KALA BIO, Inc.

Good morning and welcome to the Call of Pharmaceuticals conference call to review its fourth quarter and full year 2021 financial results. At this time, all participants are in 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 call over to Jill Steyer, Executive Director, Investor Relations and Corporate Communications for Call of Pharmaceuticals. Please proceed.

Thank you, Operator, and thank you all for participating in today's call. Joining me from the company are Mark Iwicki, Chairman and Chief Executive Officer, Todd Bazemore, President and Chief Operating Officer, Tim Brazel, Head of R&D and Chief Medical Officer, Mary Remeth, Chief Financial Officer, and Darius Karabi, our Chief Business 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 investor section of our website at www.callrx.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 direct 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 COLA'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 our commercialization of ISUBIS and INVELTUS, statements regarding the development programs and market potential for KPI 012 and updates on our preclinical programs 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 statements to reflect events or circumstances that occur after this conference call, except as required by law. Investors should carefully read the risk and uncertainties described in today's press release, as well as the risk factors which identify specific risks and other important factors that may cause actual results or events to differ materially from those described in our four statements, included in the company's annual report on Form 10-K, and other filings we make with the SEC. The Form 10-K will be filed with the SEC later today and will be available on our website. I will now turn the call over to College CEO, Mark Iwiki.

Good morning, everyone, and thank you for joining us today to review our fourth quarter and full year 2021 financial results and recent business highlights. Our mission at Kala is to provide patients and eye care professionals with a portfolio of innovative medicines that can better treat diseases that affect the front and back of the eye. As we move into 2022, we've seen continued progress across our commercial portfolio and the expansion of our clinical pipeline with KPI-012, a phase 2-3 ready asset that we're developing to treat an array of devastating rare conditions. Together, We believe that our commercial and clinical programs have the opportunity to deliver tremendous value to the eye care community. Let me now turn to our recent performance, beginning with ISUVIS, our approved medicine for the short-term treatment of dry eye disease. We've spoken about our efforts to expand payer coverage and establish ISUVIS as a preferred first-line therapy for the treatment of dry eye disease, including dry eye flares. Following a number of commercial and Medicare wins in the fourth quarter and recent months, as well as the launch of our first direct-to-consumer marketing campaign, we are seeing persistent upward trends in ISUVIS scripts. In the fourth quarter of 2021, we reported ISUVIS prescription growth of 21% over the third quarter, and we've seen this trend continue through the early months of 2022. We continue to receive positive feedback from both eye care professionals and patients, and we're confident this momentum will continue to build as we implement a number of targeted strategies aimed at patients with the goal of providing them the information and resources necessary to proactively discuss their dry eye disease and flares with our doctors. In parallel, we continue to advance our development portfolio, including our most advanced product candidate, KPI-012, a novel investigational secretome therapy. As a reminder, KPI-012 is a clinical stage asset initially in development for persistent corneal epithelial defect, or PCED, a rare disease associated with vision-threatening morbidity and sequelae, which we acquired in late 2021. We are looking forward to presenting clinical data from the completed Phase 1B trial of KPI-012 at the upcoming ARVO annual meeting in May and, subject to regulatory clearance, plan to initiate our Phase 2-3 clinical trial in patients with PCED in the fourth quarter of 2022. In addition, as we mentioned at the time of the acquisition, we believe KPI-012 has the potential to become a pipeline and a product which could benefit patients with an array of serious ocular diseases. To that end, we are actively evaluating other rare disease indications for KPI-012 and look forward to providing an update on potential further development plans later this year. From a corporate perspective, we are taking steps to reduce our expenses by a target of approximately $25 million in 2022 to extend our cash runway beyond Q2 2023. I will now turn the call over to Todd to review our commercial progress with ISUVIS and Imbeltis.

Thank you, Mark. For the fourth quarter of 2021, Symphony Health reported 22,460 ISUVIS prescriptions, representing an increase of 21% over the third quarter. We are encouraged by the continued acceleration and growth, and in particular, by the uptick in Q4 prescriptions that has carried over into the first quarter of 2022. Since the product first launched in January 2021, a total of approximately 87,000 prescriptions of Isuvus, including over 14,500 lethal prescriptions, were written by more than 7,400 unique prescribers through March 18, 2022. This is particularly noteworthy as this uptick began prior to the recent payer wins, and we believe that this momentum is likely to be supported by significant tailwinds in the months ahead. Turning to execution on our market access efforts, as I alluded to, we have made significant progress toward our goal of growing coverage with key commercial and Medicare Part D payers, and we now have coverage for more than 125 million lives. Specifically, in March 2022, we secured coverage under UnitedHealthcare, one of the largest commercial health plans in the United States, which covers approximately 13 million lives. This brings our total commercial coverage to approximately 118 million lives, or 70% of all commercial lives in the U.S. In addition, in February, we secured coverage under Cigna Medicare, which covers about 1.9 million lives, bringing ISUVIS total Medicare coverage to approximately 7.1 million lives or 15 percent of all Medicare lives. We are very pleased with this continued growth in payer coverage, particularly since we expect it will translate into higher prescription fulfillment rates for ISUVIS and further accelerate our growth trends. We will continue to vigorously pursue additional payer coverage and expect to secure additional wins in the first half of 2022. In addition to growing ISUVIS payer coverage, there remains a significant opportunity to address the unmet need in the treatment of dry eye flares, which is driven in large part by a disconnect between patients and their physicians. We know from market research that patients are in need of a product to rapidly treat their dry eye flares, and that many have not proactively had a discussion about dry eye flares with their doctors, largely because prior to ISUVIS, there were no FDA-approved rapid-acting short-term treatment options. We believe that we have an opportunity to bridge this communication gap with a direct-to-consumer digital campaign that helps patients understand that a solution to their dry eye flares does exist. And with growing payer coverage, we believe now is the time to invest in consumer efforts in an efficient and targeted manner. As a result, we have recently launched our digital DTC campaign, which incorporates in-office point-of-care videos and educational materials, consumer email campaigns, digital media, and social media education to encourage proactive discussions between patients and eye care professionals around dry eye flares, and the availability of iSuvis is the only FDA-approved rapid-acting short-term treatment option. We are pleased with the recent performance and believe improving payer coverage in our DTC efforts are key catalysts to accelerating growth even further. Recent ISUIS performance reflects a notable acceleration in prescription growth and significant improvement in payer coverage. The team is executing against our strategic launch priorities, and we believe our ongoing efforts will generate significantly increased demand. We look forward to updating you on progress on future calls. Turning now to Invelta's. In the fourth quarter of 2021, there were approximately 36,700 prescriptions reported by Symphony Health compared to 37,410 prescriptions reported in the third quarter of 2021. We believe that Invelta's prescriptions and revenues will return to growth as the number of ocular surgeries return to pre-COVID levels and as Medicare Part D coverage for the product increases. As we previously stated, our commercial efforts for INVELTUS are completely synergistic with ISUVIS as 100% of INVELTUS targets are also dry eye targets, for which ISUVIS is the primary focus and INVELTUS is in the second position sales call. I will now turn the call over to Kim to discuss our pipeline programs.

Thanks, Todd. We're really excited about the KPI-1-2 program and the progress we've made over the last few months. As we previously discussed, KPI-012 is a novel biologic clinical stage asset that we acquired as part of Combangio in November of last year. This has been a great addition to our pipeline and to our strategy to develop novel therapies for significant unmet needs in ophthalmology. This promising therapy is an application of novel technology involving the utilization of secretome, which for KPI-012 are harvested from human bone marrow-derived methadone stem cells. The secretome approach allows us to produce a cell-free therapy comprised of essential biomolecules secreted by the methadone stem cells, such as growth factors, protease inhibitors, matrix proteins, and neurotrophic factors that has the potential for multiple therapeutic applications. Being cell-free, the secretromal approach provides many of the benefits of cell therapy without the need for the administration of intact cells, which can have unexpected and untoward effects. KPI-012 is currently in clinical development for the treatment of persistent corneal epithelial defects, or PCEDs as we call them, which are defined as non-healing corneal wounds or defects that are refracted to conventional treatment. PCED can be the result of numerous etiologies, including but not limited to infectious keratitis, neurotrophic keratitis, surgical and non-surgical trauma, Sjogren's syndrome, severe dry eye, and others. If left untreated, these persistent defects can lead to significant morbidity, including infection, corneal perforation, scarring, and ultimately visual loss. PCED is a rare disease with an estimated incidence of approximately 100,000 patients per year in the U.S. and 238,000 patients per year in the U.S., EU, and Japan combined. KPI-012 has received orphan drug designation from the FDA for the treatment of PCED, and we're exploring potential submissions for fast-track and breakthrough designations. In PCED, the corneal healing process is impaired due to an imbalance of key biomolecules that orchestrate the normal healing process. We believe that KPI-1-2 can be an effective treatment of PCED across its various etiology as it has a multifactorial mechanism of action with the potential to address the varying underlying biological issues that can lead to impaired corneal healing in this disease. KPI-012 has been shown to have significant wound healing activity in preclinical models and in a Phase Ib clinical trial in TCED patients. In this initial clinical trial, significant improvement was seen in seven of the eight TCED patients treated with complete healing in six of eight of those patients. In many cases, within one to two weeks of initiation of twice daily doses. These clinical results will be presented at the upcoming ARVA annual meeting in May. From a development perspective, we are on track to submit an investigational new drug application to the FDA later this year and subject to regulatory clearance to initiate a phase two slash three clinical trial in the fourth quarter of 2022. This will be a randomized placebo-controlled trial to evaluate the safety and efficacy of various dosing regimens of KPI-012 in patients diagnosed with PCED of varying etiologies. The results of this Phase 2-3 trial are positive and subject to discussions with regulatory authorities. We believe the trial could serve as the first of two required pivotal trials for the PCED indication. If so, we would plan to conduct an additional Phase III pivotal trial in PCED patients to support the potential submission of a BLA to the FDA. While our initial focus is on developing KPI-012 for the treatment of PCED, as Mark mentioned earlier, we believe the multifactorial mechanism of action of KPI-012 also makes it a pipeline and a product. As such, we are evaluating potential expansion to front-of-the-eye indications such as limbal stem cell deficiency, chemical burns, and Sjogren's syndrome, as well as select back-of-the-eye indications, such as retinitis pigmentosa and optic neuritis. These are all rare indications with limited treatment options. We plan to provide an update on which new indications we will pursue later this year. With respect to our tyrosine kinase inhibitor, program. We are currently conducting preclinical studies to evaluate pharmacokinetics and efficacy over six months following a superchoroidal injection of the TKI to evaluate the potential to provide sustained delivery and inhibition of VEGF-induced pathology. We believe that a safe and effective tyrosine kinase inhibitor with sustained VEGF inhibition could be a valuable advancement in the treatment of sight-threatening retinal diseases such as age-related macular degeneration and diabetic macular edema, with the potential to increase patient compliance and reduce treatment burden in patients suffering from these diseases. We look forward to providing updates on this program in the coming months. Now I'd like to pass the call to Mary to go over our financial results.

Thanks, Kim. During this discussion of our financial results, I will reference certain non-GAAP financial measures. These non-GAAP financial measures exclude stock-based compensation, non-cash interest, depreciation and amortization, loss on extinguishment of debt, acquired in-process research and development, gain on fair value re-measurement of deferred purchase consideration, transaction costs related to the acquisition of Comangio, and the impact of the termination of the lease of the company's former corporate headquarters. 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 fourth quarter of 2021, our cash position as of December 31st was $92.1 million compared to $124.5 million as of September 30th, 2021. This decrease primarily reflects cash used in operations, as well as the $5 million paid as upfront consideration for the acquisition of Commangio, which closed in the fourth quarter of 2021. Our year-end cash position does not include an additional $4 million received in 2022 related to the termination of the lease on our former corporate headquarters. Based on our current plans, we anticipate that our cash resources as of December 31st, 2021, together with anticipated revenue from ISUVIS and INVELTIS, will enable us to fund operations into the second quarter of 2023. As we look ahead, we continue to focus on extending our cash runway while progressing our development pipeline and executing on our commercialization efforts. To achieve this, in 2022, we are targeting an approximate $25 million reduction in expenses compared to 2021, which we plan to achieve through improved operating efficiencies, a reduction in lease expense, as well as the elimination of one-time expenses related to the launch of ISUFIS. For the fourth quarter of 2021, we reported net product revenues of $1.9 million compared to $3.1 million in the third quarter of 2021. By product, this $1.9 million of net revenue consists of $1.2 million from sales of ISUVIS compared to $1.8 million in the third quarter and $700,000 from sales of INVELTUS compared to $1.2 million in the third quarter. Symphony Health reported that prescriptions of Isovus in the fourth quarter of 2021 increased by 21% over the previous quarter, and shipments to distributors on which we recognize revenue also increased. The impact seen on our net revenue is the result of a significant percentage of our business coming from our patient assistance program. As we have gained additional market access coverage, we expect our patient assistance programs to have less of an impact on average selling price and thus net revenue in the future. With respect to INDELTIS, the decrease in net revenue was driven by increased reserves for product returns during the fourth quarter of 2021. SG&A expenses were $24 million for the fourth quarter of 2021, or a decrease of 5% from the previous quarter. R&D expenses of $2.4 million also reflect a decrease from the third quarter of 2021. For the fourth quarter of 2021, we reported acquired in-process research and development expenses, or IPR&D, of $26.6 million. Acquired IPR&D includes costs associated with the acquisition of Combangio, which closed in November of 2021. Acquired IPR&D is excluded from our non-GAAP financial results. That concludes our prepared remarks for today. I will now pass the call over to the operator for questions.

If you'd like to ask a question, please press star then one. If your question has been answered and you'd like to remove yourself in the queue, press the pound key. Our first question comes from Andreas Argaraz with Wedbush. Your line is open.

Oh, thank you and good morning. Just a couple of questions to start. While you haven't provided guidance for ISUBIS revenues, can you provide some color on how you anticipate expanded coverage may translate to greater revenues this year? And then currently, what percentage of scripts are being rejected due to a lack of coverage? And then lastly, for KPI 287, what data can we expect to see when you provide it in the coming months? Thanks.

Tom, can you take those first two and then Ken?

Yeah, I'm happy to. Good morning, Andreas. So, you know, on the coverage front, we think the growing coverage is going to help with revenues in multiple ways, right? One is having more of the demand that we're generating resulting in filled prescriptions, which gets to the second part of your question. We know that currently about 50% of commercial prescriptions are not getting filled. and 70% of Medicare Part D prescriptions are not getting filled. So that's an opportunity to increase our prescription volume on a weekly basis by more than 2x with growing our managed care coverage. The other area that is going to help significantly is with improving our gross to nets. We continued in the fourth quarter to be heavily reliant on our copay assistance programs, and in particular for those patients that don't have a benefit that's being applied to their prescription of Isobus by their health plan, that buy-down for that patient is from the whack of $485 down to the $60 acquisition fee. So that puts a lot of pressure on the gross to net. Once those patients have a benefit coverage for Isobus through their health plan, then those scripts are covered and paid for by that patient's insurance. So the combination of increasing prescription volume as well as improving gross tenets as we become less dependent on the patient copay programs in the future are going to be the key drivers for revenue this year. And then I'll hand it over to Kim to answer the clinical questions.

Yes, good morning, Lendaris. For the KPI-287, we're currently conducting a series of preclinical studies, evaluating the pharmacokinetics and efficacy in a standard DEGF challenge model. We're doing both short-term and long-term, when I say long-term, six-month study. And many of these are on the way. So we anticipate over the coming months to be providing updates on the pharmacokinetics and the efficacy, really focused on durability and efficacy over multiple months. And we're hoping to provide that data over the next few months.

Great, thank you.

Our next question comes from Chris Nayer with JPMorgan. Your line is open.

Great, thanks for taking the questions. First one's on kind of inventory dynamics and gross to net price service in the quarter. So ICVS reported sales of 1.2 million, which were down meaningfully quarter over quarter, but you reported prescription growth of roughly 21%. Is there any way you could help us bridge the difference between the two? How much of that was patient assistance, or were there any inventory dynamics that you would highlight? I'll start there with the first question.

Yeah, Chris, this is Todd. I'm happy to jump in and answer there. So both our demand prescription volume as well as our ex-factory volume were up in Q4. Gear point revenues were down quarter over quarter. So that was completely an impact on gross to net's. And the biggest impact there is definitely from the co-pay assistance program that I referred to earlier. So both prescription demand and ex-factory shipments of products are up. We did have extra impacts on gross to net because of the co-pay assistance program. And as I said, as we get more managed care coverage and fewer scripts filled with that program, it will result in significant improvements in our gross to net.

Understood. That's helpful. And kind of on another question on more the payer coverage side, you're currently standing at 70% commercial coverage, about 15% Medicare coverage. One of the things you highlighted on the last call was the lack of payer coverage really being a headwind for the IService launch. With this recent UnitedHealth win, do you feel like you're in a good enough place where some of those payer coverage concerns are ameliorated? And what can we expect for additional coverage both on the commercial side and then on the Medicare Part D side through 2022?

Yeah, really good question. So on the commercial side, we certainly feel like we're in a position of strength now having secured UnitedHealthcare and being at 70% coverage. The last big plan to fall on the commercial side now will be CVS Caremark. You know, those bids have been submitted, and we're deep in discussions there. And securing CVS Caremark in the first half of this year would go our commercial coverage to 85% and put our commercial coverage on par to Restasis and Zydra. So we feel really good about where we are on the commercial front, and we expect, you know, to gain even further coverage in the first half of 2022. On the Medicare front, you know, with the recent addition of Cigna, we are now at 15%. We have submitted all of our Medicare bids. The three large Medicare plans, as you know, are Humana, Kmart, Silverscript, and Unitas AARP. And securing those three plans would grow our Medicare coverage to greater than 80%. We expect to learn about Medicare throughout the course of 2022. and are hopeful that we can actually see some wins also within the first half of this year, which would be really important. As I stated earlier, our current Medicare rejection rate is about 70%. So even winning one or two of those big Medicare plans would help with prescription fulfillment rates.

Great. Thanks for taking the questions.

Our next question comes from Frank Brabois with Oppenheimer. Your line is open.

Hi, thanks for taking the question. So just to hit on, sorry if questions have been touched on, but on the gross to net side, I understand the patient assistant program, but it seems like, you know, based on the scripts and the revenues and what you mentioned there in terms of the WAC gross to net discount, what happened in the fourth quarter that, maybe made it, you know, I understand that wins on the commercial side and the Medicare side will help, but why, is there a reason that it got worse in the fourth quarter in terms of the gross to net versus the third quarter or second quarter?

Well, why don't I, I'll provide a little bit of color on the co-pay assistance program, then perhaps Mary can jump in with some additional insight, but Frank, one of the issues with the copay program is that as we're securing more coverage, that's great. It's allowing more scripts to get filled. But for the health plans that we don't have coverage, in the fourth quarter, we saw a larger number of prescriptions in which the patients had no benefit from their health insurance, which means that those buy-downs on our copay program were higher, right? Those are patients that were buying down from the $485 WAC down to a $60 acquisition fee. And so as that represented a larger percentage of prescriptions filled in the fourth quarter, that put more pressure on the gross to net. And hence why it's so important that we've seen the growing coverage that we have in the first quarter, which will allow going forward more of those scripts to be covered by the patient's insurance. and fewer of those scripts to have to go through our copay assistance program. So that's on the copay card. Mary, I'll hand it over to you to see if there's any additional call you want to provide around rebates or anything else.

Yeah, that's exactly right, Todd. It was both the increase in the number of units going through the copay card and a higher percentage of the overall prescriptions that were filled in that manner, which is really what's driving that, frankly.

Okay, but if we just look at the 22,460 scripts that you mentioned and 1.2 million, just a quick back at the envelope, that's around $53 a script. I'm just wondering, is it like almost all scripts were filled with the co-pay assistant program?

It's the largest portion of that business. So I wouldn't say it's almost all, but it's the largest portion of that business.

Okay, understood. And then on the, I guess, yeah, just lastly on that side, as these things are going up, how important is the Medicare wins for the gross to net, or is commercial here if we can get CVS care marks soon, then that's pretty much where we want to ultimately be, or just trying to get a better feel of the timing as to when these gross to net issues can kind of figure themselves out.

Sure. So the Medicare front, you know, I would think of Medicare as more about opening up additional demand fulfillment for the product, right? Because if patients are on Medicare, they're not eligible to use our co-pay assistance program. So Medicare is really about allowing more prescriptions to be written, wrote and filled, written and filled rather for our Medicare patient population. The improvements and growths in that will come on the commercial side. And as we gain more health plans, like the one we just had with United, those patients now have a benefit through their insurance that will pay for ISUVIS. So if they do use the copay card, it may be to buy a copay down from, say, $50 to $40. So it has a lot less of an impact on our gross to net. And so think of growing commercial coverage helps to reduce the gross to net pressure from the copay card. Growing Medicare coverage is more about doctors being able to write and get prescriptions filled for Medicare patients.

Perfect. That's helpful. And then just to make sure here, in terms of the duration of one script, can you just remind us how long that can last a patient or how many flares that can cover?

Yeah. You know, we think patients are probably successfully treating at least a couple of flares with a single prescription. Anecdotally, we hear feedback that they'll use their eye service for a few days or up to a week to treat a flare, then they'll reserve the rest of the medication that's in the bottle for the next time that they have a flare.

Okay, great. Thank you.

Our next question comes from Chris Howerson with Jefferies. Your line is open.

Hi, good morning. Thanks again for taking all the questions. Pretty rich discussion thus far, particularly on the commercial side. I guess just to follow up on those previous line of questioning with respect to that, can you give us some sense in terms of how long a patient is on the co-pay assistance program? Have you been successful in converting patients patients, or I guess maybe what is the success rate of converting those patients to paying customers at this point, if you can answer that. And then the second question I would have would be for KPI-012. Just curious if you could give us some more information on what those pre-IND activities are in terms of gating procedures, whether it's with respect to toxicology or CM&C. Thank you.

Chris, I'll answer your questions about the Patient Assistance Program and then hand it over to Ken to talk about the KPI-012 preclinical work. So remember, this is an acute therapy that's used to treat dry eye flares for the most part. So it's not a situation where patients are typically refilling a prescription every month. And therefore, once their insurance covers the product, you go sort of from one month from copay assistance to next month under the patient's insurance. That having been said, if a patient goes back for a refill, and I think we've stated before that we think most patients will probably fill on average about two prescriptions a year. In the case of UnitedHealthcare, for example, that that script was filled in the fourth quarter, and when we were not on formulary and there was not a benefit for that patient, as of March of this year, and going forward, if that patient goes back in now to get a refill, that United patient goes back to get a refill on their Isevus, that will be covered by the patient's insurance and the burden of the co-pay assistance program will be a lot less. So it will improve, as we said, over time. It does require that patient to be going back in for a refill if they're already on therapy. And like we said, we expect that to be about two prescription fills per calendar year. And Ken, I'll hand it over to you to answer the question on KPI-01-2. Sure.

On the development program for 012, the activities we're doing now are fairly straightforward. We're optimizing the manufacturing process and demonstrating its reproducibility, optimizing the analytical techniques to control the product, both at the secret home stage and at the final product stage. We will soon be initiating a GLP toxicology study topical ocular study to look at a number of doses of KPI-012 to provide the safety coverage for our Phase 2-3 trial. We're finalizing the protocol for that trial, working with numerous key opinion leaders that are experts in this field. So everything is moving along, you know, as we had planned. We haven't run into any major issues and are moving forward towards an I&D, hopefully the third quarter of this year.

Okay. And if I may be able to just go back to ISUVIS, I appreciate the answers so far. Thank you very much. But just going back to ISUVIS really briefly, maybe another way to ask a question is, are you seeing repeat prescription behavior affected by the lack of fills? In other words, how are you messaging to physicians, hey, I know that 50% of your scripts aren't getting filled now, but keep writing them because it will get better? I guess that's, like, my concern.

Yeah, good question, Chris. And so the Salesforce has targeting tools, so they know exactly – at a physician level, what the mix of insurance within that practice is. And so we can start now being very targeted, for example, with the UnitedHealthcare win and go to practices that have a lot of patients enrolled within UnitedHealthcare to positively message this new win in addition to the formulary, just like we can do with ESI and other major health plans where we've been added to formulary. So I would say think of the physician messaging about being very targeted in those practices where we know we've got good coverage or where they have a high percentage of the health plans for which we have good coverage so we can ensure that a lot of those scripts get filled. And in those other practices where maybe there's less coverage, you know, we obviously have our co-pay assistance program that we're using to try to make sure that those doctors can get their patients on ICU service.

Okay. All right. Well, I really appreciate that, Philip. Thanks again.

Our next question comes from Yi Chen with HC Waymark. Your line is open.

Thank you for taking my question. Since PCED is driven by multiple etiologies, does the upcoming phase two slash three trial need to recruit patients only from a group of patients with similar etiologies?

Good morning, Yi. This is Kim. Yes, our clinical trial is being designed really focusing on PCEDs from any underlying etiology. And as you said, there are a variety of them. So it's really, as we sometimes call, a trial for all comers. So, you know, the primary entry criteria will be the presence of a persistent corneal epithelial defect, and then we will – uh include information from the clinician and on the case report forms in terms of what the underlying etiology is does that answer your question yeah so you believe the multi-factorial mechanism of action of the candidate should be able to address all the underlying ideology yes yes we do that's that's our working hypothesis and we've shown in a variety of different animal models that it works from different insults. And because of the nature of the product, it being a secretome, it carries with it a number of different biologic molecules that have a lot of different effects. So in general, we're attacking this problem from multiple directions, and we feel we should be able to treat the vast majority of these problems. PCEDs regardless of their etiology. You know, the key for us will be, you know, making sure we exclude those patients that can't heal no matter what. And we've worked a lot with the KOLs. There's a certain group of patients that are just, you know, their corneas are worn out and, you know, you can't bring them back. But besides that, I think we feel very confident we can treat the majority of these patients.

Got it. And do you expect to report preclinical data from a TKI candidate very soon?

Well, you know, these studies are ongoing. They take a little bit of time. And what we've said publicly is we will be reporting probably throughout the year as we get substantial data. So we're hoping this year to be able to report a couple of sets of data as they come off out of the – out of the studies.

Okay. Thank you.

As a reminder, to ask a question, please press star then one. Our next question comes from Tim Chang with Northland Securities. Your line is open.

Oh, thanks. Hey, Mark. Hey, Todd. It seems like you're definitely feeling the effects of the couponing program and then a lot of these insurance companies clamping down, as well as, you know, you're waiting for CVS Caremark to add you to the formulary on ISUVIS. And I'm sort of wondering, you know, is there a triggering point in terms of when you think ISUVIS net sales are actually going to start to rise meaningfully this year? You know, that was my first question. And then, I think with this, I had a follow-up question for Kim on KPI 012.

Tim, I'll answer your first question and then let you ask your second question of Kim. We expect meaningful growth and ICRS revenues to begin in the first half of this year. So, you know, getting this UnitedHealthcare win was really, really important. That gets us well on our path to not only accelerating prescription growth but net revenue growth as well. And then we anticipate also learning about CVS Caremark in the first half of the year, which will be another really important win. And as I said earlier, we expect our Medicare Part D wins to come throughout the year. So we expect impact in the first half of this year and to see further accelerations in both volume as well as net revenue.

Maybe just to follow up to that, I mean, how much of an impact did COVID have on your launch? of iSoup is because, you know, obviously, I guess there are now face-to-face interactions with your sales force and in the physician base. Do you think that will matter this year?

Yeah, I think it'll help a lot now that most of our interactions are face-to-face. You know, COVID had an impact on almost every launch that has occurred over the last two years. There's You know, a paper published on this by Acuvia that looked at, I believe it was in the ballpark of about 48 drug launches that occurred during the pandemic. And there was significant impact on almost every one of those launches. Now that hopefully the worst is behind us and practices are open and patients are returning and most of our sales interactions are face-to-face, we also expect that will be a positive catalyst this year.

Okay. And, Kim... My question on KPI-012 is, you know, obviously there's been, what, seven or eight patients dosed. You know, what sort of side effects do these patients experience post-dosing?

Yes. In the first clinical trial, there were no really significant adverse events. One patient complained of some irritation or discomfort. And you have to remember these patients have in many cases, a denuded cornea, so you might expect that. But in this initial trial, we didn't see any really worrisome side effects. We'll, of course, be looking at that in the upcoming trials, but we don't see any liabilities in terms of tolerability, and to date haven't seen anything that would look like an untoward effect that's being seen in these patients. Okay. And that's not to be unexpected. You know, it is a, you know, it's human biomolecules that are being applied to a human. So, you know, there's nothing there that the eye has not been exposed to at one point or another.

Okay, great. Thanks, Kim.

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

Well, thank you very much, and thanks, everyone, for joining us this morning. We continue to progress our inline products and are very excited about the pipeline and the studies that we have ongoing right now with our TKI, as well as our expectation to be able to start a late-stage clinical trial for KPI-012 by the end of the year. And we look forward to updating everyone as we continue to make progress. Thanks again for your time this morning.

This concludes the program. You may now disconnect.

Everyone, have a great day.