Aerie Pharmaceuticals, Inc.
Q1 2016 Earnings Call Transcript

Published: 3 May 2016

[Operator:]

Good afternoon, ladies and gentlemen. Thank you for standing by and welcome to the Aerie Pharmaceuticals’ First Quarter 2016 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 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.

[Richard Rubino:]

Well, thank you, Sonya. Good afternoon and thank you for joining us. We’re calling in today from the Annual Meeting of ARVO, the Association for Research in Vision and Ophthalmology currently underway in Seattle. With me today are Vince Anido, Aerie’s Chief Executive Officer and Chairman; and Tom Mitro, our 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 forecasting guidance regarding our future financial and operating performance, cash burn, the success, timing, and cost of our clinical trials, the clinical effectiveness, commercial launch, the potential future sales of our product candidates, and the potential of our new 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 our reconciliation to the most directly comparable GAAP measures, please see today’s press release which is posted on our website. Now, I will turn to the financials. As a financial update for the quarter, our first quarter 2016 GAAP net loss attributable to common stockholders was $22.7 million, or $0.85 per share. The net loss for the quarter includes non-cash charges for stock-based compensation expense of $3.5 million. When excluding the non-cash stock-based compensation expense, first quarter 2016 adjusted operating expenses for R&D and G&A totaled $11.6 million and $7.0 million, respectively. Total adjusted net loss for the quarter was $19.2 million. The $19.2 million adjusted net loss, or $0.72 per share compares to $14.5 million, or $0.59 per share for the first quarter of 2015. The first quarter 2016 cash burn was $19.7 million on track with full-year guidance and we closed the first quarter with over $130 million of cash, cash equivalents, and investments on our balance sheet. Let me make a few points that help you with your models for this year and associated analysis. When you compare first quarter of 2016 to first quarter of 2015, please note that we sold New Jersey state NOLs in 2015, in the amount of $2.9 million. We do not sell any NOLs thus far in 2016, nor do we intend to. When you adjust for the 2015 NOL sale, the percent of the full-year retained in first quarter is consistent from year-to-year, based on 2015 actuals and the 2016 guidance of $75 million. Also, in the first quarter of 2016, we made a one-time tax payment of $2 million, representing an AMT liability associated with our IP migration that took place in 2015. That $2 million is recorded as prepaid taxes and is being amortized to tax expense through our patent protection period 2030. We expect our 2016 cash burn of $75 million to be more heavily loaded to the front-half of the year, say to the tune of 55% in the first-half. In addition to the tax payment, there were significant clinical and regulatory activity underway. With that, the cash burn in the second quarter of 2016 should be similar to the first quarter of 2016. To help you bridge from GAAP to adjusted EPS, where we exclude stock compensation expense, you should assume that stock compensation expense would be approximately $15 million in 2016. Lastly, as I attempt to help you build your models for the rest of the year, it appears that some of your share counts were too high. So I’m pointing you to the actual first quarter 2016 weighted average share count of 26.7 million shares, you should use that as your starting point for the remainder of the year. With that, I’ll turn the call over to Vince.

[Vicente Anido:]

Thanks, Rich, and good afternoon, everybody. Thanks for joining us today, as we speak to you from ARVO that this should be pretty brief update since we just had a call just a few weeks ago, where we provided at a deeper dive into the Rhopressa adverse events profile, as compared to other marketed drugs for glaucoma. At that time, we also provided insight into very positive responses we received from glaucoma specialists at the American Glaucoma Society Annual Meeting in March. At this time, we have continued to hear very positive feedback from the ophthalmology community and which is really interesting, it is not only the ophthalmology community here in the U.S., but also we just had a great dinner last night with some Japanese glaucoma specialists and they reiterated many of the – that – the same ideas and the same excitement that they have about our products. As we have said, the most important task on our plate this year is to file the NDA for Rhopressa. All of our employees who are working diligently to prepare this submission and we remain fully on track to file in Q3 of this year. Now, as you know, it normally takes about a year or so to get the FDA approval. So if all goes well, we would expect to launch Rhopressa by the end of 2017. And we’re obviously entering launch mode now and there’s quite a bit of preparatory work that we’re undertaking. Importantly, glaucoma product launches in the United States are not outrageously expensive. As we said before, the cost of the fully staffed sales force of roughly 100 folks for the United States only cost about $2 million, $2.5 million alone. So the 100 reps would be able to target about 10,000 glaucoma physicians, but those are right, about 80% or so of the glaucoma prescriptions in the United State. So it also puts us at par with the sales forces of our major competitors like Allergan and Alcon. Now, turning to the combination product Roclatan, our other critical milestone for 2016 would be the 90-day interim efficacy readout for Mercury 1, the first Phase 3 clinical trial for Roclatan. Mercury 1 is almost fully enrolled, so here again, we remain on track, it is very, very important third quarter readout. Remember, the readout is only for the 90-day efficacy. Now Mercury 2, our second Phase 3 trial for Roclatan is the same as Mercury 1 without the additional safety tail that we have to add to that one. So it’s really just a 90-day efficacy trial that commenced in March of this year, and should readout in about a year so from the time that we started it. Both of these trials were successful. We expect to file our Roclatan NDA in the second-half of 2017, again, expecting about a one-year for the approval. Now, turning to Europe for just a second, we’ve got a couple of different things going on. First of all, with Rocket 4 or Rhopressa, it’s designed to provide adequate six-month safety data for that product that is necessary for the European regulatory agencies. And that data readout for the safety on Rocket 4 remains on track for the Q4 of 2016, sorry, that’s for the efficacy portion of Rocket 4 safety will be a little bit after that. We’re also planning to conduct in Europe Mercury 3. So this is a clinical trial in Europe comparing Roclatan to a fixed dose combination product marketed in Europe. And hopefully, we’re finding one that is not only been very, very successful with a high price, but also has long patent life left. This trial is currently scheduled to commence in the first-half of 2017, and we expect to finalize our strategy for European commercialization by the end of this calendar year. We also continue to develop our plans for potential Aerie own manufacturing plant in Ireland. It’s an important component of our global long-term sourcing plan. This is a reminder, we think that this is roughly about $20 million expenditure over multiple years, it is something that we can do and make a decision on our own, this is not a requirement of any sort like that. So it’s not currently included in any of the major cash burn estimates that Rich has provided. Now, turning to Japan, we continue to evaluate our path forward in terms of the clinical trials. In fact, the number of us are planning on going to Japan sometime in Q3 in order to meet with the Japanese regulatory authorities, PMDA, and as I mentioned, we had dinner with our resident experts last night, as we pursue the clinical path to approval. Now, in this particular country in Japan, a large portion of the glaucoma patients have much lower average intraocular pressures than we do in the United States and certainly the physicians last night reiterated how thrilled they’re to have a product that works so well as the pressure is decreased. So certainly, the major products in Japan with latanoprost, Timolol, don’t work as well and the majority of their patients. And so we think that this a great positioning for our product. As we said before, we think Rhopressa is going to be a bigger deal in Japan, let’s say that even Roclatan that it slips when we think about Europe, where we think Roclatan will be a much bigger deal. So, again, we’re making a lot – awful lot of progress in terms of our main two products, and we’ll continue to do everything we possibly can to continue to hitting our timelines. As is we’re here at ARVO, which is all about research, let me bring up to speed on some of the exciting new research developments at Aerie. In addition to the earlier preclinical research data that we’ve shared on Rhopressa, including the anti-fibrotic activity in Human Trabecular Meshwork Cells, the increase perfusion of the trabecular meshwork, we have other exciting recent news on differentiating aspects of Rhopressa. The first is background, just as a reminder, the trabecular meshwork is the diseased tissue in glaucoma that calls us the elevated intraocular pressure. So potential availability to modify the diseased tissue is very, very important. So our new research data on this point shows for the first time the ability of Rhopressa to reverse the fibrosis and cultured trabecular meshwork cells. This ability to restore the cells to a prefibrotic state, the significant finding on top of the previous – preclinical studies demonstrating that Rhopressa has a potential to block the induction of fibrosis. There is also very interesting research that’s being presented here at our ARVO by our Duke collaborators who are using OCT imaging to visualize for the first time, the increase in the trabecular meshwork outflow, and how our drug actually opens up to trabecular meshwork, allowing more of the aqueous humor to flow through it. This is done in life – nose, eyes after the treatment of Rhopressa. These new findings are presented here at ARVO and are available on our website. Also, while we haven’t yet discussed it in much detail, we remain very excited about the potential neuroprotective effect of Rhopressa. We previously posted on our website an abstract from Dr. Jeffrey Goldberg from Stanford that indicates Rhopressa’s potential ability to promote Retinal Ganglion Cell Survival and Axon Regeneration. Anytime you see this kind of evidence on your protection and regeneration, it become something really great interest for us. Our trabecular meshwork is a diseased tissue in glaucoma, the elevated intraocular pressure, ultimately result in damage to the optic nerve, which is while in turn causes vision loss, that’s why these findings were so exciting. Now further, our preclinical small molecule for wet AMD, AR-13154 is also the subject of new research being presented here this week. You’ll recall the slide that we have shown in the past that demonstrated the meaningful reduction and neovascular lesion size, in fact, numerically greater than EYLEA in animal models. This week we have new preclinical research that shows that AR-13154 has the potential to enhance the effect of VEGF-inhibitors, when used as adjunctive therapy. Remember, AR-13154 is a small molecule, and so we are obviously working with some partners to develop a delivery system for this. But we’re excited about this. And there is new poster that is now available on our website addresses the additive effect of combining AR-13154 with EYLEA treatment. Lastly, we’re evaluating sustained release formulation technologies and capability of delivering Rhopressa over several months to the front of the eye for glaucoma. This is going to be an important opportunity for us as we continue to build our pipeline for future growth. In addition, our research on – in addition to our research on AR-13154 for wet AMD, we have remote EG-30 for for neuroprotection and dry AMD, along with our associated work with great drug delivery, a company called GrayBug that provides us with a way of delivering our small molecules to the back of the eye. All these were generating high levels of interest among many ophthalmologists we’ve spoken to, including those that are here at ARVO today. Now with this, I’ll turn the call over to the operator for any questions-and-answers.

[Operator:]

Thank you. [Operator Instructions] And our first question comes from Adnan Butt from RBC Capital Markets. Your line is now open.

[Adnan Butt:]

Hi, everyone. Thanks for taking the questions.

[Vicente Anido:]

Hi.

[Adnan Butt:]

First, on the Mercury 1 file, Vince, the endpoint is a 90-day endpoint, and do you think – what level of confidence do you have that the readout can indeed occur in the third quarter? The reason I asked that is, because obviously the Rocket 2 study took longer to readout after enrollments, it was a four, five-month period?

[Vicente Anido:]

Well, and you’re absolutely right. And certainly for rest of the company that the Rocket 2 readout took a little bit longer. It was the first time we’d actually had something that complex to do and had huge number of sites and alike. And so those kinds of things typically take a little bit longer. The good news now is that we have obviously the same team that actually did all those. And it’s certainly, we think we’ve learned from the past. And we think that, as we have begun looking at the queries and for the data, et cetera, that, we believe that based on all the information we have today that we’re not going to have any troubles meeting our Q3 timelines.

[Adnan Butt:]

Okay, thanks. And then in terms of the M1 study, can you comment on the kind of dropout rates, where you have seen in that study, or they similar to the entire Phase 3 studies?

[Vicente Anido:]

The – we’re pretty blind, we’re not pretty blinded to the data. It comes in aggregate. And so it’s kind of harder to look at it from that perspective and try to make details out of that. And also the reason that it’s hard to compare between trials, remember that in the other studies and all of the Rocket studies we were comparing into a twice-a-day products, so there was multiple dosing every day. This one – everything has done once a day at night. And so we think that those kinds of factors influence dropout rates. The fact that you have basically three products. You have Roclatan, Rhopressa, and latanoprost, all of which cause hyperemia. We think that, we’re not going to see the dramatic differences that we saw in the other trials. Now, it just be too difficult to compare even if I had the data, which I don’t.

[Adnan Butt:]

And lastly, and then I’ll get off in terms of an ex-US strategy, you – would the company pursue approvals outside even without a partner at the stage?

[Vicente Anido:]

Yes. And so, clearly, we signal, not more than signal, we said that for Europe that we’re going to be using Rhopressa, all the data that we’ve generated for Rhopressa already and used that to file the – with the European authorities, and we use Rocket 4 to fill out the balance of the safety work, as you remember, in Europe, you need to have not only 100 patients on drug for a year, but you also you need to have 300 on drug for six months. So Rocket 4 provides to add. So we do plan on filing in Europe on our own. With Japan, it’s a little bit too early to tell, if we were talking, say, late Q3 after I come back from Japan, I may have a better feel for how much work needs to be done and how much of that we do on our own, et cetera. But certainly, we’re not slowing down and the whole purpose of us doing what we’re doing in Japan is not to slow up our ability to get the drugs onto the market spending discussions with partners. And so we’ll be fully prepared to move forward in Japan on our own, because we just don’t want to – in terms of the approval, because we don’t really want to wait until we take a partner to go through with that. So if it works out and we find a partner quickly and get everything done and their part of that process is great, but if not refinement.

[Adnan Butt:]

Okay. Thank you so much.

[Vicente Anido:]

Thank you.

[Operator:]

Thank you. And our next question comes from Annabel Samimy from Stifel. Your line is now open.

[Annabel Samimy:]

Hi, guys. Thanks for taking my question.

[Vicente Anido:]

Hi, Annabel.

[Annabel Samimy:]

So that’s some interesting additional preclinical data that you’ve been showing for potential disease modification and low IOP areas. Can you just help us understand – is it having these kinds of effects in preclinical models? Should we have seen greater separation between Rhopressa and Timolol arms especially in IOP. And I guess why are we not necessarily saying that? And is the preclinical data sufficient to convince physicians of that disease-modifying effect?

[Vicente Anido:]

But we think that the – think – we think of the position, let me start there would – we look at that very favorably, but certainly within the field of glaucoma, we’ve had other products that have been claiming neuroprotection and things like that. And so, but no one’s ever been able to show that clinically. So they – it’s been difficult to get it out of the preclinical stages and be able to show that directly. So I think it’s just a matter of what additional steps we can take, and obviously, now that we have this data. Our scientists can work with our clinical folks, who try to figure out how best the designs approach studies. So that we can try to show the same effect in humans. Relative to the activity that we just described anti-fibrotic and it’s of the disease modifying component of getting the fibrosis basically to attenuate and then get it back to a healthy state. Remember that the animal – the models that we’re using allow for immediate feedback. And so when – what we don’t know yet is, how long you have to dose in order to get to regain sort of the pliability of the Trabecular Meshwork muscle. And so, we have still work, it’s ongoing for us. But we have to think each of the missing data, because if we had that, we would be able to see that, in fact, that we may have something very, very special. Now, in part one could argue that when we looked at the 12-month efficacy data that the fact that we didn’t see any tachyphylaxis that some folks were expecting and certainly we saw it on the Timolol arm. The fact that we didn’t see anything from Rhopressa maybe an early indication that over time, we’re able to normalize the pressure and maybe even over longer periods of time, we’ll be able to see some general improvement. But, again, those are tough longitudinal kinds of studies, but we certainly, as things progress, we wanted to take a pretty hard look at that.

[Annabel Samimy:]

Okay. And just – in terms of Rocket 4, I know that, you’re coming to the filing for Rhopressa and it’s going to be on the back of the Rocket 2, if Rocket 1 is supportive. Any you’ve said in the past, you don’t need Rocket 4 or Rocket 3 for the filing. But what happens in the event, or how would FDA look at in the event that something goes off with Rocket 4, you have an unexpected outcome. How could that potentially impact the filing, could that impact the filing? And I guess certainly that that could potentially – could that derail Europe, also if you’re just looking at it for additional safety data?

[Vicente Anido:]

Well, it all depends on what the derailing really is in terms of Europe, because and as long as we don’t see any untoward effects on the adverse event type, which we obviously don’t expect to, because we’ve run it out for 12 months already. So we – and certainly, we didn’t see anything occurring at the six-month mark with those 100 patients. And so it would just really have to come out of left field that – for that to be worse. Relative to the efficacy component of Rocket 4, should something transpire there that is an unexpected rumor. The FDA only requires that we do to support of trials. And so the fact that we did a third one is a non-issue. In fact, if you take a look at the history of glaucoma development and certainly we have the benefit of having somebody who is running the R&D for Alcon on our Board, and he tells me that they never were able to get approval for any of their glaucoma product with just two clinical trials. It always took them three, but their second one – they didn’t work ended up being somewhere in the middle as opposed to being the last one. So, again, the fact that we have two trials that corroborate each other. We think there’s an awful lot of comfort that no matter what happens from an efficacy side on 4 – on Rocket 4 that we’ll be filing.

[Annabel Samimy:]

Okay. And then on Roclatan, you mentioned that your blindness is a continuation. Are there any specifics signals that said that you’re looking out 4 from earlier Roclatan trials that you would be particularly sensitive to when you’re looking at Roclatan and the Mercury 1 data?

[Vicente Anido:]

I mean, in terms of adverse events?

[Annabel Samimy:]

Yes, adverse events tolerability things like that?

[Vicente Anido:]

When we look at the Roclatan Phase 2 trial, and remember that, we’ve shown the chart showing the adverse events there of Roclatan, Rhopressa, as well as latanoprost. There was really no difference in the adverse events between Roclatan and Rhopressa. So we wouldn’t expect to see much of a dramatic shift there. We think that they would somewhat marry each other.

[Annabel Samimy:]

Okay, all right. And then – sorry, last question. The cash you have about $130 million, I think is what’s written for $131 million. So that should get you through – remind us what that should get you through and what that covers in terms of clinical or commercial?

[Richard Rubino:]

Yes. So we started the year with $150 million, as I said on the last year-end call, we expect to burn $75 million, so about half of it. So we’re currently projecting to have $75 million at the end of the year. Of course, by the end of the year, we’ll be pretty far along with the majority of our clinical spend and we get into 2017, the clinical expenses fall away very significantly, and we’ll have $75 million left to do what we need to do to prepare for commercialization. And as Vince mentioned in his prepared remarks, the product launch expenses are not that significant, you mentioned the $2 million, $2.5 million a month for the sales force, when the sales force is fully in placed 100 reps, the actual marketing launch expenses themselves will not be that significant or you’re talking about single-digit millions of dollars.

[Annabel Samimy:]

Okay. All right, great. Thank you.

[Operator:]

Thank you. And our next question comes from Serge Belanger from Needham & Company. Your line is now open.

[Serge Belanger:]

Hi, good afternoon guys.

[Richard Rubino:]

Hi.

[Vicente Anido:]

Hey, Serge. How are you?

[Serge Belanger:]

I’m great. Most of my questions have been answered, but I have one more for Rich I guess. I think when you gave the initial guidance on the last quarter – quarterly call. You talked about a couple of variables including the manufacturing spend in Aerie and potentially moving up Mercury 3. As you are thinking on either these variables changed at all and or should we expect any of these variables to now occur in 270?

[Richard Rubino:]

I would say that they’re still obviously on a radar screen. The timing is not finalized yet. So I would just say stay tuned, but you shouldn’t be concerned that we would spend money on for example the plants or Mercury 3 in such a way that it would damage our cash position where we would have some form of financing overhead. So don’t think about it that way, I would just say stay tuned.

[Serge Belanger:]

Okay, thanks. Thanks for the color and I got it.

[Vicente Anido:]

Thank you.

[Operator:]

Thank you and our next question come from Donald Ellis from JMP Securities. Your line is now open.

[Donald Ellis:]

Thank you. I too – my questions have asked – have been asked and answered. But just one quick one, can you tell us approximately what percent of patients with glaucoma of normotensive IOPs?

[Richard Rubino:]

Yes, it’s probably about 60%, Don.

[Donald Ellis:]

60% of the patients with glaucoma have abnormal IOPs?

[Richard Rubino:]

Yes, so if you look at the – and we’ve shown this chart multiple times, it’s a Baltimore eye study. And we showed it or probably since the IPO and what we know is that if you assume the normal IOPs in the 20, 21 range that by 60% of patients were normotensive.

[Donald Ellis:]

Okay, great. And just a follow-up on Annabel’s question about comparing the Phase 2 data for Roclatan and the incidence of hyperemia, obviously to an issue with investors, obviously not an issue with ophthalmologist. But is there anything that you hold out of those Phase 2 data for Roclatan that gives you comfort then where we see Mercury 1 results in the third quarter that you probably not going to see hyperemia as a concern?

[Richard Rubino:]

So again we had two ways to think it about it. One is what we saw in Roclatan Phase 2 trial, we didn’t see any difference at all with that same percent of hyperemia rates for both Roclatan and Rhopressa, right at 40%. And so we would expect that given that it’s a little bit longer term file that that may go up a little bit. So we would think that both Roclatan and Rhopressa we’d see adverse event rates they were similar to what we’ve already seen with Rhopressa in its Phase 3 trials, again because of the long-term nature of those kinds of things. And so what we know when talking to a lot of the ophthalmologist is that these are all topical adverse events. There are no systemic ones. There are no serious adverse events that associated with drug. And so that’s what they were really clamoring about it, in fact that here they have the drug that for the first time is as efficacious, we’re not a priority as timolol, which they consider to be a great drug. The problem with timolol, while it’s relatively innocuous on the eye, it does have a lot of systemic adverse events, especially on the respiratory and on the cardiovascular side and what’s interesting is the same feedback occurred from the doctors in Japan that’s why they’re excited about it, because for the first time they now have new chemical entity that just good as timolol, with just simply topical adverse events. And so we just don’t think that ophthalmology community is going to be particularly worried about it.

[Donald Ellis:]

Great, thank you very much.

[Richard Rubino:]

Thank you.

[Operator:]

Thank you. And our next question comes from John Newman from Canaccord. Your line is now open.

[John Newman:]

Hi, thanks for the question. Just like kind of a general question about Rocket 2 versus Rocket 1 as well as Rocket 4. I think based on your conversations with the agency, do you think that they will be viewing Rocket 1 has more supportive from a safety standpoint, or from an efficacy standpoint, or do you think that the safety and efficacy will be viewed equally from that regard? Thanks.

[Vicente Anido:]

Sure. Hey, John, Vince here. So Rocket 1 was only a 90-day study, and the primary endpoint there was the efficacy. We do obviously measure short-term safety, but the safety for the FDA’s perspectives – from their perspective is more geared towards the 12-month safety that was embedded into Rocket 2. So we think that Rocket 1 would be supportive to Rocket 2 for the efficacy component. And because Rocket 2 had the tail, which allowed us to show data on 12-month safety, that’s really the primary focus of the FDA on a safety point of view, obviously look at the short-term safety, but there wasn’t dramatic difference between Rocket 1 and 2 for 90 days. So it was the requirement, if you will by the FDA that we look at those 100 patients on our drug per year, which was – that was embedded in Rocket 2. Relative to Rocket 4, don’t forget that, we started Rocket 4 the minute that we realized that we had a problem with Rocket 1, it was prior to discussions with the FDA. And so we just didn’t want to lose anytime and we saw that for a $10 million to $12 million expenditure that it was well worth taking the risk and starting at both at risk, and it was only about three or four months later that we found out that the FDA was willing to let us move forward with Rocket 2 and Rocket 1 being supportive. So it’s not a lost trial by any means, because we can use the safety from Rocket 4 for Europe, because we wouldn’t have 300 patients on drug for six months based on everything else we’ve done, so this gives that to us.

[John Newman:]

Okay. And would there be any reason why you couldn’t combine the safety databases from Rocket 2 and 4 at a later point in time? Are there any demographic differences, or baseline differences between those two populations?

[Vicente Anido:]

No they really were, because we use the exact same metric criteria in terms of the primary endpoint. But Rocket 4, the main difference there was that we opened – we opened up the upper end of the IOPs up to 30 and where Rocket 1 and 2 were below 27. And so we can certainly – we always have to combine all safety data, and we have to make all safety data available to the FDA. So as soon as it becomes available in terms of Rocket 4 or Rocket 3, we do provide that or put that into the I&D.

[John Newman:]

Okay, great. Thank you.

[Vicente Anido:]

Sure.

[Operator:]

Thank you. And our next question comes from Difei Yang from Brean Capital. Your line is now open.

[Difei Yang:]

Hi, thanks for taking my question. Vince, would you remind us what kind of efficacy should we be looking for in Mercury 1? Is that 2 million, at least, 2 millimeter Mercury improvement, or is it possible to be around one?

[Vicente Anido:]

Hi, Difei. So the discussions with the FDA, when you look at what they’ve done historically and the last time they did, it was in 2013 was Simbrinza, which is the last combination that they approved. There are two different metrics that you have to achieve. The first one is the more standard one, which is, you have to show statistical superiority of the combination versus each individual component at the nine time points we measure. Remember, over 90-day period, we bring the patients back three times once you’re on drug. So at the end of week two and week six and on the 90th day and bring them back three times during that day. So that’s how you get the nine time point. So you have to first be statistically superior in each one of those nine time points, so that’s job one. Job two, as they showed in Simbrinza, the FDA approves Simbrinza with a range of differences in favor of the combination that went anywhere from under 1 millimeter to 3 millimeters. And so, again, that’s what they have signaled before is what you’re looking for. They like to see the separation, obviously it’s a statistical separation. They like to see the numerical separation at those nine time points in the range, because they realize there’s a lot of ups and downs in a measurement – intraocular pressure measurements. So that’s why they’re okay with a range of 1 to 3

[Difei Yang:]

Okay. Thank you for that clarification. Then from physicians, ophthalmology standpoint of view, do they really differentiate of one millimeter improvement versus three millimeters or – as long as there is improvement that’s good enough for them?

[Vicente Anido:]

Well, certainly when you take a look at products like Combigan, they’re not particularly off the charge efficacious. But there’s actually in today’s environment – quite a bit of use. We think that in addition to just looking at it is simply the millimeters difference, because it’s going to vary whether it was early in the morning versus later in the afternoon et cetera. I think the other thing is going to be pretty telling and it is a reminder in Roclatan Phase 2. When we take a look at the percent of patients who got to very low pressures, we had almost 50% of the patients on Roclatan to get the pressure, starting pressure to 26, but they got the pressures of 16 and below, almost half the population that was on Roclatan drop that much, as compared to latanoprost, where they again started roughly at 26 and only about 18% to 20% of their patients got to 16 millimeters and below. So again considering that any ophthalmologist, glaucoma specialist that you talked today really talks about getting these patients as low as possible. We think that it’s not only the one to three that they’re going to think about in terms of the totals, I think what they’re going to look at is this other kind of data saying it’s the one effect. It’s – they’ve never seen that many patients get pressures that low on any medications even when they add them together. And that – we think that’s the big deal for us.

[Difei Yang:]

Yes, thank you. So Vince, one last question for this – the percentage of patients getting down to 15, 16 millimeter range, will this be – do you think if you prove that point in ongoing Phase 3, do you think that that’s likely to be included in the labeling?

[Vicente Anido:]

It will be part of the clinical studies and certainly it will be part of anything that we present. So yes, no doubt that the physicians who get to see it, we’ll just have to wait and see because it is an analysis that we’ve identified upfront. So we hope to be able to convince the FDA to include it because that gives a very dramatic drop.

[Difei Yang:]

Thanks, so much.

[Vicente Anido:]

Yes, ma’am.

[Richard Rubino:]

Thank you.

[Operator:]

Thank you. And this does conclude our question-and-answer session. I would now like to turn the call back over Vince Anido, Chairman and CEO for any final remarks.

[Vicente Anido:]

Thank you, all again thank everybody for taking about an hour, so of your time this afternoon to join us. We’re very excited about the way that the company is progressing and about as hitting our timeline and certainly as we think about Q3 of this year with the Rhopressa NDA filing and with the data coming out of Mercury 1. We’re very, very excited about the prospects of the company. We think we’re well financed and are able to execute our plan and continue to do everything that we possibly can to move these products forward on a timely fashion. We’re very excited about this week, not only because of everything is going on here at ARVO, which is as Rich mentioned mainly at research side, but we immediately head down to New Orleans for the American Society of Cataract and Refractive Surgery meeting for the majority of the folks who will ultimately prescribe our products who will be and we got a number of presentations that will be there as well. So again lot of good news coming out of the company, we hope to continue that. So thank you and have a great evening.

[Operator:]

Well, ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program. You may all disconnect. Everyone have a great day.