KALA - Earnings call transcript Q1 2022 | Kala Pharmaceuticals, Inc.

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Operator

Good morning and welcome to Kala Pharmaceuticals Conference Call to Review its Fourth Quarter 2022 Financial Results. At this time, all participants are in a listen-only mode.

Following management's prepared remarks, a Q&A session will be held.

As a reminder, this call is being recorded. I would like to turn the call over to Jill Steier, Executive Director, Investor Relations and Corporate Communications for Kala Pharmaceuticals. proceed. Please

Jill Steier

and for operator, call. in you thank you, participating all today's Thank

Brazzell, and call. me Mark Chief Business and will portion Bazemore, Kim are the Financial Q&A Chief for the also of Chief Officer; Joining Kharabi, company Officer, Todd Officer; Iwicki, and from our Mary Medical Chief Officer; Executive Darius Officer; Operating be today's Head Reumuth, us R&D Chief of President joining

prospects of Kala's During are this Private make will within expectations, meaning forward-looking observations that and call, statements the and this the certain conference of comments other of statements These commercialization include EYSUVIS and and of future Securities statements plans the beliefs program management about statements with Litigation XXXX. as we of cash development will market KPI-XXX, based our associated the Reform These are and resources. of forward-looking potential expectations on regarding sufficiency INVELTYS, call. the and of our Act

differ XX-Q Kala's that factors included call over statements, expectations. as occur law. after as forward-looking carefully call materially events risks should in events factors risk other from the Iwicki. turn I CEO, the that which results we in identifies report Mark will filings the our forward-looking SEC. statements the circumstances Our any Form described the actual may as or those on actual cause and today's uncertainties required specific or to in except from made to now quarterly described differ and to with update materially company's read undertakes results The no this release, to or our Investors may reflect revise obligation press by company conference well

Mark Iwicki

Kala and effective. and with new you of morning. We of well And physicians tolerated a are front the ago medicines advance diseases of the the a highly everyone this with back patients portfolio us providing and that for joining thank safe, to mission number eye by Jill. treatment years Thanks, started of

a dry the needs EYSUVIS hands this of with the clinical addresses for the of articulated treatment only treatment eye eye strides by we goal, and advanced need. symptoms CVS of Caremark, that be XX% have milestone as access tears will have XX% of and for optometrists of patients lives more ensuring of the addition frequent EYSUVIS. commercial patients we and able chronic therapy coverage is product in into several made Over disease, the episodic on recent this many the also our we alike. In gap care the ophthalmologists EYSUVIS, the on coverage. expanded flares In and significantly case weeks, And past Since approved first of in with we through toward successfully short-term to and INVELTYS therapies. for with and XXXX, the payer product great patients and the and profile important easily Kala. educating disease, a counter and therapy over now between signs changing lives, prescription the artificial This of nature really unmet both our EYSUVIS patients was the years, approved prescription first launch bridge in FDA paradigm many for we've the developed professionals Medicare consistent for that to development the

we in assistance on We expect being prescriptions net and for reliance therefore to in growth patient into it meaningful expect additional coverage reduce increase revenue. will the programs, a significantly translate support filled Moreover, patients.

our net in increased consistent but program, patient being ensure have demand reminder, prescriptions quarters, impacting throughout the a situations more assistance In the are launch prior patient's use used not EYSUVIS, did assistance we cover revenues. to with have we patient for EYSUVIS. insurance seen where months, in representing filled a programs fully trends also As of negatively recent

an in With improvement and, the future in assistance a we payer selling average to result, revenue. translating be in price our as an expect coverage, to expansion increase programs reduced, net patient

our As we we EYSUVIS, the continue to to believe progress stage on eye also with clinical focusing care underserved we meaningfully has treatment which diseases. programs, people research and launch commercial the potential and of impact are the living of

review therapy which secretome the to Phase of front program planned X/X In year. of performance. potentially treat the the a are forward clinical at Combangio full late Todd ocular quarter our our for other look novel We new fourth presented PCED persistent last We eye for other our foundation this KPI-XXX and Xb to to potential our These acquisition significant to advancing later or With and details highlight for rare KPI-XXX the the the corneal that, Annual treatment and epithelial in Meeting. severe into to Phase commercial trial defect of PCED indication around additional our data of deliver and over approach diseases. this and serve call we to data, turn expansion as sharing of back the XXXX year strategy the advancing I'll diseases. ARVO May,

Todd Bazemore

Thank you, Mark.

than the first QX, prescriptions, rates XX,XXX fourth accelerated compared QX prescription XX% of the EYSUVIS EYSUVIS quarter in of quarter increase For currently have of over to growth reported XXXX, an XXXX. Symphony Health approximately Since we total by at XX,XXX through XXXX, of including now growing unique written approximately May XX%. a XXX,XXX prescriptions, have X, launched more X,XXX refills prescribers. first seen the product

through half largest implemented QX by This the added US. This in on the total CVS patient all largest net in XX% formulary, XXX.X of prescriptions the EYSUVIS just on a or commercial another prior in that, of of benefit program, assistance commercial XXXX, disproportionate of our EYSUVIS as going XXXX. on Caremark formulary wins. impact formulary We coverage anticipate to that last revenues be not CVS payer brand of in sales most prescribing covered XXXX. million the lives, to few EYSUVIS, to commercial restrictions three accelerate more increased And and mentioned million having pharmacy positively XXXX light its we all a manager meaningful turn addition QX fact began this commercial the quarter's the this in by EYSUVIS weeks also net is likely the to supported negative expansion momentum announced addition covered in recent ahead. price. copay significant in PBMs the I call, in uptick resulted To payer lives. only Caremark, lives bringing coverage our but May point, on Caremark the average the CVS a of ago, XX.X now second of the United formulary impact which will prescription growth, believe effective X particularly important coverage. our EYSUVIS is tailwinds we months in is States, on of As adds

a In assistance from covered of weeks to just program first over formulary the in see prescriptions. percentage the since of addition, shift this away started commercial copay fact, we've couple already a higher to

health approximately the coverage include additional will In as XX% June States, Medicare total X, Medicare of the brand EYSUVIS a million addition, million its will effective on Medicare preferred XXXX, plans doubling our of lives an to or add lives. XX.X Medicare lives, in This Humana, X United all one largest formularies.

higher coverage. it are we payer very And net noted, fulfillment sales translate expect this into our we will growth Mark average pleased continued in EYSUVIS prescription rates As higher prices. by and for

XXXX. wins expect excited and We positive additional decisions recent these coverage payer about are in

the of approximately to In there quarter reported to XX,XXX XXXX. were Turning quarter Symphony in by fourth INVELTYS. first Health prescriptions XXXX, XX,XXX the compared of

increases. the Medicare continue product D grow will that INVELTYS as prescriptions to coverage Part We believe for and revenues

are our also previously to I is in As now INVELTYS which turn completely stated, call as commercial to EYSUVIS eye are our INVELTYS dry for sales targets, will the EYSUVIS synergistic a over position primary is and the of efforts with targets pipeline second focus programs. Kim discuss for XXX% call. INVELTYS

Kim Brazzell

Thank you, Todd.

X/X currently IND or to make on to KPI-XXX a in as and a the in call PCED defect, persistent are of suffering quarter track an trial XXXX and it. epithelial progress continue Phase initiate We we from fourth on significant corneal patients clinical file

is orphan PCED are disease lead loss. in arm, PCED untreated, has stem an If the in PCED, We as which defects benefits This Japan the have mesenchymal label free, defect Being has a by is to innovative the ophthalmology. This is benefit of track often trial multiple for secretome, secreted received potential dry which for approximately the or that non-PCED technology cells was neurotrophic acquisition marrow KPI-XXX and secretome KPI-XXX proteins the from morbidity incidence surgical such patients with as allows that As great XXX,XXX evaluated approach strategy to, numerous who unexpected the conducted by many we've XXXX. and year factors, addition cell Combangio enrolled year develop limited limbal the currently fast the stage matrix XX trauma, an combined. the per KPI-XXX FDA three untoward rare discussed efficacy biomolecules, need and for and US, our Xb stem including are human is to a and then factor of can for that This clinical essential and designations trial of to vision cohort. administration infectious for in of but protease of a has the XXX,XXX PCED. breakthrough for in ultimately November therapies corneal PCED of of Combangio, as therapy cell and the significant cells. Sjögren's in who cell with scarring patient. clinical therapy treatment provides that cohort non-healing to which in perforation, significant deficiency This therapeutic presented left harvested novel demonstrates applications. previously, pipeline US Phase significant cells, exploring neurotrophic to not persistent application be us KPI-XXX patients of we of included without which for the intact utilization the a infection, keratitis, acquired inhibitors, part growth from EU patients and been are potential of approach corneal defined number syndrome, events. and result is well. keratitis, bone in can submissions or novel a we're patients secretome asset a a of X to including, designation non-surgical was involving etiologies enrolled wound estimated eye. produce KPI-XXX prospective, our KPI-XXX safety of therapy can needs single unmet free of treatment an drug which The per recently these PCED, patients in derived treatment. promising open results a the as mesenchymal stem conventional We're developing comprised and refractory the cell of

the by PCED event. end Patients of days. to healing who by cohort, of treated the etiologies and corrected four were end corneal determined corneal In of and XXX patients efficacy Other up also the evaluated throughout intraocular were of trial, ranging four, other Within patients corneal size, PCED patient a fluorescein to endpoints XX staining. pressure a opacity eight efficacy the healed was the the for endpoints of of one patients key corneal visual due healed healed in remained one the twice X ineligible were follow-up included of four as XX various events. reported Six end week pain. included of with corneal X from of to who healed adverse efficacy endpoint benefits the to non-treatment end including evaluable observed defect of best The by with were weeks, follow and defect, All week efficacy acuity presented Significant KPI-XXX was for was reduction measures week opacity. two. participant demonstrated and against Safety acuity, visual weeks. six improvement by adverse with related efficacy completely in including pain, KPI-XXX complete tolerability, the the up durations, up one in had be period. patients. eight to defect key daily the and as the

that score profile. reduction a a For zero example, reported by pain end four week experienced achieving and the who opportunity week had observed. related They pain achieving across the as KPI-XXX encouraged end well initial etiologies, for well eyecare and KPI-XXX six the PCEDs in by trial we're the Phase PCED the of convenient all pain therapy need share as can US trial pivotal the X/X key in product can on pain We're all of forward issues this our for if US. year. community urgent the looking one required to very clinical with eyedrops approved We a leaders the track with at who fourth simple, three. could in the as around of serve an improve to by the interact into the in no address enthusiasm score safety advancing quarter with the week tolerated end our one, which, of zero two was later experience. positive, of trial the trials one results, six by initiate patients the We've opinion remain significant of to trial baseline highlighted in KPI-XXX clinical these that XXXX, opportunity all patient's

to severe action. multiple by PCED surface clinical our potential mechanism multifactorial to its we a a that addition pipeline ocular potential existing diseases program, treat we and data, on product In has preclinical as opportunity damage. characterized KPI-XXX view to corneal of believe and the due KPI-XXX Based our

secretomes to in with front the currently conducting eye year. are pain constituents of and We're provide of we stem plan potential development, back the specific Additionally, analysis to for to of therapeutic updates a more future mesenchymal this and known later back the diseases eye. cell identify for depth indication

call pass financial I'd Mary go our results. the to to Now, to like over

Mary Reumuth

Kim. Thanks,

of purchase of stock-based certain amortization. of reference results, consideration contingent non-GAAP on on and financial non-GAAP deferred remeasurement These gain financial non-cash consideration. value depreciation measures. and fair discussion will interest, I remeasurement our measures fair exclude loss this value During financial compensation,

available For of to today's which measures, non-GAAP our website. press on to release our please a full GAAP reconciliation is financial refer

of the quarter to $X product, product million to of $X.X compared the fourth sales compared million quarter. revenues and of from revenue quarter net By as the $X.X quarter the in of in fourth consists as For $XXX,XXX from the EYSUVIS of net the fourth $X.X XXXX. million million we sales million $X.X reported this XXXX, compared $XXX,XXX INVELTYS in of to of first

quarter and large part quarter, the in Caremark EYSUVIS year. in of of of is for our described implemented CVS we direct the our result impact the increased assistance by discussed of Todd earlier in as seen coverage patient last second on last first As revenue net programs, the our on reliance because restrictions half XXXX the

for Non-GAAP positive able $XX.X the SG&A Caremark R&D XXXX. formulary expenses these of be which reduce May, $XX impact first million on With EYSUVIS were for reliance and R&D of price. quarter CVS we a the average the sales addition assistance to the in have were of expenses patient our on were quarter SG&A we significantly programs, expenses to our million will will first XXXX million. $X.X expenses million. non-GAAP were $X.X believe

cash quarter to revenue XX, plans, resources second XXXX. of International that position Our in our on This XX, March $XX.X cash million XXXX, primarily compared as reflects XX, million the was we XXXX anticipate cash together to of XXXX. as anticipated of December and as used with Based current enable decrease our $XX.X from will us operations. of operations EYSUVIS March into fund

mentioned going the the to extending the I cash quarter, over rest further for concludes of operator remarks forward. we we prepared last our our year reducing call by operating today. runway questions. to the and expenses for As now will remain pass That over committed

Operator

Instructions]. [Operator

Our first with J.P. comes from question Morgan. Chris Neyor

Christopher Neyor

So, the one, just net gross EYSUVIS. on for first the dynamics to

had you've So, And quarter sequentially look quarter, on of second XX% row. EYSUVIS the that's XX% in in at sales same then, a back of for script at the the And in time, growth XQ. if down XQ. were the you growth

we the the of impact? You growth could a XXXX us restrictions. prescription we net the or and vast into CVS is see Caremark growth between translate So, the positive XQ sales that the growth? help just guys growth? kind a of of sales kind Should in half the difference you majority when bridge And Is referenced more that can second impact of to better expect event? prescription

Mark Iwicki

This is Mark.

in went of the to yes, There's just Caremark of assistance your to restrictions not programs. big high first, up think level, use perfect the data the CVS I portion at answer increase prescriptions question covering know those proportion a from made patient the CVS in. essentially but of significant restrictions product a and that individual putting many of the patients from for they Caremark how the substantial it go patients to exactly through have payer, an was many

is in what part the of an going your second then through at And question, seen get caused drop. that to a assistance prescriptions we've already so, that And and Caremark copay to increase in CVS programs. reduction

half And so, yes, to of we and that this expect improvement in be second an soon year. start clearly

Christopher Neyor

regarding kind second on my payer of question coverage. touches also That

mentioned well. that as XX% guys now then you So, you're XX% and lives roughly Medicare covered seeing commercial on also coverage

Health, this prior of second, go So, And D high can most to XXXX? touch and with launch? and does what EYSUVIS resolve Medicare to United maybe strategy you've through level remainder recent you in Caremark the commercial been for including expansions, earlier just on that where headwinds referencing CVS these Part of for the coverage kind the could extent coverage that

Todd Bazemore

This I'm to is answer questions. happy in the and jump Todd.

the right? XX%. that would ultimately our first, you'll of commercial coverage. the done, to I calls for in on said at so, now sort we're commercial on We're I think brand side, prior the get say XX% that range XX% to target was And recall we

plans, national X% So, say Blue not we'll we're a mean large small we've maybe go regional individual that at continue to some gotten of plans, there's I plans. all major the Doesn't lot Cross coverage. effectively over after. the Blue state would Shield

are growth. seeing first commercial going in to the XX%. up An of all place in second for We early that in here have That's right? acceleration Scripts have quarter the coverage things, which need. weeks And already script prescription that few in result the two we data. we we're

QX rate QX So, compared of the to compared QX. rate growth almost in double to the growth

already amount seeing And seeing in copay been in we're acceleration. the early filled, scripts that utilizing of decrease the programs. that a importantly, the one of we're have data, assistance then So,

year, use So, CVS in copay of using patients to is sort XX% of XX%. said, EYSUVIS our that think were getting of have, the recent getting fourth program restrictions required assistance. of implemented by we that Caremark copay driven as numbers many EYSUVIS of scripts the the copay percent of down last programs, Mark as data of the as the to had those more largely one assistance quarter utilizing prescriptions filled, that In of most assistance week filled

in with shift reliance a along prescription rates. seeing growth we're our already, dramatic on acceleration program, that in So, an

scripts at a for going what net favorable our And two revenues forward. positively more more will so, be the will at impact combination net ASP

On the that Medicare control on There Caremark SilverScript, AARP. all Humana, X. US. are upwards Medicare Medicare are plans front, we United starts Humana of secured of just that XX% the three and coverage in June CVS They large

I United's effective as Right? us EYSUVIS. Caremark April also I commercial CVS So, in X. now us the good Humana, United side to three, and those SilverScript commercial and for we've one Caremark have at fact achieved side the took about pending just positive And at of are you bids later quarter. sometime acquiring with United and coverage of about those at bids. know, and And that good coverage business, really X. we bids feel CVS added the both the Caremark's to formulary added we May we business, in effective formulary big that coverage And learn about think decisions CVS expect AARP both third feel of the

good those coverage that submitted that bids about positive would of third and on having coverage feeling expect this me Medicare decisions the quarter the commercial we've the has So, really we year. decisions in side

Operator

[Operator Instructions].

with comes Oppenheimer. from Our next Brisebois Franc question

Francois Brisebois

any why again? And EYSUVIS hit Or And do that Caremark sudden? coverage, could all we Just on color it a why to hit added restrictions, they here? was hit happened? know then now restrictions this a the across industry? And to the it just happen did the products this took of on CVS mostly

Todd Bazemore

was This negotiating say and is formulary sort management. Todd. it normal I would of

tear. beginning formulary And prior required full covered all a right, tried were over-the-counter That's we at standard XXXX of the off it that And we place. because dry artificial patients that half first or so, being have. of not covered, when an in had in not our we discount pretty through prior on prescriptions formulary, side, the launching, rebate a the was EYSUVIS off much management on getting eye have were a were medications whack, previously did

through, for starts for really to second what product yet net to of very So, favorable product going the which year is of those their not ASP. the newly they through on in impacted were gain uncommon net restrictions QX It some a those of half formulary, revenues last prescriptions place or and to put going essentially XXXX occurred is QX the is restrictions were heighten payers launched and in products and in not if momentum XXXX. and at

of We a to which those have you removes I their CVS decision, added to been effective know, Caremark negotiating, formulary, took us X, and get as all added restrictions. positive formulary they think to May

And which as so CVS rebate at I them, well now, as those with ASPs. prescriptions can net Caremark. flow through, both contract our under increase volume, again, our will said, the will, They now as

Francois Brisebois

In the think but heard May, expecting of in half in were I terms that more impact here year. second impact the an of I the we then of

there gauge into I fair the this to guess, second now? the of timing by trying on based obviously, impact the I'm on May, to we want, And how is coverage guess, gradual. So, be that is Was the the end level get the to gross that Or well good something quarter, to to that just to we net a assume? would of would look hope it. the is improvement, I just just year commercial

Todd Bazemore

significant the you in And, end, year we be Look, net certainly, in more on the in were coverage, I of we this been occur half both side our are in second had improvements which we United of side ASPs should we really, on well. decisions then, But, see improvements continue quarters Caremark to realizing, would AARP commercial those in to contracts stated, securing in SilverScript ramp Medicare the the taken. of expect the as those sort by coverage coverage, to will place. start the growing if of the and put business, as significant successful And that CVS there as focus in in opportunity Medicare there's obviously, full a year. these benefit

Francois Brisebois

the the filled, in just ones around that were – the think the the think the were amount past, prescriptions I I that of you've fact that XX%. was versus discussed written demand,

You've touched now on the on a assistance any this quickly little filled written side, then, also, the idea the just the we prescriptions? who bit, working uses patient program, PCED can case? stand in you on where but competitive And just landscape, else versus maybe talk about anyone

Todd Bazemore

I'll hand question then second It's early, take part – the of the to Franc. and part first Kim. program of the I'll question the PCED or the

attributed we'll So, weeks look and in getting rates get percent of we're few get We'll here are the to recent growth over the a an scripts the seeing wins. these written data that acceleration prescription covered. and good next at filled

in some that accelerating. time data out our showed just data we been of So, on number XX%, weekly high scripts is growth that a rates prescription at the pure lag basis. always have payer as said, the being assistance than that data, copay drop more on I comes more a with is do that there little granular bit now there's the a program. prescription same level the That on data level filled down know a have We, has

on covered filled, are going it's So, there's getting paid insurance. more a number few and of scripts data by filled granular in they're the the getting at been here what to you the is hand when that Ken, up that indicate we showing commercial larger suspect weeks, – the get the I'll to pharmacy a PCED it over patient's I questions. as scripts

Kim Brazzell

It's PCED product by neurotrophic Dompe. the for one only only company. indication keratitis. product an OXERVATE Italian And a spaces, In today, marketed is called its

So, probably our PCED. keratitis arise a third PCEDs all represent epidemiology of about suggests that that neurotrophic from

course, of to after approach, etiology. all PCEDs of go is Our

we times significant that have complicated reconstitute day. a administered a to They requires we six system formulation So, also be they have and frozen, think XX rather steps have is to there. potential

goal Our the provide unit are dry single how be a of to will solution, to drops dose similar eye provided. current

a did level that in that'll other Phase think significant a the of were to one X/X trials X of subset neurotrophic the certainly we that's terms know There's secretome recently trial and opportunity. and they a they for. product company in results of active patient one really Phase called It's be space that the the just we So, that Noveome have PCED experience. product PCED. healing view, be PCED in of we But saw. in benefit seems as secretome well. few started are for a published keratitis There they product entire that's, and space. again, a see that our the then not But a Their

Operator

Our next question comes from Andreas Argyrides.

Andreas Argyrides

rejected the update us tell of being provide you scripts then can Just are that percentage for and International an on KPI-XXX?

Todd Bazemore

decrease rejection simply the are the some that commercial we and here fact Franc is We early coverage that the scripts It's Todd. increase weeks a showing down scripts rates going time have go accelerating. of in copay by assistance into in program to a that a asked data updated number those at are prescription a data. similar rates us few believe question. Give get the

data couple weeks' having data, to filled. available. to of pharmacy, answer more suspect decision of Fewer But rejected getting that on So, XXX. Kim getting those a have it we over then I'll but are lag the indicate here And are hand on just questions just at when Caremark scripts data that the two it's larger weeks CVS we'll post that ago. percentage granular a prescriptions effect going get took that to

Kim Brazzell

to Yes, evaluate develop we're KPI-XXX. continuing and

sites, activity are be and still a we're got hoping trials it's the we're preclinical that, next doing we've that CROs quarter, are still active we've a couple a after the position to have in had where but that We a little related updates ongoing, provide of actively to of and the delays, perhaps but to unexpected still lot evaluating in

Operator

time, I'm this At the in questions you. queue. to showing you. turn Mr. no I'll Thank more Iwicki, call back the

Mark Iwicki

you soon. Well, continued everyone, We joining in for day. Have thank us Kala updating a look And interest appreciate really to operator. today. great very and much, you your thanks, forward

Operator

participating. conference This concludes for call. today's you Thank

You may now disconnect.

Kala Pharmaceuticals (KALA) 16 May 222022 Q1 Earnings call transcript