Thank you, operator, and thank you all for participating in today's call. Joining me from the company are Mark Iwicki, Chairman, President and Chief Executive Officer; Todd Bazemore, Chief Operating Officer; Mary Reumuth, Chief Financial Officer; and Kim Brazzell, our Chief Medical Officer will also be joining us for the Q&A portion of today’s call. Today's call is being webcast live. The webcast link can be found in the Investors and Media section of our website at www.kalarx.com. During this call, we will be referring to non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in our press release issued today, which can also be found on our website. On this call, we will make certain comments about Kala's future expectations, plans and prospects that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements will include statements regarding the potential market and commercial launch plans for EYSUVIS, observations associated with our commercialization of EYSUVIS and INVELTYS and the sufficiency of our cash resources. These and other forward-looking statements are based on the beliefs and expectations of management as of this conference call. Our actual results may differ materially from our expectations. The company undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances that occur after this conference call, except as required by the law. Investors should carefully read the risks and uncertainties described in today's press release as well as the risk factors, which identify specific factors that may cause actual results or events to differ materially from those described in our forward-looking statements, included in the company's quarterly report on Form 10-Q and other filings we make with the SEC. The Form 10-Q will be filed with the SEC later today, and will be available on our website. I will now turn the call over to Kala's CEO, Mark Iwicki.

Thanks, Niranjan and good morning everyone. Thank you for joining us today to review Kala’s second quarter 2021 financial results and recent business highlights. Since our inception, Kala has been committed to advancing innovative treatments for eye diseases. We continue to execute on all fronts and benefit from a uniquely positioned portfolio that offers both near-term and long-term growth opportunities. We now have two FDA approved products based on our proprietary amplify technology and are making good progress toward advancing our pipeline of innovative, NCE development programs, which have the potential to treat both front and back of the eye diseases. As we have described before, a key area of focus for Kala in 2021 is setting up EYSUVIS for long-term commercial success. And we are encouraged by our progress year-to-date. We saw immediate effects from our initial Salesforce expansion and have significantly broadened payer coverage to include some of the largest commercial PBMs in the United States. We also recently secured our first Medicare plan coverage and are working diligently to obtain additional access for Medicare patients. As Todd will describe shortly, we believe this creates a tremendous foundation for future growth. And we're excited to continue offering EYSUVIS as the first and only prescription therapy, specifically for the short-term treatment of dry eye disease, which includes dry eye flares. We are encouraged by recent trends on INVELTYS, suggesting that elective ocular surgeries are continuing to return to pre-COVID levels as vaccines are becoming more readily available. We continue to believe that INVELTYS prescriptions and revenues will grow over time. Importantly, as we enter the second half of 2021, we continue to operate from a strong financial position with the capital to continue executing against our strategic priorities while maintaining balance sheet flexibility. We anticipate that our cash together with anticipated revenue from EYSUVIS and INVELTYS will enable us to fund our operations for at least two years as we continue to invest in building out EYSUVIS commercial efforts and advance our pipeline. With that, I will now turn the call over to Todd to review our commercial progress with EYSUVIS and INVELTYS.

Thank you, Mark. I'll begin this morning with a progress update on the EYSUVIS launch. There remains a massive unmet need in dry eye disease. There are an estimated 38 million dry eye disease patients in the US. Over 17 million of these patients have been diagnosed and are under the care of eye care professionals. We estimate that about 75% of the total addressable market, or approximately 13 million diagnosed patients, are currently not treated with a prescription dry eye therapy. Of those patients who have received a prescription medication, nearly 80% discontinue their medication within the first four months. Multiple patient market research studies indicate that approximately 80% of dry eye disease patients suffer from dry eye flares and that these flares occur on average four to six times per year. As the only FDA approved product for the short-term treatment of dry eye disease, we believe EYSUVIS has the potential to become the preferred first-line prescription therapy. We are committed to continuing to educate eye care professionals about the underserved acute dry eye market and over time change the treatment paradigm for the millions of patients who would benefit from the short-term treatment of their dry eye disease. In the second quarter of 2021, Symphony Health and our patient hub reported 15,632 EYSUVIS prescriptions, representing an increase of 93% over Q1. As of the week ended July 23, 2021, data from Symphony Health and our patient hub indicated more than 28,000 prescriptions for EYSUVIS have been filled since the launch in January, including over 2,500 refill prescriptions. More than 3,800 unique eye care professionals have prescribed EYSUVIS since the launch. We're also encouraged to report that 62% of prescriptions in the second quarter were written for patients entirely new to prescription dry eye therapy, indicating first-line use and meaningful progress toward our goal of becoming the preferred first-line prescription therapy for the short-term treatment of dry eye disease, which includes dry eye flares. Of note, we are seeing that optometrists, who often see patients earlier in the dry eye disease cycle, wrote 55% of EYSUVIS prescriptions today. EYSUVIS has grown in 'new to therapy' prescription share, a measure of the number of patients newly initiating prescriptions for dry eye therapy, and now sits at approximately 6% market share, having surpassed Cequa to become the third most prescribed dry eye product for 'new to prescription therapy' patients. We conducted a survey of over 200 eye care professionals between late May and the end of June, and the feedback was exceedingly positive. 72% of the ECPs reported prescribing EYSUVIS in the past 30 days. Approximately, 83% of the ECPs indicate they expect to increase their prescribing of EYSUVIS based on the education provided by their Kala sales representative. Our promotional messaging was rated the most effective relative to other dry eye therapies and highly recalled by ECPs. These findings are very encouraging, and we believe indicate that our current strategy is yielding results and supports continued future growth. In order to support the progress that we've made in building demand for EYSUVIS, we've increased our sales force from 91 reps at the time of launch to 105 sales reps today, which covers an additional 2,300 targeted ECPs, bringing our total called on universe to more than 14,000 eye care professionals. We are also encouraged by our progress in broadening our payer coverage. During the quarter, we announced that OptumRx, one of the largest pharmacy benefit managers in the U.S., has added EYSUVIS as a covered brand under its commercial formularies. As of the end of the second quarter, we have secured coverage for approximately 56% of commercial lives, representing approximately 96 million total lives. In addition, as of July 1, we now have Medicare Part D coverage for 7% of the Medicare population, representing an additional 3.2 million covered lives. Consistent with the customary annual Medicare Part D bid cycle, contract negotiations for 2022 coverage are ongoing, with additional decisions anticipated by the end of 2021. We are pleased with this continued growth in payer coverage, particularly since we believe it is translating into higher prescription fill rates for EYSUVIS. We look forward to further growth in our market access coverage, which will be a key driver of continued prescription growth. Now turning to INVELTYS. As we have previously shared over the past year, the pandemic has negatively impacted the ocular surgery market, resulting in fewer surgical procedures. As surgical volume has started to recover, we believe we will see INVELTYS prescriptions returning to quarterly growth. In the second quarter of 2021, there were more than 41,000 prescriptions of INVELTYS reported by Symphony Health, compared to 37,000 prescriptions reported in the first quarter of 2021, representing an 11% increase quarter-over-quarter. Despite the uncertainties the pandemic continues to present, we believe that INVELTYS prescriptions and revenues will grow over time. However, we remain unable to project the specific timing or quantify the potential impact on future revenues due to the potential disruptions of these continued uncertainties on elective ocular procedures. Overall, we are encouraged with the progress we are making in the quarter-over-quarter growth in prescriptions achieved with both EYSUVIS and INVELTYS. We are making significant headway towards securing broad payer access, and our goal of establishing EYSUVIS as the first-line prescription therapy for the short-term treatment of dry eye disease. The team is executing against our strategic launch priorities, and our ongoing efforts to engage with and educate the ophthalmology and optometry communities on EYSUVIS is generating prescription demand. We look forward to updating you on our progress on future calls. Now I'd like to turn the call over to Mary to review our financial results.

Thanks, Todd. During this discussion of our financial results, I will reference certain non-GAAP financial measures. These non-GAAP financial measures exclude stock-based compensation, loss on extinguishment of debt, non-cash interest expense and depreciation and amortization. For a full reconciliation of our GAAP to non-GAAP financial measures, please refer to today's press release, which is available on our website. Turning to a recap of the second quarter of 2021, our cash position as of June 30, 2021, was $149.6 million compared to $153.5 million as of December 31, 2020. This decrease reflects cash used in operations, largely offset by net proceeds of $40.7 million received from sales of common stock under our aftermarket or ATM offering program in the six months ended June 30, 2021, as well as the release of $10 million from restricted cash in connection with the refinancing of our credit facility in May. EYSUVIS revenue increased to $1.7 million in the second quarter from $1.6 million in the first quarter of 2021. While prescriptions were up 93% during the second quarter relative to the first quarter, units shipped to our distributors on which we recognized revenue were down as a result of stocking during the launch in the first quarter of this year. Overall, we are pleased with the increase in the number of prescriptions written and build during the second quarter. For the second quarter of 2021, we reported net product revenues of $3.1 million. This was comprised of $1.7 million of net revenue from EYSUVIS sales and $1.4 million of net revenue from INVELTYS sales, compared to net revenue of $800,000 from INVELTYS sales in the second quarter of 2020. INVELTYS's net revenues in the second quarter of 2021 decreased by $200,000 compared to the first quarter of 2021. This decrease was driven by a reserve for INVELTYS product returns of $500,000 that we believe is largely due to the COVID pandemic, which resulted in restrictions on elective surgical procedures. SG&A expenses for the second quarter of 2021 were $28 million, compared to $15.3 million for the same period in 2020. The increase was primarily due to an increase in costs as a result of the launch of EYSUVIS, including the expansion of the Salesforce and increased stock-based compensation costs. Non-GAAP SG&A expenses were $24.1 for the second quarter of 2021, compared to $13.2 million for the same period in 2020. R&D expenses for the second quarter of 2021 were $3.1 million compared to $6.1 million for the same period in 2020. The decrease was primarily due to costs incurred on STRIDE3, a Phase 3 clinical trial of EYSUVIS during the second quarter of 2020, which were not incurred during the same period in 2021, partially offset by increased spending on pipeline programs. Non-GAAP R&D expenses were $2.1 million for the second quarter of 2021, compared to $5.3 million for the same period in 2020. Loss from operations for the second quarter of 2021 was $29 million compared to $21.3 million for the same period in 2020. Non-GAAP operating loss was $24.1 million for the second quarter of 2021 compared to $18.4 million for the same period in 2020. Net loss for the second quarter of 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. Non-GAAP net loss was $25.8 million for the second quarter of 2021, compared to $20.2 million for the same period in 2020. Please refer to today's press release for the weighted average number of shares used in the calculation of our net loss per share for each of the quarterly periods discussed. That concludes our prepared remarks for today. I will now pass the call over to the operator for questions.

Our first question comes from Chris Neyor with JP Morgan.

Good morning. Thank you for the questions. The first one is about the recent restrictions on EYSUVIS. Based on Symphony Health data, we have observed a stabilization in EYSUVIS growth over the past two months. This slowdown has occurred despite the recent formulary additions for Cigna and OptumRx earlier in May. Looking ahead, what are the key factors needed to see a rebound in EYSUVIS growth from this point? I'll pause there.

Hi, Chris, it's Todd. I'm happy to take that question and good morning. In looking at the most recent four weeks compared to the prior four weeks, EYSUVIS is the only dry eye product that is growing. The summer months are typically slower for the dry eye market, with lower script volume compared to the peak months that begin in the fall and continue into winter. In fact, during our most recent four weeks compared to the previous four weeks, the overall dry eye market is flat. Zydus has decreased by about 1.5 to 2 percentage points, while EYSUVIS has shown growth of nearly 6% in the same time frame. We understand that summer can be a slower season with holidays and vacations, but we are encouraged by EYSUVIS being the strongest growing dry eye product during this period.

That's helpful. And second question, so all recorded Q2 EYSUVIS sales? We saw $1.7 million of sales, which are largely flat quarter-over-quarter, while we had EYSUVIS prescription growth of 93% quarter-over-quarter from Q1 2021. So can you help us bridge the recorded sales versus the underlying script trends? And I realize you guys don't provide forward guidance on gross to net, but any comments on kind of second half 2021 gross to net versus first half 2021? I think that would be helpful.

Yes, that’s a good question. The main reason our revenue slightly increased compared to the first quarter was our efforts to manage the initial product launch inventories. We recognize revenue when the product is shipped to wholesalers, and we believe we effectively handled the initial trade launch levels, which are now starting to normalize. As mentioned, we actually shipped less product to wholesalers in the second quarter than in the first, yet our revenues were slightly higher, indicating improvements in our gross to net metrics. We expect these metrics to continue improving over time, especially as our market access broadens and we see fewer scripts going through patient assistance and co-pay reduction programs, with more scripts being filled through traditional payer contracts.

That makes sense. And then, kind of, the last one for me. I think it's like taking a step back. It seems that expectations are for a pretty steep acceleration of growth in the second half of this year. So I think you have basically scripts more than doubling in Q3 and then further script growth in Q4. Do you think there should be a reset in expectations here, or are there any key catalysts you see to just reaccelerate growth into the second half? I think you mentioned the seasonality of the dry eye market. Looking into fall, do you think you're going to see kind of a re-pickup in growth for EYSUVIS? Thanks so much.

Yes. Sure, Chris. Look, we expect prescriptions to continue to grow, as we've always said, particularly as our market access continues to improve. We think that's going to be one of the most important drivers. We know that demand is much higher than the scripts that are actually being reported by Symphony. And there are a lot of scripts that are being written that are not getting filled because of a lack of insurance for those patients. So as we continue to improve our market access, we expect our prescription fill rates to improve and demand to continue to grow. And then the other thing I would just remind is that, we're creating a market that did not previously exist, right, the dry eye market is something that was not promoted previously. And very rarely with steroid use in dry eye, I think as you know, we've shared with you in the past that less than 3% of diagnosed dry eye patients would receive a prescription for an off-label steroid, historically, prior to the EYSUVIS approval at launch. And for the past 20 years, eye care professionals have been told that dry eyes is a chronic progressive disease. And so for the first time, we are creating this new acute market, and we're really encouraged by the progress we're making, the receptivity from eye care professionals has been extremely positive, both to the idea of diagnosing and treating acute dry eye symptoms with short-term treatment. And then probably more importantly, the feedback that we get from those eye care professionals once they've had a chance to prescribe EYSUVIS to their patients. They're consistently reporting their patients are getting a very rapid onset of action, quick relief from the symptoms. And that EYSUVIS is a very comfortable and well-tolerated eye drop. So we think these are all really great positive indicators for continued growth in the second half of this year.

Thanks.

Yeah. Thank you, Chris.

Thanks for the question. To clarify, this is not coming from Symphony; it's more of a background point. This isn't about an 80% discount on EYSUVIS and a 90% discount on INVELTYS, correct?

Yeah, François, it’s Todd. What we're dealing with EYSUVIS is what we saw within the quarter is that we actually had less ex-factory shipments as we worked through the initial inventories that we put out with the launch in the first quarter, yet with lower ex-factory shipments, net revenues were up slightly quarter-over-quarter, which would indicate improving gross to nets.

Okay, great. Regarding INVELTYS, could you explain the reasons for the decline in revenues even though the scripts are performing well?

Yeah, wouldn’t I have Mary take that.

Sure, François. So the reason for that, for INVELTYS is really the $0.5 million reserve for returns that we booked in the second quarter. So we've seen some units returned to us expired, and we believe that that is related to COVID and the restrictions on the surgical procedures that we've seen. So we believe that those units have basically sat on the shelf and come back to us unused and expired. And that was the reason for that reserve in the second quarter.

Okay, great. And then just in terms of EYSUVIS and INVELTYS, I guess, one after the other. When can we expect, if this INVELTYS thing, kind of, a one-time thing of the reserves? And then on the EYSUVIS front, when can we start seeing a better correlation between Symphony and the scripts and the actual revenues?

Yeah, so on the INVELTYS front, yes, that was related to units that we've seen returned. And we and we do believe that that's related to COVID. So we believe that $0.5 million reserve should cover up for related returns going forward? And then, I'll let Todd touch on the question about how we feel this?

Yes. As they come in a serious fight, we've done really good job working through those initial inventories that were put out in the first quarter and our inventory levels are starting to normalize. And we expect we'll continue to do so throughout the third quarter. So we don't give specific guidance, François, on that, but we just say that we feel good about where our inventory levels are right now.

Okay, great. And when you talked about the large volume of prescriptions that are written but still not filled based on reimbursement, and given that do you quantify at all what percentage of scripts are still written but not filled? Or is that like very much correlated to the reimbursement levels now or not quite?

Really good question. Not quite, there are third-party data that are put out there by MMIT, and this is one that looks at, across all categories, scripts, rejection rates, reversal rates, paid claims rates. And so, when you look at reversals and rejections for a service, it’s still greater than 60% of the prescriptions that are showing up in the pharmacy that are not getting filled. So again, we think that points to demand that's more than double the scripts that are getting filled in any given week, and those scripts, as we continue to improve on market access, will result in higher paid claim rates, and more scripts filled on a weekly basis.

Okay, great. Regarding reimbursement, is there any impact on the gross to net figures when comparing Medicare to commercial plans?

We feel good about the contracts that we have in place and the level of rebates to get the access. It's meaningful when it was written ESI and Medicare book of business, and we expect that to continue to grow. We believe the most important thing is to get those Medicare contracts in place to open up that part of the market, as you know it's about 40% of all dry eye prescriptions reimbursed by Medicare Part D payers. We look forward to continuing to grow our Medicare access in the second half of the year.

Okay, great. I’m sorry, if I could sneak in a last one here. Can you just remind us what you mentioned on the sequence there? And maybe remind us what exactly the sequence sales have been and where you passed them in your prepared comments?

Yeah. Really good question. So, I was referring specifically to what's known as NBRx share, sometimes it's called new-to-brand share or new therapy patient starts. And I think that's a really important indicator, particularly for newly launched products, right? At this time of the year, in any given week in the dry eye market, there's about 17,000 new patients starts, and that's defined as a patient that's getting their first ever prescription for dry eye medication, or at least has not been on a prescription dry eye medication for the prior 12 months. So we look at that NBRx or new to market share to see how we're performing with newly launched products. And we're currently sitting at about a 6% new-to-therapy market share having surpassed SQL in the quarter, which we think is really indicative of us getting more first-line use. As I said, in the prepared remarks about 62% of our prescriptions in the quarter were written for new-to-therapy patients, indicating that we're getting a lot of first-line use. When you look at the new-to-therapy starts, obviously Restasis is the market leader, they get about 69% of those 17,000 new patients that are starting therapy every week. Xiidra gets about 20%, we're up to 6% now and Cequa is about 3% on those new therapy starts on a weekly basis.

Hey, Frank, it’s Mark. Going a little bit farther, if you actually look at the last month, and you know, we have to remember there's a couple of holidays in this period where the scripts were a bit flatter, it's not only the low season, but there's holidays and that affects new products a lot more and especially products without a lot of refill prescriptions get impacted quite a bit more when there's a holiday period. But if you look at those NBRx, and the Shire, we're up quite a bit in the past month around 4.5%. And, you know, for example, product exaggerates down 4%. So when we look at these leading indicators, including all the prescriptions that are being written, although not all filled, as Todd described in the market research, we feel like the upcoming month should be really strong.

Okay, great. I appreciate all the clarity. Thank you.

Hi, good morning, guys. Thanks for taking my questions. As we look to payor mix over time, what would you say you would expect your split between commercial and Medicare usage could be and do you have any comps from let's say Restasis or Xiidra that could also help us out to figure out what that mix would be? And then I have a couple more follow-ups.

Sure. So good morning. At this time, we haven't given a dry eyes what we think the payor mix is going to look like in the future. I can tell you that right now more than 75% of our prescriptions that are getting filled are for commercial patients. If you look at the market, and what that looks like, overall, it really varies greatly by product, a product like Restasis, that has very good Medicare coverage. Actually, the majority of their prescriptions that are filled greater than 50% of their prescriptions are coming from Medicare patients, whereas it's there at about 40% within commercial. So they're almost the sort of the opposite of what the overall market looks like, which is about 40% Medicare and 50% commercial. If you look at a product like Xiidra, right, that's been on the market now for, I guess, it's the fifth year on the market now. And about 65% of their prescriptions are coming through commercial and about 25% through Medicare and Cequa still sort of fairly new to launch within the last couple of years, around 50% on commercial and around 30% to 35% on Medicare. So I think it's reasonable to assume that we'll start to head in the direction of where Xiidra and Cequa are. Those are products that have been in the market for a few years. But I do expect over the next couple of years that most of our scripts will continue to come from commercial payors.

Okay. And then can you give us an idea of what percent of these new scripts have been given with the patient assistance program attached?

You know, I don't have that number off the top of my head. We have a couple of different ways that the patients can get access to it. We were at a – if we look at all programs, and an easier way to say is our historical run rate for the full year since launch is probably about half of our prescriptions, a little bit more than half of our prescriptions were getting filled with some type of prepaid assistance program because most of our scripts are commercial; it's safe to assume that split is very similar for the commercial book of business.

Okay. And then, when you talk about, I guess, Todd, getting a lot of scripts that are being written, but not necessarily yet being executed on or just sense. Is there a range that you can give us to give us a better sense of what percent of those scripts are not being filled yet? And whether that trend has been improving?

Yeah. Really good question, the trend absolutely has been improving. During the first quarter of launch, which is very typical with new product launches, the rejection and reversal rates were in the mid-70%. And we have seen those numbers consistently improve. I think we have data through the month of May at this point; there's always a little bit more of a lag for payer data to be reported out. And I believe in the most recent month, if you combine rejections or reversals, those numbers were in the low-60%. So we are definitely seeing an improvement.

Okay…

…A lot of our payer coverage, as you know, didn't really start to come online until the middle or second half of Q2. And so it always takes a few months for that payer coverage once it comes in line to really start to have an effect, but really encouraged by the improvement we saw in the month of May. And we're looking forward to see the June data.

Okay, great. Thank you.

Yeah. Thank you.

Excellent, thank you so much for taking the questions. I think a lot of really excellent questions were asked already, so maybe just two for me. One is that, you know, you noted the impact of your expanded salesforce. I guess, I was just hoping or wondering if you could help us quantify that impact that you've been observing for the expanded salesforce? And then the second question that I had and I know I am relatively new to the story, but what is the stability for investors? And I guess, what are your protocols to be able to manage inventory at the surgical locations moving forward to make sure that the same impact won't happen again, in terms of expiry? Thank you.

Yeah. I'm happy to take the question. So the new expansion or the new representatives we've hired are just coming online now. So we hired those folks and they really just began in the beginning of July. They've been going through sales training in the month of July. We got the first group of representatives that were trained out in territory just last week. There was a few additional sales representatives that were trained this week. We'll be in territory next week. So it's too early to say what the impact of that is. But we're really encouraged by the quality of the sales representatives. We have a very experienced group, a lot of ophthalmology experience in the new representatives, and looking forward to see an impact. We were able to increase our target results from about 12,000 to more than 14,000 eye care professionals. So there's going to be about another 2,300 to 2,400 new eye care professionals for us to call on, that have not yet been detailed. And I see this. And we're certainly looking forward to getting out and getting some samples and getting some clinical experience for those individuals. But your question on salesforce, I believe the initial product, its back at the time of launch. I believe had about two years of dating that's now been extended, that we're up to 30 months or 36 months of total dating. We think really, the impact that we saw was a one-time impact of COVID from this past year. We had a lot of products, for example, that had shipped in 2019. That did not get used in 2020. That became short data as we got into 2021. And that was really what the biggest driver of those returns were.

Okay, that makes sense. Got it. Okay. All right. Well, like I said, I really appreciate all the discussion and thanks for taking my question.

Thank you.

Thank you for taking my question. Could you tell us whether you have a target penetration rate for Medicare Part D unlimited access by the end of this year?

Yes, Yi, we haven't publicly disclosed our internal targets for market access. We do have established goals for the team. This year, as we've mentioned previously, we expect to achieve some minimal coverage in Medicare Part D. We anticipate that most of this will take effect in 2022 based on the usual review and bid cycles. We will be having discussions in the second half of this year, likely with start dates in January 2022. However, we believe there may be opportunities, as with ESI, to have some Medicare Part D coverage begin before the 2022 timeframe.

Okay. And could you comment on the current development status for the glucocorticoid receptor modulator and also the tyrosine kinase inhibitor and what should we expect during the next 12 months for these pipeline products?

Hi Yi, this is Kim. Yes, we're continuing to move forward with both those. We're actively screening compounds to try to find the optimal compound for the cycling program. And we're hoping in the next 12 months in that program, to have identified the lead compound and be in preclinical development heading for an IND. Also, for both the SEGRM and the TKI, we are also actively evaluating delivery systems for the back of the eye and making good progress in that area and hope to have finalized our approach there within the coming months.

Got it. Thank you.

Hi. I wanted to get an update in terms of how you sort of see commercial insurance coverage in the back half of this year sort of expanding? Obviously, there's another big pharmacy benefit manager of CVS Caremark. I mean is that on your radar screen as another formulary that might include like EYSUVIS sometime in the back half of this year?

Hey Tim, good morning, it's Todd and really that's the next big one for us, right? We've gotten to the three big PBMs. We are in discussions with CVS Caremark. If we're able to get out to the CVS Caremark formulary in the second half of this year, that would immediately jump our commercial ownership and access to over 75%. And that along with continuing to execute on the existing contracts we have with Optumrx and with ESI with their on custom clients, which a lot of times with smaller regional plans will allow us to continue to grow that access even further. At the end of the first quarter, we're at 56% commercial access, but already here early in the third quarter. We've got some wins are getting ready to come online, through those Optumrx ESI contracts that I'm confident we'll quickly have is at about 60% unrestricted commercial access. But if we can tip CVS Caremark in the quarter, like I said, that would accelerate us quickly to north of 75% access with commercial payers.

And maybe just one follow-up, how has the response been when the sales reps market, I assume is to the physicians out there? I mean, how much physician awareness is out there on EYSUVIS? And then how much patient awareness on dry eye flares is out there? It almost seems like EYSUVIS is a great product, but a lot of physicians and patients aren't aware of this as a new treatment.

Yes. Tim, look, I think you're hitting a really key point there, right, is whereas eye care educating, mostly eye care professionals and we do have some direct-to-patient efforts ongoing. And we expect later in the year to launch more broad direct-to-patient efforts that will help with further educating. And we think this is a big opportunity. We know from all of our quantitative research that 80% of patients report, they suffer from dry eye flares. But when you do the same quantitative research of eye care professionals, they think it's about 40% of their patients that have dry eye flares. So that tells us this is a huge disconnect between what patients are experiencing and what physicians think. And we think the big reason for that disconnect is there's just not historically been proactive discussions about dry eye flares, because there's not been an FDA approved product to treat those patients. So that's why I say I'm really encouraged with the progress that we've made, but also recognize that takes time. We're creating a new treatment paradigm, and talking about this acute dry eye market that nobody has talked about previously. Like I said, I think EYSUVIS has been on the market for 18 years now. So for the past 18 years, all eye care professionals heard was if this was a chronic progressive disease that has to be treated with daily eye drops. And we're out there educating about the episodic manifestation of the disease due to these acute dry eye flares, and the fact that we've got a really great therapy. The receptivity to that message has been overwhelmingly positive. And as it is the case with any new product launch, it takes time to continue to establish and educate on this new treatment paradigm.

Okay, great. That's very helpful. Thanks.

Sure. Thank you.

At this time, I'm showing no more questions in the queue. Mr. Iwicki, I'll turn the call back to you.

Thank you, everyone for joining us this morning. We continue to work diligently to grow both of our products. We're optimistic with the launch of EYSUVIS and the great feedback we've heard from eye care professionals and patients, and know that our product really meets a significant unmet need as we've talked about during this call. We're encouraged by hopefully the reduction in the impact of COVID and that the surgical market will return to normal and that will give us a good opportunity to get INVELTYS back on a strong growth trend. And we look forward to updating everyone soon as we make progress on our pipeline programs. And again, thank you for joining us this morning.

This concludes today's conference call. Thank you for participating. You may now disconnect.