Kala Pharmaceuticals (KALA) 10 Nov 192019 Q3 Earnings call transcript

Good morning and welcome to Kala Pharmaceuticals' Third Quarter 2019 Earnings Conference Call. 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 now like to turn the call over to Niranjan Kameswaran, Vice President of Strategy for Kala Pharmaceuticals. proceed. Please

Good thank operator. today's for everyone call. morning you, you and joining Thank

the Iwicki, Mary are Chief me Medical Scientific company Joining from Brazzell, Kim Mark Officer; Chen, Todd Chief Chief Officer; and Financial Executive Bazemore, Chairman Operating Chief Officer; Reumuth, Officer. Hongming Chief Officer; and President

The Today's Media website our section live. can found webcast is call webcast in be on kalarx.com. link being the and Investors

Generally prepared Accepted to referring Principles. During in this measures today in financial also found issued which the accordance are will is which release with to directly be of call, reconciliation on non-GAAP not measures the Accounting measures A be available financial website. comparable our press can we non-GAAP our most GAAP

Kala's statements On and within this associated U.S.; cash the development trial; revenue. of Act include: XXXX. of future forward-looking that and with meaning sufficiency and the of expectations today, of management will on commercialization call, Securities statements are beliefs of for prospects XXXX. X STRIDE we plans, will Litigation about Observations the November and our These commercial clinical comments expectations, projected Private of the statements regarding Reform in EYSUVIS resources; are These our make the as INVELTYS based the the including statements Xth, certain plans

of after date revise obligation actual any Our the The expectations. conference statements or results may differ or update to circumstances reflect our undertakes no call. materially company from to events this

differ SEC report described The forward-looking actual results as Investors that company's is the cause after included available specific the risk the today events Form identify will should website. today's closes the be be to factors in on Form XX-Q. forward-looking on factors with described and filed in press release including filings with our will carefully the statement market This the SEC XX-Q the statements. materially as in well uncertainties read risks those and may the from or which quarterly

turn the now CEO Iwicki. Kala's Mark? will call Mark I to over

our good financial for which everyone. released and review we third quarter Thank today to morning. Niranjan you results this Thanks morning joining us earlier

describe INVELTYS will pleased we and made Todd reported of INVELTYS with Approximately prescriptions have later progress. the significant call, As market in launch launch been further is how XX,XXX we've since access are in progressing. the detail

feedback and unique has care twice-a-day importantly, proposition More from professionals exceedingly been reaffirming eye efficacy, strong positive safety, dosing. INVELTYS' of value

Phase X we from by XXXX. As an of supported NDA eye and our candidate was X That you're filed for one X. dry data product EYSUVIS STRIDE STRIDE in X NDA trials and two Phase aware trial October

had indicated with In announced response efficacy needed support August, an we NDA. additional we that letter from that received The resubmission. this a to would the additional FDA -- FDA to from from a clinical trial data complete be respect the

Phase previous FDA, to of the we recommendation quarter Based serve additional upon response an CRL. we our expect clinical of XXXX which trial initiated in X as STRIDE X basis the of third the the will the

we probability improve success. We the designed with certain criteria to STRIDE believe modifications the inclusion/exclusion study's of which X

the of months. the conclusion trial We the looking are in to forward coming

experienced We've line now projected than patient in a results we're originally first of slower enrollment and slightly XXXX. quarter targeting the top

subject the in the to half a XXXX of NDA X should which six-month We first Class of expect resubmission clock. be review a

us the through with anticipate we cash enable cash that to believe operations fund next our We position. together a will projected INVELTYS healthy months. XX revenue we Finally, existing have resources,

INVELTYS to I'd Todd turn discuss now to to launch. over like call the the

everyone. morning you, Mark. Good Thank

INVELTYS progressing. the with pleased are We launch how is

of the continue XX% represents strong Symphony quarter. We with an XX,XXX second by approximately growth being the in which third increase see prescriptions over prescription to INVELTYS reported of quarter, Health

XX.X% a branded to QX grew in October by reported just QX. Branded and share of XX As in since share over INVELTYS have prescriptions approximately prescription XX,XXX compared ending achieved week XX% months market been XXth, has new of market launch. the prescription new

continues also growth. base strong prescriber INVELTYS to achieve Our

New have our prescribers significant We there in QX. INVELTYS grew XX% approximately for add by professionals prescribed continue new room eye QX means of target. as XX% represents believe which this X,XXX compared is to we Launch-to-date, to nearly still growth prescribers. care

demonstrated and declining has other INVELTYS trends. generic Importantly, a market strong branded share are which in growth in showing and major the prescription year steroids

recognition, Symphony will has whose the in a ended the call. methodology XXXX, their discuss to for data to INVELTYS further began this they that we on commencing X% to related Health, estimates of rely the our week demand October informed of six-week third-party change providers, XXth, one make reporting later projection phasing us a Mary process revenue prescriptions. in

market study of research highly this ECPs to We and and professionals. suppression recently attributes share months. approximately self-reported overall the half XXX reported up to low already of quantitative prescribed over next intraocular a This a the having study, inflammation from they eye risk In that intend increase INVELTYS also it six prescribing reported for group key XX% care with increasing pressure. large completed the rated of of current X% ECPs of

not who have Additionally, detailed XX% six the within prescribed our INVELTYS trial of next INVELTYS to been months. by ECPs they intend but yet that salesforce had reported

great make securing in We also market continue to strides access.

for we XX% approximately representing all of to report achieved today, million of unrestricted approximately that XXX lives. commercial commercial patients We pleased access are have as

XX% negotiations achieved still covered contract D by has ongoing Part market approximately D for Medicare unrestricted Part and as of payers. Medicare of INVELTYS access lives are today,

making team an planning launch disease. commercial the update has we dry are launch for been providing also of plans pipeline on lead preparations. on EYSUVIS progress our eye Today for great our The candidate

show research Our product care interest patients with for profile. strong professionals and the eye market EYSUVIS

professionals for of treat report a an high of dry effective can therapy symptoms be flares. care interest patients rapid-acting that and eye the eye level Specifically, and to signs used

eye XX million eye which by with professional. diagnosed approximately in managed disease U.S. care of been half are dry are the There patients have and an

majority eye patients times them currently are multiple Data that flares of treated million of with the therapy. dry X prescription a year. about only diagnosed a experience However, vast suggests

Several by approximately research with an conducted dry eye an quantitative XX% flares. indicate third-party patients to external that studies market research study of report XX% done including studies independent by eye and conducted patients dry experiencing Kala firm

experiencing XXX on This report which of median a flare a each total days per days market represents million alone. in over six annually. represents flares in average U.S. billion four year a potential $X lasting Patients year addressable excess of the

up of EYSUVIS the dry If a was dry prescription eye $X.X billion. of Xiidra could approved, become we validated acquisition flares. at further Novartis' size opportunity option eye of in the by The deal for believe treatment market the preferred recently to valued

the that we be for the considered a EYSUVIS vast is episodic address believe inflammation ideal which patients prescription trigger would flares. short-term will treatment experience eye and therapy of a majority key rapid-acting the can from approved flares benefit dry If who of

as Our be more directly patients, approaches market chronic use eye such do would as to therapy [Technical severe dry mild-to-moderate an breakthrough order impact not that treat adjunctive currently in patients prescription in used who Difficulty] symptoms. tears, research palliative indicates in as their artificial which EYSUVIS to well as medication,

who on all regardless prescribe intend we of indicate approves XXX than INVELTYS. whether are will a or of total FDA to Eye artificial between the promote currently EYSUVIS a prescription reps, of both sales using EYSUVIS, half they more the If to our from XX that only force EYSUVIS dry patients, increase medication current to reps and are their for to plan tears. XX eye care they professionals

have XX% XX% We this are to professionals care expect the for responsible in approximately a of this overlap highly cover will approximately will will that to force on sales and for effectively for efficient eye allow By dry to second team. us of will our size a call prescriptions. EYSUVIS the INVELTYS targets, eye time, INVELTYS move is sales significant calls. result sales years market been position and two which There between all

with to physicians and the the prescribing preparation on INVELTYS underway. to and an the favorable EYSUVIS product year. in very EYSUVIS reporting increase continues profile next for So are over are launch feedback launch intent well summary, patient well Physician potential progress

now to turn to I call will financial the our discuss Mary over results.

Todd. Thanks,

interest will quarterly measures. our this During reference stock financial financial certain noncash I non-GAAP measures results, non-GAAP and financial expense. of exclude compensation, depreciation discussion These

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

reported third of methodology. revenue estimated mix the the in million. is revenue, quarter to payer a net Health's XXXX, in INVELTYS net change $XXX,XXX revision Included in the $X.X projection For of from a we due resulting reduction, Symphony

we relates to noted, have downward regarding quarter on Todd of second make XXXX. the As third-party our primarily to recognition. data revenue estimates adjustment, relied This this

Excluding we would in this in revenue, increase line with in net a reported growth have the prescriptions. quarter-over-quarter adjustment,

with of in was hiring for XXXX. were organization quarter expenses $XX.X million, to primarily INVELTYS compared to costs personnel, and due the in the associated same third an launch SG&A our to the costs. building facility-related XXXX increase increase support The period commercial for additional $X.X million of

an third $XX.X for for same the XXXX, in facility-related in third R&D for $X.X to by R&D in of consistent A million increase with XXXX. period quarter decrease were costs. same in were million, expenses expenses period the SG&A quarter the of of were the INVELTYS-related Non-GAAP offset the XXXX million, $X.X XXXX for compared XXXX. third spending quarter

operating the R&D compared the $XX.X million for $XX.X was loss XXXX in million third in period $X.X million quarter third the for to for same Loss XXXX. of expenses the million million from period quarter million, same in the to compared $XX.X quarter, Non-GAAP Non-GAAP period for third operations the $XX.X same for $X.X XXXX. XXXX. for were was compared to

share or loss quarter million XX.X for of net $X.XX XX.X the to third shares share period quarter in for the quarter $XX.X Net The $XX.X of $XX.X same to million and per XXXX quarter of calculate was a average for $XX.X per or XXXX. to was compared XXXX third of -- of quarter Non-GAAP XXXX. of million loss net XXXX, $X.XX net third per used share the for loss loss million for number million the the same third was weighted for the of million XXXX. compared

of We $XX.X December resources projected INVELTYS operations September together will million as the us to through cash Our of with anticipate our that enable next to XXXX. million, was XX compared XX revenue existing $XXX.X fund cash position months. as XX,

the that infrastructure We INVELTYS. to expect relatively our well third quarter. commercialize consistent We quarter to continue current expenses be with launch and EYSUVIS believe fourth is operating positioned will

expenses the STRIDE We substantially in of year. to be operating a X. result XXXX that be overall beyond line reduced we note will as this with R&D expect expenses completion Looking of

hold for ready prepared now That concludes the questions. we today Operator, we're our question-and-answer session. will take and remarks to

Instructions] from Schott of the with Chris JPMorgan. And our line question [Operator first comes

Your line is open. now

Chris Chris is on This Schott. Thanks. for Neyor

EYSUVIS. question First on

And line? now eye expectations expectations For early full expected half for launch the planned response the year if CRL particularly of initial for any in for the are possible, dry pivotal the XXXX? coverage in data, potential with readout time your first What it's XXXX XXXX. on

And on then a second question INVELTYS.

You're currently any similar Should so timing sequentially the at And that of much. can provide XXXX? XX% XQ? expect color you level there we on unrestricted Thanks coverage coverage. in for decisions in is coverage

Good morning, Chris for thanks question. the

as about thoughts line time is your of well. that So, planning our kind you talked

exact So, you believe approval never in could the product the that but see know we time line, do XXXX.

are able launch marketplace. the quickly the have existing because very We our product we in to infrastructure sales

Medicare very the the for XXXX that when the Medicare, year and but XXXX. very and would of would access talk you approved I here at then or think that I launched it we Todd, had. be can So, just it late question was get think around of the we've and hope, maybe commercial is the And maybe end quickly beginning it then about that have INVELTYS access the

think for launch it both first what look EYSUVIS there questions I had like may we currently was INVELTYS. a you access of And there Sure. Chris, and couple when

unrestricted So, XX% the commercial is INVELTYS actually for or commercial The access book business I'll and address Medicare. first. payer of XX% within the currently

and of Medicare stages going So, what to update be looking into we'll just access final the next year. our we're in is negotiations in

be in fourth at in baseline unrestricted. a XXXX. of for quarter access what XX% think for is assumption But we reasonable. going And is the commercial currently, report XX% of our INVELTYS the what we'll access quarter of is Medicare fourth I to -- end then, this year

and When year do eye, we commercial negotiate market INVELTYS, were is to able dry very gaining and this that the access start book get after be unrestricted And Medicare. we quickly XX-XX to as that expect with particularly business. we commercial launch, to within of we'll able

access unrestricted As for only the launch within after stated, three with XX% opportunity we there in demonstrates quarters to significant market, I gain is have market INVELTYS, payers commercial access year. already which the

Operator, over I you. hand it back to

Liana of our Wedbush Securities. Thank line the next comes from you. Moussatos And question with

is line Your open. now

you did effects What Liana. inclusion/exclusion for in reduce on the Kambiz do to symptom the is placebo this Hey, criteria? STRIDE X through

second more cases needs through of the question, take manifestation you Thank versus dry a you the can episodic patients of eye? us from so as suffering And severe much.

of we revisions small that the did example, during patients a phase. varied didn't your question, out symptoms, patients the before, to have On was group some run-in improve their that continued symptoms still baseline profiles to that was flares. And We've improvement to stable first a got said had quite of there significant the at and inclusion/exclusion screen bit a criteria in but they And for focus go terms were experiencing they in as once of run-in patients treatment that looked eligible were these about randomization. XX to patients their we the into were likely dramatically. phase, on

We keep patients a exclusion only those put X, handful a get criteria p-value an STRIDE together trial. added out when of of was couple we changes changes. There in those we the more. So But all the actually inclusion/exclusion X.XXX. about criteria added and we applied the an to to of -- those three a

So X. the those Take treatment basically those and that effect look a it screen patients trying created out didn't X, STRIDE as in on problem we're and those us impact for well. STRIDE at to

these that get So, were in STRIDE we're us optimistic a to we going changes are X. to point

patients like Todd need. really dry which eye the from of vast of The on about disease. thanks unmet episodic are end said very much is a medication and all actively estimate of a small patients. about the And as only patients of XX% as medicine, patients, chronic patients chronic even question manifestation Restasis. diagnosed XX% of Xiidra we on for their as an group suffer severe It's a And that up majority

as But called even by those significant patients breakthrough patients and have doctors. they're flares,

also product is could therapy be medicines with product patient's whole chronic for million be we because a course when huge actually their for disease, symptoms. not so EYSUVIS first-line on to you physicians and those get what a of expect our product that group that stays patients do the XX And medicine the more that eliminate use their of the even placed

breakthrough severity mild if they're the more, flares effect fact the patients. as those have patients the year many, disease their the In on drugs marginal of not more per of because and even of than

therapy likely would believe times think is you few the about use be EYSUVIS it the to way of So kind a this year. a we might very prescription first-line and

that progresses few between to your it a flares level, If disease moderate year. episodes. to six use your four we maybe treat a year maybe have think more times and And patients a a

this course, by varies severity. Of

as it though your expectation, be to as you'll breakthrough this baseline our rescue even patient, get you'll flares you when maintenance a have your keep a be use you and more is then And product you on EYSUVIS, may therapy. kind of severe

comes Thank you. Yi next from Instructions] Wainwright. of question the H.C. with our Chen And [Operator line

now is line Your open.

for in Chen. Hi. Faizzan Yi This is

your stable of sales or Have remain questions. quick rate expect you INVELTYS accelerate of going internal couple market Do penetration forward? in a to expectations? Just decelerate XQ met

gain great we're a significant been better the short-term help prescription we're that to increases to see the Yeah, that improvements going we'll believe of building each We written. costs improves, access. we price for currently We use while as of in prescription. to and access do the believe to amount ASP co-pay cover in continue cards continue that a prescriptions And amount have question.

a rate. very run on we're So nice

I into by mentioned XX% QX. earlier that think Todd increased about prescriptions QX

much higher and have to weeks will the believe seen probably scripts we a certainly weekly into continue data plateau couple last that XXXX. we the You've build that, from of new of

you missed Phase the this. Are thing Okay. track announce on eye still data XXXX? guys dry to other and Excellent. end may of X the I before have One

We slightly actually expected. that have enrollment first morning of to announced we the slower expect announced a this in data we than that had the we we've And quarter XXXX.

That's Thanks. Excellent. it Okay. for me.

you. Thank

questions showing turn you. no Iwicki, in call -- to I'm Thank you. time, this back not more queue. Mr. And the the at I'll

our we've the call. growth. EYSUVIS, just time very strong listening product for very feedback morning about physicians still in gains we appreciate everyone's and We're access prescription launch on from the We of Well, EYSUVIS, the excited this the set made, remain toward the hopefully And product and resubmission data a dry our few eye more our get to turning trial. then, with a or approved finish months that be a XXXX. make that product eye XXXX good to in able very early ideally clearly

really that call are a really most are severe patients have don't on products approved, mainstay Patients And really times first-line general to And eye market product earlier in absolutely to this to seem is don't disease. where not be physicians on mild-to-moderate and the their for those those and treat been for long, because but stay EYSUVIS, tolerated. they're very be for patients EYSUVIS dry few the the patients. course they a can whole really more stay be we've There huge on products to that of and said relegated believe to able well as products the few we untapped. appropriate their disease

we're our everyone final forward So the updating optimistic STRIDE hopefully we look X dry disease to about trial very and in future. in eye

that's your it Thank morning. you for operator. again this time And

Ladies participation. conference. for this today's you and Thank gentlemen, your concludes

at now time. lines disconnect may this your You