Viatris Inc. (VTRS) Q1 2020 Earnings Report, Transcript and Summary

Good morning and welcome to the Oyster Point Pharma ONSET-2 Study Results and First Quarter Earnings Conference Call. I will be your operator today. [Operator Instructions] At this time, I would like to turn the call over to Mr. Daniel Lochner, the company’s Chief Financial Officer. Please go ahead.

Good morning, everyone, and welcome to the Oyster Point conference call to discuss top line results for the Phase III ONSET-2 clinical trial in patients with dry eye disease. This morning, we issued two press releases, one covering the top line results from the Phase III ONSET-2 trial as well as the company’s first quarter 2020 financial results for the three months ended March 31, 2020. Both press releases as well as ONSET-2 slide presentation and our Form 10-Q that was filed with the SEC this morning are available on our website at www.oysterpointrx.com. Joining us on our call today are Dr. Jeffrey Nau, President and Chief Executive Officer of Oyster Point Pharma; and John Snisarenko, our Chief Commercial Officer. I will provide a brief overview of the company’s financial results for the quarter ended March 31, 2020. Following these remarks, I will turn the call over to Dr. Jeffrey Nau to discuss the ONSET-2 Phase III results. After Dr. Nau’s prepared remarks, we will then open up the line for questions. This conference call contains forward-looking statements regarding future events and the future performance of Oyster Point Pharma. Forward-looking statements include statements regarding Oyster Point’s possible or assumed future results of operations, expenses and financial position; business strategies and plans; research, development and commercial plans or expectations; trends, market sizing, competitive positioning; our beliefs regarding our clinical trial outcomes, including secondary endpoint analysis; predictions regarding product approvals or the FDA and our efforts to manage the impact of COVID-19; and industry environment and potential growth opportunities, among other things. These statements are based upon the information available to the company today, and Oyster Point assumes no obligation to update these statements as circumstances change. Future events and actual results could differ materially from those projected in the company’s forward-looking statements. Additional information regarding factors that could cause results to differ materially from our forward-looking statements are described in greater detail in the company’s press release issued this morning. Now I’ll provide a brief overview of Oyster Point’s first quarter 2020 financial results for the three months ended March 31, 2020. Additional detail about our quarterly results can be found in our Form 10-Q. For the first quarter of 2020, Oyster Point Pharma reported a net loss of $16.5 million compared to a net loss of $3.8 million for the same period in 2019. As of March 31, 2020, cash and cash equivalents were $130.6 million compared to $139.1 million as of December 31, 2019. We believe that the company’s current cash and cash equivalents will be sufficient to fund our planned operations for at least 12 months from the issuance date of today’s Form 10-Q. Research and development expenses for the first quarter 2020 were $11.3 million compared to $2.4 million for the same period in 2019. The increase in research and development expenses was primarily due to our advancement of OC-01 and reflected an increase in expenses related to CROs and CMOs of $7.8 million and an increase in payroll and personnel-related expenses, including salaries, bonuses, benefits and stock-based compensation expense of $1.1 million. General and administrative expenses for the first quarter of 2020 were $5.6 million compared to $1.6 million for the same period in 2019. The increase in general and administrative expenses was primarily due to the expansion of our organization and reflected an increase in payroll and personnel-related expenses, including salaries, bonuses, benefits and stock-based compensation expense of $2 million, an increase in professional fees for legal, accounting and outside services to support operations as a public company of $1.8 million and an increase in marketing expenses of $0.2 million. Now I’d like to turn the call over to Dr. Jeffrey Nau. Please go ahead.

Thank you, Dan, and thank you to everyone for joining us this morning. I’m hoping that everyone and their families are safe and healthy during this unique time in our lives. I would like to take the opportunity to acknowledge the patients, the eye care providers and staff that were involved in the ONSET-2 trial. The ONSET-2 study began enrollment in July of 2019 and completed in March of 2020. As the the coronavirus pandemic began to impact the U.S. and the health care system in general in March, we were fortunate and honored to work with such an amazing group of investigational centers and patients who continued to safely collect the clinical data needed to complete the treatment phase of this Phase III study. For those of you following along with the slide deck that we made available on our corporate website, please refer to slide number four. We are excited to be announcing today the positive outcome in our Phase III ONSET-3 clinical trial, which has been designed to investigate OC-01 nasal spray as a treatment for the signs and symptoms of dry eye disease. The ONSET-2 study met its primary endpoint with both the 0.6 milligram per ml and the 1.2 milligram per ml doses of OC-01 achieving a statistically significant improvement in Schirmer’s Score as compared to control at day 28 or week four. This result also translated into a statistically significant improvement in the secondary endpoint of mean change from baseline in Schirmer’s Score at week four in both doses, consistent with our data from the ONSET-1 trial. Benefits were also seen on a number of secondary endpoints in the 1.2 milligram per ml dose group, including the mean change from baseline on eye dryness score in the clinic environment at week four and as early as week two. Today’s news is a major milestone for the Oyster Point Pharma team as we look toward the filing of our first NDA in the second half of 2020. Please turn to Slide 5. The design of the ONSET-2 study is summarized here on Slide 5. As you will see, the ONSET study is a multicenter, randomized, double-masked, placebo-controlled Phase III trial, which we initiated in July of 2019. 758 subjects who were at least 22 years of age with an eye care provider’s diagnosis of dry eye disease were randomized to receive either 0.6 milligrams per ml or 1.2 milligrams per ml or placebo twice daily for four weeks. The primary criteria for enrollment was having an anesthetized Schirmer’s Score that was 10 millimeters or less at baseline. The primary endpoint of this study is the percentage of subjects with a 10 increase from baseline in Schirmer’s Score at week four. The anesthetized Schirmer’s test is an objective measure of the amount of tear film produced over the course of a five-minute time period by placing a strip into the lower lid margin. Key secondary endpoints include assessing eye dryness score within the clinic environment as well as the controlled adverse environment at week four. Additional secondary endpoints included assessment of inferior corneal staining as well as eye dryness score assessments in the clinic at week two and at week one. Please turn to Slide six. There are a number of important aspects of the Oyster Point clinical development program and the ONSET-2 clinical trial in general that are important to understand when interpreting the trial results. Pivotal dry eye trials have been consistently designed with placebo run-in phases. This design element is not a part of this trial and has not been required in any of our clinical trials. In the ONSET-2 study, there are no eligibility requirements for dry – eye dryness score, and therefore, subjects with a wide spectrum of symptom severity are included in the study population. So the wide spectrum of symptom severity are included in the study population. We feel that the design of the ONSET-2 study will translate into clinical trial outcomes that generally reflect real-world settings relevant to a broad population of dry eye patients. The ONSET-2 outcomes will also allow eye care practitioners to translate the clinical trial results into practice and strategize how to use this product in their treatment armamentarium. In this study, we used the National Eye Institute corneal fluorescein grading scale. And although this study is not designed to show a benefit in corneal staining, due to the confounding factors of proparacaine use at multiple visits as well as the use of a controlled adverse environment, we did see a staining benefit in the ONSET-1 trial and, therefore, will investigate staining in this trial. Please turn to Slide 7. As you see from the study demographics, the treatment groups were well balanced with regards to baseline characteristics of Schirmer’s Score and eye dryness score. Subjects' age and baseline eye dryness score represent a much healthier population than we typically see enrolled in dry eye clinical trials with an average baseline eye dryness score of 58 millimeters. The population is also consistent with dry eye disease epidemiology and that the population contains predominantly more females as compared to males. Baseline Schirmer’s Score is consistent with baseline characteristics, as seen from our previously completed ONSET-1 clinical trial. Please turn to Slide 8. Here, you see the primary endpoint indicating statistically significant percentage of subjects achieving a gain of 10 millimeters or more in both the 0.6 milligram per ml and 1.2 milligram per ml treatment groups as compared to placebo. For the responder analysis of those subjects gaining greater than or equal to 10 millimeters on Schirmer’s Score at week four, 44% of subjects in the 0.6 and 47% of subjects in the 1.2 milligram per ml treatment groups achieved a change from baseline in Schirmer’s Score at week four as compared to 26% of subjects in the control group. Please turn to Slide 9. This slide illustrates the consistent and reproducible data from both the ONSET-1 and ONSET-2 studies for this endpoint. As you see from the comparison, the control group is higher with regards to the mean change in Schirmer’s Score in the ONSET-2 study, supporting the fact that the baseline characteristics resemble that of a healthier population included in the ONSET-2 study as compared to ONSET-1. Please turn to Slide 10. Illustrated in this slide is the secondary endpoint of mean change from baseline in Schirmer’s Score at week four. As with the categorical primary endpoint, statistical significance was achieved in both 0.6 and 1.2 milligram per ml treatment groups as compared to placebo. Subjects in the 0.6 milligram per ml treatment group had a mean increase of Schirmer’s Score of 11 millimeters, while subjects in the 1.2 milligram per ml treatment group had a mean increase in Schirmer’s Score of 11.2 millimeters as compared to a mean change of 5.9 in the control group. Please turn to Slide 11. This slide again demonstrates the consistent and reproducible data as compared to the ONSET-1 study for the mean change in Schirmer’s Score endpoint. As you can see from the comparison, the control group is higher with regards to the mean change in Schirmer’s Score in the ONSET-2 study, consistent with what we see with the categorical endpoint. Please turn to Slide 12. The secondary endpoint of mean change from baseline in eye dryness score [indiscernible] per ml treatment group. And although there was a directionally significant in the 0.6 milligram per ml treatment group as compared to placebo, it’s not statistically significant. Subjects in the 1.2 milligram per ml treatment group had an average reduction in dry – eye dryness score of minus 22.5 millimeters as compared to a minus 15.8 millimeters in the control group. Please turn to Slide 13. In this slide, we see the comparison in the ONSET-1 trial, where there was statistically significant improvement in the 0.6 milligram per ml dose group and not in the 1.2 milligram per ml dose group. In ONSET-2, where we have balanced baseline characteristics, we see a clear dose response with 1.2 milligram per ml dose group performing better than the low dose. Please turn to Slide 14. The secondary endpoint of mean change from baseline in eye dryness score assessed in the clinic environment at week two was statistically significant in both the 0.6 and 1.2 milligram per ml treatments as compared to control. Subjects in the 0.6 milligram per ml treatment group had an average reduction in eye dryness score of minus 16.5 millimeters while subjects in the 1.2 milligram per ml treatment group had an average reduction in eye dryness score of minus 17.9 millimeters as compared to a mean change of minus 12.8 millimeters in the placebo group. We believe that this highlights the early benefit of OC-01 nasal spray on symptoms and will be important for patients that are seeking relief from the irritation and discomfort associated with dry eye disease. Please turn to Slide 15. Here, we see the secondary endpoint of mean change from baseline in eye dryness score assessed in the clinic environment at week one. Although there was a directional benefit at week one in both doses, neither dose was statistically significant. Please turn to Slide 16. This slide summarizes the improvement in symptom scores over time in the ONSET-2 clinical trial, where we see a consistent increase in the magnitude of effect in the 1.2 milligram per ml dose group over time with continued therapy. Please turn to Slide 17. The secondary endpoint of mean change from baseline in eye dryness score assessed in the controlled adverse environment at week four was not statistically significant on either the 0.6 or 1.2 milligram per ml treatment groups as compared to control. As you will see, the sample size of the endpoint was impacted by two main factors that affected the analysis and reduced sample size significantly. The coronavirus pandemic impacted a number of sites who did not feel comfortable putting their staff and/or subjects into the controlled adverse environment chamber as the pandemic was unfolding. In addition, a number of subjects in each group were asymptomatic and therefore did not meet the criteria for treatment for the full two hours while in the chamber. We were in contact with FDA prior to database lock and were instructed not to change our statistical analysis plan due to the coronavirus pandemic at that time. Since unmasking the database, we have discussed with the agency how to address this endpoint, and we will do so in the context of the NDA submission. Please turn to Slide 18. We do feel, however, that this rich dataset is useful in highlighting the benefits of OC-01 nasal spray for patients. The slide illustrates the symptom score assessment before the subjects entered the controlled adverse environment. As you see, subjects in the 1.2 milligram per ml treatment group had a statistically significant reduction in eye dryness score of minus 19.3 millimeters as compared to a mean change of minus 14.7 millimeters in the placebo group. What is most impressive about this statistically significant reduction in symptom score is that the last dose of OC-01 nasal spray was administered to the subject the evening before as the protocol for the chamber specifies withholding morning treatment, a time frame that could have represented as long as 15 to 18 hours prior to the symptom assessment. We believe that this illustrates the durability of the symptom reduction effect seen with OC-01 nasal spray. Please turn to Slide 19. This line graph represents mean eye dryness score in the controlled adverse environment for the full two hours that the subjects are placed in this low-humidity, high-airflow environment. As illustrated in the graph, the 1.2 milligram per ml dose group shows a persistent and significant separation from placebo that continues to flatten and separate over time. We believe that this data illustrates the ability of OC-01 nasal spray to resist environmental change in this adverse environment. This chamber simulates conditions such as one would experience in an airplane or forced air heating environment that exacerbates symptoms in many patients with dry eye disease. Please turn to Slide 20. Inferior corneal fluorescein staining in this study was assessed using the National Eye Institute fluorescein staining scale. Although this study was not designed to assess corneal fluorescein staining due to the regular administration of proparacaine for anesthetized Schirmer’s testing and the potential confounding caused by the controlled adverse environment, results indicate a directional benefit favoring the 0.6 milligram per ml dose group on inferior and nasal staining, although there was no statistical benefit in any of the corneal regions. Please turn to Slide 21. As illustrated by this slide, although not statistically significant, there was a directional benefit in all fluorescein corneal staining regions favoring the 1.2 milligram per ml dose group. Please turn to Slide 22. In summary, the primary endpoint of categorical change in Schirmer’s Score was statistically significant in both dose groups, as were a number of secondary endpoints in the 1.2 milligram per ml dose group. As stated in earlier slides, we will be discussing the secondary endpoint of mean change in eye dryness score in a controlled adverse environment at the time of the submission of the NDA. Please turn to Slide 23. We believe that the ONSET-2 trial data, with support from the results of the previously completed ONSET-1 study, will support an indication of signs and symptoms with clinically meaningful data that will be useful to the patient and the eye care practitioner. In the 1.2 milligram per ml dose group, we see a statistically significant increase in natural tear film as compared to control. In stimulating the production of natural tear film, we see a statistically significant improvement in symptoms as early as week two with increasing magnitude of effect at week four. We believe the unique mechanism of action for OC-01 nasal spray will help establish this product as an important treatment for the eye care professional. Please turn to Slide 24. This slide illustrates a summary of adverse events in the ONSET-2 study. Although we see a higher number of subjects in the treatment group experience an adverse event, these events are primarily driven by the most common adverse event of sneezing. There were no serious adverse events related to study drug. There were a similar number of ocular adverse events across all treatment groups. The number of subjects with treatment emergent adverse events leading to discontinuation across all treatment groups was less than 3% in any treatment group. Treatment-related adverse events leading to study discontinuation that were related to study drug are less than or equal to 2% in both of the treatment groups. Please turn to Slide 25. The most common adverse event was sneezing followed by cough. Nasal and throat irritation were reported in less than 15% of subjects in each dose group. This is consistent with the data from the ONSET-1 clinical trial with no newly identified safety signal. Greater than 99% of events were considered mild. Importantly, because OC-01 nasal spray spares the ocular surface, there were no events of burning or stinging on the ocular surface. There were no reports of serious adverse events related to nasal spray administration. Please turn to Slide number 26. This slide summarizes data collected from each administration from the nasal spray patient administration diary. In agreement with the adverse event data, the most common adverse events experienced in the treatment group was sneezing, which was mild in severity in more than 99% of subjects. Approximately 50% of all nasal spray administrations were associated with sneezing. A majority of subjects experienced zero to two sneezes at administrations where sneezing was noted. Sneezing was transient with the majority of sneezes occurring within the first minute following administration. Please turn to Slide 27. As you will see here, since August 2018, we have enrolled or started four clinical studies that encompass the OC-01 dry eye disease clinical development program. In January, we released the results from the MYSTIC study investigating 84 days of twice-daily dosing of OC-01 nasal spray. Oyster Point’s U.S. clinical development program consists of the ZEN bioavailability study as well as the ONSET-1 and ONSET-2 studies. With these positive results from the ONSET-2 study, we are on track to submit an NDA application to the FDA in the second half of 2020. We believe that the unique mechanism of action for OC-01 nasal spray will help establish this product as an important treatment for the eye care professional. Please turn to Slide 28. Dry eye disease is a chronic, progressive disorder of the ocular surface characterized by a loss of tear film homeostasis. This loss of homeostasis resulting in increased evaporation and/or decreased team volume over the – over time ultimately leads to irritation, inflammation and damage to the ocular surface. Dry eye disease is a complex and multifactorial disease that is difficult to treat effectively. The novel mechanism of action of OC-01 nasal spray stimulates the trigeminal parasympathetic pathway to produce natural tear film using the cholinergic receptor agonist, varenicline. Please turn to Slide 29. Currently, there is no substitute for the body’s own natural tear film. Natural tear film consists of a complex mixture of thousands of compounds with beneficial components including growth factors, anti-inflammatory compounds, lubricating and hydrating components and is inherently antimicrobial in nature. OC-01 provides therapy to the ocular surface that we believe will provide an early and sustained symptomatic relief while treating the underlying disruption of tear film homeostasis. Now I’d like to turn the call over to Oyster Point’s Chief Commercial Officer, John Snisarenko. John, please go ahead.

Thank you, Jeff. Please turn to Slide number 30. There’s a significant unmet need in the treatment of dry eye disease. Just in the U.S. alone, over 30 million adults are affected. 16 million, or less than half of these adults, have been diagnosed and only two million are currently treated with a therapeutic. Over seven million people have tried the currently available therapeutic options. The majority of current treatments target the inflammatory component of dry eye and take some time to see a therapeutic effect. In addition, many of these options are eyedrops, which may have tolerability issues that can lead to poor compliance. Please turn to Slide 31. Let’s take a look at our commercialization plan. In anticipation of FDA approval of OC-01, we are planning to launch OC-01 in Q4 of 2021. Our commercial strategy focuses on three key areas: direct promotion to eye care professionals, educating both prescribers and patients and enabling patient access to this important therapy for dry eye disease. We plan to hire a competitively sized specialty sales force of between 130 and 200 reps, who we believe will be able to target greater than 80% of the dry eye disease prescriber base, which includes both optometrists and ophthalmologists. We believe a sales force of this size will also be able to support the commercialization of additional ocular therapies in the future. The therapeutic dry eye market has historically been quite responsive to direct-to-consumer promotion and education. We will invest in extensive education and focused marketing campaigns to both the eye care community and to patients, leveraging our novel MOA and nasal spray. The third very important pillar of our commercial strategy focuses on enabling patient access to OC-01. We plan on contracting for broad payer coverage, which will allow for comprehensive pharmacy distribution of OC-01. We also plan on providing patient support services throughout the patient’s access and reimbursement process. Outside North America, we will consider partnerships for international commercialization. Please turn to Slide 32. We believe that with our data and the novel approach to treating dry eye disease, OC-01 nasal spray has a very compelling therapeutic profile: a convenient BID dosing delivered in a preservative-free nasal spray; a novel MOA that stimulates the body’s own ability to produce natural tears and restore tear film homeostasis demonstrated in multiple clinical trials to rapidly improve the signs and symptoms of dry eye disease; improvement in tear production was demonstrated in a majority and a broad population of dry eye patients; and as OC-01’s novel route of administration spares the ocular surface, there was no ocular burning or stinging, the most common side effect was transient sneezing. I will now turn over the call to the operator to open the line for questions.

[Operator Instructions] Our first question comes from the line of Tyler Van Buren with Piper Sandler. Your line is open.

Good morning. A huge congratulations to the positive dataset and being the first company to hit both signs and symptoms through pivotal studies. I guess since you guys have had a lot more time to analyze this data and the totality of the dataset than we have, could you just put the magnitude of response into context with the already approved agents of RESTASIS and Xiidra perhaps both on the Schirmer’s Score and eye dryness? And then also maybe just touch on onset of action as well.

Yes. Great. Thanks, Tyler. I would say one way to look at this study is we alluded to earlier in the slides this study you really addresses a broad population of patients. And because of that baseline characteristic of eye dryness score and the protocol allowing patients from 0 to 100 into the study, we really think that this trial consists of mild, moderate and severe patients, and we did not enrich the study to just enroll the moderate to severe dry eye population. So I think the important thing to take away is that we see consistent and reproducible results from the ONSET-1 and ONSET-2 trials. We don’t see a difference in the patient population between the more severe patients and the more mild patients. So we really have strived to try and design our clinical trials to have a real-world applicability and enroll a population of patients that’s more akin to those that are going to walk through the clinic on a daily basis. We think this will also translate into real-world outcomes that will be similar to our clinical trials. So we see early increase in tear film production with, as you see there, statistically significant improvements as compared to control. And on the eye dryness symptom side, we see a statistically significant outcome at week four, but I think what’s most impressive is if you look at Slide 16 and you see that progression from week one to week two to week four, where we see a continued improvement over time with this product.

Great. Thanks, Jeff. And John gave a helpful overview on commercialization strategy. But I guess my second question is just thoughts on – current thoughts on commercialization versus engaging someone with the infrastructure that’s already built.

Yes. Thank you, Tyler. We do plan to hire in-house our specialty sales force. We feel that would be supportive of the data that we want to bring to the eye care professional, the prescribers. And also, it would support other commercialization efforts for other ocular therapies that we will bring in the future. So we know where the prescribers are based on the history of Xiidra and RESTASIS and others, and we will have a competitively sized sales force that’s in-house to be able to target both optometry and ophthalmology.

Helpful, thank you.

Thank you. And our next question comes from the line of Ken Cacciatore with Cowen and Company. Your line is open.

My congratulations as well. Looks fantastic. Just wanted to ask John in terms of commercialization. Can you just talk about the current treatment success and failure rates? You said 7 million had tried, but just to give folks and us some sense of the success or failure that Xiidra and RESTASIS have. And then also wondering, in terms of potentially, at some point, combination use, any reason why there would be limitations in using it together? RESTASIS has yet to go generic. But if it does, it would – I would imagine it would be cheap and yours would be brand. Maybe there would be the ability to use it together but just wanted to get your thoughts. And then lastly, the FDA has used different criteria, different endpoints for both RESTASIS and Xiidra, and there’s been some moving around. Just the evolution of thought at the FDA in terms of the different endpoints vis-a-vis the ones that you use. Thank you.

Great. Thank you for your question. In regards to the number of patients that have tried the current therapeutic options, as we know, the current therapeutic options tend to target the inflammatory component of dry eye and do take some time to work, some as long as three to six months. So you can imagine a lot of patients have tried and have given up on some of those therapies. Hence, the 7 million over time, that group, that number has built. As well, because we’re sparing the ocular surface, the current therapeutic options are eye drops, and they do cause some burning and stinging, and patients do give up on them due to those side effects as well. So we do feel that there is a group of patients that are looking for other options. And I think even from a payer perspective, whether commercial or Medicare, there have been many patients that have tried and failed. So even if a generic RESTASIS does come on to the market, and we would have to step through a generic RESTASIS, there are many patients that would qualify to move right into OC-01 as a therapeutic option. I’ll let Jeff comment on some of the FDA questions that you had there on endpoints.

Yes. Thanks, Ken. So I think when it comes to combination therapy, I do think one of the benefits of this product because of the novel mechanism of action is that it will allow the clinicians, both optometrists and ophthalmologists, to really think about how they want to use it in the entire scope of treatment options that they have at their disposal. And so I do think that they will think about how to use this product with other therapies. I think they will think about how to use this product with other devices that may exist on the market. But because this product is novel and basically the way in which we are delivering treatment, which I think is often lost that we’re not putting anything onto the ocular surface, we’re stimulating tear film, and so to be able to get these results by stimulating natural tear film and putting healthy components onto the ocular surface, we think, will be important in the context of all of the other dry eye treatments that are out there. From an endpoint perspective, I do think that the FDA has been open to a lot of different endpoints. What I would say here is when we began this development program, we have consistently used the same endpoints over and over again. We think that eye dryness score in that it’s been used for the approval of other products was an important symptom endpoint. And then on the Schirmer’s Score, I think one of the things that’s also important here is there really are no other products out there that give the clinician a repeatably and reproducible assessment of a biomarker to see how patients are doing but also to see how patients will do. And a Schirmer’s Score is a very simple test. Every ophthalmologist and optometrist knows how to deliver that test, and we feel we’re going to be able to provide clinical data to the optometry and ophthalmology community that will be predictive based on this biomarker. But these are endpoints that are clinically meaningful. And so if you look across the landscape of endpoints that can be used in dry eye trials, I think these are really important, which is how much tear film are we putting on the ocular surface, and then what’s the impact to the patient from a symptomatic perspective.

Great. Thanks so much, congratulations again.

And our next question comes from the line of Anupam Rama with JPMorgan. Your line is open.

This is Tess on the call this morning for Anupam. Congrats as well from us on the results. Maybe a first one. With the data you saw here on EDS, are you going to be filing both doses? Or are you thinking about just trialing the higher dose? How are you thinking about this? And then I have a follow-up.

Sure. No, I think that’s a great question. With 48 hours or so of being able to digest the data, there’s still a lot of data that we need to assess. And I think we’ll be able to start to look at subset analyses and some of the other planned analyses that are not a part of the top line data. In addition, as we compile our integrated summary of efficacy from both the ONSET-1 and ONSET-2 program, I do think that, that combined dataset will also allow us to see things that maybe each of the two studies themselves are not able to illustrate. And so as we learn more, we’ll be able to give some more guidance. But I think as of today, just based on the ONSET-2 study, we do see clinically meaningful improvements in symptom score, and we do see a slightly higher improvement in those Schirmer’s scores. But I don’t think that we’re ready to make a final decision as of today.

Okay. That’s helpful. And then maybe you may have touched on this before, Jeff, but just any other color you wish to point out on sort of the higher placebo performance that we saw in ONSET-2 relative to kind of what maybe we were thinking coming into the trial? And how should we be thinking about that in the context of kind of the baseline patients that you enrolled for ONSET-2?

Yes. No, that’s a great question. So we do see a higher score across the board for that placebo group, whether it be on Schirmer’s Score, whether it be symptoms and – as compared to our ONSET-1 study. So I think what this does illustrate is a healthier patient population than we have enrolled before. I think if you were to look at the numbers, you see about 175 patients of that 758 population are actually below 40 on eye dryness at the time that they entered the study. So these are not patients that would have been entered into other dry eye clinical trials. And we see a consistent effect across all of these groups, whether they’re on the milder end of the spectrum or the more severe end of the spectrum. So one of the important things as a takeaway from this study is, I think it’s a real-world study for all the reasons that I listed in that first set of slides, and it’s going to be very translatable to everyday practice. These are patients that walk through the door. They, in some cases, have a milder form of the disease. And we really think that because of the novel mechanism of action of OC-01, this product really is applicable to patients all across the spectrum. So when we look at the data, I think it’s even more impressive, especially on the symptoms score, to be able to see this type of an effect in a patient population that’s much more healthy than we’ve seen in the past.

Great. Thanks so much for taking our question.

And our next question comes from the line of Patrick Dolezal with LifeSci Capital. Your line is open.

Congrats on the data. And thanks for taking my questions. And apologies in advance if there’s some redundancy here because I actually got disconnect at the beginning of the Q&A. So on the traditional symptoms endpoint at week four, you guys achieved significance there, and this wasn’t consistent with the CAE endpoint. I’m just hoping for a little color on the relative importance of symptoms in non-CAE versus CAE and kind of how those early regulatory discussions have been shaping up as to whether this aspect might affect labeling. And I guess beyond that, were there any study design differences that may have accounted for these results just given that in ONSET-1, the CAE was measured at week three versus week four in ONSET-2? And then I have a follow-up as well.

Sure. So I think the best way to answer overall, and it’s this common theme that you’ve heard throughout the study, is patient population is healthier than we have enrolled in the past overall. I certainly think that, that probably had something to do with the results that we’ve seen both in the clinic as well as in the controlled adverse environment. It was unfortunate that we had an impact to the controlled adverse environment due to the COVID-19 pandemic, but we do think that – and feel we got very lucky that we were able to finish enrollment with what we think overall is minimal impact to the study. And so when you look at the CAE data, you’ll see there’s a significant impact to the patient population that was able to be evaluated. That being said, what we were hoping for in the CAE is really to illustrate just how powerful this drug is in multiple environments. And when you look at the data, although we didn’t hit that point estimate, if you look at the totality of the data in the controlled adverse environment, we do see that there is a protective benefit with that, especially in that high-dose group versus control. In the context of the real world and feedback that we have from our advisers, they look at the controlled adverse environment as more of an interesting endpoint, and they really put more weight into that clinic eye dryness because that’s really what patients are going to experience on a daily basis. So we wouldn’t expect the clinicians to be putting their clinical patients into a CAE, but these are the types of environments that people encounter when they’re on planes, when they’re in forced hot air environment. So I think it’s – between the healthier population and the loss of sample size from the coronavirus impact, we saw a directional benefit certainly, not as big as what we saw in the ONSET-1 study but having the power to show those very small improvements we just did not have in the study, unfortunately.

Got it. That’s helpful. And then were you guys able to collect any data in ONSET-2 on patient satisfaction kind of outside of the EDS score to understand a bit more qualitatively how patients are viewing the product profile and kind of overall satisfaction with use and particularly perhaps on preferences for an intranasal versus an eye drop?

Yes. Yes, thanks. That’s a great question. So we didn’t formally collect data in ONSET-2, although we have market research data that does indicate that patients that are currently on branded therapeutic products for dry eye disease would consider switching over to the nasal spray. About 90% of surveyed patients said that if the product is available today, they would take the nasal spray. I think the way that we look at the product is there are patients out there in the world that – certainly, 100% of patients will not like to take a nasal spray, but we do think that the product profile is going to be well accepted. If you look at our study design, you’ll see patients did not drop out of the study due to adverse events associated with the nasal spray at any appreciable rate. And we see in our market research that as compared to eye drops, the nasal spray route of administration is preferred by most patients. And so I think we all know the patient compliance issues that come along with delivering something to the ocular surface. There are many patients that just can’t deliver the drug adequately to the ocular surface. And there’s also patient populations out there, such as patients that wear contact lenses, where this becomes problematic, and we think that this nasal route of administration bypasses many of those challenges.

Great, thank you. And congrats again.

[Operator Instructions] I’m not showing any further questions. I’ll now turn the call back over to management for closing remarks.

Thank you, operator. I’d like to thank everybody for joining the call today. Our original vision for OC-01 nasal spray to treat the signs and symptoms of dry eye disease was to develop a transformative treatment to address the large unmet medical need for patients via our hypothesis of restoring tear film homeostasis and natural tear production. We’ve produced positive efficacy results on multiple endpoints of signs and symptoms in several randomized, controlled trials. We’ve designed our trials to address a broader, real-world population, which we believe will allow eye practitioners to translate the clinical results into practice and strategize how to use this product in their practices. We feel that this is one of the reasons that patients do not often persist with current dry eye therapies as the benefits seen in the clinical trials do not translate to the broader dry eye population. I’d like to thank everyone for joining us today, and I wish and hope that you and your families stay safe and healthy.

Ladies and gentlemen, this does conclude the program. You may now disconnect. Everyone, have a great day.