Earnings Call Transcript - EYPT Q4 2021

Operator, Operator

Good morning. My name is Jonathan. And I will be your conference operator today. At this time, I would like to welcome everyone to the EyePoint Pharmaceuticals Fourth Quarter and Full Year 2021 Financial Results and Recent Corporate Development's conference call. There will be a question-and-answer session to follow at the completion of the prepared remarks. Please be advised that this call is being recorded at the company's request. I would now like to turn the call over to George Elston, Chief Financial Officer of EyePoint Pharmaceuticals. Please go ahead.

George Elston, CFO

Thank you. And thank you all for joining us on today's conference call to discuss EyePoint Pharmaceuticals' fourth quarter and full year 2021 financial results and recent corporate developments. With me today is Nancy Lurker, President and Chief Executive Officer; Dr. Jay Duker, Chief Operating Officer; and Scott Jones, Chief Commercial Officer. Nancy will begin with a review of recent corporate updates. Dr. Duker will then discuss pipeline developments for EYP-1901, and Scott will comment on recent progress made on our commercial activities. I will close with commentary on the fourth quarter and full year 2021 financial results. We will then open up the call for your questions. Earlier this morning, we issued a press release detailing our financial results as well as commercial and operational developments. A copy of the release can be found on the Investor Relations tab on the corporate website, www.eyepointpharma.com. Before we begin our formal comments, I'd like to remind you that various remarks we will make today constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These include statements about our future expectations, clinical developments and regulatory matters and timelines, the potential success of our products and product candidates, financial projections and plans and prospects. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors including those discussed in the Risk Factors section of our most recent annual report on Form 10-K, which is on file with the SEC and in other filings that we may make with the SEC in the future. Any forward-looking statements represent our views as of today only. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views change. Therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today. I'll now turn the call over to Nancy Lurker, President and Chief Executive Officer of EyePoint Pharmaceuticals.

Nancy Lurker, CEO

Thank you, George. Good morning, everyone. And thank you for joining us as 2021 was truly an exceptional year for EyePoint Pharmaceuticals on all fronts. Let me begin by emphasizing the continued positive momentum we have had in the fourth quarter of 2021 and into 2022. We are well positioned to create long-term value for our shareholders. And we continue to execute on our goal of being the leader in ocular drug delivery. In 2021, EyePoint made transformational strides across our business. Presenting validating clinical results for our lead pipeline program, EYP-1901, significantly strengthening our balance sheet, extending our cash runway and growing our commercial revenues. Throughout this exciting time, we remain committed to our overarching mission, which is improving the lives of patients with serious eye disorders and bringing our innovative products to patients in the United States and around the world. Prior to turning the call over to my colleagues, I'd like to highlight a few of our achievements from 2021 and this year so far. The Phase 1 DAVIO trial for our lead pipeline asset, EYP-1901, is a great example of our team's execution. EYP-1901 has the potential to be a new treatment paradigm, potentially providing patients with the substantial benefits of longer-term disease maintenance. With EYP-1901 administered every six months for the majority of patients, while supplementing as needed with large molecule anti-VEGF treatments for those patients who require more intensive therapy. This is a substantial improvement from today's current treatment paradigm, where most patients are treated every month or every other month. We believe based on DAVIO results, that the majority of patients can be maintained for up to six months with no supplemental therapy after an initial induction period with traditional anti-VEGF drugs. EYP-1901 is a true six-month sustained release treatment that provides a new mechanism of action with vorolanib, a TKI that binds the VEGF receptor, coupled with our proven viral BioErodible Durasert Technology that delivers vorolanib with zero-order kinetics. The combination of a new MOA and zero-order kinetics delivered with Durasert could sustain a majority of patients for up to six months and greatly reduce the treatment burden for patients with wet age-related macular degeneration or wet AMD. In 2021, we dosed the first patient with EYP-1901, completed Phase 1 trial enrollment, reported positive 30-day and three-month safety data, and presented positive interim six-month safety and efficacy data all in under one year's time. Additionally, last month, in February, we followed up with continued positive interim eight-month safety and efficacy data at the Angiogenesis Exudation and Degeneration 2022 Virtual Meeting. We believe EYP-1901’s potential to transform the treatment paradigm for wet AMD is more important than ever. As we continue to see significant unmet need across the wet AMD treatment landscape, especially in the longer duration treatment category. Wet AMD is a serious and potentially devastating eye disorder, accounting for approximately 90% of all AMD-related blindness. But despite safe and effective FDA-approved medications on the market, treatment adherence and thus, long-term compliance and effects remain an ongoing challenge for patients and physicians. As Jay will discuss in more detail later in the call, we are incredibly pleased with the intra-Phase 1 DAVIO trial results, which showed positive safety data with no significant inflammation as well as promising efficacy data at the six and eight-month follow-up so far. EYP-1901 results thus far demonstrate the sustained delivery potential of what our Durasert technology can accomplish for patients. And we're confident that EyePoint is on the right path to becoming the leader in ocular drug delivery. In December 2021, we also concluded a positive and informative Type C meeting with the U.S. FDA. And we expect to initiate our 12-month Phase 2 study for EYP-1901 in wet AMD in the third quarter of 2022, with the first look at interim six-month results in the second half of 2023. The impressive execution and dedication demonstrated by our team to reach this milestone emphasizes the entire organization's commitment to patients and through the EyePoint team's combined efforts we aim to bring this innovative technology to many eyes as quickly as possible. In addition to advancing a Phase 2 trial of EYP-1901 for wet AMD, we look forward to expanding this potential paradigm-changing treatment to additional indications with a Phase 2 study of EYP-1901 for non-proliferative diabetic retinopathy or NPDR, beginning in the second half of this year. We look forward to providing you all with an update on future indications and clinical activities for EYP-1901 in the months to come. Turning to our commercial product pipeline, we are very pleased to report record customer demand for both our commercial products in the fourth quarter of 2021 and a 70% increase in net product revenue compared to 2020. Additionally, we expanded our U.S. commercial alliance with ImprimisRx, which has been a strong partnership since August 2020 as we've been able to focus our efforts internally on our pipeline program while continuing to grow our commercial business despite the ongoing pandemic. We look forward to bringing our approved commercial products to more patients in need of transformative ophthalmologic therapies. As you'll hear from George later on, 2021 was also an exceptional year financially as we successfully completed two upsized follow-on offerings, equity offerings during the first and fourth quarters, raising $230 million, allowing us to end the year with over $210 million of cash and investments on hand. Finally, we continue to grow our organization and leadership team. Earlier this year, we were very pleased to announce the appointment of Michael Pine as Chief Corporate Development and Strategy Officer. In this role, Mr. Pine will be responsible for overseeing all of EyePoint's business development and strategy. He brings almost 20 years of business development and strategy experience to EyePoint Pharmaceuticals. And we are thrilled to have him on board during this exciting time in the company's evolution. I also want to sincerely thank our fantastic team at EyePoint Pharmaceuticals for our company's clinical, operational, and financial success to date. We've made tremendous progress in the last year. And we're so excited and motivated to advance the future of sustained ocular drug delivery. 2022 promises to be another productive and rewarding year for EyePoint Pharmaceuticals. And we are committed to continue to execute on multiple clinical catalysts and continue to strengthen our commercial business. I'll now turn the call over to Dr. Jay Duker, our Chief Operating Officer, to provide an update on our lead program, EYP-1901 as well as other pipeline initiatives.

Jay Duker, COO

Thank you, Nancy. Good morning, everyone. I'm excited to share that this is a significant moment in EyePoint's journey. Our team is well-prepared to execute several clinical milestones this year as we progress our pipeline. We're pleased with the results of our Phase 1 DAVIO trial for EYP-1901, an investigational sustained-release treatment for wet age-related macular degeneration, which is being studied as a maintenance therapy following standard anti-VEGF induction therapy. Our aim is to extend the treatment intervals for most wet AMD patients to six months or longer. Our clinical and regulatory teams have been dedicated to successfully completing this Phase 1 trial. The recently released positive safety and efficacy data after eight months strengthen our confidence in EYP-1901's unique profile regarding safety, efficacy, and tolerability in wet AMD. Before discussing the data, I would like to highlight the use of Durasert Technology in EYP-1901 and how it stands out among other retinal drug delivery options. Durasert enables a true sustained release of medication with consistent zero-order kinetics. In its non-erodible form, Durasert has a proven history of safety, tolerability, and reliable medication delivery. It has been safely used in thousands of patients' eyes across four FDA-approved products. The safety and efficacy results from the bioerodible form used in the DAVIO trial further enhance our confidence in this delivery system. EYP-1901 features a bioerodible version of the Durasert sustained release technology combined with vorolanib, a small molecule tyrosine kinase inhibitor. Vorolanib interacts with VEGF receptors to block all VEGF isoforms and PDGF, which differs from the current market anti-VEGF treatments that target the VEGF ligands. This unique mechanism of action, together with our bioerodable Durasert technology, could revolutionize the way wet AMD is treated, making it significantly less burdensome. Now, regarding our DAVIO study, it is a Phase 1 open-label dose escalation trial that included 17 wet AMD patients across four dosage groups, all of whom had previously received standard anti-VEGF treatment. No reinjections of the study drug occurred during the trial, and we followed standard protocols for any necessary supplementation with the standard anti-VEGF. We shared positive interim safety and efficacy data from the DAVIO trial at the American Academy of Ophthalmology meeting last November and provided updates with eight-month data in February this year at the Angiogenesis 2022 Virtual Meeting. We are very happy with the interim results we’ve observed thus far. Notably, over 50% of patients have been free from supplemental anti-VEGF treatment for up to six months, and 41% have remained free for nine months. Additionally, we saw a significant reduction in treatment burden, with a 79% reduction at six months and a 75% reduction at eight months. Visual acuity and central subfield thickness remained stable, with the eight-month data showing a change of minus 3 ETDRS letters in visual acuity and a thickness change of approximately plus 13 microns measured by OCT. The data from the six-month and eight-month releases showed positive safety results, with no serious ocular adverse events or drug-related systemic adverse events reported. There were no cases of dose-limiting toxicity, retinal detachments, endophthalmitis, or implant migration into the anterior chamber, nor was there significant ocular inflammation. Collectively, these encouraging early results highlight EYP-1901 as a potential six-month treatment option in the wet AMD space. As Nancy mentioned, we plan to start a randomized controlled Phase 2 study of EYP-1901 for previously treated wet AMD in the third quarter. This trial will enroll 144 patients, randomly assigned to receive one of two doses of EYP-1901, approximately 2 milligrams or 3 milligrams, or a control with aflibercept, focusing on changes in best-corrected visual acuity, central subfield thickness as measured by OCT, time to first supplemental anti-VEGF treatment, and overall safety. We expect to share interim six-month results from this Phase 2 trial in the latter half of 2023. Additionally, we are preparing to initiate clinical trials exploring the potential use of EYP-1901 for treating other serious eye conditions, including non-proliferative diabetic retinopathy and retinal vein occlusion. Later this year, we intend to begin a Phase 2 trial of EYP-1901 for non-proliferative diabetic retinopathy, and we will keep you updated on these additional indications as our expanding pipeline progresses. Now, I will turn the call over to Scott Jones, our Chief Commercial Officer, for the commercial update.

Scott Jones, CCO

Thank you, Jay. We're excited to report a strong year for our commercial businesses with $35.3 million of net product revenue, a 70% increase compared to 2020 and including record customer demand for both of our commercial products in the fourth quarter of 2021. We're pleased to see patients return to their doctors' offices and schedule their previously delayed surgeries and procedures. Our Q4 net product revenue for YUTIQ and DEXYCU was $5.8 million and $5.4 million, respectively. Customer demand was approximately 13,800 units of DEXYCU and 650 units of YUTIQ compared to approximately 13,200 units and 555 units respectively for Q3 2021 customer demand. Customer demand for DEXYCU stemmed from our strong commercial presence and our collaboration with our commercial alliance partner in ImprimisRx. We were pleased to expand the original partnership that was established in August 2020 when in the fourth quarter of 2021, we announced an expanded U.S. commercial alliance for DEXYCU. Under the terms of the amended agreement, ImprimisRx gains full responsibility for U.S. sales and marketing activities of DEXYCU, and they absorb the majority of EyePoint's DEXYCU commercial organization. EyePoint Pharmaceuticals will retain the DEXYCU NDA, revenue recognition, manufacturing, and distribution responsibility for all markets. Customer demand for YUTIQ remained strong, in part a result of the improved siliconized needle our commercial team rolled out during last year providing a consistently improving procedural experience for physicians and patients. We're incredibly pleased by the progress we've made this past year with our commercial businesses. EyePoint's mission to provide a unique sustained delivery system across all of our products that requires fewer visits to the doctor's offices is a key attribute of each product's value proposition that both patients and doctors rely on. We'd also like to thank all of our patients and physicians for their continued support and use of our products. We look forward to updating you on revenues and demand in the quarters to come. I would now like to turn the call over to George to review the financials.

George Elston, CFO

Thank you, Scott. As the financial results for the three months and full year ended December 31, 2021, were included in the press release issued this morning, my comments today will be focused on a high-level review for the quarter. To begin, in November 2021, we executed an upsized underwritten public offering with gross proceeds of $115.4 million, bringing total equity financings to over $230 million last year. The funds raised provide us with additional capital to roll out our pipeline strategy and strategically pursue potential opportunities for the company's future growth. For the quarter ended December 31, 2021, total net revenue was $11.5 million compared to $7.1 million for the quarter ended December 31, 2020. Net product revenue for the quarter was $11.1 million compared to net product revenues for the fiscal year ended December 31, 2020, of $6.7 million. Net revenue from royalties and collaborations for the quarter ended December 31, 2021 totaled $0.4 million compared to $0.5 million in the corresponding period in 2020. Operating expenses for the quarter ended December 31, 2021 totaled $29.6 million versus $19.9 million in the prior year period. This increase was primarily due to a $3.7 million increase in R&D expense, a $3.4 million increase in G&A expense, a $2 million increase in sales and marketing expense and a $0.6 million increase in the cost of sales. Non-operating expense net totaled $1.4 million and net loss was $19.4 million or $0.59 per share compared to a net loss of $11.5 million or $1.07 per share from the prior year period. Turning to the full year ended December 31, 2021. Total net revenue was $36.9 million compared to $34.4 million for the full year ended December 31, 2020. Net product revenue for the full year ended December 31, 2021, was $35.3 million compared to net product revenues for the full year ended December 31, 2020, of $20.8 million. Net revenue from royalties and collaborations for the full year ended December 31, 2021 totaled $1.6 million compared to $13.6 million in the corresponding period in 2020. Operating expenses for the full year ended December 31, 2021 totaled $92.2 million versus $71.7 million in the prior year period. This increase was largely due to an $11.1 million increase in R&D expense, a $4.8 million increase in G&A expense, a $2.4 million increase in cost of sales and a $2.2 million increase in sales and marketing expense. Non-operating expense net totaled $3.1 million. And net loss was $58.4 million or $2.03 per share compared to a net loss of $45.4 million or $3.54 per share in the prior year period. Cash and investments on December 31, 2021 totaled $211.6 million, compared to $44.9 million on December 31, 2020. We expect the cash and investments on hand on December 31, 2021 and expected cash inflows from our product sales will enable us to fund our current and planned operations into the second half of 2024. In conclusion, we are pleased with EyePoint's progress in 2021 and are well capitalized to advance our product pipeline to key value inflection points. Thank you all very much for listening this morning, and I now turn the call over to the operator for questions.

Operator, Operator

Certainly. Our first question comes from the line of Jennifer Kim from Cantor Fitzgerald. Your question please?

Jennifer Kim, Analyst

Good morning, everyone. Thank you for taking my questions and congratulations on the impressive progress since your last earnings report. I have a few questions. First, what are your thoughts on the recent challenges faced by competitors like Kodiak and what implications do you think that has for your company? Additionally, what are your views regarding potential TKI competitors that might release Phase 1 data in the latter half of this year? My second question pertains to your cash runway; does it still account for the RVO trial scheduled for the first quarter of next year? Thank you.

Nancy Lurker, CEO

I heard three questions. One revolves around the recent Kodiak data and its implications for us. There are also concerns regarding competitor shortfalls, and we want to discuss upcoming TKIs and their data readouts. Lastly, there’s a question about cash, which George will address. Let me provide a brief overview, and Jay can elaborate further. I want to be cautious here. We don’t want to delve into competitor data because it’s not appropriate, and we lack their insights. Generally speaking, the current landscape is challenging for patients, physicians, and investigators. There are dropouts occurring among companies facing difficulties with drug delivery technologies or their active pharmaceutical ingredients, which are struggling with safety profiles or achieving efficacy endpoints. As a result, the field is beginning to narrow. We have seen promising Phase 1 results, and our eight and nine-month data continues to be strong. This reduction in competitors may ultimately benefit us, though it’s not ideal for the community as a whole. Regarding other TKIs, we look forward to their readouts. As more TKIs report their data, we will see how validated the tyrosine kinase inhibitor target is. Our partner’s study with vorolanib delivered ocular efficacy in wet AMD, and we recently announced our DAVIO studies, which confirmed efficacy in wet AMD as well. Companies like Clearside and Ocular have also reported positive results with their TKIs, while Graybug faced issues primarily related to drug delivery. This validation of the target is promising, as it allows physicians to have various mechanisms of action for treating patients rather than being limited to a single target. Large molecules attach to the ligand level, while TKIs operate at the receptor level and are likely to cover a broader range of kinase receptors. The implications of all those receptors are still unclear, but there may be some positive distinctions. It’s beneficial to have multiple targets available for physicians to use. Thus far, the TKI targets appear quite promising. I’ll check if Jay has anything to add to that.

Jay Duker, COO

Hi, Jennifer. Nancy, you summarized it really well. Our goal is to balance patient safety with improved efficacy or longevity. Regarding EYP-1901, we're not aiming to develop the next EYLEA or Faricimab. Instead, we envision our drug serving as a maintenance therapy for stable patients who require less frequent treatment, potentially every six months or even longer. Although the failure in Kodiak's Phase 3 trials is disappointing for practitioners and patients, it provides us valuable insights for designing our pivotal trial. This market is quite large, and having active competitors can motivate us to enhance patient outcomes. You also had a question about financials.

George Elston, CFO

Hi, Jennifer. George here, thanks for calling in. Our cash guidance for the second half includes the initiation of three Phase 2 studies with 1901 for wet AMD, non-proliferative diabetic retinopathy, and RVO next year. We have always aimed to keep at least one year of cash on hand by the time the wet AMD study results are available, which is scheduled for the second half of next year, as we updated in our earnings release this morning.

Jennifer Kim, Analyst

Okay. Thanks. If I could sneak one more in for Scott. Was there anything that particularly drove YUTIQ and DEXYCU sales this quarter? Was this more of a one-time pent-up demand? Or is this demand sustainable? Thanks.

Scott Jones, CCO

Thank you, Jennifer for the question. We certainly hope that the demand is sustainable. Obviously, we know there is some seasonality in the ophthalmology market, especially as a Medicare market where patients are trying to get all the procedures in for the end of the year. And their benefits reset at the beginning of the year. So we do see some seasonality. But we've seen a pretty consistent growth curve despite the pandemic. And we certainly think that, that will continue moving forward. Certainly, that is our hope.

Operator, Operator

Thank you. Our next question comes from the line of Georgi Yordanov from Cowen. Your question please?

Georgi Yordanov, Analyst

Hey, guys. Thank you so much for taking our questions. And congratulations on all the progress. So maybe to start, could you talk about some of the initial observations from the Phase 1 trial that you've had some longer follow-up period for 1901? Specifically, there are patients who saw vision improvement despite the presence of fluctuating subretinal fluid. How do you explain this result? And also, how do you think some of these observations could change medical practice, especially once we start having multiple longer-acting options on the market? And then just to follow up on the competitive disclosure question. One of the things that we found interesting from that data was that it did seem like it was a confirmation that there is a sizable subset of wet AMD patients who are inadequate VEGF responders and could really benefit from a broader mechanism such as a TKI. Maybe if we can just hear your thoughts on this. And if you thought that this was kind of like possible to see from their data, and really the potential size of that patient population of inadequate VEGF responders in wet AMD?

George Elston, CFO

Well, those are excellent questions. And I'll try to start at the top and you just asked about learnings from our Phase 1 trial. First of all, we're very pleased that there were really no safety signals at all because it's very clear in this space. If you don't have safety, it doesn't matter what your efficacy looks like. And I would say, so far so good with NF-17 and a follow-up, getting close to 10 months in everybody, things look quite good. Our other learnings are, there's a significant percentage of wet AMD patients that appear to be able to be maintained with our drug for six months or longer without any supplemental anti-VEGF. And maintained means, again, primarily visual acuity. Fluid is important and we use fluid via OCT as a marker for VEGF activity. But there is not a one-to-one relationship. We've known that for years. You can go way back in the earliest anti-VEGF in OCT studies showing that the correlation coefficient between retinal thickness and vision is only about 0.6, which means it's good, not great. And we all have patients with a little bit of subretinal fluid who see pretty well. Stability in visual acuity and stability in anatomy is what we're trying to accomplish with EYP-1901. We also heard from the recent Regeneron high-dose study that 50% of EYLEA patients still have fluid with the current dose of EYLEA even when treated monthly. So we strive to get our patients dry. But there's a lot of patients out there that just can't get all the fluid to go away. And if it's a little sliver of subretinal fluid, that actually may be okay. So again, what we're trying to do is not necessarily drive better. We are trying to keep patients stable longer. Your second question was about learnings from inadequate VEGF responses.

Nancy Lurker, CEO

Georgi, I’d like to add to that and see if Jay can provide further insights. One of the key points we’ve discussed is the potential benefit for patients from a different mechanism of action. We aim to shift the current thinking and treatment approach. Patients will start on longer-lasting therapies like EYP-1901 and continue receiving treatment every six months. Some may need additional support from a large molecule antibody at times, while others may require it more frequently. However, we hope to maintain the tyrosine kinase inhibitor, ideally EYP-1901, to offer long-term protective maintenance therapy. It’s not a case of choosing one drug over another; rather, for many patients, we envision keeping EYP-1901 in their regimen even after they have been treated and are in a stable condition. Supplemental therapy would be provided when necessary to maintain their status. We believe that most patients will be able to stay stable with this approach. I'll check if Jay has anything to add.

Jay Duker, COO

Yeah. No, I think that summarized it really well. And obviously, in other areas of medicine, this is quite common. Look at high blood pressure, for example. And so that there are a lot of analogies out there for seeing you got a way to maintain a lot of patients on hopefully a safe and effective drug. But even if some of the patients break through with a little fluid, they're still at an advantage with the different methods of action where you can add another drug on top of that, but hopefully, with a much less onerous schedule as what they were on before. That's the goal.

George Elston, CFO

Thank you so much. That was really great. And again, congratulations on all the progress.

Operator, Operator

Your next question comes from the line of Yatin Suneja from Guggenheim. Your question please?

Eddie Hickman, Analyst

Yes. Hi. This is Eddie on for Yatin. Thank you guys for taking my questions. Good morning and congrats on the quarter. Just a few for me. Can you remind us of using the same injection device and procedural techniques in the Phase 2 as you did in DAVIO? And if there are any other changes you're making due to learnings from DAVIO, including how you're thinking about like patient selection and avoiding potential non-responders? And then just as a follow-up, are you thinking about adding an arm in any future studies where you put in the device earlier before six months? And where is six-month interval to goal across all the proposed indications? Thanks.

George Elston, CFO

Thank you for your great questions. We have learned quite a bit from the 17 patients enrolled in DAVIO. To remind everyone, our drug is administered in the office with a single injection using local anesthesia. We use a 22-gauge needle and can inject up to three inserts with one injection. The medium dose for our Phase 2 wet AMD trial is about 2 milligrams, which corresponds to two inserts, while the high dose is around 3 milligrams, which corresponds to three inserts. It's important to inform the investigators that delivering three inserts requires a few seconds for a successful injection, unlike a liquid that can be administered quickly with a rapid bolus into the eye. This is the only notable deviation from the standard injection technique that retina specialists are familiar with. Regarding injection intervals, it is unlikely that we would consider an interval shorter than four months. We might not even evaluate every four months in full transparency. We believe the optimal regimen for our drug, according to what retina specialists prefer, is every six months. However, we do have the capability to extend beyond six months for some patients. In DAVIO, we were able to get 41% of patients to nine months. In retinal therapy, we refer to this as individualized therapy. If we receive approval and our product is in use, doctors will determine which patients can be treated for longer durations based on a modified approach. Our drug’s unique delivery system and mechanism of action set it apart from current options; thus, monthly or bimonthly injections wouldn’t offer much differentiation. Therefore, we see multiple potential injection schedules to explore in the future, and we will allow data and market needs to guide our direction.

Eddie Hickman, Analyst

Thanks. And then can you just talk about the antigen criteria or how you might be enriching…?

George Elston, CFO

Certainly. In our Phase 1 study involving 17 patients, three required additional anti-VEGF treatment at the one-month mark. It's important to note that all participants had a history of wet AMD and received a standard care injection on day zero, followed by the administration of 1901 about a week later. If a patient showed 75 microns or more of new fluid at one month, which is five weeks after the initial injection, it indicated that their condition was not improving with either 1901 or standard care. Generally, it's reasonable to think that investigators would select patients who aren't performing well for a Phase 1 trial, rather than those who are stable. Our DAVIO trial appears to reflect this trend, as evidenced by the patient outcomes. Analyzing the data, it seems that patients previously treated but still exhibiting over 400 microns of central subfield thickness (CST) are likely not responding well to standard care, and may not fare better with our drug either. One might suggest that if these patients were treated monthly and still had 400 microns of CST, introducing 1901 could allow for extended treatment intervals, but that's not the approach we are pursuing for FDA approval at this stage. Additionally, we noted that patients maintaining significant intraretinal fluid despite prior anti-VEGF treatments also needed early retreatment, so we're excluding them from our upcoming trial. With the changes in patient selection criteria, we aim to obtain a more representative sample of the wet AMD population for our next study, unlike the bias we may have seen in the DAVIO trial.

Yi Chen, Analyst

Thank you for taking my questions. Could you comment on whether about 50% of patients that did not require a supplemental anti-VEGF up to six months will be good enough from a commercial perspective? And in real-world practice, even though if a product says the label of 50% patients could have maintained up to six months. Do you think doctors will still see these patients before six months? Thank you.

George Elston, CFO

Thank you for the insightful questions. We can certainly look at the mindset of retina specialists and how they have historically adopted new treatments for these conditions. If we have a safe, effective, and well-tolerated drug, and if 50% of patients can go six months or longer without needing an injection, we see a significant commercial opportunity, especially if we can identify those patients in advance. This will likely enhance our success rate beyond 50%, as doctors will focus on the patients who are most likely to benefit rather than treating all patients equally. Retina specialists typically begin by experimenting with new drugs on patients they believe will respond best, often monitoring them monthly to evaluate safety and efficacy against existing treatments. While we don’t currently have a monthly drug, I anticipate that 1901 will follow a similar trajectory, where patients identified through the retina community as likely to improve will be treated with it. We may see a high percentage of these patients going six months without recurrence or vision loss, allowing for continued treatment every six months. Initially, I expect that these patients will still be observed more frequently, especially at the start of treatment. We want to monitor them closely and may need to observe them several times a year, even if injections are only required every six to eight months. There's a group of patients who may still need more frequent treatments, like those currently on EYLEA or LUCENTIS, who might be treated every four to eight weeks. During our trials, we noticed that some patients who required supplemental anti-VEGF could go several months without needing another injection after the initial treatment, which reduces their overall injection frequency significantly. This benefit extends even to patients who need early interventions since 1901 presents a different mechanism of action compared to traditional treatments. Moreover, there's an added reassurance for both retina specialists and patients knowing they have a long-acting anti-VEGF therapy on hand. In cases where patients miss appointments due to illness or unexpected circumstances, they won't have to worry as much about significant vision loss from missing one or two visits.

Yi Chen, Analyst

Second question, could you give us an update on YUTIQ 50?

Nancy Lurker, CEO

Yeah. So right now, we are continuing to enroll patients. And we're waiting for the enrollment to complete, which is taking some time. And we're continuing to monitor the study.

Yi Chen, Analyst

How many patients will be enrolled for the Phase 3?

Nancy Lurker, CEO

I think we aimed for a successful outcome.

George Elston, CFO

60.

Yi Chen, Analyst

Okay. So the Phase 3 study will report results in the second half of this year?

Nancy Lurker, CEO

No. That was never the plan.

George Elston, CFO

No, we haven't guided on that. Remember, it's an orphan disease.

Nancy Lurker, CEO

Right. It's hard to find exactly. These patients are a little harder to find and locate because, again, as George just said, it's an orphan disease.

Yi Chen, Analyst

Okay. And lastly, could you provide any general comments regarding the trend of prescriptions for YUTIQ and DEXYCU for 2022?

Nancy Lurker, CEO

I'm going to actually turn this over to Scott. I just want to caution, we don't give forward guidance. So I'll let Scott just comment on sort of the general environment that we're operating in right now.

Scott Jones, CCO

Thank you for the question. As Nancy mentioned, we will not provide specific guidance regarding the number of prescriptions we anticipate for 2022. However, I can say that we are experiencing growth in our customer base, particularly with YUTIQ, which saw a 57% increase in 2021. We expect this growth to continue, especially within the retina segment, expanding beyond the traditional uveitis market. This indicates that we are successfully broadening our market presence, and we foresee this trend persisting into 2022. On the DEXYCU front, we have also noted an increase in our customer base, and more importantly, we are seeing greater utilization at each of the ambulatory surgery centers, with an increase in the number of units used per center in 2021. We hope our commercial partner, ImprimisRx, will maintain this momentum into 2022.

Yi Chen, Analyst

Okay. Thank you.

Operator, Operator

Thank you. Our next question comes from the line of Yale Jen from Laidlaw. Your question please?

Yale Jen, Analyst

Good morning. And Thanks for taking the questions. I'm going to start with a quick housekeeping one, which is for the fourth quarter. The SG&A seems grow significantly quarter-over-quarter. Should we anticipate that number to be a base for 2022 in each quarter or simply that just some one-time events that occurred at that time?

George Elston, CFO

Yeah. I think that's probably a good base run rate. We have invested across our, not just the organization but IP as well. So I would probably look to blend the two quarters, just if you're looking I'm happy to follow up with you on your models.

Yale Jen, Analyst

Sure. And the second question is that I know you guys going to start wet AMD Phase 2 study in the third quarter. What are currently the gating factors for you guys to complete before formally start the trial?

George Elston, CFO

There are many behind-the-scenes tasks that need to be completed to initiate a trial. This includes manufacturing, packaging, and distribution of the drug, which we have already finished. We also need to select a CRO, and that step has been completed. The CRO has to reach out to the sites, and those sites must agree to participate in the study. Then, the protocols need approval from their IRBs, and the drugs have to be shipped directly to the sites before we can start. All of this is progressing at a good pace. It can be a complex process that companies navigate to get these studies underway. It's worth noting that our last patient was enrolled in the DAVIO study in May, and we received six-month results in November of last year. We are well on track to initiate the Phase 2 trial. We are pleased with our choice of CRO and the interest from the sites. For a trial of this size, we had 11 sites in our Phase 1 trial, and we plan to have significantly more for this trial, which will take some time. There isn't a single hurdle; these activities are occurring simultaneously. However, I am confident that our timeline for starting in the third quarter is on track.

Yale Jen, Analyst

Okay, great. My last question is regarding the recent medical meetings where the 8-milligram data for EYLEA was reported. What are your thoughts on that, and does it affect your views on the development of 1901?

George Elston, CFO

Yeah. So the data is interesting in that. Again, safety is number one. It did appear to be safe. There were a couple of ocular AEs in the high dose that weren't seen in the regular dose. But I don't think it didn't appear to be significant. It does appear to drive better, maybe even give better visual acuity. But again, that's not a competitor to us. We're agnostic to who drives the retina for us, whether it's Faricimab, high-dose EYLEA, regular EYLEA, or KSI’s drug. Once doctors get the patients induced to as good as they feel the retina can look, that's when we'd like them to step it with 1901 to see if we can provide that longevity and assurance that there is a long-term anti-VEGF with zero-order kinetics that is safe on board. So yeah, we welcome anything that's going to help patients in this space to be terrific. And if the drying effect is better, that I think would work very nicely in conjunction with our drug.

Yale Jen, Analyst

Okay. Great. Let me ask one more question to follow up on what you just said. Regarding the initiation of maintenance therapy after the initial induction treatments, what factors should we consider? How soon do you think patients can begin maintenance therapy, and when can you provide guidance on that?

George Elston, CFO

Yeah. So that's a really good question. And again, I can put on my clinical investigator hat and say, there's a whole lot of questions I'd like to answer about how 1901 works in which patient population and when to give it. But we're really focused on getting the drug FDA approved as quickly as possible. And some of those clinical questions are going to have to, I think, wait until FDA approval occurs. And the obvious one is, are you going to test your drug in treatment, i.e., patients. Eventually, if the answer is, probably yes, either we will or the retina community will test it that way. But we have no immediate plans to do it. Because it's again in some ways, whether we work in naïve as well as we work as maintenance is kind of irrelevant. As long as we offer something that none of the current drugs offer, which is the ability to go out six months or longer without another shot in the majority of patients.

Yale Jen, Analyst

Okay. Great. That's very, very helpful. And again, congrats on the progress. I look forward you guys to start a trial soon.

Nancy Lurker, CEO

Thanks, Yale.

George Elston, CFO

Thank you for the questions.

Operator, Operator

Thank you. This does conclude the question-and-answer session of today's program as well as today's conference. Thank you, ladies and gentlemen, for your participation. You may now disconnect. Good day.