Good evening and welcome to Oyster Point Pharma’s Fourth Quarter 2020 Earnings Conference Call. My name is Josh, and I’ll be your operator today. After the company’s formal remarks, there will be a question-and-answer session. At this time, I would like to turn the call over to Mr. Daniel Lochner, Oyster Point Pharma’s Chief Financial Officer. Sir, please go ahead.

Good evening, everyone, and welcome to Oyster Point Pharma’s fourth quarter earnings conference call for the three months ending December 31, 2020. This evening, we issued a press release containing our fourth quarter financial results and recent business highlights. In addition, our earnings press release and our Form 10-K that we filed with the SEC this evening are available on our website under the investor and news section at www.oysterpointrx.com. Joining us on our call today are Dr. Jeffrey Nau, President and Chief Executive Officer of Oyster Point Pharma, and John Snisarenko, Chief Commercial Officer. Following Dr. Nau, John, and my prepared remarks, we'll open up the line for questions. This conference call contains forward-looking statements regarding future events and the future performance of Oyster Point Pharma. Forward-looking statements include statements regarding Oyster Point’s possible or assumed future results of operations; expenses and financial position; business strategies and plans; research, development and commercial plans or expectations; trends; market sizing; competitive position; our belief regarding our clinical trial outcomes, including secondary endpoint analysis; predictions regarding product approvals or the FDA; our efforts to manage the impact of COVID-19; and the industry environment and growth opportunities, among other things. In addition, this conference call discusses products that are under clinical investigation which have not yet been approved for marketing by the Food and Drug Administration. They are currently limited by federal law to investigational use, and no representation is made as to their safety or effectiveness for the purpose for which they are being investigated. These statements are based upon the information available to the company today, and Oyster Point assumes no obligation to update these statements as circumstances change. Future events and actual results could differ materially from those projected in the company’s forward-looking statements. Additional information concerning risk factors that could cause results to differ materially from our forward-looking statements are described in greater detail under the caption Risk Factors in the company’s filings with the SEC, including our annual report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on February 18, 2021. I will now turn the call over to Dr. Jeffrey Nau, President and Chief Executive Officer of Oyster Point Pharma.

Thank you, Dan. Good evening everyone and thank you for joining us on our call today to discuss our fourth quarter 2020 financial results and recent business highlights. As you know, on December 17, 2020, we submitted our NDA for OC-01 nasal spray with an indication for the treatment of the signs and symptoms of dry eye disease. In the coming days, we expect to hear back from the FDA regarding the acceptance of our NDA for review and the PDUFA date, if accepted. Once we receive correspondence from the FDA, we will issue a press release announcing the NDA acceptance. In addition to our OC-01 nasal spray for dry eye disease, we filed an IND in November to evaluate the potential of OC-01 for the treatment of Stage 1 and Stage 2 neurotrophic keratopathy. We believe that OC-01’s unique mechanism of action of stimulating natural tear film via the trigeminal parasympathetic pathway shown in preclinical and clinical studies may be beneficial for patients with corneal epithelial hyperplasia and/or punctate keratopathy as well as those with persistent epithelial defects. We plan to begin enrollment of the Phase 2 OLYMPIA clinical trial in the first half of 2021. As we are preparing for a potential launch, there are a number of major ophthalmology meetings that we plan to attend either virtually or live in 2021, depending on the current environment in light of the pandemic. The 2021 Association for Research in Vision and Ophthalmology meeting will be held virtually from May 1st through the 7th. Oyster Point’s Phase 3 ONSET-2 data will be presented at this meeting with time and date details to be announced. The 2021 Royal Hawaiian Eye Meeting will be held live from May 8th through the 14th in Maui. The American Society of Cataract and Refractive Surgery is scheduled for July 23rd through the 27th in Las Vegas. Additionally, the American Academy of Ophthalmology Annual Meeting will be held in New Orleans from November 12th through the 15th. We are looking forward to a year where we can showcase at these various ophthalmic meetings the data from our clinical development program and highlight what we believe is the strongest dataset from the treatment of a real world population in the dry eye space. We expect 2021 to be an incredible year for the company as we transition from a clinical development company to a commercial organization that remains committed to the research and development of therapies to treat diseases of the ocular surface. We plan on bringing innovative and transformative ocular surface disease treatments to patients and building Oyster Point Pharma into a best-in-class ophthalmology company. I would now like to turn the call over to John Snisarenko, Oyster Point’s Chief Commercial Officer, to discuss our ongoing preparations for the potential commercial launch of OC-01 nasal spray for dry eye disease in Q4, 2021.

Thank you, Jeff. The dry eye disease segment is a large market with over 16 million people diagnosed in the United States alone. Only a small proportion of these patients, approximately 2 million, are currently being treated with a branded therapeutic, and over 7 million people diagnosed with dry eye disease have tried and abandoned the currently available options. We believe that OC-01 nasal spray has a compelling therapeutic profile that, if approved, may address the unmet needs of a broad audience, which includes patients with mild, moderate, and severe dry eye disease, as well as the eye care practitioners who provide care for these patients. This product has been developed with patient safety and comfort in mind as a preservative-free nasal formulation that naturally spares the ocular surface from harmful preservatives and common ocular side effects associated with topical eye drops. From a commercial perspective, we are planning three phases of launch preparedness, including a disease state awareness campaign that is kicking off this quarter. We intend to reframe the narrative around dry eye disease to educate on the importance of tear film homeostasis and how tear film instability impacts dry eye disease. Historically, education has been primarily focused on later-stage disease and the inflammatory component of the disease, which, in our opinion, is a long-term sequel of a disruption in tear film homeostasis. The second phase will consist of initiating discussions with payers about OC-01's therapeutic profile and value proposition, which will also occur in early 2021. We have conducted significant research with payers, including a number of advisory boards, and we remain extremely focused on obtaining the best possible positioning of OC-01 post-approval. The third stage involves continuing to build out our sales team throughout the upcoming year. We plan on hiring between 150 to 200 representatives to target approximately 90% of the current prescriber base of therapeutic dry eye products. At launch, post-FDA approval, our focus will be on broad eye care practitioner and patient education and marketing, which will include direct-to-consumer campaigns leveraging the novel MOA and the nasal spray route of administration. As the first-in-class nasal spray to treat the signs and symptoms of dry eye disease, we feel that the target product profile of OC-01 will be compelling to both prescribers and patients. I will now turn the call back over to Dan Lochner, Oyster Point’s Chief Financial Officer, to discuss our fourth quarter financial results.

Thank you, John. I will now provide a brief overview of Oyster Point Pharma’s fourth quarter financial results. Additional detail about the fourth quarter, as well as our annual financial results, can be found in our Form 10-K that was filed with the SEC this evening. For the fourth quarter of 2020, Oyster Point Pharma reported a net loss of $22.2 million or $0.86 per share, compared to a net loss of $19.7 million or $1.41 per share for the same period in 2019. As of December 31, 2020, cash and cash equivalents were $192.6 million, compared to $139.1 million as of December 31, 2019. Total research and development expenses for the fourth quarter of 2020 were $11.7 million, compared to $15 million for the same period in 2019. The company incurred lower expenditures for preclinical and clinical programs, which were $4.6 million lower during the fourth quarter of 2020, primarily due to the completion of the ONSET-2 Phase 3 clinical trial in May 2020. The company incurred higher CMC expenses of $2.9 million, primarily due to the continued advancement of OC-01. The decrease in other research and development costs was primarily a result of NDA submission fees paid to the FDA in the amount of $2.9 million made in December 2020, which was compared to the $5 million non-exclusive license agreement with Pfizer in October 2019. This increase was partially offset by higher costs of $0.5 million related to data management and regulatory costs in connection with the advancement of the OC-01 NDA submission. Total selling, general, and administrative expenses for the fourth quarter of 2020 were $10.5 million, compared to $5.1 million for the same period in 2019. The increase was due to a higher employee headcount and reflects an increase in payroll-related expenses, including stock-based compensation of $3 million. The company also incurred higher commercialization planning expenses of $1.5 million in anticipation of an expected U.S. launch of OC-01 in the fourth quarter of 2021 if approved. Additionally, there was an increase in other general and administrative expenses of $0.9 million due to the expansion of the company's organization as it operates as a publicly traded company. With that overview of our financial results, I will now turn the call over to the operator to open up the line for questions.

Our first question comes from Anupam Rama with JPMorgan. You may proceed with your questions.

Just two quick ones for me. It's still 60 days right from the December 17 filing for when you would hear the PDUFA date, and so we're sitting here on February 18. Is there something like COVID-related or anything in terms of timelines we should be thinking about here for the PDUFA? And then second question is you mentioned the medical meetings for OC-01 where that the recent data will be highlighted, any new additional analysis we should be looking at for at these conferences? Thanks so much.

Thanks Anupam for the question. I’ll take the first question first. Just to remind everyone about the timelines for review from the FDA. So as this is a 505(b)(2) product, we have a standard 10-month review cycle, and the FDA is required to provide feedback to us in writing by day 74. So just as a reminder, we filed our NDA back on December 17, 2020. And so we're still within that day 74 window. We've had good conversations with the FDA. And as we stated in our prepared remarks, once we do receive that letter, we will issue a press release. For the second question, we do have a number of acceptances already this year with data. It will be probably a combination of top-line data as well as additional analysis. We have a great medical affairs team that we've brought on, who has now started to go through some of the additional analysis that are in our fairly robust dataset. We expect to present at both the ARVO Annual Meeting and the ASCRS annual meeting. Heading into March, we'll get into the window to submit for the American Academy of Ophthalmology where we intend to have presentations there as well.

Our next question comes from Tara Bancroft with Piper Sandler. You may proceed with your question.

I guess using the TrueTear experiences as a lens of sorts. Do you anticipate any read-through from that from payers on the intranasal delivery of your product? And I guess in the same vein, have you had more detailed discussions on coverage yet and the positioning in the treatment paradigm? And if you can't provide details of that, what is the general sentiment you're hearing on especially for coverage and first-line setting or do you think a step through will be required?

Yes. Thanks, Tara. I will address the question regarding the payers from a TrueTear perspective. TrueTear was a medical device that was not reimbursed from a traditional payer perspective. Since this is ocular education, we do expect standard commercial insurance as well as Medicare down the line to list OC-01 on formulary. What we've done to date is quite extensive research along with some advisory boards with payers. So we have a good understanding of what they are looking for, namely differentiation of the product as well as competitive contracting. It's going to be key to get competitive listing on commercial plans. We are building a compelling dossier to be used as monotherapy first-line for dry eye disease for the signs and symptoms, and we're approaching this with a competitive contracting strategy.

Our next question comes from Ken Cacciatore with Cowen & Co. You may proceed with your question.

Hi Jeff, Dan, and John, thanks for the call. I appreciate it. I was wondering maybe John if you could talk a little bit about some of the lessons learned from the Xiidra launch. I have some intimate understanding of what went right, what went wrong, and a little bit of maybe a background around the pricing issues that Xiidra and Restasis had. I think that they kind of got locked into a pricing battle. So wondering where that has shaken out if you feel that the marketplace is kind of conditioned now for you all and more stable around that? And also I was really interested you mentioned DTC, and I’m kind of fascinated by that. Obviously, Shire went out pretty hard on DTC and just how it really plays into the game plan here? Lastly, just how is the marketplace evolving? Now that we have Novartis a little bit more aggressively back in the market with Xiidra in advertising, any thoughts on the underlying trends that you're seeing would be interesting, especially given the context of COVID.

Yes, Ken. I'll address these questions. Let's start with kind of the marketplace in general. One of the things that we learned from the Xiidra launch was that the market is very promotionally sensitive, both from a field force perspective as well as consumer interaction. We've seen the market grow as high as double digits, even 30% when good efforts are put into educating the consumer around dry eye disease and getting their eyes checked and treated, which is a very positive lesson we’ve taken away. We're going to be much more precise with our direct-to-consumer efforts initially, focusing on targeting more digitally rather than casting a wide net. But as we secure more favorable payer coverage and eventually Medicare, we plan to launch quite an extensive direct-to-consumer campaign since we've seen this market react positively to it. Concerning pricing, I think all branded products, now there are four of them approved on the market, range between $500 and $600 wholesale acquisition cost on a monthly basis. This pricing seems to have stabilized over the last few years. It will be important how we approach payers with our contracting strategy. Regarding market evolution, the space has been around for over 15 years, although new competitors have come onto the market. We feel that this market still has a lot of headroom in terms of market potential. Many of these products focus on later-stage diseases, the inflammatory component. We believe that a product like OC-01 is effective in addressing the earlier stages, helping to restore natural tear film and homeostasis. We’re excited about the opportunity to expand the prescription therapeutic segment, and many of our commercial efforts will focus on education to further expand that market.

Our next question comes from Patrick Dolezal with LifeSci Capital. You may proceed with your question.

Hi, thanks for taking the questions. I have a few. Perhaps you could help us think about the unmet need in neurotrophic keratopathy and the rationale for OC-01 in this indication? And then more specifically, on the Olympia study, curious about any takeaways from the broader OC-01 experience in dry eye that might speak to the ability of OC-01 to improve corneal staining? Lastly, in a more general sense, could you contextualize how you're thinking about pursuing additional label expansion and whether there’s anything else that might be expected in the relative near-term?

Yes, great, thanks Patrick. Those are great questions. As we think about neurotrophic keratopathy, it's important to understand the disease state. With patients who suffer from this condition, imagine it similar to a diabetic patient with peripheral neuropathy, but occurring in the cornea. That underlying nerve plexus in the cornea fails to signal the brain to blink or produce tears. Consequently, there is a breakdown in both blinking and tear production, and the maintenance of the corneal epithelium. The way OC-01 nasal spray works is by bypassing the ocular surface completely. Therefore, we believe that this is a vital product for these patients, as we can stimulate natural tear film production. We are contemplating treating more than twice a day than we did in the dry eye program in the neurotrophic keratopathy program. We believe these patients will benefit because we don’t rely on that underlying nerve plexus. As we mentioned earlier, the lacrimal gland produces various growth factors critical for healing the corneal surface. Regarding the various stages of neurotrophic keratopathy, we are concentrating on Stage 1 and Stage 2 patients in our clinical trials while also considering other future possibilities for Stage 3 patients. The OC-01 nasal spray could potentially help bridge those patients during the waiting period for existing therapies. Looking at corneal staining data from the ONSET-1 and ONSET-2 studies, we are encouraged by the results. In ONSET-1, we had statistically significant improvements in various areas of the cornea, a notable achievement. Our data will be presented in more detail moving forward, specifically focusing on individual patient subsets. It’s worth noting that during the dry eye studies, we only treated for 28 days, and staining resolution may take longer. Additionally, we had to administer topical proparacaine often, which can exacerbate staining. With neurotrophic keratopathy, we won't have as much proparacaine on the ocular surface and will be treating over a 56-day period, which excites us regarding the potential data from that patient population.

Thank you. I will now turn the call back over to Dr. Nau for any closing remarks.

Thank you, Operator. I’m extremely proud of the progress that the Oyster Point team has made in developing OC-01 nasal spray, specifically through the efficient development program that began in May of 2018 when we filed the initial IND application for this product. I look forward to the team’s continued execution in developing and advancing additional pipeline assets in line with our goal to expand the pipeline to other ophthalmic indications, initially focused on transformative therapies for diseases of the ocular surface. Additionally, we have continued to bolster our R&D and clinical development capabilities, as well as strengthen our manufacturing team. In 2021, we will also continue to enhance our commercial capabilities, including a plan for a competitively sized ophthalmic sales force to launch OC-01 nasal spray in the fourth quarter of 2021, if approved. We are driven to build Oyster Point into a world-class ophthalmology company. In closing, I’d like to thank everyone for joining us today, and I hope that your family stays safe and healthy.

Thank you. Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.