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spk03: Good afternoon, ladies and gentlemen. Thank you for standing by, and welcome to the Ocular Therapeutics First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session, and instructions will follow at that time. It is now my pleasure to introduce Donald Notman, Chief Financial Officer of Ocular Therapeutics. Please go ahead, sir.
spk02: Thank you, operator. Good afternoon, everyone, and thank you for joining us on our first quarter 2022 financial results and business update conference call. This afternoon after the close, we issued a press release providing an update on the company's product development programs and details of the company's financial results for the quarter ended March 31, 2022. The press release can be accessed on the investors portion of our website at investors.ocutx.com. Leading the call today will be Anthony Modisich, our President and Chief Executive Officer, who will provide an update on the commercial progress of Dextenza and a summary of our corporate developments. Also speaking on the call today will be Dr. Michael Goldstein, our President, Ophthalmology, and Chief Medical Officer, who will give an update on our clinical developments and pipeline. Following Michael's remarks, I will provide an overview of the financial highlights for the quarter before turning the call back over to Anthony for a summary and questions. For Q&A, we'll be joined by Chris White, our Chief Business Officer, and Scott Corning, our Senior Vice President, Commercial. As a reminder, on today's call, certain statements we will be making may be considered forward-looking for the purposes of the Private Securities Litigation Reform Act of 1995. In particular, any statements regarding our regulatory and product development plans, as well as our research activities and our financial projections are forward-looking statements. These statements are subject to a variety of risks and uncertainties that may cause actual results to differ from those forecasted, including those risks described in our most recent quarterly report filed this afternoon with the SEC and our annual report on Form 10-K filed on February 28th with the SEC. I will now turn the call over to Antony.
spk09: Thank you, Donald, and welcome everyone to the Ocular Therapeutics First Quarter 2022 Earnings Report. It has been a quick turnaround following our year-end call held a little more than two months ago. We continue to make good progress executing on our commercial efforts and with the development of our leading ophthalmology pipeline. Beginning with Xtensa, we achieved $12.5 million in net product revenues and 87% growth over the comparable quarter in 2021. The extensive performance was impacted in the quarter by the surge in COVID Omicron variant and its sub-variant, AB.2, that slowed cataract procedures and challenged ASC and HOPD staffing, primarily in the month of January. Sales of in-market billable units rebounded starting in February, and in March we recorded approximately 10,500 inserts sold to ASCs and HOPDs in the calendar month. easily surpassing the old record of 9,976 set last November. Despite the ongoing staffing challenges, we are expecting a generally improving environment for the growth of Dextenza in 2022. First, we are anticipating a tailwind from increased cataract surgery volumes as the backlog of delayed surgeries begins to enter the market. We think about it this way. There were approximately 4.2 million cataract procedures in 2019 forecasted to grow at a rate of between 3% to 5% annually, according to MarketScope research. This number dropped to approximately 3.6 million in 2020 at the height of COVID. While MarketScope estimated that volumes did bounce back in 2021 to an estimated 4.4 million cataract procedures, we believe the data still suggests the potential goals of at least 800,000 backlogged procedures. We anticipate that this volume will work its way back into ASCs and HOPDs over the coming few quarters and contribute to Dextenza's growth. Second, we are entering 2022 with greater clarity on Dextenza's reimbursement with pass-through payment status through 2022 and then, very importantly, eligibility for separate payments beginning in 2023 and potentially beyond in ASCs through the non-opioid pain management supply provisions. In addition, physician reimbursement for the insertion of Dextenza is now available under our Category 1 code, which became effective January 1, 2022, ensuring more reliable payment to physicians for Dextenza placement across all payer types and in all settings of care. We believe the easier we can make it for physicians to provide Dextenza to their patients, the better we will do in growing the Dextenza franchise. Simplifying and ensuring reimbursement is key to accomplishing this, And having this clarity is a huge advantage for Ocula today. Third, in 2022, we are expanding our commercialization of Dextenza into the office setting. I've long stated that a key strategic goal of the company is to expand our presence into ophthalmology and optometric offices by providing customers with numerous innovative buy and build products, including those developed internally and potentially those licensed from other companies in the future. The FDA's approval of Dextenza for the treatment of ocular itching associated with allergic conjunctivitis, an indication that is treated in the ophthalmology and optometric office environments, gives us the opportunity to take the first step in doing that. While the strategic potential of the office environment is exciting, it represents a new space for ocular therapeutics with a unique set of challenges and opportunities. We've been able to learn a lot from the launch of Dextenza in the surgical setting, and found that the primary barriers of entry were the logistics associated with AFC and HOPD administration. We believe launching into the ophthalmology and optometric offices will be analogous but with different drivers that require bespoke solutions. We recently hired a VP of sales with over 20 years' experience successfully selling buy and build products to office-based physicians to lead this initiative. We have established a separate office-based business unit consisting initially of four new key account managers, supported by the field reimbursement team, who will be tasked exclusively with selling into the office setting. We anticipate these efforts will have some impact in 2022, but more materially in 2023 and beyond. Shifting to our pipeline, we have four clinical programs, OTX TKI for wet AMD and other retinal diseases, OTX TIC for glaucoma, and OTX DED and OTX CSI for the treatment of dry eye disease. Each of these programs is being developed to produce a highly differentiated buy-and-bill optimality specialty product with associated procedure code that addresses key unmet needs in their respective disease states. In the quarter, we took major steps forward with OTX TKI, where we completed enrollment in a Phase I study in the U.S., and with OTX TIC, where we began dosing patients in our Phase II programs. We anticipate having interim data for the OTXTKI-US trial in the third quarter of this year. We're also happy to report that our collaboration with Mosaic Biosciences has yielded a lead compound for our complement inhibitor program for the treatment of dry AMD. We believe that this compound has the potential to be best in class in the complement space with targeted dosing every three to four months. Our collaboration with AptoMed Therapeutics has also advanced during the first and second quarters of this year. In January, AFIMED dosed its first patient in a real-world setting study being conducted at the Boao Super Hospital in Hainan Province, China. The trial is designed to evaluate the safety and efficacy of dextenza for the treatment of ocular inflammation and pain following cataract surgery and is intended to support and potentially accelerate efforts to register dextenza in China. More recently, AFIMED announced in April that dextenza was approved in Macau, China. To date, Ocular has earned a total of $3 million in milestone and clinical support payments under the AFMET agreement. In the quarter, we also shared updates on our programs at a number of medical meetings. At this year's American Society of Cataract and Refractive Surgery Annual Meeting held on April 22 through 24, we shared 15 presentations, including seven company-sponsored studies and eight investigator-initiated clinical trials of Dextenza as well as OTX-DED. These presentations included real-world data evaluating the demographics and safety profile of the first 10,000 extensa inserts placed. This was the largest scientific presence we've ever had at a major medical meeting, and I believe it highlights the medical community's significant interest in our October service programs. We also had a large presence at this year's Association for Research in Vision and Ophthalmology annual meeting held May 1st through 4th, 2022. This is one of the major ophthalmic research conferences, and Ocular made multiple presentations highlighting exciting pipeline preclinical and clinical data. Looking ahead into 2022, we plan to provide an important interim update for our U.S.-based clinical trial of OTX TKI for the treatment of wet AMD in the third quarter. Wet AMD represents a potentially large market opportunity for Ocular, and OTX TKI offers a new mechanism of action with compelling durability data. Lastly, before turning the call over to Mike to discuss our pipeline in more detail, I wanted to take the opportunity to share, for the first time, annual revenue guidance for 2022. We have historically not provided guidance due to the unpredictable impact of the COVID pandemic on elective surgery volumes. To remind you, nearly all of our sales to date have come from cataract surgeries, which are considered elective surgeries in the ASC and HOPD settings. We experienced a near total shutdown in those cataract surgeries in the second quarter of 2020 due to the initial surge in COVID cases. And more recently, we experienced a significant disruption in December of last year and January of this year due to the Omicron surge. Going forward, we are assuming that closures of ASCs and HOPDs to elective surgeries would no longer be as significant a risk. However, we expect the indirect effects of COVID will be felt for at least the remainder of 2022 as the labor shortage has left ASCs and HOPDs short-staffed at a time when demand for surgeries is rising. Our challenge in growing Dextenza to its full potential in the surgical setting is to go deeper into established accounts by driving adoptions by more surgeons and moving into new payer types as we also set up new accounts in ASCs and HOPDs where Dextenza is not currently available. All of these growth levers, require ocular personnel to work closely with administrative and surgical support staff to help them institute new policies, procedures, and protocols to allow for the use of Dextenza. With a deep understanding of the market environment and an expectation of gradual resolution to the macroeconomic effects of COVID, we believe we have adequate line of sight to project forward sales of Dextenza in the surgical environment. Accordingly, we are now guiding total annual net product revenue of 55 to 60 million for 2022. This guidance represents anticipated annual growth of between 26% to 38%. Importantly, this guidance assumes growth will be almost entirely driven by sales of Dextenza in the surgical setting and therefore excludes any material contribution from sales of Dextenza in the office setting. We believe the office setting represents a significant source of long-term upside, but given the early stages of this initiative, We have excluded any material contribution in this guidance. With that, I'd now like to hand the call over to our President of Ophthalmology and Chief Medical Officer, Dr. Michael Goldstein, who will provide an in-depth look at our pipeline.
spk05: Thanks, Anthony. Let me begin with an update on our back-of-the-eye program, OTX TKI. In February, we presented an update from the ongoing Australian-based phase one trial of OTX TKI for the treatment of wet AMD at the Angiogenesis, Exudation, and Degeneration 2022 meeting. As background, this study was designed to assess the safety and tolerability of OTX TKI and assess preliminary biological activity. Our goal for this study was to answer the question, can a tyrosine kinase inhibitor administered intravitrally as a monotherapy show biological activity in wet AMD? We believe the best way to show this is to start with patients with active subretinal and or intraretinal fluid and follow them to see if OTX TKI can eliminate that fluid. This is the population that was enrolled in this Australian study. The data we shared at angiogenesis has been encouraging, and we found a clinically meaningful decrease in intraretinal and or subretinal fluid in many subjects, and in some subjects, all the fluid being treated. In addition, extended duration of activity of six months or more was observed in over 60% of subjects across all cohorts, and over 80% of subjects in cohort 3A, the 600 microgram cohort, which we believe could represent a compelling drug product profile. We are also currently running a U.S.-based Phase I clinical trial that is now fully enrolled. This is a U.S.-based multicenter prospective randomized controlled trial that is evaluating a 600-microgram OTX TKI dose in a single implant containing exitinib compared to a flibrocept administered every eight weeks in subjects previously treated with anti-VEGF therapy. The clinical trial is being conducted under an exploratory IND application at five sites targeting a total of 20 randomized subjects with a three-to-one randomization weighted toward OTX TKI-treated subjects. This trial is designed to assess the safety, durability, and tolerability of OTX TKI and to assess preliminary biological activity in subjects by measuring anatomical and functional changes of the retina. Our goal in this trial is to answer the question of how long can a single 600-microgram OTX TKI implant containing exitinib keep subjects dry without the need for retreatment. We look forward to reporting interim six-month data in the third quarter of this year. We believe achieving a similar response rate and durability to that seen in the Australian-based study would represent a compelling drug product profile. Moving to our glaucoma program, OTXTIC, we recently presented data from the completed U.S.-based Phase I clinical trial, evaluating the safety, biological activity, durability, and tolerability of OTX TIC in subjects with primary open-angle glaucoma or ocular hypertension at the Glaucoma 360 meeting held on February 11th. We believe the Phase I data presented highlights OTX TIC's ability to provide a clinically meaningful decrease in intraocular pressure, or IOP, comparable to travel across as early as two days following administration and for as long as six or more months with a single implant while preserving corneal health, representing its potential for a unique and differentiated drug product profile. With this data in hand, we have initiated and are actively dosing subjects in a U.S.-based Phase II clinical trial. This trial is a prospective, multicenter, randomized controlled trial evaluating the safety, tolerability, and efficacy of OTX TIC for the treatment of patients with primary open-angle glaucoma or ocular hypertension. The trial will enroll approximately 105 subjects in three different arms, 35 subjects per arm randomized one-to-one-to-one, in which subjects will receive a single OTX TIC implant containing a 5-microgram or 26-microgram dose of Travacrost compared with an implant of Durista. The 5-microgram arm is utilizing a fast-degrading implant, while the 26-microgram arm is utilizing a standard implant. The trial will observe the change in diurnal IOP changes from baseline at 8 a.m., 10 a.m., and 4 p.m. at 2, 6, and 12 weeks and follow duration of IOP response over time. Regarding our ocular surface disease programs, we remain committed to the development of our two dry eye programs. OTX-DED, a low-dose intercanalicular insert of preservative-free dexamethasone for the short-term treatment of the signs and symptoms of dry eye disease, and OTX-CSI for the chronic treatment of patients with dry eye disease. For OTX-DED, we're developing an optimized clinical regulatory and manufacturing plan. This plan is expected to include some additional improvements to the product's formulation and the development of an improved vehicle comparator. For OTX CSI, we are doing some reformulation work to improve retention and are also developing an appropriate placebo comparator. I would now like to turn the call back over to Donald to review our first quarter financial results.
spk02: Thanks, Mike. Net revenue, which includes both gross product revenue, net of discounts, rebates, and returns, which the company refers to as total net product revenue, combined with collaboration revenue, was $13.2 million for the first quarter and represented an 81% increase over the same period in 2021. Net product revenue of Dextenza in the first quarter of 2022 was $12.5 million versus $6.7 million in the comparable quarter of 2021, reflecting an approximate 87% increase. Total net revenue for the first quarter also included collaboration revenue of $.7 million from a clinical support payment under our licensing agreement with APMED. Research and development expenses for the first quarter were $13.1 million versus $10.9 million for the comparable period in 2021, driven primarily by an increase in unallocated expenses, predominantly unallocated personnel costs, and increased clinical trial costs. Selling and marketing expenses in the quarter were $9.1 million as compared to $8.1 million for the same quarter in 2021, reflecting increased personnel costs associated primarily with an expansion of the commercial field force. General and administrative expenses were $7.6 million for the first quarter versus $7.7 million in the comparable quarter of 2021. The company reported a net loss of $12.5 million or a loss of 16 cents per share on a basic basis and a loss of 22 cents per share on a diluted basis for the three months ended March 31, 2022. This compares to net income of $3.1 million or income of 4 cents per share on a basic basis and a loss of 24 cents per share on a diluted basis for the same period in 2021. Net loss in the first quarter of 2022 included a $7 million non-cash gain in the fair value of the derivative liability associated with the company's convertible notes, driven by a decrease in the price of its common stock during the quarter. Non-cash charges for stock-based compensation and depreciation and amortization were $4.8 million in the first quarter versus $3.7 million for the comparable quarter in 2021. As of May 6, 2022, the company had approximately 76.8 million shares outstanding. As of March 31, 2022, the company had $145.4 million in cash and cash equivalents versus $164.2 million at December 31, 2021. Based on current plans and related estimates of anticipated cash inflows from Dextenza and anticipated cash outflows from operating expenses, The company believes that cash and cash equivalents will enable the company to fund planned operating expenses, debt service obligations, and capital expenditure requirements through 2023. This cash guidance is subject to a number of assumptions, including those related to the impact from the ongoing COVID-19 pandemic, the revenues, expenses, and reimbursement associated with Dextenza, and the pace of research and clinical development programs, among other aspects of the business. I would now like to turn the call back over to Anthony for some final thoughts.
spk09: Thanks, Donald. So before opening the call up for questions, let me do a quick summary. The company demonstrated solid commercial performance, growing total net product revenue for it extends at 87% over the comparable quarter of 2021. We are guiding net revenue for 2022 of between $55 million to $60 million, representing approximately 26% to 38% growth year over year, driven predominantly by sales of Dextenza in the surgical setting. We are expanding our commercial team to address the opportunity for Dextenza in the office setting as we launch our recently approved indication for itching associated with allergic conductivitis. With the November 2021 OPPS final rule, CMS has laid out a path for the continued separate payment for Dextenza in the ASC environment after the pass-through expiration. This would allow us to maintain and strengthen our surgical business as we build a new source of growth in the office environment. The U.S.-based trial of OTX TKI evaluating a single 600-microgram implant plus anti-VEGF injection versus standard of care every eight-week ILEA is now fully enrolled and we expect to announce six-month interim data in the third quarter of 2022. We recently dosed subjects on our Phase II clinical trial of OTX TIC for the treatment of glaucoma, which triggered a $2 million clinical support payment from our partner, Asthmid Therapeutics. We are also happy to report that our collaboration with Mosaic Biosciences has yielded a lead compound for our complement inhibitor program for the treatment of dry AMD. We believe this compound has best-in-class potential in the complement space with targeted dosing every three to four months. Finally, the company ended the quarter with $145.4 million in cash on the balance sheet as of March 31st, with a continued expected cash runway through 2023. We look forward to a strong 2022, and with that, I'll turn the call over for questions.
spk03: Thank you. Ladies and gentlemen, if you have a question at this time, please press star then 1 on your telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Our first question comes from the line of Joe Cantanzaro with Piper Sandler.
spk08: Great. Thanks for taking my question, guys, and thanks for the Dextenza guidance. And maybe I could start there. So the growth you're projecting for Dextenza in 2022 in the surgical setting, can you maybe quantify how much of that is coming from increased penetration that you alluded to versus expectations for increased volumes and working through that estimated backlog and Maybe relatedly, it seems like we were off in the contribution from in-office usage this year. I guess at this point, and I realize it's early, what's been the learning there thus far, and what do you see as the biggest gating factor for this opportunity, and what might be some of those bespoke solutions that, Anthony, you mentioned? Thanks, and maybe I have a quick follow-up. Great.
spk09: Thanks for the question, John. Sure. I think on the first point, we really haven't quantified exactly where that growth is going to come from, but I think implicit in the growth number that we have, it's really going to come from existing accounts and from additional cataract surgeries in those accounts. As we mentioned, we have a nice tailwind when it comes to the increased number of surgeries, but a fairly stiff headwind when it comes to the chronic underemployment or understaffing of the ASCs in hospitals. As I mentioned in the call, really the work that it takes to grow the number of accounts requires an extra effort with the staff inside the AAC and hospital. And the willingness of the people in those places to do additional work at this moment is not particularly high. We think that's going to resolve gradually, and we think certainly as we look into 2023 that that's going to be It's going to reverse itself, so we'll have two tailwinds. But, yeah, that very much is in the growth number that we have now, is that expectation that that situation is not going to resolve itself anytime soon. In terms of the second question on the receptivity on the office side, We have not yet launched the team that is now in place to really drum up business in that sector. So it's not like we've discovered a lot of things actually on the ground with the launch in the office environment. What we do get is a lot of very eager optometrists, eager general ophthalmology practices that are looking at ways to medicalize their businesses. and to offer something more for patients that have itching associated with allergic conjunctivitis. So as you can see, we've been very conservative with what we think we're going to get for the rest of the year. I hope next quarter I'll be able to report at least qualitatively what we've been able to see and maybe even quantitatively being able to demonstrate the penetration that we're starting to see. But it's really too early right now. Unfortunately, Omicron kind of delayed us getting out into the market at a time we really would have preferred to. But given that allergy season is starting just now, it's a good time to be getting into the offices.
spk08: Great. Thanks. That's really helpful. And I could just squeeze in a couple on TKI. I know you just presented the six-month NHP GLP data at Arvo. If I recall correctly, I think that was one of the big – gating factors to filing a full IND. I'm just wondering if having these data now changes anything, or is the plan still to let the US Phase I run its course? And I know the Australian study is enrolling a single implant cohort. Is it possible we see any data there first ahead of the US study, or is the US study the next data update we should expect? Thanks.
spk05: Yeah, thanks, Joe. It's Mike. So in terms of your first question, yes. In terms of converting the exploratory IND to the IND, we needed to have the GLP tox data. So that's the six-month data. We actually have data further out than that. So the plan would be to submit that data to the FDA and convert the exploratory IND to an IND, which should happen later this summer. At the same time, as you'd note, we've got the US TKI trial, which is fully enrolled. and we look forward to having data from that trial in the third quarter of this year. And to your last question about the Australian data, as you correctly note, we do have a group going with a single implant 600 microgram group in Australia. And, you know, I think what we've always said is when we have something meaningful to say, we would say it. I think the timing of that would be somewhere probably after the U.S. data, I would guess, where we actually have enough patients that are far enough along. So I think the next readout on that would be the U.S. trial data.
spk08: Okay. Got it. Thanks. That's all helpful. Thanks for taking my question.
spk03: Thank you. Thank you. And our next question comes from the line of Dane Leon with Raymond James. Hi. Thank you for taking the question.
spk04: Congratulations on the progress. I think it would be helpful to maybe just go through some expectation setting on the OTX TKI readout at the six-month mark in the U.S. study. Based upon your knowledge of the patients at baseline that are being enrolled into the study and feedback from some of your PIs, what are you looking for in the six-month outcome when compared to the active afib receptor arm? are you looking for actual resolution of intraretinal fluid? Are you looking for maintenance of patients that had minimal fluid at baseline or, you know, just a pure comparison in terms of the amount of standard of care or rescue injections in the active arm or in the OTX TKI arm? Anything on that would be super helpful. Thank you. Hey, Dave.
spk05: Thanks for the question. So, yeah, great question as always. So it's really important to keep in mind that the population we're looking at in the U.S. is different than the population we looked at in Australia. So the Australian population came in. They could have been previously treated or naive, but they had to come in with a fair amount of fluid to get in the trial. And we were really trying to see if with a TKI could we get rid of that fluid. So not could we stabilize it, but could we actually get rid of that fluid. And I think what we found is with an intravitreal injection, we could get rid of that fluid. And in some cases we could completely get rid of that fluid and we could do that durably or in many patients, six months or longer. And we didn't have any safety signals that we were concerned about. So with that, we went into the US trial and that trial is looking at a different population. I think we would, I think most KOLs would say it's an easier population. So it's a group of patients that have previously been treated and are coming in in a relatively dry state. And we're asking a different question, which is if you have patients who come in who don't have a lot of fluid, can you maintain them in that dry state? And we did. So that trial is another difference is that trial is a mass trial, and it was randomized three-to-one to TKI versus the Aflivercept group, which was every eight weeks. And so what we would expect is with the Aflivercepts, that the OCTs would remain without fluid. And likewise, with the TKI group, we would expect that those patients will maintain their vision and also be maintained without fluid. So that's the data we will have in the third quarter of this year. And again, if you compare that data to the Australian population, we believe this is a lower bar to hit. If you already have the fluid removed, we think maintaining that is a lower bar than trying to actually get
spk04: Great. And if I could ask just one follow-up on that. And this is a question that just comes up, you know, across a couple of your programs now. I think given the results that we had with OTX-CSI, could you maybe just take us through your level of confidence that the formulation with OTX-TKI is effective as a single dose and you will not run in or show issues with it? formulation of the product that have been an issue in some of the other programs. Thank you.
spk05: Yeah, I mean, every program is different. So they all use different hydrogels, different eggs, and they're all specific to each program. And also, the place that we're placing the inserts or implants is different. So in the case of CSI, it was intercatalicular. And here, when we're talking about an intervitreal injection, it's obviously inside the eye. We know that there's more consistency with hydrogels and breakdown when they're in fluid-filled spaces. So when you put something in the eye, whether it's intracameral or intravitreal, we know that's more consistent than it is when you place it into the canaliculus, where it's really only exposed to fluid at sort of the top end, if you will. So I don't think there's any read-through from CSI to... I think based on the Australian data, we're very confident about what we'll see in the U.S. trial. You know, is there more work we could do with formulation? Yeah, there always is, and there's always tweaks that we can make, and I expect we would do that. In terms of CSI, I'll just, you know, from a brief word. So we actually, you know, the issue is pretty straightforward with CSI. There was a certain excipient that was placed that we have other ways of mixing the drug. We can get rid of that excipient. And by doing that, we can actually improve retention for CSI. So I don't think there's any read-through to the TKI. And I also think, you know, CSI, we have a good way to get it back on track.
spk04: Excellent. Thank you very much. I appreciate the additional commentary on CSI. Thank you. Thanks, Dave.
spk09: Thanks, Dave.
spk03: Thank you. And our next question comes from the line of John Wallaban with JMP Securities.
spk06: Thanks for the updates and taking the questions. One on Dextenza and then a couple on the pipeline, if I may. You mentioned the strong quarter in March in terms of billable inserts. Wondering if you could provide any comments on how April early may have looked, or are we going to continue to see, you know, the last month of the quarter be the strongest and then partly that end-of-month demand with the backlog? Just how to think about the demand throughout the quarter.
spk09: Well, April may have been entirely consistent with the guidance that we've given, so there's certainly no reason to believe that we'd be falling behind that guidance. I think there is good reason to expect that the last month of each quarter is going to be it's going to definitely have the majority of the units in the quarter. So I don't think there would be any reason to change that going forward.
spk06: Okay. And I might have missed this in the prepared remarks, but do you have a timeline when we could get an update on CSI and DEB in terms of next trial initiations?
spk05: Hey, John. Thanks. It's Mike again. So you didn't miss it. We have tell you is just to mention today's question. For CSI, the issue is some reformulation work on the active, and that's active work that's going on. For both programs, there's work that needs to go on in terms of the comparator. As we've discussed before, the comparator for both of these trials is an intercalicular insert with the hydrogel. What we know is that the hydrogel is a very effective way to block the canaliculus, and this is a treatment that we use for dry eye disease. So it's no surprise then that you actually had not a placebo comparator here, but an active comparator. So we are working on other appropriate placebos, which will play a role for both the CSI and the DED. We plan to bring both back into Phase II programs, but we haven't revealed a timeline of when that will happen yet.
spk06: Okay. And last one for me, I saw the data coming to ASGCT. How are you thinking about, you know, delivery of AAB vectors via your hydrogel, you know, I guess at a high-level strategic perspective? And then also, what are the potential benefits of, you know, sustained delivery of a gene therapy to the eye?
spk05: Yeah, great question. So I think there are two fundamental problems that we can address with the hydrogel. The first is that all gene therapy programs, the dirty secret in gene therapy is that all gene therapy programs have issues with inflammation, and it's dose-dependent inflammation. And we believe that by delivering the viral vectors using a hydrogel, we can deliver higher concentrations or a higher number of viral vectors without inducing as much inflammation. So that's one big opportunity. The second is location. So when you do gene therapy, particularly when you're doing subretinal delivery, you make a bleb, subretinal bleb with the viral vectors, and you hope that it goes where you want it to go. But sometimes it doesn't, sometimes it doesn't, sometimes it doesn't. And what's done now is you just put more in. if it's not going in the direction that you want. And so you end up with a very large bleb, and a lot of that then goes back through the retinotomy. So there is the potential to exactly place in a very customized way the viral vectors in the area you want it. If you put them in, if you can imagine like a sheet of hydrogel, you can place that exactly under the cells that you want to transduce. and therefore get better location. So we think that it has an opportunity in terms of decreasing inflammation or delivering more viral vectors. We think that there's an opportunity to deliver things in more appropriate locations. I think those are the two big benefits that we could get. And as you said, we have data now on this in animal models. That first presentation of that data will be at the SGCT conference coming up.
spk06: Exciting stuff. Thanks again for taking the questions.
spk03: Thank you. And our next question comes from the line of Yi Chen with HC Wainwright.
spk07: Thank you for taking my questions. At this point, could you comment on whether the momentum you observed in March sort of persisted into the current quarter?
spk09: What I mentioned before is that what we've seen in April and May is entirely consistent with the guidance that we've given. So that is definitely we're seeing a return in the market, but we certainly have a great deal of confidence that we'll be able to satisfy our guidance going forward.
spk07: Got it. Do you expect any revenue generated from AEC at all during this year?
spk09: Yes, we do. We just don't expect it to be material relative to the surgical setting.
spk07: And it's not part of your guidance, right?
spk09: That's not part of the guidance, right.
spk07: Got it. And do you anticipate to pay down any part of your current outstanding debt during 2022?
spk02: We don't at this point. We'll stick to the initial payment schedule for that.
spk07: Okay, thank you.
spk03: Thank you. And our next question comes from the line of Anita Duchenne with Varenberg Capital.
spk01: Hi, good afternoon. Thanks for taking my question. I just wanted to clarify one more thing related to the guidance on revenues that you're giving for 2022. Would that be like the lower end of the number that you're expecting this year, considering, you know, like you mentioned, labor shortages continue to persist? And obviously, that is quite a bit of a headwind combined with, you know, the backlogs that are continuing to build through the year.
spk09: You're absolutely correct. There is quite a bit of headwind from the understaffing, which in some ways is exacerbated by the return of a lot of cataract surgeries that were delayed during the COVID period. Because you have basically 80% staffing, and that staff in the ASDN hospital is typically less experienced than pre-COVID. You layer on top of that an increase in demand, It makes it harder to install new accounts or to go into existing accounts into different payer types into existing accounts. Like I said, as we go through the year, we would expect this to resolve, but it is a macroeconomic issue that will resolve, I think, with the entire economy, not just ASCs and hospitals.
spk01: Okay, thank you. That's helpful. Lastly, in terms of launching in China, I'm sorry if I missed it. Was there any timelines communicated there prior to this?
spk10: So, Anita, this is Chris White. I oversee the Appamed relationship. No, what we referenced relative to our partnership with Appamed is that the product has been approved in Macau and is now actually has been launched in Macau. Our partner, APMED, is continuing to pursue the registration of dextenza in China.
spk01: Okay, thanks.
spk03: Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect.
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