SGHT - NASDAQ

Good day, and thank you for standing by. Welcome to the Sight Sciences Second Quarter 2024 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn it over to your first speaker today, Trip Taylor, Investor Relations. Please go ahead.

Thank you for participating in today's call. Presenting today are Sight Sciences Co-Founder and Chief Executive Officer, Paul Badawi; and Chief Financial Officer, Ali Bauerlein. Also in attendance is Sight Sciences' Chief Commercial Officer, Matt Link. Earlier today, Sight Sciences released its financial results for the 3 months ended June 30, 2024, and narrowed revenue and adjusted operating expense guidance for full-year 2024. A copy of the press release is available on the company's website at investors.sightsciences.com. I'd like to remind everyone that comments made by management today and answers to questions will include forward-looking statements within the meaning of the federal securities laws. These forward-looking statements include statements related to the company's anticipated financial performance, operating results and liquidity position, and ability to achieve cash flow breakeven, ability to achieve current and long-term strategic objectives, market opportunity, and the ability to enter new markets and capture market share, the pricing strategy and the impact of proposed rules on payment rates, product reimbursement, coverage and strategy, expectations regarding regaining commercial momentum, account utilization and engagement, clinical trial strategy and results, and the disposition of the patent infringement case. Forward-looking statements are based on estimates and assumptions as of today are neither promises nor guarantees and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied by these statements. A description of some of the risks and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements on this call can be found in its public filings with the Securities and Exchange Commission, including in the Risk Factors section of the company's annual report on Form 10-K and quarterly reports on Form 10-Q. The company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law. On this call, management may refer to financial measures that were not prepared in accordance with generally accepted accounting principles in the United States, including adjusted operating expenses. The company believes these non-GAAP financial measures are important indicators of its operating performance because they exclude items that are unrelated to and may not be indicative of its core operating results. See the company's earnings release for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures as well as additional information about the company's reliance on non-GAAP financial measures. I will now turn the call over to Paul.

Thanks, Trip. Our second quarter results represent consistent commercial and operational execution throughout the quarter as we continue to advance our mission of developing transformative, interventional technologies that allow eye care providers to procedurally elevate the standards of care, empowering people to keep seeing. In the Surgical Glaucoma segment, we drove sequential increases in utilization and the number of accounts ordering our products. In our Dry Eye segment, the SAHARA 1-year data was published, which represents a critical milestone in support of our efforts to establish equitable market access for interventional dry eye treatments. Additionally, we continue to prioritize operational excellence as we maintain solid margins and exercise diligent expense management. Quarterly cash usage declined by almost 30% compared to the prior year period, reflecting disciplined spend while still allowing for investment in all of our critical value drivers. For the second quarter, we generated total revenue of $21.4 million, reflecting sequential growth of 11% in line with our expectations. We are excited about the tremendous opportunity to execute on our long-term goals and reestablish double-digit growth driven by continued adoption of both of our paradigm-shifting interventional technologies. I will now turn to a more detailed discussion of our business segments, starting with our Surgical Glaucoma segment. We are pleased with our quarterly performance with Surgical Glaucoma revenue of $20.2 million, representing sequential growth of 11% compared to the first quarter of 2024. The sequential improvement tracks to our expectations year-to-date, and we remain confident in double-digit growth in this segment in the second half of 2024 as compared to the same period in the prior year. As a reminder, if the recently proposed draft LCDs from May become effective in their current form, procedures that use our OMNI and SION technologies would continue to be eligible for Medicare coverage nationwide. We believe our technology is critical to the thousands of surgeons who use OMNI routinely and is an important part of the glaucoma treatment continuum. We are extremely proud of OMNI's differentiated clinical profile as demonstrated in high-quality, long-term, peer-reviewed data, which we believe will continue to support access to the technology for the appropriate patient population. Separately and importantly, on the reimbursement front, in July, CMS published the 2025 proposed Medicare payment rules for hospital outpatient and ASC procedures, along with physician professional fees. The ASC payment rule for 2025 proposed to grant device-intensive status and a related increase in Medicare's facility payment rate for procedures reported with CPT code 66174, a code that is currently used to report our comprehensive OMNI procedure. These proposed rules are not considered final until the final rule is published, which we expect to occur in the fourth quarter of 2024. We firmly believe device intensive status has always been appropriate for our OMNI technology and procedure, and receiving confirmation of this status has been a long-term initiative for the company. As part of our OMNI market access efforts, we have diligently worked to establish device-intensive status for CPT code 66174, so we are very pleased with this proposal from CMS. If the rule is finalized with device-intensive status for this code, effective January 1, 2025, it will result in an increase to Medicare's ASC facility payment of approximately $600, or 29%, compared to Medicare's ASC payment rates for 2024. Should device-intensive status be finalized for this code, we believe this would be a meaningful development that would enhance our value proposition from a facility economics perspective for OMNI technology versus both MIG stent implants and goniotomy procedures. We are encouraged by this development and plan to provide further updates once the final rule is published. Now I'll focus on the progress made against our core strategic initiatives this quarter. Within our Surgical Glaucoma segment, we remain steadfastly focused on a few critical drivers that we believe are keys to solidifying long-term success for the business, which include increasing surgeon utilization across all accounts and reengaging with accounts that ceased or decreased orders during the LCD uncertainty period last year. In addition, we are working to increase the pipeline of new surgeons who will be trained on OMNI and SION. Looking first at utilization, as discussed before, the differentiated efficacy of our technology across the spectrum of disease severity has made OMNI a leading minimally invasive interventional technology for surgeons managing primary open angle glaucoma patients. We are focused on increasing utilization with accounts already using OMNI and have been successful here over the past two quarters. Utilization of ordering accounts was up 5% from the first quarter of 2024. We believe the recent improvement in utilization is evidence of recovery and is a testament to the unique benefits of OMNI and SION and their importance to surgeons and patients. Jumping to reengagement with accounts. In the second quarter of 2024, we experienced an increase in the number of accounts ordering surgical glaucoma products compared to the first quarter of 2024, which highlights our growing momentum as the year has progressed. 1,131 customers ordered surgical glaucoma products in the second quarter, up 5% from the first quarter of 2024 and flat from the second quarter of 2023. While we are continuing to work to further increase this number, our progress during this quarter represents a positive trend that we expect to continue moving forward and again highlights the importance of OMNI and SION in the marketplace. As we progress through the year, we are increasing the number of surgeons scheduled to be trained on OMNI and SION. The growing clarity on reimbursement following the newly proposed LCDs is enabling a more normal environment for new surgeon training. Increasing the trained surgeon base is an important step that will continue to be a vital aspect of our growth strategy. In the first half of 2024, we've trained over 150 surgeons on OMNI and over 100 surgeons on SION. We believe we are well-positioned for growth due to the shifting mindset among glaucoma surgeons towards interventional glaucoma, the comprehensive nature of the OMNI procedure, the proposed increase in facility reimbursement that would improve the overall economics of OMNI versus our competitors, and our continued organizational optimization. Now I'll turn to our Dry Eye business. Since its inception, we established our long-term mission of pioneering the field of interventional dry eye with a three-pronged strategy, developing best-in-class technology, delivering superior long-term clinical outcomes supported by RCTs, and executing an effective market access strategy. We have spent a decade developing and enhancing our transformative TearCare technology. An effective procedural option for certain patients with meibomian gland disease, or MGD. We estimate there are over 11 million U.S patients diagnosed with MGD, the leading cause of dry eye disease. The TearCare procedure targets the disease meibomian glands directly and comprehensively, thereby addressing the root cause of evaporative dry eye disease. TearCare technology has been used in over 60,000 dry eye procedures, despite operating in a cash pay environment. Over the past 6 years, we executed two large RCTs for TearCare. One designed for regulatory clearance purposes, and the other designed for payer coverage determinations. Both RCTs met their primary endpoint. Most recently, our second RCT, Sahara, demonstrated the superiority of TearCare over the market-leading prescription dry eye therapeutic, Restasis, for the study's primary objective endpoint. The 6 and 12-month data from the SAHARA trial have been published and serve as the foundation for the third leg of our three-pronged strategy, establishing equitable market access based on our growing body of robust clinical evidence. From this, we will continue to lay the foundation for market access and deliver our technology to those who can benefit from the procedure. We recently published the 12-month results of the SAHARA RCT, which demonstrated improved signs and symptoms of dry eye disease for TearCare patients crossed over from Restasis. The Phase 2 crossover of the SAHARA RCT included subjects who were previously treated with Restasis for 6 months and then subsequently taken off Restasis before receiving a single TearCare treatment. These patients experienced further statistically significant improvements in the signs and symptoms of dry eye disease. The first two phases of the SAHARA RCT, month 6 and month 12 endpoints suggest the clinically significant efficacy of TearCare appeared to be the same whether or not a study patient had prior treatment with Restasis, and that similar results could be expected when TearCare is used as a primary or secondary treatment for dry eye disease. The next milestone for the SAHARA RCT will be the publication of the results of the third and final phase of the trial. Phase 3 of the Sahara trial follows the TearCare Crossover cohort through to 24 months, and we expect it to be published in 2025. The goal of this cohort is to gain more clarity on requisite treatment frequency and the clinical impact of repeat TearCare treatments as needed. With the 6-month and 12-month data in hand, we are already having meaningful conversations with payers. Still, we are excited for the final trial phase and believe it will only continue to build on our growing library of compelling clinical data supporting the TearCare procedure. Along with the support from our TearCare clinical data, we have also recently begun introducing the results from our budget impact analysis to our discussions with payers. In May, we presented the analysis at ISPOR, the International Society for Pharmacoeconomics and Outcomes Research. And we are pleased with the early response to our model, which showcases the health economic impact and system savings for TearCare versus Restasis. As we have always intended, following the successful results of the SAHARA RCT, we have positioned our technology to ensure that the clinical and economic value of the procedure is appropriately reflected. As TearCare's body of clinical evidence continues to grow, our investment and value proposition are also evolving. Following a thorough analysis, we'll be modifying our pricing structure to more accurately reflect the clinical and health economic value of the TearCare procedure as demonstrated in both Phase 1 and Phase 2 of the SAHARA RCT and our budget impact model. We have recently informed existing TearCare customers of the future price increase, which will be effective October 1, 2024. We expect our list price to increase to $1,200 per set of TearCare smart list. Appropriate reimbursement at the level supported by our evidence would still show compelling economics and value to patients, payers, and eye care providers, as well as to Sight Sciences, as the manufacturer that has invested over $100 million in developing and commercializing this technology. Our strategy within Dry Eye for the rest of 2024 and beyond has shifted to a targeted focus on achieving fair and equitable reimbursement. We are encouraged by the work we are doing now with payers, which we believe has put us on track toward long-term success. To this point, we've had a small number of TearCare Commercial claims paid on a case-by-case basis, and we continue to do the foundational work needed to establish broader coverage on a larger scale with commercial payers and Medicare. The critical drivers of conversations with payers are strong clinical data and health economics, and we believe we have established a solid position from both perspectives. With high-impact, peer-reviewed level 1 clinical evidence and demonstrated health economic benefits now in hand. We believe we are well-positioned to drive forward coverage conversations and remain on track to begin receiving positive coverage policy decisions in 2025. As we look to the future, we remain committed to our long-term goals and feel we are currently operating from a position of strength with the ability to execute them successfully. Surgical Glaucoma and Dry Eye represent significant opportunities to capture market share, develop new interventional markets, and drive a return to double-digit growth. We look forward to capitalizing on upcoming catalysts and delivering positive results. I will now turn the call over to Ali to discuss our financials.

Thanks, Paul. Before I turn to the second quarter financial results, I want to mention that we continue to execute both our strategic and operational goals and are confident in our ability to support these goals moving forward. We plan on achieving cash flow breakeven without the need to raise additional equity capital and are excited about our long-term growth opportunity. Moving back to the second quarter, total revenue was $21.4 million. This reflects 11% sequential growth and an expected decrease of 9% compared to the second quarter of 2023. Surgical Glaucoma revenue for the second quarter was $20.2 million, down 5% versus the comparable period in the prior year, and up 11% compared to the first quarter of 2024. This decrease was primarily driven by lower utilization and a lower average selling price in the second quarter versus the same period in the prior year. Our Dry Eye revenue for the second quarter was $1.1 million, down 46% compared to the second quarter of 2023. This expected decline was primarily due to fewer new accounts and related smart hub sales as a result of the planned reduced sales infrastructure and the focus on the next phase of our commercial strategy for our Dry Eye segment, which involves achieving market access. Gross margin for the second quarter was 86%, flat compared to the same period in the prior year. Surgical Glaucoma gross margin in the second quarter was 88%, down slightly from 89% in the same period in the prior year, primarily driven by product sales mix. Dry Eye gross margin in the second quarter declined to 46%, compared to 55% in the same period in the prior year, primarily due to product sales mix and higher overhead cost per unit in the current period due to lower production volume. Total operating expenses for the second quarter were $31 million, a decrease of 12% compared to $35.3 million in the second quarter of 2023, which reflects reduced operating expenses and improved operating expense leverage in the second quarter of 2024 as compared to the same period in the prior year. The decrease was primarily due to lower personnel related expenses, partially offset by increased stock-based compensation expenses. Adjusted operating expenses were $26.6 million for the second quarter, a decrease of 15% compared to $31.5 million in the same period in the prior year. Our loss from operations for the second quarter was $12.7 million compared to a loss of $15.2 million. So the second quarter of 2023. Our net loss was $12.3 million or $0.25 per share in the second quarter compared to a net loss of $14.8 million or $0.30 per share for the second quarter of 2023. We ended the quarter with $118.2 million of cash and cash equivalents and $35 million of debt, excluding debt discounts and amortized debt issuance costs. We used $9.1 million of cash in the second quarter, reflecting continued operational discipline. This was a substantial improvement, 29% less than the $12.8 million cash used in the second quarter of 2023. As a reminder, this does not include any monetary damages awarded in our successful jury trial verdict in our patent infringement case against Alcon. The final ruling is still pending the judge's determination to confirm the jury's verdict, establish ongoing royalty damages, and/or determine any potential enhancements, and is subject to appeal. Moving to our outlook for the full year 2024. We still expect double-digit surgical glaucoma revenue growth in the second half of 2024 compared to the same period in the prior year as we regain commercial momentum and expand utilization and our customer base. However, we expect Dry Eye revenue to decrease due to our increase in Dry Eye pricing effective October 1st, 2024, which we believe will have a significant negative impact on cash pay volume in the second half of 2024 before we expect a return to growth in 2025 with market access win. With respect to gross margin, we continue to expect overall gross margins be in the mid 80s. However, we anticipate incurring increased overhead cost fro We believe this is the right approach to begin capturing the true clinical and health economic value of TearCare. transform the treatment of MGD, and create a significant new category in Eye Care. We expect to see strong Dry Eye revenue growth in 2025 with reimbursement coverage for TearCare and an expanded commercial presence. We expect dry eye revenue for full year 2024 to be less than $3 million, including $2.1 million of revenue achieved through the end of the second quarter. As a result, we are narrowing our guidance expectations for revenue to 81 to 83 million from our prior range of 81 to 85 million, representing growth of approximately 0 to 2% compared to 2023. We expect third quarter 2024 revenue to be down compared to the second quarter of 2024, primarily due to typical seasonality and up slightly versus the comparable period in the prior year, primarily driven by increased OMNI utilization with existing and new accounts, partially offset by lower TearCare demand. As mentioned, we expect the new pricing structure for TearCare will result in lower demand to the second half of 2024, particularly in the fourth quarter when the new pricing becomes effective. Over the long-term, we do not believe pricing will impact adoption of the technology or demand once fair and equitable reimbursement is established. With respect to gross margin, we continue to expect overall gross margin to be in the mid-80s. However, we anticipate incurring increased overhead costs per unit due to minimal production builds planned in the second half of the year in our Dry Eye segment. We are narrowing our guidance expectations for full year 2024 for adjusted operating expenses to $107 to $109 million from our prior range of $107 to $110 million, representing a decrease of approximately 1% to 3% compared to 2023. We remain focused on further penetrating and expanding the surgical glaucoma and dry eye market as we execute and deliver on our long-term goals and build for our future. Operator, please open the line for questions.

[Operator Instructions] Our first question comes from the line of Tom Stephan of Stifel. Your line is now open.

Great. Hey everyone, thanks for taking the questions. Maybe I'll start with Surgical Glaucoma. And for the second half, if I run the implied 2-year CAGR for that business, it comes out to about maybe mid to high single-digit growth. And that compares to CAGRs, I think, in the low teens for 1H '24. So, maybe can you talk about why the potential deceleration in the back half for surgical glaucoma on a 2-year CAGR basis?

Yes, I can take that, Tom. So, obviously, in 2023 in particular, we were dramatically impacted associated with the proposed LCDs that were ultimately withdrawn. And we've recently seen more favorable LCDs proposed that did not include coverage restrictions for OMNI or SION. So obviously, that impacted our growth, particularly in the second half of 2023, and our focus in 2024 was really to regain that momentum and get back to recovery and double-digit growth off of that phase. And so that's really what we've been executing to. That recovery is tracking to our expectations in the first half of 2024. And now, we have proposed LCD clarity, and we do expect to be back to double-digit Surgical Glaucoma revenue growth in the second half of 2024. And we do believe that we're set up very nicely looking further ahead into 2025 and beyond with both the proposal of device intensive, which could be an accelerant for us in terms of growth, as well as just our overall efficacy profile of OMNI as a very comprehensive procedure. So of course, we were impacted if you look back over time in that 2023 period, but we feel like we are set up for success and we have been executing for that plan in 2024.

Got it. That's great color. Thanks, Ali. And then my follow-up, just two parts, both pretty quick. First, are you maintaining the 2025 double-digit growth expectations that I think you've talked about in the prior two calls? And then Ali, what's maybe a rough revenue run rate that gets you to cash flow breakeven? If you're able to provide some guardrails there. Thanks.

Yes. Thanks, Tom. So at a high-level, we are not prepared today to give 2025 guidance. It would be a little premature for us to do that, but we do feel very confident in our ability to continue to continue to gain share over time and grow this market. As we've said many times before, we have both a large combination cataract market for OMNI as well as a standalone market. And we do see that market developing over time, that should lead to significant growth in that double-digit range. So we are continuing to have strong beliefs in our ability to execute on that growth plan and to return to growth in 2025 and beyond. Of course, TearCare is also an accelerant of that growth if we can achieve market access wins. And so that's something that we are very excited about when we look to 2025 and beyond. And for your second question on cash flow, we haven't put out any type of particular target yet around what level of revenue would be needed to achieve cash flow breakeven. But you've seen us make substantial improvement over the last 1.5 years really since the end of 2022 when we had cash usage in 2022 of about $75 million. And you see this quarter, we had cash usage of about $9 million, so down significantly if you run rate that cash utilization. So we feel like we are in a great spot. We've been very efficient with our operating expenses while also regaining momentum on the revenue side. And we feel like we are properly funded to reach our goals.

Great. Thanks, Ali. Thanks, everyone.

Thank you. One moment for our next question. Our next question comes from the line of David Saxon of Needham & Company. Your line is now open.

Hello, this is Joseph on for David. Maybe just picking up on the cash burn, if you can maybe give some color, what are your expectations for the second half of '24 for cash burn. I guess you expect to make further improvements, or I guess maybe how are you thinking about driving leverage there while also investing in the Glaucoma business and building out the Dry Eye market access team.

Yes. Thanks, Joseph, for the question. And we do expect to continue to show improvements in cash burn over time, both in the second half of 2024 and into 2025 as well. So that is a focus of the company to continue to execute on those plans and to be efficient with our spend. So that's the plan. We haven't provided any specific targets on cash burn in those periods, but we've been executing appropriately.

Okay, understandable.

And what was the second question? I think I maybe missed part of it.

Yes. I mean, I think you answered it was just kind of how are you thinking about driving leverage while also investing in the Glaucoma business and Dry Eye.

Yes. So that is built into our assumptions to continue to invest in those key, both commercial activities as well as our R&D activities that we think are important for our long-term. So that's been built into our models. More of the Dry Eye investments will come in 2025. As we see market access wins in specific markets, then we will target additional resources added into those regions to go work with the partners in those spaces. So that's less of a 2024 impact and more of a 2025 impact, but those are incremental investments. That's not a significant shift to our overall expense planning.

Okay, great. Perfectly clear. And then maybe just one more. For any of the doctors or practices that have gotten TearCare claims paid out, what are you kind of seeing in terms of volumes there? Have they been stable or growing? I guess if there are other doctors in the practice, are you seeing their claims drive other adoption?

So we are still very early in the process of getting claims paid for TearCare. While we've seen a low level of claims being paid at reasonable rates that we are very pleased with, it is still very much early innings. So there is not anything that we would extrapolate out of that at this point or saying that that's driving volume. At this point, these are really about establishing coverage and payment over time, but these are still very small overall claims paid at this point.

Okay. Thank you very much for taking our questions.

Thank you.

Thank you. [Operator Instructions] I’m showing one more question. One second -- one moment please. Our next question comes from the line of Joanne Wuensch from Citi. Your line is now open.

Hey, guys, this is Felipe on for Joanne. I was just wondering if you could start with mix of OMNI usage and standalone and combination procedures. And then just on standalone reimbursement, it seems like you got a really significant bump compared to your competitors. I guess like, where do you think you're going to shake out in terms of adoption once those facility fees are implemented? Thanks.

Yes, so I can take that. At a high-level, the standalone market for us, we don't have specific claims based data to look at procedure volume to know specifically whether somebody is doing a standalone procedure or combination cataract procedure. So we don't have that specific visibility. However, we do estimate that about 85% the procedures are done in combination with cataract and about 15% of our procedures are done on a standalone basis. When we look at the claims data for the entire space, it's more like 5% are done on a standalone basis. So certainly, we are a key part of that standalone market and a key developer of that market. And we see this as a large growth potential over time for us. And the second part of your question again was …

Just on your expectations for adoption with the updated facility fees, especially the standalone market, because it seems like you got the biggest bump in facility fee compared to your competitors. Thank you.

Yes, just to clarify the proposed increase, it's still pending final approval, which we had expected -- learn in the in the second half of the year, late October, early November. So that's still pending and obviously have further commentary at that time. I think the other thing to call out is that the proposed increase in reimbursement for CPT 66174 does not apply to standalone specifically. It applies to the broader code. That is a code often utilized in conjunction with the procedure enabled by OMNI. And so there definitely is some correlation. I think when we look at the standalone opportunity, as Ali said, we continue to see that sight and OMNI specifically are a significant contributor to the standalone market opportunity. More broadly, I think we are very encouraged by the continued growth and development of an interventional mindset looking at how to use procedural intervention earlier in the continuum of care for glaucoma patients. We also believe that in a standalone case when the sole purpose for surgery is the treatment of glaucoma, the clinical profile and demonstrated clinical efficacy of OMNI is significant in terms of the ability to provide the best available treatment for those patients. So certainly, we are going to continue to monitor the proposed rule change and potential increased payment -- facility payment with device intensive for 66174 and further determine what we think that can provide in terms of a tailwind to OMNI utilization and further growth and development of the standalone market. But overall, we are pleased with our team's effort to continue to lean into the standalone market. And the overall markets continued acceptance and adoption of these interventional type procedures for standalone patients.

And Felipe, this is Paul. Just to add to Ali and Matt's comments, this has to happen. Interventional glaucoma has to happen in standalone, in particular. Patients are treated with eye drops. For years, maybe they'll get SLT, get more eye drops, their disease inevitably progresses. And we are trying to demonstrate that intervening earlier in a minimally invasive, safe and effective manner is ultimately better for the patient long-term. What's the best way to demonstrate that? It's with real world clinical data on a large scale. And so OMNI, since we launched OMNI in 2018, it's been used in both combination cataract and standalone settings. And now, we have the benefit of being able to mine that large-scale, real world evidence to see how is OMNI performing in the standalone patients in the hands of the average glaucoma surgeon. And so that exercise is underway. We are in the middle of it. Actually, I think we are more on the tail end of it. Hopefully, we'll be able to see the analysis of OMNI's real world performance in standalone patients in this IRIS Registry, get it submitted for publication hopefully within the next 2 to 3 months, and hopefully published in the next few quarters. And I think that real world evidence is going to be helpful to that next potential standalone glaucoma surgeon who's considering using OMNI as an earlier standalone surgical intervention to be able to see how the procedure performs in the hands of a number of colleagues. This evidence is critical to continuing to develop the standalone market, and we're really excited about it. Hopefully, we'll see some effect in 2025.

Great. And then just on Dry Eye, if you could just give us an update on how conversations are going with commercial payers, that'd be helpful. Thank you for taking the questions.

Yes. So I think I'll echo Ali's earlier comments that we are still early days in our conversation and communication with all payers, not just commercial payers, but also the Medicare administrative contractors. So we are encouraged by the conversations we've had to date. I think the important thing is to point to the fact that the reason that we are encouraged and the nature of the conversations being positive really hinge on the quality of clinical evidence and the demonstrated economic benefit of TearCare for these patients with meibomian gland dysfunction and the unique category creating opportunity we have with TearCare. So again, early in those conversations, but encouraged that the data and the investments made by Sight Sciences into this category are being well received in the conversations we are currently having with payers.

And just to add a final comment and be specific to Matt's enthusiasm around the coverage discussions, we see for us, TearCare coverage right now is driven by four key drivers, and they're all very positive. That's SAHARA Phase 1, through 6-month treatment head-to-head with Restasis, that's been published; SAHARA Phase 2, that's the crossover arm of Restasis patients treated with a single TearCare treatment and see how they're doing at 12 months, further significant improvements in all signs and symptoms. That was just published in May. And then the other two drivers of TearCare coverage, budget impact model, where we compare the cost impact of TearCare versus Restasis. That's been completed and submitted for publication, very positive. And lastly, the most recent driver, the cost effectiveness analysis. So that's an analysis that we recently conducted will hopefully be submitted for publication within the next 1 to 2 months and hopefully published maybe early next year. So with SAHARA Phase 1, SAHARA Phase 2, budget impact model, and cost effectiveness analysis, those are the critical drivers to having highly productive coverage conversations, and that's ongoing.

Thank you. One moment for our next question. Our next question comes from Tom Stephan of Stifel. Your line is now open.

Great. Thanks for letting me hop back in here. Just had a follow-up on Dry Eye, actually, sort of a two-parter again. I guess first, how did you arrive at that number, specifically $1,200 as it's a pretty significant step up from the current price? And then my main question is, I guess, is it fair to assume there is a strong level of confidence that payers will reimburse at these types of levels to make it worth it for the doctors? And hopefully that makes sense, but any color there would be helpful. Thanks.

Hey, Tom, it's Matt. I'll take the first shot at this, and obviously, Ali and Paul can weigh in. And I guess what I'd really turn to is the comments Paul just made. The quality and the strength of the data plus the compelling comparison and savings associated with the health economic impact model are really what informed the price increase, but the timing's important. Obviously, we had a view of where clinical evidence would land, but ultimately, it's the sequence of not just completing the enrollment, the study, doing the analysis, but it's submitting for publication, actually seeing that publication, and then utilizing the data from that publication to drive the analysis, some of which is still pending in its own right from a health economic standpoint. So very judicious and thoughtful approach to that, a lot of internal analysis. We are very fortunate to have a group of advisors that we've been able to speak to as well truly to understand the benefit in addition to data, what's the practical real world implications when you implement this in a clinical setting, which I think is a part of what the question you're asking is about. And so we feel really good about where we are. As stated earlier in response to other questions, we are early in our discussions with payers. I think everybody understands that this is a process and a transition period, but the nature of those conversations are such and the analysis supported the price that set.

That's great color. Thanks, Matt.

Thank you. I'm showing no further questions at this time. I would now like to turn it back to Paul Badawi, CEO, for closing remarks.

Thank you for attending today's call. We appreciate your interest in Sights Sciences, and we look forward to updating you on our progress in the future. Thank you.