Good afternoon, ladies and gentlemen. Thank you for standing by and welcome to the Ocular Therapeutix's Fourth Quarter and Year-end 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. It is now my pleasure to turn the call over to Donald Notman, Chief Financial Officer of Ocular Therapeutix. Please go ahead, sir.

Thank you, Latif. Good afternoon, everyone, and thank you for joining us on our fourth quarter and year-end 2019 financial results and business 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 quarter and year ended, December 31, 2019. The press release can be accessed on the Investors portion of our website at investors.ocutx.com. Leading the call today will be Antony Mattessich, our President and Chief Executive Officer, who will provide a summary of our corporate developments and an update on the DEXTENZA commercial launch. Also speaking on the call today will be Dr. Michael Goldstein, our Chief Medical Officer, who will give an update on our clinical developments and pipeline. Following Michael’s remarks, I will provide an overview of the financial highlights for the fourth quarter and year ended 2019 before turning the call back to Antony for a summary and questions. For Q&A, we will also be joined by Scott Corning, our Senior Vice President, Commercial. As a reminder, during today’s call, we will be making certain forward-looking statements. Various remarks that we make during this call about the company’s future expectations, plans and prospects, constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of the most recent Annual Report on Form 10-K, which was filed with the SEC this afternoon March 12, 2020. In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, except as we are required to do so by law even if our views change. I will now turn the call over to Antony.

Thanks, Donald, and thank you everyone for joining the call today for an update on the events of the quarter, including an update on the company, the commercial launch of DEXTENZA, and on the recent advances in our pipeline. The launch of DEXTENZA remain the key focus and we’re encouraged with our progress. Importantly, DEXTENZA is performing well and patients as well liked by surgeons and is getting very good feedback from the market. And all the key launch metrics signal growing momentum. For those who may be new to the Ocular, DEXTENZA is a bioresorbable, intracanalicular insert that delivers a 0.4 milligram tapering dose of preservative-free dexamethasone for up to 30 days. DEXTENZA is approved for the treatment of ocular inflammation and pain following ophthalmic surgery. The product is the first of a novel dosage form and route of administration that has the transformative product for both patients and physicians. For patients, DEXTENZA offers the convenience of a full course of steroid treatment and a single preservative-free insert; for surgeons, it puts control of the post-surgical steroid regimen back in their hands by mitigating the risk of patient noncompliance. We started the commercial phase of our DEXTENZA launch in July 2019 with a temporary C-code and pass-through payment status, which assured reimbursement for Medicare Part D patients treated in ambulatory surgery centers or ASCs and hospitals. In October, we received a major boost when our permanent J-Code became effective. [Indiscernible] of the J-Code enhance our ability to sell in ASCs and hospitals, it also allows for permanent product coding in the office setting. Today we're in the market with 28 key account managers or CAS, focused on selling DEXTENZA at the high volume ASVs in hospitals. Coupling the work of our camps and a critical element to gaining penetration…

Thanks, Anthony. DEXTENZA represents a franchise opportunity for Ocular and for the potential treatment of a number of Ocular surface diseases. As Anthony mentioned, we have just completed dosing patients in a Phase 3 clinical trial of DEXTENZA, in the treatment of ocular itching associated with allergic conjunctivitis. The current study is a multicenter, one-to-one, randomized, double-masked, placebo controlled Phase 3 clinical trial that enrolled 96 subjects. The study's primary objective is to evaluate the safety and efficacy of DEXTENZA versus a placebo vehicle insert using the modified conjunctiva allergen challenge model for the treatment of ocular itching associated with allergic conjunctivitis. The trial is designed to assess the effect of DEXTENZA compared with the placebo and allergic responses using a series of successive allergen challenges over a 30-day period. The primary efficacy endpoint being evaluated in this study is ocular itching when we following insertion of DEXTENZA. We anticipate data from this trial in the second quarter of this year. If successful, this trial will be part of a supplemental NDA submission to the FDA to expand the potential indication of DEXTENZA for the treatment of ocular itching associated with allergic conjunctivitis in the outpatient setting. As important as the indication would be to expand the growth of DEXTENZA franchise, the potential approval would be the first indication not directly associated with surgery and enable us to use to DEXTENZA more widely within the physician office. The ocular conjunctivitis, we are being pleased with the interest from the ophthalmic and optometric communities. The interest points to the versatility of the products and the opportunity to potentially study DEXTENZA in other areas that treat off their surface diseases beyond those cataract inflammation and pain. One metric of the strong indication is the number of requests for an investigator initiated trials…

Thanks, Michael. Gross product revenue net of discounts, rebates and returns, which the company refers to as total net product revenue was $2.3 million for the three months ended December 31, 2019 reflecting 172% sequential increase over the third quarter. Net product revenue of DEXTENZA in the first quarter of 2019 -- in the fourth quarter of 2019 was $1.6 million versus $0.3 million in the third quarter and reflects a 433% sequential increase. Total net product revenue for the fourth quarter of 2019 also includes net product revenue of $0.7 million from ReSure Sealant. Overall, net product revenue for the year ended December 31, 2019 was $4.2 million versus $2.1 million for 2018 and primarily reflects the addition of DEXTENZA sales beginning in the second quarter of 2019. Research and development expenses for the fourth quarter were $10.1 million versus $10.3 million for the comparable period in 2018 and primarily reflects an increase in on that allocated costs and clinical trial costs associated with the Phase 3 DEXTENZA, the allergic conjunctivitis trial and the Phase 1 trials for OTX-TIC and OTX-TKI offset by a significant reduction of the Phase 3 clinical trial costs associated with OTX-TP. Overall, R&D expenses for the full year increased $4.2 million to $41.1 million from $36.9 million in 2018, reflecting increased unallocated costs and the trend in clinical trial expenses mentioned above. Selling and marketing expenses for the fourth quarter were $7.1 million as compared to $2.3 million for the same quarter in 2018. This increase relates almost entirely to support of the commercial launch of DEXTENZA, driven primarily by the full impact of the hiring of new members of the commercial team, including key account managers. field ramp managers and medical sales liaisons beginning in the second quarter of 2019. Overall selling and…

Thanks, Donald. So before opening the call for questions, let me do a quick summary. We're pleased with the building momentum and momentum under the DEXTENZA launch. And my helpful CFO has told me that I misspoke earlier about the only important metric in the launch of DEXTENZA, which is the sales of billable units from the specialty distributor into the ACS and hospitals. To repeat what I guess I should have said, at time was the growth -- month over month growth in December was 9% over previous months. In January of this year was 26% over previous months. And then February it was 34% over the month Before that. We start off in March with a very strong growth rate and we expect to be able to reach in year 2000 billable inserts into the 80s and hospitals for the month of March. So the momentum is increasing, and we're very excited about how that is working out in the marketplace. We are also anticipating a Phase 3 read out for DEXTENZA, an allergic conjunctivitis in the second quarter that could potentially extend DEXTENZA franchise into Ocular surface disease in our Phase 1 glaucoma program with intracameral OTX-TIC, we are seeing both the magnitude and durability of effect that support a product that could become standard of care in the treatment that elevated to drop the pressure. Finally, and most importantly, we have seen the evidence of biologic activity in our OTX-TKI program, keeping alive our dream and developing a true next generation treatment for wet AMD. With that, I'll turn the call over for questions.

Thank you, sir. [Operator Instructions] Our first question comes from the line of Joe Catanzaro of Piper Sandler (sic) [Jaffray]. Your line is open.

Hey, guys, thanks for taking the questions and congrats on the progress. I guess first just a couple on DEXTENZA. And the first one there and maybe it's too early to say, but you seeing or hearing patients deferring their cataract procedures because of the coronavirus situation?

To date, we haven't heard anything. What we are hearing -- sorry, to hear now, is that hospitals are starting to not have elective surgeries to delay the delay elective surgeries. So we haven't seen anything yet so far in terms of what the number of procedures that are being done, but we will monitor it very, very closely and clearly if it becomes a very important driver for our business in the future.

Okay, great. And then another one quick on, on DEXTENZA. I guess, maybe, can you give a little bit of a sense of how ordering patterns have changed over time for those AFSC that have been ordering accounts for six plus months, both in terms of maybe size of orders, timing of orders.

Yes. This is Scott. Good morning. I'll take that. I mean, over time what we've seen, Joe, is more accounts ordering and those orders after gaining reimbursement confidence, especially starting in the fourth quarter with the [indiscernible] on board, really put the trust in reimbursement. And so order sizes got larger and we've maintained a nice high reorder rate through this period. So as more accounts have come on board, we expect reorders from those accounts because as we've said all along, the product is so well received that people are having a quite a positive experience with it.

Okay, great. And then maybe one quick one on OTX-TKI. So the press release notes that you guys are going to look one more additional dose, just wondering if you could say what those that would be and whether there are any formulation changes that would need to happen beyond just putting more drug in the insert. And then maybe a bit longer term, once you establish the recommended does what you envision as the next steps for this program?

Hi, Joe. This is Mike. Thanks for the question. So the next we have a protocol amendment that we're working on to go to the next higher dose would be -- which would be 600 micrograms. So to do that, we would actually not need another, we would not need a population change. We could do that with the current formulation we have. And so once we have the data from the full trials and have been able to assess activity both as monotherapy and in combination in some way with anti-VEFF drugs and understand durability, well then develop a Phase 2 program based on that information.

Okay. Perfect. Thanks for taking the questions.

Thank you.

Thank you. Our next question comes from Dane Leone of Raymond James. Please go ahead.

Hi. Thank you. Hey, guys. It sounds like you may have been hanging out at the Biogen crew too much. I just want to ask on allergic conjunctivitis. You have -- what -- can you just remind us of the regulatory pathway for this one? So you'll have the readout of now a second Phase 3 in the second quarter, correct? Just trying to remember what you guys think the pathway is for Ocular itching.

Yes. Hi, Dave. So just like with any indication you needs two adequate and well-controlled trials. The -- so in the -- with the indication in allergic conjunctivitis, you can get medication for Ocular itching. And there are basically two pathways you can use. One is to use the conjunctivitis allergen challenge model, where allergen is placed directly on to the eye, and the other is to do a true environmental study. Of all the drugs that are approved in the U.S. almost all of them are going to approved using the [indiscernible] Allergen challenge model and that’s the model we’re using. So in that model, you put the allergen on the eye and you then assess itching symptoms at various time points after the allergen goes on the eye. And you need to show statistically significant improvement compared to the placebo. And the difference needs to be clinically meaningful. And the FDA defines clinically meaningful as a half unit at all time points measured in a unit difference at a majority of time points.

Okay. And so you'd based on the results that you'll have and because the other Phase 3 study, correct me if I'm wrong with clear the statistical endpoint on itching, but not [indiscernible] readiness.

That’s correct.

So this one, if this one hits on Ocular itching, then that will complete the package?

That's correct.

Okay, great. So basically after you get the data, you could get the package together and then submit the supplementary NDA for us?

Yes, that's correct. So the question is, how do you go-to-market in the context of DEXTENZA currently. I mean, where are the new touch points that your team has to work on? Can you price it the same? Is there how is the reimbursement coding going to work? Anything you guys can highlight from that, I think, would kind of help our models. Thank you.

Sure. I mean, the basic touch points that we were focusing on at launch really was around the [indiscernible] segment surgeon and getting them to understand the benefit of this product and the patients. We did work with ASCs in terms of getting them to understand the proper reimbursement pathways and being able to select our patients for whom they could get reliable and timely reimbursement. What the -- the area that we’re focusing on more going forward, we continue to focus on the [indiscernible] surgeon. But what we can do is we can do a lot more for the ASC's themselves and particularly for the consolidators of the ASCs. And that's an area where we think we can really leverage our business going forward, now that we've built up demand with the entire segment surgeons. So what you don't want to do is you don’t want to open that door with the ASC and get them excited about using and then have no demand within that ASC we have a lot of pent-up demand and physicians would like to use it, being able to open that door with the ASCs is going to be a major opportunity for us moving forward.

How would someone get referred to DEXTENZA in this indication? Would it be the PCP or ...?

It's generally the choice of the [indiscernible] segment surgeon to use the product or not to use the product [indiscernible].

Yes, I mean -- so it's a great question, Dane. So we typically do use steroids in cases of allergic conjunctivitis that have failed antihistamine/mast cell stabilizers, which are sort of standard of care. And as you are probably aware, the largest antihistamine/mast cell stabilizer, although haven’t been just went over the counter, I believe this month. So people coming to our offices, my office, they could walk in and they could try antihistamine/mast cell of their own. They could have come through their PCP, they could come through optometrist, they could come through general ophthalmologist, or a big source as they come through allergists. So a lot of different ways, but they end up in the -- generally in the office of an [indiscernible] segment surgeon or accordion specialist, which is, by the way, the exact same population that we're calling on for DEXTENZA in the surgical field. So there's a high overlap in these groups of people -- groups of the physicians.

I think one of the important things to understand about the AC indication is that it is our entree into the eye color surface disease in the ophthalmologist office, which is a much larger opportunity over a longer period of time than the surgical product alone would be. So as we look at where we would move this product over time, allergic conjunctivitis is a great initial indication. We're very excited by the results of the STRIDE program for Ocular. If that would lead to a -- an approval for Ocular product in dry eye, having a steroid approved and drive therapy would be very exciting for I think the marketplace would also open up a potential pathway for us to be able to move into an area where DEXTENZA would be ideally suited because there are no preservatives in DEXTENZA. There's punctual occlusion, which is already a very common treatment for dry disease. There's non-volatile dosings. You have a consistent dose of dexamethasone, it's also non abusable, which is a huge, huge factor in the favor of a product like DEXTENZA. So AC is part of stepping stone, in out itself it's a valuable indication, but the larger area of ocular surface disease, particularly dry eye disease, is something where we see real value in the product.

Okay. Thank you very much.

Thank you.

Thank you. [Operator Instructions] Our next question comes from the line of Yi Chen of H.C. Wainwright. Your line is open.

Thank you for taking my question. Would you be able to provide us with the number of inserts used by ASC's since launch?

We certainly could, because the present [indiscernible] presentation that we showed actually showed the billable units by months. So in that -- in there the numbers were there. So you could add those up and you would then have the number of -- I don't remember whether it included all the months that we've been on the market, but that was -- those were definitely the lion share of the billable units that have been sold into the ASCs and hospitals.

But right now, we're in billable units over 6,000 in samples were almost at 10,000. But it is important to note that we were sampling almost exclusively at the beginning and over time, the number of samples use has dropped precipitously as sales have increased. So in the -- by the fourth quarter, and especially in this quarter, sales by far outstripped samples and samples are used simply as a training element at the very beginning of customer taking the product.

Thank you. Second question, could you remind us the gross price of DEXTENZA currently and how much rebate or discount you've been giving to either end user or distributors?

We haven't been using rebating as a driver for the business to date. The whack price is $538 per insert. We've had some issues with the timing of our average selling price. We’ve made ASCs whole on what that is, but it has not been a driver of our business in any way, shape or form up until now.

Thanks. Final question for commercialization, for the DEXTENZA for the allergic conjunctivitis indication, would you need a different sales team or do you plan to start with the existing team?

We would start with the existing team. As Mike mentioned, the people who are treating in the office and our sort of refractory setting for allergic conjunctivitis with something like DEXTENZA, would be the same patient, with same physician population that we're currently seeing for the surgical products. Clearly, over time, as we move into ocular surface disease and more deeply into the offices of not only the ophthalmologists, but the optometrist, that would require a larger field structure.

Thank you.

Thank you. As I show no further questions in queue, this does conclude today's conference call. Thank you for participating. You may now disconnect.