Ocular Therapeutix Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 8, 2023

There are 9 speakers on the call.

Operator

Good day, and thank you for standing by. Welcome to the Ocular Therapeutics First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Donald Notman, Chief Financial Officer.

Operator

Please go ahead.

Speaker 1

Thank you, Julia. Good afternoon, everyone, and thank you for joining us on our Q1 2023 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 Q1 ended March 31, 2023. The press release can be accessed on the Investors portion of our website at investors. Ocutx.com.

Speaker 1

Leading the call today will be Anthony Modisich, our President and Chief Executive Officer, We will provide an update on our pipeline developments and the commercial progress of DEXTENZA. Also speaking on the call today will be Doctor. Rabia Austin, our Chief Medical Officer and Steve Myers, our Senior Vice President, Commercial. Following their remarks, I will provide an overview of the financial highlights Before turning the call back over to Anthony for a summary of questions. For Q and A, we will be joined by Chris White, our Chief Business Officer And Doctor.

Speaker 1

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 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 Form 10 Q filed this afternoon with the SEC and our most recent annual report on Form 10 ks filed March 6, 2023. I will now turn the call over to Anthony.

Speaker 2

Thanks, Donald, and welcome everyone to the Ocular Therapeutics Q1 2023 update. We're very pleased with our progress in the quarter, both on the development of our pipeline and the commercial side of the business. Importantly, on the heels of an ARVO meeting last month that highlighted the emergence of PKIs as an exciting New potential option for the treatment of retinal diseases, we thought it would be a good idea to reintroduce OTX TKI to the many new investors who have recently become interested in the space. We started on our OTX TKI program because we believe there is a desperate need for novel MOAs that enable new treatment paradigms for VEGF mediated retinal diseases Like wet AMD, diabetic macular edema, diabetic retinopathy and retinal vein occlusion. Despite the emergence of antibody treatments that have the ability to quickly reduce fluid in the retina, The problem is far from solved and the constraints of current treatment paradigms result in many patients with wet AMD remaining untreated.

Speaker 2

Those who are lucky enough to get treatment, real world studies have demonstrated the initial vision gains from treatment are not maintained. As a result, VEGF mediated retinal disease remain a leading cause of blindness. So why is there such a need despite seemingly effective therapies? We believe it has to do with deficiencies inherent in those therapies, deficiencies that OTX TKI is designed to overcome. Fundamentally, VEGF mediated retinal disease is caused by cellular dysfunction that results in chronic disease.

Speaker 2

Existing antibody treatments Like EYLEA, Lucentis and revismo are only effective in binding to pro angiogenic ligands in the extracellular space. Additionally, existing treatment affects only specific ligands, mainly VEGFR2, while data demonstrates that the presence of all the isoforms of VEGF As well as PDGF play a role in the disease process through other types of receptors. Most important of all, current therapies are delivered as bolus injections into the eye. This results in period where drug levels are briefly thousands of holes above the IC50 and then quickly fall below therapeutic levels, which may leave the retina unprotected and exposed to disease reactivation. Because of the rapid elimination of these antibody therapies from the eye, there is a need for frequent injections.

Speaker 2

Frequent injections lead to poor compliance, poor compliance leads to loss of vision. To reduce the real world vision loss Caused by the burden of frequent injections, retina specialists have created a new paradigm of treatment called treat and extend. Treat and extend is an involved Process with the goal of establishing individualized dosing intervals for each patient. It is analogous to a game of chicken with the disease process where the retina is left unprotected Without therapeutic levels of medication and the provider tries to time a reinjection as closely as possible to disease reactivation. Treat and extend is also an imperfect process given the natural variability of the disease in a patient and the need for perfectly timed business to be maintained, which is difficult to achieve in the real world.

Speaker 2

However, it is the best that can be done with the current treatment and it is a testament to the inventiveness and patient centricity of the retina community. We believe the world needs a treatment that works inside the cell binding at the receptor level, one that covers all the isoforms of VEGF and PDGF And most importantly, one that can be delivered at a steady state over a long period of time with minimal injections, so patients and providers can move beyond the current treatment extend approach. With OTX TKI, we are developing a therapy designed to treat VEGF mediated retinal disease like a chronic disease, like the chronic disease that it is, With a baseline maintenance therapy, it stays above therapeutic levels to avoid disease reactivation. Most importantly, It's possible that vision gains may be maintained in the real world with easier compliance regimens of a long acting maintenance therapy. In this new treatment paradigm, which we like to call treat to maintain, the antibody therapies would be reserved to do what they do best, Removed extracellular fluid quickly and would be reserved in the occasional circumstances when fluid might break through the maintenance therapy, Much like a rescue inhaler in the treatment of asthma.

Speaker 2

OTEX TKI is designed to have all of the properties above. Axitinib, the active ingredient in OTECI is highly selective for the VEGFR2 receptor, which we believe to be the most important contributor to retinal disease and covers all the different types of VEGF and PDGF receptors with negligible affinity to any other receptor. As a TKI, Its mechanism of action is working inside the cell. Most importantly, its potency and solubility profile lends itself to formulation with Our ILUTIX technology allowing for the development of formulations that can deliver continuous therapy for 9 to 12 months from a single injection. In designing OTX TKI, the challenge to our formulers was to develop a product that could deliver 9 to 12 months of a continuous dose of axitinib with a single implant.

Speaker 2

We additionally challenged the team to deliver the implant through a 25 gauge or narrower needle and required that a retreatment window be created For an effective dose of axitinib is still getting to the target tissues after full bioresorption of the initial implant. This would ensure that the VIVITRUIS would never have more than one implant at any one time and that the patient would have leeway in scheduling an appointment to be redosed. The data we observed in our clinical, preclinical trials and in vitro trials, the formulations for OTX TKI appear to be supportive of this target product profile. It's worth saying something about our ILUTIX technology. The hydrogel technology that underpins ILUTIX has been used in the human body since 1992 And has demonstrated safety and effectiveness in over 5,000,000 patients across 5 FDA approved devices since that time.

Speaker 2

Our own approved product DEXTENZA has been used in nearly 300,000 iosmins launched with reported adverse events in less than 1 in 10,000 patients. The only factors that regulate the bioresorption of our ILUTIX polymers are temperature and pH of the aqueous environment. Since the human vitreous does not vary significantly in temperature and pH and there's enough water in every retina to saturate our polymer matrix, We believe we can program the time to bioresorption so that the implant will be intact long enough to deliver the desired dose and duration of axitinib And then be fully bio resorbed when it's time to redose. The added benefits of not creating an acidic microenvironment, Easy elimination from the vitreous leaving behind no harmful byproducts and soft gel properties give us added comforts regarding safety profile. This technology would potentially provide solutions not only for the durable therapies for wet AMD to decrease the injection burden, but also for other retinal indications which need frequent injections, like the new therapies treating geographic atrophy.

Speaker 2

However, no matter how I deal the formulation and active ingredient, OTX TKI needs to perform in the clinic, which it has. We put OTX TKI in a very challenging situation in its initial clinical trial in Australia by testing it as monotherapy in patients with uncontrolled disease in wet AMD. You saw in that trial that OTX TKI was able to eliminate fluid as monotherapy in some patients in a dose dependent fashion, something that no other TKI development program has done. In the second trial, our current U. S.-based trial, we are evaluating OTX TKI to assess the durability benefits of continuous dosing in patients with controlled retinas that is retinas in a dry state.

Speaker 2

Interim data has shown that 73% of patients were maintained rescue free for up to 10 months and the injection burden was reduced by 92%. These data were recently presented as an encore presentation by Doctor. Andrew Moschevy at the 2023 ARVO Meeting held in New Orleans. We augmented the results from this ongoing clinical trial with pharmacokinetics data from 2 animal models showing the uptake of axitinib from our hydrogel implant In the choroid and RPE cells where axitinib acts intracellularly to exert its VEGF receptor inhibiting effect. The data show that clinically representative formulations of OTX TKI delivered sustained axitinib concentrations through 12 months They were well above the IC50 for VEGFR2 in cynomunkeyretina tissue and in choroid retinal pigment epithelium tissues.

Speaker 2

This excellent preclinical pharmacokinetics data aligns with the pharmacodynamics data we have observed in our ongoing U. S. Clinical trial. Namely, the high proportion of rescue free subjects up to at least 10 months and suggest continuous VEGF receptor inhibition, which in turn will support this new treatment paradigm, treat to maintain in wet AMD care. As a note, we expect to release our 12 month data for the U.

Speaker 2

S. Trial of OTX TKI for the treatment of wet AMD at the clinical trials at the Summit Conference on June 10. We anticipate seeing a reactivation of disease in some patients, which we believe would indicate OTX TKI continues to function as designed With axitinib concentrations beginning to fall below therapeutic levels as we approach and exceed 1 year of treatment. We believe the next steps with OTX TKI will be to prepare to commence our first pivotal trial in wet AMD as early as Q3 of this year And our first pivotal trial in diabetic retinopathy as early as the Q1 of 2024. Our confidence in entering pivotal programs is based on the clinical program to date Nearly all of the boxes one would require from a robust Phase 2 program.

Speaker 2

1st and foremost, we have proof of concept As monotherapy and uncontrolled retinas in the Australia study and in controlled retinas with anti VEGF antibody induction in the U. S. Trial. We were able to demonstrate a dose response in Australia and have settled on an optimal dose per day. We have comparative data from a mass trial Comparing OTX TKI to EYLEA given every 8 weekly, we also have at least 60 patients dosed with OTX PKI prior to the commencement of our first pivotal, some of whom will have had follow-up for nearly 4 years.

Speaker 2

As we continue to evaluate funding alternatives, including collaborative partnerships and finalized trial protocols, we hope to be able to give concrete guidance on precise plans in the near future. I would like to now hand the call over to Rabia, who will explain our ongoing clinical trials, where we are with our planned pivotal clinical trials in wet AMD and diabetic retinopathy and our next steps for our OTX, TIC and dry eye programs. She will then hand over the call to Steve Myers, our Senior Vice President, Commercial, We'll recap our commercial business, which is currently experiencing exciting end market growth. But I hope you don't mind me giving a bigger picture overview of our ALLETE technology and our OTX PKI story. It is increasingly clear, especially since ARVO, that the longer acting antibodies are not going to solve the problems of the current therapy And the gene therapy approaches to VEGF mediated diseases are unlikely to replace current standard of care in any near term horizon.

Speaker 2

We believe TKIs are really the most promising new therapies that will allow patients and providers to evolve beyond the imperfect and onerous Treat and extend into a new area of treat and maintain, enabled by pan VEGF receptor inhibition intracellular therapies like OTX TKI. Ravi?

Speaker 3

Thank you, Anthony. Let me begin with an update on our Becco BI program, OTX TKI. We are currently completing a multicenter prospective masked randomized controlled U. S.-based clinical trial In 21 subjects evaluating a 600 microgram OTX TKI dose in a single implant containing axitinib compared to ocilberstat administered every 8 weeks in controlled wet AMD subjects previously treated with anti VEGF therapy. The trial is designed to assess the safety, durability and tolerability of OTX TKI and to assess biological activity in subjects by measuring anatomical and functional changes of the retina.

Speaker 3

To date, we have reported interim data at 2 time points, 7 months 10 months, and have not observed any drug related ocular or systemic serious adverse events in OTX TKI treated subjects. Importantly, the 73% of the OTX TKI treated subjects who were rescue free at month 7 interim analysis We remain rescue free at month 10, highlighting what we believe is best in class durability. Furthermore, we saw in the trial a 92% reduction in treatment burden for up to 10 months, While patients showed stable and sustained best corrected visual acuity and central subfieldfolio thickness comparable with the oflibercept arm dosed every 8 weeks. We believe the data highlights the potential OTX TKI to become a differentiated product capable of providing a durable anti VEGF response that improves upon today's standard of care in the management of Bet AMD. We continue to have productive dialogue with the FDA and recently completed a formal meeting with the agency that included a discussion of our data and clinical development strategy.

Speaker 3

Based on the feedback, we believe we have 2 potential designs for the pivotal designs pivotal trials. We will share more about the trial design that we plan to use in future and still intend to be prepared to initiate The first two required pivotal trials in Bet AMD as early as the Q3 of this year, subject to obtaining the necessary financing. Moving to OTX TKI for the treatment of diabetic retinopathy. We continue to enroll subjects in a multicenter prospective masked randomized CONTROLS U. S.-based trial in 21 subjects, evaluating a 600 microgram OTX TKI dose In a single implant containing oxitinib compared to a sham injection procedure, We believe the same attributes that make OTX TKI a compelling product candidate for the treatment of wet AMD.

Speaker 3

The ease of use of an office based injection and long term durability could establish OTX TKI is the 1st standard of care in the treatment of diabetic retinopathy. Based on the feedback from the recent agency discussions, We believe we have a potential pivotal design for diabetic retinopathy that is consistent with the FDA's guidance And subject to top line data from our ongoing trial and obtaining the necessary funding, We believe that we will be well positioned to initiate a Phase 3 clinical trial for this program as early as Q1 2024. We are also making excellent progress with our another one of our late stage Pipeline Programs, OTX TIC, our Troprost Intracemoral implant using our ELITIX technology being developed for the treatment of patients with primary open angle glaucoma or ocular hypertension. The ongoing Phase 2 trial of OTX TIC is currently enrolling and we believe we are on track to complete the trial on schedule. OTX TIC is a program that we believe represents a significant opportunity for ocular therapeutics.

Speaker 3

While there are many medications available to lower intraocular pressure or IOP, glaucoma remains a leading cause of blindness, In part because of unwanted side effects, improper technique or simply forgetting to take their daily drafts, We believe most patients will fail to comply and may ultimately lose their vision. OTX TIC is being developed to close the gap between clinical trial and real world outcomes by taking patient compliance Out of the equation. We are enrolling approximately 86 subjects in this prospective multicenter mass Randomized controlled U. S.-based Phase 2 clinical trial evaluating the safety, tolerability and efficacy of OTX TIC for the reduction of IOP in subjects with primary open angle glaucoma or ocular hypertension. The trial is designed to over time against Thurisstah.

Speaker 3

We look forward to sharing Phase 2 top line clinical data in Q4 2023, Assessing the efficacy and durability of OTX TIC and as importantly, the preservation of endothelial cell health That could indicate that the product candidate is suitable for repeat dosing. Regarding our ocular surface disease programs, We remain committed to the development of our 2 dry eye programs, OTX TD, a low dose intracanalicular insert Containing dexamethasone for the short term treatment of the signs and symptoms of dry eye disease and OTX CSI, acyclosporin intracanalifugarin cert for the chronic treatment of patients with dry eye disease. We initiated a small study in this quarter to evaluate the performance of OTX PET versus placebo inserts, namely fast dissolving collagen flaps and no inserts at all. We plan to use the results of this For both the OTX DED and the OTX CSI that could potentially help derisk the pivotal programs moving forward. I would now like to turn the call over to Steve for a commercial update.

Speaker 3

Steve?

Speaker 4

Thank you, Rabia. On the commercial front, we finished the quarter with DEXTENZA net product revenue sales to specialty distributors at $13,200,000 representing growth of approximately 6% over the same period last year. Importantly, in market billable units were up 25% versus the prior year period, which represent an increase of over 7,200 units. Measured against Q4 2022, in market billable units in the Q1 of 2023 grew by over 2,500 units or 8%. Throughout the quarter, weekly and monthly DEXTENZA end market sales continue to accelerate.

Speaker 4

In fact, in March, DEXTENZA recorded the highest end market sales ever surpassing 13,000 units in 1 month. We anticipate that with the full sales team in place, a revised pricing discounting strategy that was implemented in the Q3 of last year and our strong market access, DEXTENZA will continue its growth in 2023. Looking at DEXTENZA Q1 net revenue, our recorded net revenues were slightly down versus Q4. The difference between DEXTENZA's recorded net sales and the growth of DEXTENZA's in market billable units is due to distributor stocking patterns, not changes in gross to net. The specialty distributors closed March with 8 fewer days of product on hand compared to Q4.

Speaker 4

However, with the continued Strong end market unit volumes recorded in April, we believe specialty distributors inventories have been rebuilt to meet end market demand of DEXTENZA. Looking ahead, I remain bullish for the remainder of the year. We have secured several national strategic account contracts over the past few quarters that are now in place and helping fuel our growth. We've also achieved exceptional market access coverage for DEXTENZA, including 100% coverage in Medicare Part B, Over 90% coverage in Medicare Advantage and over 70% coverage on the commercial payer side. Additionally, in Q1 2023, we launched a commercial assurance program to provide assistance with patients' out of pocket costs And the early feedback has provided us more confidence to expand into the commercial patient population.

Speaker 4

Based on these dynamics, we remain confident reiterating our DEXTENZA net product revenue guidance for the full year 2023 to be between $55,000,000 $60,000,000 representing potential growth of approximately 10% to 20% over 2022. With that, let me turn the call back to Donald to discuss our financial results.

Speaker 1

Thank you, Steve. Total net revenue, which includes both gross DEXTENZA product revenue, net of discounts, rebates and returns, which the company refers to as net product revenue and collaboration revenue was $13,400,000 for the Q1 of 2023, Slightly ahead of Q1 2022 net revenues of $13,200,000 and slightly behind 4th quarter net revenue of $14,100,000 DEXTENZA net product revenue grew from $12,500,000 to $13,200,000 over the comparable period in 2022, While collaboration revenue declined from $700,000 to $200,000 Research and development expenses for the quarter of 2023 For the Q1 of 2023, we're $14,700,000 versus $13,100,000 for the same period in 2022, driven primarily by an increase in expenses associated with clinical and preclinical programs. Selling and marketing expenses in the Q1 of 2023 were $10,800,000 as compared to $9,100,000 for the same quarter of 2022, reflecting primarily an increase in field force Personnel. General and administrative expenses were $9,100,000 for the Q1 of 2023 versus $7,600,000 in the comparable quarter of 2022, primarily due to an increase in personnel related costs, including stock based compensation and professional fees. The company reported a net loss for the Q1 of 2023 of $30,300,000 or a loss of $0.39 per share on both a basic and diluted basis, Compared to a net loss of $12,500,000 or a net loss of $0.16 per share on a basic basis and a loss of $0.22 per share on a diluted basis for the comparable period in 2022.

Speaker 1

Net loss in the Q1 of 2023 included a $6,600,000 Non cash item attributable to a change in the fair value of the derivative liability associated with the company's convertible notes, Increasing total other expenses as the price of the company's common stock increased during the quarter. Non cash charges for stock based compensation And depreciation and amortization were $5,100,000 in the Q1 of 2023 versus $4,800,000 for the comparable quarter in 2022. As of March 31, 2023, the company had $79,000,000 in cash and cash equivalents versus $102,300,000 as of December 31, 2022. Based on current plans and related estimates But excluding any expenses related to our planned pivotal clinical trials for OTX TKI, the company believes that its existing cash and cash equivalents are sufficient to enable the company to fund planned operating expenses, debt service obligations and capital expenditure requirements to the middle of 2024. As of May 4, 2023, the company had approximately 77,500,000 shares outstanding.

Speaker 1

This concludes my comments on our Q1 and I would like to turn the call back to Anthony for some final thoughts.

Speaker 2

Thanks, Donald. So before opening the call up for questions, let me do a quick summary. OTX TKI continues to progress well and we are pleased with ongoing FDA communication regarding our TIC in glaucoma and we plan to provide top line data in Q4 2023. DEXTENZA has had a strong start in 2023 with volumes in the Quarter running over 20% above the Q1 of last year, it leaves us confident in our ability to meet our 2023 guidance of $55,000,000 to $60,000,000 in net sales. And we have a solid balance sheet with $79,000,000 in cash that currently supports our ambitious plans and other Plan pivotal programs into the middle of 2024.

Speaker 2

With that, I'll turn the call over to the operator for questions.

Operator

Thank you. At this time, we will conduct a question and answer session. Our first question comes from the line of John Wallobin of JMP. Your line is now open.

Speaker 5

Hey, good afternoon and thanks for taking the questions. A couple on the 12 month data and then a follow-up on the pivotal trial, if I can. Just wondering if you could give us a little bit more granularity on what you expect to see in the 12 month update as exitinib is Getting a biorzorbed in the eye, how is that going to manifest? Is it just going to be seeing fluid Tick back up or is there some other manifestation? And then at ARVO, you mentioned the average resorption was about 9 months hydrogel, but wondering what kind of variability you saw in the patients within that 9 month average?

Speaker 2

Well, I mean, what we expect to see at 12 months is that the disease should start to come back in some patients. What we saw in the trials to date is exactly what we anticipated that the hydrogel goes away in a very tight window In about 8 months and that there is a release of drug after that, that stays in the retina for a couple of months. In some patients, it clears a little faster than others. So what we expect to see is the disease coming back. We enrolled patients in this trial that had a demonstrated need for anti VEGF therapy, so that as that therapy starts to wane that you would expect the disease process Come back and while we expect that to vary quite a bit in terms of individual to individual, We would expect to see some of that back and that would be reassuring.

Speaker 2

That would show that the pharmacodynamics actually are representative of the pharmacokinetics. Okay.

Speaker 5

And can you tell us a little bit more about why 2 different pivotal trial designs? And When you say one could start in Q3, how you decide which to move forward? And then is it going to be 2 differently designed pivotal trials or a subsequent trial identical to the first

Speaker 2

Yes, we have a lot of options. And even with the new guidance and the feedback from the FDA, there There are a lot of paths that we could take. Clearly, we have a very active data room now and discussions with strategics will potentially determine which path we take. So unfortunately, we don't really have the ability to kind of definitively say at this moment, Which protocol we would choose to go down, which protocol or protocols, But we hope to have that in the very near future. It's actually it's a very exciting time with a lot of possibilities and the data room is extremely active.

Speaker 2

I'll hand it over to Ravi to see if she can sort of add to that a bit.

Speaker 3

Yes. I mean that's a really good description Shumgar, we are now. John, I just wanted to answer your question whether our pivotals would be the Same or not? Yes, it would be the similar design to similar design of the going forward. But as Anthony explained, we're just going to make that decision and move forward, but ultimately, they need to be they're going to be similar

Speaker 5

Thanks. Okay. Thank you. I'll jump back in the queue.

Speaker 3

Thank you, John.

Speaker 2

Thanks, John.

Operator

One moment for our next question. Thank you. Our next question comes from the line of Joe Catanzaro of Piper Sandler. Your line is now open.

Speaker 2

Hey guys, thanks for taking my questions. Maybe just one quick one for me on the potential pivotal design for What AMD studies, I think I recall previously there was maybe some speculation that future pivotal Design could maybe include 2 active arms, 2 different doses exploring maybe 2 different formulations. I'm wondering if that is Still a possibility between these two potential designs or have you sort of formally committed to moving forward Solely with the current formulation. Thanks. And the quick answer to that is yes.

Speaker 2

The one of the pivotal trial designs actually We'd use both formulations and there's another that would only use one formulation. So we have the ability to go either direction. Okay, got it. I think that's all I had. So thanks for taking my question.

Speaker 2

Thanks, Jeff.

Operator

One moment for our next question. Thank you. Our next question comes from the line of Tara Bancroft of Cowen. Your line is now open.

Speaker 6

Hi. Thanks for taking the questions. So I understand you're not disclosing specific details, but I was wondering if you can discuss hypothetically what you would consider the most favorable pivotal Design like perhaps elaborating on the pros and cons of choosing EYLEA versus Lucentis as a comparator arm and maybe the possibility of using a superiority endpoint?

Speaker 2

That's a great question, Wilma. I'm not sure I can be suckered into answering at the moment, but there certainly are There's lots of options available and VIVISMA is also a potential comparator if you're thinking about a superiority trial. But yes, It's all to play for. There's a non inferiority design that looks very interesting and there are superiority designs that also are good potentials. But I don't think we can say anything more, other than that until we actually settle on the path that we take.

Speaker 6

Okay. Thanks.

Operator

One moment for our next question. Thank you. Our next question comes from Colleen Koozie of Baird. Your line is now open.

Speaker 6

Great. Thanks. Good afternoon and thanks for taking our questions. So just to clarify, on the 2 wet AMD trials that you're considering, It sounds like one might include 2 formulations, one might include 1. Is there anything else that you're willing to share in terms of How you're thinking about the 2 different trial designs?

Speaker 2

I don't think at this point it would be wise to do that. But I do appreciate the question And we'd love to be a little more fulsome in the response, but until we get them sort of actually nailed down, I think it's not wise to say anything anymore.

Speaker 6

Fair enough. And then on diabetic retinopathy, have you discussed with the FDA what the bar for success would be? Or do you have any internal on what you'd like to show to move into pivotal in diabetic retinopathy?

Speaker 2

Diabetic retinopathy is far clear. I can defer to Ravi to fill So, you know, where we are with diabetic renouncement?

Speaker 3

Yes. In our Type C meeting, Colleen, we had Discussion on the diabetic retinopathy design as well. That will be have the design agreed by the agency, the design we propose to them. It would be TKI versus One injection of anything, the per our understanding, sham injection is Not a good comparator, but any injection would be accepted. That's why that design is clear.

Speaker 3

It's The injection of TKI at baseline versus any injection on the other comparator and the follow-up for 12 months. It's a very clear design and we are ready to move forward as soon as We have as Anthony was pointing at, our partnering processes done.

Speaker 6

Okay, great. That's helpful. Thank you. And just one quick follow-up on the ongoing study in diabetic retinopathy. How much follow-up would we expect to see in the initial readout from that study?

Speaker 3

I don't think we disclosed how long the initial readout is going to be Top line, that's why I'm just going to keep it for now. But we do follow-up the patients 12 months and even more for the safety reasons.

Speaker 6

Okay, great. Thanks for taking our questions.

Speaker 2

Thanks, Ben.

Operator

One moment for our next question. Thank you. Our next question comes from Yi Chen of H. C. Wainwright and Co.

Operator

Your line is now open.

Speaker 7

Hi. Thank you for taking my questions. Could you give us a rough estimate of the cost to complete the Phase 3 trial in wet AMD and the Phase 3 Trial in Doctor?

Speaker 2

Insurance, it varies widely. It depends on the design of the pivotal. And that is That's really dependent upon whether we're going to go after a non inferiority design or superiority design. But we're looking at ranges of potentially $70,000,000 for 2 pivotal in a Doctor or A superiority in wet AMD to $300,000,000 for a 2 pivotals in a non inferiority. That's kind of Westfinger in the air at the moment, but that's those are the numbers that we've quoted in the past.

Speaker 7

Thanks. And regarding the Phase II trial in glaucoma, could you talk about your expectations for the top line readouts in the 4th quarter?

Speaker 2

Ravi, you want to handle that one?

Speaker 3

Sure. The SB like just mentioned, That trial is currently enrolling and enrolling well and our expectation is to share the top line data In the Q4 of this year, the that data, of course, would provide the IOP P readings as required by the FDA and also durability information. In addition, we're going to have the data on the corneal heart endothelial cell counts in that top line.

Speaker 7

Okay. Thanks. Last question is when can we expect to see the results from the small study of LTX TED?

Speaker 3

Yes. We have recently initiated that trial and the we have not guided any Time line to share the top line data yet, in future we're going to share when the data should be expected.

Speaker 7

Thank you.

Speaker 2

Thank

Operator

Our next question comes from the line of Caroline Pomilek of Berenberg Capital Markets. Your line is now open.

Speaker 8

Thanks for taking the question. So on the expense side, you mentioned that there's revised pricing and the discounting That you've implemented in the Q3. Just wondering if you could elaborate more on that and particularly how that Is affecting your gross to net? And then on just a follow-up on the business side, just wondering if also Do you have any guidance on operational spend for 2023? And I'll stop there.

Speaker 8

Thanks.

Speaker 2

I'll defer this to Steve. I just Well, I'm sorry, top line that there has been no change in the gross to net from the Q4 of last year until the Q1 of this year. So the growth in end market sales is and the decrement in net sales is due entirely It's a stockholder to the distributor stockholder. So I'll transfer on to Steve for the changes in our discount.

Speaker 4

Yes. Thanks, Anthony. Last year from January until June, customers were purchasing DEXTENZA, the acquisition cost was higher Then the reimbursement and following the close of a quarter, the customers were getting a rebate. They didn't like Cost economics of that, in July, we changed our pricing strategy so that the customer would get a discount at the time of purchase. So we provided a discounted acquisition cost that they got below that equaled reimbursement in July, starting in July of last year.

Speaker 4

It took about 3 months for our customers to get acquainted with this. But since then, we've seen tremendous growth in both Q4 and Q1 and customers now get a discount at the time of purchase and then they also get rebates at the end of the quarter That's determined by their aggregate purchases throughout the quarter.

Speaker 8

Got it. That's helpful. Thanks. Thank

Operator

you. Thank you for your participation. This concludes our Q and A and today's conference call. You may now disconnect.

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