Good evening. And welcome to Oyster Point Pharma’s First Quarter 2022 Earnings Conference Call. My name is Shannon, and I will be your 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. Arty Ahmed, Oyster Point Pharma’s VP, Investor Relations. Please go ahead.

Thank you, and good evening, everyone. And welcome to Oyster Point Pharma’s first quarter 2022 earnings conference call. This evening, we issued a press release containing our financial results and recent business highlights for the first quarter ended March 31, 2022. In addition, our news press release and Form 10-Q, which were filed with the SEC after the close of market today are available on our website under the Investors and Media section at www.oysterpointrx.com. Joining us on our call today are Dr. Jeffrey Nau, President and Chief Executive Officer of Oyster Point Pharma; Dan Lochner, our Chief Financial Officer; and John Snisarenko, our Chief Commercial Officer. Following our prepared remarks, we will open up the line for questions. Please note that during the call today, we will be making forward-looking statements regarding potential future events, including statements on Oyster Point Pharma’s potential future financial status and results of operations and our plans and potential for success relating to commercializing TYRVAYA Nasal Spray. These forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. For a description of these factors, please see our quarterly report on Form 10-Q for the quarter ended March 31, 2022, filed with the SEC after the close of the market today. I will now turn the call over to Dr. Jeffrey Nau, our President and Chief Executive Officer.

Thank you, Arty. Good evening, everyone, and thank you for joining us on the call today. 2022 continues to be very exciting for Oyster Point. We have had a great first quarter and I am pleased to report strong quarterly results related to the sales of TYRVAYA. In November 2021, we launched TYRVAYA as the first and only FDA-approved nasal spray for the treatment of signs and symptoms of dry eye disease. Today, I will provide you with an update on the commercial progress during our first full quarter in the marketplace and perspectives on the significant opportunity ahead for us with TYRVAYA Nasal Spray. I will then review additional business highlights and our pipeline progress. Dry eye disease and ocular surface disease in general has historically been addressed by topical eye drop therapy. Topical dry eye disease drops can stay and burn when administered to an already irritated ocular surface often resulting in poor patient compliance. Compounding the problem of patient compliance and persistence is the fact that these products often take such a long time to work for most patients. TYRVAYA Nasal Spray is an effective treatment option with a new innovative pathway to treating the signs and symptoms of dry eye disease for the estimated 38 million people impacted by dry eye disease in the United States. Over the past few months, I have spent a considerable amount of time in the field throughout the United States, meeting with eye care professionals and listening to their feedback. I continue to see high levels of interest and enthusiasm for TYRVAYA among the eye care community. Ophthalmologists and optometrists consistently tell me they are excited to finally have an effective, well-tolerated treatment option with a new mechanism of action, leveraging the biologically active natural tear film to treat dry…

Thank you, Jeff, and good evening, everyone. We are very excited about the progress we have made during the quarter. I am happy to report continued strong uptake of TYRVAYA nasal spray six months post launch. Our vision for TYRVAYA has always been to transform and improve the lives of the estimated 38 million people in the U.S. alone who experience dry eye. As Jeff highlighted previously, we are very pleased with the first quarter net product revenue of $2.7 million. Sales force have been meeting with and educating eye care professionals or ECPs, including both optometrists and ophthalmologists. In the first quarter of 2022, approximately 19,000 prescriptions have been filled and were written by over 4,500 unique ECPs. This reflects the enthusiasm for TYRVAYA from ECPs and patients alike. TYRVAYA’s market position continues to strengthen as it increasingly considered an exciting and effective new treatment for the signs and symptoms of dry eye disease. Additionally, our market access team has had continued success in securing coverage for TYRVAYA with top payer organizations. As mentioned during our last earnings call, effective February 19, 2022, TYRVAYA was placed on Express Scripts National Preferred basic and high performance formularies, which collectively make up around 26 million lives. Since then, we have successfully obtained coverage with additional payers. According to a third-party syndicated source, TYRVAYA now has commercial coverage for up to approximately 95 million lives, which represents 52% of all U.S. commercial lives. As we continue to gain commercial leverage, we expect an increase in the propensity of physicians to write prescriptions for TYRVAYA. We are pleased with the progress in commercial coverage of TYRVAYA since launch and anticipate receiving coverage determinations for all major commercial payers in the U.S. by mid-2022. In addition to commercial coverage, we expect Medicare coverage determinations…

Thank you, John. I will now provide a brief overview of Oyster Point Pharma’s first quarter financial results. Additional details about our first full quarter can be found in our Form 10-Q that was filed with the SEC this evening. For the first quarter of 2022, Oyster Point Pharma reported a net loss of $47.9 million compared to a net loss of $18.9 million for the same period in 2021. As of March 31, 2022 cash and cash equivalents were $143.4 million, compared to $193.4 million as of December 31, 2021. Net product revenues for the first quarter 2022 were up approximately $2.7 million following the commercial launch of TYRVAYA in the U.S. in November 2021. The company did not generate any revenues during the three months ended March 31, 2021. Cost of product revenue for the three months ended March 31, 2022, was $0.3 million and consisted of product royalty expenses, third-party manufacturing costs, reserves for inventory obsolescence and material cost of $0.7 million. This was partially offset by a $0.4 million of supplier credit recognized during the three months ended March 31, 2022. Inventory manufactured prior to the FDA approval of TYRVAYA nasal spray was charged to R&D expense, and as a result, the company expects the unit cost of product revenue will be lower until the company fully utilizes the product that was manufactured pre-FDA approval. The company started expensing pre-approval inventory 2020. The company’s sales and marketing expenses increased by $22.4 million during the three months ended March 31, 2022, compared to the same period in 2021. The increase was primarily due to higher payroll related expenses of $11.6 million, inclusive of an increase in stock-based compensation of $0.7 million, as well as sales commission expense, which was driven by onboarding a commercial field force in…

Thank you. [Operator instructions] Our first question comes from Ken Cacciatore with Cowen and Company. Your line is open.

Hey, team. Well, a lot of good metrics here. I just want to tick through a few of them. On the pricing, it seems like you are actually driving that a little faster than we would have thought. So the gross to net here of 75%, I am seeing like a per prescription valued about $140. Just wondering, can you talk about the pacing through the balance of the year? And then maybe that would dovetail to the consensus is around $30 million, it looks as kind of we peak in our model and some of these metrics, you are nicely on track, but wondering if you would speak to that. And then also, John gave some nice data points around the refill rate. Can you just talk about that in comparison to Restasis and Xiidra, so we have a little bit of a feel for where that compares? Thanks so much.

Yeah. Thanks, Ken. I will jump in. As we progressed through Q1, we clearly have a little bit more clarity on various gross to net items related to folks on bridge or on commercial based product. So we are happy where we came in, in Q1. We would expect Q2 to be more or less around where Q1 is and then an improvement in the second half versus the first half. And then related to the revenue outlook for 2022, while we haven’t at this point provided that guidance, of course, we have seen continual growth in prescriptions and TRx, which John will get a little bit more into, we are comfortable with where our consensus is that.

Hi, Ken. Thanks for your question on retail rates. Yes. We are quite pleased with the initial refill rates. So we are seeing kind of aggregate around 65% refilled over 60 days. The interesting stuff is that we have seen actually patients that were put on TYRVAYA in the early parts of launch November, December that are still on drug, getting their six refills now in six months in. So in comparison in Xiidra and Restasis, I mean, we haven’t quite done the math to see what persistence will be. But with these retail rates, we do feel that we are really performing a little bit above expectations on TYRVAYA’s persistence rate. So we will get that number for you as the year progresses. But, overall, the indicators are quite positive on the acceptance of TYRVAYA by both patients, as well as our prescriber base.

Okay. And then, John, maybe I will sneak one more in. In terms of the prescribers, can you talk about repeat prescribers, kind of what percent you are seeing, obviously, you are nicely expanding the clinician base, but if you have that data point.

Yes. In terms of unique writers, we mentioned for Q1, we were close to 4,500. If I am looking launch to-date, we are now at 5,500 and a good proportion of them do repeat and write, we are currently running around 75% of those. One thing we have fine-tuned in our launch is when we initially went out with time to breadth of prescriptions, we are now also doing a lot of follow-up calls to make sure that the prescription, the physicians that have already written a prescription actually continue to follow up with their patients and continue to write. So that’s been a bit of a fine-tuning in our approach and we are seeing kind of higher and higher repeat prescriptions based on that.

Okay. Thanks so much. I appreciate it and keep up the good work.

Thanks, Ken.

Our next question comes from Chris Neyor with JPMorgan. Your line is open.

Great. Thanks for taking the question and…

Chris, your line is open.

Great. Thanks for taking the question and congrats on the progress. First one on payer coverage, just wanted to get a bit more color on the additional covered commercial lives you added. Were these patients kind of downstream from ESI or were there additional kind of major payers that you brought onboard or any additional color you could provide there would be helpful?

Yeah. Thanks, Chris. Yeah. We did have some downstream plans from ESI that continue to be added to the original national formularies. I think there’s another big group, the UnitedHealth Group that was added during the period, Kaiser, Tricare and we are very pleased that we are now able to be providing covered drug to the VA as well. Those are kind of the top six plans and payers that make up the majority of those 95 million lives that we currently cover.

Great. That’s a great progress to hear. And maybe just one kind of tangential but related point. So if we think about kind of the expansion of coverage through the remainder of the beginning of the year and you guys have had the bridge program in place. So how effective has that been really for patients who are either facing script rejections or who don’t currently have coverage, how successful you have been in bringing those patients over and making sure they actually do get scripts? I noticed oftentimes there could be some timing issues and there can be some friction in getting them to the patient hub. So maybe some color there and then also should we expect that as you expand coverage that we are going to see some flow-through in terms of the script trends or should we think about that impact being more on pricing?

Yeah. Let me comment first on the -- our progress with commercial payer listing. So we do expect coverage determinations by midyear this year with the other two large PBMs that control the majority of commercial lives. So while we are awaiting that coverage, we do encourage our physicians to enroll the patients into our Team TYRVAYA program. If they are deemed insured, but not covered at automatically get enrolled into our Bridge program. And we have seen very, very good kind of fulfillment rates through our partner, 90% of those scripts that do get processed and get shipped to the patients, so very, very pleased with that partnership with our third-party hub provider. And as we do get additional commercial listings on board, we expect to start to convert these patients to revenue patients over time. And we will keep that Bridge program going while there’s still a need for the patients. So we want to make sure that if an appropriate patient deemed to be prescribed TYRVAYA and the physician feels that the patient is appropriate that we want to make sure that, that script gets to that patient.

Great. Thanks. That’s it from my end.

Thank you. [Operator instructions] Our next question comes from Patrick Dolezal with LifeSci Capital. Your line is open.

Hi. This is Cory on for Patrick. Thanks for taking our questions. Just a quick one from us. So looking forward into 2022, how do you plan on or how is your commercial strategy looking to shift over the course of the year? Do you have any granularity on when a DTC focus might emerge, and when that does occur, what are some of the implications you have on cash burn and runway of that campaign?

Yeah. So I will talk a little bit around the DTC efforts. Right out of the gate, we launched a lot of digital efforts targeting both the patients, as well as our physicians. So a lot of focus on social media, on search, on digital efforts and then very, very targeted. We don’t plan to really go broad on DTC until we get good coverage, not just commercially, but in 2023, we do want to -- we do expect to get Medicare coverage only then we will start to consider kind of a broader DTC effort. We feel that we -- more targeted digital efforts that we have started since launch have been working quite well for us.

Got it. And can you provide any additional guidance on where SG&A spend might net up going forward, and thinking about cash runway, what are some of the near-term payouts you are anticipating from the Ji Xing agreement and is this included in your guided cash runway?

Yeah. So, at the moment, I would say that our OpEx as reported in Q1 would likely remain pretty consistent on a quarterly basis going forward throughout 2022. We have really built out all the internal infrastructure to effectively market TYRVAYA, whether it’s on the SG&A side, as well as everything that we need provision on the R&D side. So stopping short provided quarterly consensus, I would say that, we feel comfortable with the current OpEx run rate and then we will look at that as we enter into 2023, of course, adding an additional buckets of capital, as John alluded to, on the DTC spend. To-date, we have been pretty adamant on taking a direct to patient perspective with digital and we have been spending a decent amount of capital on social media, that John can kind of speak a little bit closer to. But at the current cash runway, we are still seeing about 12 months forward on our current budget.

Excellent. Thanks for taking our questions.

Thank you. I will now turn the call back to Dr. Nau for closing comments.

Thank you, Operator. And thanks for all of you for joining the call today. In closing, we hope you have a clear picture of the strong trajectory of TYRVAYA, as a truly unique and innovative option for the treatment of dry eye disease. We are extremely excited about the potential for significant growth ahead for TYRVAYA, as well as our pipeline assets. We endeavor to continue to bring transformational ophthalmic therapies to patients, while delivering long-term value to shareholders. I want to thank everybody for joining the call today. Have a great evening.

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