Therapeutics and Eef Schimmelpennink, CEO. Just by way of background, my name is Jason Gerber. I'm one of the Smidcap Biotech Inspect Pharma analysts at BofA. I've known you guys for a couple of years now. Here we are, we're getting closer to the big day, your FDA action date for LNZ100, your treatment for Presbyopia. Maybe if you want to just kind of level set, you know, in terms of where you guys are at as a company, I think you did a recent investor event. My takeaway was it's kind of heads down, blocking and tackling, making sure that, you know, all your I's are dotted and T's are crossed ahead of the regulatory event, but also getting ready for launch. Maybe anything you want to say, and then we'll get into more specific questions.
Absolutely. Thanks, Jason. Thanks for having us here. Like you said, we're very close to our expected approval. PDUFA date is August 8 this year. I think we're within 90 days of that date now. The interactions with the FDA are moving forward very nicely. I know it's on all of our minds. No impact there. Our review team on the FDA side is fully in place. Interactions are as frequent and fruitful as they have been. We remain very confident on our approval timeline there. With that, it's indeed heads down and actually pens down on the commercial strategy. Everything is locked, everything is loaded. We're hiring the final sales reps and all making sure that we're ready to go upon approval. That is indeed the focus of the company at the moment. Getting the FDA to approve the products, making sure that we're ready to launch. It's off to the races.
All right. And, you know, given the strength of the phase three data, I do not really think most investors probably look at this as a low regulatory risk event. But nonetheless, we kind of have to ask all of our companies, you know, in lieu of like some headcount reductions at FDA and dislocations at FDA. I think you sort of alluded to it in your opening response, but that things are kind of status quo with the review team and who is overseeing the review. And that underpins confidence and sort of timeliness of review outcome.
It does. Yeah. No, like I said, our review team on the FDA side is fully in place. Our late cycle review is actually pulled forward. Frankly, I do not read too much into that other than I think it is a coloring thing, but obviously it is nice to be pulled in rather than better than to be pushed out. Later this month, we will let the late cycle review. As we all know, it is the last couple of months where we hope to get label feedback, final inspections of sites as we move to that August 8 approval date. Again, we have not seen any changes on our end. We are definitely on top of the pile given the attention that we are getting from the FDA at the moment.
August, assuming you get approved, you've talked about 4Q launch. What transpires between August and say October 1, which is the beginning of 4Q in terms of packaging or some of just the things that you maybe can't have ready on the ready, or maybe it could just also be that eye doctors are not as easily available in August, and August isn't a good time to launch as well. Maybe what are some of the factors that lead to that lag in launch time?
Yeah, so it's definitely not the latter. You can think of this product as a very high volume product, which means that we are actually already producing bulk. So commercial product is being produced as we speak, but we need to wait for final labeling to do final packaging. That's truly a logistical moment between approval and having product in the market. It just takes some time, as you can imagine, to print final labels, do the final packaging on a very high volume product. That's what's making up that time between, let's call it August 9, and actual product in the market. It's not that we're sitting still in that period. Our sales force, like I mentioned, is almost completely hired.
They'll be in place on July 1. We'll train them up and they'll be ready to go when we have approval. They'll start making their first calls to doctors, making sure that everything is in place there. They'll start to educate. We'll continue to educate doctors because we already have an MSL team in the field right now. They'll get a couple of call cycles in, and then once we have product, they'll start to hand drop samples. Obviously, we'll have product in the channel for scripts to be filled.
Okay. In terms of manufacturing readiness, these will be single use sort of droppers. Is that right? Does that add any layer of complexity in terms of having drug product in, I guess, dispensers available to supply the market? Where are you in terms of like a manufacturing readiness and like a sales force readiness standpoint?
Yeah. No, so we're ready for commercial manufacturing. Like I said, we are producing at commercial scale. We actually produced our clinical batches at commercial scale already. These little blow-fill seal containers or these droppers, you know, if you walk through your CVS or whatever Target aisle, you'll see hundreds of different brands of OTC products. It's the same type of dropper. This is not a complicated product to produce. They're being produced by the tens, if not hundreds of millions. It does not add a layer of complexity. It's actually, and we've chosen to do that because we wanted to have a preservative-free product.
That's what the whole market is going to. Also something you need to be able to commercialize ex U.S. It's also the preferred packaging unit for a consumer because it allows you to have five in your office, five in your bathroom. You can take them wherever you want. That is why we chose for that product form. Like we said, we have a lot of bulk products on hand already waiting to be final packaged.
Okay. Any, I guess as you go into the process of submitting an NDA, any label variables that to you are important to the commercial story and uptake of the product that you'd be kind of anticipating negotiating with FDA, or do you feel like the package insert's pretty straightforward based on the clinical data?
Yeah. No, the package insert we expect to be pretty straightforward. And most of you know that AbbVie launched a product a couple of years ago. We expect the label to be pretty much identical to their label. It's important to realize that this is not a label sell. So very different than your oncology products where it's exactly on what's on your label defines what patient population you can target. This label is extremely broad. The VUITY label was for the use in Presbyopia in adults. We expect that we're going to get that same label. This is much more an experience sell. So we'll sample very heavily.
It will be a five-pack sample because we know we can pretty much guarantee by looking at the clinical data that if you're a Presbyopia, you put a drop in your eye, you're going to be able to see your phone again and actually read it within a very short period of time. It is that sample that's actually going to convince people that this works, not so much the label. Having said that, our label will have our data in it, we expect, which is multiple times better than anything else out there. That will allow the sales force to actually talk about the data.
Yeah, I was going to say, I think the clinical section should be your main point of differentiation, right? Maybe can you speak to other Myotic drops, launches, or data and how you see your clinical section differentiating LNZ100?
Yeah. From a clinical and a data perspective and an MOA perspective, these products are very straightforward. It's all about creating a small Pinhole pupil and you need to be below 2 mm. If you're not below 2 mm, your near vision does not really improve. That's what we saw with VUITY. If you want to compare products, and frankly, there's not that many products out there anymore, what you do is look at pupil size. You see that we're the only product that consistently has almost everyone below 2 mm in pupil size. We keep everyone there for 10 hours. You compare that with VUITY, the smallest pupil size that they got to was about 2.3 mm. Very quickly, they got above 3 mm again.
That is what you see with the one or two other products that are trying to compete or get to the market as well. That pupil size then imMediately translates to efficacy. If you compare our efficacy again with VUITY, we are about three times more efficacious, at least at three times longer duration, but also six times larger population. VUITY and others really focus on people with good distance vision because they impact negatively distance vision. We do not have that issue. Just to round out, our 10-hour data is actually better than peak efficacy for VUITY. Peak efficacy for VUITY was 25%. Our 10-hour data is 40%. Our half an hour, one hour data is 70% for three lines, 95% for two lines. Really completely different experience for patients.
That is what we have actually shown in our commercial day as well, where we had some patient testimonials in there, the first ones to give everybody a sense of what this product does. That is where you see how people respond to a product like this.
Yeah, it seems like some key differentiating aspects are that it still works really well at 10 hours.
Yep.
It doesn't cause myopic shift. Is that data that you think would get into the label? That's probably more secondary endpoint type of data. I'm just kind of curious how you think about that, or that's just data that you'll be able to communicate in other mechanisms.
Yeah, it's very easy to communicate. Like I said, we already have a 10 people MSL team out there, obviously doing their up to over 2,000 or so individual doctor-to-doctor interactions. This is almost optometry 101 for optometrists and ophthalmologists. This is what they learn probably in their first course. If you overstimulate what's called the Ciliary body, you're driving Myopic shift, which negatively impacts your distance vision. That's what you saw with VUITY. It's what you expect to see with Pilocarpine and other products. You don't see that with our products. Our clinical data shows that, but also the MOA shows that. We don't stimulate the Ciliary body. It's very pupil selective. Therefore, a product that's ideal for Presbyopia. Again, that's something that's very easy to communicate, very easy to understand for doctors.
Okay. Safe to say, would you characterize this as a, well, it's a massive market. There's no debate about that, but that it's a promotion-sensitive market?
Absolutely. There are two ways to win. Again, and I want to keep comparing to VUITY, but the nice thing is that we had a product in the market that we could learn from a lot. When VUITY launched with the sales force only, they got very quickly up to about 3,000 new scripts a week. That is organic. Every optometrist on average sees over 200 presbyopes on a monthly basis. That is 40 million presbyopes that are just presenting themselves to the channel. That is that first part of the commercial strategy. When I turn on DTC, which is what we will do as well, a quarter or so in, that number doubled. It is very promotionally sensitive. There are two ways to win. One, you target patients that are already presenting themselves, 40 million or so. You turn on DTC, and that's a number that you can double. Huge amount of patients indeed out there to target. Yeah.
Okay. One interesting aspect of this market is that it's not reimbursed, right? It's cash pay. That affords you maybe some latitude promotionally to do some things that maybe if it was a reimbursed Medication you couldn't do. Are you able to speak to that dynamic at all in terms of, I thought it was interesting at your commercial day, talking about how you've already engaged with a lot of optometrists on the brand, or I guess the unbranded promotional strategy and how you're getting them engaged and thinking about the product and acting almost as influencers, right, to kind of get the word out about LNZ100.
Yeah. Now, the fact that it's cash pay, we value a lot. We think that's a great attribute. It's going to, it's a market. You see more and more products shifting in that way. GLP-1 is obviously the prime example at the moment, which acts as a very promotionally sensitive market that shows great results and then people are willing to pay. We're not going to be priced like a GLP-1. VUITY priced at $80 a month. It's safe to assume that we'll be closely around that. We've not guided yet. This is therefore a product that you don't have to first get lives insured or people covered. The very first script that we sell, it's going to hit our bottom line. A very healthy, clean revenue stream that's obviously very attractive to us and potentially others as well.
From an influencer point of view, we're starting to see it happen already. We spoke about it at the commercial day that doctors are, people that were in our trial are talking about it because it's something that you can see happening, no pun intended, before your eyes. They put a drop into the patient's eyes and within 10-15 minutes, they could see up close again. That effect is obviously a very powerful one. They like to talk about that. We're actually seeing patients that were in our trials also in the panel from us obviously talking about it. As recent as last week, we were just looking at StockTwits and we saw somebody there raving about, "I was in this trial and I used to be able to play pool and now I couldn't because I was a presbyope.
I took the drop and I could again." We were like, "Is this somebody that's just trying to pump the stock?" We checked it. It was actually somebody that was indeed in our study. That is something that we expect is going to happen over and over again because it is such a clear effect that you see so rapidly.
It seems like perhaps a comp here is contact lenses. Contact lenses to the patient, the out-of-pocket cost is probably going to be similar on a monthly basis. You are ultimately appealing to somebody that wants to be glasses-free, right? Do you look at the contact lens market at all in sort of informing how you think about a launch ramp and patient segmentation?
Yeah. Great question there. Like I said earlier, massive market, 128 million presbyopes. That pretty much everyone, because we had an almost all-common study, can benefit from a product like this. You want to make sure that you definitely initially target segments that over-index on willingness to use. Contact lens wearers are one of them. There are 47 million people that wear contact lenses in the U.S. that use drops very rapidly at like 45, 50 because they actually become presbyopic and now they need to wear reading glasses. They stop using contact lenses. A product like ours is going to be able to keep them in contact lenses. Very valuable patient for optometrists as well.
There are over 10 million in that age group just sitting there. A second group of people have had LASIK. Similarly, they have paid money to be glasses-free. They've not thought about wearing glasses from the moment that they had LASIK, let's call it from age 25 or so, not at 45, 50, and they see their near vision go and they need to wear glasses, which clearly they don't want to. Again, great group, large group over 10 million that can use the drops to stay glasses-free. The third initial group to go after is people that go to a Medi Spa. People that obviously care about their appearance. They don't want to leave the Medi Spa with a great face and then have to put a pair of glasses on them.
Those are groups that we'll target initially just to make sure that we don't go out to 128 million people. Again, it doesn't mean that the market is not a lot larger, but just to make sure that we give a little bit of guidance to sales force and to optometrists.
Yeah, I was going to say, thinking about your 15,000 ECPs, how does that break out between ODs and MDs? How are you able to touch the Medi Spa within that sort of target prescriber base? I would imagine that the Medi Spa is more of an aesthetic dermatologist.
Yeah. So it's not a Medi Spa from a core point of view, but it's a Medi Spa consumer. And the optometrist, ophthalmologist, they can single them out very easily. Like we've asked them, "Do you know who your LASIK patients are, your contact lens wearers, and your Medi Spa?" And they go, "Oh yeah, we can identify each one of them very easily." So it's more the core point that's still optometry. And to your point, 80% of the core point is going to be on optometry, about 20% ophthalmology. That's where we see the split in scripts. 15,000 core points with about 100 reps. That gets you to about a three-week core cycle. Every three weeks, you're going to see their rep. The rep is going to hand deliver the samples. Like I said earlier, key for us to have every sample pack, which is a five-day sample pack, be accompanied by a script. That's how the patient will walk up.
Okay. You mentioned DTC and how important is that if you turn it on in a couple of quarters? Investors tend to think DTC can be pricey, but given a company your size, resources, and the ambition to get to cash flow breakeven based on the resources you have at hand, what that may look like and how important that's going to be to the early adoption.
Yeah. From the beginning, we wanted to build a company that can launch a product in a great way. We're not skimping on it there. We've made sure that we have the resources to put a launch on in the size that you would expect from frankly Big Pharma. We're actually doing a little bit more even than what AbbVie did with VUITY. Think about it as about $100 million between sales force and marketing in year one after launch. That's how we're going to put the launch on. The nice thing is, and we're, I guess, blessed with that, is that we have a very healthy balance sheet. As recently as last week, we guided to be sitting on $190 million of cash at PDUFA date.
At the moment of launch, we'll have $190 million. We continue to guide that we have done that for the last five quarters, that that can get us to being cash flow positive at that cash. So right amount of money, importantly, the right team in place to then pull off what we think is going to be a phenomenal launch of this product.
Okay. In terms of marketing strategy, if you were just to kind of pinpoint how we're going to do it differently than, say, AbbVie had done it with VUITY, it seems like the sampling e-pharmacy, maybe that's one component that's uniquely different. Perhaps how you approach DTC and just sort of pre-launch commercial marketing efforts are different. Maybe if you can kind of walk us through what you think the key pillars are to how you market and launch, or I should say market the launch differently.
Yeah. Let me tie that to our commercial strategy. Commercial strategy has three pillars. One, doctors to recommenders, that's obviously sales force. Two, consumers to request us by name, that's the DTC campaign. The third is seamless journey to use. That's the sampling and then getting your final product. What we're going to do different on the first one on the doctor side is that we're actually targeting 80% optometry, 20% ophthalmology, which is exactly the reverse from what VUITY did or what AbbVie did. Logically, AbbVie's sales force is ophthalmology. That's where the rest of their product sits. Scripts flow through optometry. They were, if you will, on the wrong core point.
We're going to start off by going on the right core point, but also with a product that works. That sounds a little bit cheeky, but that's ultimately what the big difference is, that the product works, you go to the right core point. On a DTC side, we have a campaign lined up that's much more of today's world. Much more digitally focused, meeting patients and consumers where they live, whether it's the Facebooks, the Instagrams, the TikToks of this world. Definitely not linear TV, which is where AbbVie went. They have commercials on the Hallmark channel, which again, that's not where you want to meet your consumer.
Definitely not where we feel our target consumers live. On the seamless journey to use, to your point, five-pack sample, as I've mentioned, think of that as just the five days to get you between first sample use to final script. E-pharmacy is a channel that we have in place. We also have retail pharmacy in place. As a consumer, you can choose when you're in the office, your doctor will ask you, "Whether you want me to send your script," will drive to e-pharmacy, and we all know how it works nowadays. You leave the office, you have a text coming up on your phone, you opt in, you put your credit card details in, drug shows up on your doorstep three to five days later.
That's one channel. If you do want to go a little bit more traditional, you can still have it sent to your CVS or your Walgreens or wherever you want to pick it up, and you just pick up the script there. Both are going to be available to consumers.
Okay. Persistency of use is obviously a kind of a key modeling variable. Maybe walk us through how you think about that. I would imagine that with a lot of patients wanting to be glasses-free, everybody's got a sweatpants and glasses day or two here, right? I imagine a month's supply could last longer than that. How you think about a patient that's on board, how frequently they're going to use it in a given year.
Yeah. So we've obviously done a lot of research on that through surveys. It came out in four to seven days a week. And then we, as you would imagine, asked all our patients that were on product in our clinical three trial. After they've used it for six weeks or six months, like how often would you continue to use it? And again, came back four to seven days a week. So people are all saying they're going to use it pretty much every single day of the week because why wouldn't you? It gives you back your vision. We're looking at it in a lot more conservative way, though. We say that's great. They say that, but let's be modest about it. Let's cut that in half. Four to seven day use would be 10 scripts a year. We're saying let's cut that in half.
Like I said, five scripts a year. So 42% refill rate is what we model with. That's what gets you to a $3 billion market, U.S. alone. Obviously, a lot of upside in that given that patients are saying that they're going to use a lot more often, but let's get to that number first.
Okay. In terms of the pricing, you mentioned where VUITY kind of settles in at. Do you think that this will be sort of an economically sensitive sort of product, right? If there was like a recession, for example, how that might impact and maybe look to contact lens data utilization in different past historical scenarios, or do you think that sort of the consumers are going to be higher on the socioeconomic strata and maybe be a little bit more insulated from those pressures?
Yeah, they are would. We've obviously looked at that. We've done quite a bit of work over the last couple of months to get a sense for that. We do feel that we're going to be pretty insulated. The reason that we feel that is one, indeed, just how we model it. We're saying to get to the $3 billion number, consumers that we're targeting are making at least $100,000 a year. Again, let's assume it's an $80 product. That's not going to be too impactful. More importantly, if you look at either 2008 recession or more recently COVID, you see that products that people feel are important to them, whether it's Botox or contact lenses or other, let's say, lower-cost aesthetic products, are pretty insulated.
Maybe a 5-10% impact on Botox in the 2008, 2009, 2010 timeframe, but even that was minimal. You do not see a lot of impact. If you were to see it, it is again, maybe a 5% or 10%, which is obviously great. People look at this as just like you are not going to stop using your contact lenses. You are not going to stop using a product that gives you near vision.
Yep. Okay. And so that $3 billion market, right, as a TAM, how do you think about the competitors that are out there and scenarios where LNZ100 can be the dominant option versus do you see any competitors that, hey, like Share of Voice might be good and they'll build up the market and maybe we think we can be the dominant product, but that others can coexist in this marketplace?
Yeah, we truly see this as a category of one. That is not us trying to be arrogant, but that is just really looking at the data. Like I said earlier, if you look at pupil size or look at clinical data, it is just a very different product. This is not a product that you can promise your way through. You cannot promise somebody that here is an eye drop that restores your near vision and then it does not. People are not going to use it. That is what we saw with VUITY. That is what we expect. We will see with one or two other products that may come to the market because frankly, they just do not have the product, the profile.
Again, we look at this as a category of one and that is how we are approaching it. That's how we're approaching it with our commercial strategy to really build it up like that. I think it's the product and the experience that is going to set us apart. It's super easy, super accessible to get a sample. Why wouldn't you try it? If the product works and others don't, then it's hard to see how that will change the market.
Okay. From an IP runway perspective with this drug, you've got some patents, I think to 2034, some to 2039, I think some patent term extension. How long of a lived asset do you see this from an exclusivity standpoint in the key U.S. market?
Yeah, it's got a very long, long life cycle. A couple of regions in the middle, indeed, sits the IP. We have seven grants of patents in the U.S. that go to 2034, method of use. So a cycling for the use and Presbyopia formulation patents. There's now a 13 or 14 that's currently under review that will take it to 2044. So very strong patent portfolio. In front of that sits, if you will, a new chemical entity protection, so data exclusivity of five years in the U.S. On the back end, this is never going to be a product that genericizes in the traditional way because there is no insurance involvement. There's not going to be a mechanism where at pharmacy level or at e-pharmacy level, you're going to get switched to a different product.
What you see with these branded products is that they live on, I won't say forever, but for a very, very long time. I think we and many people that look at the product look at it as a very healthy, safe, insulated revenue stream, no PBM negotiations, no pricing discussions that are happening even over the last couple of days. We're all insulated from that with a very, very long tail.
Okay. We are running out of time here, but how should investors think about your R&D investment and strategy? I imagine in the near term the focus is on your launch, but longer term, is it life cycle management investments that you'd be thinking about making or complementary assets down the road once you get to a comfortable place of cash flow breakeven and maybe leveraging your commercial infrastructure? What does the longer term look like for you when you think about R&D investment and maybe the timing for like, all right, now we've gotten LNZ100 to a good place, we start to think about additional investments?
Not a very fair question. By design and from the beginning, we focused our company on this one asset. There are not that many $3 billion-plus opportunities out there. We wanted to make sure that we had every dollar, every brain cell focused on this product. We do see that once we have shown the opportunity and how this can evolve, this can be a great cornerstone product in a larger portfolio. Given the company and how we expect to grow the portfolio, I would expect that to be M&A and BD driven. We would be looking for late-stage or maybe even on-market products that we can add to the back, either in ophthalmology or maybe even as a life cycle company.
Lastly, is there a profile of the sales rep that you want to hire? Is this somebody that has pre-existing relationships with ODs who are going to be the primary prescriber and has a foot in the door? Given there aren't many RX therapeutics available for ODs to prescribe other than like Xdemvy that I can think of, I don't know, is there a profile?
There always is a profile. There's always a profile. We have 88 territories, 88 reps that we're hiring. We're close to 8,000 applicants now. Somebody, one of the investors, said it's actually harder to get into LENZ than into Harvard, which I thought was a pretty apt comparison. A lot of interest. What we're looking for is somebody that has indeed sales experience, ideally in eye care. The profile of the 50 or so that we've currently hired out of the 88 is just that. An average of more than 10 years of sales experience, 90-95% of them have eye care experience. We're lucky that people are leaving great jobs to get to even better ones. We're able to hire extremely talented people.
All right. Great. This is really helpful and appreciate that you're coming by.
Thank you.
All right.