KALA BIO, Inc. Q3 FY2021 earnings call

• Acquisition of Combangio: Expanded clinical stage pipeline with KPI-012, a secretome product for persistent corneal epithelial defect. Welcomed Darius Kharabi as Chief Business Officer and Mark Blumenkranz to the Board.
• KPI-012 progress: Phase Ib clinical data in PCED patients is promising; plan to file IND in 3Q 2022 and initiate Phase II/III trial. Has broad wound healing activity and potential for multiple orphan indications.
• EYSUVIS commercial performance: Ramp of EYSUVIS has been slower than expected. Initial launch strategy focused on education; now implementing new targeted strategies including a digital direct-to-consumer campaign by year-end. Saw 19% increase in prescriptions over previous quarter, with refills up 94% in Q3 compared to Q2.
• Cost containment: Decided to downsize corporate office, with savings of approximately $6 million per year through October 2026. Maintain sales force at current size.

In the third quarter of 2021, Kala Pharmaceuticals reported net product revenues of $3.1 million. EYSUVIS contributed $1.83 million, representing a 10% increase from the second quarter. INVELTYS contributed $1.2 million, a 11% decrease from the second quarter. Symphony Health reported EYSUVIS prescriptions increased by 19% over the previous quarter. Retail prescriptions for EYSUVIS were 3,115 in the third quarter, a 94% increase over the second quarter. Weekly script volume for EYSUVIS was 22% higher over the last nine weeks compared to summer months, and new-to-therapy prescriptions for EYSUVIS saw a 10% growth in the most recent four-week period.

• Cash resources: Believes cash resources, along with anticipated revenue from EYSUVIS and INVELTYS and cost containment measures, will enable funding operations until Q2 2023.
• 2022 plans: Anticipate overall operating expenses will not increase above 2021 levels. Plan to progress development programs including KPI-012 and implement the targeted digital direct-to-consumer campaign for EYSUVIS.

• Market access challenges: Slow acquisition of market access coverage for EYSUVIS, particularly with large commercial and Medicare Part D plans.
• COVID-19 impact: Pandemic has negatively impacted the medical system, affecting ocular surgery market and patient office visits.
• Treatment paradigm change: Difficult to reverse the historical use of steroids as a last-line therapy and position EYSUVIS as a first-line prescription therapy, requiring significant education and time.

Q: Andreas Argyrides asked about EYSUVIS metrics, refills, and split of prescriptions between ophthalmologists and optometrists.

A: Todd Bazemore responded that EYSUVIS prescriptions grew 19% quarter-over-quarter, refills were up 94% in Q3 compared to Q2, and about 60% of prescriptions come from optometrists and 40% from ophthalmologists.

Q: Christopher Neyor inquired about payer coverage timelines and cash runway.

A: Todd Bazemore discussed ongoing coverage discussions with large commercial and Medicare Part D plans, and Mary Reumuth mentioned cash resources will fund operations until Q2 2023.

Q: François Brisebois asked about net revenue decline and PCED causes.

A: Todd Bazemore explained revenue impact from patient assistance programs, and Kim Brazzell described PCED etiologies including neurotrophic keratitis, viral herpes keratitis, etc.

Q: Chris Howerton asked about KPI-012 prioritization and DTC marketing comparators.

A: Mark Iwicki discussed prioritizing KPI-012 along with other assets, and Todd Bazemore mentioned Restasis and Xiidra as examples of successful DTC marketing in the ophthalmology space.