Kala Pharmaceuticals(KALA) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - As of June 30, 2021, the company's cash position was $149.6 million, a decrease from $153.5 million as of December 31, 2020, primarily due to cash used in operations [34] - Net product revenues for Q2 2021 were $3.1 million, consisting of $1.7 million from EYSUVIS and $1.4 million from INVELTYS, compared to $800,000 from INVELTYS in Q2 2020 [35] - The net loss for Q2 2021 was $36.5 million, or $0.57 per share, compared to a net loss of $23.3 million, or $0.42 per share, for the same period in 2020 [37] Business Line Data and Key Metrics Changes - EYSUVIS prescriptions increased by 93% in Q2 2021, totaling 15,632 prescriptions, while INVELTYS prescriptions rose to over 41,000, an 11% increase from Q1 2021 [18][28] - EYSUVIS achieved a market share of approximately 6% for new-to-therapy prescriptions, surpassing Cequa to become the third most prescribed dry eye product [21] - INVELTYS's net revenues decreased by $200,000 compared to Q1 2021, primarily due to a reserve for product returns related to COVID-19 restrictions [35] Market Data and Key Metrics Changes - EYSUVIS has secured coverage for approximately 56% of commercial lives, representing about 96 million total lives, and Medicare Part D coverage for 7% of the Medicare population, equating to 3.2 million covered lives [24][25] - The company estimates that around 75% of the total addressable market for dry eye disease patients, approximately 13 million diagnosed patients, are currently untreated with prescription therapy [15] - The overall dry eye market is experiencing a seasonal slowdown, but EYSUVIS is reportedly the only dry eye product showing growth during this period [42] Company Strategy and Development Direction - The company aims to establish EYSUVIS as the first-line prescription therapy for the short-term treatment of dry eye disease, focusing on educating eye care professionals about the acute dry eye market [11][17] - The expansion of the sales force from 91 to 105 representatives is intended to enhance market penetration and support the launch of EYSUVIS [23] - The company is actively pursuing broader payer coverage and anticipates that improved market access will drive prescription growth [26][99] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of elective ocular surgeries and the potential for INVELTYS prescriptions and revenues to grow over time [29] - The company believes that demand for EYSUVIS is higher than reported prescriptions due to reimbursement issues, and as market access improves, prescription fill rates are expected to increase [49][63] - Management highlighted the importance of creating a new treatment paradigm for dry eye disease, which has historically been viewed as a chronic condition [102] Other Important Information - The company reported a significant increase in SG&A expenses to $28 million in Q2 2021, primarily due to costs associated with the EYSUVIS launch [36] - The company is in discussions with CVS Caremark for potential formulary inclusion, which could significantly enhance commercial access [97] Q&A Session Summary Question: What are the key requirements to see a reacceleration of EYSUVIS growth? - Management noted that EYSUVIS is currently the only dry eye product growing, and seasonal trends typically affect script volume during summer months [41] Question: Can you help bridge the recorded sales versus the underlying script trends for EYSUVIS? - Management explained that revenue was slightly up due to working through initial inventories from the launch, indicating improvements in gross to net [44] Question: What is the expected split between commercial and Medicare usage over time? - Currently, over 75% of prescriptions are for commercial patients, with expectations to align more closely with established products like Xiidra and Cequa in the future [74] Question: What percentage of new scripts have patient assistance programs attached? - Historically, about half of prescriptions have been filled with some type of patient assistance program [78] Question: How has the response been to the expanded salesforce? - The new representatives have just begun their training and are expected to impact sales positively as they engage with eye care professionals [85]