Aerie Pharmaceuticals, Inc.
Q2 2018 Earnings Call Transcript

Published: 9 Aug 2018

[Operator:]

Good afternoon, ladies and gentlemen. Thank you for standing by and welcome to the Aerie Pharmaceuticals Second Quarter 2018 Earnings conference call. [Operator Instructions] Today’s conference call will be recorded. It is now my pleasure to turn the floor over to Aerie’s Chief Financial Officer, Rich Rubino. Please go ahead sir.

[Rich Rubino:]

Well, thank you, Denise. Good afternoon and thank you for joining us today. With me today are Vince Anido, Aerie’s Chairman and Chief Executive Officer; Tom Mitro, Aerie’s President and Chief Operating Officer; and John LaRocca, Aerie’s General Counsel. Today’s call is also being webcast live in 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 forecasting guidance regarding our future financial and operating performance. These statements will include projections associated with our commercial launch of Rhopressa in the United States including at revenue expectations and cash burn. They will also include expectations regarding the success, timing and cost of our clinical trials. Additionally, we will discuss progress regarding maintaining, requesting or obtaining approvals from the FDA or other regulatory agencies about product and product candidate including our efforts on international expansion. Lastly, we will address the timing and cost of our manufacturing activities and 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 will file our 10-Q tomorrow. 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 our reconciliation to the most directly comparable GAAP measures, please see today’s press release which is posted on our website. With that, I will turn the call over to Vince.

[Vince Anido:]

Hi, thanks Rich and good afternoon everybody. Just in case you are wondering, we are changing the lineup a little bit today. It’s not that Rich forgot to discuss our financials it’s just that we decided probably better that we cover the highlights of the quarter and talk a little bit more about Rhopressa etcetera, before we get into the highlights. Obviously, we have an awful to talk about today as our first quarter reported Rhopressa revenues. Perhaps the most important message on Rhopressa is that we pass along today is that the levels of intraocular pressure reduction that physicians are reporting in the field are very, very impressive. In fact, we have heard many instances, where the IOP drops are in fat much tighter than anything we reported in our clinical trials. It shouldn’t be really surprising, because in the clinical trials, we were just adding Rhopressa to anything. It was to simply Rhopressa as a standalone. In those trials, we saw IOP drops of on a IOP drop of roughly about 5 millimeters of mercury, but the range is pretty broad. So, we did have some patient pressures up in the teens and that dropped from down to the teams as well as we some that didn’t particularly work well at all. One of the things that we did see is that we are seeing in the patient experiences are that the adverse events, specifically to hyperemia the redness is less than many perspectives. As a result, patients and physicians are both overall very highly satisfied in those powered with the Rhopressa performance. Healthcare professionals are delighted to start using the first new drug class in the generation and we are seeing them prescribe the drug primarily concomitant therapy, which is consistent with our expectations. Now, the anecdotal evidence [indiscernible] overall includes reports of meaningful intraocular pressure reductions in patients across a broad spectrum of pressures and our patients taking a broad spectrum of additional therapies. Rhopressa appears to perform very well and take it in combination with other therapies. Also, we believe what we are seeing in Rhopressa is taken on top of a prostaglandin we see results that are – that mimic what we have seen in the Roclatan trial. So, it’s very, very significant drop in IOP. So we are very happy with that result that we are seeing and feel. And as always, we are seeing a limited number of patients that are either not responding adequately through Rhopressa or not tolerating their level of hyperemia and we and the prescribers are thus far very, very happy with the bigger picture. Now, of course another important component to the product uptake is market access. We told you upfront that this is going to be one of the prime drivers of success. As you have seen in our press release, we are making steady progress of securing coverage. I just want to remind everybody that the glaucoma market is really divided between Medicare Part D and commercial pay and it’s about an equal 50-50 split. And that we talked before we launched the product that we expect it to have significant uptake in the commercial coverage early in the long period, but it will take us a while really towards the end of the calendar year for the Jan 1 start of the Medicare Part D coverage. As of today, we have about 80% of the commercial lives have now access to Rhopressa and is comprised of 25% in Tier 2, which is a preferred brand here and 55% in Tier 3. The 80% is great news compared to the 70% we reported previously. Now, on the Medicare Part D side, which as I mentioned normally doesn’t start on Jan 1 of next year were now covered in Tier 2 for about 12% of the lives. We fully expect to make more progress as we continue further in 2018. And just as a reminder for patients who are covered under commercial plan, for those who are not yet currently covered it all sees our commercial plans we do offer co-pay assistance to card. And the co-pay brings their co-pay component down to about $25 to $50 depending on whether it’s generally covered or not covered at all. And so – and we are doing other things, for example, we are using prior authorizations at the Medicare patients and we will be seeing the two groups that we are using to help physicians out with those, is that 80% or so of the prior authorizations are actually going through. So, even Medicare patients are beginning to get some utilization, which is great news for us. Now, continuing to update you on the progress by the end of June, we had already placed about 100,000 samples in the hands of physicians. It takes a while for those samples to work your way through, because they are amongst supply and able to follow-up before we start seeing prescriptions. As you can imagine, we are seeing some regional differences in terms of the uptake of Rhopressa in the marketplace. We see some parts of the country that are doing exceedingly well in other months that have an awful lot of catching up to do. For example, if I look at our top three districts in the country, the Northwest is leading the pack and not far behind is our New York City district and they are followed closely by that of New England. And so congrats to those guys and we are hoping that everybody else catches up to them. From an individual rep point of view, we see our leading rep in terms of total number of Rhopressa prescriptions, it comes out of the Chicago West area or territory; second is San Francisco; and then third is Midtown Manhattan. And so we do see an awful lot of uptake and a lot of interest in the products on a repo basis. And as I said, some of you are better than others and we are hoping to catch up pretty quickly across the board. We are reiterating our full year net sales guidance of $20 million to $30 million and we do remain comfortable with a range based on what we have seen so far and expect for the rest of the year, including expectations for increasing levels of market access. And one of the things and all of you are obviously looking at new prescriptions and total prescriptions etcetera and just as a reminder those all have 10-day lags when we look at them, one of the other metrics we look at, it gets us comfortable with the range that we provided is we look at the orders that are leaving the wholesalers going to the retailers. And the reason we do that is because a) we get that live almost, it’s same day information that we get. And what’s interesting about that is when we do see some regional differences just that we see in prescriptions, what we are seeing is a far greater number of those orders going into the retailers than the prescriptions that we see and it was interesting that we don’t see the wholesaler inventories changing much, it’s about 15-day supply for them and we know the retailers don’t maintain much of an inventory at all. So, because of the fact that there is no lack in that orders to retail number, we are very, very encouraged that the prescription activity is in fact picking up very nicely as a result of all those orders that we are seeing. So, again, we are reiterating our net sales guidance to $20 million, 30 million. And for us the key objectives are to continue to make strides in gaining market access and importantly to raise the bar, so that all of our sales territories perform as well as the best. I want to make sure that we are maximizing the value that we are generating from Rhopressa, which is a product that is far outperforming our expectations from both inefficacy and an adverse events perspective. And moving on to Roclatan, as you know, the big news is that we did get our PDUFA date, it’s middle March of next year, which basically says we have got 7 months left in order to get ready to launch that product. And there aren’t that many companies out there to get to launch two products in the category within that length of time of each other. So, we are ecstatic about the prospects for that. As a reminder, we do still plan on using our current 100% sales force, we think we have got great coverage out there. It does give you 7 months to get them trained and get them ready to go expecting an approval in the middle of March of next year. Turning to our initiatives outside the United States, our global expansion, our plans are just to request application for European regulators by the end of this calendar year. And if all goes well, by the end of ‘19 that product should be approved. Also by the end of ‘19 we do expect that we should have top line data for our Mercury 3 clinical trial, which is currently underway in Europe. As a reminder as a comparison between Roclatan and another well-known combination product available in Europe and it’s mainly for price increases, but obviously we are going to be looking at all the parameters in that clinical trial. As we prepared from markets in Japan, in addition to our Phase 2 trial for Rhopressa that we are conducting here in the U.S. we were looking at Japanese and Japanese-American patients. We are also now planning to expand our Phase 2 activities into Japan itself, which obviously will provide access to much higher level of patient availability for that file and better set the stage for the product or as we progress into Phase 3. Now with that, we are currently planning of establishing a small office in Tokyo to receive our clinical and regulatory activities in Japan. Now, as we look at our pipeline, obviously we are very excited about some of the things that we are doing in the retina space. As a reminder, AR-13503 is a rho-kinase, protein kinase C inhibitor with the potential to treat both wet age-related macular degeneration and diabetic macular edema. We believe that this is a completely new pathway for treating these diseases in 503 as shown in preclinical experiments, the ability to provide therapy as an adjunct to market-leading Eylea, I will be very efficacious [indiscernible]. We are also advancing our steroid implant, which is AR-1105 of DME. We expect that [indiscernible] for the steroid we will be filing the IND towards the end of this calendar year beginning clinical trials early next year and then the IND for 503 will follow about 3 to 6 months after that. And so we are excited about the prospects for both of those products [indiscernible]. And you also saw here about a few weeks ago, we recently expanded our collaboration with the SM, the capabilities we have to our original DSM collaboration provide an exciting opportunity to gain long-term sustained release for small molecules such as AR-13503. Through our expanded collaboration, we now have worldwide exclusive license to use our technology for all ophthalmic indications and for an unlimited number of compounds. We also have access to a preclinical stage Latanoprost implants and intra-femoral injection if you will for the treatment of glaucoma. Essentially, we have created a potential for highly innovative sustained release platform for eye care diseases through its expanded collaboration. As a reminder, we also have manufacturing platform to make popular implants in precise shapes and sizes through our exclusive ophthalmic rights to the print implant manufacturing technology. Finally, as you know, we own a very sizable library of rho-kinase molecules each with unique features and attributes it ultimately may address additional diseases beyond the eye. We are currently evaluating on our own or through academic executions partners, opportunities in certain pulmonary dermatology indications as well as cancer. We will report back to you as we continue progress. And with that, I’d like to return now the call back to Rich to cover the financials.

[Rich Rubino:]

Thanks, Vince. We recorded $2.4 million of net revenues following our commercial launch of Rhopressa in the U.S on April 30, 2018. Our net sales per bottle amounted to $136 as we continue to gain coverage among commercial plans and Medicare Part D plans and therefore pay more rebates we expect the net revenue per script to ultimately be reduced to approximately $100 consistent with our longstanding previous guidance. Our net revenues reflect volumes of nearly 18,000 bottles, of which about 40% was pull-through and 60% was channel, of course, to launch new product across the channel to satisfy the upcoming demand. As we get deeper into the launch, we would expect approximately 2 to 4 weeks of future demand in the channel. Our gross margin for the quarter ended June 30, 2018 was 98% and some of the inventory costs were expensed prior to FDA approval and our normalized gross margin will be approximately 97%. Our second quarter 2018 GAAP net loss was $55.0 million or $1.40 per share. When excluding the $10.3 million of stock-based compensation expense, our total adjusted net loss was $44.7 million or $1.14 per share. Adjusted operating expenses for the second quarter of 2018 totaled $47.7 million, which includes $32.1 million in adjusted SG&A expenses reflecting our Rhopressa launch. For additional information regarding our second quarter 2018 results and prior period comparisons please refer to today’s press release and tomorrow’s Form 10-Q filing. Our first half 2018 cash burn, excluding the offset from accounts receivable collections, was approximately $103 million, including a slight uptick from approximately $50 million in the first quarter to $53 million in the second quarter, reflecting a heavier investment quarter in our Ireland plant, with the delivery and installation of the filling equipment. The capital spending for our Ireland plant is now largely behind us. Additionally, in the second quarter, we paid our Roclatan filing fee to the FDA of $2.4 million. We ended the second quarter with $286 million in cash, cash equivalents and investments and 39.8 million shares outstanding. On an adjusted basis, including the additional shares from the Deerfield conversion we announced on July 23, we now have 45.2 million shares outstanding. Please note that in your third quarter models, you should add $24 million of non-cash expense associated with the incremental 329,000 shares issued as part of that conversion. Also please remember that we paid $6 million to DSM in July as part of that new agreement and we expect that the $6 million will be expensed in the third quarter of 2018. In addition to reaffirming the full year 2018 guidance for net revenues in the range of $20 million to $30 million on the U.S. GAAP basis, as Vince already discussed, we are also reaffirming our full year 2018 cash burn guidance of $200 million to $210 million. And now, I would like to turn the call over to the operator for questions. Denise?

[Operator:]

[Operator Instructions] Your first question comes from Adnan Butt with Guggenheim Securities. Your line is open.

[Adnan Butt:]

Hey, thanks for the question and congrats on launching the first sales. On Rhopressa, what are you finding as kind of the sweet spot for its users, is it in a certain type of patient, is it in a certain combo or is it sort of all over the place at this time?

[Vince Anido:]

Yes. So, I will let Tom give you some specifics, he has been out in the field quite a bit, but certainly given our expectations we thought it would be added to prostaglandin or added to some whatever the patient was already on and certainly we have been getting awful lot of that. But let me have Tom answer that.

[Tom Mitro:]

Sure, Adnan. So, this is correct and as most physicians are using it naturally, it’s an adjunct to our prostate gland and the interesting thing is they have started off by adding it sort of like end stage patients, that is the patient just prior to surgery. And what they have found quite often is they get pleasantly surprised by the results. I mean, Chicago today and we talked to a physician who said off the top of my head, I can remember 4 patients who I would have taken into surgery, had I not put them on Rhopressa, but Rhopressa lowered their enough to avoid surgery, which by the way is great. Now that before we have a chance to say anything to those physicians, they say it, so because of that I am moving it up in my armamentarium. That is I am starting to look at my patients to use our prostaglandin and an adjunct and wonder should switch out that adjunct, if they are currently using that might require 3 times a day dosing or something and moving them over to Rhopressa. So, primarily the conjunction with prostaglandin they are delighted with the results. They have put it at the end stage by good results and as a result, they are moving it up in their armamentarium as they are getting more and more experience with it.

[Adnan Butt:]

Do you know at the time if results are the same, but different prostaglandins or as an adjunct our one prostaglandin can that deliver more efficacy?

[Tom Mitro:]

This is because, they have the number of physicians is there one particular prostaglandin seems to work better for and maybe it struck their shoulders and say, I used it with all the prostaglandin, which is obviously the result and I am hoping to get it bind, but they can’t comment that it work or it did not work on any one individual prostaglandin.

[Adnan Butt:]

And then in terms of the experience to-date is there a specific hurdle or a sticking point in terms of usage, is it doctor’s office, is it the payer, is it the patient out of pocket expense, if there is a specific bottleneck at this time?

[Tom Mitro:]

I think the biggest issue that physicians bring up, but they also actually complimented for us a little bit is Vince had mentioned managed care coverage. Because as Vince said, today, we have very good coverage in the commercial plans and we have co-pay cars that help to freight some of the cost of the co-pay that the patient has. But on the other hand, the Medicare side, we are still making progress there and they congratulate it if I am getting the work that we have done so far, but we have got a long way to go and we have a prior authorization program that seems to be working very well. It appears that 80% to 90% of the prior-off are approved for the patient, but nonetheless they all say to me, the way I am talking to people just to give you the example free the people that I talk to over the last two days have over 100 patients on Rhopressa and one has over 60, so not that much of an issue for them, but what they say is when you get managed care to where you want to be and congratulations on where you are, the floodgates are really going to open and I believe that from the experience that they tell us about. So, that’s the [indiscernible]. Managed care getting rid of that would be a big thing for everybody.

[Adnan Butt:]

And last one before I drop off what’s adherence like today, what’s that experience?

[Tom Mitro:]

I have heard you say adherence?

[Adnan Butt:]

Yes, like patients are sticking with the treatment?

[Tom Mitro:]

Yes, patients are sticking with the treatment, what I commonly hear what about discontinuations, they say don’t worry about discontinuations, we are finding it the number I comment against about 5% of patients, which by the way, it’s right within their expectation.

[Adnan Butt:]

Thanks, Tom. I will get back in line.

[Tom Mitro:]

Sure.

[Operator:]

Your next question comes from Annabel Samimy with Stifel. Your line is open.

[Annabel Samimy:]

Hi, guys. Thanks for taking my question. Just following from Adnan’s question, so you mentioned that physicians removing Rhopressa forward into treatment. And most of this treatment is already on the patient’s current therapy. Have physicians gotten to a point yet they can drop 1 or 2 drops that patients are already taking, so that it ends up just being a prostaglandin for Rhopressa, is that – are they there yet with that kind of experimentation or are they just leading these patients on their full cocktail of treatments as is? And with that, we heard that the hyperemia issue is not really emerging as a concern for these physicians, are there any other kind of side effects you are seeing more interactions that you are seeing with the various cocktails that they are using?

[Vince Anido:]

Hi, Annabel. The physicians are – every one of them has a totally different experience at this point. So, some of them get abused and got great results by adding it on top of 3 to 4 drugs or some of them are just leaving everybody on there, but some of them are actually making the active choice of saying, look, I don’t want my patients on those medications that are 2 to 3 times a day. I’d rather try to get it down a little bit at a time in some cases. It other cases, they just basically say, yes, I am getting rid of all of them for the prostaglandin and I am just using Rhopressa. So, it’s too early to see any particular pattern, except for the fact that the only pattern is that Rhopressa seems to be working pretty well to these docs and the patients. So, all that is pretty good news for us. And so I don’t think that will at this stage in the launch that it makes sense to even have those kind of metrics to worry about, although it’s great to get those anecdotals, but it’s too early to see anything. I mean, I was with the doctor and that in Tarpon Springs, Florida and he decided after he looked at an awful lot of data that he has just going to bypass all, he does have surgery right out of the gate. I know he is convinced out that he is going to do simply Rhopressa. And so again, I think everybody like they have a new toy and that are just trying to figure out how many ways that they can use it.

[Annabel Samimy:]

Okay. And in terms of the drug interactions with the other cocktails, I am not seeing any?

[Vince Anido:]

No, we have it. We didn’t really expect to see very much of that. We thought that it would be highlighted by hyperemia, but even then we are not seeing much off.

[Annabel Samimy:]

Okay. And maybe I can switch over to some questions for Rich, so clearly, you already have some very decent coverage if I heard the numbers correctly, I think was 55 for Tier 3 and now 25 for Tier 2, so that’s about 80%, is that correct and should we be expecting any improvement on that coverage this year or should we just wait for next year or obviously your new drugs for most plans to set you up and then have you to wait 6 months for additional coverage. I get Medicare Part D, we are not going to see additional until January, but how should we think about improvement in coverage this year specifically?

[Vince Anido:]

Yes. So, when you get from – when you try to go from Tier 3 to Tier 2, it’s a matter of one formulary rebate contract at a time. So, we are actively engaged with all the payers as you would expect, but importantly to have achieved 80% commercial coverage at this early stage, it’s quite a success story. And from a patient perspective, because we have the co-pay coupon card, the out-of-pocket for the patient is fairly consistent regardless of whether they are in Tier 3 or Tier 2, so very, very happy with where we are with commercial. We certainly expect to make more progress certainly entering Tier 2, but with the co-pay coupon card not as critical as you would click. On the Medicare Part D side, it’s interesting as we have discussed in the past to have 10% and now 12% coverage so early in the year is pretty much unheard of. So, to Tom’s point, we have made great progress, but there is quite a few patients that are uncovered. Importantly, with all of the success we have seen in prior authorization with the high approval rates in the 80% to 90% range that creates an interesting financial incentive for the payers to cover Medicare Part D in Tier 2, because at least in Tier 2, they will earn a rebate from us. That meaningfully reduces their out-of-pocket, the payers out-of-pocket but also they don’t need to incur the administrative cost associated with managing the prior authorization process. So, if you look at the net plant cost, which is how the payers look at this, the net plant cost if you are in Tier 2, covering a Tier 2 was actually one-third the cost of what an uncovered prior authorization script is. So, it’s a meaningful savings to the payers if they contract with us currently.

[Annabel Samimy:]

Okay, got it. And if I can just squeeze in one more question, you mentioned that there was I guess 14, 15 days of inventory, how should we think about the trajectory with that inventory in mind, is it going to be – is there going to be a dip following this inventory or is demand sufficient to swallow that inventory and continue to grow through that, should we expect sort of some lumpiness from second quarter, third quarter and then back to fourth quarter, just want to know how to think about that?

[Vince Anido:]

Ultimately, as we go through the year, a year ago and you see a change in the relationship of what’s in the channel versus the scripts obviously. So, because we launched our first product, the channels certainly needed inventory at the time of the launch as we get later into the year and there is more of a pattern with regard to what the ultimate demand will become, we have said as I said in my prepared remarks that as we get toward the end of the year, you should probably expect more like 2 to 4 weeks of projected demand in the channel, but that relationship will change over time, the relationship from a revenue perspective of pull-through versus what’s in the channel.

[Annabel Samimy:]

Okay thank you.

[Operator:]

Your next question comes from Dewey Steadman with Canaccord Genuity. Your line is open.

[Unidentified Analyst:]

Hi, guys. This is Saeed in for Dewey. Congrats on CMD first sales for Rhopressa. I actually want to go a little bit ahead and kind of talk about Roclatan, assuming that you do get approval for Roclatan, how are you thinking about Rhopressa and Roclatan kind of existing in the same type of space? And my second question is what kind of advantages or pads has Rhopressa really carved out that potentially Roclatan could piggyback on? Thanks.

[Vince Anido:]

Hi. So, we think that the experience of the doctors you are getting when they take Rhopressa simply added to whatever cost still it grows if they were on particularly when the patients on prostaglandin and they get these exorbitant drops in incremental pressure is getting them pretty excited about the thought of bringing everything down though basically one product that has two drugs in it in one eye drop. And from a compliance point of view, obviously that’s their goal etcetera, etcetera. I think you are seeing the kinds of results that they can expect when Roclatan comes out based on their current experiences with Rhopressa. Now, having said that, because every patient is different, every doctor is different, managed care will have some say here in swing utilization one way or another and we think that while is going to be a huge amount of excitement and want to try Roclatan right out of the gate, I think that there is going to be just as many folks sitting out there saying, well, wait a minute, I don’t really like Latanoprost, how about I have just simply keep using Lumigan or Cryotan or whatever prostaglandin, I have got them on and I just simply add Rhopressa. And I think from our perspective, the message is still going to be we think that there is room for both drugs. We think that it’s going to be – it is going to take some time forward all to sort out, we are trying to from a pricing point of view as we talk in the past, there is not going to be a huge difference in price. So, the price won’t drive utilization with one or the other. And frankly, at the end of day, as always, our total market share for Rhopressa and Roclatan continue to climb. We don’t really care what the mix ends up being. I think you will see some bunch of regional differences even wider than the ones that we see today, but again, I think that having both drugs on the market will certainly give doctors choices for their patients. And so that’s what we are striving for.

[Unidentified Analyst:]

Okay, thank you. And have you seen any advantages that Rhopressa had maybe even on the managed care side that you think Roclatan could piggyback on?

[Vince Anido:]

The managed care side probably not, I think the breakthrough potential and the expectation for Roclatan will set it up on its own. So, I think it’s going to be possible to actually go the other way, where Roclatan helps us get on also plans that are hesitant to put Rhopressa on.

[Unidentified Analyst:]

Okay, thank you so much.

[Operator:]

Your next question comes from Serge Belanger with Needham & Company. Your line is open.

[Serge Belanger:]

Hi, good afternoon. First, you talked a little bit on anecdotal feedback about how hyperemia and how it’s handled? Any feedback on whether corneal verticillate has been an issue for prescribing physicians and how they are managing that as a matter of fact?

[Vince Anido:]

I am sorry you broke up on my line. Can you repeat that?

[Serge Belanger:]

Yes. So we have heard some anecdotal feedback about hyperemia and how it’s being managed by physicians, just wanted additional color on whether corneal verticillate has been an issue at all and whether what’s being done to manage it?

[Vince Anido:]

We haven’t seen too many. The fact I haven’t seen any reports yet on the corneal verticillate, which isn’t surprising, but remember it was not reported in the 90-day data that we had in our efficacy trials and it is sort of after that, that has started kicking in. The physicians that we do talk to are well aware that there is potential problem for. There are adverse events that may show up and they understand what it is and the fact that it’s not site threatening or anything like that. So I think, they are prepared for it, but we haven’t seen it.

[Serge Belanger:]

Okay. And then just on the IMS data that tracks Rhopressa scripts, how accurate is that to the demand of the product you are seeing and are we seeing any sampling within the data that could cloud the numbers?

[Vince Anido:]

Well, I think that the 100,000 samples that Tom’s folks who have put out there probably are clouding the prescription activity we are seeing. Because as I mentioned in the prepared remarks, we have got 100,000 of them out there, it’s a month’s supply, so by the time they use that up and then they come back and get tracked etcetera, etcetera, etcetera, then we see the prescriptions taken off. And so I think you do see it somewhat clouded. What I think is at least short-term a better metric for us is the sales out of wholesalers to retailers and that’s real data, like that’s actual data, that’s not a sampling of any sort. And so we see quite a few more of those and we see prescriptions per week and so that basically tells us that the prescription activity that you are going to end up picking up downstream will continue growing based on the information we see.

[Serge Belanger:]

Thank you.

[Operator:]

Your next question comes from Ken Cacciatore with Cowen & Company. Your line is open.

[Ken Cacciatore:]

Hi, thanks. I noticed this question is going to seem like them putting the cart way ahead of the horse, but clearly the Rhopresso launch is going well and we share your enthusiasm for Roclatan’s potential, but there is a chance that there could be some assets available, assets like Xiidra, maybe some other external assets, what’s the appetite the company has to maybe look to add on to the commercial infrastructure that you have with maybe on marketed products if they were available? Thank you.

[Vince Anido:]

Well, we don’t have appetite for acquiring assets etcetera. And I think what’s really interesting is obviously like everybody else we have been contacted about Xiidra specifically. I think it’s important to note that we think that the assets that we have, I am sorry – that we think that the infrastructure that we have built today really doesn’t need a third drug as we think that the 100 sales reps that we have out there are perfect for what we are trying to do with Rhopressa and Roclatan and so we acquired assets certainly of significant size, it would require additional sales representation etcetera, etcetera and so which would also come in with an incremental cost, but we think it’s an interesting asset. We have also – we are aware of their price expectations and we think that any generic restasis that comes out will have significant impact on those expectations. And so while we are interested that’s a fact the company kind of an approach and so it’s awfully pricey for what you are getting, but generally, risk in assets.

[Ken Cacciatore:]

Great, thank you.

[Operator:]

Your next question comes from Elemer Piros from Cantor. Your line is open.

[Elemer Piros:]

Thank you. Good afternoon gentlemen. Vince, I was wondering if you could – if you have identified perhaps the reasons for why some of the regions are performing much better than other whether it maybe due to the background, the experience of the reps in those territories or the demographics have you started looking into it considering that it’s fairly early in the launch?

[Vince Anido:]

It is early in the launch. And it is certainly we are taking a look at the reps and we are taking a look at the characteristics we know we have some that have a lot of experience in ophthalmology and then some that little or no experience in ophthalmology. You also know that we have some folks out there who had great – doctors who had great experience and Rhopressa is part of the clinical trials and so some of those are early adopters. And so as Tom and I and others go visit a lot of these territories, a lot of these doctors we see some of that playing out. And so the good news is for us is here in about another week or two we are going to meet with the sales management team itself to try to really dig into the differences that they see and obviously make sure that we correct this as much as possible, because as I mentioned we have got 7 months of Rhopressa being on the market by additional Rhopressa being on the market by itself before we have to launch Roclatan. So, we certainly want to make sure that we understand fully what we have in front of us before we start getting ready for the Roclatan launch. But again, it’s too early to tell.

[Elemer Piros:]

And couple of housekeeping questions to Rich. Rich, I think I asked this before, but I just wanted to double make sure that the cash burn projections include revenue or cash coming into revenue correct?

[Rich Rubino:]

Thanks for the question. So, the cash burn that I gave, guidance I gave for this year is gross cash burn. What I mean by that is it does not include an offset for collections of receivables. So, the $200 million to $210 million is gross burn that would include expenses, capital and inventory. Just to give you a little factoid, we did collect $2 million in accounts receivable in the second quarter already.

[Elemer Piros:]

Okay, thank you. And with regards to the Irish facility, did I hear it correctly that the investment is largely done and so no more CapEx would be incurred on that front?

[Rich Rubino:]

The heavy lifting is behind us. We have the filling equipment delivered. As a matter of fact, I saw it’s very impressive during the second quarter installed in the second quarter. So, the heavy capital investments are behind us. There certainly will be smaller capital investments as we bring the plant ultimately online and as you know we expect to have commercial product out of the Ireland plant in 2020.

[Elemer Piros:]

2020, so it will take to validate the plant and the dry runs in 2019?

[Rich Rubino:]

That’s right.

[Elemer Piros:]

Okay. Thank you very much.

[Vince Anido:]

It’s also pretty consistent with what we said right through the very beginning we thought that we would be able to utilize that the output of that plant in the early part of 2020.

[Elemer Piros:]

Yes, thank you very much.

[Operator:]

Your next question comes from Oren Livnat from H.C. Wainwright. Your line is open.

[Oren Livnat:]

Thanks, I have a few questions. You let off with this anecdotal data you are seeing in the field with regards to significantly higher IOP pressure lowering or larger magnitude of learning that you saw in trials, but assuming you can only promote what’s in your label, how do you help that information get from one doctor’s experience to a potential writer?

[Vince Anido:]

Yes, thanks. So the doctors themselves are sharing that kind of information as they are visiting with their friends and things like that. And it’s not a surprising number as I mentioned, because that the data is similar to what we saw in Roclatan, where we had prostaglandin plus Rhopressa. And so – and it certainly doesn’t appear – it doesn’t occur all at the time, but it certainly occurs quite a bit of the time. And so Tom has a medical affairs team that’s working pretty hard together, an awful lot of that information and try to put it together in a package that we can then sort through exactly how best to share that with the entire physician community, but again it’s happening all over the country. So as speakers pickup on it or as they get growth own experiences with it, you hear this from the audience. I attended a presentation a while ago, where several of the speakers were talking about their own experiences, but even the audience had some great stories that they were telling about IOP lowering. So, it’s happening pretty much on its own, it’s almost all word-of-mouth.

[Oren Livnat:]

Okay, thanks. And I am not sure anyone asked this already, I got cut off, but Roclatan, the PDUFA date is March 14, are you comfortable that you will meet any potential April filing deadline for 2020, Jan 1, 2020 Medicare coverage?

[Vince Anido:]

Yes, we are. One of the things that’s interesting is, I think here over the last couple of months there is new guidance coming out of the FDA where you could actually start talking about pricing in your visits with managed care folks on products that have yet to be approved. And so John LaRocca who is on the call was obviously taking a hard look at that from a price point of view to make sure our managed access guys don’t do anything out of the ordinary here, but it certainly look promising that we can get into some of those discussions upfront and be able to make those deadlines for Roclatan prior to the April submission. What also helps is the fact that many of those plans, we already have Rhopressa on it. So, the contract negotiations etcetera are pretty well done that was just simply adding a product which is great position to be in.

[Oren Livnat:]

Okay, that’s helpful. And just lastly you mentioned 100,000 samples out there, obviously that’s going to have impact on the script pull-through in the early phases, what kind of sampling magnitude do you expect to do going forward either near-term, but also just indefinitely?

[Vince Anido:]

Well, we do you have plans on exactly what we are planning on doing, especially as we approach the Roclatan launch next year etcetera, etcetera, but I really don’t want to get into the specifics of that, because it does provides some interesting competitive dynamics which I would rather not divulge to them what our plans are.

[Oren Livnat:]

Okay, interesting. Thanks. That’s all for me.

[Operator:]

Your next question comes from Difei Yang with Mizuho Securities. Your line is open.

[Unidentified Analyst:]

Hi, good afternoon guys. This is Alex on for Difei. Thank you for taking the questions. I have two. One, I was wondering if you could comment on the prescription growth that we saw in the month of July and then secondly on the study with Japanese patients when could we expect to see some data from the Phase 2 trial? Thank you.

[Vince Anido:]

Yes. I will let Tom kind of talk a little bit about the prescription activity in the second, on Japanese trial, one of the reasons why we have decided to move it and open up the Phase 2 trial in Japan and that one will just start here or at the beginning of next year, so you are not going to see any data from that full trial until later on in the year, but in the meantime here in the U.S., one of the challenges for us has been trying to find enough Japanese and Japanese-American patients that actually fit the requirement of PMDA, the Japanese FDA for what a Japanese person where he is. And one of the challenges we have been facing in order to meet the criteria in many of the patients that are coming into the trial are into the 80s, it’s not the ones here in the U.S. And so it’s hard to find enough patients here in the U.S. to fully satisfy our needs. So, it’s hard to say what we will end up finally doing with that particular trial. We will make a decision. It’s one we are conducting here in the U.S. It is possible that we will roll it up to a certain point and then as we start the Japanese trial in Japan that we may stop enrolling in the U.S. and we may get data on Japanese patients early, but it’s too early to make that call. But certainly, the Japanese study in Japan we should have data sometime towards the back end of next year.

[Tom Mitro:]

And from the prescription levels in July from the IMS data, as you know the first we only have 3 weeks and one of those weeks was July 4 week. So, that’s only much of a less week, but we are happy with where we are so far, most notably what we are happy about is the refill rates that are occurring off of our prescriptions, because about almost 25% of our prescriptions now are refills, which speaks to it here, the patients staying on the drug and also obviously continuing with the drug and continue to buy the drug. So overall, we are quite happy and like I said when you combine that with the anecdotal responses we are getting from physicians in the field we think it’s going to do nothing other than continuing to increase. So, so far so good.

[Unidentified Analyst:]

Great thank you.

[Operator:]

There are no further questions. At this time I will now turn the call back over to Vince Anido, Chairman and CEO for final remarks.

[Vince Anido:]

Well, thank you. Thanks everybody for joining us on the call today. Obviously, we covered an awful lot of ground and hopefully you can tell how excited we are about the prospects of Rhopressa. We are happy with the way that it’s taken off right out of the gate. Certainly, there is a lot of great things coming out of the launch, not the least of which were surprises on the efficacy side as well as on the adverse events side, much better than we originally expected. And so the physician and the patient experiences have been very, very positive. Ecstatic about 7 months from now launching Roclatan and we think that, that’s going to bode well for the company and its prospects as well as building out the pipeline. So again thank you for joining us this afternoon and hope all of you have a great evening. Bye-bye.

[Operator:]

This concludes today’s conference call. You may now disconnect.