LENZ - NASDAQ

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

Thank you. Good afternoon and thank you for joining us today. My name is Dan Chevallard, Chief Financial Officer of LEN

Thank you, Dan, and good afternoon, everyone. The first quarter of 2025 has been a focused and highly productive period for LEN

Thank you, Eef. Good afternoon everyone. As we've discussed on previous calls, the commercial potential for an effective presbyopia treatment represents one of the largest eye care market opportunities in the United States. Presbyopia impacts an estimated 128 million people in the US, population nearly 4 times larger than those impacted by dry eye and nearly 6 times larger than those impacted by Demodex blepharitis. For further context, presbyopia impacts more than the combined US population suffering from dry eye, Demodex blepharitis, childhood myopia, macular degeneration, diabetic retinopathy and glaucoma. The first eye drop treatment for presbyopia was approved in 2021 and confirmed that there is a strong consumer desire for an eye drop treatment as evidenced by initial paid new scripts of up to 6,000 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% cannot deliver the consumer required performance. Extensive independent consumer market research suggests this category is wide open for an eye drop solution that can deliver what consumers desire, a once-a-day eye drop that provides seamless near vision for the full workday for the majority of presbyopes. Unlocking this market requires an ideal presbyopia eye drop and we're excited for the prospect of Aceclidine-based LN

Thank you, Shawn. As has been mentioned the first quarter of 2025 has been a very productive and focused time for the company with our PDUFA target action date for LN

Thanks, Dan. As you can see, we're off to a great start in 2025 and believe we have tremendous momentum as we are now about three months from our PDUFA target action date. We've never been more confident in our abilities to deliver once-daily, well-tolerated and rapidly acting treatment to 128 million individuals living with presbyopia in the United States. We're looking forward to the exciting months ahead. With that, I'd like to open up the call for questions.

[Operator Instructions] Your first question comes from the line of Stacy Ku from TD Cowen. Please go ahead.

Hi. Thanks so much for taking our questions. Congrats on the progress. So we have a few. First, as we think about the LN

Great. Thanks, Stacy. This is Shawn. So for your first question, you asked me about where are we in our readiness and ability to sample right out of the gate for LN

Got it. And then the last comment on what type of metrics you might disclose?

Yeah. So in terms of the metrics so what we see there is this product will be distributed both through the retail pharmacy as well as the e-pharmacy. So I think where most people will be looking for us in terms of metrics early on everyone will be going to the IQVIA data looking at that new script rates as well as that refill rate. I think early on the focus of Q4 is going to be samples. Once we move into Q1 I think that focus is really going to be what are those new scripts per week. And then moving into Q2 it's going to be a lot about how are those refills coming through. Given the e-pharmacy obviously that's often not picked up in IQVIA. We'll make sure that we can provide some guidance on how that's going so the appropriate analysis can be made.

Stacy just adding to it I think you had a question in there on how we would expect to go from samples to ultimately use. That's really that -- our idea is that that sample will be confident with a script. At that moment the patient can choose to fill that script as Shawn mentioned through e-pharmacy. This is the -- what we're like accustomed to now leave the doctor's office and the text will pop-up on your phone and that product will then be delivered to your doorstep or if you want to go to more traditional route you can pick the actual product up at the retail pharmacy. And then the second part of that question was what we think about stickiness. Hard to say at the moment I think what's different from our product and Shawn highlighted that sample use and we know that 95% of patients hit at least two lines of near vision improvement to expect that people see that improvement on the sample. If they are converting to a script they should be motivated to continue to use that. We would expect relatively high stickiness once people have converted into a script.

Wonderful. Okay, I will leave the floor. Thank you.

Your next question comes from the line of Pawan Patel with Bank of America. Please go ahead.

Hi, guys. This is Pawan on for Jason Gerberry. First question is related to the five-day sample pack. I know that's a key part of the strategy. How will sample distribution be managed and tracked to ensure that they reach high potential prescribers and patients? And what's the expected conversion rate from sample to paid prescription? And then on the manufacturing and supply chain with the start of manufacturing in February of 2025 can you help us understand what's the current inventory level? And what's the target inventory for launch? And then one follow-up if I may.

Absolutely. Shawn, do you want to take the sample pack?

Yeah, great. Great to hear from you Pawan. So the five-day sample pack when we think about how that will be managed and tracked. So what will happen is obviously our sample vendor will hold all of the actual bulk samples in their location. And then how that we manage every month that product will be shipped to each rep right? So every month there will be a shipment that goes to the rep. They'll hold their products in their storage locker. And then that shipment will be dependent on the number of targets and then the expected amount of samples they'd be dropping off so that will be replenished every single month. Once that rep goes to the actual doctor's office to the eye care professional every time samples are dropped off we will make sure that they're signed for and fully accounted for to make sure that it's a clear transfer of ownership to the eye care professional. And then every subsequent visit they'll be checking in on how many samples were written -- or sorry how many samples were left and how many scripts were written to make sure it maintains the right ratio. In terms of the expected conversion from samples to full-time users I think it's a little bit too early to tell on that. But when we have more insight we'll share more on that.

Thanks, Shawn. Just to add to that before I go to the inventory question we do the math on the 15000 doctors and 88 reps you get to about a three-week call cycle. So every three weeks the rep's in that office. On top of that there's a mechanism for doctors if they run out of samples in that period to request more. So on the inventory you are right that we started production of our to be commercial products in Q1. I don't think we're going to be sharing at this moment what our inventory levels are other than we're confident that we can supply what we believe will constitute a successful launch.

Great. And then just for a follow-up, maybe if you can elaborate on the mechanics of the e-pharmacy partnership and how that will strengthen the patient journey from prescription to refill including data capture on script conversion and adherence? Thank you.

Yes, absolutely. What we've really seen over the past few years are the growth of people that prefer their medicines to be delivered to their house just like their Amazon packages, right? So there's really been this growth in the use of e-pharmacies. What's great about that is it really creates like a closed system which is helpful. So our partner that we're going to be using for our e-pharmacy is already active in the eye care professional space. What that means and why that's important means when we go to – when a doctor goes to enter the scripts into their EMR system that e-pharmacy should already be loaded up within that computer. So it should be seamless to send it on to e-pharmacy. Once the e-pharmacy actually receives the scripts they then take over the ownership and relationship with the patient to get them the product. So the e-pharmacy shoots the text to the patient's phone right? At that point it's just a link to click in. And from that link they put in their credit card information and shipping information and that product starts shipping to their door. Throughout that process also what's great about it is the opportunity for auto refill which means in terms of stickiness right that product showing up every single month to the door. If they didn't select the auto refill of course the e-pharmacy will also follow up once they're at the end of their first box or second box to follow up and say hey, it's time to order again. So it definitely creates a nice close environment where you have a strong relationship with the consumer. And then one other question which you asked earlier that I think I missed the spot on you want to make sure the samples go to those high-volume prescribers. Because our samples are rep delivered, they're targeting those eye care professionals that we've identified as high decile users of the Vuity box. So our reps are going to those practices, which have already shown a high volume of Vuity use early on and therefore that way the samples are going to the right accounts.

Thanks, guys.

Your next question comes from the line of Yigal Nochomovitz with Citi. Please go ahead.

Hi. Thank you very much. Regarding the marketing plans, can you talk about when you're going to turn on the influencers and not who you're going to get but kind of when that might happen and on what platforms? And then as far as the commercial model in terms of how you're thinking about the launch, obviously Vuity got to 6,000 scripts per week I believe and then it peaked out. I'm just wondering if you get to that point would that be breakeven for you or would you need to be higher or lower? And how quickly do you think you could get to that 6,000 script high watermark that Vuity got to and then presumably exceed that? Thank you.

Hi, Yigal, this is Shawn, again. Thanks for that. I'll take the first question on the marketing plans and when to turn on the influencers. So when we think of – when we go to market, immediately upon the August 8, PDUFA date if approved, the field will go out and start training ECPs. Our main goal ahead of the influencer campaign is to make sure the ECPs are aware of the product and comfortable with it, right? So that's what we want to make sure is in place, before we turn on the influencer campaign. That's important because what we heard about Vuity is if you turn on the influencers too quick, the doctors are caught off guard. So I think it's safe to assume Q4 is really a focus on the eye care professionals. What's also great about our product is it's a cash pay product. So we're not beholden to when we have coverage by the PDMs to turn on DTC. So we can turn on faster than other products that are covered by insurance. So when we start turning on influencer, campaigns and really promoting DTC, that's going to happen in early 2026, I would expect. I think by that time we'll have had enough time to meet with the doctors, a few times each, make sure they're comfortable with the products before turning on DTC. In terms of channels, we worked a lot on identifying the early adopters and where they spend their time. What we are finding these people over 45, they're spending the majority of time on Facebook, Instagram, YouTube and Pinterest. So those are really going to be the avenue that we focus to drive that awareness. We're not finding that they're spending their time on like linear TV, so your standard TV channels. So timing early 2026 in channels Facebook, YouTube, Pinterest and Instagram.

Got it. Got it.

Thanks, Shawn. I'll take a question on the modeling Yigal, and thanks for dialing in. You'll appreciate that at this state in the company and pre-launch, we're not guiding on revenue or volume. What we have shared is that ultimately we can see this being a $3 billion-plus market. And as we've shared previously, that's based upon eight million ultimate users in the U.S. alone using the product five refills a year, at what would be yearly pricing. So, with that in mind and the fact that we're guiding to be cash flow positive, I think many of the models including yours, are actively at least giving a sense of when that could happen. But again, we're not guiding to what we have in our plans.

Okay. Got it. Thank you.

Your next question comes from the line of Lachlan Hanbury-Brown with William Blair. Please go ahead.

Good morning guys. Thanks for taking my question. So, Shawn, just on the DTC marketing, I mean you've obviously had a pretty comprehensive unbranded campaign prior to approval. So, I was curious how you think about the transition from that to branded campaign to DTC? Does that if DTC starts in early-2026, does the unbranded campaign continue until then, or does it sort of slip over to something else upon approval or availability? And then second, you sort of touched on this a little earlier, but with the sales force expected to all be hired by July 1 and presumably at least some of them will have been through that three weeks training, what can they do in terms of the interactions with target ECPs before an approval, if anything? Because I know there are obviously a lot of restrictions around what they can and can't say and do. So, could you just elaborate on what they can do in that, say, five weeks before the PDUFA?

Thanks, Lachlan, great questions. Yeah, happy to cover those topics, so, first thing, when does the unbranded stop? So, right now, the unbranded campaign -- obviously, it's a disease state awareness and looking for what's the ideal solution look like in Presbyopia. Our plan is to continue to run that up until potential approval, and then we would sunset that campaign. So, it's really what we can have out there so we can get the excitement going for future solutions in Presbyopia. Once we can transition to speaking about the brand, we want to immediately transition to that and make that the focus of all messaging. And so, what that transition will look like to DTC marketing. So, right now, in the unbranded campaign, a lot of that's focused on where do doctors spend their time, as well as the conventions that they're going to, in their publications. When we move over to DTC for the direct-to-consumer, we'll actually first start with direct to practitioner. So, we'll actually bring on branded messaging to the doctors. So, we'll just transfer everything we're doing on the unbranded side, flip it over to branded materials directly at the doctors to really drive their awareness and make sure they're comfortable with the product. And then, as we transition to then DTC after that in early 2026, the whole game resets in terms of how we target them, because now that we're targeting a consumer, we're moving off of the platforms where doctors are focused for information back to that Pinterest, YouTube, Facebook, Instagram. And to do that, we've brought on the right type of media buy agencies, that have those relationships to make sure that we have hard-hitting, impactful messaging on those platforms. So, that's how we're really going to transition to DTC. Now, the sales force, as we shared, over 40% of them have already accepted offers. Some of them will be on before July 1, right? You spoke about the three weeks of training. So, what can happen after their training before approval? So, that's again where the unbranded campaign comes in. The unbranded campaign is fair game for sales force to talk about, so they can actually start their call cycles. So, they can start to meet the eye care professionals, confirm routings, confirm emails, get to know the doctor -- just the discussion will be limited to the EYEAMSELECTIVE campaign. And then upon approval, they can then immediately switch to the branded calls. So, that's how to think of that transition from hiring until product approved.

Okay. Thanks. That's useful.

Your next question comes from the line of Gary Nachman with Raymond James. Please go ahead.

Hey, guys. This is Denis Reznik on for Gary Nachman. Thanks for taking our questions and congrats on the progress. First, could you provide an update on the work you're doing surrounding the additional patent protection for LN

Absolutely, great questions. If you think about the current patent estate, we have seven granted patents that go out to 2039 already. This fall roughly in two buckets: one around the use of Aceclidine to treat Presbyopia, so very strong patents around that another suite of product formulation patents and very strong patents that go out to 2039. And the patents that are currently under review and I'm talking U.S. only here for the moment, that will extend that to at least 2044, further patents in those two categories, as well as use patents in different use cases that we have seen in our product. That's going to be again, a very broad very strong patent estate just to complete that on the protection side for the products. Ahead of that sits because it is a new chemical entity for the US at least five years of data exclusivity upon approval is what we expect to get. And on the back end, because it's a self-pay product, you'll never see your traditional generic switch for a product like this because there's no insurance involved. So there's no insurance pushing the pharmacists to switch a brand over to a generic. That we feel on the back end, and now we're talking 2044 and beyond, will provide a very strong and long-lasting life cycle for the product.

And this is Shawn, for the second question on the process to select e-pharmacy. So we spend a lot of time making sure we chose the right partner for e-pharmacy. One of the most important criteria is we wanted to make sure we selected an e-pharmacy that already existed within the eye care professional EMR ecosystem. What we didn't want to select a pharmacy that's not already established in the eye care offices because obviously that takes work to set up all their EMR systems. So that was a key criteria another key criteria was actually the interface for the consumer, right? With this being consumer products, we want something that was sleek, easy to use and a partner that had good follow-up to ensure compliance. So other factors that were behind those two, speed of delivery, ability to handle high volume of actual scripts and other partners making sure that they work with other reputable partners as well not necessarily in eye care, but other high-end pharma companies. What was not in the selection process that's different than many other companies is their ability for prior authorization or insurance claim adjudication, that was not something that we put into the factors as we were involved evaluating e-pharmacy given the fact that this is a cash pay product.

That's super helpful. And then just given there's been some previous rumblings of recession, perhaps consumer sentiment being worse than people had anticipated, if that does end up occurring where there is a recession, how does that kind of change your initial call points, if at all? And then would that cause you to focus on certain geographies over others? Congrats on all the progress.

Yeah. So Denis, this is Dan Chevallard. I'll start the first part of that question and then I'll pass it to Shawn to conclude it. So the topic of recession is one that we've certainly looked at. And as you think about relative risks for a product with our profile, we evaluated the medical aesthetics field Beauty category, medical procedures like LASIK, dermatology and others. And I think reference time points where you could look back to, to say, well gosh, how did those profiles or how do those categories behave. You don't have to go too far back to see how do these categories behave in the COVID era and then prior to that in the Global Financial Crisis era of 2007 through 2011. Key takeaways, I think we would be naive to say that we're not immune, but historical precedent really suggests that the medical aesthetics category and we'll use the neurotoxins and fillers as maybe the closest proxy to what we do are a bit more insulated from a recession risk than higher-priced elective procedures such as cosmetic surgery. So that's one way to look at it. I think that it's fair to say that discretionary spend will always potentially be impacted. But I think for a product like ours that impacts quality of life that has such a large addressable market and you could even kind of put it into a category like these medical aesthetics from the standpoint of consumerism, you could almost put this into a beauty-like view of this being becoming something that is viewed as an essential, really which I think could insulate us from significant downside risk. Just to quantify that, you could look at the categories that we're highlighting as the closest proxies and you get at the high end single-digit negative impacts from a growth perspective, at the peak of recession years, but on balance coming through in an extremely strong way.

Great question, Matt. I think Shawn and I might tag team, a little bit on that. I think ultimately with these products it's all around does it work, yes or no? Do you achieve as a consumer what you're expecting, which is can you go with [indiscernible] at least a very significant part of the thing. We've seen that with Beauty that was not the case which was a high-dose aceclidine [ph] that clearly did not deliver that expectation on that expectation. And therefore, after our initial good launch, people didn't refill, because it didn't work. These are not products that you get people to say, use it for three months and maybe you notice an effect. It's on the very first day, you either like it or you don't like it. And the liking it, truly comes down to does it work. So it's hard to believe, how others currently on the market can achieve that. We'll see. We're very much focused on what we can deliver. And that's where we know, again, if you just look at our clinical data but especially also at the patient feedback and we shared some of that at the Commercial Day, how they're talking about the product and how they've experienced that very first drop that went into, their eyes. And because of that what you see us do is, very heavy sampling which is different than what others are doing. So I'll leave it, with that. We -- it's hard to see that, you'll step in with one product and then if you will graduate to something else. Sampling is going to be key and people pick the ones that they will like.

Thanks, Matt.