LENZ - NASDAQ

Good afternoon, ladies and gentlemen, and welcome to the LEN

Thank you. Good afternoon, and thank you to everyone for joining us today to discuss LEN

Thank you, Dan, and good afternoon, everyone. The first half of 2024 and recent period has been transformational for LEN

Thank you, Eef and thank you all for joining us today. The commercial potential for an effective presbyopia treatment represents one of the largest eye care market opportunities. As I stated, presbyopia impacts an estimated 128 million people in the U.S. An incident population that is nearly 4 times greater than those impacted by dry eye. It is also more than the combined population suffering from dry eye, childhood myopia, macular degeneration, diabetic retinopathy and glaucoma in the U.S. The first eye drop treatment for presbyopia was approved in 2021 and confirmed that strong consumer desire for an eye drop treatment, as evidenced by initial paid new scripts of 3,000 to 5,000 per week. Long-term usage beyond the trial period of this product did not materialize as pilocarpine, even at the high concentration of 1.25%, couldn't deliver the consumer required performance. We believe this leaves the category wide open for a non-pilocarpine presbyopia eye drop solution that can deliver what consumers desire. Unlocking this market requires an ideal presbyopia eye drop, and we are excited for the prospect of our aceclidine-based LN

Thank you, Shawn. As has been mentioned, the team has continued to execute across the organization in the second quarter in recent period. On the financial front, we were very pleased to have completed the $30 million private investment in public equity or PIPE with Ridgeback in mid-July. I would like to reiterate each comments to say that we're pleased to welcome an investor of Ridgeback's caliber adding to what is an already strong and supportive investor base in LEN

Thanks, Dan. In summary, we are very pleased with the progress that the team has made on all fronts. The recent period has been and promises to continue to be a very exciting time at LEN

We will now begin the question-and-answer session. Our first question will come from the line of Pavan Patel with Bank of America. Please go ahead.

Hey, guys. This is Pavan Patel on for Jason Gerberry. Congrats on your recent NDA submission and thanks for taking our questions. The first question is, can you give us an idea of when we should expect SG&A spend to pick up as you begin to incur more meaningful pre-launch investment on your P&L? And then second question is, maybe if you can remind us how you're thinking about the market opportunity and identifying the patients who would be good candidates for a pharmacotherapy treatment of loss of near vision versus reading glasses? Thank you.

Thanks, Pavan. Great questions. I'll hand the first one over to Dan.

Sure. Yeah. Thanks for the question. Kind of, as we said for this quarter, we did see a 32% quarter-on-quarter increase in SG&A and I think that you should expect us to have a modest ramp over the balance of this year. I think where you'll really start to see is, as we move into 2025 and then, subsequently preparing for commercialization, salesforce, hiring etc., as we approach the mid-year of next year.

Thanks. And then as for which patients we would prioritize, Shawn?

Yeah. So looking at how we identify the patients that would be good candidates for this trial. So when you think about our product, we had a very broad inclusion criteria. So we want to develop a product that did work for everyone and that's why we're focused on an all eyes, all day solution. Now that being said, there are people that are more prone to be early adopters of an eye drop solution. We commissioned a very large study to do market research in this space and we really found three groups of individuals that stood out as the earliest adopters And those three groups fall into people that are in contacts now, entering presbyopia and want to stay in contacts. They've been looking for -- they've been in a glasses free lifestyle and want to continue that. And a big reason for dropout of contacts is because of presbyopia. The second one are people that have had refractive surgery in the past. So again, people who paid for LASIK, invested in glasses free lifestyle and want to continue it. And thirdly, we found a high correlation to people that have been to a Medispa in the past 12 months. Each one of those groups are north of 10 million individuals.

Great. Thanks, Shawn.

Our next question will come from the line of Yigal Nochomovitz with Citi. Please go ahead.

Hi, Eef and team. Thanks for taking the questions. I had a few. I'm just curious with respect to the target prescriber audience, the optometrists, can you just give some perspective as to what percent of the optometrists pool in the United States are currently able to write prescriptions for LEN

Absolutely. So this is Shawn Olsson again. So when we think of LN

Okay. Great. And then one other question we've been getting from investors is, if you could talk a bit about how you ran your studies and the data that supports the use of LEN

Absolutely. So we did all our near vision measurements in what's called mesopic conditions. So mesopic is low light. Just to give you an idea of what that means, so we actually have one of our KOLs describe that very adequately in our KOL event. That basically means that you lower the lights in the room to almost candlelight conditions. So it's very low light in the room and then you have them read a backlit screen. So it's truly low light conditions that we've measured all our near vision in. So if you will, it's the most challenging condition because we definitely wanted to avoid that we brighten the room in a way that it would impact positively near vision that we could not ascribe to our products. So again, very low light dim lit conditions in the room. And just to back up a little bit into Shawn's statement on the retina exam, that's something that all optometrists pretty much do already. So it's a very standard exam. So it's not something that we need to train them on or that we need to -- that they need to add to the practice to be able to describe at Rock and again, very common practice in optometry.

Okay. Thank you.

Thanks, Yigal.

Our next question comes from the line of Joseph Catanzaro with Piper Sandler. Please go ahead.

Hey, everybody. Thanks for taking my questions. Maybe two for me. First, as it relates to the NDA filing, can you just remind us whether there was any formal engagement with the FDA like a pre-NDA meeting ahead of the filing? And if so, any sort of feedback learnings you glean from those interactions? And then second question, I guess related to early adopters, but less from a patient perspective and more so from a physician perspective, what are you looking for there? Is it simply those who have written a Vuity (ph) script in the past or are there more things that you're honing in on that could potentially identify early writers? Thanks.

Thanks, Joe. I'll take the first one and then take the next one over to Shawn. So yes, there's been definitely an end of Phase 3 and pre-submission meeting with the FDA. More importantly, we've had many discussions and engagements with them along the years of our development. And that's where most of the feedback actually came from the FDA. So we're very well aligned with them on especially our clinical program manufacturing setup, basically everything that was relevant for the development. And that actually that made the end of Phase 3 meeting with them pretty benign. I think there was hardly any questions actually that we had left that we wanted to ask. It was merely a confirmation of this is all the data that we've gathered. This is the amount of patients that we have on both the efficacy and the safety side. And they once again confirmed that, that was completely aligned with their expectations for our NDA. So we're very confident that the filing has or the submission has everything in it that the FDA wants to see.

And for your second question, when we're identifying early adopters from an eye care professional standpoint, again, we commissioned a very large study and took into account many factors. We looked at the prescriptions of Vuity. We looked at early adopters of other recent eye care launches. We also looked at history of prescriptions for dry eye, as well as different locations such as urban city centers where we saw a lot of the beauty scripts. Ultimately, when we did all the analysis, what came out and what's the primary focus of the targeting was their actual, propensity to write beauty and how many scripts they wrote. And that's really where we come up with those 15,000 target ECPs that represent over 85% of all the beauty scripts.

Okay.

Our next question will come from the line of Marc Goodman with Leerink. Please go ahead.

If I, could you please review what you've done on CMC, what's left to do? Just give us an update there, please. Thanks.

Absolutely. Thanks, Marc. Good question. So on the CMC side of the manufacturing side, we've actually produced all our clinical Phase 3 material at commercial scale. So we're fully set up to produce large quantities at that scale. Our complete supplier network is in very good standing with the FDA. So very confident that our commercial network, commercial manufacturing is all in place there. And that goes for both drug products, as well as drug substance or API.

Stability all done, everything you need to do there?

Yeah. Stability is all done. So all the stability that we needed to submit our program and this is generic for any submissions you need to submit with at least 12 months of stability data on your registration batches, which obviously given the fact that we submitted, we have that in place and submitted and that data all looks stellar.

Great. And then just secondly on the unbranded campaign, can you just go into a little bit of detail, a little more color just on what's the discussion, what it's like, maybe just give us a sense of what a session would be like and the feedback you're getting? Thank you.

Yeah, absolutely. So we're really excited about this unbranded campaign. What's unique to presbyopia is the fact that when you think about it, everyone knows about reading glasses. We don't have to train them on the disease state. What we have to train people on is, how to look for what an ideal presbyopia eyedrop solution is. So really what we're talking about is what's the ideal pupil size, the importance of an eye drop that focuses on reducing the pupil but avoiding that ciliary muscle. And then also because there's so many people out there impacted by presbyopia, who are the early adopters? So a lot of that's training on those three groups I talked about before, people in contacts, people who had refractive surgery and people who had been to a Medispa. And overwhelmingly, what we see at the different conventions is excitement for the campaign. It's very easy to feed forward. So we have over 50 people that are -- the face of the campaign across all of our presentations, all of our conventions. And we actually release a new one every week on LinkedIn and we're getting calls from doctors saying, hey, when is my photo going out because I actually want to see my photo on LinkedIn. I want to like it. So it's going very well. And I think what's always really important with our product, the first thing people want to know about the product and this is separate from the unbranded because we can't commingle the two, but they want to know it's not pilocarpine, that's the really important thing and the doctor’s care about. As soon as they know it's a non- pilocarpine solution on the medical side, they're very excited to learn more about the product and engage. So we've seen this as a very good success. We've seen a lot of traction and a lot of ECPs coming to us that want to share their excitement for the future of presbyopia solutions. They want us to tell them more.

Thank you.

Our next question comes from the line of Tim Lugo with William Blair. Please go ahead.

Hey, guys. This is Lachlan on for Tim. Thanks for taking the questions. As you've shared the data with a wider audience of physicians over the past few months, are there any new findings or sort of nuances that have emerged about how they're thinking of using it that maybe that hadn't really come through fully in your prior market research? And secondly, I believe at the KOL day one of the physicians said or suggested that they would most patients would first try the drop in the office. Is that sort of correct or is that what you're expecting?

Thanks, Liam. Good to hear you. So on that first one, and I'll keep that very brief because obviously I want to make sure that, one, we don't talk about anything that's not on the label yet or that we've not studied. But for sure, the medical community is talking and thinking about uses of how they could see this product being used outside of near vision. So yeah, that's something that in-depth context is discussed, not something for me to elaborate on.

In terms of the use of the product, we meet with a lot of different eye care professionals across optometry. Many of them want the patient to experience in the office. And what's great about our product is, because you have that immediate response that we saw in our trial, people can have that wow effect right-off the bat when they put it in. Now some doctors, especially those that go for the dilated eye exam, are going to want them to take the samples home and try it at home. But, we see that how the ECPs (ph) run their practice will decide whether or not they do it in office or outside of the office. It will be a good mix.

Thanks.

Just one thing to add there, like, on the data side, just thinking about it some more on what you just asked. One of the things that we've realized that we shared during that KOL event that what the data shows is that as your presbyopia gets worse, the actual impact keeps up with that. So the worse your presbyopia, the more lines you gain. That's certainly something that we've resonate really well in the medical community. So when maybe people initially were thinking about a presbyopia eyedrop as something that could have an effect early on, and in some months, presbyopia journey, it's very clear now that actually eye drop, uniquely, because it is unique to our product, keeps up with how you are. Presbyopia, I guess, gets worse. So if your presbyopia is 20 over 80, or 20 over 100 and you would need 4 or 5, maybe 6 lines, that's what the product actually delivers for you. So it ties into that very broad age range that we've tested in our trial.

Thanks.

Our next question comes from the line of Matthew Caufield with H. C. Wainwright. Please go ahead.

Hi, Eef and team. Some very exciting developments for the quarter. So our question was considering filling a prospective monthly prescription, have you shared how many refills per year could be anticipated among presbyopia patients if or when ultimately approved? Is the baseline assumption that patients could be using the drops daily or more likely on select days per month per patient kind of based on their scheduling? Any clarity there or thoughts there could be helpful and excited to see the progress. Thanks.

Great. Thank you. This is Sean again. So a couple of comments on that. So in terms of what we found in our market research, people are looking for an everyday eye drop that lasts all day. And we see this across multiple different studies. So not only in our consumer research do we see that the majority of patients wanted to use it 4 to 7 times a week. When we actually look at the patient reported outcome from our Phase 3, 81% of the patients that would continue to use the product after the study plan to use it 4 to 7 days a week. So we do see that's much more like contacts where people want to use it every day. Now that being said, all medicines, most medicines are not 100% compliant, right? If you look across the board, for contacts, it's about 89% compliance rate for daily contacts. [indiscernible] had about a 65% refill rate. General medicines is about 50%. So when you look at that $3 billion market cap or $3 billion market size, it assumes a conservative five sales a year or a 42% refill rate. So that's what's built into that $3 billion number. However, when we speak to consumers, they're looking for an everyday eye drop, looking at probably 4 to 7 days per week.

Very helpful. And just to confirm I heard that right, you said 5 times per year as sort of an average from your analysis?

Yeah. So if you think of average medicines are 50% compliance, five refills a year would just be a little bit conservative to that, that would be a 42% refill rate.

Got you. Okay. Understood. Thank you for that.

Thanks, Matt.