Welcome everyone. I'm Jennifer Kim, one of the biotech analysts at Cantor, and I'm looking forward to hosting this fireside chat with LENZ Therapeutics. I'm joined by Eef Schimmelpennink, CEO. Eef, thanks for being here.
Thanks you.
Maybe to-
Thanks for having us.
Of course. Maybe to start things off, can you give a quick snapshot of LENZ?
Absolutely. So at LENZ, we've developed a pharmaceutical once-a-day eye drop that restores your near vision, which is relevant because as we age, all of us are gonna ultimately be walking around with these reading glasses. It's called presbyopia, so your lens hardens, you can no longer see up close. So what we've developed is effectively reading glasses in an eye drop. So think of this as you wake up in the morning, brush your teeth, put your eye drops in, and your near vision is restored for the full workday. A very late stage. We actually completed our phase III studies early in the year, filed our NDA in the middle of the year. So what's next for us is we are actually quite confident in getting the approval middle of next year, and really focused now on launching the product second half of 2025.
Maybe we can start with a high level overview of the presbyopia market. So Vuity was the first eye drop that got approved in 2021. Another therapy was approved last year. There have been some challenges in this market, and for those who are less familiar, how would you characterize the challenges of this market?
Yeah. No, great question. So obviously, it all starts with what are people looking for? So the product that people want is, like I said, a once-a-day eye drop with very rapid action. Needs to work, you know, within 10, 15 minutes, you need to know the effect of it, and that needs to last for the full workday. So that's the profile, and then you want a drop that works for pretty much everyone, or as we say, you know, our mantra there is a drop that's for all eyes, all day. So against that backdrop, what Vuity launched with was a product that promised that, but didn't deliver. And the good thing, what they showed, is that the market is there.
They launched initially, focused on doctors in their first, let's call it three months or so, with that promise, and very rapidly went up to about 3,000 new scripts a week. Then they turned on the DTC. It's a very easily motivated audience, and those 3,000 scripts doubled to about 6,000 new scripts per week. Unfortunately, everyone that used the product, or most everyone that used the product, realized that it doesn't work. The Vuity profile is only one in four people actually notices the effect. You know, their one-hour data is about 25% placebo controls. Our 10-hour data is far superior to their best data, so people use it. If it worked, it didn't work long enough, and they lose efficacy in about three hours.
So for most people, it works, maybe if it works two, two and a half hours. So that's just not the profile that people are looking for. 150,000 people went out, bought a script, very few of them refilled because it didn't work.
And then what data have you shown, and why do you think that's different?
Yeah. No, so like I said, we had our phase III data readout earlier in the year, and we're very pleased with those results. It's effectively everything that we could have hoped for and maybe a little bit more, so if you think about the FDA endpoint for a product like this, is that you need to show at least three lines of near vision improvement, so the same lines that you read at your optometrist or ophthalmologist, without losing more than one line of distance vision. We're actually improving distance vision, and I'll get to that, so our data there is showing that on that endpoint, at half an hour, we had 71% of participants hitting at least three lines of near vision improvement. We had people hitting five, six, seven lines of near vision improvement.
That lasted nice and long at three hours, which is the primary endpoint, still 71%, and then at 10 hours, all the way at the end of the day, still 40% of participants hit three lines or more. All triple zero one p values, so very highly statistically significant. The two-line gains is actually what's clinically meaningful. If you give me two lines, I no longer have to walk around with my reading glasses. At half an hour, 95% of participants had at least two lines of near vision improvement, 69% at the end of the 10 hours. So it's truly a product that, like we said earlier, works very rapidly, works long, and it works for almost everyone.
We have a very broad inclusion criteria, forty-five to seventy-five-year-olds, minus four to plus one on your distance correction, and obviously presbyopic, but also people that had LASIK, contact lenses, and again, it works for that broad population.
I really like your characterization of a broken promise with some of these initial therapies and the importance of patient experience and patient satisfaction. Maybe if we could dig into the data. There were some cases of mild dimness of vision and headaches, but I think you pointed out fairly enough that it didn't seem to affect patient satisfaction all that much. Can you walk us through what those AEs look like in a patient and whether that impacts your expected target patient?
Yeah, absolutely. Now, so we've shown we feel it's a very comfortable and safe product. So let me just unpack that, those two. So if you look at AEs first, the ocular AEs over 5%, all of them, like literally every single one, was scored as mild. So 100% mild, scored by patients, and then very few, you mentioned the mild dimming. This product works by actually giving you a small pinhole pupil that improves your depth of field. That's the mechanism of action. It's as straightforward as that. It's been known for decades, if not centuries, that if you look through a pinhole or if you actually squeeze, you improve your near vision. So that's shrinking of the pupil.
For some people, they feel that it brings the light down in a room where they are a little bit. So it might feel a little bit like a room like this. You very quickly neural adapt. This is why 100% of the patients, of the ones that did notice that, say it's 100% mild. And then some people, it was about 7% of us, or in our study, placebo-corrected, have a very mild transient headache. So that very quick pull on the muscle for some people give like a little bit of a pulling sensation. Again, very transient, doesn't last long, and actually we've shown that it's actually tachyphylactic. So if you use the product for a couple of days or a week, that no longer occurs.
It's a very comfortable product, very safe. We're the only company that has done a long-term safety study with over 30,000 patient treatment days on the product now, zero serious adverse events, so very safe there, as well, and that translates to your point into a patient-reported outcome, where people really want to continue to use the product, so we frankly have had issues getting product back from patients 'cause suddenly it was lost after the study. We have it all now, but people want to continue to use it, so we asked them: "Do you want to continue to use this after the study?" 75% of the participants said yes.
They also said that they would want to use it four to seven days a week, but I'm sure we're gonna get to that.
Yeah, we are. Maybe starting with the NDA, you submitted in August. Can you just walk us through the timelines that investors should keep an eye on and what you're doing ahead of the potential launch?
Absolutely. So as you said, we filed our NDA in August. I'm sure you're very familiar with the PDUFA cadence, but what happens is that if you don't hear from the FDA at day 60, they formally accept your filing. And then at day 74 is when you get the letter with the PDUFA date. So PDUFA date is the date by which, at the latest, they'll approve your product. It's 10 months after day 60, so the whole thing takes the usual 12 months, which is why we're guiding to an approval middle of next year.
We've had a lot of dialogue, as you can imagine, with the FDA over the years, so we're very confident that submission has everything that it needs, that the clinical trials are designed in the way that they want to see it, and frankly, this is not the world's most complicated submission. There is a regulatory pathway. Obviously, Vuity got approved, so I think there's a general very high confidence in the approvability of our product.
Okay, and then your preparations ahead of potential launch?
Yeah. So we're obviously fully focused now on getting ready for that launch. So we think about commercial strategy, and it was time to implement. It's basically three key pillars in our commercial overall strategy. It's one, have doctors recommend us. Two, have the patients request us by name, and three, make sure that their journey to the product is seamless. Obviously, because it's not yet approved, we cannot market, so that second one, targeting the patients is something that we'll start with later. But we are doing a lot of work with doctors now in an unbranded campaign. It's called an I Am Selective campaign, eye am selective.com. And that's where we're really teaching docs on this is what you need to look for.
This is what a good presbyopia product does, get your pupil below two millimeters. These are the patient groups that are your early adopters. That's how we're actually prepping the market to make sure that once we are approved, we can build on that and really get our sales force out there.
As you look at the market, you've pointed to $3 billion plus in the market opportunity in presbyopia.
Yeah.
Can you break down the numbers that get you there, like the number of patients, what you're assuming for the label, the pricing, etcetera?
Absolutely. So this is such a huge market 'cause everyone ultimately gets presbyopia, that it's very easy to get to very large numbers. So what we really do is wanna build a good level of conservatism in our numbers. So top-down, if you go, there's 128 million presbyopes here in the US alone. So 128 million, what we do first is this is a cash pay product, so we cut that by people that are making individually $100,000 annually. That gets the 128 million down to 23 million. And we've done a lot of surveys on are people likely to want to try the products? It's a five-rating scale. If we only tick the highest box, so the people that would seriously consider sampling, that's 60%.
If we add the consider box, we're up in the 90s, but we're taking only that 60% as, okay, these are the people that are seriously considering trying. That takes it 23 down to 12 or 13 million people. We then look at that 75% number that I referred to earlier with people that said, "Okay, I've used the product, and I want to continue to use it." So 75% came out of our phase III study. That takes it 12, 13 to about 9 million. We give it an extra 10% haircut. That gets it to about 8 to 10 million. So that's the population that we'll be targeting early on. So then on a pricing, we've not guided on pricing. We've done a lot of work on it.
Vuity, the Vuity consumer price was about $79. So if you use that currently as a benchmark, $79. And then we're also going very conservative in how often would people use it or how often would they refill? So again, like I mentioned earlier, in the phase III study, we've seen a patient set that they would want to use it four to seven days a week. We're actually taking a much more conservative approach and say, well, what if that would be half, like three days a week? So three days a week, that's about five scripts a year or a 42% refill rate. So if you take those numbers together, eight million people at an $80 price at a 42% refill rate, that gets you to a $3 billion market.
Okay, you're making the modeling easy. Maybe as you're thinking about those three pillars, you want to pull patients in, you also want to get physicians to put this in front of patients.
Yeah.
What is the incentive for optometrists and other target physicians to put this type of product in front of their patients?
Yeah. We are, as you know, your average fifty-year-old presbyope, a very difficult group for optometry and ophthalmology, 'cause they basically don't have a different or a good solution for us. We've not been wearing glasses for our lives or we're happy with our contact lenses, and now basically the message is, "Sorry, you're getting old. There's nothing you can do other than get a pair of reading glasses." What's good for them is that this will give them another option to actually share with their patients. One that's more convenient, that works for a lot of people. It also obviously drives more patients into their clinic, and more patients mean more selling fees, more eye exams, and just a larger group, so a higher dollar quality of patients coming in.
So what we've seen is that doctors are actually very enthusiastic about a product like this, and it really complements their practice.
Okay. And you've touched on your cash pay model. Why is that an important part of the story? And what have you said in terms of, I guess, the expected COGS and gross net spread?
Yeah. So it, this is a new cash pay product, which we like a lot. It means that from the very first, first script that we will sell, those dollars are, will flow to our bottom line. We don't have to deal with PBMs, there's no formulary, there's no Medicare, Medicaid, there's no IRA issues with our product. So it's a very straightforward cash pay model, which again, we like. So from a gross to net, it's actually not quite gross to net, but think of it as your retail price or the price that the consumer would see. Again, we've not guided on price, but, you know, in case of Vuity, let's say that was about $80, the actual spread then to your net price is only about 25%.
It's totally your wholesaler fees and things like that that sit in there, but again, none of the PBM parts, none of the actual discounts that you need to make, and it also means that we've got access to that whole patient population from day one, so it's a feature that we like a lot, that we also actually, frankly, see that in the overall industry is seen as a great benefit. It's much more sticky and easy to get through.
Okay. And can you talk about the sizing in terms of target touchpoints and the sales force that would support that?
Absolutely. So the good thing with having Vuity out there is it obviously gave us a great roadmap. So if you look at Vuity, it's about 15,000, mostly optometrists, about 80% optometrists, that wrote Vuity scripts. So those are, you know, our core targets, of course. You'll need about, you know, just shy of 100 reps to target those. So that's the sales force that we are building, which is a very common number. If you look at actually Allergan Vuity, that was about 100 reps. Tarsus launched with 88. They're building that out now. So you'll definitely see us do the same. With that group, we can touch all of those doctors in a very adequate way.
Okay, and then can you talk about your other launch strategies in terms of like DTC, digital versus TV, and what are the... How should we think about costs to drive a successful launch?
Yeah. So like I mentioned earlier, a very strong and good component of this is that you have a patient population or a consumer population that's very easy to motivate, and we'll definitely do that. We'll do it in a much more targeted way. What Vuity did is they spent about $36 million on commercial on the Hallmark Channel. We'll spend similar amount of dollars, but in a much more targeted way. We've identified those early adopter groups, you know, those are the people that are in contact lenses and wanna stay in contact lenses. People who have had LASIK, they know what good vision looks like. They've obviously paid, you know, five-10 thousand dollars to not having to wear glasses.
Presbyope people actually put them in glasses, so it's a great opportunity for them to continue their lifestyle or people who have been at a med spa, people that, you know, care about their appearances and obviously don't wanna, you know, leave their Botox visit and then put a pair of reading glasses on. Each of those groups is actually over 10 million, so very large groups, each in themselves, is larger than the Botox group or Invisalign, or people that have had LASIK, so very large target populations that you can target very, very nice, very targeted with your DTC, so we'll do that. We're very focused on that. We're very well on our way to develop those campaigns.
Obviously, those will only start to run after we've launched, but also after we first had a chance, let's call it, you know, a couple of months, maybe three months, to re-educate the doctors. So that once that influx of patients come, that they actually, you know, are ready to receive them. And from a cost perspective, you know, again, we're not, we're not guiding there. But if you benchmark, if you look at, you know, others in the ophthalmology field or with similar sales forces, the sales force like that is usually about a $20 million cost. And then on the DTC end, you see on the marketing end, you see people spend, you know, $70-$80 million or so a year.
Are there any useful analogs that people should look to in terms of the launch curve? And you've talked about your confidence in getting to a positive operating cash flow. What sort of underlies that confidence?
Yeah. So there's obviously a couple of benchmarks that you can look at. You know, one would be Vuity. Like I said earlier, Vuity actually had a great initial launch. When they launched the product, focused on doctors only with their sales force. They hit that 3,000 new scripts a week very rapidly, and then about three months or so in, they turned on DTC, like we said, in a different way than what we would do. But even in that way, they were able to double that to about 6,000 new scripts. So that's actually blockbuster-type launch curve that you would have there. Now, for them, those interactions didn't get translated into repeat users, 'cause the product didn't work. So that's where the difference needs to come.
You know, roughly, if you look at our product, how we sometimes talk about how it is, we're about three times more efficacious. We work at least three times longer, but also for a six times larger population. So we have everything we feel we need to be successful. At the same time, you know, we're again being conservative in our assumptions there. Now, that launch curve initially is gonna be a little bit slower, like you would see, but I think Vuity is a great comp. Another comp that people are currently looking at is Tarsus. They launched now, I'm gonna say nine or twelve months ago with their product. Similar goal points, optometry, similar sales force, and they've actually had a really great launch as well.
That's another, you know, comp that you could look at.
Okay, great. And I think you've also said that script data could be a bit bumpy in the first few quarters of your launch. Are there any launch metrics that you're planning to provide as those numbers smooth out?
Yeah. What you'll see is that. You know, I earlier touched on our three commercial pillars. The ones that I didn't really talk about was the seamless journey for a patient to get the product. So what that means is we wanna make sure it's very easy, once they have the sample to actually get their actual script filled. So that can either go to a more traditional brick-and-mortar, your CVSs of this world. That will be picked up by IQVIA. We also have a channel in place already with e-pharmacies. That's a channel that's not usually picked up very well, definitely not initially by IQVIA. What you see is that maybe IQVIA numbers will underreport a little bit what the actual script data is.
What you'll see us do is definitely on our earnings calls, you know, provide insight in what the overall usage is, and that will, you know, then over time, you'll start to be able to to connect that back to IQVIA data.
Okay. And then, over the long term, is there a way to think about how the distribution between those channels could shake out?
Yeah, we definitely. So we'll see how that goes. Vuity, actually, but it's not the best comp. Only, I think it was less than 10% that they were driving e-pharmacy. Tarsus is using only e-pharmacy, so logically, that's a full 100% there. We'll see how it will ultimately shake out, for us. It's a channel that we like, and I think we need to just test that and see what we can do to push it in that direction.
Okay, great, and where are you at in terms of manufacturing readiness?
Yeah, no, great question, so we actually produced a clinical trial material already at commercial scale, so we have a fully operational commercial supply chain in place. It's all Europe and US-based, both the API and finished product, so we're very confident with our supply chain, and that it will be able to support the full launch and beyond.
And then ex-U.S. plans?
Yeah. Ex-U.S., so again, we're obviously focused on launching and commercializing ourselves here. Ex-U.S., we have a licensing deal in place with Ji Xing in China. We did that early because they have to do a phase III trial there as well. They actually recently indicated they are fully enrolled on their phase III trial, so think of it as, you know, twelve to eighteen months behind us. Other territories, we will license out, whether it's Europe, Canada, Middle East, Africa. We know that there's very significant markets out there. If you think of Botox, it's about two-thirds U.S., one-third ex-U.S. We do wanna make sure that we drive the most value there.
Given our current cash position, we're not, you know, necessarily looking for early dollars, so we'll time it in a way that we feel we can drive the most value in those territories.
Okay, and then can you talk about your IP?
Yeah. Very strong set of IP in place, even though this is obviously a product that was previously used in a glaucoma setting in the U.S., just focusing on the U.S. for now. We have six granted patents in place that go out to twenty thirty-nine. There's another 15 that are currently under review that will take that to twenty forty-four. It's also a new chemical entity for the U.S. The product was never launched in the U.S., so that will add an additional five years of initial data protection. So that's the IP landscape. That was tested obviously a lot by all the Cooley's and the Mintz's of this world, either when we went through the public or previous financing rounds. So very strong IP.
The other piece to know that to realize there is that this will never be your, you know, straight generic switch. It's a cash pay product, so it's not that you come in with your, you know, branded script and at pharmacy they will switch you over to a generic. This is gonna be a branded product that we feel is a very long tail, and that's what you see with, you know, many of these big branded products that just last on forever.
Okay, great. We're getting to the end of our time. Are there any closing remarks? And what should people keep an eye on?
Absolutely. No,
Pun intended.
Yeah, no, great. So maybe the one thing that we haven't touched on is our cash position. You mentioned it earlier on, that we've been guiding ever since we went public, that the then cash would be able to get us to be cash flow positive upon launch. Since then, we've done an opportunistic financing with Ridgeback. We have an additional $30 million, so that message is only stronger. We actually ended the second quarter with $226 million in cash. So a very healthy cash balance to get us to that point. So what to look forward or to look for is, you know, continue to look to see us build out our commercial strength, definitely on the unbranded side first.
Obviously, working to get the product approved, so we would imagine that somewhere end of October or November, we'll get the approval date, and then we'll share that with everyone.
Yeah, I'm looking forward to this commercial story. I'd like to thank Lens again and Eef for a wonderful discussion. This ends our time. Thanks, everyone, and enjoy the rest of your conference.
Thanks, Jennifer. Thanks, everyone.