Aerie Pharmaceuticals, Inc.
Q2 2017 Earnings Call Transcript

Published: 2 Aug 2017

[Operator:]

Good afternoon, ladies and gentlemen. Thank you for standing by and welcome to the Aerie Pharmaceuticals Second Quarter 2017 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. Today's conference will be recorded. It is now my pleasure to turn the floor over to Aerie's Chief Financial Officer, Rich Rubino. Please begin sir.

[Rich Rubino:]

Thank you, Tyrone. Good afternoon and thank you for joining us today. With me today are Vince Anido, Aerie's Chairman and Chief Executive Officer, and Tom Mitro, Aerie's President and Chief Operating Officer. Today's call is also being webcast live on our website, investors.aeriepharma.com, and it will be available for replay as indicated in our press release. Now for forward-looking statements and non-GAAP financial measures. On this call, we will make certain forward-looking statements including statements, forecasts and guidance regarding our future financial and operating performance and cash burn. We will also discuss the success, timing and cost of our clinical trials, the timing of and our ability to request, obtain and maintain FDA or other regulatory approval of our product candidates. Further we will discuss the clinical effectiveness, commercial launch and potential future sales of our product candidates, the timing and cost of our manufacturing activities, the potential of our preclinical research findings, as well as other statements related to future events. These statements are based on the beliefs and expectations of management as of today. Our actual results may differ materially from our expectations. Investors should read carefully the risks and uncertainties described in today's press release as well as the risk factors included in our filings with the SEC. We assume no obligation to revise or update forward-looking statements whether as a result of new information, future events or otherwise. Please note that we expect to file our 10-Q later this week. In addition, during this call, we will be discussing certain adjusted or non-GAAP financial measures. For additional disclosures relating to these non-GAAP financial measures, including a reconciliation to the most directly comparable GAAP measures, please see today's press release which is posted on our website. As a quick financial update, our second quarter 2017 GAAP net loss was $28.4 million or $0.82 per share compared to $23.2 million or $0.87 per share for the second quarter 2016. The net loss for the second quarter 2017 includes non-cash stock-based compensation expense of $6.7 million. When excluding the non-cash stock-based compensation expense, second quarter 2017 adjusted R&D expense and SG&A expense were $9.2 million and $11.9 million respectively. Total adjusted net loss for second quarter 2017 was $21.8 million. The $21.8 million adjusted net loss were $0.63 per share compared to $19.3 million or $0.72 per share for second quarter 2016. For additional information regarding our second quarter 2017 results, please refer to today’s press release and for additional information regarding our year-to-date results, please refer to our Form 10-Q when filed. We ended the second quarter 2017 with approximately $308 million of cash, cash equivalents and investments. Our cash burn for the first half of 2017 was $48.8 million and at this point we are guiding to a full-year cash burn rate ranging from the original $100 million guidance up to $110 million reflecting the many initiatives underway including that which we just announced yesterday regarding moving forward with AR-13154 and others which Vince will be discussing in his prepared remarks. With that I will turn the call over to Vince.

[Vince Anido:]

Thanks Rich and good afternoon everybody, thanks for joining us today. It’s been at least a couple of weeks since our last call, but even with that we had news to share today on top of the fact that we've had very, very successful Mercury 1 12-month safety and efficacy results. First, we ended the quarter at record level of cash as Rich mentioned and certainly set the stage well for many exciting programs and initiatives we have underway, not the least of which is obviously the Rhopressa launch. As a quick update, virtually all of the key milestones that we laid out for ourselves all the way back when we wrote the S-1 in the fall of 2013 are pretty much on track. And so we're very, very proud of that success. For Rhopressa, we continue to expect an advisory committee as part of the Rhopressa approval process associated with the February 28 of 2018 PDUFA date. From a launch preparation point of view we continue to do an awful lot of work, including conducting an introductory meetings with the Top 10 payers representing the vast majority of drug spend in the US as we strive for a successful Rhopressa formulary positioning upon approval. We also continue doing an awful lot of work to building our presence within the marketplace especially at the medical meetings like the American Society of Cataract and Refractive Surgery and the recently concluded World Glaucoma Congress where we had [indiscernible] and where we had an awful lot of success meeting with physicians and telling our story, not only about the company, but also about our products. Beyond that, we're well under on our way with a broader range of preparatory activities for our Rhopressa launch, not the least of which is bringing in top talent into the company. You see that over the last few months, we have a number of press releases where we add folks in the marketing and sales groups, medical affairs, professional affairs, manufacturing, just a few of the examples of the kinds of talent we're bringing into the organization. Most of the candidates were seen are from recognized companies in the ophthalmology space and other aspects of healthcare. We are seeing very high level of interest in employment opportunities at Aeri, not only here in the United States but also as we're building our Athlone facility manufacturing facility in Ireland. Moving onto Roclatan, the key remaining item on the critical path for an NDA submission is the 12-month product stability. We have guided to expect our submission of the NDA for Roclatan in the first half of 2018, which is pretty safe assumption we think. We will know for sure once we have our Roclatan pre-NDA meeting that determine specifically which of the Roclatan manufacturing batches will be allowable for our stability program and we've discussed this matter on previous calls. Our global expansion strategy remains intact with Mercury 3 trial for Roclatan in Europe, which is a combination trial of Roclatan versus Ganfort, which is a combination of prostaglandin and timolol available in Europe. We do expect the first patient dose to be here relatively quickly. We're also working on the Phase 1 and 2 trials for Rhopressa for the Japanese market starting later this year. As a reminder, both the Phase 1 and 2 trials will be conducted in the United States on Japanese patients. As I mentioned, our manufacturing plant in Athlone, Ireland continues progressing on schedule and we are making excellent progress as we prepare to bring a second contract manufacturer online for both Rhopressa and Roclatan sometime in the back-end of 2018. That’s all pretty exciting and by itself it's great, but the real new news since we had our last call relates to our recently announced deal with a company called DSM out of Europe. And we released that just yesterday. We've been talking to them for a long - we've been talking to you guys for a long time about our interest in delivery technologies for both front and back of the eye committed that we would have decisions made for those technologies before the end of the calendar year. We have also shown data over the past several quarters from our own small molecule AR-13154, which inhibits not only Rho kinase but also Protein kinase C. The mechanism is addressing not only vascular dysfunction, but fibrosis and inflammation. You may recall that in preclinical models for wet AMD, our drug AR-13154 resulted in lesion sized reductions or level similar to the market leading VEGF inhibitor and also generated incremental lesion size reductions when added adjunctively to that particular product. You’ve also seen in a preclinical model for proliferative diabetic retinopathy the promising potential of his molecule to reduce neovascularization. Based on the early results to-date, we believe that we have the potential to provide a whole new pathway to treat diseases of the retina. Since our product 154 and related molecules are small molecules with relatively short half life measured in days and not months, and as many of the retinal diseases are by definition located in the back of the eye, we need to find a delivery system that will actually deliver the molecules to the back of the eye over protracted period of time ideally about six months or so. We're hopeful that we may have found that technology with DSM’s bioerodible implant technology. In appearance it's essentially a tiny injectable fiber. Pre-clinical experiments have demonstrated early success in conjunction with our products. We see a linear system sustained elution rates over several months as well as an achievement of target concentration of the drug in the retina. All those were critical elements that Casey Kopczynski, our CSO and his team found to be very, very important and actually choosing this as our delivery technology. Timing is everything and with our expanded focus on retinal diseases as a result of our excitement around 154 and the delivery mechanism, I'm pleased to report that Casey Kopczynski, our CSO will be presenting at the Ophthalmology Innovation Summit and it's coming up at the American Society of Refractive Surgeons in Boston next week. His presentation is quite timely as it includes further characterization of our molecule 154 and its ability to address the multiple disease processes that underlie wet AMD and diabetic retinopathy. He will also present the results of successful pairing of 154 with the DSM technology showing that long linear release from the small bioerodible implant. We plan to post his presentation to the research section of our website after Casey presents. We're obviously delighted that we may have a pathway to unlock the value for AR-13154 because it doesn’t provide entirely new way to help serve unmet needs of patients with retinal diseases. And we continue to explore delivery technologies for Rhopressa for front of the eye conditions like glaucoma. And so before the end of the calendar year as promised we do expect that it will make the final decision on those. Now going even further into our pipeline as we've said many times, we own a very sizable library of Rho kinase molecules, each with unique features and attributes that ultimately may serve our purpose beyond diseases to the eye. To that point we are commencing the screening of our molecule library for additional indications beyond ophthalmology where Rho kinase inhibition may provide a benefit. The list of potential indications is long but those are perhaps the most obvious to us. Some of those are perhaps pretty obvious to us, but they include things like pulmonary health, including pulmonary fibrosis, bronchial asthma, dermatology, cancer, just a few examples of the uses of Rho kinase inhibitors in the literature and those are some of the areas we plan to pursue on our own. While we may not necessarily take all these opportunities into the clinic on our own, we think they are value creating opportunities just as same and plan to move forward on those this calendar year. That pretty much sums up our progress and strategies and with that I'll turn the call back over to the operator for Q&A.

[Operator:]

[Operator Instructions] Our first question is from Tyler Van Buren of Cowen & Company. Your line is open.

[Tyler Van Buren:]

The first one is on Rhopressa and the potential for an advisory committee. Could you just remind us kind of what your expectations are in terms of when they give you the formal final notification of an adcom and the briefing documents and kind of how that process leads up to the actual meeting?

[Vince Anido:]

Sure. Hey Tyler, welcome back. I wish we got to take vacation. So from an advisory committee point of view as we've said, we do expect one. And the typical letter that we get from the FDA says either expect one but we may change our minds or don't expect one, but we make change our minds. And so we're just assuming that we're going to have one and we've been public about saying that we just don't think because the PDUFA of February 28 that it’s going to happen sort of between Thanksgiving and the beginning of the year. So we think for all intents and purposes we are expecting it before Thanksgiving. And so, we don't know for sure when it will be. We have some ideas, but don't know for sure, won't know until they decide to publish it in the Federal Register. And typically, by REG, that's about a two week window that they give us prior to the meeting itself. And so, now hopefully they'll be nice and give it to us long before that and tell us about it and give us the questions they're going to ask et cetera, but there's no guarantees there. And so we have been talking to the FDA on a regular basis just to make sure that we're on top of things and we do a pretty solid team that's been planning already, we've had multiple meetings with mock panels and stuff like that. So but in reality they don't have to tell us until two weeks prior, we will tell you guys as soon as we get the letter, but it will be somewhat consistent with whenever they decide to make it public anyway. But there's no - I can't give you any better answer or any better timing than that.

[Tyler Van Buren:]

And turning to Roclatan and the potential timing of the pre-NDA meeting, have you all requested that already, when might that occur?

[Vince Anido:]

So we had to wait until we knew for sure that we were going to lock and load on the 12-month Mercury 1 data because obviously we had to have that in hand in order to do that. So we have submitted that and we're hoping that it will be sometime this quarter or the latest, again before Thanksgiving.

[Tyler Van Buren:]

And just finally on the update with the retinal programs and delivery device. Can you just give us a rough timeline of when it may enter the clinic or when we might have some additional proof of concept, preclinical data?

[Vince Anido:]

So I think you'll have continued data. I think the first step is what I've mentioned, which is the presentation next week at the ASRS meeting where Casey Kopczynski will be presenting some of the data. Our molecule in the technology that we just described or just announced on, we've been doing a lot of kick the tire deals as you know and this is the one that worked best with our molecules. So you'll see quite a bit of the data then. And then as time progresses we’ll provide additional information. We think that ultimately it could be 18 to 24 months before it actually goes into the full blown clinicals.

[Operator:]

Thank you. Our next question is from Annabel Samimy of Stifel. Your line is open.

[Annabel Samimy:]

Just quickly on adcom, what are some of the areas that you think might require the most solicitation for the panel? Do you have any sense of where some of focus might be? And then I have a follow-up question on reimbursement.

[Vince Anido:]

So I think from a panel point of view, we think that because they haven't seen a new glaucoma product come through. I think that they'll focus on first protocol. They'll try to understand this whole issue of non-inferiority of Rhopressa versus a standard, in our case we chose timolol. So I think it will be a little bit of that and we’ll get into the advocacy. The good news is, as a reminder we did get not only Rocket 1 and 2 into the NDA but also we got Rocket 4 into the NDA. So we have quite a bit of data showing not only efficacy at 90 days of pressures in essence below 27, primary endpoint below 25, but in Rocket 4 we ran it all the way out to pressures of 30 and below which is pretty darn good. So I think they’ll look at all that efficacy data an understand this whole issue of non-inferiority et cetera. And then I think they'll get into the adverse events and I think that the, you know, the fact that the adverse events that we've all reported - we've been obviously reporting have all been sporadic, intermittent, and mild, and self-resolving and so you take a patient off drugs, they typically resolve and if you sometimes leave a patient on drug they still resolve. We think all those go in our favor. The fact that there are no systemic adverse events, we think it's a big deal obviously for an ophthalmology panel because most of them will know how to treat anything that occurs in the eye, it’s a systemic stuff that gets them nervous. And so we think that's a good news for us, but I think we'll have to explain it. I mean I think the, you know, they're not going to worry about the hyperemia rates because all the drugs in this category have it and so they'll delve into some of the other ones. And so we'll be prepared to answer those.

[Annabel Samimy:]

And then on reimbursement discussions, you mentioned that you had already met with Top Ten payers and obviously you talked a lot about getting onto tier-3. What is the likelihood that you might be on tier-2 right out of the gate, is there a possibility of that or do you think we're just going to have to wait six month or 12 to 18 months for them to really come to terms with that?

[Vince Anido:]

So as a reminder, so coming out of the gate because if we get it - we have a PDUFA date of February 28 that means with all these payers that we've been talking to, we've got a fair chance of getting into their contracts that they're going to be submitting for Medicare in April. But that means that we’ll be on the Medicare formularies for those plans later on in the year or the beginning of the following years, so call it 2019. But right out of the gate, our plan would be to shoot for tier-2 and as many plans as we can possibly get make it as easy as possible, remember those are all commercial plans not Medicare plans. So in essence it represents about half the market right out of the gate shooting for tier-2. I'm sure there's a handful of plans out there that will sort of insist that we start off in tier-3 and do rebate cards et cetera, which for commercial plans we can do, can't do those for the Medicare portion. So we'll start out of the gate in majority of the plans at tier-2, some in tier-3. We’ll do a lot of the co-pay cards for the commercial side of the business. And then wait until we get on the full Medicare formularies for the balance of the plan which will be towards the end of the calendar year.

[Annabel Samimy:]

So that's interesting, you think you’re going to get out of the gate at tier-2. What is the basis for getting in tier-2 in many of the plans, is it going to be just economics or is it going to be the fact that it's novel mechanism.

[Vince Anido:]

We think that based on the meetings that the team has had which is basically our medical affairs folks along with our access team going in. We think that the novel mechanism plays a big, big role in this thing. And so the fact they haven't seen a lot. A new one for a long period of time is going to help us tremendously. And so we think that the drugs, the efficacies, the level of side effects that we have along with the fact that it’s obviously also economics. As we've talked before, we think the average rebates that we're going to be talking about in the mid 20s, low to mid 20s. And so that should be able to get us for a new mechanism of action and then CE [ph] into that tier-2.

[Operator:]

Our next question is from Serge Belanger of Needham.

[Serge Belanger:]

Just a couple of quick questions for me. First one, just a follow-up on all the prior questions around the adcom. Assuming we get one for Rhopressa, would that preclude another one for Roclatan?

[Vince Anido:]

That's a good question. So our intuition is that it would not be required and the reason is two-fold. Number one, by then, both of the chemical entities will be well known and so really from the FDA’s perspective, they don't need an awful lot of help, because they will have known Rhopressa, it would have been out in the market for roughly a year or so plus already been approved. So we think that that puts it into a totally different category. So I think if we had to guess today, again, we haven't had our pre-NDA meeting, but if I had to guess today, I’d guess probably not. I don't think that combo would require it. It could be that they use it to highlight, not necessarily the efficacy and the safety of the drug, but they may decide to have one to simply to vet the combination therapy protocols that the FDA uses, but again that, if they do that, it's mainly because of some things going on inside politically that they have to address and so they decide to do it, but not so much drug related, but my gut tells me that probably not, won’t be required.

[Serge Belanger:]

And then remind us, around Mercury 3, is this powered for superiority or non-inferiority to Ganfort and then what type of or what level of baseline IOPs will you be recruiting for this trial?

[Vince Anido:]

So we're looking at a pretty broad set of baselines, pretty much what we saw with the Mercury series already, because we like the fact that certainly for the first two Mercury studies, we had the broadest range of IOP studied in ophthalmology for these kinds of drugs, so we like that. But it is -- remember it's a head to head with Ganfort. In Europe, you're allowed to shoot for first non-inferiority, which is what we've done, but then we also power for superiority, so that in Europe, you're allowed to do both. In the US, you have to pick one. And so if you hit non-inferiority, if we hit non-inferiority to Ganfort in this particular trial, then we'll do the stats for superiority. And remember, this study is mainly for pricing reasons, because we think again we've got plenty of evidence showing efficacy of the combo. So, because Ganfort is one of the highest priced, if not the highest priced drug in Glaucoma in Europe and the majority of the relevant countries that we have to think about, we think that going after them in worst case if we're not inferior, we get the same price and therefore superior hopefully will get a better price.

[Serge Belanger:]

Okay. And do you expect timelines around the study to kind of mirror the prior Rocket and Mercury studies in terms of enrolment?

[Vince Anido:]

Well, it's a little bit longer only in the sense that remember, we typically report out at 90 days and that's what you guys have come accustomed to for all of our trials in the US. The Ganfort or the Mercury 3 is actually a six month readout. So it will take longer for us to read it out. So it's more like, the best way to think about it, it's almost like Rocket 4 was, except it won't have a 90-day readout necessarily.

[Serge Belanger:]

And then one last question, I think you talked about some upcoming presentations at the retina specialists meeting, what are plans in terms of Mercury, possible Mercury presentations that you have this fall?

[Vince Anido:]

Well, we'll certainly have quite a bit of data presented. We've already had some, but we’ll continue presenting data. I think -- the actual latest data will be presented long before then, but as I always remind you, the data that we're presenting at these medical meetings is hardly any different from what we present to you guys at the time that we announce. All you have are the final numbers and little tweaks here and there to the numbers and that's about the only Delta.

[Operator:]

Our next question is from Dewey Steadman of Canaccord. Your line is open.

[Dewey Steadman:]

Can you just give us an update on the older collaborations for 1 by 4 like the Remote and GrayBug collaborations, are they still going on?

[Vince Anido:]

No. What we ended up doing remember is we described all of our sort of studies that we were doing with drug delivery programs as kick the tire deals. We didn't want to sign up anybody and then hope like things would work and so what we ended up doing is just said, hey, look, we'll send you drug, you put it in your delivery system, we’ll test it and if it works, we had pre-specified what this license would look like. And so those -- some of those other ones, Remote was actually a product specific deal. We found that in our hands, we were having troubles matching it up. So we ended up turning that back to the developers in Israel. And for GrayBug and other technologies that we were doing kick to tire deals with, we tested them for roughly about a year or so. We didn't find them to be the perfect match for our molecules, which is really what we were looking for and so therefore, we had to move on until we found the right match.

[Dewey Steadman:]

Okay. What commercial structures, besides the sales force obviously, do you still have to put in place. Obviously, you've got a lot done in the past quarter, but what else is there to do?

[Vince Anido:]

Well, I wish I could tell you for all our folks that are listening that we're almost done hiring, but every time I go to one of our offices, I do nothing but interviews. And so I think what's happening is we have a senior structure in place. As a reminder, we always build up from a top down and so what we ended up doing is bringing in some incredibly talented folks with far more experience than their current job here requires. So we're looking to build and have people around that can actually help us build this organization and so they're now going through sort of filling in underneath. So as an example, we brought in Gary Menichini who runs sales who used to run sales and marketing for Alcon US and so he's coming in now and we're interviewing regional sales directors for him. And so then, when they come in and eventually we’ll have four and outside chance we may end up with a fifth, then we'll start looking at district managers and stuff like that. So, we've got most of the senior folks. I think we've got one left, one position left in the commercial side that needs to be filled. We've got a number of talented folks that we’re interviewing now on the marketing side, so hopefully it’s filled soon and then, but again, it’s just filling underneath that is -- it will be taking place between now and the end of the year.

[Dewey Steadman:]

Excellent. And I don’t want to leave Rich out. Rich, what do you think of 300 million in cash. What are your thoughts on use of capital from this point forward?

[Rich Rubino:]

Well, we’re of course very adequately financed, right. So this last financing we did in the second quarter was essentially topping off with another $125 million. So obviously, I'm not going to give you guidance for next year, but the good news is, for this year, we said we'd spend one 100 to 110, so we should end the year with about 250 million or so on the balance sheet and with that hopefully just a few months into next year, we'll have an approved product and we hope to be generating revenue certainly as we get into the back half of next year. So I couldn’t be -- as the CFO, I couldn’t be any happier with where we are right now and I don't have any plans at this point to do any future financing based on the business as we understand it today.

[Operator:]

Our next question is from Elliot Wilbur of Raymond James. Your line is open.

[Elliot Wilbur:]

First question or a line of question for Rich as well. Rich, what was CapEx in the quarter and should we still expect to spend roughly $16 million. I think, you had indicated previously on your ex-US facility, really just trying to get a sense of kind of the interplay between cash burn and OpEx levels for the balance of the year. Obviously expect R&D to trickle down and SG&A to kind of move up and those probably offset each other, but just maybe an indication of directional movement of those two line items over the next two quarters?

[Rich Rubino:]

Yes. Sure. So we had very little in the first quarter. In the second quarter, we had $2 million in CapEx and for the first half, we came out to about $2.5 million. For the full year, we're still at the same number we gave earlier for the Ireland plant, which is about $16 million in capital and that will be the large majority of our total capital spend.

[Elliot Wilbur:]

And then just anything you can say in terms of directional movement in R&D and in SG&A. Do you expect, in aggregate those numbers kind of stay flattish going forward or they move down a little bit?

[Rich Rubino:]

Well, so if you look at where we are at the end of the second quarter, Rhopressa is essentially done right and that's why you see our R&D expenses going down and Mercury 1, as of the, pretty much the end of the second quarter, is also done. So the US clinical expenses are essentially behind us with very minor exceptions and in the back half of this year, we'll look for Mercury 3 and the Japanese trials. Those two combined in the back half of the year will be less than 10 million in total. So you're going to see the same trend with the R&D expenses going down. Certainly on the clinical side, we are going to pick up on the research side as we start to do the IND enabling work for AR-13154 and do some of our screening, but those aren’t going to be very large numbers.

[Elliot Wilbur:]

Okay. And then just a quick follow-up question for Vince as well. Have you -- is there anything you can share I guess in terms of the ongoing review of Rhopressa around specific dates and I guess thinking about, most specifically, indications of timing of pre-approval inspection and whether or not there's been any additional information come out of B&L regarding the status of the Florida facility. I know that you indicated earlier that you’re ready for inspection, but not certain if that's occurred if there's any update there that you could share with us?

[Vince Anido:]

Yeah. Really from a B&L manufacturing perspective, it’s their plant, they're the ones that are going to have to be on point to make those kind of announcements when those kinds of inspections take place and when they actually, whatever resolution that they have coming out of those plants and so all we can tell you is that we know that from our review when they come and inspect that plant that from our product perspective for Rhopressa that we think we're pretty clean. We had former ex-FDA folks go in and check it out on our behalf and look at all of our records. And so as long as B&L passes, I think we're going to be in really, really good shape. So that's all I can tell you. I can't give you any sort of blow by blow or timely things because to get into their facility and they're the ones that need to make those kinds of announcements. I think from a general review point of view, we know things are progressing pretty well. The way that our Head of Regulatory, Marvin Garrett explains us, it's like, for him, it's a ping pong match where basically the FDA hits the ball over and we try to hit it back as soon as we possibly can. He's got an internal clock set at 24 hours and we try to respond as quickly as we possibly can to all the requests knowing that anytime we ask them a question, it’s going to take longer than 24 hours. And so typically we’d like to stay ahead of that game. So it's ongoing. We know that they've asked us questions about just that’s in there. We’re very, very pleased that we think that the clinical review is going very well. They're looking at all the studies that we submitted as part of the NDA. And as I mentioned, it's not only Rocket 1 and 2, but also Rocket 4 and we think they are taking a look at that 90-day for Mercury 1 as well. And so all that bodes well for us and so we haven't hit any snags as it relates to providing them with any data and certainly just hopefully, we’ll continue on the kind of progress we've been making. So it's just -- it's a constant thing. I bet, Marvin and his team are talking to the FDA, if not daily, it's pretty darn close.

[Operator:]

Our next question is from Corey Davis of Wainwright. Your line is open.

[Corey Davis:]

Two questions. The first one is more general and what you think prospects are for long acting agents in general, in ophthalmology, both for front and back of the eye.

[Vince Anido:]

So we think that there's and I think Corey, you've heard me say this before, the good news is that the venture capital community has invested a huge amount of money and a bunch of startups for delivery of drugs in ophthalmology and so it's both front and back of the eye and so we certainly have gotten to know an awful lot of them pretty well. There's been some that have been on the market for quite a while that have devices, think about [indiscernible] and some of those kinds of companies and other ones. They're the most recent IPO we've seen in this space, which is more of a, how do I get more molecule into the back -- into the eye than I could if I just simply just put it into an eye drop. And so all that I think is good news. I think that the art -- our take on this is still the same, which is the best ones will be those who almost take the patient out of the equation if you will where it makes it easy for them and so we think that the implantable inserts for the front of the eye have an awful lot of play. I'm thinking there about the [indiscernible] obviously being first into the market or first into the clinic. They’ve had their own issues and hopefully they'll resolve those, but we think there are quite a few technologies that bode well for delivery to small molecules to front of the eye. And clearly we believe that DSM is just another example of one we tested that happens to work best with our drug. But it doesn't mean it's the only technology out there because God knows our team tested quite a few and so we like the prospects. We think that repurpose drugs could have a play here to revive some old molecules, deliver them better, maybe get rid of some of the adverse events, but we favor those where the patient is no longer involved that there are more inserts than anything else and not surface deliver drugs. We think that those, for whatever reasons, maybe it’s the bolus required when you put the eye drop in. The eye drop always seems to do better than any surface delivery system can handle. And so we see that as being somewhat problematic for long term use.

[Corey Davis:]

And then second question, Rich, you were asked about capital allocation, but more specifically and it ties into what you were just saying as well, where does business development fit in your hierarchy of capital allocation priorities, specially with all this new infrastructure and all this new talent you’re bringing in, how do you think about -- how urgent it is to bring in other new products for the pipeline?

[Rich Rubino:]

Well, we're very fortunate that we have so many unique Rho Kinase molecules in house and perfect example of that is AR-13154, which we've been discussing and that certainly is our immediate priority along with looking into other delivery technologies as Vince mentioned in his prepared remarks, but we always have our eyes open for other opportunities whether they be new delivery technologies or therapies, constantly on the alert, our Head of Business Development is very, very engaged. We now have the list of names and companies and we're always looking. So to the extent there was something that was out there that we would want to take advantage of, as you know, there are many tools to take advantage, whether it's licensing agreements or outright acquisitions using whatever capital means we think is the lowest cost of capital at the time whether it's using our shares or we're doing some kind of a financing to cover that, but at this point, with our market capping in 2 billion plus, we really have many of our options wide open to take advantage of any opportunities.

[Vince Anido:]

Hey, Corey. The other way to think about this is we've got sort of the geographic expansion. So we're spending a little bit of money in Europe, we’re going to spend some more money here in the US on Japanese patients, doing the Japanese Studies and then eventually run the Phase 3 trials in Japan. All of those are going to cost a kind of money that we spent that we just spent on US for Rhopressa and Roclatan. And so we're going to have an awful lot of room and the sort of our -- on the R&D expense line, especially when you start thinking about the kind of revenues that we’re projecting for these drugs and so it gives us an awful lot of room to do, to build out the pipeline and so we're focused on trying to get at least one other molecule into the clinic, over the call it ’18 and ’19 timeframe, because we think that in addition to finishing up in Europe and doing the work for Japan that that's something that we can handle. We certainly don't have to change the infrastructure, because we have a great clinical team that got us to this point already and so we can certainly add more things to them as some of these other clinical trials tail off and so we think we have the bandwidth to do that.

[Operator:]

Thank you. There are no further questions at this time. I would like to turn the call over to Vince Anido, Chairman and CEO for any final remarks. Thanks, Tyron. Thanks everybody for listening this afternoon. Obviously, we like the progress we've made. We're very, very excited about the prospects for Rhopressa and the work we're doing right now and to do everything we possibly can to get that drug approved on its PDUFA date, which as a reminder is February 28 of next year and again right on the -- right behind that is filing the NDA for Roclatan. And so, now, we have all the clinical trials done here in the US for Roclatan. We're very excited and have an awful lot of guys again pulling their hair out and getting all the work done that they need to get done to file that NDA as quickly as we possibly can. But as you heard during the call, we think that we're doing everything possible from a launch readiness point of view and also in terms of building the pipeline and the good news for us is that we have the resources in-house, not only from a talent point of view, but from a cash point of view in order to execute on our plan. So I want to thank everybody for listening. Have a great evening.

[Operator:]

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes the program. You may now disconnect and have a wonderful day.