Good day Ladies and gentlemen, and welcome to the Sight Sciences Second Quarter 2021 Financial Results Conference Call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instruction will fall follow at that time. [Operator Instructions] As a reminder, this call may be recorded. I would now like to introduce your host for today's conference. Mr. Philip Taylor, Investor Relations, you may begin.

Thank you, and thank you all for participating in today's call. Presenting today is our Sight Sciences co-founder and Chief Executive Officer Paul Badawi and Chief Financial Officer Jesse Selnick. Earlier today, Sight Sciences released financial results for the three months and six months ended June 30, 2021. A copy of the press release is available on the company's website. Before we begin, I'd like to remind everyone that comments made by management today and answers to questions will include forward looking statements. Those include statements related to Sight Sciences future financial and operating results and plans for developing and marketing new products. Forward-looking statements are based on estimates and assumptions as of today, and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied by these statements, including the risks and uncertainties described in Sight Sciences filings made with the SEC. The company undertakes no obligation to publicly update or revise any forward looking statements, except as required by law. For more information, please refer to the forward-looking statements, notices and risk factors in our recent SEC filings. And with that, I will turn the call over to Paul.

And thank you to everyone joining us on our first earnings call as a publicly traded company, our Chief Financial Officer Jesse Selnick and I look forward to updating you on our performance in the second quarter, and our Chief Commercial Officer Shawn O'Neil, is also with us today. Since our story may be new to many of you, I'd like to start by providing an overview of Sight Sciences, our mission, our guiding principles and our growth strategy. We are gratified and humbled that many new and existing investors participated in our IPO and are joining us on our journey to transform the lives of patients suffering from the world's most prevalent eye diseases. Eyesight is fundamental to our quality of life. Over 50% of the human brain is devoted to vision, and over 80% of the information we need to perceive the world enters through our eyes. Our overarching goal is to improve quality of life by protecting and enhancing our most precious sense, vision. Sight Sciences is not a conventional eyecare company. I started Sight Sciences over decade ago with my brother David, a world class ophthalmologist, we came up with the all encompassing name Sight Sciences while performing simulated glaucoma experiments out of the garage of Dan, our first outside employee and our current Vice President of research and development. We believe from the very beginning that if we did things right and have some good fortune along the way, we could methodically build a platform eyecare company serving many disease categories through the development of novel and improved medical devices. To fully address the breadth and importance of our mission we built our company for the long run from day one. Many years later, and thanks to the efforts of our now almost 200 talented…

Thanks, Paul. And good afternoon everyone. Our total revenue for the three months ended June 30, 2021 was $12.5 million, which was a 258% increase from $3.5 million in the same period of 2020 and a 45% sequential increase from $8.6 million in the first quarter of 2021. Our results in the second quarter of 2021 in the second quarter of 2020 are materially impacted by COVID-19 related elective procedures shut down during that period and to a lesser extent were impacted during the first quarter of 2021 due to what we observed to be patient driven cancellation. We were encouraged in the second quarter of 2021 that the operating environment closely resembled that during pre-COVID periods, with what we observed to be normalized cataracts and glaucoma procedural volumes and controlled but open commercial access to facilities for prospecting, and training eyecare providers on OMNI and TearCare. All of that being said, we are closely monitoring the Delta variant and its impact on our end markets. To-date, the primary observable impacts from the Delta variants have been related to operating practice restrictions, as opposed to noticeable widespread procedural volume impacts. However, just this week, we've been informed of some Delta very related cancellations of OMNI cases by both patients and surgeons. Again, we continue to monitor these developments extremely closely. Our combined gross margin for the second quarter of 2021 was 82% as compared to 40% in the corresponding prior year period, and 73% in the first quarter of 2021. The drivers of this increase will be discussed more in depth as we get into segment performance. Our surgical glaucoma segment revenues which is from the OMNI product for the second quarter of 2021 were $12 million up 263% from $3.3 million in the second quarter of 2020, and a…

Thank you, Jesse. As I said earlier, we build Sight Sciences for the long term. And our pledge to deliver the power of sight to patients with eye disease is unwavering. We are grateful for the support from all of our investors, customers, eye care providers, team members, societies, payers, and other stakeholders. While we were thrilled by the outcome of our successful IPO, the most important result is that our newest investors in trusted us with their capital, which we will deploy with a singular focus on achieving our full potential. We look forward to updating you on our business again in a few months. We will now open up the call for questions. Jesse and I will be joined by Shawn O'Neil our Chief Commercial Officer to answer your questions. Operator.

Thank you, sir. [Operator Instructions] Our first question comes from the line of Cecilia Furlong of Morgan Stanley. You may ask your question now.

Thank you, and good afternoon. And thanks for taking the questions. I wanted to start off with OMNI and really just ask what you've seen since you received the new label in terms of standalone volume trends, as a percentage of your total OMNI procedures versus what you saw in 2020 at the 20% just how the label is really resonating with physicians and then the impact on being able to expand into standalone.

Hi Cecilia, maybe Shawn, Jesse and I can all tag in this one. I'll just start off with a with a just some comments on the label itself to make sure that everyone's on the same page. The OMNI surgical system is indicated for canaloplasty, micro catheterization and transluminal bisco dilation canal, followed by trabeculotomy, cutting up trabecular meshwork, to reduce intraocular pressure and adult patients with POAG. Importantly, what you don't see in our label is a restriction to advanced to refractory disease. You also don't see anything about lamp status or in combination with cataract surgery. So OMNI is broadly indicated for IOP lowering and adults with the POAG. We believe our label is the Holy Grail indication within the mixed category and we were very appreciative of our highly productive, thoughtful, collaborative FDA review process late last year and early this year which ultimately resulted in our expanded label in March. So OMNI has been many years in the making, and it's comprehensive and reproducible procedure profile, and 360 degrees of treatment through two procedures targeting all three sources of resistance. And the resulting clinical data we provided to the FDA was fortunately compelling enough to warrant this very strong clearance. The expanded label is particularly important for us at Sight not only because we differentiate ourselves on efficacy. We asked our surgeons to do more and perform significantly more angle surgery again two sequential procedures up to 360 degrees each, to hopefully drive more consistency of efficacy and more robust efficacy. This consistency is particularly important in standalone surgery where OMNI angle surgery would be the only reason for the visit to the operating room. So we couldn't be more thrilled about our label than now allows us to educate the market referring ECPs and surgeons on OMNI. It allows us to share our compelling clinical data in combo cataract and standalone and thereby effectively develop a much bigger and largely Greenfield mild to moderate standalone market. Shawn, Jessie, do you guys want to talk about what you've seen in the market and as it relates to increasing use of OMNI standalone?

One of the things that we have always leverage and discussed with even right at the beginning of the demand creation and bringing on new surgeons is the value proposition of standalone. The label, since the label it really gives us an opportunity to hone in on that part of the value proposition and with that it's been well received. I think it's been accelerated to get new surgeons on board, but also it's been well received from an adopted surgeon standpoint and we are currently, as Paul mentioned the opening comments, preparing and launching a industry leadership level, education disease state education campaign around mild, moderate standalone patients to the eyecare provider, primary eyecare providers as well as to patients and that'll be forthcoming as well, which we believe will have again, additional impact on expanding into that standalone space.

Great, thank you for the color. And if I could ask as well, just in terms of account openings, being able to leverage the new label that you have, can you just walk through what you saw in 2Q and really after 2Q, either with COVID headwinds, abating being able to access sites, but really is the ability for yourself for us to leverage this new label to open new accounts? And thank you very much.

The opportunity that the new label really provides us is the ability to not only share the value proposition that I spoke of a second ago, but also to share the data behind the products and really demonstrate the consistency and the efficacy that you get with OMNI when creating primary open-angle glaucoma and adult patients and with that's what's really been allowing us I believe to be the accelerated and normalized selling environment when our sales reps have the opportunity to share that data, that compelling data that we have, and get the surgeon and the administrators and the facilities excited about bringing OMNI in for additional patient care for the primary open-angle glaucoma patients.

Our next question comes from the line of [Indiscernible]. Your line is open.

Thank you for taking the question. Can you hear me? Excellent, wonderful. Two things. The first one was with the reimbursement changes that are on the table, what do you think the impact will be to your business model and do you anticipate that it will start as we exit this year or sort of once it's finalized, or maybe even in January, like I just I'm just trying to understand, given your conversation with decisions, the type of feedback that you've been receiving?

Yes. Hi, Joanne. I'll just comment a bit and then John, if you want to add some color, I think we discussed the adjust for the proposed adjustments that are not yet finalized. But if finalized, there's an adjustment to CPT 66174 reduction to $739. In speaking with surgeons and KOLs during ASCRS a couple of weeks ago, they were very encouraged by OMNI 12 months prospective multicenter U.S. clinical data on IOP lowering effect duration and maintaining target IOP levels. And the ability for patients to lower the number of their topical drop medications or go completely off drop therapy. So we're ultimately confidence that given OMNI clinical benefits this proposed fee reduction if implemented next year will not lead to an active disruptive for OMNI utilization given its proven efficacy and safety profile and in a real world setting of care. Now that being said, we think, recommendation was thoughtful and thorough and we fully support that recommendation that would have resulted in a more accurate work value. We will be providing comments to CMS additional information to hopefully inform a more appropriate work value believe there is room for improvement for the 6617 for physician fee since we don't believe the proposed value takes into full consideration the value of OMNI technology and time and intensity required to perform a canaloplasty and more specifically, a circumferential canaloplasty followed by the evaluation of CPT 66174 we don't think takes into account the skills involved in the concomitant [Indiscernible] procedure perform using OMNI for their label.

Yes. And the second question. Yes, thank you.

I agree with Paul's comments especially around the feedback that we did receive it ASCRS as the proposal is very fresh in everyone's minds. The surgeons that we spoke with we were really pleased with the responses that they had in terms of the increase on the facility side of the 3.5% obviously, is favorable, from a facility standpoint for surgeons that have financial ownership in some of their facilities, and then, to Paul's point, we believe we have additional opportunity to physician side. But overall from a relative standpoint to other alternatives the surgeons were still very positive on the reimbursement amount as relative alternatives for 66174.

Thank you. My second question has to do at the beginning of a conversation, you talked about investing aggressively in clinical and commercial. Can you just give us two or three examples of those levels of investments that you're looking towards? Thank you.

It's Paul. On the clinical side, we have a very rigorous clinical roadmap across both OMNI and TearCare I think of it in three buckets, one OMNI standalone, clinical studies and publications, number two OMNI combination cataract, clinical studies and publications, and number three TearCare. So I'll just talk about the larger studies and OMNI standalone, we have one prospective RCT that's underway in Europe. That's the OMNI standalone versus trabecular micro bypass, stenting standalone, three arm study about 450 patients at 22 sites across seven countries in Europe. And then we have three additional studies for OMNI standalone that are retrospective studies. We're really excited about initiating this large RCT and guiding patient should enroll by the end of the year. Then in OMNI in combination with cataract, we have a prospective single arm study that's concluded Gemini. I discussed that in the prepared remarks and we're looking forward to publishing that 12 month data soon. We have a prospective RCT that we hope to kick off soon. We are in discussions with the FDA around an IDE for that study. And I'd mentioned it in my prepared remarks and that will hopefully, if successful lead to a canaloplasty alone indication. We're looking forward to executing that trial in due course, and then we also have two additional retrospective studies that we're going to be executing. All of these studies I'm mentioning, they should have some important milestones either study initiation, patient enrollment and/or publications within 12 to 18 months timeframe. And then lastly, on TearCare another four studies that should have some milestones in the next 12 to 18 months. One is the prospective RCT that we're super excited about and I talked about in the prepared remarks that's TearCare versus [Indiscernible]. It's a two year trial with two goals, one to compare and hopefully we can show TearCare superiority at the six month endpoint and then the second goal of this study, again, based on feedback from discussions with payers was to show durability of treatment effect. So we're going to crossover all of the patients to TearCare at six months, and then run that study through to two years to show durability of treatment effect. In addition to that prospective RCT in the U.S., we also have three retrospective studies that are either under where it will soon be underway again with milestones and hopefully publications in the next 12 to 18 month timeframe. So again, we're super excited to execute all these trials. We spend a lot of time again, as I'd mentioned on product development, and truly addressing the underlying causes of disease. We believe that puts us in a very competitive safety and efficacy position. And so we love to invest heavily in the clinical data that validates our thesis.

[Operator Instructions] Our next question comes from the line of Matthew O'Brian, your line is now open.

Thanks for taking my question. So, Paul, can we just flash out a little bit more on the reimbursement side, just to follow up on Joanne's question. So you're talking about this one code potentially impacted in the proposal but I think the market reader in MIGS has proposals and a couple of areas that are scheduled to be down meaningfully. So I just think on a relative basis you're probably a little bit better position than again, the market leader and then another player in the space. So I'm just curious if you seen, maybe Shawn can talk a little bit about this just an increase in the number of competitive conditions that are coming to you just ask about OMNI in response to this maybe it's too early. And then even in the near term here, I know these are all proposed, because there's something you can do from a marketing perspective to really highlight the potential difference here and really drive more clinicians over to site in the near term.

Matt, Shawn, maybe you and I can tag team on that one. I think all along we built Sight Sciences with a laser focus on trying to be best in class clinically and best in class from an efficacy position. So that's how we view kind of our jobs and we've been commercializing OMNI especially since that label expansion that allows us to share that differentiated clinical data. We're just really excited to lead first, as we always do with safety and efficacy first. So as it relates to what's happened in the field, and with respect to the new codes and proposed values for accommodation cataract and stent procedures, our understanding, CMS proposed to reduce the independent value of inserting stent during a cataract procedure as compared to current payment amounts. We think that if you look at the overall clinical and economic value that surgeons may reconsider. I mean that's kind of what we've seen at least John probably has more insight into it. But again, I think you get to add up the clinical and economic value and surgeons will make their determination. Shawn, do you have any color on?

Yes. Happy to give some additional color to that. So obviously, they are proposed rules right now. So I think it's too early to one of your questions was on timing I think it's too early to say that there is meaningful change in the transition of customers outside of the demand that we're already creating which is, as Jesse shared with the numbers has been really-really positive for OMNI. And to that, we're obviously focusing our marketing efforts on making sure that demand creation is built off of the consistent efficacy delivered by addressing all three points of resistance and conventional outflow pathway and we're obviously sharing our known economics for 66174 so that both all stakeholders, the facility managers, as well as the surgeons understand what the financial aspect of performing a OMNI procedure is and again the sentiment right now is even under the proposed rule, that those are positive opportunities for both those stakeholders. And so we're going to just continue to focus our message on those things and we feel like that puts us in a position to not only compete in that combo space, but also take and develop the leadership position in the mild to moderate standalone arena.

Thanks for that. And then for Jesse, I don't want to feel totally left out here, one for you it's got a couple parts to it. The guidance for the year is completely understandable that you kind of keep it in this range. It doesn't assume much sequential improvement throughout the back half of the year. Is that really COVID specifically and you mentioned some cases that were getting canceled. Are you just kind of assuming now that those get pushed into 2022 at this point and just love to hear a little bit more on that and then with the size of the IPO. I think you talked a little bit about this too. I mean, is there any potential for you guys to accelerate sales force expansion, other marketing activities, etc, here in the near term, which we could see impacting 22. Thanks.

A couple things, Matt, and thanks for letting me not left out. I was getting a little sad. Second quarter, we believe is the seasonally strongest quarter. And I think when you couple that factor with the fact that we believe that the second quarter for us at least was a greater than 100% quarter kind of something we talked about on the road show a lot, given that we have a preliminary number that we didn't expect much sequentially from the third quarter, which is actually a sequentially weak quarter. Heightened a lot this quarter, I think, is given the Delta noise, but also just in terms of patient and surgeon availability for procedures. And so it does we do anticipate nice sequential growth, but we're really kind of with that one exception and that exception being that we had already discussed that we thought second quarter OMNI results were extra strong, and that the third quarter is seasonally weaker quarter than the second quarter in terms of procedure volume. With respect to the proceeds I will say this, we're keeping a close eye on the market dynamics that yes, about we want to be opportunistic. We had a plan that we presented last month, and then obviously, during that road show process, some potential changes to the competitive dynamics propped up. We haven't, we're still watching, right. But if we see pockets or verticals, or geographies where we can accelerate we will. Same thing on the TearCare side. But it's kind of still that kind of prudently aggressive philosophy we've taken historically about how we'll spend it. But obviously, we'll keep a very close eye on the MIGS market in the near term and see if there's some attractive opportunities that pop up.

Our last question comes from the line of [Indiscernible] from Bank of America. You may ask your question now.

Congratulations on the first earnings call. And thanks for taking the questions. Two for me. First one kind of building on Cecilia’s earlier question, as you think about the guide, and that 20% of your mix coming from standalone last year how do you think about that mix being reflected in the 2021 guide and then longer term? Also, how do you expect that mix to kind of shift as you further pursue the standalone opportunity and then the second question if you could just expound a little bit on the canaloplasty only label, how significant do you think that that could be an offering positions further flexibility?

Jesse or Shawn, do you want to tackle the first question. I can tackle the second? I mean, I can tackle the second question first. We think the canaloplasty alone label will be helpful. We view the overall mix category just to generalize or simplify and think of six buckets. So you have combo cataract and standalone and within each of those you've got mild, moderate or severe. And in that, in that mild combo cataract segment, I think surgeons are really serious about ensuring day one post op visual acuity. They want perfect outcomes, and they want their patients to be really-really stoked about their vision on day one post op. So offering something that is more gentle, like procedure I think, would be very well received in that mild combo cataract segment. I think as it relates to moderate or advanced combo cataract or mild moderate severe standalone we like our position by the current label for canaloplasty intravascular anatomy and having the surgeons perform to sequential procedures that allows them to address all three sources of outflow resistance and do so for up to all 360 degrees of the disease conventional outflow pathway we think that functionality is necessary in other categories. So hopefully that helps explain where we think as canaloplasty alone has a nice position again, if successful with our IDE and clinical trial.

This is Jesse Selnick I'll tackle the first one. So second quarter was very strong in terms of utilization per our customer per facility. So we believe it was, we looked at it, probably beyond what a review actually happened which would inform sort of my comments to Matt about that we thought that the second quarter had some, was a little bit greater than 100% quarter, right. We just saw some volumes from some very steadily ordering customers that were beyond what we were used to seeing from them. That being said, I think a big part of that is expanded use cases as well . It's not all going patient backlog or anything like that. And it was kind of across the board very strong in terms of relative utilization to previous periods. That comes, all that comes in one of two ways, right, or one of three ways. We're either getting more share, within sort of the profile they've been using OMNI for, they're expanding their use case for severity, or they're moving in the standalone procedures. So we know, it's uplifting, it definitely was uplifting on an accelerated basis unless you're aware, and anyone that spent a lot of time with us in the road show or process, we're still figuring out a way to be able to more systematically measure our standalone mix as a percentage of the whole. So a lot of the leading indicators and like which will infer from the result were nice progress and we just don't have the ability to sort of convey that with a confident metric that's repeatable at this point in time.

And that concludes the Q&A session. I will now turn the call over back to Paul Badawi for closing remarks.

Well, thank you all. We enjoyed our first earnings call. Hopefully it was informative for everyone and we look forward to keeping everyone up-to-date on all the progress of Sight Sciences. Thank you very much.

And that concludes today's conference call. Thank you again for participating. You may now disconnect.