Kala Pharmaceuticals(KALA) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - As of December 31, 2021, the company's cash position was $92.1 million, down from $124.5 million as of September 30, 2021, primarily due to cash used in operations and the $5 million paid for the acquisition of Combangio [31] - For Q4 2021, net product revenues were $1.9 million, a decrease from $3.1 million in Q3 2021, with $1.2 million from EYSUVIS sales and $700,000 from INVELTYS sales [33][34] - SG&A expenses were $24 million for Q4 2021, a decrease of 5% from the previous quarter, while R&D expenses were $2.4 million, also reflecting a decrease [36] Business Line Data and Key Metrics Changes - EYSUVIS prescriptions grew by 21% in Q4 2021 compared to Q3 2021, with a total of approximately 22,460 prescriptions reported [15][34] - INVELTYS prescriptions decreased slightly to approximately 36,700 in Q4 2021 from 37,410 in Q3 2021, with expectations for growth as ocular surgeries return to pre-COVID levels [21] Market Data and Key Metrics Changes - EYSUVIS now has coverage for over 125 million lives, with 70% of all commercial lives in the U.S. and approximately 15% of Medicare lives covered [16] - The company secured coverage with United Healthcare, covering about 13 million lives, and Cigna Medicare, covering about 1.9 million lives, which is expected to enhance prescription fulfillment rates [16][46] Company Strategy and Development Direction - The company aims to reduce expenses by approximately $25 million in 2022 to extend its cash runway beyond Q2 2023 while progressing its development pipeline [13][32] - KPI-012 is being developed for persistent corneal epithelial defect (PCED) and is expected to enter a Phase 2/3 clinical trial in Q4 2022, with potential expansion into other rare ocular diseases [12][27][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued growth of EYSUVIS prescriptions and the positive impact of expanding payer coverage on revenue [10][20] - The company anticipates meaningful growth in EYSUVIS revenues to begin in the first half of 2022, driven by recent payer wins and improved market access [74] Other Important Information - The company is actively evaluating other rare disease indications for KPI-012 and plans to provide updates on potential further development later this year [13][28] - The company reported that the initial clinical trial of KPI-012 showed significant improvement in 7 of 8 patients, with complete healing in 6 patients [26] Q&A Session Summary Question: Can you provide insights on how expanded coverage may translate to greater revenues this year? - Management indicated that growing coverage will help increase filled prescriptions and improve gross to nets, as reliance on co-pay assistance programs decreases [40] Question: What is the current percentage of scripts being rejected due to lack of coverage? - Approximately 50% of commercial prescriptions and 70% of Medicare Part D prescriptions are currently not getting filled due to lack of coverage [40] Question: Can you explain the dynamics between EYSUVIS sales and prescription growth? - Management clarified that while prescription volume and shipments were up, the gross to net was impacted by the co-pay assistance program, which is expected to improve with increased coverage [44][50] Question: What is the expected impact of recent payer wins on EYSUVIS? - Management expects that recent wins will significantly improve prescription fulfillment rates and overall revenue growth [46][74] Question: What are the preclinical activities for KPI-012? - The company is optimizing the manufacturing process and preparing for a GLP toxicology study, with plans to submit an IND application later this year [61]