Aerie Pharmaceuticals, Inc.
Q3 2015 Earnings Call Transcript

Published: 4 Nov 2015

[Operator:]

Good afternoon, ladies and gentlemen. Thank you for standing by and welcome to the Aerie Pharmaceuticals' Third Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. 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 go ahead, sir.

[Richard J. Rubino:]

Thank you, Genesee. Good afternoon and thank you for joining us. With me today are Vince Anido, our Chairman and Chief Executive Officer, and Tom Mitro, our President and Chief Operating Officer. Today's call is also being Webcast live on our Web-site, 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 be making certain forward-looking statements, including statements and forecasts regarding our future financial and operating performance; the success, timing, and cost of our clinical trials; the clinical effectiveness, commercial launch and potential future sales of our product candidates; 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 our reconciliation of the most directly comparable GAAP measures, please see today's press release which is posted on our Web-site. As a quick financial update for the quarter, our third quarter 2015 GAAP net loss attributable to common stockholders for the three months ended September 30, 2015 was $18.0 million or $0.69 per share. The net loss for the quarter includes non-cash charges for stock-based compensation expense of $3.3 million. When excluding the non-cash stock-based compensation expense, adjusted operating expenses for R&D and G&A totaled $9.3 million and $4.7 million respectively for the third quarter of 2015. Total adjusted net loss for the third quarter 2015 was $14.6 million. The $14.6 million adjusted net loss or $0.56 per share compares to $10.8 million for the same quarter in 2014. Importantly, our balance sheet remained strong. At the end of the third quarter 2015, our cash and marketable securities totaled approximately $163 million. This is essentially unchanged from our June 30th balance as we raised additional proceeds in the third quarter from our previously filed at-the-market program at an average gross price of approximately $31 per share. We have $100 million remaining on the shelf we filed last November which is available for our use assuming the cost of capital is attractive. With that, I will turn the call over to Vince.

[Vicente Anido:]

Thanks, Rich, and good afternoon everybody. Thanks for joining us today. Really it's a pleasure to be with you again, and certainly as we think back over the last six months or so or last two quarters, it's been quite a rollercoaster ride for the Company and we're very excited about what we reported in our press release and it's my pleasure to give you just an update on where we are. I'm going to start off first with a news on the Rhopressa NDA prospect, and as you know we've had multiple discussions with the FDA over the last few months, especially when we changed the range for the primary endpoint in Rocket 2 back two or three months ago and came out with positive results. As you saw in the press release, we've been continuing those discussions and in fact we had a Type 2 Pre-NDA meeting recently and the great news out of that is that we don't have any changes in what we've been telling you, which is basically we do plan on filing the NDA with Rocket 2 as our pivotal and Rocket 1 data as supportive, and the FDA was comfortable with us doing that. What new news, one piece of new news is that they did agree that we're going to file only with the QD form as part of the dosing schedule as opposed to both the QD and the BID. Obviously we think that that has a lot to do with the fact that we only have one study with BID but also the fact that there is a lot of dropouts in the BID arm. And FDA saw that there's just a lot more adverse events, so really the QD was the dosing schedule to go with. As expected, and as we've said before, neither Rocket 3 nor Rocket 4 results are needed for the NDA filing. Again, we've always believed that those would be nice to have, it's good backup and insurance policies for us, and so again the FDA agreed that those were not required for the NDA filing. So with this new clarity, we do expect to file our NDA for the once-daily Rhopressa in Q3 of 2016, still within our original schedule, and again, given the rollercoaster ride we've been on, it's great to be able to say that. Those are the key points from that recent FDA meeting. We do expect to have other FDA meetings on a going forward basis, probably all the way up to the time that we file the NDA. Also as part of the last meeting with the FDA, we did talk about their expectations and our plans for submission on the safety side, and as we've told you since the beginning of the program, Rocket 2 did have the [indiscernible] for safety on the back of the 90 day efficacy trials, and so we do expect to file with the 100 patients on drug. We expect to have those patients completed by the end of this year, beginning of next year, and we'll give you the results on those. Now, we will continue to finish up. I'm sure there's going to be more than 100 patients that finish up that trial on the QD form. So we do expect that the number could end up being over 100 by the time it's all said and done, and so we'll file all the patients that complete the trial as part of the NDA plan for next summer. Obviously for us this is all very, very good news. We do have a clear line of sight into hopefully not only submitting Rhopressa on time but also getting it approved roughly about a year or so later. As you could imagine, our clinical team is pretty busy these days. They are actively engaged in executing ramp of Rocket 4 which you remember this is the fourth Rhopressa trial as well as Mercury 1 which is the first of the Roclatan or the combination trials. As a reminder, Rocket 4 I said is our fourth Phase 3 trial for Rhopressa that is designed to provide adequate information on safety for six months, which we do believe will support the European filing. In addition to that, obviously we are getting the typical 90-day efficacy data that you've seen out of Rocket 1 and 2, and also we've built in a six-month efficacy data point into Rocket 4. So all of that will be available as we finish up next year, the 90-day data will be available roughly at midyear of 2016 and then the six-month efficacy data will be available towards the end of 2016. Those results will be submitted to the FDA. As you can imagine, we need to do that. But they are not submitted directly into the NDA. They are actually filed into the IND and then referenced to the NDA, and the FDA is made aware that we've made that filing, and so if they want to access that data and see what the results were, they can certainly do that. But again, we are not planning on filing that directly to the NDA. So, again, I want to reiterate, Rocket 4 is not necessary for the submission of the Rhopressa NDA in the middle of the next year, although we will be obviously, once it's completed, all that data will be available into the IND and the FDA can look at it at that point. As I mentioned, Mercury 1 represents our first Phase 3 trial for Roclatan, which is a very important step as we move to our second product candidate further down the pipeline. It is a 90-day efficacy readout as well as a 12 month safety trial designed to demonstrate as you'll remember the superiority of the combination Roclatan over each of the individual components of Rhopressa and latanoprost. The design is actually very, very similar in terms of the protocol to our very successful Phase 2 trial which read out in the middle of 2014. We do expect the 90 day efficacy top line results for Mercury 1 to be available in approximately 1 year or so from the start date, which is sometime in the middle of September. So it will be in roughly Q3 or so of next year. And so the good news is, things are going pretty well there. So that so far is in line with expectations. Our second trial for Roclatan, which will be called Mercury 2, is expected to start sometime in the second quarter of 2016. It will have the same comparators as Mercury 1, meaning it's a Roclatan combination versus each of the individual components. It will be a 90 day efficacy trial only. So typically these 90 day efficacy trials that you've seen take us roughly a year or so to run from the time that we start up to the time when we report top line data. Now assuming all goes well with Mercury 1 and Mercury 2 results, they'll be the only trials we need to get Roclatan approved in the U.S., and with that the Roclatan NDA filing could be in the second half of 2017 or towards the end of it, roughly about a year or so behind Rhopressa. And again, this is something that we've been signaling since we started all these programs. Now in addition to the U.S., we also are planning what we call Mercury 3 to be a non-inferiority trial comparing Roclatan to a combination product marketed in Europe. That will be used in Europe not only to support the filing in Europe but also obviously for price comparisons, but become very, very critical over there. Schedule to commence Mercury 3 has not yet been finalized. It will certainly not be one of our top priorities. Clearly getting Rhopressa and Roclatan approved in the U.S. is priority number one for the Company, but we'll move as quickly as we possibly can to get Mercury 3 started in Europe, so that we can again follow on the heels of Rhopressa filing in Europe and move that in there as quickly as we possibly can. Now there's obviously quite a bit on our plate right now and we are focused first on U.S. approvals, as I mentioned, and which is where we're going to generate the majority of our earnings, if the products are as successful as we think they are going to be. Our Company continues to be focused on execution. So anything that we can do to accelerate these programs, obviously we'll try to do and we have more good news on that front. And both Rocket 4 and Mercury 1 are running slightly ahead of our expectations in terms of enrolment. We think this is a testament to the level of physician interest in both of those products and certainly we're looking forward to the American Academy of Ophthalmology meeting which starts in the middle of next week in Las Vegas, and again, we think we'll get a lot of feedback there from the physicians, and again so far all of that has been very, very positive for both of these products. As I said in the past, if successful, we believe Rhopressa could become the adjunctive therapy of choice due to its efficacy profile, lack of systemic adverse events, the once-a-day dosing schedule and its synergy with prostaglandins, and that Roclatan will be the first line drug of choice due to its high efficacy over prostaglandins alone. And so, we think that both of these will play a major role in the treatment of ocular hypertension in glaucoma patients. And just as a reminder, there are about 33 million, 34 million prescriptions for these kinds of products in the United States today and roughly half of them are first-line drugs like prostaglandins and the other half are for all of the other products that are typically adjunctive therapies that are dosed two or three times a day. So we think we can play pretty well on both sides of the pie chart, if you will, in terms of where these products play. And again, the interesting characteristics for our drug which we've reported many times in terms of how they relate to glaucoma patients is that we know that 75% of glaucoma patients have intraocular pressures below 25 millimeters mercury, and so that's why we're very excited not only about Roclatan obviously because we think that's going to be a huge drug, but also feel very comfortable about the prospects for Rhopressa because as we've shown in the Phase 3 trials, we're not inferior to timolol that had to be dosed twice a day to be effective but we did that with once a day dosing. Now in addition to all that and getting these drugs approved, our research team continues to do quite a bit of work performing preclinical research on Rhopressa to further support disease modification and/or protective potential. We hope to continue to characterize Rhopressa's unique activities, both in animal models as we've already reported and we'll continue to report, and eventually in human trials. We do think we have something special here in these compounds and we believe our job is to characterize those for you. In addition to that, we have as promised a lot of business development activities going on in the last quarter. We were very, very successful there. From a research point of view, in terms of some of the things that excite us, we took one of our own products, AR-13154, that is a Rho kinase inhibitor that also hits JAK2 and PDGF receptor beta, and it's an exciting small molecule for the treatment of wet AMD. In fact, as we have reported, we were able to reduce lesions in a choroidal neovascular rat model, about as well if not a little bit better than Eylea, so an awful lot of excitement in our camp about that drug. In addition to that, we announced two deals in the last quarter. One of those was with a drug delivery company called GrayBug which is a private company that was spun out of technology that was housed at Johns Hopkins University, and focused on the biodegradable polymer delivery technology. Now we think that something like that is perfect for delivering a small molecule like AR-13154 to the back of the eye with a very long lasting sustained delivery potentially up to six months or more. So we are targeting to be able to deliver our drug for at least six months. That same delivery system, we also have the rights to use that for front of the eye deliveries. This is certainly something we'll look at with the Rhopressa or one of the other molecules. In addition to that, we also signed a collaboration with Ramot at Tel Aviv University and we are able to bring in a product which is EG-30. It's a small molecule in the beta amyloid category for both neuroprotection and ultimately to treat dry AMD. Again, a small molecule, we are very excited about some of the early Phase 2 work that was done as this drug was studied as a topical, but obviously we believe that the right thing to do with a drug like this one is to study it for injection into the back of the eye, and certainly technology like GrayBug could play an important role for us there. As you know, back of the eye uses of drugs, typically as you know the large molecules or proteins dominate today's therapeutic choices and we've created an incredibly large commercial – and they've created a large commercial opportunity as a result of that. We hope to bring one or more small molecules to that party in the very, very near future. Now lastly before I turn the call over for questions, I want to remind you about our investor media event which is scheduled on November 13th at noon Pacific Time at American Academy of Ophthalmology meeting in Las Vegas. It will be Webcast in case you can't join us in person. We are pretty busy right now preparing for that presentation, and during that event, we do plan on taking you through a deeper dive of the Rocket 2 efficacy and safety results, give you a further color on the Rhopressa regulatory update that I provided today, as well as an update on Roclatan and some of our preclinical research and business development activities that I mentioned earlier. Now with that, I will turn it over to the operator for questions and answers.

[Operator:]

[Operator Instructions] Our first question comes from the line of Adnan Butt with RBC Capital Markets. Your line is now open.

[Adnan Butt:]

Vince, congrats on the progress. Asking on the pre-NDA meeting, could you tell us when it was held and if the Company has minutes from the meeting already? Just trying to make sure that filing Rocket 2 as the pivotal and Rocket 1 as supportive, that's something that's in the minutes. And then is the implication therefore that R4 is not needed for an NDA but also not needed for approval?

[Vicente Anido:]

So as we have said, this isn't the first time we have talked to the FDA about using Rocket 2 and Rocket 1 as the only two studies that we needed for NDA filing. And so it was one of the questions that we posed to the FDA very directly about did they agree that we had that, and they did that we could use Rocket 2 and Rocket 1 and file for QD dosing schedule. And so that will be in the minutes. The meeting only occurred about a week or so ago, and so we have submitted our version of the minutes, but we also have the questions that they answered, which they always do. Prior to us going to the meetings, they gave us written response to those questions. So, yes, we will have it in writing, if that's your direct question.

[Adnan Butt:]

Okay. And then just broadly, Vince, I mean the Company has interacted with the FDA several times, what's their temperature around glaucoma in general? I mean do you see them more understanding of new drugs, new mechanisms than in the past?

[Vicente Anido:]

Certainly the whole atmosphere by the way on Rocket – as we have done these discussions with the FDA, it's night and day from anything that we've ever experienced certainly over the last decade or so. I think that they are very supportive of companies that are coming in with new mechanisms and trying to work with them to work through the different issues and make suggestions. In fact one of the shocking ones in this last meeting is, one of the key FDA guys is actually making some marketing recommendations for Tom. And so hopefully don't take those into consideration to rate the launch plan. And so we see it very much, very supportive, and again, as we've said many times, we're pleased with the progress that's been made at the FDA and certainly our intersections with them. Just I did fail to answer the back end of your question, which is – your first question which was regarding the need for Rocket 3 or Rocket 4. Yes, we verified all that with the FDA, and again, all we're going to do is, when we get those results, we'll file it through the IND, not to the NDA itself, and they are aware of that and were supportive of that.

[Adnan Butt:]

Okay, I'll get back in line. Thanks.

[Operator:]

Our next question comes from the line of Annabel Samimy with Stifel. Your line is now open.

[Andrew:]

This is Andrew in for Annabel. I just had a couple of questions. First on I just wanted to understand more on Rhopressa's stability and what type of data should we expect when the 12 month read out, is it just going to be safety or is there going to be additional data with respect to disease modification, let's start off with that?

[Vicente Anido:]

So the 12 month data that we are going to be providing will be primarily safety, but in addition to that we actually looked at efficacy. We looked at – obviously we'll have the 90 day efficacy data from those patients but we'll also look at 6, 9 and 12 month, but we're only looking at the 8 AM time point on the days that they come back for their safety readings. And so we'll have that one time point. We are not looking at disease modification. I mean if by that you mean that we see a continuous drop in pressure, gosh, if we get that, that would be terrific, but that was not the original design of the trial. Obviously we do plan other work around disease modification and so – but that was not ever the intent of the safety component of Rocket 2.

[Andrew:]

Does Rhopressa need the 12 month stability to be approvable?

[Vicente Anido:]

No. That's purely for safety.

[Andrew:]

Okay. And last question, you mentioned before you were reviewing the necessity of Rocket 3 given the 100 patients you're going to be using from Rocket 2. So you're still pursuing Rocket 3?

[Vicente Anido:]

Yes, because right now with enrolment the way it's going and things like that, it's not like we're adding a huge number of patients up in Canada. And so we can easily just move to what I would call maintenance mode or we just take the patients we currently have and finish them up, and that would certainly satisfy the needs that we have for Canada, and certainly add a few more patients on the safety record for what we'll be submitting for Rhopressa for the NDA and we can be happy doing that. So it's not going to take up a lot of money or time for us.

[Andrew:]

Okay, great. Thank you so much.

[Operator:]

Our next question comes from the line of Serge Belanger with Needham & Company. Your line is now open.

[Serge Belanger:]

First, a question to follow up on the very first question, your level of confidence seems to have increased since the last time, the last call. I know you have previously discussed that you were planning to file with Rocket 2 as the pivotal study and Rocket 1 as supportive. I guess what has changed since then? It seems you have gotten some more specific inflow from the FDA?

[Vicente Anido:]

My level of confidence around being able to file with Rocket 2 as pivotal and 1 as supportive hasn't changed at all. What we have is just one more meeting with the FDA where we have meeting minutes, et cetera, but we had them before. And so it's just a continued consistency from the FDA that gives us quite a bit more comfort. In addition to that and really the new news that came out of the meeting was that they were comfortable with us moving forward with filing just on the QD, the once a day dosing schedule, as opposed to some or other throwing in the BID component in there. And so again, very, very consistent and given the history of the FDA and certainly this section of the FDA, we like the consistency. And so the more times that I come back to you and say, yes, it's exactly as I told you before, here's what they are looking for, the more confidence all of us are going to have that these drugs will make it out the door.

[Serge Belanger:]

So I know you're expecting safety data I guess late this year or early next year from the Rocket 2 study, what additional data or other requirements will be needed for filing the NDA in the third quarter?

[Vicente Anido:]

So in addition to the safety, and again as I mentioned earlier during my prepared remarks, the safety here is not only the 100 that I promised to street, it also is however many patients end up with 12 months data that I'll submit to the NDA. And so I do need to complete those. And then secondarily – and really the gating item for us is that we need to have – for FDA guidelines, we need to have 12 months of stability from our final manufacturing sources, our commercial manufacturing sources at the time of filing. And so really for us to [indiscernible] on a critical path is making sure we have enough stability [valued at] [ph] 12 months on our finished product from our final manufacturing source in order to be able to file the NDA. So really it's not a clinical issue that will keep us from filing early, it's the stability on the finished product that's holding it out and would be the driver for the filing in Q3, simply waiting.

[Serge Belanger:]

Okay. One last one and I'll get back in queue. On your European plans, I know that you will need Rocket 4 results for those, but have you had the same discussions with the European agency as you've had with the FDA in terms of the regulatory pathway and requirements for filing?

[Vicente Anido:]

So we had a team that went over to Europe about a year or so ago and they had a good discussion with the folks over there. So that's why we believe that in Rhopressa that we'll be ready to go once we get the six-month safety from Rocket 4, because that's the one thing that we didn't have. I mean in Europe they require safety for both one year, they need 100 patients on for one year, and they need 300 on drug for six months, and so we were missing that second piece. So we need to finish that which will be towards the end of the calendar year 2016 and then we'll be in a good position to file Rhopressa at that point.

[Serge Belanger:]

Okay. Thanks for taking the questions.

[Operator:]

Our next question comes from the line of Caroline Corner with Cantor Fitzgerald. Your line is now open.

[Caroline Corner:]

Thanks for all of the updates. Very helpful. My first question, just a follow-up to your comments, Vince, about the gating factor being that 12 month stability data you need for the product at the time of the NDA filing, when I'm looking at the language in the press release where you've said the third quarter of 2016 is when you will file that NDA, previously you had said mid-2016 in other conversations, and in the commentary today you said summer of 2016. Is there anything to that with regard to this kind of month or two delta we're looking at there, is it all just coming down to this stability data just needs to get done before you can turn in the paperwork?

[Vicente Anido:]

It's just basically we need to finish it up. And so depending on when we ask and how long some of this is going to take just dictates whether it's going to be a specific month or a specific – or it's going to roll over into the next month. And so as Rich and I were talking about what's the best way to do it so that we don't get surprised here, because we were talking summer, and at least down here in California as you all know September is still summer. So we were thinking, we are pretty well covered but we thought putting it in a particular quarter would help folks. So that's what we're doing.

[Caroline Corner:]

Okay, thanks, that's helpful. And then with regard to Mercury 1, just wondering how enrolment is going in getting the sites up and running. I know there may have been some site-specific issues with Rhopressa, and I know you're using different sites, but just curious how enrolment is going, and just to confirm, you said it's still running about a year behind Rhopressa, so should we be looking therefore a filing of the NDA for Roclatan in the third quarter of 2017, is that still the case?

[Vicente Anido:]

I'm going to have Tom just give you an update on exactly where we are with Mercury 1 here in just a second, but relative to the filing, we're talking about in the second half of 2017 for the Roclatan because we think that again as you know we try to do everything as quickly as we possibly can and we do try to beat the timelines we give you as much as possible. A lot of this is purely driven by enrolment, and these are massive trials we are running, and so so-far we've been pretty lucky in terms of the enrolment and the sites. Let me turn it over to Tom and he'll talk a little bit more about where we are with Mercury 1.

[Thomas A. Mitro:]

So as you know, as Vince mentioned earlier, we dosed our first patient in September for Mercury 1 and frankly we couldn't be happier with how enrolment has gone. We are slightly ahead of our projections at this point and we certainly continue that or anticipate that that will continue just based on the enthusiasm of the investigators we have out there. The other thing I'd say is we're quite happy just on the execution from our Company and the investigators so far because as you also know we started Rocket 4 at about the same time that we started Mercury 1. So to initiate two Phase 3 trials of that size, both which have around 60 sites in both trials and they are not the same sites, they are totally different sites, but to get that execution going and have enrolment going for both studies slightly ahead of our expectations makes us feel very good at this point.

[Caroline Corner:]

Thanks. I appreciate that color. It's very helpful. One more question from me and then I'll hop back in queue, but in the press release you were talking about the AAO meeting, the investor event which I'm looking forward to. You said you were going to be looking at Rocket 2 results in more detail but also regulatory considerations. The [indiscernible] regulatory considerations, you did just mention that you're going to be doing QD dosing and not including BID anymore. Is there anything else we should be thinking about as we try to think about what you might be delving into when we discuss regulatory considerations of the 13th?

[Vicente Anido:]

One of the things that we want to make sure that we help investors understand is the depth of the management team. And so we'll have somebody there, Marv Garrett, who's going to be talking about – who is experienced with the regulatory environment here and our plans. And so unfortunately because of the earnings call being ahead of that one, I sort of stole his thunder a little bit because I got to talk about the meeting where a lot of these things finally got settled in writing and the whole [bid] [ph]. But it's really – you shouldn't read much into it other than I want to make sure that you guys get a chance to see who our front person is with the FDA, because Marv has had an incredible amount of experience, he and I have worked together now probably for about 14 years or so, and we've fought an awful lot of battles with the FDA and he has had an awful lot of wins with the FDA. I think it's probably 20 some product approvals just with the ophthalmology group. And so I just want to make sure you understand the management depth and that's in part why we're having him present.

[Caroline Corner:]

Great. Thanks and congratulations on all the progress.

[Operator:]

Our next question comes from the line of Donald Ellis with JMP Securities. Your line is now open.

[Donald Ellis:]

Most of my questions have been asked and answered, but just a follow up on the November 13th Analyst Day, what we can expect with respect to topics, are you going to talk about compliance, dropout rates, drifters? And then if we are assuming a mid-2017 potential approval for Rhopressa in the U.S., will you be doing any hiring in 2016 for regional managers, sales reps, et cetera? And then the last question is, some guidance on operating expenses in the fourth quarter, will they be similar to the third quarter of this year?

[Vicente Anido:]

The November 13 look at the data really is mimicking the kind of questions that you and I and a whole bunch of others have been getting from investors about the data. There's an awful lot of things that investors knew about Rocket 1 because we had three or so shots on goal to explain what was happening there and the like. With Rocket 2, all we've been able to deliver is top line results, and so the idea is to make sure that everybody has got a complete data set so they can match up Rocket 2 and Rocket 1. And so you'll see everything from the strength of the statistical package and looking at various cut to the data to trying to get answers for sort of what happened at the after 1 mm ranges and things like that, and further some administrative things or logistical things like how do we go from over 700 patients that were screened all the way down to getting to 400 or so that were actually per protocol at below 25 mm mercury. So again, we're trying to provide that whole perspective. And so hopefully everybody who come out of there as comfortable as they can be that what we've been talking about in terms of using Rocket 2 as pivotal and Rocket 1 as supportive is the right thing to do. Now let me turn it over to Tom for the question on hiring and then we can have Rich talk a little bit more about guidance on the expenses.

[Thomas A. Mitro:]

So what we'll be doing is really following the same amount of reviews that our previous companies went on when we had our first product launch. So next year you'll see 2016, we'll add a couple of folks in here from the marketing and perhaps the medical affairs here to help us get a real acute understanding, to get a look at the markets so that we can refine our launch plans and our marketing plans. And then as we roll into 2017, we may add a couple of more, but the significant hiring for our sales team will begin only after approval of the NDA when we're sure it's ready, set, go and we can get them up and going and they are not waiting around even for a month or something like that. That's what we have done before and it's worked out very, very well. So it will be insignificant hiring, significant for us from a plan perspective but insignificant from a numbers standpoint.

[Richard J. Rubino:]

And on the expense forecast you should assume that the fourth quarter will look probably closer to the second quarter. We guided very early this year that we expected to burn about $55 million to $60 million in cash. We'll probably be a little closer to the $60 million. And the reason why you will see a slight pickup in expenses in the fourth quarter is, as you would expect, the ramp-up of Rocket 4 as well as Mercury 1.

[Donald Ellis:]

Okay. And one more question for Vince. Did you really rub it in that it's still summertime in September in California?

[Vicente Anido:]

We're just far to the country, that's probably true.

[Donald Ellis:]

All right, thanks a lot.

[Operator:]

We do have a follow-up question from Adnan Butt of RBC Capital Markets. Your line is now open.

[Adnan Butt:]

Vince, I'll have many more regulatory questions on the 13th, don't worry.

[Vicente Anido:]

Okay. I'm not worried. Marv will be there.

[Adnan Butt:]

So you mentioned adjunctive use for Rhopressa. How do you foresee it being used in addition to being used with a prostaglandin? I mean ROCK/NET really the combo, Rhopressa you mentioned as an adjunctive. Could it be used with other agents?

[Vicente Anido:]

Again as you know, most of the patients that come in to see the doctor, they get diagnosed with the ocular hypertension or glaucoma walk out the door for the most part with a prostaglandin onboard. Depending on who you talk to, which glaucoma specialist you talk to, and as you know we have a new CMO who actually practices ophthalmology three weeks out of the month, he tells us that [indiscernible] comes to show, he'd have to say it's about 75% or 80% of his patients that walk out with a prostaglandin first. But it's not always latanoprost. And so physicians out there, and if you look at the script volumes for the other, for Travatan and Lumigan, the other two prostaglandins, they roughly have the other half of the market for prostaglandins. And so we take the Rhopressa prior to Roclatan getting approved. That would be the primary add-on therapy. And then once Roclatan gets approved, then it becomes primary. There will still be some docs that either don't want a prostaglandin at all because light-color eyed patients don't want to go through the permanent cosmetic changes of the iris color and things like that, or prefer one of the other prostaglandins for whatever reason. So they'll pick either Lumigan or Travatan or by then the BNL, the new product from BNL might be available and that's a prostaglandin. So as they pick up some patients and we could be adjunctive to that as well with Rhopressa. So I think that that's where you're going to see some ply.

[Operator:]

Our next follow-up question is from Serge Belanger with Needham & Company. Your line is now open.

[Serge Belanger:]

Just a question on R&D. You've made some additions to your R&D team and your clinical research team this year and you're talking a lot more about the pipeline and the disease modifying attributes of Rhopressa. Just trying to get an idea if we should expect any of these early candidates to enter the clinic next year and when we will hear more about them?

[Vicente Anido:]

Serge, we do think that these things will start moving through the animal studies and hopefully make past some of the hurdles that we have established for ourselves in order to move them down the pipeline. The goal that we have however is to move something into the clinic about the time we launch Rhopressa. So we don't think that we'll see anything coming out in 2016 that will go into the clinic. We're doing an awful lot of work between now and then, but it won't be till 2017 when you start seeing one of these things come through into the clinic. However we will, as data becomes available, we will go ahead and give you snapshots of what we're doing for not just the new products, for 154 or for EG-30 or how we're doing with the GrayBug technology for delivery, but also anything that we find on Rhopressa's ability to further protect the trabecular meshwork from damage, i.e., its anti-fibrotic effect, or anything that we can find on neuroprotective side with that drug, we'll certainly report those out. But again from a pure actual clinical point of view in humans, we're not expecting that till 2017.

[Serge Belanger:]

Okay, thank you.

[Operator:]

I would now like to turn the call over to Vince Anido, Chatman and Chief Executive Officer, for final remarks.

[Vicente Anido:]

Thank you, guys, for spending your afternoon with us. Again, it's been a pretty dramatic rollercoaster ride for us since back in the late April when things weren't going that well, but we're very, very pleased with the progress we have made and the team here has done an incredible job of not only keeping the heads down and getting the work done and believing in the product, but also, again just got to be full compliments for the way they have handled the interaction with the FDA, and again as I mentioned we're very pleased just with the tone of the discussions we've had with the FDA and look forward to getting both Rhopressa and Roclatan NDA submitted as soon as we possibly can and getting those products out to the market. So with that, I want to thank everybody for spending an hour or so with us and have a great evening. Take care.

[Operator:]

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