Ocular Therapeutix, Inc. (OCUL) Q2 2020 Earnings Report, Transcript and Summary

Good Morning, ladies and gentlemen. Thank you for standing by, and welcome to the Ocular Therapeutix Second Quarter 2020 Earnings Conference Call. [Operator Instructions]. It is now my pleasure to turn the call over to Donald Notman, Chief Financial Officer at Ocular Therapeutix. Please go ahead, sir.

Thank you, Kevin. Good morning, everyone, and thank you for joining us on our second quarter 2020 financial results and business update conference call. This morning, before the open, 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 ended June 30, 2020. 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 second quarter before turning the call back over to Anthony for a summary and questions. As a reminder, on today's call, certain statements we will be making may be considered forward-looking statements for the purposes of the 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. And 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 most recent Form 10-Q on file with the SEC. I will now turn the call over to Antony.

Thank you, Donald, and welcome, everyone, to Ocular Therapeutix's Second Quarter Earnings report. I'm pleased to report that despite the challenges caused by the global pandemic, it has been a very productive quarter for Ocular as we have positioned the business well for the second half of the year. As I've said in past calls, 1 of the great benefits of Ocular Therapeutix is that despite being a small company, our technology platform allows us to advance many programs across several of the most valuable segments in ophthalmology such as retinal diseases or wet AMD, glaucoma, ocular surface disease, including dry eye disease and allergic conductivities; and post-surgical inflammation and pain. Beginning with the largest of these value drivers, wet AMD, the global market for retinal diseases was approximately $13 billion in 2019 and is estimated to grow at 11% over the next 5 years. A key driver in the treatment selection for wet AMD is durability. The longer a treatment works to keep a patient without fluid on a single injection, the greater attractiveness of the treatment in general. Current standard of care typically has patients needing reinjection every 4 to 8 weeks. In the space of the last few quarters, OTX-TKI, our wholly-owned intravitreal tyrosine kinase inhibitor eluting implant designed to deliver up to 6 months of therapy with a single injection, has shown a favorable signal in the clinic, and we believe has the potential to set the standard of care for durability of treatment for wet AMD. We look forward to providing further clinical updates on this key program in the fall. In addition to OTX-TKI, Occular is working on a second product for wet AMD with our partner, Regeneron, to develop an extended delivery suprachoroidal injection formulation of the FDA-approved VEGF trap aflibercept. As many of you know, this has been a long-standing collaboration. But what many may not know is that in May, we successfully amended the collaboration whereby Regeneron will compensate Ocular Therapeutix on a cost-plus basis for all work performed under the preclinical portion of the collaboration. There's no change to the back-end economics of the original agreement to provide for potential option exercise fees and milestone payments of $305 million and tiered escalating royalties from the high-single-digits into the low- to mid-teens. We are thrilled to continue our work with Regeneron. We are more excited than ever about the potential value this collaboration could bring to Ocular. Moving to glaucoma. A market worth nearly $5 billion in global annual sales where possibly the greatest unmet need is for a product that ensures better patient compliance. As we mentioned on the call last quarter, we have confidence in the regulatory path for OTX-TIC, our travoprost-eluting intracameral implant, and we believe our hydrogel platform can potentially offer additional safety and durability benefits. With the magnitude of IOP lowering at least as good as prostaglandin drops given in a clinical trial setting and a potential durability of 6-plus months from a single insert, we believe OTX-TIC has the potential to become standard of care for treatment of elevated IOP in glaucoma. For the treatment of ocular surface diseases such as dry eyes and allergic conjunctivitis, we have seen positive developments this quarter. In the treatments of dry eye disease, by far, the largest segment of ocular surface disease, we now have 2 products. OTX-CSI is our cyclosporine intracanalicular insert for the treatment of chronic dry eye, and we have added OTX-DED, a product candidate designed to treat episodic dry eye disease. With the addition of OTX-DED, along with OTX-CSI, we now have 2 potentially transformative products, one to treat chronic forms of the disease and the other to treat acute disease, thereby effectively covering the broad spectrum of the approximate $5 billion dry eye disease market. In allergic conjunctivitis, we remain on track to file our sNDA application by the end of the year. Notably, allergic conjunctivitis could represent DEXTENZA'S first ocular surface disease indication and be the first indication used primarily in the ophthalmology office environment. Now turning to DEXTENZA for the treatment of post-surgical inflammation and pain. On the sales side, we reported $1.4 million in DEXTENZA net product revenue for the second quarter. After a near total shutdown in cataract surgeries in April, DEXTENZA bounced back strongly and recorded a record month in June. Billable inserts to Ambulatory Surgery Centers and hospitals, our key metric of end market demand, increased from only 64 inserts in April, when cataract volumes were down 97% nationally, to nearly 2,300 inserts in June, exceeding by 40% the previous pre-COVID monthly high and breaking the $1 million threshold in market in a calendar month for the first time, a threshold we cleared again in July. Despite of the fact that many ASCs and HOPDs are still either nonoperating at capacity or operating at reduced capacity, the record month suggests that DEXTENZA has earned an increased share of cataract volume in the post-COVID environment. We believe the market sees our hands-free alternative to drugs as compelling, and we expect to see this momentum carrying over into the third quarter. Adding to our confidence in DEXTENZA sales are 2 potential accelerators as we head into the second half of the year: first, we initiated a new rebate program that is being well received, especially by the large, typically private equity-backed ASC consolidators that now dominate the cataract space; secondly, we recently announced that 2 Medicare administrative contractors, or MACs, Novitas and First Coast, have established physician fee schedules for reimbursement of procedure code 0356T, the CPT code for the placement of a drug-eluting intracanalicular insert, including DEXTENZA. What this means is that physicians inserting DEXTENZA can expect a professional fee payment of between $95 and $115 for each insertion, which is separate from the reimbursement for the drug itself. First Coast and Novitas cover nearly 30% of all Medicare beneficiaries. In addition, 4 of the remaining 5 MACs have retired their noncoverage policies for 0356T, and we eagerly await the publication of fee schedules from them. Overall, we think these goals represent significant catalysts that, along with a return to normal -- more normal cataract volumes will further help us build on momentum we are seeing with DEXTENZA. In summary, Ocular Therapeutix is making important strides in the development of its portfolio, but is also being helped by changes in the competitive market and the overall environment. As we look at Ocular's prospects, even a few quarters prior, we see a different outlook today. Across the spectrum of wet AMD, glaucoma, dry eye disease or allergic conjunctivitis and the prevention of postsurgical pain and inflammation, our products have progressed substantially. With that, I will now turn the call over to Mike Goldstein.

Thanks, Antony. Let me begin with an update on our back-of-the-eye program. OTX-TKI is a bioresorbable hydrogel implant containing axitinib which has anti-angiogenic properties and is delivered by intravitreal injection and designed to extend the durability of treatment for wet AMD. It's being developed to treat patients with wet age-related macular degeneration and other retinal diseases, such as diabetic macular edema and retinal vein occlusion. We continue to dose subjects in a multicenter, open-label dose escalation Phase I clinical trial in Australia that is designed to assess the safety and tolerability of OTX-TKI as well as to assess preliminary biological activity by measuring anatomical and functional changes. The first 2 cohorts are now fully enrolled, and a third cohort is currently enrolling. The data demonstrates that OTX-TKI in both cohorts is generally well tolerated with a favorable safety profile with no serious ocular adverse events reported to date. While still early, initial interim data suggests that there is a dose response as evidenced by a greater clinical response in the second higher-dose cohort compared with the first lower-dose cohort, and higher dose cohort, OTX-TKI, several treated subjects showed a decrease in retinal fluids as measured by decreases in intraretinal and/or subretinal fluid with the longest treated subject with wet age-related macular degeneration now up to 7.5 months without needing anti-VEGF treatment. Additionally, some patients in cohort 1 who will require frequent anti-VEGF dosing prior to enrollment in the study were shown to potentially not need rescue therapy for as long as 10 months after being treated with OTX-TKI. While the drug's product profile is still emerging, we are pleased with the interim data that suggests intravitreal injection of a TKI can potentially reduce intraretinal and/or subretinal fluid. In terms of upcoming milestones for OTX-TKI, we're enrolling a third cohort of patients where half the patients will be dosed at 600-micrograms and half of the patients will receive a 400-microgram dose and an anti-VEGF induction -- injection. We plan to give an update on this study at a medical conference in the fall. We are also on track to submit an exploratory IND to the FDA by the end of the year and start dosing in the United States for wet AMD, DME and retinal vein occlusion. Moving to our glaucoma program. OTX-TIC is a bioresorbable, travoprost-containing hydrogel implant delivered via an intracameral injection designed to deliver extended duration of IOP reduction. We continue to enroll subjects with primary opening of glaucoma or ocular hypertension in a Phase I prospective, multicenter, open-label dose escalation clinical trial in the United States to evaluate the safety, biological activity, durability and tolerability of OTX-TIC. Data from the first 2 fully enrolled cohorts showed decrease IOP in patients receiving OTX-TIC, that was comparable to current standard of care, topical travoprost in place in the non-study eye. The data showed that the IOP remained consistently decreased for an extended duration of 6 to 9 months in many subjects for the single implant and 1 subject had IOP control for over 21 months for the single implant. In terms of next steps, we have completed enrollment in cohort 3, same dose as cohort 1, but using it more rapidly, degrading hydrogel implant and are currently enrolling cohort 4, which is a smaller implant at a lower dose. We are targeting initiating a Phase II clinical trial for OTX-TIC in the first half of 2021. Next, we have some exciting programs to discuss in the area of ocular surface diseases, which includes the large potential markets of dry eye and allergic conjunctivitis. For dry eye, we have 2 programs. OTX-CSI is addressing dry eye patients with chronic disease, and we recently announced, and we have a new program, OTX-DED, targeting patients with episodic or dry eye flare. We've also completed Phase III trials evaluating DEXTENZA for the treatment of patients with allergic conjunctivitis. OTX-CSI is an intracanalicular insert, which combines 2 modalities commonly used to treat dry eye patients. OTX-CSI is designed to release cyclosporine for approximately 3 months to the ocular surface and to provide punctal occlusion over that time period. By releasing low dose of cyclosporine over an extended duration of time, OTX-CSI has the potential to minimize what we believe is 1 of the biggest patient complaints about topical cyclosporine, stinging and burning. By combining drug release with punctal occlusion, OTX-CSI's potential to provide more rapid onset of symptomatic relief for patients with cyclosporine alone. For OTX-CSI, we have recently completed enrollment of the Phase I clinical trial. Patients have been treated with OTX-CSI for a number of weeks. The safety committee has met and was supportive of moving to Phase II clinical trials. We remain on track if the data from the Phase I clinical trial is favorable to begin enrolling the randomized double-masked placebo-controlled Phase II clinical trial by the end of the year. We are very excited about the potential for this hands-free option in helping dry eye patients receive the benefits of cyclosporine over a rate with a potentially greater tolerability and more rapid clinical benefit compared to therapies currently available on the market. Our newest product candidate, OTX-DED, is a low dose intracanalicular insert of dexamethasone for the treatment of patients with episodic dry eye disease. While it incorporates the same active drug as DEXTENZA, this is a new product candidate with a lower dose and smaller insert size. Many of these dry eye patients experience episodic flares of their signs and symptoms, which we believe are likely related to inflammation. Currently available topical steroids are used off-label for dry eye patients and have preservatives, which can result in ocular surface toxicity. This may also lead to adverse events such as elevated -- they may also lead to adverse events such as elevated IOP or cataracts if used chronically. OTX-DED potentially offers these patients the opportunity to be treated with a non-abusable physician-administered, preservative-free and hands-free steroid therapy. Because OTX-DED has a lower concentration of dexamethasone compared with DEXTENZA, we are able to leverage the DEXTENZA safety package generated to date. We plan to file it in an investigative new drug application with the U.S. FDA, evaluating OTX-DED in dry eye disease by the end of 2020 with the plan to move directly into Phase II clinical trials in patients with dry eye disease. In allergic conjunctivitis, we remain on track to submit sNDA by the end of 2020. Overall, we believe the data package highlights a compelling product profile targeting unmet need that could potentially change the current standard of care for the onetime, long-acting, hands-free therapy for treatment of ocular itching associated with allergic conjunctivitis. This sNDA, if approved, would represent our first in-office indication. Lastly, before turning the call over to Donald, I would like to add that there continues to be significant interest and excitement in evaluating DEXTENZA in many areas of unmet need with over 70 investigator-initiated trials requests submitted. We currently have 14 IITs that are active in enrolling subjects, including 2 that have completed enrollment. I would now like to turn the call back over to Donald.

Thanks, Mike. The gross product revenue, net of discounts, rebates and returns, which the company refers to as total net product revenue, was $1.6 million for the 3 months ended June 30, 2020. Net product revenue of DEXTENZA and ReSure Sealant in the second quarter were $1.4 million and $0.2 million, respectively. Research and development expenses for the second quarter were $8 million versus $9.4 million for the comparable period in 2019 and primarily reflect the decrease in personnel and unallocated costs due to the organizational restructuring announced in November of 2019. Selling and marketing expense for the second quarter was $6.2 million as compared to $7.2 million for the same quarter in 2019, stemming primarily from a decrease in travel, consulting, marketing and conference expenses as a result of the COVID-related slowdown in the commercialization of DEXTENZA. Finally, general and administrative expenses were $5.1 million in the second quarter of both 2020 and 2019, with a modest increase in facilities expenses being offset by decreased professional costs in Q2 2020. With respect to financial results for the second quarter, we reported a net loss of $36.6 million or a loss of $0.64 per share on a basic and diluted basis. This compares to a net loss of $24.5 million or a loss of $0.57 per share on a basic and diluted basis for the same period in 2019. The net loss for the second quarter included $2.5 million in noncash charges for stock-based compensation and depreciation compared to $2.3 million for the same quarter in 2019. In addition, the net loss for the quarter includes a noncash charge of $17 million related to the change in the fair value of the derivative liability associated with our convertible notes, primarily as a result of the significant increase in our stock price as compared to the prior quarter. As of August 1, 2020, the company had approximately 63 million shares outstanding. As of June 30, 2020, the company had $84.3 million in cash and cash equivalents versus $48.2 million at the end of Q1 2020. The cash balance benefited during the second quarter from $48.3 million in net proceeds generated from a public offering stock in May and also from net proceeds of $1.7 million from the sale of common stock under the company's 2019 Sales Agreement under which the company may offer and sell its common stock having aggregate proceeds of up to $50 million from time to time. Approximately $1.3 million of common stock remains available to be sold under the 2019 Sales Agreement. Based on current plans and including related estimates of anticipated cash flows, from DEXTENZA and ReSure Sealant product sales and cash outflows from operating expenses, the company believes that existing cash and cash equivalents as of June 30, 2020 will enable the company to fund planned operating expenses, debt service obligations and capital expenditure requirements for, at least, the next 12 months. This cash guidance is subject to various assumptions including those related to the severity and duration of the COVID-19 pandemic and expect a continued rebound in cataract surgeries beginning in the third quarter and other assumptions related to revenue expenses associated with the commercialization of DEXTENZA, variable expense reductions and the pace of research and clinical development programs as well as other aspects of the company's business. This concludes my comments on the second quarter financial results, and I would like to turn the call back to Antony for some summary thoughts.

Thanks, Donald. So before opening the call up to questions, let me do a quick summary. In wet AMD, the performance of OTX-TKI in the clinic continues to support a product profile that could potentially set a new standard of care for durability. We look forward to providing further clinical updates later this fall. In glaucoma, OTX-TIC continues to support a product profile that could potentially set the standard of care for patient compliance. We plan to advance that program into a Phase II clinical trial in the first half of 2021. In ocular surface disease, for OTX-CSI for treatment of chronic dry eye disease, we have completed enrollment in Phase I, and if successful, plan to enter Phase II before year-end. For OTX-DED, our newly announced treatment for acute dry eye, we plan to file a Phase II-enabling IND before year-end and if accepted, enter Phase II shortly thereafter. Beyond dry eye disease, we remain on track to submit our sNDA for DEXTENZA and allergic conjunctivitis by the end of the year. For DEXTENZA, in postoperative inflammation and pain, we have seen accelerated momentum in sales uptake in June and now in July as well, and are optimistic such momentum will continue in the quarter. With the added benefits of a new rebate program and Medicare reimbursement of the procedure associated with DEXTENZA, we look forward to an even greater growth in the future. So in summary, it has been a very productive quarter, and we look forward to continued productivity in the second half of the year with a number of key catalysts within our pipeline and continued momentum with DEXTENZA. With that, I will turn the call over for questions.

[Operator Instructions]. Our first question comes from Joe Catanzaro with Piper Sandler.

Congrats on the progress, especially given the backdrop. Maybe first, just a couple on TKI. The data update that we expect to see later this year, should we expect just an update for the first 12 patients in the first two cohorts? Or is there potential to see initial data from the patients treated in the third cohort? And then maybe as a follow-up to that, what are the plans once the exploratory IND in the U.S. is cleared? Are the next steps there dependent on what you've seen in cohort 3? Maybe you could just walk us through how the development program evolves once you can dose in the U.S.

Thanks, Joe. This is Mike speaking. So in terms of your first question, we plan to give an update on TKI in the fall. There are several meetings we have targeted. As you know, we will give an update on where we are with the first 12 patients in cohort 1 and cohort 2. We're currently actively enrolling cohort 3 and depending on how enrollment goes, and if we have something meaningful to say, we may be able to give an update on cohort 3. We're not committing to that at the moment. As far as the exploratory IND, as you know, the plan is to file the exploratory IND in the U.S. by the end of the year. That exploratory IND would allow us potentially to treat patients with AMD and as well as diabetic macular edema and retinal vein occlusion. Concomitantly, we're working on some changes to the formulation in terms of coming for the higher-dose implants. And working on the tox studies, which will be going on in parallel. And we would then do the updates of the formulation, do the necessary tox work and then look to file -- look to start a Phase II trial.

Okay. Got it. That's helpful. Maybe just a follow-up and one on DEXTENZA here. Do you guys have visibility into the extent of physician utilization of 0356T? If so, what have you seen since the update of those 2 MAC fee schedules? And is 0356T something you guys can specifically promote too?

It's still a little early to say about the physician utilization. There was some resistance to cope for 356T before it had consistent reimbursement. Simply because of the way the accounting worked in some of the ASCs, they didn't like to have non-payments, even though there was no cash outlay. But what we're getting now is it's really accumulating evidence of reimbursement across the board. And we're seeing certainly reimbursement within First Coast and Novitas. But we're also seeing some reimbursements in the other -- sorry, in the other MACs that have yet to issue a fee schedule. We are collecting as much data as we can. Clearly, we are not going to market this to -- directly to physicians. This is something that they should be aware of through their MACs and through their ASC administration. And it's a standard part of what we recommend when using DEXTENZA that they should code for 356T as well, but we're not going to coach them on how to get reimbursement.

Our next question comes from Yi Chen with H.C. Wainwright.

My first question is, could you give us some additional color on the time line of development for those 2 dry eye candidates and which product could potentially reach the market first?

Yes. I'll start off and then hand it off to Mike for maybe a more specific discussion about how to bring these forward. DED, the product with dexamethasone that is, at the moment, going to enter Phase II probably slightly behind CSI, given the nature of the trials, and the shorter duration of treatment, it's probably likely to overtake CSI in its development. So even though it's yet to file its IND in the states, it is probably going to be the 1 that reaches the market first. That being said, there's a number of different opportunities we can follow in terms of how we bring these to the market, particularly because we have active comparators or would imagine we would have active comparators in both of these indications. So I'll hand over to Mike to talk specifically about how we would conduct those trials going forward.

Yes. Thanks, Yi. So as Antony mentioned, so cyclosporine, the CSI program is currently active. We've completed enrollment for the Phase I program, and we're on track to start the Phase II program by the end of the year. That's a product that will release the cyclosporine over approximately 3 months. And it's really targeted the more typical dry eye, which is the chronic disease state. And so we would need to do long-term safety and all those sorts of things. The DED program is using a lower concentration of the dexamethasone steroid, and it's really targeting this sort of acute onset of dry eye or dry eye flares. The plan there is to file the IND with the FDA by the end of the year and then move rapidly into clinical trials. And we believe based on what we already know about this product, based on what we've learned from DEXTENZA, that we could move right into Phase II program in dry eye patients with these acute flares. The target there would be to have a product that lasts less than a month, and it would not be chronic dosing. So as Antony mentioned, although the DED program will be second in terms of work when we start the trials, it should rapidly take up -- get ahead of CSI. And there, we don't need to do long-term dosing, meaning dosing for over a year. So the ability to get to market is going to be much quicker with the DED program.

Got it. And just to follow-up, for DED, do you need to meet both sign and symptom endpoint -- symptom endpoints in a pivotal trial? And for CSI, do you only need to meet the Schirmer's test endpoint in a pivotal trial?

Yes. Great question. So in general, for both indications for dry eye, we are targeting a sign and symptom endpoint into adequate and well-controlled trials. There are some exceptions, 1 of which, is -- as you point out, is around Schirmer. But that would not be the target. The target would actually be to get signs and symptoms into adequate and well-controlled trials.

[Operator Instructions]. Our next question comes from Dane Leone with Raymond James.

Congrats on the progress of the CSI and DED. Actually, just wanted to ask maybe a slightly different question. How -- what's actually the comparative bar for these studies, what you would need to show versus, obviously, widely available drops? And how you think about that? And what's been the feedback from your discussions with clinicians, of what they would want to see to think about either in the chronic or the acute setting to use an insert?

Thanks, Dane. So it's a great question. So from a regulatory perspective, there are 2 potential pathways for comparators. So the typical pathway has been to show statistical significant superiority compared to a vehicle comparator. The other -- and that's been sort of the traditional way that drugs in the dry eye space have gotten approved. Now that we have approval in the United States for 2 drugs, at least in the chronic space, cyclosporine and lifitegrast, there is the opportunity to go head-to-head with an active comparator and show noninferiority. So that would apply to OTX-CSI. In terms of OTX-DED, there are no drugs currently approved in that acute or dry eye flare space. Now there may be a drug that gets approved later this year, and we think that's likely. And if so, then that potentially serves as an active -- in an active comparator type trial.

Just following up and saying what physicians are looking for. I mean, clearly, on the cyclosporine side is looking for something that has less burning and stinging. And it has a more immediate onset of action. And we feel that the CSI would be able to answer both of those issues. And on the DED side, being able to treat a flare with a steroid, they would be looking for a product that would be non-abusable. And in our case, we're physician-administered and is a non-usable formulation of a steroid, also something that wouldn't have a preservative, which would also be the case for CSI. But I think additionally, 1 of these things that both of these products would offer that is unique in the environment currently, is that currently, there is no opportunity for revenue generation for physicians and physicians' offices in the drug treatment of dry eye or dry eye flare. With CSI and DED, both of them, obviously, would use 356T for being deployed, so there's an opportunity to code for an additional procedure. And they would be buy-and-build products that would be purchased by the physician's office, which would create opportunities from a rebate standpoint and also potentially from a margin standpoint. So we think that this would hit not only a hole in the market in terms of the efficacy that's needed compared to products that are on the market or will shortly be on the market. But also in that it creates a whole new opportunity for a revenue generation from -- for physicians.

Great. And if I could just ask 1 follow-up on that since you brought it up. How do you -- from your market research, how do you think the actual consumer would feel about an insert? Do you -- are there certain features of either compliance or utilization that's been experienced with the drops that either there's a convenience angle or just actually treatment of fact angle that's apparent and kind of understood by the clinical community? Or would that require more education on your part?

Well, it's pretty universal that any time you do research on drop therapies that people don't like drops. So that's a fairly easy thing to demonstrate. The second thing is, certainly as it relates to cyclosporine, the burning and stinging of the drops that's associated with having the pulse dose. So that is pretty clear that you can get rid of those 2 issues that you have a win with patients. But also the immediate onset of action. As you look at the Restasis in particular and even [indiscernible] if you look at the persistence of therapy, patients drop off very, very rapidly. And the number of scripts that people are still taking after 6 months or after a year is exceedingly low, mostly because of the slow onset and because of the stinging and burning. So in all of those situations, I think we would do very, very well with patients even if there was a self-pay environment. But Mike, maybe you want to add?

Yes. So just to add to that, I mean -- and you bring up a great point, Dane. So 1 of the key ways that we treat dry eye currently is with punctal occlusion with punctal plugs. So putting -- placing something into the canaliculus is really standard of care for our dry eye patients. So in terms of that, this doesn't really change the paradigm. What's changed is that not only do you get the punctal occlusion, but you're actually getting an active drug release over a period of time.

Our next question comes from Jonathan Wolleben with JMP Securities.

A lot of mine have been answered, but just a couple. First on DEXTENZA. Now that we're getting further along in the launch, and we've gotten past COVID and you have some of these medical, administrative contractors coming on board. Have you thought about providing guidance either later this year or next to give us a better feel for long-term demand?

Yes. We will be issuing guidance at some point in the future, but we have 3 very large confounding factors that we're really going to be able to sense what it's going to do with DEXTENZA sales over the next quarter. The first, which is, by far, the largest and most uncertain to be able to judge is what the impact COVID is going to have on elective surgeries. We have no hard data, but from anecdotal data we get back from our fields, we feel that it's probably about 50% of normal at the moment. And appears to be holding steady despite the fact that some areas are starting to get more intense. The second is the rebate program, which is really brand new. we're probably going to see the maximum effect in the fourth quarter rather than the third quarter, but we will see an effect in the third quarter. And then finally, it's the reimbursement of 356T. Because of those 3 factors, the uncertainty of DEXTENZA in the future is enough to where we don't feel that providing forward guidance at the moment is going to be terribly useful. But I believe that by the end of the third quarter, we should have a bit of a read on what those 3 major factors are going to -- how they're going to impact us going forward. And as soon as we feel confident in a go-forward scenario, then we'll definitely start guiding the market appropriately.

Great. And then just 1 looking across the landscape. Roche recently presented some Phase III data in wet AMD for a port delivery system. I was wondering just your thoughts on that approach? And anything -- any comments on their data?

Yes. I mean, I think it's obviously a very large market and what people are seeking is a longer or more durable therapy. So I think the Roche data is super interesting. It is a surgical procedure. And there are certain technical issues in terms of delivery through that system. But I think that looks like a really interesting and attractive option. What we offer is probably a simpler way of delivering the medication. It really -- the way that the TKI works is the implant is inserted using basically the same techniques that people use for current anti-VEGF therapy. So it wouldn't require any change in skill set. It would be able to be placed by retina specialists who're doing most of those as well as non-retina specialists who're making up a larger and larger percentage of those people doing anti-VEGF injections. So in many ways, I think they could be complementary to each other.

And since there are no further questions at this time, this does conclude the Ocular Therapeutix Conference Call. You may all disconnect, and have a wonderful day.