to seeing the impact. We were able to increase our target universe from about 12,000 to more than 14,000 eye care professionals. So there's going to be about another 23 to 2400 new eye care professionals for us to call on that have not yet been detailed on ISUVIS And we're certainly looking forward to getting out and getting some samples and getting some clinical experience for those individuals. And then, you know, your question on Indultus, I believe, you know, the initial product back at the time of launch, I believe, had about two years of dating that's now been expanded. We're up to 30 or 36 months of total dating. We think really the impact that we saw was a one-time impact of COVID from this past year. We had a lot of products, for example, that had shipped in 2019 that did not get used in 2020 that became short-dated as we got into 2021, and that was really what the biggest driver of those returns were.

speaker
Chris Howerton
Analyst, Jefferies

Okay. That makes sense. Got it. Okay. All right. Well, like I said, I really appreciate all the discussion, and thanks for taking my questions. Thank you.

speaker
Operator
Conference Operator

Our next question comes from Yi Chen with HC Wainwright.

speaker
Yi Chen
Analyst, H.C. Wainwright

Thank you for taking my question. Could you tell us whether you have a target penetration rate for the Medicare Part D limited access by the end of this year?

speaker
Todd Baysmore
Chief Operating Officer

Yeah, we haven't publicly shared what our internal targets are for market access. Obviously, we have goals that we've established for the team. You know, I think This year, as we have said all along, we expect to get some minimal coverage in Medicare Part D. We expected most of that to come online in 2022, just based on the normal review bid cycles, right? You'll be having those discussions in the second half of this year with most likely what would be start dates in January of 2022. But we do think there will be an opportunity, like in the case of ESI, to have some Medicare Part D coverage start before the 2022 time period.

speaker
Yi Chen
Analyst, H.C. Wainwright

Okay. And could you comment on the current development status for the glucocorticoid receptor modulator and also the tyrosine kinase inhibitor, and what should we expect during the next 12 months for these pipeline products?

speaker
Kim Brazel
Chief Medical Officer

Hi, Yi. This is Kim. Yes, we're confused. We're continuing to move forward with both those. We're actively screening compounds to try to find the optimal compound for the Segrim program. And we're hoping in the next 12 months in that program to identify the lead compound and be in preclinical development heading for an IND. Also, for both the Segrim and the TKI, we are also actively evaluating delivery systems for the back of the eye and making good progress in that area and hope to have finalized our approach there within the coming months.

speaker
Yi Chen
Analyst, H.C. Wainwright

Got it. Thank you.

speaker
Operator
Conference Operator

Our next question comes from Tim Chang with Northland Capital.

speaker
Tim Chang
Analyst, Northland Capital

Hi. I wanted to get an update in terms of, you know, how you sort of see commercial insurance coverage in the back half of this year sort of expanding. You know, obviously there's another big pharmacy benefit manager, CVS Caremark. I mean, is that on your radar screen is another formulary that might include ISUVIS sometime in the back half of this year?

speaker
Todd Baysmore
Chief Operating Officer

Hey, Tim. Good morning. It's Todd. And really, that's the next big one for us. We've gotten two of the three big PBMs. We are in discussions with CVS Caremark. If we're able to get added to the CVS Caremark formulary in the second half of this year, that would immediately jump by a serious commercial unrestricted access over 75%. And that, along with continuing to execute on the existing contracts we have with OptumRx and with ESI, with the their custom clients, which a lot of times are smaller regional plans, will allow us to continue to grow that access even further. You know, at the end of first quarter, we were at 56% commercial access, but already here early in the third quarter, we've got some wins in getting ready to come online through those OptumRx and ESI contracts. And I'm confident we'll quickly have us at about 60% unrestricted commercial access. But if we can tip CVS Caremark in the quarter, like I said, that would accelerate us quickly to north of 75% access with commercial payers.

speaker
Tim Chang
Analyst, Northland Capital

And maybe just one follow-up. You know, how has the response been when the sales reps market ISUVIS to the physicians out there? You know, I mean, how much physician awareness is out there on ISUVIS, and then how much patient awareness on dry eye flares is out there? is out there. It almost seems like Isobis is a great product, but a lot of physicians and patients aren't aware of this as a new treatment.

speaker
Todd Baysmore
Chief Operating Officer

Yeah, Ken, look, I think you're hitting a really key point there, right? We're out there educating mostly eye care professionals, and we do have some direct-to-patient efforts ongoing, and we expect later in the year to launch more broad digital direct to patient efforts that will help with, you know, further educating. And we think this is a big opportunity. We know from all of our quantitative research that 80% of patients report they suffer from dry eye flares. But when you do the same quantitative research of eye care professionals, they think it's about 40% of their patients that have dry eye flares. So that tells us there's a huge disconnect between what patients are experiencing and what physicians think. And we think the reason for that disconnect is there's just not historically been proactive discussions about dry eye flares because there's not been an FDA approved product to treat those patients. So that's why I say I'm really encouraged with the progress that we've made, but also recognize it takes time. We're creating a new treatment paradigm and talking about this acute dry eye market that nobody has talked about previously. Like I said, I think Restasis has been on the market for 18 years now. So for the past 18 years, all eye care professionals heard was if this was a chronic progressive disease, that you have to treat with a daily eye drop. And we're out there educating about the episodic manifestation of the disease due to these acute dry eye flares and the fact that we've got a really great therapy. The receptivity to that message has been overwhelmingly positive. And as is the case with any new product launch, it takes time to continue to establish and educate on this new treatment paradigm.

speaker
Tim Chang
Analyst, Northland Capital

Okay, great. No, that's very helpful. Thanks. Sure. Thank you.

speaker
Operator
Conference Operator

At this time, I'm showing no more questions in the queue. Mr. Iwiki, I'll turn the call back to you.

speaker
Mark Iwicki
Chairman, President, and Chief Executive Officer

Thank you, everyone, for joining us this morning. We continue to work diligently to grow both of our products. We're optimistic with the launch of iSuvis and the great feedback we've heard from eye care professionals and patients and know that our product really meets a significant unmet need, as we've talked about during this call. We're encouraged by hopefully the reduction in the impact of COVID and that the surgical market will return to normal, and that will give us a good opportunity to get InVeltus back on a strong growth trend. And we look forward to updating everyone soon as we make progress on our pipeline programs. And, you know, again, thank you for joining us this morning.

speaker
Operator
Conference Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.

Disclaimer

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