Good evening. And welcome to Oyster Point Pharma's Third Quarter 2021 Earnings Conference Call. My name is Jeff, and I will be the operator today. After the company’s formal remarks, there will be a question-and-answer session. At this time, I would like to turn the call over to Mr. Daniel Lochner, Oyster Point Pharma's Chief Financial Officer. Please go ahead.

Good evening, everyone. And welcome to the Oyster Point Pharma third quarter earnings conference call for the 3 months ending September 30, 2021. This evening, we issued a press release containing our third quarter financial results and recent business highlights. In addition, our press release and our Form 10-Q that was filed with the SEC after the close of market today are available on our website under the Investors & News section at www.oysterpointrx.com. Joining us on our call today are Dr. Jeffrey Nau, President and Chief Executive Officer of Oyster Point Pharma; and John Snisarenko, Chief Commercial Officer. Following Dr. Nau, Mr. Snisarenko, and my prepared remarks, we will open the line for questions. During the call today, we will be making forward-looking statements regarding potential future events, including statements regarding Oyster Point Pharma's potential future financial status and results of operations and our plans and potential for success relating to commercializing TYRVAYA. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from our future results, performance and achievements expressed or implied by such statements. For a description of these factors, please see our quarterly report on Form 10-Q for the quarters ended September 30, June 30 and March 31, 2021, and our annual report on Form 10-K for the year ended December 31, 2020, as filed with the SEC. I will now turn the call over to Dr. Jeffrey Nau, President and Chief Executive Officer of Oyster Point Pharma.

Thank you, Dan. Good evening, everyone, and thank you for joining us on our call today to discuss our third quarter 2021 financial results and recent business highlights. As you may have seen in our Q3 earnings press release, we have achieved several important milestones during this quarter, the most important of which is the October 15 FDA approval of TYRVAYA nasal spray for the treatment of the signs and symptoms of dry eye disease. TYRVAYA nasal spray is the first and only nasal spray and the first and only cholinergic agonist indicated for the treatment of the signs and symptoms of dry eye disease. The onboarding of our field force was completed during Q3. And we are proud to have one of the leading U.S. eye care focused field forces in the industry. Last week, we hosted our national sales meeting and had the opportunity to gather our talented group of territory representatives to prepare for our launch. I couldn't be more excited and impressed by the caliber of the field force that we have assembled here at Oyster Point Pharma. This is a team that is motivated to make this launch a success. Following our national sales meeting, we are now pleased to announce that as of this past Monday, we have initiated the U.S. launch of TYRVAYA nasal spray for the treatment of the signs and symptoms of dry eye disease. This is an exciting time for patients and their eye care providers to have a new option to address the signs and symptoms of dry eye disease. TYRVAYA nasal spray's differentiated mechanism of action is believed to activate the trigeminal parasympathetic pathway resulting in increased production of basal tear film as a treatment for dry eye disease. Basal tear film is responsible for lubricating, nourishing and…

Thank you, Jeff. As we have previously communicated, the dry eye disease segment is a large market with over 17 million people diagnosed in the United States alone. Only a small proportion of these patients approximately 2 million, are currently being treated with a branded therapeutic. Over 7 million people diagnosed with dry eye disease have tried and abandoned the currently available option. We purposefully designed our trials to target a broad subject population to achieve clinical study results in subjects reflective of dry eye disease patients visiting an eye care practitioner. We also allowed trial subjects to utilize artificial tears as we believe this would occur once TYRVAYA nasal spray entered the commercial marketplace. As a result, we believe our trial designs should allow the clinical trial experience of TYRVAYA nasal spray to translate into clinical practice and enable access to a potentially larger addressable patient population. TYRVAYA nasal spray will be a new treatment option for the large refractory patient population that exists in the dry eye disease marketplace as well as those patients who are newly diagnosed. As Jeff highlighted previously, we are incredibly excited to have initiated the U.S. launch of TYRVAYA nasal spray on November 1. Last week, we hosted our national sales meeting, where our sales representatives received the last phase of their extensive training and are now fully prepared to call on the eye care practitioner and pharmacy communities. They are currently detailing TYRVAYA to customers. We have previously highlighted our commercial strategy that includes promoting accelerated payer adoption through the early introduction of Oyster Point and TYRVAYA to the top payer organizations. We recognize the importance of developing strong market access in the dry eye marketplace. We have continued our dialogue with payers throughout Q3 via the process of pre-approval information exchange.…

Thank you, John. I will now provide a brief overview of Oyster Point Pharma's third quarter financial results. Additional detail about our third quarter as well as our quarterly financial results can be found in our Form 10-Quarter that was filed with the SEC this evening. As a reminder, last month, we entered into a waiver and amendment to our August 2021 credit agreement with OrbiMed to waive certain label requirements required to permit the availability of the second $50 million tranche of funding. As of this afternoon, we have received these proceeds from the second tranche. For the third quarter of 2021 Oyster Point Pharma reported a net loss of $17.7 million, compared to a net loss of $16.3 million for the same period in 2020. As of September 30, 2021, cash and cash equivalents were $184.2 million compared to $192.6 million as of December 31, 2020. Based on our current business plan, we believe the company's available cash and cash equivalents will be sufficient to fund the company's planned operations for at least 12 months from our 10-Q filing this evening. Total research and development expenses for the third quarter of 2021 were $6.2 million, compared to $8.2 million for the same period in 2020. The decrease was primarily driven by lower CMC expenses incurred by the company in the third quarter of 2021 compared to the third quarter of 2020 which included significant pre-approval inventory costs as well as expenses related to the preparation of the NDA filing in December 2020. Selling, general and administrative expenses for the third quarter of 2021 were $28.5 million, compared to $8.1 million for the same period in 2020. The increase was driven by higher payroll related expenses of $11.2 million, inclusive of an increase in stock-based compensation of $0.8 million…

Thank you. [Operator Instructions] And our first question comes from Ken Cacciatore from Cowen and Company. Your line is now open.

Hey, guys. Couple of questions. Just wondering, how would you characterize the reps that you've been able to hire? Are they very experienced in dry eye or general ophthalmology? And then Dan, that was great commentary about pacing. Would you want to give a little bit of sense? Some of us are around $35 million to $40 million in revenue. It sounds like obviously, it would be back-half weighted around coverage decisions. But maybe just give a little bit of a sense what you all would view as success if you don't want to talk about revenues. Maybe talk about share expectations exiting 2022, would be helpful? And then lastly the patient support system clearly is going to be critical in the first 6 to 9 months. So understanding that we could go to the web page and take a look at it. But maybe a little bit more nuance around co-pay assistance. How it works, to what degree the ease here. Maybe -- was there any examples of best practices that you saw that others did that you're trying to implement here that would be wonderful to hear about. Thanks so much.

Great, Ken. Thank you so much for your question. I'll address the first and third one, the 2 commercial questions. And then I'll hand it over to you. In regards to our representatives that we've hired and trained and are now in the field, we were trying to find the right mindset. These are reps that have been working in competitive environments in their past. And I would say, close to 40%-45% of our rep population has had previous eye care experience, both front of the eye as well as back of the eye and medical device as well as pharmaceutical. So we feel we have quite a tenured field force and quite a motivated field force based on our national sales meeting last year -- last week, I'm sorry. In regards to the patient support program, so we did announce literally a couple days ago that how it will work is that for eligible patients that are commercially insured. If they are insured but the product is not covered, they will go into our bridge program. So they will pay as low as $10 for that prescription. And we will be making sure that that prescription is filled for that patient until they get -- until TYRVAYA gets insured in their plan. For patients that are insured and covered, the co-pay will be as little as $0 out-of-pocket for those eligible patients. So how it works is that if they go into our Team TYRVAYA site or if the practitioner actually enrolls them on the spot they will receive a text right away that they are enrolled and they are in that savings program. And then our patient services hub does behind the scenes all the work to make sure that, that script is filled with the appropriate co-pay out-of-pocket for the patient. I think you mentioned best practice from our previous experiences. We did look at the landscape, both in ophthalmology as well as outside of ophthalmology to see what really works well. And we took some of the best aspects of what we've seen. So it's really -- automation is a key thing. Technology so that patients and physicians there's not a lot of faxing and paperwork. It actually is more electronic. It's more streamlined and hopefully an easier experience for the patients as well. So we've taken examples from the migraine space. We've also looked at what worked well with Xiidra and other ophthalmic products from that perspective. And we feel we've packaged kind of one of the most comprehensive patient services programs that we hope will support TYRVAYA for our launch.

Great. John, before you turn it over to Dan, I was just wondering about Part D and just kind of setting our expectations and to what degree it's important here in this patient population.

It is very important. We've mentioned before that almost -- if you look at the patient population 40% are commercially insured, 40% are Medicare Part D, and then the remainder are cash and cadence, so on and so forth. So it is important for us to eventually get Medicare D listings. We've already started dialogue with payers. We know the contracting cycle for the following year is always closing in mid-June time period. So we missed the MedD contracting for 2022, but we are starting the dialogue and we'll start that contracting cycle to be listed hopefully in 2023. From a commercial insurance perspective, we've had many interactions with payers in a pre-approval setting to date. And now that we're approved, we're meeting with them again and expanding that. To date, we've had very good interactions and a lot of interest in specifically the differentiation, the different MOA and route of administration, which payers have been very excited about and interested in. So now we're meeting with them over the next couple of quarters to try to get TYRVAYA listed really as quickly as we can. We're hoping 12 months post launch, we have approximately 80% of commercial lives covered.

Yes. And then on the revenue side, the way we're thinking about it is very early on. We're focused on really trying to get the experience at TYRVAYA with not just the ECPs but also with patients themselves. And so there's -- that strategic focus, which is really based off of driving share of mind and share of voice as well as NRx and TRx. And so in the first quarter out, which will be Q4 as well as partly in Q1 we're really trying to cover those 20,750 targets that our ECPs or our sales force is really targeting. And that will take time to really get into those physician offices, talk about the product, cover them once or twice and then really start seeing the pull through in terms of the patients. And then we would anticipate that to be kind of on a sequential basis as you walk through the quarters. And then, of course, once you start seeing the NRx, then start seeing the refills pull through and the ratios of NRx, the TRx will change over time as that persistence starts to pull through. Then, of course, the other dynamics that we did touch on that is really a consequence of payer coverage is the gross to net, which is really a consequence of the period of coverage at launch. And then of course when we believe those national commercial payers will begin to have their coverage determinations, which we're currently looking at the later part of Q2 '22. And that of course as they come on has a positive impact to the gross to net. But in those earlier quarters, there is that patient assistant programs in place to really ensure that patients can get on product, they can get filled and are able to really benefit from the product itself. But that, of course has that kind of temporary dynamic at play.

Thanks so much. Excited to watch launch. Thanks.

Thank you. And our next question comes from Joe Catanzaro from Piper Sandler. Your line is now open.

Great. Thanks so much. Thanks for taking my questions. Maybe just 2 couple of quick ones from me. So you guys have emphasized sort of the prevalent pool of patients who have tried other options and failed. And I'm wondering if there's any way to have a lead on those patients who have tried and abandoned other options like Restasis and Xiidra. And if those patients believe they've exhausted all options, how frequently are they returning to their physician? How easy is it to get them back into the office? And just a quick follow-up. I know it's early days, but wondering if you have a sense around the level of in-person engagement that your sales force is having with physicians. Thanks.

Thanks, Joe. In regards to the prevalent patients and the ones that have abandoned treatments over the years, we see that pool as approximately $7 million. And they do come in regularly to get their eye exams and -- ophthalmic examinations for diseases and so on. And I know what we've heard from our physicians is that they have a pool of patients that they're waiting to try something new on and TYRVAYA is in our initial interactions this week already. They have lists of patients that they want to recall and bring back to try TYRVAYA on because it's a different mode of action and a different approach to the anti-inflammatories that they had tried in their past. As well from a direct-to-patient perspective we do have some partnership with digital providers that do track these kind of patients, the demographic of patients that have tried and failed therapies. And we'll be able to target them from a digital perspective initially to try to get them to go back into their office and get their eye exams. So it's a combination of direct rep engagements with these physicians that have these patients in their offices and also trying to get these patients to get back to the office for their eye exams. In regards to your question on in-person interactions. We found that now -- I wouldn't say post-pandemic, but there's a sense of normalcy now. We do see quite a few offices accepting reps. And we are able to get those appointments and the interactions have been very robust in the first 3 days. There's a lot of interest there. We hope to cover the majority of our targets in the next 2 months, right after launch. So by the end of the year, we're hoping to at least hit on those physicians in the top tiers at least once to introduce TYRVAYA. So that is our goal for this year. So it's an ambitious one, but we're on track from a call perspective to hit them all.

Okay, perfect. That’s helpful. Congrats again. Thanks for taking my questions.

And thank you. And our next question comes from Anupam Rama from JPMorgan. Your line is now open.

Hey guys. Thanks for taking my question. I think if I heard correctly in your payer discussions, you've talked -- gotten some pre-approvals from 15 payers which covers 75% of commercial lives. In those discussions, have there been any indications that there may be step edits or anything like that before you get reimbursed for the product? Thanks so much.

Thanks, Anupam. Yeah. So despite of our pre-approval information exchange these exchanges are definitely with the medical side of the payers along with the business side. So part of it is presenting to P&T committees. And we covered those 16 payers that cover approximately 77% of commercial lives prior to our approval. Now that we do have approval, that's when we come in and start talking about the contracting and so on. Our goal is to get the best possible listings without any step edits through our incumbent products. We know the majority of payers do have some prior authorizations with artificial tears that patients should try artificial tears before going onto a prescription. So we feel that's going to be table stakes for all the products that are incumbent as well as ourselves and any new products that come. But we do want to make sure that we're on a level playing field, and we don't have the step edits when we do come to the contracting discussions that will happen over the next couple of quarters.

Thanks so much for taking our question.

Thank you. [Operator Instructions] And our next question comes from Patrick Dolezal from LifeSci Capital. Your line is now open.

Hi. This is Cory on for Patrick. Thanks for taking our calls. So to start, how broadly are you able to market some of the symptomatic improvements you observed in ONSET-1 and 2? Is this exclusive to physician materials, DTC materials both? And on that note is there any desire to eventually attain that symptomatic data on the clinical study section of the label? And also, how relevant are that symptomatic data on label given the historical precedent of therapeutics without that on the label? And I have a follow-up, if you don't mind.

Jeff, do you want to take the second one? Or do you want me to --

Sure. This is Jeff. I'll take the second part of the question just around the plan to bolster the label. And I think this is something that we've talked about since the start of these programs, is we do think that there is broad utility for the nasal delivery of TYRVAYA. We are continuing to do development. So as you know, we continue to work on neurotrophic keratopathy in Stage 1 patients. We've also engaged with a partner in China, where we'll continue to do some clinical development to attain approval in China. So there's always the possibility that we will continue to expand the label and add additional clinical data to the label. What I would say is that we think that it's incredibly important that we were able to obtain that signs and symptoms indication statement. And so that's important for us. As we stated before, the FDA has consistently landed on primary or co-primary endpoints in the efficacy section. And although we would have liked that in there, we do think that we will be able to use that information from our clinical trials when we are talking to clinicians. And I'll let John talk a little bit more about that. But I would just stress that we are continuing to develop this product. This is the first indication. We look to bring on additional indications and expand the label to other patient populations. And there will be additional dry eye disease data that we will be developing as we move into other parts of the world. As many of you know, dry eye disease is handled differently in other parts of the world with different endpoints and different requirements. And so we expect, as we move into those other areas, including China being the first one that we will continue to expand our data set and the amount of clinical information that we're able to then bring back to the agency. John will talk a little bit about how that data will be able to be used in the marketplace.

Yeah. Thanks, Jeff. In regards to detailing the eye care community both optometry and ophthalmology, we are very, very pleased that we have signs and symptoms in our label. And we will be communicating all the data that's consistent with that indication. So the physicians will be able to have access to that. We're also going to be publishing that data very shortly and they will be available so we can be able to hand the clinical trial information from ONSET-1 and ONSET-2 to those eye care prescribers. You also asked around direct-to-patient will we be really promoting data to the patient population. I think from a patient perspective, these patients want to get relief. So we're really going to position TYRVAYA more as treats the signs and symptoms of dry eye and is a very novel approach, new MOA, route of administration. Please go in and get your eyes checked for dry eye, and it will be a lot more direct on the suffering patients and what they can expect with TYRVAYA. So we're not going to get into data with the patient's promotion that we had planned in the upcoming quarter.

Got it. Thanks. And just one follow up. So we've seen some really great dry eye launches as well as some more lackluster ones in recent times. So in a general sense, what do you think really moves the needle in a dry eye drug launch? Is it labeling? Is it marketing? The patient experience on drugs? A differentiated mechanism? Just curious to hear your thoughts here as you move on to commercialization mode and how you plan to best address these key aspects of adoption?

Yeah. No, great point. I think it's all of the above. We have to be -- we have to do a stellar job in each one of those levers each one of those segments. And I think one of the most important ones is for physicians to try and get experience with the product and for patients to try and get experience with the product. And so the -- being able to provide that patient that prescription with a reasonable out-of-pocket is key. So we feel our bridge program and our co-pay savings programs are going to be key to get initial trial very quickly. We have -- we feel very competitive share of voice in regards to the number of territory managers that are calling on the eye care practitioners. We're targeting 94% of the prescriber base that I mentioned earlier. And over the years, we've observed some of the aspects of the launches that are -- that have been done very well. We feel this is a very promotionally sensitive segment. So our investment as we get commercial insurance listings in direct-to-consumer, direct-to-patient advertising, is going to ramp up because we do see that this market does respond to investment on DTC and DTP. So we're going to invest in all of these levers. And hopefully, the combination of them is what's going to provide a stellar launch for us.

Excellent. Congrats. And thanks for taking our questions.

Thank you. I would now like to turn the call back over to Dr. Jeffrey Nau for closing remarks.

Thank you, operator. And thanks to all of you for joining the call today. As I mentioned in my opening remarks, we are extremely pleased to announce that TYRVAYA nasal spray indicated for the treatment of the signs and symptoms of dry eye disease is now available to eye care providers in the U.S. Our vision and focus on bringing innovative and transformative ophthalmic disease treatments to patients and building Oyster Point Pharma into a best-in-class ophthalmology company remains our primary goal. We look forward to seeing everyone next week in New Orleans at the American Academy of Ophthalmology Meeting, where we will continue to interface with the eye care community regarding TYRVAYA nasal spray. In closing, I want to thank everybody for joining us tonight and to have a great evening.

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