Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Ocular Therapeutix Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. It is now my pleasure to turn the call over to Donald Notman, Chief Financial Officer at Ocular Therapeutix. Please go ahead, sir.

Thank you, Kevin. Good afternoon everyone and thank you for joining us on our third quarter 2020 financial results and business update conference call. This afternoon, after the close, we issued a press release providing an update on the company's product development programs and details of the company's financial results for the quarter ended September 30, 2020. The press release can be accessed on the Investors portion of our website at investors.ocutx.com. Leading the call today will be Antony Mattessich, our President and Chief Executive Officer, who will provide a summary of our corporate developments and an update on the DEXTENZA commercial launch. Also speaking on the call will be Dr. Michael Goldstein, our Chief Medical Officer, who will give an update on our clinical developments and pipeline. Following Michael's remarks, I will provide an overview of the financial highlights for the third quarter before turning the call back over to Anthony for a summary and questions. For Q&A, we will also be joined by Patricia Kitchen, our Chief Operating Officer; and Scott Corning, our Senior Vice President, Commercial. As a reminder, on today's call, certain statements we will be making may be considered forward-looking for the purposes of the Private Securities Litigation Reform Act of 1995. In particular, any statements regarding our regulatory and product development plans as well as our research activities are forward-looking statements. These statements are subject to a variety of risks and uncertainties that may cause actual results to differ from those forecasted, including those risks described in our most recent Form 10-Q on file with the SEC. I will now turn the call over to Antony.

Thank you, Donald, and welcome everyone to Ocular Therapeutix's third quarter earnings report. Ocular Therapeutix is a rapidly changing company, even different today compared to what it was at the time of the last quarterly earnings report. First of all, in this past quarter, we have seen DEXTENZA net sales to distributors rise to $5.4 million for the third quarter of 2020, which represents 280% growth over the previous quarter. More importantly, the pace of our in-market sales to surgery centers and hospital outpatient departments, which would be an indicator of true demand, is reaching the point where DEXTENZA is poised to become a net product contributor to Ocular’s income. With over 4,000 billable units purchased by ASCs and HOPDs in October, we have the opportunity to make Q4 DEXTENZA’s first product contribution positive quarter. DEXTENZA is a highly differentiated specialty ophthalmology product that relieves the daily steroid dropper in the treatment of inflammation and pain following ophthalmic surgery. It also can improve the business of ophthalmology as a buy and bill medical benefit product with rebate potential. Importantly, DEXTENZA has an associated procedure code, CPT code 0356T, that can allow for additional physician payment. Earlier this week, we announced that we received a formal Category I CPT code that will remove the temporary status of 0356T and make it permanent beginning in January of 2022. I cannot overstate how important this decision is in realizing our goal of making eye drops obsolete. The benefits to the patient of being able to treat diseases of the eye with a truly hands-free solution are clear, as is the efficacy of delivering therapeutics to the ocular surface from intracanalicular insert. The recognition by the American Medical Association that physicians should be separately compensated for the placement of these inserts completes the win-win proposition for this novel route of administration. Clearly, Category I status for the procedure of inserting a drug-eluting insert into the nasolacrimal canaliculus delivers immediate benefits for DEXTENZA, but also for our two dry eye programs. Furthermore, DEXTENZA is wholly developed and manufactured in-house here in Bedford, Massachusetts with no significant royalties, resulting in a high gross margin. Our goal in launching DEXTENZA ourselves was to demonstrate the commercial potential of our platform and a rapid return on investment for products like DEXTENZA. With the recent developments and assuming the environment for elective surgeries remains stable, we are well on our way to doing that. The second major difference in Ocular at this earnings report is that we believe we now have the means to fully fund our four clinical stage pipeline assets through their planned Phase 2 clinical trials. Shortly after the third quarter ended, we executed an oversubscribed public offering that raised more than $75 million in net proceeds for the company, significantly extending our cash runway and positioning us to fund our four planned Phase 2 trials. We also entered into a licensing agreement in late October with AffaMed Therapeutics for rights to DEXTENZA and OTX-TIC in China and other key Asian markets that have the potential to net another $12 million in upfront payments and offers the potential for up to $91 million in future aggregate milestones and payments and tiered double-digit royalties on future sales. AffaMed is focused on commercialization in emerging Asia Pacific markets and was founded by C-Bridge Capital with Samsung Bioepis. With the recent public offering and this business development deal in place, we have never been in a better financial position. Our four clinical stage programs; OTX-TKI for the treatment of wet age-related macular degeneration and other retinal diseases, OTX-TIC for the reduction of intraocular pressure in patients with primary open-angle glaucoma or ocular hypertension, OTX-CSI for the chronic treatment of dry eye disease, and OTX-DED for the short-term treatment of the signs and symptoms of dry eye disease share much in common with DEXTENZA. They are all highly differentiated ophthalmology specialty product candidates that address the key unmet need in their respective disease states. They are also designed to become viable medical benefit products with CPT codes associated with their administration. Finally, they are all fully developed in-house without the burden of significant royalty obligations. While DEXTENZA competes as a surgical product in a large $1 billion market, our four pipeline assets potentially address much larger global markets estimated over $20 billion in annual sales. Clearly, we are excited to have more control of our own destiny and to get to work on advancing our pipeline product candidates into and through Phase 2, where we believe significant value inflection typically occurs. With an update on where we are with these product candidates, I will hand it over to our Chief Medical Officer, Dr. Michael Goldstein.

Thanks, Anthony. Let me begin with an update on our back-of-the-eye program. OTX-TKI is a bioresorbable hydrogel implant containing axitinib being developed as a product candidate to extend the durability of treatment for wet AMD. We continue to dose subjects in a multicenter, open-label dose escalation Phase 1 clinical trial being conducted in Australia that is designed to assess the safety and tolerability of OTX-TKI as well as to assess preliminary biological activity by measuring anatomical and functional changes. To date, we have enrolled the first two cohorts and another third cohort that is currently enrolling patients. The data from the first two cohorts demonstrate that OTX-TKI in both cohorts has been generally well tolerated with a favorable safety profile and no serious ocular adverse events reported to date. While still early, interim data suggests that there is a dose response as evidenced by a greater clinical response in the second higher dose cohort compared to the first lower dose cohort. Additionally, we are seeing good durability with one patient previously treated with monthly anti-VEGF injections, now out to nine months after OTX-TKI treatment without needing rescue. While the drug product profile is still emerging, we are pleased with the interim data that shows intravitreal injection of a TKI can potentially reduce intraretinal and/or subretinal fluid. We plan to provide additional data on safety, biological activity and durability at the upcoming American Academy of Ophthalmology conference next week. Beyond this data announcement, we are on track to submit an exploratory IND to the FDA by the end of the year to allow us to start dosing subjects in the U.S. with wet AMD and expect to initiate a Phase 2 trial in Australia in the middle of 2021. Moving to our glaucoma program, OTX-TIC is a long-acting travoprost intracameral implant for the treatment of patients with primary open-angle glaucoma or ocular hypertension with a target duration of drug delivery of four to six months. We continue to enroll subjects in a Phase 1, prospective, multi-center, open-label, dose-escalation clinical trial in the U.S. to evaluate the safety, biological activity, durability and tolerability of OTX-TIC. Data from the first two fully enrolled cohorts shows decreased IOP in patients receiving OTX-TIC that was comparable to current standard of care, topical travoprost placed in the non-study eye. The data showed that the IOP remained consistently decreased for an extended duration of six to nine months in many subjects with a single implant and one subject had IOP controlled for over 21 months with a single implant. In terms of next steps, we have fully enrolled cohort three, a faster degrading implant same dose as cohort one and are completing enrollment of cohort four, a smaller implant lower dose. We're targeting initiating a Phase 2 clinical trial for OTX-TIC in the middle of 2021. We're also making progress with our ocular surface disease programs, which include products for dry eye and allergic conjunctivitis. In dry eye, we have two programs; OTX-CSI, which is designed to increase tear production for the chronic treatment of patients with dry eye disease and OTX-DED, which is a new program announced last quarter, targeting the short-term treatment of the signs and symptoms of dry eye disease. OTX-CSI is an intracanalicular insert which combines two modalities to treat dry eye patients. Local programmed release of cyclosporine for approximately three months to the ocular surface, along with punctal occlusion over the same time period. By releasing low doses of preservative-free cyclosporine over an extended duration of time, OTX-CSI has the potential to minimize what we believe is one of the biggest patient complaints of our topical cyclosporine, stinging and burning. As an intracanalicular insert, OTX-CSI may provide more rapid onset of symptomatic relief for patients than cyclosporine drops alone. In October, we announced data from the U.S.-based Phase 1 open-label, single-center trial that was designed to evaluate safety, tolerability, durability and early biological activity in five subjects, in 10 eyes over approximately 16 weeks. All subjects completed the 16-week study period with no dropouts or serious adverse events reported. The inserts were observed to be well tolerated and there were no adverse events of stinging, irritation, blurred vision or tearing reported or observed. Tear production as measured by the Schirmer’s test improved from mean values of 4.2 millimeters at baseline to 8.2 millimeters at week 12. One of five subjects or 20% of subjects had a greater than or equal to 10 millimeter increase from baseline in Schirmer’s score at week 12. Subjects treated with OTX-CSI demonstrated an improvement in signs of dry eye disease as measured by corneal total fluorescein staining, a mean value of 6.7 at baseline, improved to a mean value of 2.7 at week 12, on a scale of 0 to 15 and an improvement in symptoms of dry eye disease as measured by the visual analog scale eye dryness severity score, a mean of 51 at baseline, improved to a mean value of 33 at week 12, on a scale of 0 to 100. The onset of action of OTX-CSI was seen as early as two weeks for both signs and symptoms of dry eye disease and continued over the 16-week study period. We’re excited about the potential for this hands-free and preservative-free option in helping dry eye patients receive the benefits of cyclosporine with potentially greater tolerability and more rapid onset of action compared to therapies currently available on the market. Based on the results from the Phase 1 trial, we recently announced that the first patient was dosed in a Phase 2 U.S.-based, randomized, masked, vehicle-controlled, multicenter clinical trial evaluating two different formulations of OTX-CSI with vehicle insert in approximately 105 subjects who will be followed for a period of 16 weeks. Endpoints include tear production as measured by the Schirmer’s test, signs of dry eye disease as measured by corneal fluorescein staining, and symptoms of dry eye disease as measured by the visual analog scale eye dryness severity score and the visual analog scale dry eye frequency score. We anticipate receiving top line data from this Phase 2 clinical trial in the first half of 2020. Our second product in dry eye, OTX-DED, is a low-dose intracanalicular insert, a preservative-free dexamethasone for the short-term treatment of patients with dry eye disease. While it incorporates the same active drug as DEXTENZA, this is a new product candidate with a lower dose and smaller insert size. Many of these dry eye patients experience episodic flares of their signs and symptoms, which we believe are likely related to inflammation. Topical steroids have long been used clinically off-label for dry eye flares and have preservatives which can result in ocular surface toxicity. They also lead to adverse events such as elevated intraocular pressure or cataracts if used chronically. OTX-DED potentially offers these patients the opportunity to be treated with a non-abusable, physician-administered, rapid onset, preservative-free and hands-free steroid therapy. Because OTX-DED has a lower concentration of dexamethasone, we are able to use the DEXTENZA data safety package to rapidly advance the program into late-stage clinical trials. We remain on track to file an IND application with the U.S. FDA evaluating OTX-DED in dry eye disease by the end of 2020 with the plan to move directly into Phase 2 clinical trials in patients with dry eye disease in the first quarter of 2021. In allergic conjunctivitis, we remain on track to submit a sNDA by the end of 2020 for DEXTENZA for the treatment of ocular itching associated with allergic conjunctivitis and would then expect a PDUFA date in October of 2021. Overall, we believe the data package highlights a compelling product profile and targeting an unmet need that could potentially change the current standard of care with a one-time, long-acting, hands-free therapy for these patients. This sNDA, if approved, would represent our first in-office indication. Lastly, I would like to add that there continues to be significant interest and excitement in evaluating DEXTENZA in many areas of unmet need with over 80 investigator-initiated trial requests submitted. They currently have over 20 investigator-initiated trials that are active and enrolling subjects, including two that are fully enrolled. I would now like to turn the call back over to Donald to review our third quarter financial results.

Thanks, Mike. Gross product revenue net of discounts, rebates and returns, which the company refers to as total net product revenue was $5.9 million for the three months ended September 30, 2020 as compared to $1.6 million in the second quarter. Net product revenue of DEXTENZA was $5.4 million in the quarter versus $1.4 million in the second quarter. We believe the significant increase of over 280% quarter-over-quarter was driven by the continued re-opening of ASCs and HOPDs as well as the impact of the DEXTENZA rebate program and the more recent physician payment of the procedure CPT code 0356T by some of the Medicare Administrative Contractors, or MACs. Net product revenue of ReSure Sealant in the third quarter was $0.5 million versus $0.2 million in the second quarter. Research and development expenses for the third quarter were $7 million versus $10.2 million for the comparable period in 2019 and primarily reflect a decrease in personnel and other unallocated costs due to the organizational restructuring announced in November 2019. Sales and marketing expenses for the third quarter were $6.5 million as compared to $6.8 million for the same quarter in 2019, stemming primarily from a decrease in travel, consulting, marketing and conference expenses as a result of the COVID-related slowdown offset somewhat by increased personnel expenses. Finally, general and administrative expenses were $6 million in the third quarter versus $6.2 million in the same period of 2019, reflecting a decrease in personnel expenses offset by an increase in professional costs. With respect to financial results for the third quarter, we reported a net loss of $11.9 million or a loss of $0.19 per share on a basic basis, and $0.21 per share on a diluted basis. This compares to a net loss of $18.8 million or a loss of $0.40 per share on a basic basis, and $0.45 per share on a diluted basis for the same period in 2019. The net loss for the third quarter included $2.6 million in non-cash charges for stock-based compensation and depreciation compared to $3.8 million for the same quarter in 2019. In addition, the net loss for the quarter included a non-cash gain of $3.8 million related to the change in the fair value of the derivative liability associated with our convertible notes. As of November 1, 2020, the company had approximately 71.4 million shares outstanding. As of September 30, 2020, the company had $70.6 million in cash and cash equivalents versus $84.3 million at the end of Q2 2020. The cash at the end of the quarter does not include incremental cash of $75.2 million net of offering discounts, commissions and estimated expenses that was raised in a secondary public offering of stock that was completed in October of 2020 and the anticipated proceeds of $12 million in upfront payments from the recently announced licensing agreement with AffaMed Therapeutics. Based on current plans and including related estimates of anticipated cash inflows from DEXTENZA and ReSure Sealant product sales and cash outflows from operating expenses, the company believes that existing cash and cash equivalents, as of September 30, 2020 in combination with the net proceeds from the recent equity offering, will enable the company to fund planned operating expenses, debt service obligations and capital expenditure requirements into 2023. This cash guidance is subject to various assumptions including those related to the severity and duration of the COVID-19 pandemic and other assumptions related to the revenues and expenses associated with the commercialization of DEXTENZA, and the pace and expenses of our research and clinical development programs, as well as other aspects of the company’s business. This concludes my comments. And I would like to turn the call back to Antony for some summary thoughts.

Thanks, Donald. Before opening the call up for questions, let me do a quick summary. With the successful capital raised and new licensing agreement and momentum in DEXTENZA, we believe we have the resources to fully fund our four clinical stage pipeline assets through completion of their planned Phase 2 programs in disease states within large ophthalmology markets estimated to account for over $20 billion in annual global sales. In wet AMD, the performance of OTX-TKI in the clinic continues to support a product profile that could potentially set a new standard of care for durability. We look forward to providing further clinical updates at the AAO conference next week and entering the Phase 2 program in the middle of 2021. In glaucoma, OTX-TIC continues to support a product profile that could potentially set the standard of care for patient compliance. We plan to advance that program into a Phase 2 clinical trial in the middle of 2021. In dry eye disease, OTX-CSI recorded results in a Phase 1 study that are consistent with the product profile that could potentially demonstrate comparable efficacy to standard of care, but with faster onset of activity and less ocular irritation. We look forward to having results from our recently initiated Phase 2 clinical trial in the first half of 2022. In the short-term treatment of dry eye disease, we intend to advance OTX-DED with the filing of an IND by year end 2020 and initiate a Phase 2 study in the first quarter of 2021. Beyond dry eye disease, we remain on track to submit our sNDA for DEXTENZA in allergic conjunctivitis by the end of the year, and then would expect a PDUFA date by October of 2021. With that, I will turn the call over for questions.

Our first question comes from Dane Leone with Raymond James.

Hi. How's it going everyone? Congrats on all the progress and thanks for taking the questions. So just two for me. Firstly, Anthony, clearly there's been an inflection point with the commercial ramp of DEXTENZA. From an access perspective with the ophthalmologists that you're working with and want to get the product into commercially, what are the blocking and tackling steps that you think will be the key milestones as you head into 2021 to make sure that you open up access on the reimbursement side as much as possible? And then the second question, I guess, would be for Michael. In terms of setting the table and the presentation on cohorts one and two, what do you think are the most sensible things to focus on when you do update the data in terms of interpretation for the study? And what do you want to see in OTX-TKI? Thank you.

Thanks for the questions, Dane. You're quite right. I'll handle the first one and Mike will handle the second. I think the short answer about the access is that we really don't have an issue with that. We are getting pretty much ubiquitous coverage with DEXTENZA in the marketplace as a product. I think the question you might be asking is what are the potential issues or obstacles that we face in getting pull through, and those come essentially from the ASC inpatient and from the issues that sometimes we face with being able to select out appropriate patients or having the ASC select our appropriate patients. With that, we are working with the ASC ownerships directly to be able to help them implement. Clearly, we have a rebate program in place that makes them incentivized to bring this product through, which they very much are. The reception we've had with ASC and ASC consolidators has been very, very strong. But in some cases, they are high control ASC consolidators and in some cases, they are low control. In low control environments, in particular, we need to help them help themselves in terms of being able to train up their administrative personnel, also being able to train up their clinical personnel in order to be able to understand how the product can be used most effectively. So it's really that there really aren't obstacles that we can't remove. It's really now about just making sure that we get people more and more excited about pulling this product through. Did that help answer it?

Yes, that’s super helpful.

Hi, Dane. Thanks for your questions. It’s Mike. So I think there are three main things that we want to get out of the study and that we hope to give an update on. So the first is, it's a Phase 1 first-in-human studies. So it's about safety and we’ll give a better sense of where we are from a safety perspective with all the patients dosed to date. The second is that you're looking for evidence of biological activity as measured by anatomical improvements. So with these early studies, you're not really looking for functional improvements. It would be nice to see. But the reality is, with these early studies, it's really about seeing anatomical improvements as measured by seeing fluid going away on OCT. So we'll give an update on where we are with that. And the third issue is durability. So it's seeing does it really go away and then how long can you keep the fluid away for? And we'll give an update on where we are with that. So I think it will be a nice update. I think you'll like what you see. And we will continue to give updates as we have meaningful things to say.

Excellent. Thank you so much. Congrats.

Thanks, Dane.

Our next question comes from Joe Catanzaro with Piper Sandler.

Hi, guys. Thanks so much for taking my questions here and congrats on all the nice progress. Maybe similarly one for you, Anthony, and maybe one for you, Mike. First off, on DEXTENZA. Are there any considerations that we should keep in mind when we look at the growth in billable inserts you saw in September, whether that be a procedure bolus coming out of the summer or impact from the rebate program at the end of the quarter? And then with the CPT procedure code and movement to Category I in 2022, is there any additional work that's needed, whether it's regards to shifting the payment indicator or is it pretty much all set after this recent decision? And then on TKI, the update next week, I appreciate your comments prior. But should we expect any data from patients treated in cohort three? And if so, how many should we expect? And what would be the mean duration of follow-up there? Thanks.

Yes, great. Mike can actually answer questions on commercial and I know a little about clinical sometime, but we will stay with Mike answering the second questions and I'll answer the first. Concerning the uptake in September, we certainly don't believe that that's a bolus of our surgeries. We think there's a return to somewhat normal levels of cataract surgery. We still believe that they are well below normal nationally. There's some areas where they're at 100%, other areas where they're well below. But certainly you wouldn't see a sales bump like that because of an increase in the number of surgeries for that month. We hope that's an enduring effect, that as we get back to normal surgery levels, we’ll consistently do that through the quarters. Clearly, it's hard to ascertain what the effect of COVID is going to be going forward. The jump that we saw in sales we believe was a result of two factors. The first was our rebate program. And clearly September is the last month of the quarter. So you're going to get some purchases in that last month of the quarter. In order for people to move into the next rebate tier, we were a little nervous in October about whether we would see a bit of a dip and we didn't reach the level of sales that we saw in September, which is about 4,800 units. But we had about 4,200 units in market in October. And the last two weeks, in particular, well over 1,000. So we're comfortable that what we're going to have with the rebate programs is a little bit of a seesaw where we have the last month of the quarter, where we expect to have a higher number of sales probably the first month of the following quarter with a little bit of a dip, but then a build back up as people try and move up those rebate tiers. That tells us the rebate is having an effect which we're very excited about, because clearly that was something that we needed in order to be able to make the ASCs less resistant to a buy and bill product. The other question you have is about the CPT code and is there anything else that we need to do? Just sort of stepping back for a second, we couldn't be more excited about where we are with how far we've come how quickly. I remember a couple of years ago trying to convince people. First of all, we couldn’t even get DEXTENZA through the FDA, much less getting a J code and much less getting a Category I CPT code. And here we are so close after the launch having both of those things in place. There's a couple of things left to do that will evergreen our reimbursement potential in the ASCs in hospitals. The first thing is, as you mentioned, is to change the status indicator for the CPT code which would allow for a facility payment. And that facility payment then is what we will – if indeed we lose pass-through, because there are a number of potentials where pass-through gets extended or we become permanently separately paid, we get bundled into that facility payment. So the second thing we need to do is, of course, make sure that that facility payment is adequate to be able to cover the cost of DEXTENZA, which we feel confident we'll be able to do. So, yes, there's more work to do. But we couldn't be happier about where we are from a coding and reimbursement standpoint. Does that cover your DEXTENZA question, so we can shift over to Mike?

Yes, that’s super helpful.

Thanks, Joe. Thanks for the question. I think we've been pretty consistent in saying when we have something meaningful to say, we'll say it and we'll bring it forward. For cohort three, it's still early in order to say something meaningful across the cohort. That said, I think one of the things we're looking for is indications of biological activity. And to the extent that we can demonstrate that, we'll try to share that.

So is that – we shouldn’t expect cohort three data next week or is there still a chance that we may see some early patients?

To the extent we can show you something that’s evidence of biological activity, i.e. demonstrates the ability to get rid of fluid, we would show that patient. But in terms of showing something across the cohort, it’s still too early.

Joe, I think we’ve been very – as a company, we've been very transparent; in some cases, potentially too transparent about getting data out there before it was thoroughly vetted. Certainly in the case of the patient that was rescued at four and a half months in the second cohort. We want to make sure that any data we put out there is properly validated. But also, if the data is bad, we'll put it out there. If the data is good, we'll put it out there. As Mike says, if it's meaningful, we will make sure that it gets presented and it was a perfect opportunity to do that.

Okay, got it.

Thank you, Joe.

Our next question comes from Jon Wolleben with JMP Securities.

Hi. Congrats and thanks for the questions. Just two for me. With the recent AffaMed partnership, can you discuss any obligations on your end for development? And then, with the dry eye program, I believe Michael mentioned that there's going to be a vehicle insert in the trials. It seems to be a high hurdle for development. Can you discuss the expectations for that vehicle insert arm for both CSI and DED?

Sure. Actually, Patricia Kitchen is here as our Chief Operating Officer and is going to be the one to deliver most of the issues around AffaMed. So I’ll let her talk about the obligations relative to AffaMed.

Thank you, Anthony. Thank you for the question. In regards to AffaMed, our development obligations are first and foremost, to work with the Chinese authorities to be able to get an IND in China and begin a clinical program within the Chinese population. Then we will begin doing the work as well as for the Korean regulatory officials to ensure that we have a robust submission for Korea as well. Once we have those completed, we will work with the Southeast Asian countries to be able to meet their regulatory obligations.

Should we shift to your second question or would you like a follow-up on the AffaMed requirements?

No, that’s good.

Hi, Jon. Thanks for the question. So there are two different dry eye programs. So the OTX-CSI program for the chronic treatment of dry eye patients and OTX-DED for the short-term treatment of dry eye patients. And as you point out, there's a lot of discussion about what the appropriate competitor is. So for these trials, we are doing a design where we go against a hydrogel insert that's got essentially nothing in it. We think this is probably the most appropriate competitor to go against. So in the CSI, there are actually two different hydrogel competitors we're using. So one hydrogel competitor is designed to biodegrade in the same timeframe as the active. The other, which is an interesting one, is a rapidly degrading hydrogel that will go much quicker. And so we're looking at both those competitors. And then in the DED program, the hydrogel insert is designed to sort of mimic the biodegradability of the active.

Okay. Thank you. I appreciate it.

Thank you.

Your next question comes from David Steinberg with Jefferies.

Hi, guys. It’s actually Ed Chung in on for Dave. Just very quickly on the dry eye program. Just curious to understand how I guess the cyclosporine program mechanistically works different than Restasis which historically takes quite a bit longer time for onset of action and as well as how are you able to get around some of the stinging issues with Restasis?

Yes. So thanks for the question. And you're exactly right. The Restasis is a product – well, I should say cyclosporine products, of which Restasis is one of the two approved products in the U.S. are products that we commonly use clinically for the treatment of dry eye patients. The two issues that we confront with cyclosporine products are; one, they take a long time to work between many weeks and even many months. And the second is there's a pretty significant tolerability issue with stinging and burning in a number of these patients. So we believe that the OTX-CSI product can overcome both of these limitations. So we believe that the problems with stinging and burning are directly related to the peak effect that you get with a drop immediately after putting it in, and then you get a trough effect. And so by releasing a lower concentration of the drug over a longer period of time, we can sort of be in that therapeutic sweet spot for a longer period of time. So we believe that to be true. We have from our Phase 1 trial the evidence would be at least in that small set of patients with 10 eyes, we didn't have any tolerability issues. Now, obviously, that's a small trial. We got to see how it plays out. But given my clinical experience using cyclosporine, I would say even in a very small trial, you would likely see tolerability issues, it's that prevalent. As far as how long it will take in order to see meaningful benefits, you are correct. Typical cyclosporine drugs do take a long time. We also know that the punctal occlusion component typically happens very quickly, and you'll get some benefits there. And there may be extra benefits of putting the cyclosporine on top of this ocular surface in the setting of punctal occlusion. And so by putting those together, we believe we will see a more rapid onset of action. Again, in the Phase 1 trial, we did see that. We'll have to see if that plays out in the larger Phase 2 trial.

That’s super helpful. And one last question here is do you have any updates on the Regeneron partnership and kind of what the latest is in terms of the development program?

No updates. Clearly, we need to agree with Regeneron on any external updates. We would love to be more transparent if we could, but we want to be good partners with Regeneron. So nothing to update on, but I hope that will change in the relatively near future.

Thanks.

Thank you, Ed.

And your next question comes from Yi Chen with H.C. Wainwright.

Thank you for taking my questions. My first question is how much impact is the AMA Category I CPT code going to bring to the adoption of DEXTENZA going forward?

That is not just to the option of DEXTENZA, so it's really hard to overstate how important that Category I code is not just to DEXTENZA but to CSI, to DED and any other development program we might bring into the clinic or onto the market that uses the intracanalicular route of administration. As you know, with a Category I code, it's very easy, much easier for both public and private payers to support a Category I. They're pretty much paid universally. So in terms of physician payment, it basically clears the slate in terms of the checkerboard of reimbursement we're getting with the local coverage decisions, and makes it more uniform across the country. But it also makes the change in the status indicator easier as a separate Category I code rather than as a Category III code which is something that is vital to our reimbursement future in the ASC and hospital. The future of our intracanalicular business and of DEXTENZA as well is in the ophthalmology office where the Category I code will be a tremendous benefit to both the practice and to the patients because it makes the environment very much a win-win environment for the use of that route of administration.

Got it. Second question, is it true that OTX-DED contains less dexamethasone than DEXTENZA and therefore could be priced at lower price level?

The first part of your question is correct. The concept with OTX-DED is to leverage the strong safety signal we've seen with DEXTENZA, but to release less steroid over a shorter period of time. While DEXTENZA releases the steroid over up to 30 days, OTX-DED would target a profile with steroids released over two to three weeks. As far as pricing goes, that's a whole different matter.

Yes. As you say, it's a separate NDA and so the price would be fully independent from DEXTENZA. So it could be more. It could be less. But we haven't determined the pricing strategy yet. Having that flexibility is nice. So having a separate product in the space is it works on a lot of different levels.

Okay. Thank you.

Thank you.

Since there are no further questions at this time, this does conclude today’s conference call. You may all disconnect, and have a wonderful day.