Good day, and thank you for standing by. Welcome to the Sight Sciences Second Quarter 2023 Earnings 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] Please be advised that today's conference is being recorded. ,:

Thank you for participating in today's call. Presenting today are Sight Sciences, Co-Founder and Chief Executive Officer, Paul Badawi; Chief Financial Officer, Ali Bauerlein and Head of Corporate Strategy, Tom Huang. Earlier today, Sight Sciences released financial results for the three months ended June 30, 2023. A copy of the press release is available on the company's website at investors.sightsciences.com. I'd 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. These forward-looking statements include statements related to Sight Sciences' anticipated financial performance and operating results, market opportunity, business strategy and plans for developing and marketing new products. Forward-looking statements are based on estimates and assumptions as of today 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 for the year ended December 31, 2022, filed 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. I will now turn the call over to Paul.

Thanks, Trip. Our strong second quarter performance displayed the continued successful execution of our growth initiatives across surgical glaucoma and dry eye. We generated record total revenue of $23.5 million, growing 36% compared to the second quarter of 2022. We saw great revenue growth in both of our businesses, propelled by strong commercial activity and expanding clinical evidence supporting the value proposition of our technologies. Most notably, we were thrilled to announce the success of SAHARA, our landmark device versus drug, randomized controlled clinical trial, comparing interventional eyelid procedures enabled by our TearCare technology to Restasis for the treatment of dry eye. At the six-month endpoint, interventional eyelid procedures enabled by TearCare technology were superior to Restasis and improving tear break up time or TBUT, the primary objective sign endpoint. TearCare was also non-inferior to Restasis with respect to improvement in Ocular Surface Disease Index, or OSDI, the primary subjective symptoms endpoint. As importantly, patients in the TearCare Group demonstrated clinically and statistically significant improvements of all 10 signs and symptoms endpoints measured at every observation interval. We are extremely excited about these clinical results and believe they will lay the foundation for us to help physicians rethink how they treat dry eye and transform the market by moving away from daily prescription eye drops and towards once or twice a year interventional dry eye procedures. An abstract of the six-month Phase 1 results from SAHARA has been accepted by the American Academy of Optometry for presentation at its annual meeting in October. We look forward to discussing the SAHARA data with payers as a key part of our efforts to establish reimbursement and fair patient access for TearCare treatments. To begin our surgical glaucoma discussion, I would like to address the draft LCDs for MIGS recently proposed by 5…

Thanks, Paul. I'm excited by the progress we have made this quarter across both surgical glaucoma and dry eye. Total revenue for the second quarter was $23.5 million, representing 36% growth compared to the second quarter of 2022. Surgical glaucoma revenues for the second quarter were $21.4 million, up 35% versus the comparable period. Over 1,100 customers ordered surgical glaucoma products in the second quarter, up 30% compared to the prior year period. Our commercial team did a tremendous job introducing our technologies to new customers and maintaining strong relationships with existing customers in the second quarter, particularly given the uncertainty associated with the proposed LCD. Our dry eye revenue for the second quarter was $2.1 million, up 56% compared to the second quarter of 2022. As we prepare to evolve TearCare beyond the controlled launch phase in the coming quarters, we would like to help investors better understand our dry eye business by introducing new operating metrics and a more targeted view of our core addressable market. We see vast potential to improve the lives of patients across the spectrum of mild, moderate and advanced dry eye disease. Our market research indicates that of the approximately 17.8 million patients with dry eye disease, there are between 11.6 million and 15.5 million diagnosed MGD patients in the U.S. Approximately, 55% of these patients or 6.4 million to 8.5 million patients would be categorized with moderate to severe MGD and we believe these patients are the most likely candidates for treatments like TearCare, while patients with mild MGD can also benefit from treatments such as TearCare. These patients and their eye care providers may not feel the same urgency to seek out a TearCare procedure until the patient symptoms progress. Given the significant MGD patient population, we believe it is important…

Thank you, Ali. We will now conduct the question-and-answer session. [Operator Instructions] Our first question comes from Craig Bijou from BofA. Go ahead, Craig.

Thank you. Good afternoon everyone. Thank you for taking the questions. Maybe just wanted to start. Obviously, you have this overhang with the MACs and the LCDs. And I appreciate the fact that you don't know what timing -- what the timing is to get an update. But maybe if we can -- if you could provide a little bit of color on what would happen if the LCDs were put into place, what are some of the options that you have if that were to happen? Maybe just kind of how to think about the timing of some of those.

Sure. I'd be happy to take that question. First of all, what I would say is I'd remind everyone that we feel like we've done a very good job outlining our case to each of the MACs on why coverage should be maintained for our products. And I think that that's really important for investors to understand that we believe that the proposed LCDs will not be put in place as they currently stand, it will be revised in some capacity. We don't have, as we said in the prepared remarks, visibility on exactly when the MACs will decide to make a decision. They could individually make decisions of what they want to do for their coverage areas or they together could get together as a tax meeting again and have another discussion about options there. Of course, as we've said in our previous coverage of these issues, this is a significant portion of our surgical glaucoma revenue from 2022 or in the states covered by these MACs, over 60%. So that is a significant portion of our revenue at risk, but we believe that it is a low chance that these LCDs will move forward in their current form. Our options, if they do, would be, of course to go through an appeals process associated with those LCDs. Of course, we could also pursue an NCD or other coding options. So those would really be our main options if these do progress in the unlikely scenario that these move forward.

Great, thank you, Ali. And I appreciate all of the color on the market opportunity for TearCare. And would love to -- now that you have the strong data from SAHARA and the opportunity is kind of now out there in front of you. Would love to get your updated thoughts or -- I know it's early, but feedback on SAHARA from the docs, what you think SAHARA could do for insurance coverage going forward? And then I think you guys have talked about a similar growth between surgical glaucoma and dry eye going forward as part of your medium-range plan. So is that still the case? Or how should we think about the opportunity to grow the dry eye franchise in '24 and beyond.

Yes. Hi, Craig, I'll take the first part of that question and then maybe Ali can add on. I think the feedback from SAHARA from our investigators has been very, very strong. There's a lot of excitement. There's a lot of excitement internally here at Sight Sciences. I do want to remind everybody, SAHARA is our second RCT, our first RCT, which was also very successful called OLYMPIA. We randomized TearCare against the first-mover leading MGD procedure and last year published superiority of symptoms in that trial. This trial, SAHARA was another very ambitious study designed to transform treatment towards interventional procedures and away from drops, artificial tears and prescription eye drops, very rigorously designed. We spoke to a number of payer medical directors in advance of embarking on this journey. We wanted to make sure that the data that we would be able to provide payers if the study was successful, would be meaningful to them making hopefully positive coverage decisions. We demonstrated, as we had mentioned in the prepared remarks, very consistent improvements in all signs and all symptoms. The study was a success. We demonstrated superiority to Restasis in our primary sign endpoint of pure breakup time. In terms of the plan, we will be publishing or submitting for publication within the next few months, hopefully, by the September time frame, we'll submit to a top journal, if not the very top journal in eye care. We'd hope to get the publication by the end of the year, if all goes to plan. And we're in parallel assembling a very strong payer relations team. They're mapping out the strategy for 2024 in terms of which payers we're going to target first to 2024, hopefully, with publication in hand, not just the publication in terms of the clinical data, but also health economics research and the budget impact model with those publications and the strong payer relations team will be working hard in 2024 with payers to hopefully start securing some coverage wins, which I would think in the 2025 time frame, Ali, you can cover that what we would expect to see maybe with success.

Yes, sure. So, happy to talk a little bit about where we see the trends going here. Obviously, we aren't prepared today to give any specific guidance for 2024 or 2025, associated with where we see the dry eye portion of the business going. We would be fairly cautious in expanding our commercial resources until we start seeing some market access wins. So for us, the priority in terms of our resources right now is to really go about securing appropriate and fair market access for TearCare. And as we get wins on that front, we would expect those to be accelerant to our revenue growth. Already, you see on our dry eye side of the business because it's growing from a small base, it is growing quicker than our corporate average revenue growth rate. And we would expect just given still the small base in the business that, that could continue. Now I think it will just depend on the timing of these market access agreements and how quickly we can ramp those up. But we see this as a very large market opportunity for us. We think we have great clinical results that we can share with the payers on why this is appropriate for coverage, but we need to go execute on that before we'll start talking about specific guidance and where we can take this opportunity.

Great, very helpful. Thank you for taking the questions.

Thank you. Our next question comes from Tom Stephan from Stifel. Please proceed with your questions.

Great, hi everyone. Thanks for the questions. I'll start with TearCare and SAHARA more specifically. In regards to kind of the payer discussions and ultimately trying to secure reimbursement. Could you maybe put a little bit of a finer point around roughly, I guess where you believe base case reimbursement for a single procedure might be for it to be viable. I guess your ASP on the SmartLid is a good starting point, but maybe if you can just help us with how to think about when the reimbursement decisions come in, what's a good outcome? What's a great outcome, what you're targeting, et cetera, that'd be helpful.

Yes, Tom, what I'd say is at this point, it's really too early. We are just now starting to think about engaging payers on that front, and we need to have those conversations and do the appropriate health economics and outcomes assessment to be able to set fair and reasonable reimbursement. I would say that even with our current business, we believe that this is a viable business on the self-pay market that we've already been accessing in the controlled launch. And we think that establishing fair reimbursement will only accelerate that patient access. But we aren't going to give specific ASP targets today because it's just too early for us to comment on that and provide anything realistic.

And I'll just add one comment to that, Tom. The design of SAHARA was deliberate. We randomized against the market-leading dry eye prescription Rx, which is sold billions of dollars over the years. And in discussions with payers, they naturally want to understand what they're paying for today, how it's working for the patients? Is it addressing their patient signs and symptoms? Is it addressing the underlying cause of disease. We know that TearCare does all of these things exceptionally well, and that prescription Rx can sometimes be prescribed to patients who really are in need of an interventional procedure addressing the underlying disease meibomian gland. So there's a lot of economics at stake right now. The design of SAHARA to randomize against costly prescription Rx was deliberate, and those prescriptions can cost thousands of dollars per year to the system and to patients -- so just you can rest assured on one thing that there's plenty of value here in terms of what the results look like for TearCare, the clinical value, the health economics value. So we're confident that should we be successful in our payer coverage discussions that there are -- there's a very attractive business model for all stakeholders, good value for all stakeholders.

Got it. That's helpful. And if I can set it to the glaucoma side of the business, maybe a two-parter. First, quickly, just on the IRIS Registry data, when can we expect to see the next tranche or set? I believe there were multiple analyses that were being explored? That's part one. And then part two to this is just on competition in the U.S. Paul or Ali or Tom, just your latest thoughts and observations. More specifically, are you seeing Infinite a little bit more in the field? And then maybe how would you compare this year's competitive landscape in 2023 to last year where I think there were some challenges with new products.

Yes, Tom, I'll take a couple of those. First, starting off with IRIS. We're very excited about this data -- while we partnered with Verana who's got a license to this Iris real-world evidence database that's a American Academy of Ophthalmology's real-world outcomes database, thousands of cases of MIGS real world. We did -- our investigators have presented this year at various conferences, one-year outcomes, which are very exciting that show OMNI's very consistently effective in primary open-angle glaucoma. And we're really looking forward to the two-year outcomes and getting those published. Very, very good results in terms of both IOP reduction as well as medication reduction. OMNI is -- the data showed OMNI was numerically greater than all of them and reached statistical significance across several of those arms. So it will be very important data, I think, for the field of MIGS to see. It will be submitted hopefully very soon within -- hopefully within a month or so, will be submitted to a very top journal, and we would hope to see publication by the end of the year. Yes, that study, just to be more specific, it included OMNI cases, hundreds of OMNI cases, many, many Hydrus cases, many iStent cases and cataract alone cases. And all of the MIGS interventions, OMNI, Hydrus and iStent were performed in combination with cataract surgery. So that's IRIS, Hopefully, if all goes to plan, we could see a publication in a top-tier journal by the end of the year or early 2024. And that's two-year outcomes on both IOP reduction and medication reduction and it's very favorable to OMNI. In terms of competition, what are we seeing out there? We are seeing some use of stand-alone stents, Frankly, we welcome it, stand-alone, stand-alone market opportunities, as we've said many…

Got it. And maybe I can ask one follow-up to that. I wanted to ask about doctor trainings and facilities ordering on the MIG side. I don't think we've received those figures for maybe a couple of quarters now. So Paul, if you can just talk to what a doctor trainings on OMNI, and I guess well looked like over the past couple of quarters, maybe has competition or have the LCD noise slowed that a bit?

Yes. I'll take that one. We haven't disclosed the specific numbers on surgeon training. Q2 was also strong, saw great growth on a year-over-year basis, and we're pleased with that, and that's obviously a portion of what's driving our growth in overall surgical glaucoma up 35% year-over-year. But we think the more important metric is active ordering accounts, and that is a number we do disclose that was up over 1,100 versus 875 in the second quarter last year, so up 30% year-over-year. In terms of impact associated with the proposed LCDs, we did have some sales rep just time impact in June associated with the proposed LCDs. Our staff spent time covering those changes, and that did have a small impact on surgeons trained and ordering accounts in the period, but not a material one. Obviously, we still exceeded expectations for the quarter, and we're happy with the overall growth rate in surgical Glaucoma.

Perfect, thanks everyone.

Thanks.

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

Thank you all for your time and attention and interest in Sight Sciences. We appreciate it. Thank you and have a great day.

This concludes today's conference call. Thank you for participating. You may now disconnect.