Good afternoon, ladies and gentlemen, thank you for standing by. And welcome to the Ocular Therapeutix Fourth Quarter and Year End 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. It is now my pleasure to turn the call over to Donald Notman, Chief Financial Officer of Ocular Therapeutix. Please go ahead, sir.

Thank you, Daniel. Good afternoon, everyone and thank you for joining us on our fourth quarter year end 2018 financial results and business update conference call. This afternoon, we issued a press release providing an update on the Company's product development programs and details of the Company's financial results for the quarter ended December 31, 2018. The press release can be accessed on the Investors portion of our website at investors.ocutx.com. Leading the call today will be Antony Mattessich, our President and Chief Executive Officer, who will provide an update on DEXTENZA, and a summary of our corporate developments and upcoming clinical milestones. Also speaking on the call today will be Scott Corning, our Senior Vice President-Commercial, who will then provide an update on DEXTENZA commercial plans and Dr. Michael Goldstein, our Chief Medical Officer, who will then provide an update on the clinical developments and our pipeline. Following Michael's remarks, I will provide an overview of the financial highlights for the fourth quarter and year ended 2018. Before turning the call back over to Antony for a summary and questions. For Q&A, we will also be joined by Dr. Dan Bollag, our Senior Vice President, Regulatory Affairs and Quality. As a reminder, during today's call, we will be making certain forward-looking statements. Various remarks that we make during this call about the Company's future expectations, plans and prospects constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent Annual Report on Form 10-K, which was filed with the SEC today, March 7, 2019. In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, except as we are required to do so by law even if our views change. I will now turn the call over to Antony.

Thanks, Donald. 2018 was a transformational year for Ocular and we are thrilled with early momentum we are seeing as we enter 2019, having recently submitted our sNDA to expand the label for DEXTENZA, commence dosing in our OTX-TKI trial and closed to 37.5 million convertible debt financing which strengthens our cash position and extends our runway into early 2020. 2018 was obviously highlighted by the FDAs approval of DEXTENZA, our dexamethasone intracanalicular insert for the treatment of post-surgical ocular pain. This accomplishment brings us one step closer to realizing the significant potential of our hydrogel drug delivery platform. We're at a critical moment in the company's history as we are on the cusp of becoming a fully integrated commercial stage biopharmaceutical company. We remain on track to have DEXTENZA available for sampling in May with a formal commercial launch set to begin upon confirmation of our pass-through payment status expected in July of this year. DEXTENZA is not only Ocular's first drug approval, but is also the first products approved in an entirely novel dosage form. Drug-eluting intracanalicular inserts are minimally invasive, easily deployable route of administration that can deliver drugs to the surface of the eye without the challenges associated with eye drops. While we intended to introduce multiple products treating many different diseases using this novel dosage form we believe DEXTENZA can be transformative for both patients and physicians. For patients DEXTENZA will offer the convenience of a full course of steroid treatment in a single preservative-free intracanalicular insert. This novel means the delivery can replace a complex I dropped regimen that under a current standard of care can require up to 70 ocular steroid drops delivered over a full month and require a weekly change in pathology. For physicians DEXTENZA puts control back in their hands…

Thanks, Antony. We're incredibly excited about the upcoming launch of DEXTENZA and I would like to update everyone on the status of our commercialization efforts. As Antony said, we remain on track to have DEXTENZA available for sampling in May with plans for our commercial launch in July upon receipt of pass-through payment status when we expect CMS the issue our new C-Code. Starting with market opportunity, there are approximately 9 million topical ophthalmic steroids prescriptions in the United States, about 4 million of which are associated with cataract surgery. Of those approximately 2 million or cataract surgeries performed on patients covered under Medicare Part B. These cataract procedures will be our initial target market as they will be reimbursable with a C-Code in hand. We are launching DEXTENZA ourselves in the United States market, will do so with the direct sales force. This is an important aspect of our commercialization strategy based on our strong belief that this specialized sale essentially the surgical sale of the pharmaceutical product is best performed by a key account team with experience in ophthalmology and selling, buy and build products that can navigate the complexities of account based selling. For us, it is important to have a dedicated team that not only shares in DEXTENZAs success as a product, but also on Ocular's success as a company. We realize there are a number of new and existing products being used presently or that will be used post cataract or post ocular surgery. And we believe we are well positioned to compete effectively given DEXTENZAs unique value proposition as the only drug-eluting intracanalicular insert. DEXTENZA releases up to 30 days of preservative-free dexamethasone to the ocular surface on a tapering basis, replacing the most arduous post-operative drop regimen with a single insert there by…

Thanks, Scott. Before getting to our pipeline it is important to our continued efforts to expand the potential of DEXTENZA. DEXTENZA truly represents the franchise opportunity for the company with multiple lifecycle expansion opportunities and other indications where a product profile like DEXTENZA has the potential to change the standard of care. In January of this year we submitted our supplemental new drug application to expand DEXTENZAs label to include the treatment of ocular inflammation following ophthalmic. We expect the FDA to complete its review in the second half of 2019. In addition as we expand the DEXTENZA franchise, in 2019 we plan to initiate clinical trials that will evaluate DEXTENZA in pediatric cataract surgery and in allergic conjunctivitis. We have received proposals for and plan to support several investigator initiated trials evaluating DEXTENZA different clinical situations. Beyond DEXTENZA, our development efforts now shift to our pipeline of products that target multiple other ocular diseases both the front and back to the eye. Each of the products within our pipeline targets a well-defined market that we believe is underserved by the current standard of care and like DEXTENZA each of the products in the pipeline is a customized formulation that uses our proprietary hydrogel technology platform that we believe can produce treatments that offer significant benefits over those offered by existing drugs on the market today. Two programs within the pipeline that we're very excited about target patients with glaucoma or elevated intraocular pressure. As many of you know glaucoma is a large market and a disease that infects an estimated 2.7 million people in the United States. It is recognized as a leading cause of blindness in people over 60 years of age. It is also an area where we believe one of the greatest unmet medical needs is…

Thanks, Michael. Let me begin by summarizing our capitalization. As of the quarter ended December 31, 2018, we had $54.1 million in cash and cash equivalents versus $56.9 million at the end of the third quarter. The Cash Balance benefited during the fourth quarter from 5 million in net proceeds generated from the sale of common stock under the company's 2016 Sales Agreement or ATM, and $12 million of net proceeds from an expansion and extension of our existing five year term loan facility. Of setting the ATM inflows during the quarter were net losses of $17.4 million and principal debt and interest repayments of $1.5 million. As disclosed in this afternoon's 10-K filing, we have continued to opportunistically sell common stock under the ATM into 2019, raising an additional $5 million net of expenses. At this point, we have exhausted the current ATM facility. In addition, as announced two weeks ago, we raised $37.5 million in a convertible note offering to further support the launch of DEXTENZA and the ongoing development of our pipeline. This seven year note bears annual interest at a rate of 6% and is convertible into common stock at $6.50 per share, representing an 80% premium to closing stock price on the day of announcement. We are pleased to have put this additional funding in place that sought to minimize dilution to existing shareholders. Based on our current plans and forecasted expenses. We believe that existing cash and cash equivalents will fund operating expenses that service obligations and capital expenditures into early 2020. This is of course, subject to a number of assumptions about the pace of not only our research and clinical development programs, but also the costs related to the commercialization of DEXTENZA as well as other aspects of our business. Research and…

Thanks, Donald. Now, before opening the call for questions, I'd like to recap the company's upcoming milestones for 2019. We remain on track to launch DEXTENZA midyear upon receipt of the C-Code. We anticipate the FDA to complete its review of our sNDA to expand DEXTENZA label and include information in the second half of 2019. We expect to report results from our first pivotal Phase 3 study for OTS-TP in the first half of 2019. We have made progress on both of our Phase 1 programs. For OTX-TIC, we have completed dosing our first cohort and begun dosing our second cohort. We expect to present the initial results at the ARVO meeting in April of this year. For OTS-TKI, we're pleased to announce we have commenced dosing and plan to continue to recruit this Phase 1 trial over the course of the year. In both of these programs we will collect safety data and also have an indication of biological activity by the end of 2019. Finally, we remain active in business development discussions seeking to leverage our hydrogel platform, our pipeline programs and the uncovered territories for DEXTENZA. Our expectation is that the approval of DEXTENZA will enhance our ability to negotiate deals that will bring fair value back to the company. In summary, we are encouraged with our progress in all aspects of our business and look forward to evolving into a commercial biopharmaceutical company. Before turning the call for questions, I'd like to quickly mention that we have a plan to host later this month an R&D day in New York City to highlight our pipeline and the opportunities we have with our hydrogel platform. We'll be sending along a save the date note shortly and I certainly hope to see you all there. And with that, I want to thank you for your time and we can now open the lineup for questions.

Thank you. [Operator Instructions] Our first question comes from Adnan Butt with Guggenheim Securities. Your line is now open.

Hey thanks. Thanks for the question. First, on the glaucoma program, Antony, what do you think you need to see from the OTX-TP Phase 3 study to start the second Phase 3? And then for OTX-TIC what is that compound need to show in terms of IOP lowering to stay competitive in this space?

Thanks for the question Adnan. I'll form that out to Mike Goldstein who's answered in a number of different times in essentially the same way, so I'll give you Mike.

Yeah, so thanks Adnan. This is Mike. So I think as we've said before, we'd like to see the data come in from the OTX-TP Phase 3a study before we commence the 3b study. The primary endpoint is to show a statistically significant difference between the active treated group and the placebo group at the nine diurnal time points. So that's a two weeks, six weeks and 12 weeks. And it's looking at 8am, 10am and 4pm. And the additional part - so that's what the primary point of the study are. To get approval the additional part is that the change from baseline that we see with the active group needs to be clinically meaningful. I think it's at that point that there - it's really a risk benefit discussion with the FDA to determine how you come up with clinically meaningful given we have a single insert that will provide therapy for a period of up to three months. So I think it's really analyzing that data, having the discussion with the FDA and then crafting the appropriate 3b study. As OTX-TIC, so that's our intracameral program. So by putting the travoprost into the eye, we expect to have greater IOP lowering effect. And we fully expect to see that with the TIC program relative to the TP program and we've seen that in the small number of patients that we've done thus far.

Mike, a follow up here, in terms OTX-TP when the company says in discussions that the benefit has to be clinically meaningful, is that not yet defined by the FDA or is that something that's negotiated and you don't want to commit to that?

So I think the - so the FDA has not define that and it's up to the sponsor to justify what's clinically meaningful based on the unique product characteristics that we have. I think the definition for that would be very different for a product that's got the value proposition that this has, which again is a single insert no drops for a period of three months that's a very different value proposition to - you have to administer drops either once or twice to three times a day every single day. So ultimately it's the risk benefit. What's the benefit that we see? And then what's the risk and how does compliance play a role in that? And it's up to the sponsor to make the justification to the FDA as to what's clinically meaningful in that setting.

Now there is another long acting insert that's past Phase 3 studies. Do you think the FDAs view of risk benefit will be impacted by that particular compound and then that's why I posed the OTX-TIC question as well? What do you think as the hurdle for that one in terms of being viable?

Yeah, I mean, so OTX-TIC again is the intracameral injection of travoprost, so that's a more still minimally invasive procedure, but certainly more invasive than putting something in the canaliculus. As you note, there is a program that is completed two Phase 3 programs and they've shown nice efficacy on par or maybe even slightly greater than what you'd see with a very compliant topical drop patient. So I think that's a reasonable efficacy barrier or reasonable efficacy mark to hit. But I think the products will have very different other profiles. So the OTX-TIC platform uses the same hydrogel platform that we've used in other programs and it's been programmed to completely go away in approximately six months. And so I think that could be a really interesting competitive differentiation. And then we need to look at other safety metrics including, half the health for cornea in the long run with each of these products. So again, ultimately it's going to be a risk benefit looking at the various - the profiles of the different products, but I think both will really solve a key unmet need and probably the most important unmet need and glaucoma which is patient compliance. So while coming up with new mechanisms is certainly important. Being able to come up - being able to solve the compliance issues glaucoma I think you talk to most glaucoma experts I think that would be probably the biggest unmet needed in glaucoma.

Last one before I get back in line, you mentioned TIC data at ARVO, Antony, does the company plan to top line that press released at or do we have to wait for the medical meeting to see it?

So you have to wait for the medical meeting. That will not be full data set. It will not be from all the subjects. It will be a snapshot of where we are at that particular point in time. So we believe - so it won't be one or two or three patients, there will be more than that, but we will not have been able to follow all 10 patients out to the full. Originally were designing the trial for six months, we've actually seen in the first couple of patients longer efficacy. So we've extended the trial for a little bit longer period of time. But we will not be able to see the full efficacy for all the patients at that meeting. But it will give you a snapshot of where we are at that point.

Thanks.

Thank you. And our next question comes from Dan Leone with Raymond James. Your line is now open.

Hi, thank you for taking the questions. Congratulations on the progress. I want to ask and just double check here that there's no potential delay in the review for the C-Code given the disruption in the government operations as you guys were submitting that for DEXTENZA?

We certainly don't expect there to be a delay. We were - as you might remember, we actually submitted as part of the previous cycle, but did not have a fully complete - we didn't yet have a published price. We were told by CMS that they would put us both sort of on the top of the pile for the next round, which we understand is progressing as when it's supposed to. So we have every expectation that will be able to get the C-Code in the July timeframe.

Okay, great. In terms of just alleviating some of the capital position that you have, obviously you have a pretty deep pipeline that you're looking to accelerate can just kind of touch on what you want to do as the capital constraints are alleviated that you guys have been working on and what we could expect from a timeline or maybe bringing new programs out that haven't been unveiled yet over the course of this year. And just kind of general thoughts of balancing the commercial effort that you rolling into the DEXTENZA versus still some of the developmental efforts?

Well, I mean, clearly the commercial efforts around DEXTENZA will be sacrosanct. We are going to optimally resource that launch. And we are sort of ring fencing any kind of investment that we would do around that DEXTENZA launch to make sure we get the traction that we need with that product. As Donald mentioned, with the existing cash and cash equivalents that we have in place, we would be able to fund the entire pipeline that Mike went through, through early 2020. We also gave a teaser about our pipeline - additions to the pipeline that we will be talking about in the March Investor Conference. Accelerating some of those into an earlier clinical path would clearly be something we do if we had additional resources, but certainly the early stage development formulation Pre-IND work, we can do relatively inexpensively and relatively quickly. So we really don't need any additional financial resources to get those to the clinic. Clearly, once we're in the clinic then having multiple programs in later stage clinical trials, we would need additional resources for that. And we would either get that by ourselves or we've worked through partners who would be able to help fund those and potentially fund other programs that we have in development as well.

Excellent and can you just kind of clarify the wording on the final formulation for OTX -IVT? Is that is that new wording or is that just kind of the same thing that's been evaluated over the last 12 months?

It's exactly the same thing. I mean, I think we're as frustrated as everyone else that we're not able to announce that there have been changes one way or the other in that program. And we're clearly working very hard as are Regeneron to try and understand how we go forward with this, but there has been no change and very purposely no change because there is nothing material that we can talk about.

I think this is disclosed when the partnership was signed, but they do owe you some milestone payment if it goes into Phase 1, right?

If we keep with existing agreements, and they option the product, and yes, there's a $10 million payment associated with that. That's assuming that we keep the existing agreement in action, the existing agreement.

Okay. Then, one last one for me to Mike in here, the context of the nine months target for OTX-TIC, maybe you could provide some color in terms of - we saw some of this formulation, some novel compound formulations, extended duration formulations presented at the angiogenesis conference a few weeks back, just kind of where's your thinking in terms of competitive positioning if you really can get the OTX-TKI to work up to nine months as a sustainable delivery mechanism and what IND?

Yeah, thanks for the question. Yeah, so OTX-TIC is the glaucoma program and so there we are targeting six months, but I've seen longer. OTX-TKI -

Yeah, sorry about the TKI.

The TK I program which - we were never talking about TIC at angiogenesis I got it. So I think there are two novel opportunities there. So one is duration and as you know standard of care or macular degeneration and diabetic macular edema is treatment every one to two months. There are some near term programs that probably extend that every three months. And so from a durability perspective, we think anything greater than three months is going to be pretty novel without having to refill a T product in the eye. So getting a single insert getting beyond three months, we think would be pretty novel. With the animal data we've had at hand we've actually seen in effect out to about 12 months with a single insert. When you sort of take into account different sides of the eye, and different viscosity of the vitreous, we think that correlates to the human to about every nine months. But we think it'd be clinically viable. Even if we don't hit every nine months, if we were able to show three or four months in that range, we still think that would be clinically viable. So I think that's sort of one line of thinking. The other is new mechanisms in the AMD space. So clearly anti-VEGF drugs have revolutionized the space and they clearly work but they don't work for everyone in there. There are certainly opportunities to come up with new novel mechanisms. So with the TKI program, I think we hit on both of those. We've got a novel mechanism and we think we can increase the durability of the effect.

Okay, great. Thank you very much.

Thank you. And our next question comes from Bill Moran [ph] with Cowen and company. Your line is now open.

Hi, thanks for taking the question. I was hoping can we get any metrics on the size of the planned sampling program for DEXTENZA that will be starting later this spring? And secondly, how should we view the launch of DEXTENZA in terms of the competitive environment with another product launching into the same space at the same time? Thanks.

Okay, great. I'll handle the first question about the sampling. We've yet to determine what the sampling levels would be. We won't be restricted though by the amount of volume that we expect to be able to produce. We are lucky enough to have control our own means of production and we're able to produce really as much as we think we could possibly need. The main issue around that it's going to be that we are going to remain in compliance and ensure that we don't run afoul of any kind of compliance arrangement with potential over sampling, but we'll give as much as we can. I'll let Scott, our head of commercial to sort of handle the competitive situation.

Yeah, thank you. We look forward to launching into a really competitive and vibrant market. There's two topical launches or new products that will be taking place as well as one injection and then on top of that, of course, DEXTENZA. We believe we know the markets been clamoring for sustained release products for years and so we think we will compete very effectively versus any topical drop. Prednisolone acetate prejudice of course, a generic is the lion's share of the market. So that's really the main competitor. But as far as the other competitive entrants, we look forward to being in that space. And to use that of spoken cliché, A Rising Tide Lifts All Boats and so we will be entering into offices and to ASCs after someone else has already talked about the steroid marketplace and vice versa. So I think we'll all benefit from, as I said, a vibrant marketplace.

Thanks. And then as a follow up, is there any thought to maybe an ex-US launch or partnership anytime in the foreseeable future? Thanks.

Absolutely, I mean, this is something we're very actively involved in looking at potential ex-US partners. At this moment, we don't have a desire to go direct ex-US. We've not given any guidance on when we would intent to file ex-US particularly in Europe and some of the other large markets. Once we get those, the clear understanding of what it takes to fall in those areas and are able to commit to a timeline will come forward with one, but absolutely this is a better way of giving a steroid drop and stereo drops are given all over the world. So the intention is very much to leverage that we are global rights to this product.

Thank you.

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

Hi, this is Rob on for Yi. Just two questions if I may. The first one being, so has the CMS indicated that the procedure of inserting DEXTENZA could be separately reimbursed? And the second one would be what are your expectations for sales in 2019 before the issuance of the J-Code? Thank you.

I'm sorry I didn't get the second question.

The second one is what are your expectations for sales of DEXTENZA in 2019 before the issuance of a J-Code?

Okay. The first one, the CMS has not indicated that the product - you're talking about the product or the insertion?

The procedure for inserting to DEXTENZA, could it be separately reimbursed?

Yes, it could be separately reimbursed. But that's one of our key goals will be determining under what circumstances and how that gets reimbursed, clearly that becomes a key driver in the uptake of the product. But having gone through this movie before, what you have to do is you have to test the code, you have to submit it and then you have to do a bit of hand-to-hand combat to ensure that it gets reimbursed in a reliable fashion. We'll launch as a category three code, which is an experimental code and there are some players that are more willing to pay against that code and then others. Over time, the goal is very much to turn that into a category one code where it will be universally separately reimbursed, but we have some work to do before we get there. In terms of the expectation, I'll turn it over to Scott for the second part of question.

Yeah, as far as - as we stated, our expectations to launch with a laser focus on Medicare Part B reimbursement suggest that we're not waiting for the J-Code. Of course, that opens things up widely for us and we look forward to the day when we have the J, but as stated, we're launching with a limited sized sales force that's targeted on the surgical opportunity very purposefully and once we get the sales and reimbursement engine up and running, that's when we plan to expand rapidly, as I said to about 40 key account managers by year end. But as far as a specific number, that's something that we're not giving at this point. Our goal is to get patients treated. And we want to do that by getting out into the marketplace, speaking to surgeons in their offices, and of course, working with them in their ASCs and getting DEXTENZA into the hands of the physicians who can get it into the patient. So our goal will be overall patients treated as opposed to unit sold in the first few months of deploying into the field.

Thank you. And I am not showing any further questions at this time. Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program and you may all disconnect. Everyone have a wonderful day.