Welcome to the EyePoint Third Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. As a reminder, today's conference call is being recorded. I would now like to turn the conference over to your host, Mr. George Elston, Chief Financial Officer of EyePoint Pharmaceuticals. Please go ahead, sir.

Thank you and thank you all for joining us on today's conference call to discuss EyePoint Pharmaceuticals third quarter 2022 financial results and recent corporate developments. With me today are Nancy Lurker, President and Chief Executive Officer; Dr. Jay Duker, Chief Operating Officer; and Scott Jones, Chief Commercial Officer. Nancy will begin with a review recent corporate updates. Dr. Duker will then discuss Phase 2 clinical trials for EYP-1901. And Scott will comment on our third quarter 2022 commercial performance. I will close with commentary on the third quarter 2022 financial results, and we will then open up the call for your questions. Earlier this morning, we issued a press release detailing our financial results as well as commercial and operational developments. A copy of this release can be found on the Investor Relations tab on the corporate Web site, www.eyepointpharma.com. Before we begin our formal comments, I'll remind you that various remarks we will make today constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. These include statements about our future expectations, clinical developments, and regulatory matters and timelines, the potential success of our products and product candidates, financial projections, and other plans and prospects. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent annual report on Form 10-K, which is on file with the SEC, and in other filings that we may make with the SEC in the future. Any forward-looking statements represent our views as of today only. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views change. Therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today. I'll now turn the call over to Nancy Lurker, President and Chief Executive Officer of EyePoint Pharmaceuticals.

Thank you, George. Good morning everyone and thank you for joining us to discuss the continued progress that EyePoint made in the third quarter of 2022. Despite the challenging macroeconomic conditions, we are well funded to reach our critical readouts and we remain optimistic about the direction we're headed in, as we work to bring innovative ocular therapies to patients with serious eye disorders. Prior to turn the call over to my colleagues, I'd like to highlight a few of our achievements last quarter. We continue to consistently and successfully execute important milestones across our pipeline, with the first patient dose in our Phase 2 PAVIA clinical trial evaluating EYP-1901 for non-proliferative diabetic retinopathy, or NPDR, in September. Notably, this was our second Phase 2 clinical trial for EYP-1901 initiated in the third quarter. As a reminder, in July, we dosed the first patient in our Phase 2 DAVIO 2 clinical trial for wet age-related macular degeneration, also known as wet AMD. In the 18 months since initiating our Phase 1 DAVIO trial, we've completed the trial and reported positive 6 and 12-month data, held a Type C meeting with the FDA for Phase 2 and 3 clinical trial plans and initiated our Phase 2 DAVIO 2 clinical trial for wet AMD and Phase 2 PAVIA trial for NPDR, respectively. I'm very proud of these achievements, and we'll continue to execute consistently and effectively. EYP-1901 combines the VEGF receptor-binding tyrosine kinase inhibitor vorolanib and a bioerodible formulation of our proprietary Durasert technology. EYP-1901 has the potential to provide patients a duration between treatments of six months or longer, while maintaining stable visual acuity and macular anatomy. It's important to highlight that we view 1901 not as a replacement for current standard of care large molecule anti-VEGF treatments, but as a…

Thank you, Nancy, and good morning, everyone. Before I begin, I want to reiterate what a productive quarter this has been for the EyePoint clinical team as we executed on multiple milestones, further advancing our innovative pipeline. Turning to our product pipeline, EYP-1901 is an investigational sustained release therapy using a bioerodible formulation of our Durasert technology with vorolanib, a tyrosine kinase inhibitor that binds the receptor, therefore blocking all isoforms of VEGF. Vorolanib's differentiated mechanism of action from the standard of care ligand blockers may provide additional benefits such as neuroprotection. Compared to other TKIs, vorolanib features reduced off target binding, leading to a potentially improved safety profile with no reported ocular toxicity. Durasert as a proven and safe sustained release delivery platform differentiates EYP-1901 from other agents targeting VEGF mediated retinal disease, as this bioerodible insert allows for true sustained release of the drug with zero order kinetics with up to nine months duration of activity. In wet AMD, EYP-1901 has been studied as a maintenance therapy following induction therapy with a standard of care anti-VEGF therapeutic, a new treatment paradigm which we call treat to maintain. Our goal is to sustain the majority of wet AMD patients treatment interval up to six months or longer with a single injection of EPY-1901. By providing the sustained delivery therapy, patients and practitioners can potentially have the flexibility to safely reduce the number of visits to their retina specialist through controlled and sustained intravitreal delivery of a differentiated anti-VEGF drug. Turning to non-proliferative diabetic retinopathy, or NPDR, it is a very common disease affecting almost one-third of diabetic adults over the age of 40, and it's projected to impact over 14 million Americans by 2050. In NPDR, blood vessels are weakened and this may lead to both swelling of the…

Thank you, Jay. We're excited to report a strong quarter for our commercial business with 9.7 million of net product revenue, an increase of 13% from the third quarter of last year. Our Q3 net product revenue for YUTIQ and DEXYCU was 7.3 million and 2.4 million, respectively. Customer demand for the third quarter was approximately 890 units of YUTIQ, 14,100 units of DEXYCU. Customer demand for YUTIQ continues to grow as we see positive traction from our focus on retinal specialists for posterior segment inflammation and continued use by uveitis specialists. We hope to see increased demand continuing in the quarters to come with further support from the ongoing Phase 4 studies that are currently underway. As Nancy previously discussed, in October of 2022, the company mutually terminated an agreement with ImprimisRx for the commercialization of DEXYCU effective December 31, 2022, as a result of the Medicare Hospital Outpatient Prospective Payment System and ASC Payment System Proposed Rule, which was published in the Federal Register by the Center for Medicare and Medicaid Services on July 26, 2022. The final rule published yesterday did not contain an extension of the pass-through payment period for DEXYCU beyond December 31, 2022. We will work with the ImprimisRx team supporting the DEXYCU franchise through Q4 while also actively looking at all strategic options available to us for the asset. We're very pleased by the progress that we've made with our commercial businesses and remain on track for breakeven for the franchise in 2022. I'd like to thank our commercial teams for their dedication in bringing our ophthalmic therapies to physicians and patients in need. I would now like to turn the call over to George to review the financials. George?

Thank you, Scott. As the financial results for the three months ended September 30, 2022 were included in the press release issued this morning, my comments today will be focused on a high level review for the quarter. For the third quarter ended September 30, 2022, total net revenue was 10 million compared to 9.1 million for the quarter ended September 30, 2021. This includes net product revenue for the third quarter of 9.7 million compared to net product revenue of 8.6 million for the prior year period, an increase of 13%. Net revenue from royalties and collaborations for the third quarter ended September 30, 2022 totaled 0.3 million compared to 0.5 million in the corresponding period in 2021. Operating expenses for the third quarter ended September 30, 2022 totaled 28.4 million versus 24.4 million in the prior year period, primarily driven by an investment in personnel across the organization, including non-cash stock compensation and ongoing clinical trial and development costs for EYP-1901. Non operating expense net totaled 0.2 million and net loss was 18.4 million or $0.49 per share compared to a net loss of 16.7 million or $0.58 per share for the prior year period. Cash and investments at September 30, 2022 totaled 157.3 million compared to 171.2 million at June 30, 2022. We expect cash, cash equivalents and investments on hand at September 30, 2022 and expected net cash inflows from our product sales will enable us to fund our current and planned operations into the second half of 2024. In conclusion, we are pleased with EyePoint's progress in the third quarter of 2022 and are well capitalized to advance our product pipeline to key value inflection points. Thank you all very much for listening this morning. And I'll now turn the call over to the operator for questions.

Thank you. [Operator Instructions]. Our first question comes from Jennifer Kim of Cantor. Your line is open.

Hi. Good morning, and thanks for taking my question. I have a few here. Maybe to start off, how do you think about the positioning of sustained release therapies on the back of the detailed high dose EYLEA data?

Yes. So first of all, I want to stress a couple of things and then I'm going to have Dr. Duker elaborate. It's very important that people realize this is meant as maintenance therapy, EYP-1901. So we've never viewed ourselves as a competitor to the large molecule anti-VEGF. And as we also have shown in our Phase 1 data, we are able to get a majority of patients out beyond six months. The other thing to consider is that as we further develop the product, we're continuing to work on the mechanism of action. And it is a different mechanism of action. And generally speaking, that can be a positive when you look at approaching a disease from multiple angles. And we've got some interesting preclinical animal data that Jay can elaborate on, which we believe further highlights there could be some additional benefits to using a different mechanism of action while you occasionally may need to supplement with a large molecule anti-VEGF. Jay?

Thanks for the question, Jennifer, and to elaborate a little bit more on what Nancy said and just to go over the data, Regeneron announced that about 77% of their wet AMD patients within the study could be dosed at an extended timeframe up to four months. In our DAVIO trial, we had 76% of eyes go out that long. And in addition, of course, we had 53% go up to six months without a rescue or supplement. And we had a third of eyes go one year. And those are findings that really the ligand blockers are unable to achieve. So to differentiate on just the basis of longevity, I think that we have the possibility of going significantly longer with a single injection. We don't have to do that in everybody to have us a very successful product. If you again look at our DAVIO data, even the patients who required a supplement before six months, in general, those patients received much less treatment than they had been getting prior. So that reduction in treatment burden from every month or two will still be a benefit to patients, even if they require treatment every three to four months with EYP-1901. And finally, the differentiated mechanism of action, I think Nancy touched on this, but we do have some preclinical data in a retinal detachment model that suggested that vorolanib, which is our tyrosine kinase inhibitor, showed neuroprotection, both measuring vision in affected animals as well as looking at the OCT findings of the outer retina in this retinal detachment model. So we're certainly encouraged by that and we're looking at other preclinical evidence of other mechanism of action that may differentiate vorolanib from the standard of care. And of course, the clinical data we hope will bear that out as well.

Okay, that's really helpful. Thanks. My second question is, I know it's a little early but any color around the rate of enrollment in DAVIO 2? And I know it's even earlier, but in PAVIA?

Yes, go ahead, Jay.

Yes. So I would say the onset, the first patient dosed in the DAVIO 2 trial was exactly where we planned. In saying that, I think the initial enrollment has been a bit slower than what we hoped for, that had a lot to do with the rolling out of the sites. Now we have a lot of sites up and running. And we are now enrolling at a respectable clip. And we still, at this point, believe we'll have top line data to share in approximately a year in the fourth quarter of next year. PAVIA, again, right on target at this point, I think because as Nancy used the term macroeconomic, because of macroeconomic factors at both the CROs and the sites, it's been a little slower getting the sites up and running. But once the sites are up and running, then the enrollment is going just fine.

Okay, very helpful. And then my last question is you mentioned actively looking for alternative paths around DEXYCU? Could you give a bit more color on that, and when we might get an update?

So let me just comment on that, which is that we're going to look at potential partnerships, because I just want to remind everyone, CMS has indicated they will provide reimbursement should you have a pain indication. And given that we have an FDA approved drug, it still retains significant value with a patent life out till at least 2035. So we are going to be looking at various options to potentially complete those pain studies, but nothing definitive yet. And we'll be back to the investors as soon as we nail down exactly what we're doing.

Okay, great. Thanks again, guys.

Thank you. One moment, please. Our next question comes from the line of Georgi Yordanov of Cowen. Your line is open.

How are doing? How are you? Regarding some of the interesting data that you presented, the subset analysis from DAVIO in patients with no residual fluid. So maybe we're just wondering if you can kind of like dive deeper into those results. They seem very impressive. Do they in any way kind of like inform future designs of the pivotal trials or in kind of like any way clarify the opportunity there? And then we have a couple of follow ups.

Jay?

Yes, I'd be happy to answer that. So first of all, what Georgi's referring to is we went back in the DAVIO data, the Phase 1 data and looked at the patients who entered the study dry with no excess fluid. Remember, we didn't have any fluid cutoffs in the DAVIO trial for enrollment. We enrolled patients who were under good control, bad control, we really took all comers. Nine of the patients of the 17 were dry going into, those patients did exceptionally well with about 67% I think up to six months without a supplement. Within the first six months, the three that did need supplement only needed one. The change in visual acuity in the first six months was about a letter minus and the OST looked good. And so that subset of patients did very well. So parenthetically, I got asked a question by Jennifer earlier about high dose EYLEA. Well, high dose EYLEA if you look at the data, about 50% of regular dose EYLEA patients at 16 weeks were dry, high dose EYLEA at 60%. So if this data holds for EYP1901, that dryer eyes do better, in some ways, high dose EYLEA may actually be a better drug to lead into 1901 than regular EYLEA is because more eyes will be dry. How does this inform us? Well, again, we are really trying to enroll patients who are basically doing well on anti-VEGF therapy in DAVIO 2. And we're not excluding a little bit of fluid, because there is certainly evidence that a little bit of subretinal fluid is maybe protective to vision acuity in the long term. But you also may recall, and I'll remind everybody on the call, that every patient in DAVIO 2 is getting a loading dose of EYLEA. And so these are patients who were previously treated. We're loading up everybody with three monthly injections. And that should also increase the number of patients who when the time they get EYP-1901 are dry. And so that should we hope result in more robust findings in DAVIO 2 than what we saw in DAVIO 1.

Great. Thank you so much. It's super helpful. And as another follow up, I guess just broadly on the technology, you've really shown that the Durasert technology is a powerful platform. So maybe can you speak to your opportunities to bring any other molecules to Durasert? One area we've been following where Durasert could be particularly beneficial would be GA. So can you maybe just talk through the strategic considerations of potentially exploring that area?

Well, I'll comment on that. And thank you for the question. We're actively engaged in that. However, these things take time. And beyond that, we're not going to go into specifics, because obviously, we want to keep things confidential in terms of some of the specifics that we look at. But we do believe that this could be a significant opportunity. And I'll let Jay comment on the opportunity with GA in a longer treatment duration.

Well, I think we all hope that we will have an approved drug for geographic atrophy in the near future. And if we do, it looks as if the approved drugs, the ones that are being looked at, what we hope shortly approved drugs, will have to be delivered quite frequently, probably every month to be effective. So clearly, if there's a delivery system that can deliver an anti-complement that's safe and effective that could go out longer than that, that would be a tremendous advantage. I think that's obvious. So in order for us to be a differentiator, we have to be able to take a molecule and put it into Durasert and be able to deliver it for that period of time. And so there's a lot that goes into the evaluation of such a molecule; size, solubility, the dose you actually need to achieve the clinical endpoint. And so as Nancy indicated, this is an area that we are actively looking at. And when we have some positive news, we will certainly announce it. I will add though, neuroprotection, which I touched on briefly, is another area that is a bit of a Holy Grail for posterior segment disease. And while neuroprotection as a mechanism of action is a little less defined, I would say, than complement inhibition and geographic atrophy, neuroprotection opens up a lot of other markets. And so that's another area in general where we're looking at molecules that can provide neuroprotection to the retina or to the ganglion cells in a sustained release delivery system.

Great. Thank you so much for all the details and congratulations on all the progress.

Thank you.

Thank you. One moment, please. Our next question comes from the line of Yi Chen of H.C. Wainwright. Your line is open.

Thank you for taking my question. So for the patients enrolled into the Phase 2 PAVIA trial for NPDR, are these newly diagnosed patients or existing patients who are receiving active treatment or existing patients who are not receiving active treatment?

Jay, go ahead.

Yes, so active treatment would be an exclusion. So NPDR patients, in general, see well and have minimal symptoms. NPDR is diagnosed in the doctor's office based on examination of the fundus. We do know that NPDR is a progressive disease. And left unchecked, it will eventually progress and in many cases go on to diabetic macular edema or proliferative diabetic retinopathy. So these patients could be newly diagnosed. If they're newly diagnosed, it doesn't mean they just had diabetes for a short period of time. In order to get moderate to severe NPDR, you really have to have diabetes for a while, but they may have just come into a doctor's office for the first time. So in a sense, they could be newly diagnosed. But if they're being actively treated for the complications of DME or PDR, then they won't be eligible for the study.

Okay. So these are moderately severe to severe NPDR patients and they usually reject treatment even after diagnosis by the ophthalmologist, correct?

Yes, I think to say -- I'm not sure they reject it more than most retina specialists still are reluctant to offer it. And so there are two approved drugs for the treatment of non-proliferative diabetic retinopathy, and our research to the market suggests that no more than 2% to 3% of patients are actually getting the drugs, because they require at the beginning monthly treatment. And after a while, you can cut back a little. But if you go too far the cutback of treatment, then you're going to lose the effect. So it really has to be something like a sustained release that would enable these patients to go on with their lives normally and not be tied into the doctor's office. Because remember, these NPDR patients are not patients who are typically visiting the doctor every month or two. They may be on a six-month to one-year schedule. So if they're asymptomatic with good vision, asking them to undergo an injection monthly for an asymptomatic condition is a big lift. So I don't think it's just patient reluctance. I think there's some physician reluctance there too.

Got it. Thank you. And I don't know if you can provide any color on the potential growth trajectory of YUTIQ in 2023 at this point?

Yes, sorry about that. I was on mute. So I'll let Scott comment on it. But we don't give forward guidance. However, we continue to have some very good quarters. And Scott, you want to just comment a little bit on our approach with YUTIQ?

Sure. Thank you, Nancy. Yes, as Nancy mentioned, we will not provide guidance for the fourth quarter or for future quarters. However, I would say that a month into the fourth quarter, we're very pleased with the performance of the product. And what we have seen coming out of the third quarter is that physicians kind of fully back in the office and we're starting to see a lot more patients flowing through, and as you can imagine that provides a lot of more opportunities for treatment. I would say that, as I mentioned previously in the discussion, we have been really pleased with the uptake of YUTIQ overall in the marketplace, especially within the retinal segment, as we're seeing a lot of retina physicians, a lot of new retina physicians come on board in terms of utilizing YUTIQ. And so we see that as a nice harbinger for the future.

Got it. Thank you.

Thank you. One moment, please. Our next question comes from the line of Yale Jen of Laidlaw & Company. Your line is open.

Good morning, and thanks for taking the question. My first question is for the DAVIO 2 study. How many sites currently are being enrolled? And what will be the targeted number of sites to be enrolled in this study?

Hi, Yale. Yes, we're not going to disclose that. But suffice it to say, it's typical. So we don't go into that level of detail on our clinical studies.

Okay, no problem. Thanks for that. Just two small quick ones, the first one for the PAVIA study and the readout [indiscernible] level changes. Does this endpoint also could be used for the future pivotal study, or you're thinking about something else?

Jay, go ahead.

No, that would be as of now the endpoint for the future pivotal studies. That is an approvable endpoint. Both LUCENTIS and EYLEA were approved for NPDR based on that endpoint. And so the plan right now would be to use that as the endpoint in the pivotals.

Okay, great. And maybe the last question here is that the assumption for the runway, would that include very minimum DEXYCU revenue as the base case?

George?

Yes, I can answer that, Yale. Thank you for that. We guided about DEXYCU in Q2. We kind of knew that the pass-through extension was unlikely. And so that's always been -- the reduction in DEXYCU revenues has always been part of our cash projection. Recall that we brought in Imprimis as a commercial alliance partner back in 2020. So it's been a non-core program for us. And while yes, it's been breakeven, it wasn't a significant component of our cash generation.

Okay, great. Thanks a lot. And I look forward to see the progress.

Thank you.

Thank you.

Operator?

[Operator Instructions]. Our next question comes from the line of Daniil Gatualin of Chardan.

Good morning, guys. Thanks for taking the question. Just a quick one I guess on a big trend long term. Can you comment on the plans with regard to other anti-VEGF indications such as plans for RVO?

Yes, go ahead, Jay.

Yes. So the next indication which we plan on pursuing is diabetic macular edema and the current plans we expect to initiate that study in the second half of next year. We will probably do RVO at some point. We don't have it built into our models yet. Again, RVO is a much smaller market than the others. And while we think there probably will be benefit, that's not in our current plan. But we expect as we unfold with the pivotal trials for wet AMD and NPDR that will come more into focus. I'll also add, there's other smaller indications which we will probably layer on eventually as well, like myopic choroidal neovascularisation. We expect that 1901 will do very well in that indication. And we're also looking at the possibility of using EYP-1901 in a high risk eye, in other words an eye that has dry macular degeneration but has not yet converted to wet macular degeneration, using EYP-1901 as a preventative kind of maintenance therapy to prevent the conversion to wet. There's considerable evidence from the oral studies of vorolanib in wet AMD that there was a protective effect to the fellow eye. So that's another potential indication that we will be modeling and looking at in the future.

Got it. Thank you. That was very helpful.

Thank you. One moment, please. Our next question comes from the line of Yuan Zhi of B. Riley. Your line is open.

Good morning. Thank you for taking our question. Can you remind us the market opportunity of NPDR patients? And when you look at the treatment landscape, what do you think could be the standard of care two years later when you are planning or initiating your potential Phase 3 trials in NPDR? Thank you.

Yes. Scott, you can answer the market opportunity and then Jay on the clinical side.

Thank you for the question. Yes. As you're certainly well aware of the diabetes or population with diabetes is continuing to grow and is substantial number of patients at this point. It could be numbering as many as 15 million patients who are flowing through some form of ophthalmology practice or optometrist practice. We believe that certainly the opportunity, as we said, is extremely large. Jay, I think did a really good job of laying out kind of the current conundrum as it relates to the treatment paradigm, which we believe we certainly offer a really unique opportunity moving forward.

Jay?

Yes, so it's hard to project anything in this day and age. But looking realistically at the two FDA approved drugs for NPDR, it's hard to believe that the market is going to open up substantially in the next two years. I think inroads will be made. I think more of the young doctors might be more interested in pursuing an aggressive treatment of NPDR. By aggressive, I mean frequent injections. But again, in this patient population who are generally younger and working, it's hard to think in an asymptomatic disease, they're going to want to come in that frequently and subject themselves to the small but finite risk of multiple injections. Other sustained release products are going to, I'm sure, look at the NPDR market. But this again is a risk benefit kind of thing. The refillable [ph] core technology, I would expect if it was synthesis effective, it would be as well, but that may not meet the standard of risk versus benefit. And again, I think some of the other products out there, gene therapy is potentially a pathway to have sustained release of any drug too, but that remains to be tested. So we think that there's still going to be in two years substantial opportunity in every nine months or perhaps even once a year intravitreal in office bioerodible injection that could substantially alter the course for the positive in many patients with NPDR.

Thank you. That's very helpful.

Thank you. I'm showing no further questions at this time. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day.

Thank you.

You're welcome. Thank you.