Good morning. My name is Sarah, and I'll be your conference operator today. At this time, I would like to welcome everyone to the EyePoint Pharmaceuticals Q4 and full year 2019 financial results conference call. There'll be a question and answer session to follow at the completion of the prepared remarks. Please be advised that this call is being recorded at the company's request. I would like to turn the call over to George Elston, Chief Financial Officer and Head of Corporate Development of EyePoint Pharmaceuticals. Sir, you may begin.
Thank you, Sarah, and thank you all for joining us on today's conference call to discuss EyePoint Pharmaceuticals' Q4 and full year 2019 financial results and recent corporate developments. With me today is Nancy Lurker, EyePoint President and Chief Executive Officer, and Scott Jones, our Chief Commercial Officer. Nancy will provide a corporate overview as well as highlight recent pipeline developments, and Scott will comment on recent progress made on our commercial launches. I will provide commentary on the Q4 and full-year financial results after those updates, and we will then open the call for your questions, where we will be joined by Dr. Dario Paggiarino, Senior Vice President and Chief Medical Officer. Earlier this morning, we issued a press release detailing our financial results as well as commercial and operational developments.
A copy of the release can be found in the investor relations tab on the company website, www.eyepointpharma.com. Before we begin our formal comments, I'll remind you that various remarks we'll make today constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These include statements about our future expectations, clinical developments, and regulatory matters and timelines, the potential success of our product candidates, financial projections, and our plans and prospects. Actual results may differ materially from those indicated by those forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent annual report on Form 10-K, which is on file with the SEC, and in other filings that we may make with the SEC in the future. Any forward-looking statements represent our views as of today only.
While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our views change. Therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today. I'll now turn the call over to Nancy Lurker, our President and Chief Executive Officer.
Thank you, George. Good morning, everyone, and thank you for joining us. 2019 was a year of significant progress and achievement for EyePoint, marked by our transition into a commercial-stage pharmaceutical company focused on delivering innovative ophthalmic products to patients in need. We began 2019 with Q1 U.S. commercial launches of DEXYCU for the treatment of postoperative inflammation following ocular surgery and YUTIQ for the treatment of chronic non-infectious uveitis affecting the posterior segment of the eye. Our 45-person sales team of key account managers, or KAMs, led by our Chief Commercial Officer, Scott Jones, introduced and educated ambulatory surgical centers, or ASCs, and surgeons on DEXYCU and uveitis specialists on YUTIQ. Through our cohesive efforts, we ended the year with $20 million in total revenues, including $16.8 million in product revenue, $4.8 million for DEXYCU, and $12 million for YUTIQ.
We expect there will continue to be some disparity between reported 2020 quarterly revenues and underlying customer demand as new distributors adjust their inventory levels. However, we do expect these metrics to track more closely as 2020 progresses. Our underlying customer demand remains strong, and we were very pleased to see continued demand growth for both DEXYCU and YUTIQ, with increases of 111% for DEXYCU and 59% for YUTIQ as compared to the Q3 of 2019. Now, in parallel with our commercial initiatives, we've advanced our very exciting ophthalmology pipeline and prioritized EYP-1901, an anti-VEGF tyrosine kinase inhibitor, otherwise known as TKI, six-month sustained release potential therapy using our bio-erodible Durasert technology. EYP-1901 is being developed for wet age-related macular degeneration, or wet AMD, diabetic retinopathy, or DR, and retinal vein occlusion, or RVO.
We have also clarified the clinical and regulatory pathway for YUTIQ 50, our short-acting six-month treatment for chronic non-infectious uveitis affecting the posterior segment of the eye. I'll provide more color and upcoming development plans for these programs a little later during this call. I'm now going to turn the call over to Scott Jones, our Chief Commercial Officer, to review in more detail our commercial performance.
Thank you, Nancy. Let me first begin with an update on the DEXYCU launch. During the fourth quarter, our focus remained on both training physicians and educating their ASCs on DEXYCU to promote both initial orders and reordering. Physicians continue to respond positively to the quick and easy administration of DEXYCU and its ability to control inflammation for up to 30 days post-surgery. The rapid injection of DEXYCU at the end of the cataract surgery helps keep physicians on track with their busy surgery schedules and sends patients home with an important anti-inflammatory treatment in place, which reduces the complexity of the post-surgical steroid eye drop regimens. Since launch, our team of 33 KAMs for DEXYCU have called on over 640 physicians, which has yielded approximately 440 ASCs that have completed training and certification for DEXYCU use.
We've seen very strong reception and orders from our targeted core high-volume physician-owned ASCs in the markets that have the largest population of Medicare beneficiaries and with the highest concentration of cataract surgeries. We're also continuing to work to educate private equity-owned ASCs on the advantages of DEXYCU and the streamlined reimbursement with the processing of our assigned J code. Based on our internal data, we estimate that ASCs that have been in service and trained today as part of our launch initiatives represent a $170 million market opportunity, and physicians that have continued to reorder represent a $105 million market potential. To put that in context, the overall cataract surgery market potential is estimated at $2 billion, which highlights the great potential of DEXYCU and the attractive market opportunity for this product.
It's important to note, though, that changing a treatment technology like we're trying to do with DEXYCU, moving from post-surgical eye drops, which are patient administered and distributed through retail pharmacy chains, to an end-of-the-surgery administration and a buy and bill distribution through the ASC, it takes time to complete. We remain very confident in DEXYCU's potential, given its excellent efficacy and safety profile, which is now being demonstrated in the real world, and its administration by physicians, allowing them to take control of a critical element of post-ocular surgery, which is treating the post-surgical ocular inflammation. One of our key priorities has been to expedite the training process in order to increase ASC adoption and orders. We're seeing that the timing between the first and second orders continues to decrease quarter-over-quarter.
Importantly, we're still seeing that for most accounts, the number of units ordered have nearly doubled in the second order placed as compared to the initial order. As Nancy noted earlier, customer demand represented by the units purchased by ASCs from our distributors was up 111% over Q3, with repeat customers representing 98% of the Q4 order volume. December alone represented our strongest month for orders during our launch to date. Since launch, over 14,000 patients have been injected with DEXYCU. Reimbursement of DEXYCU has been consistently positive based on our WAC price at $595. Medicare fee-for-service claims continue to be paid consistently, and Medicare Advantage and commercial paid claims have increased quarter-over-quarter. ASCs are gaining more confidence each day to this reimbursement process, which eventually translates to increased orders once this barrier has been lifted.
Another key priority area in our launch has been to secure additional access and purchase agreements with both integrated health networks and also other vendors. ASCs continue to show adoption based on this. A recent agreement with the Vision Center Network of America and EyeSouth Partners, which collectively perform approximately 115,000 cataract surgeries per year, exemplifies this progress. We hope to continue this trend in 2020, and we're actively negotiating agreements with additional group purchasing organizations and networks. The strong DEXYCU product profile continues to receive positive reception and recognition from the KOL community. Positive retrospective case study data of DEXYCU were presented at the 2020 Caribbean Eye Meeting this January.
These interim results presented are from 154 patients administered with DEXYCU and show the proportion of patients with complete anterior chamber cell clearing, which is a key measure of inflammation, was 84.1% at postoperative day 14 and 87.5% at postoperative day 30. These are very good results. They're real-world results as opposed to controlled clinical trial data. They provide additional support for our belief in the therapeutic potential of DEXYCU and its ability to improve patient compliance for treating post-ocular surgical or surgery inflammation. Turning to YUTIQ. We continue to receive very strong adoption with uveitis specialists that share our excitement for YUTIQ as a highly differentiated treatment option compared to existing therapies due to its ability to deliver a consistent, sustained 24-hour microdose of steroid every day for up to three years.
This is remarkable when you think about it, especially for the posterior segment uveitis, which often flares unpredictably, and these flares can lead to blindness. In addition, YUTIQ is delivered as a convenient single administration in the physician's office, and physicians regularly provide feedback on need for long-acting treatments for non-infectious uveitis affecting the posterior segment of the eye to control these uveitis flares. As a result, YUTIQ fills a very critical unmet medical need. YUTIQ's durable 36-month efficacy clinical data and positive safety profile have been well received within the ophthalmology community and has already built a very strong buzz among physicians and patients.
As we shared earlier this week, our 36-month top-line results from the second phase III study of YUTIQ showed the same durable response as the first study, with a recurrence rate of 46.5% compared to 75% of sham eyes with a P value equal to 0.001. This is an approximately 40% reduction in patients who suffered from even one flare over three years. The visual acuity gains or losses of three lines or more were both similar between patient groups, even though sham patients had to be rescued with intra and periocular therapies at a much higher rate of 51.9% versus only 8.9% for YUTIQ. The safety data showed no unanticipated side effects at each follow-up time point at 12, 24, and 36 months. These results provide additional validation of YUTIQ's ability to reduce flares and control inflammation in patients who suffer from this devastating disease.
During the Q4 , customer demand, represented again by units purchased by physicians from our distributors, increased by 59% as compared to the third quarter. 87% of customers that ordered during the quarter were repeat customers, and their orders accounted for 98% of the total order volume. Cumulative orders since launch have increased month-over-month, and we hope to continue this growth trajectory in 2020. As a result of this very positive demand for the product, we expect to add to the existing 12 KAMs covering YUTIQ during 2020 to better grow our coverage in the U.S. On the reimbursement front, Medicare fee-for-service claims have been paid consistently, and a growing number of Medicare Advantage and commercial payers are covering the product.
The permanent specific J-code for YUTIQ was effective as of October 1st of 2019. It expedites the reimbursement claims paid to just a few weeks compared to up to three months. Recall that we did see customer demand slow toward the end of the Q3 as prescribers waited for the J-code to go into effect to avoid the cumbersome reimbursement process that occurred when using the prior miscellaneous J-code. We hope to extend the growing momentum seen in the Q4 throughout 2020. We recognize that we have plenty of work and education left to do for both products. We believe in 2019, we laid the foundation for both products. We're now focused on accelerating the revenue growth. For DEXYCU, we're truly introducing a technology shift for these patients and for physicians and the ASCs and where they practice.
Our expansion activities will continue to focus on securing additional volume-based agreements with ASCs and integrated health networks to expand access for patients. For both products, we remain focused on continued target account penetration and increased educational activities with key opinion leaders at the major ophthalmology medical meetings. As Nancy mentioned in our opening comments, in the Q4 , we moved from a single distributor title model to a traditional network of specialty distributors, which is much more common in our industry. We hope that this model will better align our reported product revenues and customer demand. They will likely trap separately for some period during 2020. It is also important to note that during the first calendar quarter, fewer treatments are typically performed both in surgical and drug-related therapeutics. I think that's especially true of ophthalmology.
This is especially noticed where you have larger co-insurances and co-pays are required due to insurance plans resetting at the beginning of each calendar year. With that, I'll now turn it back over to Nancy.
Thank you, Scott. Let me now move to our pipeline programs, including our lead development product candidate, EYP-1901, an anti-VEGF tyrosine kinase inhibitor, six months sustained release potential therapy using our bio-erodible Durasert technology for wet AMD, RVO, and DR. We're very excited about this program as it has the potential to provide a disruptive six-month sustained delivery product to the wet AMD market and potentially other indications using our proven Durasert technology coupled with vorolanib, an anti-VEGF small molecule. Vorolanib as a TKI has already established efficacy signals from two prior human studies in wet AMD as an orally delivered therapy. In February, we announced an exclusive licensing agreement with Equinox Science for vorolanib for an upfront payment of $1 million, future developmental and regulatory milestones, and single-digit post-commercialization royalties.
Although the agreement was recently announced, we have been actively working with vorolanib for over a year and completed the license after establishing initial activity in a classic animal model of wet AMD and evaluating ocular safety and PK for EYP-1901, the combination of which is bio-erodible Durasert and anti-VEGF vorolanib. The prospects for EYP-1901 are very compelling based on several important factors. First, and very importantly, is that the Durasert delivery technology has been used in multiple FDA-approved products and has demonstrated its safety in thousands of patients. This includes Retisert, ILUVIEN, and YUTIQ. The Durasert bio-erodible intravitreal insert used in EYP-1901 has no new excipients, and therefore, we expect to see the same safety profile as our non-erodible Durasert. Over the years, many promising ocular drug delivery technologies have failed due to safety issues that materialize in the clinic with the delivery technologies.
We believe the Durasert regulatory history and clinical history is a critically important differentiator for EYP-1901, and that it could substantially reduce the risk of this development program. Second, vorolanib, the anti-VEGF active compound in EYP-1901, has been evaluated already in separate phase I and phase II human trials as an oral therapy for wet AMD, and it reported positive efficacy signals, including improved best corrective visual acuity, a decrease in rescue anti-VEGF injections, and a reduction in central retinal thickness. Consequently, EYP-1901 is advancing towards the clinic with both a proven drug delivery technology in Durasert and an active drug, vorolanib, that brings an efficacy signal in wet AMD as an oral therapy.
We believe that delivering vorolanib locally in the eye as EYP-1901 as a six-month sustained delivery potential intravitreal treatment will equal or even improve results observed for the oral delivery of vorolanib without the toxicities associated with the oral anti-VEGF treatments. In our initial animal studies of EYP-1901, promising activity was demonstrated in an established CNV laser animal model of human wet AMD, and preliminary ocular and systemic safety was observed in initial PK and non-GLP toxicology two-month studies. In these non-clinical studies, EYP-1901 and vorolanib was measured in the retina at concentrations well above the IC50 levels, which is the half maximal inhibitory concentration and is a measure of drug potency. We've been very busy. We also recently completed a positive type B pre-investigational new drug meeting with the FDA in January and have a clear pathway to begin phase I clinical development of EYP-1901.
GLP toxicology studies are expected to begin this month, and if positive, we plan to file an IND in the Q4 of this year, allowing the initiation of a phase I study that can potentially provide data readouts as early as the second half of 2021. Finally, and equally important, EYP-1901 is potentially a disruptive and beneficial product option for patients and physicians in established, attractive, multi-billion-dollar retinal disease markets. wet AMD, diabetic retinopathy, and retinal vein occlusion are most commonly treated with intravitreal injections of biologics that block VEGF, which is a growth factor that plays a central role in the abnormal retinal blood vessel growth and leakage, leading to disease recurrence. FDA-approved biologic treatments for these diseases are injected into the eye as frequently as monthly. In real-world outcomes, patients typically receive fewer injections, leading to progressive visual acuity loss.
It's tough to get your eye injected monthly or bimonthly for the rest of your life. Thus, it's become increasingly urgent to get to these patients effective anti-VEGF treatments that do not require these often scary and unpleasant monthly or bimonthly eye injections. Finally, and not to be minimized, is the consistent 24/7 microdosing of drug that EYP-1901, we expect will deliver for up to six months. In addition to the potential risk directly associated with frequent intravitreal injection procedures, such as ocular infections, it's not healthy for the eye to receive a monthly or bimonthly bolus eye injection, which causes a seesaw drug concentration and theoretically can result in the VEGF receptors to downregulate over time and slowly stop responding. We anticipate that there is real potential for an improved treatment effect by having consistent drug delivery over six months using EYP-1901.
We expect these markets to continue to grow with the aging U.S. population and the pressing need for treatments to replace the current available biologics with fewer injections and sustained delivery of anti-VEGF therapy. EYP-1901 represents a promising and potentially game-changing potential six-month sustained microdosing release and an exciting treatment option for these patients. EYP-1901 is a complementary fit to our ophthalmology pipeline and aligns with our greater strategy of targeting areas of highly significant unmet medical needs in the ocular disease space. We look forward to providing updates on this potentially transformative program throughout the year. Late in 2019, we also received clarification from the U.S. Food and Drug Administration, or FDA, on the regulatory pathway to approval for YUTIQ 50. The FDA is requiring an approximately 60-patient, six-month trial for inclusion in a supplemental new drug application for the product.
We are actively planning the trial and prioritizing resources and investment requirements and look to provide updates on timing later this year. On the corporate front, we recently expanded our partnership with Ocumension Therapeutics with the signing of a second licensing agreement for the development and commercialization of DEXYCU in Mainland China, Hong Kong, Macau, and Taiwan. We maintain worldwide development and commercialization rights outside of the territories licensed to Ocumension. Under the terms of the agreement, we received an upfront payment of $2 million and are eligible to receive up to an additional $12 million if certain future pre-specified development, regulatory, and commercial sales milestones are achieved by Ocumension, as well as royalties on their product sales.
We are delighted to grow this partnership and bring DEXYCU to additional patients in need in China. In November, we also appointed George Elston as our Chief Financial Officer and Head of Corporate Development. George brings a wealth of experience as a senior executive of such biopharmaceutical companies like Enzyvant Therapeutics, 2X Oncology, Juniper Pharmaceuticals, and KBI Biopharma. I'm now going to turn the call over to George to review the financials.
Thank you, Nancy. I joined EyePoint in November because I truly believe in our mission to change the treatment paradigm for patients suffering with ocular diseases, and I believe we have the right team and the right pipeline to achieve this goal. I'll now turn over to the financial results included in the press release that was issued this morning. For the three months ended December 31st, 2019, total revenue was $8.6 million compared to $2.4 million in the corresponding quarter in 2018. Net product revenue was $7.9 million, with $4.8 million for YUTIQ and $3.1 million for DEXYCU. Neither of these products had net product revenue in the corresponding quarter in 2018. Net revenue from licenses, royalties, and collaborations for the three months ended December 31st, 2019 totaled $750,000 compared to $2.4 million in the corresponding quarter in 2018.
The prior year quarter had the recognition of $1.7 million from an upfront licensing fee to Ocumension for YUTIQ. Operating expenses for the three months ended December 31st, 2019 increased to $17.6 million from $13.4 million in the prior year period, due primarily to investments in sales and marketing infrastructure and program costs and the cost of sales related to product revenue. Non-operating expense net for the three months ended December 31st, 2019 totaled $1.4 million of net interest expense. Net loss for the three months ended December 31st, 2019 was $10.4 million, or $0.10 per share, compared to a net loss of $11.6 million or $0.12 per share for the prior year quarter. For the full year ended December 31st, 2019, total revenue was $20.4 million compared to $4.6 million in the corresponding period in 2018.
Net product revenue was $16.8 million, with $12 million for YUTIQ and $4.8 million for DEXYCU. Neither of these products had net product revenue in the corresponding year, 2018. Net revenue from licenses, royalties, and collaborations for the full year ended December 31st, 2019 totaled $3.5 million, compared to $4.6 million in the corresponding period in 2018. Operating expenses for the full year ended December 31st, 2019 increased to $68.2 million from $43.6 million in the prior year period, due primarily to investments in our sales and marketing infrastructure and program costs, increase in personnel expenses related to senior management additions, and the full year impact of prior additions, and cost of sales related to product revenue, partially offset by a decrease in research and development expense.
Non-operating expense net for the full year ended December 31, 2019 totaled $8.9 million and consisted of $5.1 million of net interest expense and $3.8 million from the loss on extinguishment of debt related to the payoff of the SWK term loan. Net loss for the full year ended December 31, 2019 was $56.8 million, or $0.54 per share, compared to a net loss of $86.1 million or $1.27 per share for the prior year period. Cash and cash equivalents at December 31, 2019 totaled $22.2 million compared to $31.8 million at September 30, 2019. In February 2020, we completed an underwritten public offering of 15 million shares of common stock at a public offering price of $1.45 per share. The gross proceeds of this offering were $21.8 million before deducting the underwriting discounts and commissions and other transaction expenses.
In addition, underwriters were granted a 30-day option to purchase up to an additional 2.3 million shares of common stock at the public offering price, less underwriting discounts and commissions. We expect that our cash and cash equivalents, combined with the February 2020 underwritten public offering proceeds and projected cash inflows from anticipated YUTIQ and DEXYCU product sales should fund the company's operating plan into 2021. We will now turn the call over to the operator for questions.
Thank you, ladies and gentlemen. If you have a question at this time, please press the star and then the number one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Again, ladies and gentlemen, if you have a question at this time, please press star and then the number one key on your touchtone telephone. Your first question comes from the line of Dana Flanders from Guggenheim. You may ask your question.
Hi. Thank you very much for the questions. My first one here, can you just elaborate a little bit more on your TKI? I know there is some data out there in the public domain, but just a little bit more on the efficacy that you have seen in prior studies and why that has you excited to move forward with this into phase I. My second one on the TKI, just any early thoughts on how big the phase I will be that you plan to run later this year?
I'm going to address at a high level, and then I'll have Dr. Dario Paggiarino go into a bit more detail for you on that, Dana. First of all, vorolanib went through a phase II human study. Phase I, which is published, and phase II, and in both cases showed efficacy in wet AMD. Dario can go into the specifics. It did stop prematurely in phase II due to well-known tyrosine kinase inhibitor orally delivered systemic side effects, which again, are usually typical that you see with TKIs when delivered orally, which have to do with liver enzyme elevation and some GI issues. We expect that when we're able to deliver this in the eye locally, that you should not see the systemic liver enzyme or other systemic side effects that you see with much higher oral or orally delivered doses.
The second to your point about phase I, Dario will come back and address in a little bit more detail some of the efficacy signals that we're seeing, is that the FDA in our pre-IND meeting required a very small phase I. We're not going to go into specifics right now because we're still finalizing the design. However, we expect this to be a very modestly sized study. I can tell you it's probably going to be less than 25 patients, maybe even smaller than that. Again, very small study. Because of the fact, the good news is, when we had our pre-IND meeting, the FDA is already familiar with vorolanib because it's already gone through phase II. It's already very familiar with Durasert.
Because of those two factors, they were very comfortable with us moving quickly into a small phase I and then into a larger phase II. I'll now turn it over to Dario to talk just a bit more on the efficacy signals seen with oral vorolanib.
Thank you. The oral vorolanib formulation was actually tested in two studies, phase I and phase II, as pointed out. The first study was an open label, dose escalation study in about 35 patients. These were patients, for the most part, who have been pre-treated with anti-VEGF treatment. The objective was, first of all, to determine safety. Second, also to possibly see evidence of efficacy. Indeed, we actually see some improvements in visual acuity. Quite a number of patients, about 60% of them actually did not require a rescue with injections. We observed not only increasing visual acuity, but also a reduction in the retina thickness. Very importantly for that study also, no adverse event associated with any ocular findings. That study justified moving to a phase II study.
The phase II study was a larger study. It was about 150 patients randomized. Again, three doses, oral doses. Again, these patients were also patients that had responded well to anti-VEGF therapy. The study was terminated early only because there were systemic side effects associated with the oral product. About half of the patients actually completed the study through one year. Again, we observed stabilization of visual acuity, and essentially a 50% reduction in the need for rescue injections. Also, very importantly in this study again, no significant ocular events. Essentially, those two studies confirmed the fact that the vorolanib orally is actually active and is also having an acceptable ocular safety.
Okay. Great. Just another follow-up. On your comments earlier around demand seasonality, should I take that as we should expect revenue to be down, I guess, quarter-over-quarter into 1Q? Just how much of that is related to pharma seasonality versus some of the dynamics going on with your distributors? Another follow-up on DEXYCU. I think you mentioned you had trained ASCs representing about $170 million market. How should I think about the pace of that increasing throughout 2020, and just what are the big gating factors to seeing that ramp? Thank you.
Yeah. Thanks, Dana. This is George. We're not going to guide specifically on quarter or the year, except to say that we do expect to see continued underlying growth in demand. As you know, as we stated, we went from a single distributor to a multi-distributor structure in the Q4 . We expect that will sort through as they sort out their inventory over time. As 2020 progresses, we expect revenue and demand to get more closely aligned. We expect it to still be a little bit bumpy. I think the important message is underlying demand will continue to grow. Q1 will be a little more modest simply because of the seasonality, as Scott had pointed out. In fact, we learned, I think there's a conference almost every weekend in January and February for the cataract surgeons.
Clearly, it's a time that they pause because their demand is down. That said, we still expect to see underlying customer demand to continue to grow.
Then Scott Jones will answer your second question, Dana, around the contracts and ASCs.
Thank you. Thanks for the question, Dana. As I mentioned earlier on the presentation, we're continuing to bring on additional customers through contracts, both in the private equity market as well as in some of the integrated health networks. We expect to see the addition of those contracts play out through the year in terms of underlying demand. We're ramping up actively in those areas and really what it does, it provides additional access for our representatives and accounts that are covered by those contracts. We're already starting to see a return in the Q1 , and we expect that to expand throughout the year.
Okay. Thank you.
Okay. Next question comes from the line of Andrew D'Silva from B. Riley FBR. You may ask the question.
Hey, good morning. Thanks for taking my questions. Just a few quick ones for me. I'll start off with YUTIQ. I was just curious, was there any sort of benefit during the quarter from the OZURDEX supply constraints that were announced in early October? If you remember, we did several channel checks, and there was a contingent of retinal physicians that, say, entered the space before 2005 that were generally unfavorable to implants in the market, specifically due to issues with the Retisert. I was curious if you were noticing any pushback from that in the market, or if that just really hasn't been an issue at this point.
All right. Let me answer your question. As for OZURDEX, no. In all candor, we really did not see any impact from OZURDEX. Remember, too, what we're seeing with the use of YUTIQ versus OZURDEX, and in fact, there was a very recent article published on this, where physicians seem to be using OZURDEX and injectable generics is to bring down the initial inflammation, and then they look to YUTIQ for maintenance. We've always said YUTIQ is not ever meant to be used when that initial patient presents, where their eyes are almost always seriously inflamed. They've got all kinds of problems with it, and you want to hit it hard with a more of a bolus injection. OZURDEX does give you this burst effect, but then it quickly drops off. That's where YUTIQ comes in.
Once the patient is controlled, then they use YUTIQ. To your answer, we don't see an impact from OZURDEX having been out of stock. What you're seeing is true underlying demand for YUTIQ. Your second question, around a contingent of patients back in 2005, I think you said, Andrew.
Oh, it was physicians. It was retinal physicians in the space, yeah.
Yeah. Look, in all candor, look, most doctors, though there still is some Retisert use, most doctors plan to move away from it. Why is that? Retisert is a surgical procedure. You've got to go into the ambulatory surgery suite and have surgery. YUTIQ can be delivered in the physician's office. It's $18,000 for one implant. Ours is $8,900. Retisert lasts for two years. Durasert lasts for up to three years. The other nice thing about YUTIQ is you get less IOP than is seen in the clinical trials with Retisert. We're not seeing hesitancy to put an implant in. The other thing I will tell you that's helping us is that ILUVIEN's been on the market for three years, or excuse me, for five years for DME. Because these are basically identical products, they just aren't seeing any problems with ILUVIEN inserting it.
As a result, they're much more comfortable using YUTIQ.
Okay. No, that's good to hear. I just wanted to make sure.
Yeah.
Just moving over to DEXYCU, can you just maybe discuss the broader market in a little bit more detail? I know the C code issue with other offerings created some headwinds out of the gate here. How much have just changes in the broader ASC market from a private equity roll-up standpoint played a factor here versus just the J code/C code confusion? For example, looking at OMIDRIA, the sales when it was on a C code and going through pass-through for the initial first three years with a similar ASC were trending significantly ahead of DEXYCU. With that being said, obviously, there's been a change in the ASC market in some capacity.
I'm curious, when you look at it as a whole, how much of the change from where you initially thought you'd be to where you were now with DEXYCU specifically was maybe a broader market shift versus a coding issue?
Okay. I'm going to let Scott answer that question, but let me just give one quick highlight, which is there's no doubt that shifting the control of what's used in the ASC from a physician-owned ASC, where the doctors really call the shots, to more of an integrated delivery networks who own these now, a lot of them, a majority of them, and private equity-owned has taken a lot of control away from doctors. The doctors still have to say, yes, they want to use it, but they can't dictate anymore what gets used. As a result, we now have to go that extra step and get these contracts signed with private equity firms to integrate delivery networks. I'm going to let Scott further elaborate.
Thank you, Nancy. I'll answer the first part of the question relative to OMIDRIA. I think it's difficult to look at OMIDRIA versus dexamethasone one to one, because OMIDRIA obviously has a much different and broader indication, and the utilization is outside of just the post-surgical inflammation. However, one of the things that you said, which is relating to the reimbursement challenges of a pass-through product, is right on the money. The process for ASCs getting comfortable with pass-through has certainly changed over time, and I think part of that is comfort level with both a permanent J code now, which is different than the C code that OMIDRIA launched with and that we certainly launched with. I think that is one big change in the marketplace.
Relative to your broader question about the market, as Nancy said, the market has changed considerably over the last several years. It used to be dominated by physician-owned ASCs. Now the physician-owned and community hospital-owned segment is the smallest segment of the ASC market. Private equity is taking up a larger share, but still the largest share are those ASCs controlled by the chains, HCA, et cetera. The primary issue relating to implementing a product in the surgical space is related to access into those markets. Clearly that's what our strategy, and the discussion today implies, is that we're actively trying to create additional access in all of those target market opportunities.
Okay. Thank you for the color on that. I have two more just quick ones here. Pardon, my memory is not perfect here, but is EYP-1901 effectively the same delivery platform that you had with that Tevidor product you were developing a few years ago, with Avastin, or is it different since that was utilizing a mAb versus a small molecule? Mostly just curious, is there a reason to go with a six-month versus a three-year, or is the plan to develop a six-month then move out to a three-year eventually?
I'll answer some of that. I'll let Dario opine as well. First of all, Tevidor is dead, buried, and long gone. That was a silicon-based delivery mechanism. It did not work. We killed that program a long time ago. This is using Durasert, that's the one thing we also like about this and why we think this program is relatively de-risked. I should say, I want to be careful here, potentially relatively de-risked versus other programs out using sustained delivery for anti-VEGF. Why is that? Because we're using Durasert. Durasert is used in YUTIQ, ILUVIEN, and Retisert. By the way, long ago, Vitrasert. It's the same excipient. The only difference is that we're using now bioerodible Durasert, whereas YUTIQ and ILUVIEN and Retisert are non-erodible.
The main difference is that we are not using a polyamide tube, and I'm not going to go into other details because it's proprietary. For the bioerodible, there's no polyamide tube, whereas there is one in the non-erodible. Important to note, there is no new excipient in the bioerodible versus the non-erodible Durasert. There's other things we've done to it, but there's no new added ingredients. As a result, because Durasert has proven so safe in patients over the years and thousands of patients have been injected with the non-erodible form of Durasert, we do believe that we've got a well-proven drug delivery technology that we're using with EYP-1901. As to six months versus three years, let me again state this. In uveitis, where we have three years, it's a totally different disease. That disease, again, is because you get these unpredictable flares. These patients are young.
They're usually in their 40s. You have no idea when you're going to flare, so you need a longer delivery mechanism. As a result, doctors like the three years with YUTIQ for uveitis. It's different when you get into these chronic diseases that progress slower than uveitis, like wet AMD. As a result, what we found out in the marketplace, most doctors want a delivery device that delivers an anti-VEGF 6 - 12 months. They really don't want something that goes longer. There's a couple of reasons for that. Number one, they really want to make sure that they keep control of the patient, and they want to make sure that they are on top of this disease and that when you get out longer than that, the cost goes up, number one, for the patient, the cost goes up for the doctor.
Remember, unlike uveitis, which is an orphan disease, and you might see a handful of patients. These wet AMD, DME, and RVO markets, you go into these doctor's offices, again, they're like factories. The patients are lining up to get their injections every month to every other month. Right now, that's what they're being treated with, and with BEOVU potentially once every three months. It's running a lot of patients through, and as a result, they want to be able to maintain contact with these patients and get out to 6 months - 12 months without going all the way out to three years. The second thing is, and I think it needs to be stated, is doctors do derive some income off frequent injections.
You get out too far, they have to bear the cost of a more expensive product, and they don't get to inject as frequently. That's just the reality of this marketplace. They do like these shorter acting, but long enough that you get better compliance. I'm going to turn it over to Dario to comment anything.
No, I think, Nancy, I really don't have any additional comments. I think you covered all the points I would have covered.
Okay.
Yes. Thank you.
Just follow up, a couple bookkeeping questions. What was cash flow from operations and CapEx for the year? Last year, you noted from a cash flow standpoint that you would expect to be cash flow positive this year. Obviously, George wasn't there at the time. I'm just curious if that's still a benchmark we should be targeting.
No. Thanks for the question, Andy. As we look to invest in 1901, as we think about cash, and as I mentioned in my prepared comments, is that we expect cash on hand from both at the end of the year, the financing, and generated from continued success with the commercial programs will fund us into next year. The way to think about the commercial programs is over time, we expect that with continued commercial success, that those commercial programs should largely fund our operating costs. We would look to fund R&D in the future separately.
Okay. Did you happen to have your CapEx and cash flow from operations for 2019?
We'll file that in the 10-K likely next week. It's not too inconsistent from the run rate through Q3.
Okay, great. Thank you very much. Best of luck going forward.
Thanks, Andy.
Your next question comes from the line of Yi Chen from Laidlaw & Company. You may ask your question.
Good morning, thanks for taking the questions. I'm just going to start with the pipeline product, EYP-1901, a little longer-term question, which is that you have three indications you can explore. Is there a priority in terms of which one, how would you prioritize that?
Yeah. Wet AMD first, then RVO, then diabetic retinopathy, in that order. We'll probably go after wet AMD first. Again, we're still in the early stages of sorting through all that.
Yeah. I think, Yi, the way to think about that is the phase I study should support all. There are other folks out there with similar programs targeting these, and we'll certainly learn from that. Right now we're focused on having the phase I be able to support multiple indications.
Yeah. Let me also state to the listeners to just remind people that wet AMD is a very developed market. It's a multi-billion-dollar market. As a result, it is the one that has some of the highest unmet need in it in terms of needing this sustained delivery. It also is the larger of the three markets. Again, if you look at the main products on the market, it's Lucentis, which is delivered monthly, injected in the eye every month, usually for the rest of patients' lives, and then Eylea, which is injected usually every other month. If you recall, when Eylea was launched, they quickly overtook Lucentis, mostly because of the fact you were able to diminish that frequent eye injections. Then now Novartis has launched BEOVU, which is up to three months injections into the eye.
Again, the goal is every time they're trying to extend out the length of these eye injections. That is the holy grail right now. Get these patients out as long as possible, up to one year, no longer than that generally, with less frequent eye injections. That's why we're so excited about EYP-1901.
Okay, great. That's very helpful. Also, maybe just to tag on just a little bit. In terms of your cash, and you say you're going to file IND in the fourth quarter of this year, I guess. With the cash at this point, you anticipate at least a complete or a start of phase I study, given that it's a smaller study, or you will totally depend on other sort of resources going forward just for the phase I?
I think important to note, Yi, is that the phase I is not a big investment. We're looking at likely single-digit millions of investment. It's certainly something that we can accommodate in our operating plan.
Okay. You already considered that into your budget at this point in terms of when you guided the cash runway?
Yep, that's baked in. Absolutely.
Okay, great.
to get out to mid-next year on our current cash.
As I stated earlier, cash and continued success with the operating plan.
Okay, great. One more question on the penetration to the private equity on ASC. I know this is still in early stage, relatively early stage. Can you quantify that a little bit in terms of how far you have been in terms of If you can, use percentage, otherwise use other metrics? What sort of goal you hope to achieve toward end of this year in terms of that particular set of ASC?
I mean, yeah. Let me make sure I understand. Are you saying what % of ASCs we penetrate market share-wise? Is that your question? I want to make sure we got your question right.
No, the ASC, most particularly in the private equity-owned one, because that's a major upcoming growing one, and that's probably the biggest target you guys want to sort of achieve.
Okay. I'm going to turn that question over to Scott.
Sure. Thank you. This part of the market is evolving, and there are a number of private equity players in the marketplace. However, there is, I would say the smaller portion of that are those private equity firms that have gobbled up enough ASCs to have put in place management companies. Those are the principal private equity-owned ASC that we're targeting. As we've talked about during the call, we recently completed contracts with two of those. We're negotiating several more, but that will continue to be throughout the year. As that part of the market evolves, we'll continue to focus and expand in that market opportunity.
Your next question comes from the line of Yi Chen from H.C. Wainwright. You may ask your question.
Thank you for taking my question. My first question is it possible for you to provide some color regarding the breakdown of the Q4 product revenue between DEXYCU and YUTIQ?
Did you say Q1 or Q4 , Yi?
Sorry, Q4 . The last quarter.
Yeah. It's in the release, but I'll give you the numbers now. Let me just pull it up. Give me one second.
Yi, it was for the year. I want to be clear, for the year, it was $12 million YUTIQ and $4.8 million DEXYCU. $4.8 million for YUTIQ in Q4 and $3.1 million for DEXYCU for a total product revenue of $7.9 million.
For the quarter.
For the quarter.
Okay. Thank you.
Okay. Thank you. Regarding that number, 14,000 patients treated with DEXYCU since launch. Does that number also include patients treated in the first and second, the January and February of 2020? If so, can you provide us with the number of patients treated in 2019?
First of all, you got to remember the 14,000 also includes some sample usage, so it's a total number of patients that were injected. Of course, when you go out and launch, you're going to have some sample usage. The main point there is we wanted to make sure that we had good safety and efficacy in all these patients, and that's basically what we have seen. We're not going to give color on exactly how many patients were given in 2019 versus now. You said 2020, I think? Basically the 14,000 is what was all injected in 2019. We haven't given any guidance or numbers for 2020 yet.
Again, keep in mind that as these ASCs are trained and brought up to speed, there is sample usage as they get up to speed on how DEXYCU is delivered. We don't give granularity. We're not really ready to give granularity beyond that yet.
I am showing no further question at this time. I would like to turn the conference back to CEO, Nancy Lurker.
I want to thank everyone for your time today, and we look forward to keeping you updated on our commercial launch progress as well as our exciting pipeline initiatives in the coming quarters. Thank you very much for your continued support.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and have a wonderful day. You may all disconnect.