Sight Sciences(SGHT) - 2023 Q4 - Annual Report

Special Note Regarding Forward-Looking Statements This section highlights forward-looking statements in the 10-K, subject to risks and uncertainties, advising against undue reliance - The report contains forward-looking statements covered by safe harbor provisions, subject to risks, uncertainties, assumptions, and other factors described in the 'Risk Factors' section, advising investors not to unduly rely on them as predictions of future events[10][12][14] - Key factors that could cause actual results to differ include the ability to obtain and maintain sufficient reimbursement, market entry and competition, the impact of strategic realignment, intellectual property protection, and extensive government regulation[11] PART I Item 1. Business Sight Sciences, Inc. is an ophthalmic medical device company developing interventional technologies for glaucoma and dry eye disease (DED) Overview Sight Sciences is an ophthalmic medical device company developing interventional technologies for glaucoma and dry eye disease, focusing on restoring natural physiological function - The company's mission is to develop transformative, interventional technologies for eyecare, focusing on preserving, protecting, and restoring natural physiological functionality to diseased eyes[19] - Initial product development focuses on glaucoma and dry eye disease (DED), with estimated annual addressable U.S. markets of $6.0 billion for surgical glaucoma and $2.5 billion for dry eye[20] - Surgical Glaucoma products (OMNI and SION) accounted for 92% of total revenues in 2023, while Dry Eye products (TearCare) accounted for 8%[25][29] Our Solutions Sight Sciences designs OMNI, SION, and TearCare as interventional ophthalmology technologies to address underserved markets in glaucoma and dry eye disease - OMNI, SION, and TearCare are designed as interventional ophthalmology technologies to address significantly underserved markets in glaucoma and DED[33] Our Product Development Approach The company's product development approach is guided by principles focused on understanding disease physiology, treating underlying causes, intuitive design, strong clinical evidence, and ensuring patient access - Product development is governed by fundamental principles: comprehensive understanding of disease physiology, treatment of underlying causes with an interventional mindset, intuitive design, strong clinical evidence, and patient access[34][37] OMNI Surgical System The OMNI Surgical System is a handheld, single-use therapeutic technology for Microinvasive Glaucoma Surgery (MIGS) that addresses all three known areas of resistance in the eye's conventional outflow pathway - OMNI enables a comprehensive MIGS procedure addressing all three known areas of resistance in the conventional outflow pathway: the trabecular meshwork, Schlemm's canal, and the distal collector channels[36][37] - OMNI is FDA 510(k) cleared for canaloplasty and trabeculotomy to reduce IOP in adult POAG patients, for both standalone and combination cataract procedures[36] - A version of OMNI capable of delivering 21 microliters of OVD was FDA 510(k) cleared in August 2023 for the same indications but has not yet been released to market[36] SION Surgical Instrument Introduced in Q3 2022, SION is a bladeless, Class I 510(k) exempt device for excising trabecular meshwork in ophthalmic surgical procedures, targeting specific subsets of cataract MIGS surgeons - SION, introduced in the third quarter of 2022, is a bladeless, Class I 510(k) exempt device used to excise trabecular meshwork in ophthalmic surgical procedures[41] - SION targets specific subsets of combination cataract MIGS surgeons: high-volume, less experienced (e.g., surgical fellows), and those seeking cost-effective procedures, with very little overlap with OMNI's use cases[42] TearCare System The TearCare system is a proprietary, interventional dry eye device designed to treat evaporative DED caused by Meibomian Gland Disease (MGD) by applying heat and facilitating meibum removal - TearCare is a proprietary, interventional dry eye device designed to melt and facilitate the comprehensive removal of meibomian gland obstructions and restore gland functionality and healthy oil production[28][43][47] - The system comprises a reusable SmartHub™ and single-use, software-controlled, wearable SmartLids® that deliver precise heat to the eyelids, allowing patients to blink naturally during the thermal portion of the procedure[44][46] - TearCare received FDA clearance in December 2021 for localized heat therapy in adult patients with evaporative DED due to MGD, when used in conjunction with manual expression, with a next-generation product cleared in December 2023 but not yet launched[48] Our Success Factors & Growth Strategy The company's success is driven by transformative technologies, continuous innovation, and clinical excellence, with a growth strategy focused on robust clinical data, market expansion, and commercial capabilities - Success factors include large market opportunities, continual development of transformative technologies, consistent delivery of exceptional customer experience, prioritization of clinical and commercial excellence, focus on compelling economics, and scaling the team based on core behaviors[49] - Growth strategies involve establishing OMNI and SION as standards of care, developing and expanding the Standalone MIGS segment with OMNI, driving fair market access to TearCare leveraging SAHARA and OLYMPIA trials, and expanding into additional international markets[53] Clinical Data Sight Sciences is committed to being a clinical leader, conducting robust clinical trial programs for POAG and MGD, leveraging published results to drive product awareness and adoption - The company is deeply committed to conducting studies to evaluate the safety, effectiveness, and durability of treatments using its products, and subjecting the results to rigorous peer review for publication[50] - Ongoing and planned clinical studies for OMNI include EVOLVE (RCT vs. standard medical care), IRIS® Registry (retrospective, real-world data), Meta Analysis, and PANGEA (multinational RCT)[53] - For TearCare, the OLYMPIA RCT showed statistically significant clinical improvements in DED signs and symptoms, and the SAHARA RCT demonstrated superiority over Restasis® eyedrops for TBUT improvement[54][55][56] Commercial Approach Sight Sciences employs a direct sales organization with specialized teams for Surgical Glaucoma and Dry Eye, focusing on increasing awareness and adoption through clinical data and professional education - The company has built a world-class direct sales commercial organization with professionals and executives experienced in launching new technologies and securing market access[58] - Distinct sales, marketing, and training teams support Surgical Glaucoma (OMNI, SION to ASCs/HOPDs) and Dry Eye (TearCare to optometry/ophthalmology practices) segments[59] - Commercial efforts are centered around increasing awareness and presenting clinical study results through medical publications and industry meetings, supported by approximately 130 commercial professionals as of December 31, 2023[58][60] Seasonality Sales may be impacted by seasonal factors, typically showing higher procedure volumes in Q2 and Q4, though this can vary due to external market uncertainties - Sales may be impacted by seasonal factors, typically experiencing higher procedure volumes in the second and fourth quarters versus the first and third quarters[61] - Seasonality can vary year-over-year, as demand was softer in Q4 2023 due to the impacts of Draft LCDs that were ultimately withdrawn but created demand uncertainty[61] Reimbursement Reimbursement is crucial for product adoption, with Medicare coverage for non-implant MIGS and varying private payor coverage for Surgical Glaucoma products, while TearCare is primarily cash-pay with ongoing efforts to secure formal coverage - Medicare coverage for non-implant MIGS procedures (OMNI, SION) is available, and private payor coverage varies, with an estimated 79% of medical benefit covered lives having reimbursed access to canaloplasty procedures as of December 31, 2023[64][65] - Multiple procedure payment reduction rules apply in ASCs and HOPDs for concomitant procedures, affecting payment for lower-cost procedures[67] - TearCare is not currently covered by Medicare or private payors via formal medical policy and is primarily cash-pay, with the company generating clinical data (SAHARA, OLYMPIA) to support positive coverage decisions and a permanent Category I CPT code[71][72][75][78] Medicare National Unadjusted Average Payment Rates (2023 vs. 2024) | HCPCS Code | Descriptor | HOPD Facility Payment Rate 2023 | HOPD Facility Payment Rate 2024 | ASC Facility Payment Rate 2023 | ASC Facility Payment