Operator
Good afternoon, ladies and gentlemen, and welcome to the Lens Therapeutics second quarter 2024 conference call. At this time, all participants are in a listen-only mode. Following prepared remarks from management, we will conduct a question and answer session and instructions will follow at that time. As a reminder, this call is being recorded. At this time, I would like to turn the call over to Dan Chevalard, Chief Financial Officer. Please go ahead.
Dan Chevalard
Thank you. Good afternoon, and thank you to everyone for joining us today to discuss LENDS' second quarter 2024 financial results and recent highlights. My name is Dan Chevalard, Chief Financial Officer of LENDS Therapeutics. We are joined today by Abe Schimmelpennig, our President and Chief Executive Officer, and Shawn Olson, our Chief Commercial Officer. In addition, Dr. Mark Odrich, our Chief Medical Officer, will join us for the question and answer session. Before we begin, I would like to remind you that this call will contain forward-looking statements regarding LINZ's future expectations, plans, prospects, corporate strategy, regulatory and commercial plans and expectations, cash runway projections, and performance. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors and risks, including those discussed in our filings with the Securities and Exchange Commission and which can also be found on our website. In addition, any forward-looking statements represent only our views as of the date of this webcast and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligations to update such statements. The company encourages you to consult the risk factors contained in our SEC filings for additional detail including in our second quarter 2024 410Q, which was filed today. With that, I will now turn the call over to Abe.
Abe
Thank you, Dan, and good afternoon, everyone. The first half of 2024 and recent period has been transformational for Lance. In short succession, we made our debut on our public markets with a strong investor base and balance sheet, delivered the results of our phase three clarity trials, which we believe support LNG100 as the potential best-in-class treatment for presbyopia, concluded a $30 million pipe financing, and importantly, submitted our NDA to the FDA. I am incredibly proud of the continued excellent execution across the organization and highly confident that we are well on our way to deliver the first and only a cyclin-based eye drop for the improvement in their vision in people with presbyopia. Looking ahead, and in line with our previous guidance, we continue to work towards a potential approval by the FDA in mid-2025, and if approved, US launch as early as second half of 2025. Before I review our key achievements in more detail, and as a quick reminder, presbyopia is the inevitable loss of near vision that impacts the daily lives of nearly all people over the age of 45. As the crystalline lens in our eyes hardens with age, the eye is less able to accommodate and focus the incoming light for near vision on the retina, resulting in blurry near vision. Although the progression of presbyopia is gradual, presbyopes often experience an abrupt change in their daily life as the symptoms become more pronounced starting in their mid-40s when reading glasses or other corrective aids are suddenly necessary to read text or conduct close-up work. To address the daily challenges faced by presbyopes, we are developing a once-daily eye drop that in our clarity trials has shown to be capable of improving their vision throughout the full workday without the need for reading glasses. More specifically, in April, we reported positive Phase III data, which we complemented with capstone data in June, in which LNG100, our Cycadine-based product candidate, continued to show strong performance and best-in-class potential. Highlighting some of the key results of the trial, and for the moment focusing on the results of Clarity 2, as this is the direct vehicle control trial, we saw a rapid onset effect with 71% of participants achieving three lines or more of near vision improvement at 30 minutes on the very first day of use of the product. At three hours, our primary endpoint, we also observed a three line or more responder rate of 71%. And we maintained these high levels for the full workday with 40% of participants still achieving three lines or more of near vision improvement at 10 hours, the last time point measured in our efficacy trials. And these three-line gains turned out to be only the beginning. Eighty-four percent of participants achieved at least a four-line gain during the study and a staggering 52% at least five lines. We also saw a very impressive near universal response to LNG100, with 95% of participants achieving at least two lines of near vision improvement. This is an important measure because it is seen as clinically meaningful. Notably, 69% of the participants still reported this improvement at the end of the day, 10 hours after dosing. Interestingly, we also observed a statistically significant at least one line of distance vision improvement across the population. In terms of safety, LMZ100 was seen to be well tolerated with no treatment-related serious adverse events observed in the over 30,000 treatment days across all three clarity trials. Of all reported adverse events, 95% were classified as mild, believed to be transient, and consistent with those observed in previous trials. We also saw that in the rare cases, more specifically 7.6% placebo corrected, that participant noticed a mostly mild and transient headache following installation of the drop. This appears to be tachyphallactic and for most no longer appearing with prolonged use of LNG100. These strong clinical results and the promise they bring for 128 million presbyopes in the U.S. alone allowed us to further strengthen our balance sheet with a $30 million investment from Ridgeback Capital in July. We appreciate the significant support and confidence shown by the Ridgeback team and are pleased to add this additional capital as we aim to make LNZ100 the best in class, if not only in class, therapeutic option for the treatment of presbyopia. Lastly, I'm very excited to highlight that we have submitted our NDA for LNZ100 to the FDA, marking a key milestone for the company. Our NDA is a culmination of a development program that along the way incorporated valuable feedback and guidance from the FDA. We believe that we have compiled a dossier with strong clinical manufacturing and quality data, and we look forward to working with the agency as they review our submission. The first step in this, and following a positive initial review, would be the formal acceptance of our NDA within 60 days of submission. Once the FDA accepts our NDA, the agency must complete their review within 10 months. The date at the end of this period is referred to as the PDUPA date, and once the FDA has provided us with it, we will communicate this with you. As mentioned earlier, and in line with previous guidance, We believe that this PDUFA date can be in the middle of next year and, if our submission needs approval, could lead to launch of LNG100 in the US in the second half of 2025. To highlight some of the key areas of focus as we begin to prepare for our potential launch, I will now hand the call over to Sean Olson, Chief Commercial Officer.
Sean Olson
Sean? Thank you, Ace, and thank you all for joining us today. The commercial potential for an effective presbyopia treatment represents one of the largest eye care market opportunities. As Abe stated, presbyopia impacts an estimated 128 million people in the U.S., an incident population that is nearly four times greater than those impacted by dry eye. It is also more than the combined population suffering from dry eye, childhood myopia, macular degeneration, diabetic retinopathy, and glaucoma in the U.S. The first eyedrop treatment for presbyopia was approved in 2021 and confirmed that strong consumer desire for an eyedrop treatment, as evidenced by initial paid new scripts of $3,000 to $5,000 per week. Long-term usage beyond the trial period of this product did not materialize, as pilocarpine, even at the high concentration of 1.25%, couldn't deliver the consumer-required performance. We believe this leaves the category wide open for a non-tylocarpine presbyopia eyedrop solution that can deliver what consumers desire. Unlocking this market requires an ideal presbyopia eyedrops, and we are excited for the prospect of our cycladine-based LNZ100. We believe the commercial potential of LNZ100 was validated in our phase three clarity study, with 90% of participants noticing an improvement in your vision, and 75 participants indicating they would continue to use LNZ100 after the study, of which 81% plan to use the product four to seven days per week. Together with our broad inclusion criteria, we believe this positions LNZ100 well for the estimated $3 billion market potential opportunity and in what could potentially be a category of one. In parallel to our recent effort towards our NDA submission, our commercial launch preparedness is well underway. In February of 2024, Lens launches unbranded I Am campaign to educate and excite eye care professionals about future presbyopia solutions. Over 50 key opinion leaders are involved in the campaign, of which many are featured at IAmSelective.com. That is E-Y-E-AmSelective.com, where eye care professionals can learn about the importance of ideal pupil size, iris muscle selectivity, and expected early consumer adopters of presbyopia eye drops. Continuing on that momentum and to support the projected launch following potential FDA approval, Lens has fully staffed its commercial leadership team across marketing, sales, and commercial operations with expertise in eye care, direct consumer, influencer, and consumer products goods. From an infrastructure standpoint, LEND is actively building out its U.S. commercial capabilities, highlighted by completion of our third-party logistics contracting, all in preparation for a potential launch of LNG100 as early as the second half of 2025. As we think about the commercialization of LNG100, our strategy is clear and based on three primary pillars. First, we want doctors to recommend us. This requires calling on approximately 15,000 eye care professionals who represent over 85% of the beauty scripts with our potential best-in-class product to educate and equip them to recommend LNZ100 and to integrate our solution into their patient offering. Second, we want consumers to request us by name. This requires developing a product brand and consumer campaign that will elicit a strong emotional connection and promotional sensitivity to direct-to-consumer advertising. And third, we want to ensure ease of product access for consumers with a seamless journey to use. This requires enabling the consumer to experience the product and move quickly from trial to usage. To support this, our team is building out consumer sampling capabilities and commercial access with multiple channels, including the traditional retail pharmacy as well as home delivery. We look forward to providing further updates and progress on our pre-commercial preparations in the quarters to come as we approach potential approval and launch. With that, I'd now like to hand the call over to Dan Chevalard, our CFO, to step through our financial results.
Dan Chevalard
Thank you, Sean. As has been mentioned, the team has continued to execute across the organization in the second quarter and recent period. On the financial front, We were very pleased to have completed the $30 million private investment in public equity, or PIPE, with Ridgeback in mid-July. I would like to reiterate Abe's comments to say that we're pleased to welcome an investor of Ridgeback's caliber, adding to what is an already strong and supportive investor base and lens. Inclusive of the $30 million in proceeds on a pro forma basis, we ended the second quarter with approximately $226.2 million, in cash, cash equivalents, and marketable securities, which is anticipated to fund the company's cash runway to post-launch positive operating cash flow. Turning now to our second quarter operating results, our operating expenses and resulting cash burn for the second quarter were substantially in line with our plan. Total operating expenses for Q2 2024 were approximately $14.4 million, compared to $15 million for the same period in 2023. Sequentially, our total operating expenses decreased quarter over quarter by 11% from $16.1 million in the first quarter of 2024, as we moved away from costs associated with the recent merger transaction and reduced overall clinical development spend. On our first quarter call, we highlighted that we would anticipate a sharp decline in our research and development expense expenses in subsequent quarters due to the recent conclusion of our phase three clarity study, which we certainly have realized in the second quarter. Total R&D expenses decreased to $6.9 million in Q2 2024 compared to $12.6 million for the same period in 2023. Sequentially, R&D expenses decreased quarter over quarter by 34% from $10.5 million in the first quarter of this year. We anticipate R&D costs to continue to decline over the balance of the year while shifting our development focus towards pre-approval manufacturing activities. Similarly, and further to our go-forward reallocation of capital towards the commercial organization, total SG&A expenses increased to $7.4 million in Q2 2024 compared to $2.3 million for the same period in 2023. and sequentially increased quarter over quarter by 32 percent from $5.6 million in the first quarter of this year. This change was directly attributable to key personnel additions within our commercial leadership team and increases in our pre-commercial planning initiatives. Finally, our net loss per share, both basic and diluted, was 40 cents per share in the second quarter of 2024 on a net loss of $10.3 million compared to a net loss per share of $7.53 per share in the second quarter 2023 on a net loss of $14.7 million. As was noted on our first quarter call, we again wanted to remind you that these loss per share figures calculated on a GAAP basis consider only weighted average common shares outstanding, which were considerably different in the comparative periods. For example, as a public company with a single class of stock outstanding, Q2 2024, net loss per share was calculated on approximately 25.6 million weighted average common shares outstanding. Compare this to Q2 2023, when as a then private company with multiple classes of preferred and common stock outstanding, net loss per share was calculated on approximately 2 million weighted average common shares outstanding. Putting the nuances of loss per share aside, and the lack of comparability to 2023, we ended Q2 of this year with approximately 25.8 million shares of common stock outstanding. To roll this forward through our July 2024 pipe, we had approximately 27.4 million shares outstanding following that financing. With that, I'll conclude the financial update for what has been a very productive quarter in recent period, and I'll now turn the call back over to Abe for final remarks.
Abe
Abe Miller Thanks, Dan. In summary, We are very pleased with the progress that the team has made on all fronts. The recent period has been and promises to continue to be a very exciting time at Lens. With these important achievements and milestones, we now turn our full focus towards preparing for the potential approval and commercialization of LNG100. And we believe we are well positioned to deliver a once-daily, safe, and rapidly acting treatment to the 128 million individuals living with presbyopia in the United States. With that, I'd like to open up the call for questions.
Operator
We will now begin the question and answer session. Our first question will come from the line of Bhavan Patel with Bank of America. Please go ahead.
spk13
Hey, guys. This is Bhavan Patel on for Jason Gerberry. Congrats on your recent NDA submission, and thanks for taking our questions. The first question is, can you give us an idea of when we should expect SG&A spend to pick up as you begin to incur more meaningful prelaunch investment on your P&L. And then our second question is maybe if you can remind us how you're thinking about the market opportunity and identifying the patients who would be good candidates for a pharmacotherapy treatment of loss of near vision versus reading glasses.
Bhavan Patel
Thank you.
Abe
Thanks, Rafael. Great questions.
Abe
I'll hand the first one over to Dan.
Dan Chevalard
Sure. Yeah, thanks for the question. Kind of as we said for this quarter, we did see a 32% quarter-on-quarter increase in SG&A, and I think that you should expect us to have a modest ramp over the balance of this year. I think where you'll really start to see is as we move into 2025 and then subsequently preparing for commercialization, Salesforce, hiring, etc.,
spk04
as we approach the mid-year of next year.
Bhavan Patel
Thanks.
Abe
And then as for which patients we would prioritize, Sean?
Sean Olson
Yep. So, looking at how we identify the patients that would be good candidates for this job. So, when we think about our product, we had a very broad inclusion criteria. So, you know, we wanted to develop a product that did work for everyone. And that's why we're focused on an all-eyes, all-day solution. Now, that being said, there are people that are more prone to be early adopters of an eye drop solution. We commissioned a very large study to do market research in this space, and we really found three groups of individuals that stood out as the earliest adopters, and those three groups fall into people that are in contacts now, entering presbyopia, and want to stay in contacts. They've been in a glasses-free lifestyle and want to continue that. And a big reason for drop of contacts is because of presbyopia. The second one are people that have had refractive surgery in the past. So again, people who paid for LASIK, invested in Glasses Free Lifestyle and want to continue it. And thirdly, we found a high correlation to people that have been to a MediSpa in the past 12 months.
Bhavan Patel
Each one of those groups are north of 10 million individuals. Thanks, Sean.
Operator
Our next question will come from the line of Igor Nakamovitz with Citi. Please go ahead.
spk14
Hi, AFN team. Thanks for taking the questions. I had a few. I'm just curious, with respect to the target prescriber audience, the optometrists, can you just give some perspective as to what percent of the optometrist pool in the United States are currently able to write prescriptions for LENS100? And then also, what percent of the optometrists have the basic ability to perform the retinal eye exam to prescribe ONES-100? Thanks.
Sean Olson
Absolutely. So this is Sean Olson again. So when we think of LNG-100, upon potential approval, those that are able to prescribe it, when we think of the optometrists, nearly all the optometrists across the US will have the ability to prescribe LNV100. So it falls in the category of meiotics. And with the exception of a couple of states, they will have the ability to prescribe on day one. And so that really covers the vast majority of all optometrists. In terms of doing retinal eye exams, Retinal eye exams are going to be a very common process done for, again, nearly every optometrist across the U.S. They will be able to do those retinal eye exams. So in terms of access, we see ourselves in a very good position for access upon approval.
Sean Olson
Okay, great.
spk14
And then one other question we've been getting from investors is if you could talk a bit about how you ran your studies and the data that supports the use of Lens 100 in lower light conditions, for example, if you're out at a meal at a restaurant, and you need to read the menu, for example. Could you just talk about that aspect of the product profile?
Abe
Absolutely. So we did all our near vision measurements in what's called mesopic conditions. So mesopic is low light, just to give you an idea of what that means. So we actually have one of our KOLs describe that very adequately in our KOL events. That basically means that you lower the light in the room to almost candlelight conditions. So it's very low light in the room. And then you have them read a backlit screen. So it's truly low light conditions that we've measured all our near vision in. So if you will, it's the most challenging condition. Because we definitely wanted to avoid that we, you know, brighten the room in a way that it would impact positively near vision that we could not ascribe to our products. So again, very low light, dim lit conditions in the room. And I just to back up a little bit into Sean's statement on the retina exam. That's something that all optometrists pretty much do already. So it's a very standard exam. So it's not something that we need to train them on or that they need to add to the practice to be able to prescribe a drug. Again, very common practice in optometry.
spk08
Okay, thank you.
Bhavan Patel
Thank you all.
Operator
Our next question comes from the line of Joseph Cadenzaro with Piper Sandler. Please go ahead.
Joseph Cadenzaro
Hey, everybody. Thanks for taking my questions. Maybe two for me. First, as it relates to the NDA filing, can you just remind us whether there was any formal engagement with the FDA, like a pre-NDA meeting, ahead of the filing? And if so, any sort of feedback learnings you gleaned from those interactions? And then second question, I guess related to early adopters, but less from a patient perspective and more so from a physician perspective, what are you looking for there? Is it simply those who have written a VUID script in the past, or are there more things that you're honing in on that could potentially identify early writers? Thanks. Thanks, Joe.
Abe
I'll take the first one, and then I'll take the next one over to Sean. So, yes, there's been definitely a... end of phase three and pre-submission meeting with the FBA. More importantly, we've had many discussions and engagements with them along the years of our development. And that's where most of the feedback actually came from the FBA. So we've very well aligned with them on especially our clinical program, manufacturing setup, basically everything that was relevant for the development. And that actually then made the end of phase three meeting with them pretty benign. I think there was hardly any questions actually that we had left that we wanted to ask. It was merely a confirmation of this is all the data that we've gathered. This is the amount of patients that we have on both the efficacy and the safety side. And they once again confirmed that that was completely aligned with their expectations for our MBA. So we're very confident that the filing has, or the submission has everything in it that the FDA wants to see.
Sean Olson
And for your second question, when we were identifying early adopters from an eye care professional standpoint, again, we commissioned a very large study and took into account many factors. We looked at the prescriptions of UD. We looked at early adopters of other recent eye care launches. We also looked at, you know, history of prescriptions for dry eye as well as different locations such as urban city centers where we saw a lot of the beauty scripts. Ultimately, when we did all the analysis, what came out and was the primary focus of the targeting was their actual propensity to write beauty and how many scripts they wrote. And that's really where we come up with those 15,000 target ECPs that represent
Bhavan Patel
over 85% of all the beauty scripts. Okay.
Operator
Our next question will come from the line of Mark Goodman with Lear Inc. Please go ahead.
Mark Goodman
Yes, hi. Could you please review what you've done on CMC, what's left to do? Just give us an update there, please. Thanks.
Abe
Absolutely. Thanks, Mark. Good question. So on the CMC side or the manufacturing side, we've actually – produced all our clinical phase three material at commercial scale. So we're fully set up to produce launch quantities at that scale. Our complete supplier network is in very good standing with the FDA, so very confident that our commercial network, commercial manufacturing is all in place there. And that goes for both drug products as well as drug substance or API.