Sight Sciences, Inc.

Good day and thank you for standing by. Welcome to the Site Sciences first quarter 2023 earnings results call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Philip Taylor, Investor Relations. Please go ahead.

Thank you for participating in today's call. Presenting today are SiteScience's co-founder and Chief Executive Officer, Paul Badawi, Chief Financial Officer, Ali Bauerlin, and Head of Corporate Strategy, Tom Wong. Earlier today, Site Sciences released financial results for the three months ended March 31, 2023. A copy of the press release is available on the company's website at investors.sitesciences.com. I would like to remind everyone that comments made by management today and answers to questions will include forward-looking statements within the meaning of the federal securities laws. Those include statements related to Site Sciences' anticipated financial performance and operating results. market opportunity, business strategy, and plans for developing and marketing new products. Forward-looking statements are based on estimates and assumptions as of today, are neither promises nor guarantees and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied by these statements. A description of some of the risks and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements on this call can be found in the risk factors section of the annual report on Form 10-K filed with the Securities and Exchange Commission. The company undertakes no obligation to publicly update or revise any forward-looking statements except as required by law. I will now turn the call over to Paul.

Thanks, Tripp. In the first quarter of 2023, we continue to penetrate and expand the glaucoma and dry eye markets. We generated total revenue of $18.8 million, growing 26% compared to the first quarter of 2022 and in line with our expectations. Our strong performance out of the gate and progress advancing underlying business drivers, including surgeons trained on Omni, positions us well to meet our financial and operating objectives for the year. We are reiterating our expectation for 2023 revenue to range between $89 million and $94 million. First quarter surgical glaucoma revenue was $17.3 million, up 25% compared to the same period in the prior year, and dry eye revenue was $1.5 million, representing growth of 47%. We also came in below our $30.5 million average adjusted operating expense target. Healthy revenue growth, strong gross margins, and disciplined spending drove strong operating leverage improvements. demonstrating further progress toward achieving cash flow breakeven in 2025 with a substantial cash cushion. As I'll discuss in more detail later, our ambitious clinical program continues to chart new territory in glaucoma and dry eye. We expect to have near-term readouts for two landmark studies this year where we seek to demonstrate the clinical superiority of both omni and tear care versus the existing therapeutic standards of care in glaucoma and dry eye, Two of the most prevalent diseases in eye care, which taken together represent total addressable market opportunities of over $16 billion. Demonstrating clinical superiority with both Omni and TierCare is an ambitious clinical goal and represent our original mission and purpose, to elevate patient care with transformative innovations that will create sustainable long-term value. Turning to our business units. In surgical glaucoma, our main objective is to provide surgeons with the best microinvasive solutions for their patients, regardless of disease state or cataract status. Our surgical glaucoma growth strategy focuses on three objectives. The first priority involves training more surgeons on our Omni technology. Surgeons continue to show strong interest in Omni. We trained over 150 US surgeons in the first quarter, but have reached less than half of the estimated 5,700 makes trained surgeons in the U.S., leaving plenty of runway for us to continue to train more surgeons over the coming years. When we train new surgeons, we further penetrate the legacy combination cataract make segments, and surgeons often select POAG patients with concomitant cataracts who are already on their operating room schedule for their first OMNI cases. Our second objective, increasing the utilization of OMNI among our trained surgeon base, is a natural extension of our exceptional training program. Omni's safety, efficacy, intuitive use, and broad FDA-cleared label provide us with a uniquely clear path to increase utilization by expanding use of our Omni technology across the entire population of POAG patients, including the $5 billion standalone opportunity. Once adept at using Omni, surgeons gain the necessary confidence to expand their usage to standalone cases, as well as more severe combination cataract cases. Now that we have achieved broad customer adoption, increasing utilization among our existing surgeon base is a powerful growth lever. The math is simple. If each of our first quarter active accounts performs just one additional OMNI procedure per month, annual revenue increases by $13 million, which represents just 0.2% of the overall MIGS opportunity. Our third objective is to drive adoption and utilization of Scion among specific subsets of surgeons who opt for a more basic goniotomy procedure. Scion provides surgeons with a complementary technology to Omni and has gained rapid adoption. Our focus on constantly improving functionality and usability produced our next generation Omni technology, the recently launched Ergo series. We successfully executed a smooth introduction, and Ergo has gained wide and enthusiastic adoption. Omni has established a new standard in glaucoma surgery. Based on leading efficacy and usability, our Omni technology can greatly expand the use of MIGs. Omni's growth continues to outpace total MIGs market growth as a result of both share-taking within the legacy combo cataract segment and market expansion into the standalone segment. As surgeons get more comfortable using OMNI, they naturally increase usage. Our analysis of nationwide third-party claims data indicates strong growth in the standalone MIGS segment. In 2022, an index we created to track relevant standalone activity grew 26%, well ahead of the high single-digit growth in overall MIGS. To accelerate development of the standalone MIGS segment, we continue to execute our comprehensive market development program, leveraging targeted field resources, comprehensive patient and physician education, clinical evidence, and marketing initiatives. Our multicenter trace study illustrated the safety and efficacy of Omni in patients with uncontrolled IOP despite a history of trabecular bypass dent implantation at the time of cataract surgery. We are seeing more surgeons surgically intervening with Omni in these stented pseudophagic patients whose IOP has become uncontrolled. We are pleased to see that our Omni technology can be used to help improve the lives of the 1 million plus patients who have undergone combination cataract stent implantations and whose pressure may one day become uncontrolled. Last month, clinical ophthalmology published an extended follow-up from our ROMEO study involving seven centers and 72 mild to moderate glaucoma patients that demonstrated continued safety and effectiveness of our Omni technology in both standalone and combination cataract settings out to two years. As a reminder, the FDA reviewed the 12-month results from the original ROMEO study when clearing Omni's expanded label in 2021. So it is very gratifying to see that there is growing evidence of Omni's highly compelling one-year safety and efficacy results maintained through two years and beyond. Another important clinical program involves our study of the American Academy of Ophthalmology's IRIS registry, which includes 9,000 MIGS cases. The study analyzes post-surgical outcomes for the leading MIGS technologies in the U.S., including Omni, iStent, and Hydrus. We believe this data further supports our belief in the clinical superiority of Omni. We plan to present and publish these groundbreaking results, including comparative IOP and medication reduction outcomes at the one and two year marks at multiple medical meetings and in peer reviewed literature throughout 2023, including at the ASCRS meeting this weekend. We believe the combination of increasing evidence of sustained clinical benefits from use of the Omni surgical system at two years coupled with a non-implantable approach that does away with the lifelong concern of indwelling metallic implants sets a new standard in glaucoma surgery for the future. In striving to provide the best solutions for our customers, we developed the first bladeless goniotomy technology, Scion, the second product in our surgical glaucoma portfolio. We launched Scion last August. The usability, procedural predictability, Elegance of the technique and its general interaction with the anatomy are the main factors cited by surgeons who now use Scion as their goniotomy technology of choice. As we expected, many of our Scion users prioritize a simpler MIGS procedure and were not prior Omni customers, demonstrating that our portfolio approach has attracted new customers. We have observed a significant positive impact from Scion in Omni accounts with existing goniotomy practices, in terms of both overall revenue growth and increased Omni usage. Among accounts that ordered Omni in the first quarter of 2022, and both Omni and Scion in the first quarter of 2023, revenue grew 39%. These customers also increased their utilization of Omni by 16% on average. As intended, Scion has proven to be a complementary technology to Omni and has enhanced our sales growth and commercial strength. On the international front, our launch of direct operations in Germany, our second direct OUS market, has gone very well. Germany and the UK, our other direct OUS market, are two of the largest international MIGS markets. We will continue to prioritize expansion in our existing international markets while also considering launches in other countries with attractive market access, regulatory, and commercial environments. Before turning our attention to dry eye, I want to take a moment to highlight the activities we have scheduled for ASCRS this weekend in San Diego. Tomorrow, we're hosting a surgical glaucoma investor symposium that will feature presentations from leading Omni and Scion surgeons. We have several other presentations featuring our technologies throughout the weekend. You can find more information in our recent press releases. Now, turning to our dry eye business. There are 14 million diagnosed evaporative dry eye sufferers in the U.S. Our dry eye business has experienced rapid adoption despite lack of coverage by health insurance providers. The cash pay environment has not deterred our over 1,100 customers or the tens of thousands of patients who have sought treatment for meibomian gland disease with our tear care technology. We have placed ourselves at the vanguard of a transformational shift in dry eye treatment away from eye drops toward interventional procedures. We designed our controlled launch of TierCare to help us optimize the development of this large and underserved market. We've accumulated numerous important findings that we will leverage to serve pent-up demand, especially if we can achieve our market access goals. I'd like to take a moment to recap the dry eye market and our transformative mission with TierCare as we approach the readout this summer of our pivotal Sahara RCT. Daily artificial tears and daily prescription eye drops are the gold standard treatment in dry eye today and collectively represent many billions of dollars of annual revenue for their manufacturers. Restasis, our comparator in Sahara, is the top-selling dry eye therapeutic. Despite the significant commercial success of prescription eye drop therapeutics, they don't address disease meibomian glands, the primary root underlying cause of dry eye for most patients, estimated at 86%. of all dry eye cases. We designed TierCare to set a new standard in dry eye treatment. Correspondingly, we designed our Sahara RCT to prove TierCare superiority over the prescription gold standard with input from eight payer medical directors. If successful, the comparative clinical benefits and health economic value of TierCare will serve as the foundation of our market access strategy. As a reminder, in the third quarter of 2022, we completed enrollment of Sahara, a 345 patient randomized, masked, multicenter superiority study comparing interventional procedural treatment with tear care to twice daily prescription eye drop treatment with Restasis. Insurers have paid billions of dollars for Restasis and other dry eye medications. Sahara has the potential to prove that our tear care technology can improve clinical outcomes for patients and bottom lines for payers. We are pleased to report that we completed our last six-month patient follow-up in April. As a reminder, it can take several months to complete the data analysis. We plan to release top-line results this summer and present full results at a major medical meeting and publish these results in a leading medical journal later this year. To summarize, we continue to execute across our business generating strong growth in both surgical glaucoma and dry eye, and advancing the underlying commercial, clinical, and market access drivers that will bolster further growth. We have built a solid foundation to continue training new customers and expand utilization. Our plan for robust ongoing growth, coupled with our top-tier gross margins and disciplined operating expense spend, are positioning us to improve operating leverage, and keep us on a path to achieve positive cash flow in 2025. I now have the pleasure of formally introducing Ali Bauerlein as our new Chief Financial Officer. I am thrilled to have Ali on board. A proven entrepreneur and exceptionally talented executive, Ali brings public company CFO experience and a track record of co-founding and leading a rapidly growing med tech business through multiple phases of growth culminating in over $350 million of annual revenue. Ally is already making a positive impact at site in so many ways and is a perfect fit with our team. We're delighted to have Ally help us continue to scale the business the right way and drive towards profitable growth. Over to you, Ally.