Good day, ladies and gentlemen and welcome to the Sight Sciences Fourth Quarter and Full Year 2021 Financial Results Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today’s conference, Philip Taylor. You may begin.

Thank you for participating in today’s call. Presenting today are Sight Sciences Co-Founder and Chief Executive Officer, Paul Badawi; Chief Financial Officer, Jesse Selnick; and Chief Commercial Officer, Shawn O’Neil. Earlier today, Sight Sciences released financial results for the 3 months and 12 months ended December 31, 2021. A copy of the press release is available on the company’s website at investors.sightsciences.com. I would like to remind everyone that comments made by management today and answers to questions will include forward-looking statements within the meaning of the federal securities laws. Those include statements related to Sight Sciences’ anticipated financial performance and operating results; market opportunity; the future impact of COVID-19 on operations, business strategy; and plans for developing and marketing new products. Forward-looking statements are based on estimates and assumptions as of today and are neither promises nor guarantees and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied by these statements. A description of some of the risks and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements on this call can be found in the Risk Factors section of the annual report on Form 10-K filed today and other filings with the Securities and Exchange Commission. The company undertakes no obligation to publicly update or revise any forward-looking statements except as required by law. For more information, please refer to the forward-looking statement notices and risk factors in the recent SEC filings. I will now turn the call over to Paul.

Thanks, Trip, and thank you all for joining us today. I’m very excited to provide an update on our business and the progress we have made delivering the power of sight. I will touch on the accomplishments that made 2021 a huge success and how we are positioning Sight Sciences for continued success going forward, including an introduction to some of the exciting new products we are developing. OMNI and TearCare are well on their way to becoming breakthrough products, yet we have never stopped innovating. We are employing our rigorous product development process to develop a portfolio of new products that will enable us to serve an even broader array of patients suffering from glaucoma and dry eye disease. These programs which we anticipate will include controlled product releases and launches this year will help us drive organic growth for the next decade and beyond. But first, I’d like to start by reviewing our strong performance in the fourth quarter. Our total revenue increased to $14.7 million, representing growth of 63% compared to the fourth quarter of 2020 and 12% growth compared to the third quarter of 2021. Despite headwinds from resurgent COVID disruptions and shifting reimbursement dynamics, we delivered meaningful sequential growth in the fourth quarter, driven by continued new customer wins and higher utilization in our surgical glaucoma segment which grew 12% sequentially and 60% year-over-year to $13.9 million. As others across our industry have discussed, we experienced a similar slowdown in activity in mid-December due to Omicron and the holidays that dampened what could have been an even more exceptional quarter. Fundamentally, our core principles position us to succeed and underpin the growth of our business. Our efforts are always focused on the needs of patients and protecting and enhancing mankind’s most precious sense sight. We…

Thank you, Paul. I will start with a discussion of the fourth quarter results and then I will move on to our 2022 guidance, including an update on our year-to-date performance, trends in the operating environment and our outlook. Our total revenue for the 3 months ended December 31, 2021 was $14.7 million, a 63% increase from $9 million in the same period of 2020 and a 12% sequential increase from $13.1 million in the third quarter of 2020. Our combined gross margin for the fourth quarter was 87% compared to 74% in the corresponding prior year period and 84% in the third quarter of 2021. Our surgical glaucoma segment revenues for the fourth quarter were $13.9 million, up 60% from $8.7 million in the fourth quarter of 2020 and a sequential increase of 12% from $12.4 million in the third quarter of 2021. Underlying fundamental business trends, including utilization and ordering facilities were very encouraging until the second half of December as we experienced business disruption similar to our peers due to the surge in the Omicron variant. Sequentially in the quarter, our number of ordinary accounts grew by approximately 5%. The remainder of our sequential growth came from an increase in utilization from ordering accounts, which we achieved despite 3% fewer OR days in the fourth quarter versus the third quarter. So we did a very nice job both adding to our user base and leveraging our existing user base to expand usage. Through the first half of December, we generated extremely strong sales, and we were actually on pace to grow sequentially by between 17% and 19% for the quarter, inclusive of the historical slowdown of bookings around the holiday season, which, in our experience, the first half of December generates approximately 60% of the whole month’s…

Thank you. [Operator Instructions] Our first question comes from the line of Joanne Wuensch with Citibank. Your line is open. Please go ahead.

Hi, can you hear me, okay?

Yes. We can. Hey, Joanne.

Hi, how are you doing? I just want to make sure I caught a couple of the numbers that you were talking about. I got the number of active accounts, 750 in the quarter for MIGS. I got that there are roughly 550 facilities doing dry eye. But I’m looking for a couple of other pieces of information, particularly and I apologize if I missed this. Of those 750 active accounts, can you back us into either the number of physicians and/or the percentage of procedures that are stand-alone versus concomitant?

So I’ll take the first. We can’t track – we track trained surgeons, Joanne, but we can’t track utilizing surgeons, right? So we’ve trained, we ended – we’re currently around 1,500 trained surgeons. And there is actually recently some research that came out that estimated the total number of MIGS-trained surgeons to be 5,000. So still a lot of runway there. And then there is – we kind of estimate about 1.3 to 1.5 surgeons per utilizing surgeons per facility at this point in time, but that’s just an estimate. And then Paul, standalone combination?

Yes. It’s hard for us to track with any specificity right now, stand-alone penetration. We obviously have a number of investments we talked about that we’re making part of those in parallel with those investments were – we continue to explore ways to track our progress both internally for ourselves and also to report publicly to you all, Joanne, especially around the GCC, the team of 20 that we’ve hired. They are fully trained now. We hired them in this quarter, and we’ve been training them over the past several months. We’d expect for their contributions to start showing up meaningfully later this year, and Shawn can talk about that and Shawn, the metrics we will use to track the progress there? Shawn O’Neil: Yes, Joanne, as we’ve mentioned before, the CPT codes do not differentiate between a combination cataract or a stand-alone case. So we’re still looking at that data at a high level to try and gain insights, but it’s not obvious. One thing that we are doing with our GCC team is they do have a finite target list that they are going to be focusing on. And obviously, we know what the baseline sales and activity are in those facilities and we will be able to track that over time and identify incremental growth, which is obviously one of the KPIs that we’re going to be focused on. So we believe we will be able to take several of these data sets and then be able to crystallize them into a better answer.

Okay. I’ll leave it there. Thank you.

Thank you, Joanne.

Thank you. And our next question comes from the line of Cecilia Furlong with Morgan Stanley. Your line is open. Please go ahead.

Hi, good afternoon and thank you for taking the questions. I wanted to ask on ‘22 guidance. one, how you’re thinking about continued expansion in your established accounts into stand-alone, how that contributes to your outlook as well as your expectation for new center adds throughout the year?

So gave you in my comments, probably it was a mouthful, Cecilia. But we added 98 new facilities, brand-new facilities, first-time orders in the fourth quarter. That kind of pace is a pace that I think we expect to continue at a baseline minimum, right? So that should give you some color on that. And as Shawn alluded to and Paul, like the way we build our model is we look at utilization overall, Stand-alone is obviously a really important driver. And yes, I mean everything, all of our trends point very positively towards that. We decompartmentalize our growth in terms of customer acquisition growth and use case growth. And we feel – honestly, we feel like with these investments that we’re making and the growing market presence that sort of natural organic growth in use case is going to see tailwind actually as we continue to progress through the year and see the results of the GCC and a lot of the really focused marketing that we’re doing around the opportunity.

Great. Thank you. And if I could follow-up as well, just on R&D, both near-term but more so as you think over the next several years with the pipeline updates you provided today, how you’re thinking about just the level of R&D investment incremental to what we were previously contemplating with the aforementioned product portfolio and clinical trials that you had previously planned?

Yes. So low double-digit millions in terms of pipeline investment, that’s both headcount and project investment this year. So it’s fair to look at how we were trending in that area and add that to it as a good proxy for that line item. The reality is our development process itself is very efficient and practical kind of similar to – we were very capital efficient in getting OMNI into market. I’m proud of that fact. And I think we’re working on these projects with a real similar mentality. So I think there is a lot of opportunity for a very reasonable amount of spend there.

Thank you for taking the questions.

Thanks, Cecilia.

Thank you. And our next question comes from the line of Andrew Brackmann with William Blair. Please go ahead.

Yes. Hi guys, good afternoon and thank you for taking the question. Maybe just start there on the competitive front and the trialing you expected. Jesse, I didn’t hear sort of a specific number that you are sort of anticipating in your guidance for the year, so maybe just a housekeeping around that if you have a specific number. But I guess then bigger picture, I guess from your perspective, how do you see all of these sort of newer non-implantable devices or tools sort of impacting the market broadly. Anything that you can sort of share from a surgeon sort of perspective that you are hearing given those announcements over the last 10 months, 12 months? Thanks.

Yes. I will go to the specific question, and then I will let Paul and Shawn take the bigger picture question. And on the specific – Andrew, like it’s a factor in how we look at our model, right. Like I do think that what it does is it creates an adoption lag. What we haven’t seen is we haven’t seen share loss because of it. But what we have seen is it’s harder – there are cases where it’s harder to get on the calendar to move people along the trialing curve. So, when you look at our range, that reflects a range of thinking about what our trial period might be. And as you kind of know from our model, that’s just a really key driver given how high growth it is in terms of when we get people to move along to that sort of steady ordering cadence. And so I wanted to kind of flag what the impact of that is in our model just as sort of an order of magnitude, but it doesn’t – it’s not like there is a bridge that says competitive products and competitive trialing has had x dollars of impact on us.

Yes. I will add a couple of comments. Shawn has other comments to add as well. But we are seeing it, first of all, these new entrants primarily in combination with cataract surgery and primarily being bundled or used in combination with stents. I believe that’s all we are seeing to-date. And so for us, in response to that, as we always do, we highlight the benefits of OMNI, right. And that’s usually enough. The comprehensive ophthalmic procedure that addresses uniquely all three points of resistance, the usability and procedural predictability based on many, many years of design iterations, a best-in-class indication for use based on highly compelling clinical data in all adult patients with POAG, combo cataract standalone, mild, moderate, advance. So, all-in-all, for us, as we look at these things, we think it’s hard to compete with what we offer, and our commercial team does a really, really excellent job of developing unshakable relationships with our customers. They are always doing the right things, highlighting the right things, the clinical value of OMNI always first and foremost and frankly, the lack of clinical evidence with some of these new entrants. Shawn, I don’t know if you have got anything else to add. Shawn O’Neil: From a commercial standpoint, obviously, focusing on our execution from the sales, marketing and training standpoint, we are definitely continuing to focus on the value of OMNI. I think the thing that’s important in the trial setting for your question is these being new products, they do not have clinical data nor do they have a track record of a reimbursement pathway. So, we continue to focus on the value of OMNI, the ability to lower IOP in adult patients with primary open-angle glaucoma, also the additional benefit of the medication, potential medication reduction, all within that stable, clear reimbursement pathway with 66174. So, our team is focused on mitigating any of that trial activity and then quickly pivoting back over to demand creation for OMNI and ultimately keeping the patient at the center of the conversation and providing the best option for the patient.

That’s great. Thank you all for that. And then maybe just sort of pivoting here to the pipeline. Obviously, a lot of new things sort of being unveiled here today and definitely warrant an Investor Day later this year, so excited about that. But I guess maybe from your perspective, sort of on those non-implantable newer devices, those seem to be the ones that are probably closest to market. How should we be thinking about sort of the differentiation of those devices versus the sort of aforementioned newer entrants in the canal based sort of surgery that we have been talking about here. Thanks guys.

Andrew, sorry, are you referring to our pipeline versus some of the new entrants or something else? I didn’t follow that exactly?

Yes. So, your pipeline exactly, so the new goniotomy device and then also the second-generation or third-generation OMNI device, how are those expected to sort of compete with those newer pipeline products from competitors? Thank you.

Yes, well, I will say that. We don’t enter any category without a whole lot of thought. We don’t enter any category without the expectation to be best-in-class. That is the expectation that’s from – before we even file a patent. These are the things going through our minds. So, we are not disclosing details, Andrew, on this call of that product or some of the other products in detail. We did want to preview it with you and everybody because we have been thinking about these things for several years. Some of them, we filed IP on them. We are now beginning to invest in them. We have recently hired a very talented head of pipeline strategy and development. And so we wanted to preview with you, we will be speaking in detail later this year either at an Analyst Day or Investor Day or both about those details that you are asking about, but just expect whatever we are going to disclose will be compelling. We have done it twice with OMNI and TearCare. We have a history of internally developing breakthrough products, the pipeline that we are talking about here has all been internally developed. Obviously, in the future, we will look externally. But for now, what we are talking about is internal development. We will share details, Andrew, on it in due course.

Okay. Thanks guys and thanks for the color today.

Sure. Thanks.

Thank you. And our next question comes from the line of Matt O’Brien with Piper Sandler. Your line is open.

Hi guys. Good afternoon. This is Drew on for Matt. Thanks for taking the questions. I do just want to follow-up a little bit on the comments on the commercial delays related to the competitors. I guess just to be clear, I mean what’s informing your view that gives you confidence that those delays are temporary? And then I guess two, have you made any tweaks at all to the commercial strategy until you have the canaloplasty label or on label for OMNI, or is it just about whether in this period till things get back to normal? Shawn O’Neil: So, from a commercial, - sorry, go ahead, Jesse.

Go ahead, Shawn. Shawn O’Neil: So, from a commercial strategy standpoint, we consider, we continue to stand behind the value of OMNI addressing all three points of resistance as a key differentiator addressing the conventional offload pathway in that manner. So, what we are doing is really being focused on continue to drive demand and focusing our strategy, especially with our investments in GCC is to expand use our SSRs to mitigate trial and continue to create demand and train new surgeons and then utilize our investment in GCC is to expand use case by educating the broader medical ECP community on making sure that patients are aware that there is another alternative for their earlier surgical intervention for their mild-to-moderate glaucoma needs. So, from that standpoint, we are being consistent and continue to drive value with that strategy.

And as for the canaloplasty alone indication and the studies, the Trident, Precision trials, let’s see what the clinical data looks like. We are excited about them. And we think that it – as you can tell from at least the high-level description of the portfolio that we are building out here, we want to offer the broadest, deepest, most rich portfolio of solutions for every doctor. And different doctors have different preferences. Some may prefer to do canaloplasty alone. Some may prefer to do canaloplasty with trabeculotomy. Some may prefer to do either of those procedures in combination with an implant. We have seen everything in the market. And we have a very, very good R&D team and manufacturing and operations team here. I can tell you that the Menlo Park office is buzzing with pipeline development right now, a ton of good energy here. And we want and can or capitalize to bring this portfolio to market, again, addressing all of these different use cases.

And you asked a question about why we are confident. We are using our eyes and ears to be confident. It was very noisy to try to assess January given the variants. But we have a really high touch sales model. We get great field intelligence about what’s out there, and I think we pretty have a conviction that in terms of what we are seeing and seeing order patterns through three quarters, March as well that kind of that characterization is accurate.

Okay. That’s very helpful. Thank you for that. And then I understand your comments on how it’s difficult to bifurcate the guidance as the standalone and combo cataract. But I guess to maybe just ask it simply, does standalone need to post similar growth last year? Does it need to accelerate from some of those investments you are making? What’s needed to get to the midpoint of the guidance range? Shawn O’Neil: We do believe – I mean we are confident that it will accelerate. It’s been part of our objectives as we brought OMNI out with, especially when we received its broadest label and we are confident that as we execute correctly, that is what will occur.

Yes. I mean, Shawn, the answer is the right one. We are confident that’s what we are making that investment but there is not a – there is a lot of – one of the great things about this product is there is a lot of different drivers of growth, and it’s still at even with a $14 million-ish fourth quarter, there is so much room to grow in terms of like the low amount of market penetration in standalone and combination cataract. And so there is a ton of conviction and a ton of investment in belief, but there OMNI’s ability to do sort of help to achieve this guidance. There is multiple ways to get there.

Okay. Thank you.

Thank you. And I am showing no further questions at this time. And I would like to turn the conference back over to Paul Badawi for any further remarks.

I just want to thank everyone for their time and questions and attention and interest in Sight Sciences and thank our team for a stellar year in 2021, and what’s looking like a really amazing year ahead with everything that we discussed today. So, thank you all.

This concludes today’s conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.