Ocular Therapeutix, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Ocular Therapeutics fourth quarter and year-end 2022 earnings conference call. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session, and instructions will follow at that time. It is now my pleasure to turn the call over to Donald Notman, Chief Financial Officer of Ocular Therapeutics. Please go ahead, sir.

Thank you, operator. Good afternoon, everyone, and thank you for joining us on our fourth quarter and year-end 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 fourth quarter and year-ended December 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 our pipeline developments and the commercial progress of Extenza. Also speaking on the call today will be Steve Myers, our Senior Vice President Commercial, and Dr. Rabia Ozden, our Chief Medical Officer. Following their 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 will be joined by Chris White, our Chief Business Officer, and Dr. Peter Kaiser, our Chief Medical Advisor, Retina. 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, 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 annual report on Form 10-K, filed this afternoon with the SEC. I will now turn the call over to Anthony.

Thanks, Al. The fourth quarter of 2022 was a tremendous success for oculotherapeutics, and has set the stage for a very strong start to the year in 2023. First, on the sales side, we finished the quarter with extended net product revenue sales of $13.9 million compared to the same quarter of previous year sales of $12.2 million and sales over prior quarter of $11.9 million. That represents growth of approximately 14% and 17% respectively. Total extended net product revenue was $50.5 million, representing growth over prior year of approximately 20%. Most importantly, in the fourth quarter, we regained in-market sales momentum, and I'm pleased to report that this momentum has continued in the first couple of months of this quarter. I will introduce you to our new Senior Vice President of Commercial in a few moments, who will go over the reasons for the return to growth and our go-to-market strategy. While we were very pleased to regain momentum with Xtensa, we are really seeing the potential value of our pipeline continue to emerge. Following the recent data we shared on OTX TKI, our accitinib-containing hydrogel implant for the treatment of wet AMD and other VEGF-mediated retinal diseases. On February 11th, Dr. Andrew Muschbege presented the interim 10-month results from our Phase 1 study in the U.S., where we compared a single dose of OTX TKI to ilea given every eight weeks in patients with wet AMD. The results were spectacular, as we saw no additional rescues up to month 10 of the 73% of patients who were rescue-free up to month 7. demonstrating potential best-in-class durability. We believe the $15 billion global market for wet AMD and diabetic retinopathy is driven by durability. While these results mean a great deal to ocular therapeutics and its shareholders, more importantly, they suggest a better future for patients suffering from VEGF-mediated retinal diseases, such as wet AMD, diabetic retinopathy, and diabetic macular edema. In the case of wet AMD, it is well known that the vision gain seen when starting anti-VEGF treatment are not maintained over time in the real world. The primary reason for this is the lack of compliance caused by the injection burden of current antibody therapies like Lucentis and ILEA. In the real world, patients tend to miss necessary injections for a variety of reasons. Wet AMD patients are elderly and can find it difficult to get to retina offices on a four to eight weekly basis, so appointments are missed or delayed, and permanent vision loss occurs because of the damage caused when the medication wears off and the disease process returns. In the case of diabetic retinopathy, where patients are generally of working age, a lack of urgency given that disease may not have yet manifested, and finding time to get treated on a frequent basis create real compliance challenges. In this population, the current standard of care is watchful waiting, and many patients frequently progress to more severe vision-destroying disease before seeking treatment, making the resulting diabetic macular edema a leading cause of blindness among the working age population. In short, we believe the promise of a drug like OTX TKI is not only about convenience, but also about saving vision. We can move durability from the current frequency of injections to at least nine months and beyond. We believe we can keep people on treatment and maintain vision. Lastly, it is important to understand that OTX TKI is a different paradigm than typical antibody treatment. Existing treatments, like lisentis and ilea, are bolus injections where a large amount of antibodies, well above the amount needed for immediate efficacy, are injected into the vitreous that, over time, are eliminated from the vitreous until they drop below therapeutic levels, allowing the disease process to restart. You extend injection intervals by making the antibody larger and slower to eliminate, or just by jamming more antibodies into the eye with each injection. Either way, you're still treating a chronic disease with pulsatile dosing. OTX TKI is different. OTX TKI is designed to deliver a continuous dose of exitinib, a potent inhibitor of VEGF, keeping drug concentrations above therapeutic levels for extended periods without the drug peaks and troughs of pulsatile dosing. We believe the results we recently shared bear this out and demonstrate that our hydrogel technology could allow us to maintain therapeutic levels of exitinib at continuous levels in the for durations of at least 10 months. This new paradigm would allow physicians and patients the comfort of knowing the drug is always on board and can hopefully demonstrate that there is less variability in the retina over time, and more importantly, that vision gains from anti-VEGF therapy are maintained in the real world. So what's next? We believe we have our proof of concept for OTX TKI and wet AMD, and by extension, have gone a long way toward proof of concept in other VEGF-mediated retinal disease. Importantly, we also have a working formulation. We believe we'll be ready to enter the first pivotal trial in wet AMD as soon as the third quarter of this year. We are in ongoing discussions with the FDA regarding pivotal study designs and are very encouraged by the potential path forward, both in wet AMD and diabetic retinopathy. We have also mentioned that commencing this trial is subject to financing, and we are considering a range of non-dilutive or minimally dilutive funding options, but we have strong preference and are seeking to go forward with a potential strategic alliance. We have also stated our intention to begin a Phase 3 program for diabetic retinopathy in the first quarter of 2024, assuming positive top-line data results from our ongoing Phase 1 clinical trial in diabetic retinopathy. The diabetic retinopathy program is a separate program with much more modest resource requirements than WET-AMD, and consequently, we believe we could secure funding on our own without necessarily having a strategic alliance in place for our WET-AMD program. We do, however, recognize that a potential strategic interested in our wet AMD program would also likely be interested in our diabetic retinopathy program. Our current plan is to commence the first pivotal trial in diabetic retinopathy in Q1 2024. Net-net, we believe we have a very valuable asset in OTX TKI with a strong plan moving forward. With that, let me turn the call over to Steve Myers, our new Senior Vice President Commercial, to discuss more on Dextenza and our 2023 guidance.