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Edited Transcript of AERI earnings conference call or presentation 8-Nov-17 10:00pm GMT

Q3 2017 Aerie Pharmaceuticals Inc Earnings Call

Bedminster, Nov 17, 2017 (Thomson StreetEvents) -- Edited Transcript of Aerie Pharmaceuticals Inc earnings conference call or presentation Wednesday, November 8, 2017 at 10:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Richard J. Rubino

Aerie Pharmaceuticals, Inc. - CFO & Secretary

* Thomas A. Mitro

Aerie Pharmaceuticals, Inc. - President & COO

* Vincente J. Anido

Aerie Pharmaceuticals, Inc. - Chairman & CEO

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Conference Call Participants

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* Adnan Shaukat Butt

Guggenheim Securities, LLC, Research Division - Senior Analyst

* Annabel Eva Samimy

Stifel, Nicolaus & Company, Incorporated, Research Division - MD

* Tyler Martin Van Buren

Cowen and Company, LLC, Research Division - VP

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Presentation

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Operator [1]

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Good afternoon, ladies and gentlemen. Thank you for standing by and welcome to the Aerie Pharmaceuticals Third Quarter 2017 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.

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Richard J. Rubino, Aerie Pharmaceuticals, Inc. - CFO & Secretary [2]

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Well, thank you, Giles. Good afternoon, and thank you for joining us today. With me today are Vince Anido, Aerie's Chairman and Chief Executive Officer; and Tom Mitro, Aerie's President and Chief Operating Officer. Today's call is also being webcast live on our website, investors.aeriepharma.com, and it will be available for replay as indicated in our press release. Now for forward-looking statements and non-GAAP financial measures. On this call, we will make certain forward-looking statements, including statements, forecasts and guidance regarding our future financial and operating performance, cash burn, the success, timing and cost of our clinical trials, and the timing of, and our ability to request, obtain and maintain FDA or other regulatory approval of our product candidates. We will also discuss the clinical effectiveness, commercial launch and potential future sales of our product candidates, 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 a reconciliation to the most directly comparable GAAP measures, please see today's press release, which is posted on our website.

As a quick financial update, our third quarter 2017 GAAP net loss was $32.4 million or $0.89 per share. The net loss for the third quarter 2017 includes noncash stock-based compensation expense of $6.6 million. When excluding the noncash stock-based compensation expense, our total adjusted net loss was $25.8 million or $0.71 per share. For additional information regarding our third quarter 2017 results, full year results and prior period comparisons, please refer to today's press release and tomorrow's Form 10-Q filing.

We ended the third quarter 2017 with $282 million of cash, cash equivalents and investments. Our third quarter year-to-date 2017 cash burn was $74 million, which is in line with our previous full year guidance of $100 million to $110 million. The recent asset acquisition, which we announced on October 5th, reflected a total cost of approximately $25 million, including $10.5 million in cash and 263,000 shares of Aerie's stock for the remainder of the $25 million. With that, on a full year basis, we are now guiding to cash burn in the range of $115 million to $120 million, which includes the $10.5 million toward the asset purchase and importantly, an acceleration of preparatory expenses associated with Rhopressa commercialization.

Our year-end 2017 cash, cash equivalents and investments balance is now expected to be approximately $240 million. From a modeling perspective, please ensure that you include the additional 263,000 shares from the asset acquisition early in the fourth quarter in your share count estimates. Also, your models for fourth quarter EPS should assume the entire $25 million from the asset acquisition announced on October 5th, is recorded to R&D expense, all in the fourth quarter.

With that, I will turn the call over to Vince.

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Vincente J. Anido, Aerie Pharmaceuticals, Inc. - Chairman & CEO [3]

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Thanks, Rich, and good afternoon, everybody. Thanks for joining us today. We're currently at the American Academy of Ophthalmology Conference here in New Orleans, and we're very -- just very proud of everything we've accomplished to date. That we are hearing quite a bit of buzz about our company Aerie, especially in our products, Rhopressa and Roclatan, and really just fueled by the fact that not only we've had success in the clinic, but also a very successful FDA advisory committee meeting on October 13th on Rhopressa. And certainly, there while the overwhelming positive panel vote is not a guarantee of ultimate FDA approval on our February 28, 2018 PDUFA date, we certainly are delighted with the advisory committee outcome.

During the panel it was clear that there is an unmet need in treating glaucoma and it was certainly understood that Rhopressa is effective at lowering intraocular pressure dose once a day with tolerable adverse event profile. As Rich mentioned earlier, in light of the good news of the advisory committee meeting as well as from our contract manufacturer perspective that I'm sure you've heard about here in recent days, we are accelerating certain of our commercialization preparation expenses for Rhopressa, from early 2018 into 2017. While we fully expect a Feb 28 of next year PDUFA date, we believe it is wise to prepare if things were to accelerate. Now certainly we're doing everything we possibly can with the FDA to answer all your question. As you know from the advisory committee meeting, we actually got into label discussions as part of that meeting, et cetera. So it is important for us to be ready, in case the FDA decides to give us an early Christmas present and approve the drug earlier. So we are accelerating some of those commercialization expenses in order to do that. We're now at the late stages of preparations for Rhopressa commercialization, including hire additional sales executives, market access folks, and certainly a lot of medical affairs folks in order to get our messages out. The team is making excellent progress in refining the launch plan, including completing volume and revenue assumptions. We expect to provide you with guidance on key assumptions pending approval next year.

As we've discussed previously, we do plan on hiring a sales force of about 100 sales representatives. The sales force won't get hired until we get the approval letter. Assuming a February 28 approval, the sales reps are expected to be trained by the end of the second quarter, and then begin their detailing efforts and sampling efforts, et cetera, in a meaningful level during the third and fourth quarters of 2018.

Note that in the back half of 2018, we expect to be ramping up with coverage on commercial formularies only. Medicare Part D formularies, which represent about half of the U.S. market really won't kick in until beginning of 2019, since they are on an annual cycle. Because of our February 28 PDUFA date, we do expect that come the April submissions for CMS reimbursement that we should be on many of the plans that are relevant when they make their submissions in April, which will allow us then to get coverage in the beginning of 2019.

In the meantime, our medical scientific meeting for the top payers have gone very, very well. We look forward to commencing contract negotiations pending the potential approval of Rhopressa.

And moving on to Roclatan, our programs there remain on track. We are preparing for filing our NDA sometime in the second quarter of 2018, as we await the 12-month stability data on our manufacturing batches, which are necessary before we file. The level of excitement among physicians about Roclatan is very, very high, and we're seeing quite a bit of that here at the AO this week especially as we start meeting with a lot of physicians and share the story and share the data.

Moving beyond the U.S., in addition to the European Phase III trial Mercury 3 which is underway in Europe for Roclatan, we are also about to commence our Phase II trials on Japanese and Japanese Americans in the U.S. as a precursor to conducting Phase III trials in Japan for Rhopressa.

With these trials in process, our global expansion strategy is moving forward very, very quickly. Now let's look at our earlier stage pipeline, including our preclinical retina program. As you may know the retina market in the U.S. is about $5 billion in 2016, roughly double the size of the glaucoma market. We are fortunate enough to have 2 preclinical product candidates for this market. The first one we've talked about in the past is AR-13154, which is Rho kinase inhibitor that also inhibits protein kinase C, for the potential to treat both diabetic macular edema and wet age-related macular degeneration. Now this is a completely new pathway for treating these diseases and AR-13154 has shown in preclinical experiment to meaningfully add to the efficacy of market-leading Eylea while being very efficacious on its own on a stand-alone basis. As part of our recent acquisition of the PRINT technology from Envisia, we now have a second product designated as AR-1105, which is dexamethasone steroid for the treatment of diabetic macular edema in the PRINT technology. Preclinical activities are ongoing for both 154 and 1105. And we are enthusiastic about each molecule's potential in the marketplace.

The capabilities we now have through our DSM collaboration provide an exciting opportunity to gain long-term sustained release for small molecules, such as our product 154. Now on top of that we also have manufacturing platform to make ocular implants in precise shapes and sizes through our exclusive ophthalmic rights to the PRINT implant manufacturing technology, which we acquired just at the beginning of this quarter. Further as you know, we own a very sizable library of Rho kinase molecules, each with unique features and attributes that ultimately may serve a purpose beyond treating diseases of the eye. We are commencing this screening for a molecule library for additional indications beyond ophthalmology where Rho kinase's inhibition may provide a benefit. The list of potential indications is long. But there are perhaps the most obvious to us, include pulmonary health, such as pulmonary fibrosis, bronchial asthma, lung dermatology and cancer. We will report in our progress in these efforts over the next several quarters. So in conclusion, we've made tremendous progress over the last few weeks and months. And I'd like at this point to turn it over back to the operator for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from the line of Annabel Samimy from Stifel.

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Annabel Eva Samimy, Stifel, Nicolaus & Company, Incorporated, Research Division - MD [2]

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And congratulations on a positive outcome, if I haven't talked to you since.

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Vincente J. Anido, Aerie Pharmaceuticals, Inc. - Chairman & CEO [3]

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Thank you.

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Annabel Eva Samimy, Stifel, Nicolaus & Company, Incorporated, Research Division - MD [4]

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And speaking of outcome, so there was some discussion about specifying IOP levels in a label, and I know that you had mentioned that there were some label discussions in the outcome, we saw the blackline version. So you've spoken in the past of IOP not being carved out for other drugs. Do you think that this might be a possibility in your drug? Is it a major negotiating point there and is there anything else in the blackline version of -- that the FDA supply that you take issue with or that you would want to negotiate with them?

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Vincente J. Anido, Aerie Pharmaceuticals, Inc. - Chairman & CEO [5]

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Annabel, Vince here. So we don't think that they're going to use us particularly to make a point here, because there are other study or other products been approved that have used lower baseline pressures and there's been no mention of that. And certainly, if you go back to the transcript of the advisory committee meeting, I thought that Wiley Chambers at the FDA was pretty clear about those kind of things that -- they're included on the label and they do approve things just based on specific indications, which I think ours is just going to be general just like everybody else's. And as we've said before, we think the dimension of intraocular pressures is going to show up in the clinical section of the package insert of the label, which is exactly where they had it in the draft label that they started with. And so I think it's important to note, and while we certainly are negotiating pretty hard that we thought that the draft label that they proposed was relatively tame and pretty straightforward. And so it's a great starting point for us.

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Annabel Eva Samimy, Stifel, Nicolaus & Company, Incorporated, Research Division - MD [6]

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Okay. Great. Yes, I thought so as well. So then on moving over to the manufacturing side, obviously, we all saw the Visal's approval. That's comforting because now it seems like that hurdle is out of the way for your PDUFA, for Rhopressa. Now you had mentioned you're still looking for 12-month stability for Roclatan, so is that implying that the FDA has no interest in using the older batches and you can't push that forward -- the filing forward or have you not had that discussion with the FDA?

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Vincente J. Anido, Aerie Pharmaceuticals, Inc. - Chairman & CEO [7]

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So again, for Rhopressa, we made those batches all the way back in 2015. So there is no issues from a manufacturing point of view. So we think we're pretty clean there, and we do agree with you. I'm very happy. It's not often that we're happy to see a potential competitor get approved, but certainly here is a case where we were. On the Roclatan batches, remember, we had to redo those batches at the beginning of this year because they didn't get the original batches we made as you know got caught in some of the issues that they were facing. And so we've talked to the FDA about that. And as we've said before, we do -- we talked to them, but they're still insisting that we do the 12-month stability. And so given that, that's why we're -- we've been calling out that we are going to see a -- an NDA submission for Roclatan sometime in Q2 of next year of 2018.

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Annabel Eva Samimy, Stifel, Nicolaus & Company, Incorporated, Research Division - MD [8]

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Okay. If I can entertain one more question. Just moving to international. I guess, you are about to initiate the Phase II in the Japanese patients? Can you tell us what the specific clinical requirements are of a Japanese study. I know obviously, FDA requires comparison again timolol, I can't imagine it's the same thing in Japan? Or maybe it is? Maybe you can just give us an idea of what those studies might look like?

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Vincente J. Anido, Aerie Pharmaceuticals, Inc. - Chairman & CEO [9]

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Well, everybody has had different things to do in Japan to get their drugs approved. And we're no exception and so we have another Rho kinase inhibitor in Japan, Glanatec that has been -- it was approved about 2 years or 2.5 years ago. And so that gives us a little bit of a -- it gave us a little bit of understanding as to what may come our way, and in fact, it did. Once we complete our Phase II trials on Japanese and Japanese Americans here in the U.S., the Phase III trials in Japan are going to be twofold. Number One, we do believe that we're going to have to do a trial where you take prostaglandin patients. Then you split them up into half and you take -- one side gets only prostaglandins and the other -- the other side gets prostaglandin plus Rhopressa. So adjunctive therapy. And then we'll have to run those out for some specified period of time. So that will be for efficacy. Then we'll have to do a separate safety trial to run out in 12 months. And so based on the discussions that we've had with their PMDA, which is their equivalent of the FDA, those are the 2 Phase III trials that they currently believe we'll have to do. Obviously, all this can change pending any result out of Phase II. But we don't -- we've done enough studies now where we don't expect any surprises there.

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Annabel Eva Samimy, Stifel, Nicolaus & Company, Incorporated, Research Division - MD [10]

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Okay. And that Phase II, you said it's an open label?

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Vincente J. Anido, Aerie Pharmaceuticals, Inc. - Chairman & CEO [11]

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No, no, no, it's just a very traditional Phase II trial. We had to do dose ranging specifically on Japanese and Japanese Americans and things like that, so -- but it's one of those where we have to compare different concentrations.

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Operator [12]

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Your next question is from the line of Tyler Van Buren from Cowen and Company.

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Tyler Martin Van Buren, Cowen and Company, LLC, Research Division - VP [13]

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Vince, in your prepared remarks you mentioned a potential early Christmas presents -- present, which kind of peaked my interest. In terms of the advisory committee panel, you had a pretty good sense on when the timing would be for that. So just curious to hear some additional thoughts on, I guess, why it could potentially come that early? Clearly, we are all expecting February. And is it just a matter of the kind of the advanced discussions that you guys had on the label with the advisory committee? Or is there anything else in particular that leads you to believe that it might come that early?

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Vincente J. Anido, Aerie Pharmaceuticals, Inc. - Chairman & CEO [14]

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Well, there is 2 -- really 2 points that lead to the potential for an early approval. And again, one of those was the fact that they did have the label, as part of the advisory committee meeting. I can't find anybody that's in my position in any company that has gone through advisory committee meetings where actually they showed a draft copy of a label. So that was a bit unusual. But we think that's a positive, because I think that, that shows that we made an awful lot of progress certainly with the clinical section of the FDA. On the regulatory -- I'm sorry, on the CMC side, the chemistry manufacturing controls, we think that the recent approval from that -- the contract manufacturing site, it certainly is a real positive for us. They have another approval or another PDUFA date for another one of their products coming up before the end of the calendar year. So that will give us a second shot on goal. And again, assuming everything continues to be positive, we'd like to think that we've answered all their CMC questions. But they really have to go and do all their finish -- finish all their inspections and things like that. And so they could always hold up something for any number of reasons and hold it till the PDUFA date. But on the other hand, things have gone really well. So we have tried to answer all their questions. And so maybe they will feel like they'd like to get another feather in their cap and get another approval into the calendar year. And so we're trying -- and certainly, we're trying to do everything we possibly can to make that happen.

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Tyler Martin Van Buren, Cowen and Company, LLC, Research Division - VP [15]

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Great. That's helpful color. And hopefully you guys do get an early Christmas present. With respect to the payer conversations, clearly, you guys have done a lot of surveys over the years, and have a pretty well-defined plan when it comes to pricing and access. But maybe you could just give us a little more clarity in these more recent meetings you'll have leading up to a potential approval. And then, once you guys get approval, how those conversations change with respect to the formal presentations and how you would expect the coverage by commercial plans to progress over the course of the months following the approval and launch?

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Vincente J. Anido, Aerie Pharmaceuticals, Inc. - Chairman & CEO [16]

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As you know, we get to cheat a little bit, because we have somebody in Rich that certainly knows the space very, very well having been on the other side. And so the nice thing is since we both got here back a number of years ago, we haven't seen any changes in the feedback we've gotten from managed care. But to be a little bit more specific, let me turn it over to Tom, the managed access guys report up to him. So I'll let him chime in here.

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Thomas A. Mitro, Aerie Pharmaceuticals, Inc. - President & COO [17]

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Tyler, so it's Tom Mitro. So yes, what we're finding with our managed care organizations, is first off we're getting a lot of organizations that are requesting presentations from us. And they really want to do 2 things, Tyler. They want to get a scientific presentation that explains what our drug does, why our drug is different and how it performs? And they are very eager to hear that presentation. By the way, not just for Rhopressa, but actually very early even for Roclatan. But then they want to a category review, because it's really been a long time since they have actually dug their teeth into what's the difference between a beta blocker and alpha agonist, and what are the upsides and downsides and all of that kind of stuff. Of course, what we can't do, as you know, at this point is to get any sort of negotiation around our product at this time. But what you get through their questioning is, we get a sense for some of the positioning they are thinking about in their minds that were very favorable for them. Do you know the other thing is they -- managed care though they are -- they want to get, obviously, the best price they can get, the other thing they want to do and they're very clear on that, is they don't want to keep new MOAs or new medicines away from the clientele that they cover. So to our viewpoint from where we are right now, they seem to be very eager to have the next round of questioning, which will occur when we get the final approval. Then get down to the negotiation part to it. But the good thing we are seeing is, we're not seeing people shaking their head on the other side of the table when our folks are talking to them, giving us a sense that we would have a major uphill climb. It's quite the opposite, they seem very eager to work with us to get the products covered under formulary.

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Tyler Martin Van Buren, Cowen and Company, LLC, Research Division - VP [18]

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And do you still think eventually getting Tier 2 is possible over time?

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Thomas A. Mitro, Aerie Pharmaceuticals, Inc. - President & COO [19]

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Without a doubt, I think it's highly possible. Obviously not in every case, but in the vast majority of cases, that's exactly what we're going to. And we know that -- we certainly believe, how about that, that that's achievable with the vast majority of managed care organizations.

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Vincente J. Anido, Aerie Pharmaceuticals, Inc. - Chairman & CEO [20]

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That's right, that's the ultimate goal. We don't expect to and on Tier 2 on Day 1, with all the plans of course; sometimes it takes a few quarters, but that's the goal.

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Operator [21]

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Your next question comes from the line of Adnan Butt from Guggenheim Security.

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Adnan Shaukat Butt, Guggenheim Securities, LLC, Research Division - Senior Analyst [22]

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Congrats from me, too, on the panel vote. So first question on, in terms of your payer conversations, even if the FDA is not focused on IOP levels, is it possible for the payers to show a preference for by -- IOP level for in terms of having the drug, in terms of paying for the drug? And then second, I imagine you do not expect step therapy for Rhopressa, but for Roclatan have those discussions come up or is it too early?

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Vincente J. Anido, Aerie Pharmaceuticals, Inc. - Chairman & CEO [23]

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So the -- again, nothing has changed since the very beginning of us talking to managed care all the way back to 2012. And it seems like the most important things for them at this point based on the scientific/medical discussions we have been having with them, really the fact that it's a novel mechanism of action. It is once-a-day, and it does treat patients pretty consistently, and because of the clinical trials that we've done, not only with Rhopressa, but then with Roclatan, where there is a prostaglandin on board, we've been able to show a pretty darn good efficacy across all IOP levels. And so we think that most of their reimbursement is going to be not driven just purely by IOP, because they certainly have an awful of drugs that have never been shown to be not inferior to timolol that are reimbursed. And so we think that it's going to be on, again, the mechanism, be novel, the fact that it is once a day, et cetera, and so an adjunctive therapy.

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Thomas A. Mitro, Aerie Pharmaceuticals, Inc. - President & COO [24]

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Yes. Adnan, it's Tom, I just wanted to add one more thing. Remember most of these managed care organizations, they don't understand ophthalmology exceptionally well, right? And they may not have somebody on staff that understands it well, so they'll call the local ophthalmologist and have them on our panel in essence. When they start talking about our product versus the existing adjunctive therapy market, the number -- well, one of the things that comes up, of course, is the safety because ophthalmologists will time and time again say, "I'm tired of dealing with these significant safety issues that might be caused by some of these adjunctive medications." The heart, lung issues that might be caused with the beta blockers as an example, the cymose that might be caused by the alpha agonist, along with a multi time to-date dosing. So the good news is from our viewpoint is when they call the community ophthalmologist and even the KOLs to ask him that, they get an earful from the KOLs, and that's a very positive for our viewpoint.

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Vincente J. Anido, Aerie Pharmaceuticals, Inc. - Chairman & CEO [25]

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I think to your other part of your question on Roclatan getting stepped, I view that as unlikely as long as we price Roclatan responsibly, which is just a slight premium over Rhopressa, then there will be no basis to step. As long as the spread is equal to or less than the cost of a generic latanoprost, I don't see any step therapy for Roclatan.

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Adnan Shaukat Butt, Guggenheim Securities, LLC, Research Division - Senior Analyst [26]

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Okay. That's helpful. And then in terms of launching, how soon after approval would you be prepared to launch? And then is there a plan for sampling?

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Vincente J. Anido, Aerie Pharmaceuticals, Inc. - Chairman & CEO [27]

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Well, I'll answer for Tom, because this can go on for a while. But I guarantee you, there is a plan for sampling, and typically in these kinds of things with chronic sampling is one of the -- it's certainly not the largest expense, because headcount is for the sales force, but it's certainly the largest of all of the commercial expenses that we're going to face. And so there is certainly a pretty extensive sampling plan involved in. We're not going to get into the details for that. But we think that again, we don't hire -- we hire an awful lot of folks in order to get ready for the launch. And you see those announcements coming out from us all the time. We do not hire the sales force until the day we get approval, and we think that roughly 90 days or so after we get the approval, we'll have the sales force ready to go, been trained and start going out calling on the docs. And so in order to do that, we have to have product and we have to have everything set up for them. So that's about the time line that we've provided.

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Adnan Shaukat Butt, Guggenheim Securities, LLC, Research Division - Senior Analyst [28]

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Okay. Last one, I can't help myself on the pipeline. Do you -- when do you expect to take those compounds into the clinic either for the retina? And then Vince I'm mystified, the steroid, what's the thought there?

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Vincente J. Anido, Aerie Pharmaceuticals, Inc. - Chairman & CEO [29]

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So for the steroid, you have to -- let's start there. So we think that the steroid has a shot at going into -- certainly getting ready to go into the clinic towards the end of calendar '18. We think there's steroid for the back of the eye for diabetic macular edema. We think our particular formulation of our steroid allows us to deliver it where there is a gap. Right now, you've got 1 product in OZURDEX that only works for about 3 months or so maybe. You've got another product, it goes out for maybe 3 years or so. I think that there is an awful lot of room between the 3 months and the 3 years. The doctors would like to see something, and perhaps that has a lower adverse event rate in terms of the intraocular spikes. And so -- the market is pretty sizable. And so we think that if we've got a better product to deliver for the patients, it'll get some utilization and actually have a -- give us a component to have in our own shop with our drug delivery technology. On the 154 for age-related macular degeneration, we think that's going to be the back end of 2018 for -- to get it into the clinic. We still have an awful lot of work to do. But we're doing everything we possibly can to get it out in the first half of '18 if possible.

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Operator [30]

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Your last question comes from the line of Difei Yang from Mizuho Securities.

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Unidentified Analyst, [31]

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It's actually [Alex] for Difei. So just coming back to the manufacturing. Do you guys still expect a pre-approval inspection at the Florida facility?

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Vincente J. Anido, Aerie Pharmaceuticals, Inc. - Chairman & CEO [32]

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We have certainly [pinging] the FDA continually about whether there is going to be something or not. We know that they've been at that manufacturing facility a couple of times since we've been involved and probably more than twice since we've been involved there. We don't -- we do know that they've looked at our data, just based on the questions that we're getting and things like that. And so because there is another product in front of us, meaning that they have a product called Luminesse coming out of that site, that has a PDUFA date of December 27. If, in fact, they choose to go back in there, I suspect that they may take another look at our stuff. But I think they've already been looking. So there is no guarantees either way that they won't look again.

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Unidentified Analyst, [33]

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Okay. Great. That's helpful. And then one last one. Just on the reimbursement front, could you just remind us what the ongoing rebate percentages are for a drug in Tier 2 versus Tier 3? And what those rebates might look like for you?

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Vincente J. Anido, Aerie Pharmaceuticals, Inc. - Chairman & CEO [34]

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Right. So normally, if you have a competitive product like we believe we have, you can also land on Tier 3 with little or no rebating at all. But with regards to getting into Tier 2, it could be in the 25% to 35% off of gross rate.

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Operator [35]

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I would now like to turn the floor over to Vince Anido for closing remarks.

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Vincente J. Anido, Aerie Pharmaceuticals, Inc. - Chairman & CEO [36]

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Good afternoon, again. Sorry about that. We are not quite sure why our call was dropped off. But it must have been because of the great answer that was being provided for the last question. So are there any other questions before we close?

Okay. If not, just want to thank everybody for joining us on this call. I was surprised a little bit that I didn't get any questions about Rich Rubino being named to 2018 All-American Executive team for small-cap and healthcare. I thought the question would be, why he came in on third instead of first. But otherwise, we are very, very proud of the work that he has done. And I want to thank everybody for listening this afternoon. We've had a great, great 3 quarters for the company. And are looking forward to the next few months as we -- I get ready for approval and launch of Rhopressa. Again, thank you, and have a great day.

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Operator [37]

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