Ocular Therapeutix Inc (OCUL) 2015 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Ocular Therapeutix second-quarter 2015 earnings conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session, and instructions will follow at that time.

It's now my pleasure to turn the call over to Brad Smith, Chief Financial Officer at Ocular Therapeutix. Please go ahead, sir.

Thank you and good afternoon, everyone. Welcome to Ocular Therapeutix second-quarter 2015 earnings and business update conference call. Earlier this afternoon we issued a press release providing details of the Company's financial results for the second quarter ended June 30, 2015, and recent Company developments and near-term milestones. This press release is available on the Investor portion of our website at investors.ocu.com.

Leading the call today will be Dr. Amar Sawhney, President, Chairman and Chief Executive Officer, who will provide an update on the status of each of our clinical and preclinical development programs, as well as anticipated milestones. Following Amar's remarks, I will provide an overview of the financial highlights for the second quarter of 2015 and our recently completed follow-on financing before opening the call for questions.

We're joined on the call today by Eric Ankerud, our Executive Vice President of Clinical, Regulatory and Quality, as well as Scott Corning, our Vice President of Sales and Marketing.

As a reminder, during today's call we will be making certain forward-looking statements. Various remarks that we make during this call about the Company's future expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent quarterly report on Form 10-Q filed with the SEC, which was filed earlier today.

In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. 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. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to today.

I will now turn the call over to our Chairman, President and CEO, Amar Sawhney.

Thank you, Brad. Good afternoon, everyone, and thank you for joining us today on our second-quarter 2015 earnings call.

Before I provide an update on recent Company developments and expected milestones, I want to take a moment to reinforce our vision at Ocular Therapeutix. I strongly believe that we have the ability to transform the way in which patients receive care for their ocular diseases by providing a one-time treatment for acute conditions and a less frequently administered therapy in the case of chronic diseases. Patients with front-of-the-eye conditions are faced with the difficult task of administering eyedrops daily, and compliance and safety concerns are major issues that could potentially be overcome with our product candidates. Patients with back-of-the-eye conditions, such as those suffering from age-related macular degeneration or AMD, require intravitreal injections, typically every one to two months.

We called out the prospects of sustained delivery of drugs for up to six months, potentially reducing the number of injections to twice a year. These could be major paradigm shifts in the treatment regimen of patients in (inaudible) ophthalmic diseases.

I will now provide an update on recent developments and expected milestones. During the second quarter, we have made progress on our clinical programs and on the corporate development front. We finalized enrollment in three clinical trials, including a Phase 3 trial for DEXTENZA in allergic conjunctivitis, a Phase 2b trial for OTX-TP, our sustained release trial product candidate for glaucoma, and an exploratory Phase 2 trial for inflammatory dry eye, also with DEXTENZA.

In addition, this quarter was highlighted by our closing of a follow-on public offering, which resulted in approximately $66 million in net proceeds to Ocular. I will let Brad provide more details on the financing later on in the call. But I do want to say that this was an important step for us as a public company and puts us in a strong position to continue with the development of our programs and to more broadly execute on our vision.

Thus far, 2015 has been a busy and exciting time for Ocular Therapeutix as we continue to advance our clinical development stage programs for our lead product candidates, which include DEXTENZA, which is a sustained release dexamethasone product for the treatment of postsurgical ocular inflammation and pain. DEXTENZA also for the treatment of allergic conjunctivitis and inflammatory dry eye disease and OTX-TP, a sustained release travoprost product for the treatment of glaucoma and ocular hypertension.

We recently completed patient enrollment in our Phase 3 clinical file for DEXTENZA for the treatment of allergic conjunctivitis. We began enrollment in June 2015 for this prospective US-based multicenter one-to-one randomized parallel arm, double-masked, vehicle-controlled study with subjects who exhibited chronic signs and symptoms of allergic conjunctivitis. A total of 73 patients were enrolled in this trial to evaluate DEXTENZA versus a placebo vehicle punctum plug using a proprietary modified conjunctival allergan challenge model which accommodates for the longer therapeutic effect of a one-time administered sustained release drug product.

This study is designed to assess the effect of DEXTENZA compared with placebo on allergic reactions using three series of successive Allergan challenges over a 30-day duration. DEXTENZA or placebo will be administered 48 to 72 hours after the final confirmatory exploratory Allergan, and the primary endpoints to be evaluated are ocular itching and conjunctival redness at day seven following insertion. The secondary efficacy measures for both itching and redness are measured at day 14 following insertion and on day 28 post insertion.

We expect to report topline efficacy data for this trial in the fourth quarter of this year. We are excited about the potential for DEXTENZA to serve as an attractive alternative over topical steroids as a treatment option for allergic conjunctivitis due to its constant yet low-dose elution of therapy over an extended period.

As part of our strategy to expand potential indications for DEXTENZA and as a means to gain experience in this complex area of dry eye disease in general, we are also evaluating this product candidate for the treatment of inflammatory dry eye disease.

In January we began enrollment in a Phase 2 prospective multicenter randomized parallel arm, double-masked, vehicle-controlled study to evaluate the safety and efficacy of DEXTENZA for the treatment of inflammatory dry eye disease. During the second quarter, we completed enrollment with 43 patients at two US sites. The study was designed as a serial phase study whereby patients were initially administered a placebo vehicle punctum plug for 30 days to establish a baseline for the investigative drug treatment. Patients who responded to the placebo plug only in treatment of their dry eye disease were excluded from the study. Patients who continued to exhibit symptoms of dry eye during the initial 30 days qualified for enrollment in the treatment phase of the study. Qualified patients were then randomized to receive either DEXTENZA or a placebo vehicle punctum plug.

We are exploring the following signs and symptoms in this trial to inform us on the design of potential future studies: corneal and conjunctival staining; (inaudible) test; tear film makeup time, MMP-9 level; and certain additional assessments under the slit lamp evaluation. We will also be assessing the presence of the depot or placebo plug, ease of product use and visualization and resorption following the therapy. We expect to have topline efficacy data in the fourth quarter of this year.

As a reminder, the study has not been powered to demonstrate statistical significance of the efficacy measures, but rather as a way for us to begin to assess the viability of a product candidate for this potential indication.

We also recently closed patient enrollments for our Phase 2b clinical trials for OTX-TP, our preservative free sustained-release travopost product candidate for the treatment of glaucoma and ocular hypertension. We began enrollment last November and enrolled 73 patients at 10 clinical sites in the United States. This is a prospective multicenter, randomized, double-mask parallel arm, active controlled study to evaluate patients for the safety and efficacy of OTX-TP as compared to timolol. Study efficacy measures include the differences in the mean intraocular pressure change between the treatment groups from baseline at multiple time points throughout the study.

Our objectives for this study are as follows. We wish to demonstrate that OTX-TP appears to be comparable to timolol and its ability to lower intraocular pressure from baseline; assess the duration of effect at 60 and 90 days; to determine if patients are able to self-assess the presence of the drug product and receive a replacement if needed and to assess the safety profile. OTX-TP is administered by a physician as a depot through the punctum, a natural opening in the eyelid near the tear ducts designed to deliver travoprost to the ocular surface for up to 90 days. We expect to have topline efficacy data on this trial in the fourth quarter of 2015.

Previous pilot and Phase 2a clinical trials evaluating OTX-TP reductions in intraocular pressure for up to 75 days, similar to results found with twice-a-day timolol dosing. No serious adverse events occurred, and patients were comfortable with the use of the drug product overall. We did not observe any hyperemia or redeye in the OTX-TP group, which can be a common side effect of glaucoma drugs.

We're excited about the potential opportunity for OTX-TP. Glaucoma and ocular hypertension are chronic sight-threatening diseases caused by elevated intraocular pressure, which affects approximately 2.7 million people in the United States alone, which resulted in 33 million prescriptions and the sale of $2.4 billion in 2015, according to IMS.

The current standard-of-care eyedrop therapy has significant limitations that we believe our technology could effectively address and better serve these patients. We have outlined the challenges of current standard of care, which include difficulty with administration, peaks and valleys of dosage, poor compliance, high rates of hyperemia and the need for higher concentration of drug due to the interference of natural tears, which wash out about 95% of the active drug and prevent penetration into the intraocular tissues.

We also continued to advance the preclinical program of our sustained delivery hydrogel depot for the delivery of anti-VEGF drugs for the treatment of wet age-related macular degeneration or wet AMD. The market for anti-VEGF drugs for the treatment of wet AMD and other back-of-the-eye diseases is large, which with about $3.5 billion in sales of [IDL] centers in the US in 2014.

We are collaborating on this program with several different pharmaceutical companies using protein-based anti-VEGF agents and are also conducting our own internal preclinical development using the anti-VEGF agent bevacizumab. We are also exploring the delivery of small-molecule drugs such as tyrosine kinases inhibitors or TKIs in our hydrogel depot and have been researching the optimal candidates for this program. We believe that this class of drugs is well-suited for our platform, given its high potency, market target capability and lower side ability.

In the absence of a sophisticated drug delivery system, these drugs have been difficult to deliver to the eye at therapeutic levels without causing local and systemic toxicity. We feel our drug delivery technology gives us unique advantages in this regard. We may seek to move forward on delivery of a small molecule on our own in parallel with a protein-based anti-VEGF delivery program, which would require the involvement of a collaboration partner. We plan to continue working with our pharmaceutical company partners on development efforts and also continue exploring potential business development deal structures, as well as advancing our internal development efforts on our sustained release hydrogel depot for the treatment of back-of-the-eye diseases.

Our research efforts to date have focused on three key milestones. Firstly, demonstrating that our sustained-release hydrogel depots can release anti-VEGF drugs in clinically meaningful concentration over an extended duration. We have demonstrated release of anti-VEGF drugs over a six-month period in vitro and up to four months in vivo, and we have shown clinically meaningful of drug presence in ocular tissues.

Secondly, confirming that anti-VEGF drugs can be incorporated into our hydrogel depots without denaturing the drug, we have demonstrated that protein-based drugs can be incorporated within our hydrogel depot without denaturation.

Thirdly, demonstrating that our hydrogel depot incorporating anti-VEGF drugs has an acceptable level of tolerability with respect to foreign body response. We have seen a favorable ocular compatibility profile of our hydrogel depot as we have advanced the design of our product.

We have had a very busy second quarter, and we look forward to a number of data readouts for our three ongoing clinical trials. Additionally, we are on track to submit an NDA for the treatment of postsurgical ocular pain later this year.

In order to expand DEXTENZA's indications for use in treatment of postsurgical ocular inflammation, we remain on track to initiate a third Phase 3 clinical trial for DEXTENZA later this year, enrolling approximately 440 patients. Some modifications to the design of this third Phase 3 clinical trial compared to our two completed Phase 3 clinical trials of DEXTENZA are planned as follows. One-to-one randomization of treatment in placebo groups instead of a two-to-one randomization, exclusion of patients who are being treated with high dose levels of oral NSAIDs, and improvement of vertical training and adherence for the on-site clinical investigators, including the appropriate use of rescue medications.

Assuming favorable results of our third Phase 3 clinical trial of DEXTENZA for ocular inflammation and pain subject to receiving approval for the pain indication for the initial NDA, we plan to submit an NDA supplement for DEXTENZA for the treatment of ocular inflammation following ophthalmic surgery in the second half of 2016.

I am pleased with the progress we have been making and feel confident about our path forward for all our programs. I will now turn the call back over to Brad, who will review the second-quarter 2015 financials, as well as provide more granularity around our recent follow-on public offering.

Thanks, Amar. With regard to our cash and investment position, as of June 30, 2015, we had $123.7 million in cash, cash equivalents and marketable securities. As Amar alluded to, we closed a follow-on financing in early June through an offering of 4.6 million shares, including the underwriters option. The Company sold 3.2 million primary shares at a price of $22 per share and received net proceeds of $66 million, and two selling shareholders who are venture capital investors who invested at an an early stage of the Company's development sold a portion of their holdings, 1.4 million shares.

We are pleased to have had Morgan Stanley, Cowen and RBC Capital involved in our financing once again, and we added Nomura and BTIG as comanagers for the offering.

Our balance sheet was considerably strengthened with our cash position nearly doubling with this recent offering.

We believe that we have sufficient cash and cash equivalents to fund the Company through the third quarter of 2017 and through several important clinical and commercial milestones with our product development programs. These expected milestones include submitting the NBA for DEXTENZA for the treatment of postsurgical ocular pain, initiating and completing patient enrollment in our Third phase 3 clinical file for DEXTENZA for postsurgical ocular inflammation and pain, advancing our DEXTENZA program for the treatment of allergic conjunctivitis, completing a Phase 2 exploratory clinical trial of DEXTENZA for the treatment of inflammatory dry eye disease, reporting topline efficacy data and assessing the longer-term strategy for this program, completing a Phase 2b clinical trial of OTX-TP for the treatment of glaucoma and ocular hypertension, and reporting topline efficacy data and then initiating Phase 3 clinical trials, and advancing our sustained hydrogel depot preclinical program for the intravitreal delivery of anti-VEGF drugs for the treatment of wet AMD and other back-of-the-eye diseases to include additional preclinical milestones, updates on internal development and partnering opportunities, the buildout of aseptic manufacturing capability, which we have started in support of this program, and potentially following through and initiating a Phase 1 clinical trial.

Our cash used in operating activities was $15.4 million year-to-date through June 30. We expect cash used in operations to be $35 million to $37 million for 2015 and expect capital expenditures to be $3.5 million to $4 million for this year.

For the second quarter ended June 30, 2015, we reported a net loss of $10 million or a loss of $0.45 per share. This compares to a net loss of $6.4 million or a loss of $2.10 per share for the second quarter of 2015. The net loss for the second quarter of 2014 included $1.2 million in non-cash charges for stock-based compensation compared to $600,000 in non-cash charges for stock-based compensation for the comparable quarter in 2014.

Revenues for the second quarter of 2015 totaled $500,000, including $334,000 in revenue from sales of ReSure Sealant and with $125,000 in collaboration revenue from our feasibility agreements with pharmaceutical company partners. As previously stated, we don't expect product revenues from sales of ReSure to be material in 2015.

Total operating expenses during the second quarter of 2015 were $10.1 million, which compares to $6 million in the second quarter of 2015. Research and development expenses totaled $6.7 million in the second quarter of this year compared to $4.3 million in the same quarter last year. The increases in R&D expenses related to a greater level of clinical development activities, including the Phase 3 clinical trials of DEXTENZA for the treatment of allergic conjunctivitis and postsurgical ocular inflammation and pain, as well as the Phase 2b clinical trial of OTX-TP for the treatment of glaucoma, internal development efforts on the anti-VEGF program, as well as other programs we are pursuing for our DEXTENZA product for multiple inflammatory conditions.

As of the end of June 2015, we had approximately 24.7 million shares outstanding, and we had $15 million in outstanding debt with principal payments currently expected to start in October for this year.

This concludes my comments on the second-quarter 2015 financial results. We will now turn it back over to the operator for Q&A.

(Operator Instructions) Ken Cacciatore, Cowen and Company.

One of the key differences in the Phase 2b glaucoma study from Phase 2a is the patient is now trying to be able -- to be able to observe whether they still have the plug or not. So I was just wondering -- I know your math is the study -- if there is any kind of anecdotal view you can give on what is being observed in terms of ability for patients to at least know if the device is out or not, not necessarily, clearly, the retention rates, which I know you can't give us. But maybe any feedback on the ease or difficulty in observing that?

And then also maybe talk about some of the complexities with your back-of-the-eye programs. I would assume that some folks may want to take a license, but, of course, maybe you want to retain the program. It would be more attractive to any large suitor if you were able to not license it out. So just kind of balance the ability or the desire to move forward with the partnership versus wanting to maybe retain your own rights to the program.

So let me begin by answering your first question on the patient's ability to visualize and assess the presence of our drug product. While the study is masked and we don't know which of these group's things may fall in, everybody does get a plug and everybody does get a fluorescent plug which can be visualized using the little blue light that we provide to the patients. So, while we cannot comment upon how it is performing in one group or the other, what we do see is that some patients have been able to visualize that they have lost a plug and have asked for a replacement. And in almost all cases what the patient's findings are are confirmed by the physician's findings.

Now, this has, by far, been the minority number of patients. However, what we do see is a good correlation between the physician's findings and the patient's fundings. So it appears to be working in that, when patients feel that they are missing a plug, that is confirmed by the physician also.

With regards to the second question, regarding the back-of-the-eye program, as you know, we're pursuing a two-pronged strategy. One is on the protein side, and the second is on the TKI.

We are able to, in our discussions with the various potential partners, segment this out in that the small molecule work we intend to add, they have actually expressed a willingness for us to be able to pursue that on our own while we're pursuing protein-based programs with the potential partners.

Now, the type of deal structures -- without going into too much in detail, there are obviously a balance to be walked between, on one hand, gaining nondilutive type of financing and that having an interesting contribution to us in terms of funding our other efforts.

On the other hand, we want to be able to regain enough commercial upside so that as we grow to become not only a technology licensor but a real company that is pursuing commercial development of products, that we retain sufficient commercial upside.

So I think what you will see is us trying to strive that balance and to be able to do licensing deals on the protein front while keeping the small-molecule efforts for our own development.

Thank you.

Adnan Butt, RBC Capital Markets.

First, one on OTX-TP. So, Amar, this Phase 2b -- will it give the Company sufficient data to be able to determine if OTX-TP should be taken to Phase 3 or not, and if so, what exactly is the Company looking for?

And then please tell me if using the new plug that has a high retention rate, does that require any kind of a bridging study, or is the company free to use that in the Phase 3 glaucoma study?

So with regards to what we expect to learn from this Phase 2b trial, as we talked a little bit about in the earnings script is there are three things that we're looking for or maybe four. The first is, do we have an adequate level of effect? While this study is not statistically powered to be able to show the 1.5-millimeter noninferiority, if we see an effect of IOP lowering in that general range, I think we will feel that now we can basically use that information and power the appropriate Phase 3 study. So that's one thing we're looking for.

The second thing we're looking for is we have seen in the past work that we have done IOP lowering at one month, two months and up to 75 days. We want to be able to see can we take it out to 90 days. Because 90 days is the natural period in which people come back to see their ophthalmologist if they have glaucoma, which is not to say that a two-month product is not a viable product. A three month would be a little bit more preferable because it naturally fits in with the timings.

And then, ultimately, we talked about this point already, about the ability of the patient to visualize and replace. Because if you are developing a chronic therapy, you want to be able to make sure that the patients are able to get a chronic therapy. And the way we look at this is we look at not only making the best retained plug, but also making a plug that patients can visualize themselves and ask for a replacement if they find it to be missing so as they are sure to continue therapy.

Finally, safety is always something that we keep an eye on, and we are pretty encouraged in that regard. Because up until now, with this type of a drug product, we have not seen any hyperemia, for example, which usually, as you know, in many -- whether it is prostaglandin drugs or raw inhibitors, can be seen 35% to 40% of the time in patients and is one of the factors that leads to noncompliance by the patients. So by being able to eliminate that, which is principally a peak dose-related effect, we are able to create a product that could potentially have not only compliance enhancement but patient preference as a result of that. So we are excited about these different aspects on the glaucoma therapy.

In the prior call, the Company talked about a plug with a higher retention. If that were to be used for the Phase 3, would you need a bridging study, or can that be taken direct into a Phase 3?

No, you would not need a bridging study because those studies -- we're already doing nonsignificant risk studies with blank plugs. They have microparticles in them, but they don't have an active drug agent in them, and we are studying those in separate clinical trials. And the information from those trials will be provided to the FDA, along with the Phase 2b trials, to be able to file and proceed for our Phase 3 trials.

So those are basically the hydrogel delivery system, and we continue to improve the prospects of how those are designed and developed for the maximum retention, ability to replace, visualize and ease of insertion.

Okay. And if I can get a question on the anti-VEGF depot program, would you expect any differences in timelines of development for a biologic versus a small molecular?

Good question. I think -- so let's look at for the biologic, on the one hand, there's a lot of history of usage and a lot of clinical data and awareness that the partners might bring to the table.

On the other hand, formulating those is more technically challenging, requires aseptic processing, etc., customized manufacturing, something that we are starting to invest in, and that's what you see in the capital investment this year. So faster in some regards, slower in other regards.

Small molecules -- if we pick molecules that already have some level of history of usage in oncology drugs, for example, some of these are renal cell carcinoma drugs, that helps. But what really helps is that the manufacturing for these depots is simpler because these would be terminally sterilized. The small-molecule drugs, for example, are stable to radiation sterilization. So manufacturing becomes a lot more phase out, and we can react and move much faster with that.

So I think, net-that, our feeling is that we should be able to move with the TKI agents once we have selected the appropriate agent, and we are selecting the agents based on potency, different target effects, solubility, the IP situation. All of these things go into the selection of the particular TKI agent, and we have narrowed it down to a few candidates, and we should be in a position to pick one and move with it very soon.

Okay. Thanks.

Hartaj Singh, BTIG.

Just one question on the filing for DEXTENZA in pain. With the Phase 3 that you run the two cope primary endpoints, I'm just trying to visualize when you file this -- and I'm trying to see it in my head -- how will the actual filing be done? Will you be able to separate out the cope primary endpoints and just be able to submit pain, which I assume that was a pre-NDA discussion? And then, assuming you have a positive readout for information, then how will that fit in as an sNDA into the previous NDA?

And then lastly, because they were co-primaries, is there any potential that the FDA might want to go to an [add com] with this simply because it's a little bit different from normally what they are used to with NDAs? Or just any thoughts on that.

We did have a pre-NDA meeting with FDA in regard to our plan filing for the ocular pain indication. And so the NDA right now is being structured for pain-only labeling. It includes the data from both of our Phase 3 trials in support of that indication with the expectation, as we've stated, for a third Phase 3 study with the same endpoints of inflammation and pain to support an NDA supplement to gain the inflammatory labeling pending the approval of the initial NDA for ocular pain.

So you would actually -- I assume, if the timing works out right, then you would actually go ahead -- you would probably get a 10-month review, at which point you will have the readout for information, and then that will be able to get submitted while you are getting approval for pain.

Well, the 10-month review is what we are anticipating for the NDA for ocular pain. The third Phase 3 study will be in progress, and the timing of completion for that study is in line with a supplement following that initial NDA approval for ocular pain.

And then just one last -- just a housekeeping question. With the slight increase in burn going to this year, would you expect -- and not looking for any guidance going into 2016 or 2017, but just in a broad perspective, would you see that with the increased clinical activity that you are having, preclinical activity, that there would be some concomitant kind of growth in just expenditures going into 2016?

We do, yes. So we certainly gave the guidance for this year of $35 million to $37 million in operating cash burn plus CapEx. But just with four major clinical-stage development programs next year, anticipating the Phase 3 glaucoma programs, which will be expensive, we do anticipate an increase. And when we give guidance, we believe we are funded to the third quarter of 2017, it takes all that into consideration.

Got it. Thank you.

(Operator Instructions) Ian Somaiya, Nomura.

It's [Matthew] on for Ian. Just a couple of questions, if I may. First, I want to come back to something, Amar, you mentioned. You said that you are continuing to work to improve and maximize the retention of the plugs for the glaucoma study. And I was just wondering if you might be able to expand on that if there's anything that's different or that has changed in your expectations or hurdle rates versus the last time you touched on that?

And then, secondly, as you gear up for the fourth-quarter NDA filing, can you maybe talk a little bit about any sort of pre-commercialization activities that you guys are undertaking now or that you've got planned for the early part of 2016, and if you fed any discussions with payers, what the tone of those have been?

Finally, I was hoping you might be able to maybe give some sort of directional guidance on when we will get any additional visibility into the TKI program.

Sure. So let's first talk about the retention rates. As we had mentioned that with some of our later product candidates which have been going through the placebo vertical plugs that have been going through the non-significant risk studies, we have seen retention rates over a three-month duration as high as 92%.

So what we changed in those to be able to achieve those types of rates are looking at the stiffness of the plugs, the swelling of the plugs, the size of the plugs. Those types of things have changed. So we have some key learnings that have come from that.

Now what we're trying to optimize is to be able to make sure that the plugs are not only well retained, but in the chronic therapy, you will need to have them be removed at the end of three months and then new plugs reinserted. While the plugs are designed, these systems are designed to be absorbable, what we want to make sure is that they are delivering drugs for the duration and the absorption is a longer duration than that. So they would need to be removed and then other ones inserted.

So we're looking at different compositions of hydrogels. This is all well within our learning and our capability. This is standard stuff that we do. But that progress was made along with and in parallel with the drug delivery work that is being done in the Phase 2B trials. When those two pieces of information come together, we are allowed -- we pick a candidate that has the best patient experience is the best way to describe it that would be entering the Phase 3 and also has the drug delivery capability. So that's the progress that we have made to date over there.

On the precommercial activity, I'm going to turn it over to Scott in a second so he can talk about that. But maybe I can talk a little bit about the TKI.

So what is the progress that we have made since the last time? The last call we have mentioned that we are going to be entering into the TKI programs and evaluating molecules. So we have screened about 120 different molecules. And based on their solubility, based on their potency towards VEGF-R2 and PDGF, based on not having off-target effects and other types of factors that can cause complications or toxicity, from what we have known, and based on the IC50 or how tightly these bind and what their KDs are, we are picking the right type of candidates and also looking at the IP expiry of these in the 2020 timeframe so that by the time these products enter into the market, the intellectual property has expired by that point in time, which cover the base molecule.

Based on that, we have narrowed it down to four or five different TKI agents. We have placed some of these in preclinical studies within our hydrogel depots and have seen good compatibility and ability to place. We are looking at the amount of drug that is released and in various ocular tissues. So once we have a good sense for all of that and we have cemented the IP position, we will give guidance as to timelines and formal entry into the development program.

So now I will turn it over to Scott to speak a little bit about some of the precommercial activities and any payer conversations.

This is Scott Corning. Right now, regarding precommercial activities we are busy, namely in the planning stages. Of course, we got the name for the product several months ago, and so now we are working on branding activities and campaign ideas, as well as working on our marketing and sales staffing plans, putting people in place to prepare for commercialization of the product as early as third quarter of next year and then also looking at MSL deployment, which we could do prior to launch if we so chose to do, and also working constantly on our publication plan, our KOL engagement and also ensuring a strong Congress presence. So there's a lot of activity going on right now, and that will only increase as time moves on.

Regarding reimbursement, we are looking at the scenarios that could come to fruition with the product, so we are working closely with reimbursement consultants to gain a better understanding about the specific situation as it relates to the product.

Of course, our goal is to get the product reimbursed, and we're working towards doing that. And part of our strategy in terms of having an expanded label, multiple indications for DEXTENZA, would only increase our chances of doing so. So a lot of activity on that front as well.

Okay. Thank you.

And I am showing no further questions. I will now turn the call over to Amar Sawhney for closing remarks.

Well, I want to thank everyone for taking the time to join us on the call today. We continue to deliver in advance on multiple programs including DEXTENZA, sustained-release dexamethasone for postoperative ocular inflammation and pain, allergic conjunctivitis and inflammatory dry eye disease, for TXTP sustained-release driver for glaucoma and ocular hypertension, and our preclinical anti-VEGF agents for back-of-the-eye diseases.

We look forward to several important value-creating milestones during the second half of 2015. We also look forward to seeing many of you at the Morgan Stanley Healthcare Conference and at the Citi Biotech Conference in September.

As always, I want to thank our employees, advisors and board members who have been devoting their time, energy and passion to advance the Ocular Therapeutix pipeline and vision. On behalf of the entire Ocular team, thank you for all of your support. You may now disconnect.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone have a great day.