Q2 2023 Ocular Therapeutix Inc Earnings Call

Participants

Antony Mattessich; President, CEO & Director; Ocular Therapeutix, Inc.

Donald Notman; CFO; Ocular Therapeutix, Inc.

Rabia Gurses Ozden; Chief Medical Officer; Ocular Therapeutix, Inc.

Steve Meyers; SVP of Commercial; Ocular Therapeutix, Inc.

Caroline H. Palomeque; Biotech Analyst; Joh. Berenberg, Gossler & Co. KG, Research Division

Chaitanya Gollakota

Colleen Margaret Kusy; Senior Research Analyst; Robert W. Baird & Co. Incorporated, Research Division

Dane Vincent Leone; MD & Biotechnology Analyst; Raymond James & Associates, Inc., Research Division

Dingding Shi; Equity Analyst; Jefferies LLC, Research Division

Jonathan Patrick Wolleben; Director & Equity Research Analyst; JMP Securities LLC, Research Division

Joseph Michael Catanzaro; Director & Senior Biotech Analyst; Piper Sandler & Co., Research Division

Tara A. Bancroft; VP; TD Cowen, Research Division

Presentation

Operator

Good day, and thank you for standing by. Welcome to the Quarter 2023 Ocular Therapeutix Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your speaker today, Donald Notman, CFO. Please go ahead.

Donald Notman

Thank you, Jacintha. Good afternoon, everyone, and thank you for joining us on our second quarter 2023 financial results and business update conference call. This afternoon, after the close, we issued a press release providing an update on the company's product development programs and details of the company's financial results for the second quarter ended June 30, 2023. The press release can be accessed on the Investors portion of our website at investors.ocutx.com.
Leading the call today will be Antony Mattessich, our President and Chief Executive Officer, who will provide an update on our pipeline developments and the commercial progress of DEXTENZA. Also speaking on the call today will be Dr. Rabia Ozden, our Chief Medical Officer; and Steve Myers, our Senior Vice President, Commercial. Following their remarks, I will provide an overview of the financial highlights for the quarter before turning the call back over to Anthony for a summary in questions.
As a reminder, on today's call, certain statements we will be making may be considered forward-looking for the purposes of the Private Securities Litigation Reform Act of 1995. In particular, any statements regarding our anticipated net product revenues and our regulatory and product development plans as well as our research activities are forward-looking statements. These statements are subject to a variety of risks and uncertainties that may cause actual results to differ from those forecasted, including those risks described in our Form 10-Q filed this afternoon with the SEC and our most recent annual report on Form 10-K filed March 6, 2023.
I will now turn the call over to Antony.

Antony Mattessich

Thanks, Donald. Hello and welcome, everyone, to our second quarter 2023 earnings call. We are pleased to share with you the tremendous progress we've made over the past 3 months to build on our previous successes and to provide clarity on our plans going forward.
First of all, we're pleased to report that we achieved a new record of $15 million in DEXTENZA net product revenues in the second quarter of this year, 24% over same quarter previous year and 14% sequential growth over the previous quarter. Most importantly, in-market unit volume growth quarter-over-quarter for the last 3 quarters has been 21%, 8% and 7%, signaling a consistent growth trend that gives us confidence in DEXTENZA's future potential to augment funding of our fast-developing pipeline.
Based on the trends we are seeing, we anticipate DEXTENZA net product revenue guidance for the full year 2023 will now come in at the upper end of the current $55 million to $60 million range provided at the start of the year. Steve Meyers, our Senior Vice President, Commercial, will walk you through the drivers behind this growth and our determination to further accelerate revenue growth through the unlocking of a facility payment for CPT-68841, the procedure code for insertion of DEXTENZA.
Second, we are confirming our previous guidance that we plan to initiate our first pivotal trial for OTX-TKI before the end of this quarter using a superiority design. The trial we have developed will be a prospective, multi-center, randomized, parallel group pivotal trial that will be run primarily at U.S. sites. The trial is designed to enroll approximately 300 evaluable wet AMD subjects who are treatment naive in the study eye. It will compare a single implant of OTX-TKI to a single injection of aflibercept and assess the safety and efficacy of OTX-TKI in subjects with wet AMD by measuring best corrected visual acuity and central subfield thickness.
Feedback from the FDA made the security pathway, the preferred choice for OTX-TKI in wet AMD. Under the new draft guidance, advice from the FDA has evolved, particularly for products with expected durability advantages given their reduced dosing frequency over current therapy. Most notably, from our interpretation of the feedback we received from the agency, a traditional 2-arm sham controls, comparison trial against treatments with established non-inferiority markets, either aflibercept or ranibizumab, dosed according to their labels is no longer acceptable for investigational drugs with reduced dosing frequency as the FDA requires at least 1 additional comparative arm in which the dosing frequency, criterion for dosing adjustments and criterion for interventions are the same as in the investigational drug arm. This means that an additional arm with actual non-sham injections given with the same frequency as the OTX-TKI arm, which would be 9 to 12 months in our case, would need to be included in that OTX-TKI would be required to show superiority over this arm as well as non-inferiority to the on-label aflibercept or ranibizumab arm.
Under the new draft guidance, however, the FDA also accepts a pivotal design that would simply show superiority alone to any treatment dosed identically to the investigational drug, in this case, OTX-TKI. Since we believe we can demonstrate superiority over a single injection of any approved pulse dose antibody treatment with approximately 300 evaluable subjects at a cost of approximately $50 million, moving forward with a superiority trial has become the clear and compelling choice compared to a non-inferiority trial that would, according to our interpretation of direct feedback from the FDA, require us to demonstrate both non-inferiority and superiority in a single trial.
In discussions with key opinion leaders and clinical trialist, we believe that we have a pivotal design that will satisfy the FDA requirements and be enrolled in an acceptable timeframe and has achievable endpoints. Additionally, we expect the trial to be primarily enrolled in the United States for our discussions with many key investigators. Finally, we are pleased to announce that we have secured the funding that allows us to initiate this pivotal trial.
Given the recent share price, we have consistently stated our desire to pursue non-dilutive or minimally dilutive financing pathways to bring OTX-TKI NDA filing. By securing a debt facility of $82.5 million, we have obtained the funding that allows us to initiate our first pivotal trial for OTX-TKI and extends our cash runway into 2025 through non-dilutive means. Donald Notman, our CFO, will go over the details of the debt facility later in the call.
Another lever of non-dilutive funding that we continue to pursue is the securing of a strategic partner. I want to be clear that our new debt facility and the initiation of our first pivotal in wet AMD does not alter our strategy of aligning with a strategic partner. To date, we have been very pleased with the quality and level of engagement as we focus discussions with potential partners that have the ability to globally optimize a product with the potential of OTX-TKI. We believe that getting started with our first pivotal trial and demonstrating solid execution could add tremendous value to OTX-TKI and enhance our ability to generate a partnership that reflects OTX-TKI's value.
So before handing off to Rabia, I wanted to mention a major milestone we achieved recently with OTX-TIC, our travoprost containing intracameral implant for the treatment of glaucoma. We recently completed enrollment in our Phase II program, keeping us on track to present interim results in the first quarter of 2024. With the recent interest around the iDose program at Glaukos, we are excited about the prospects of bringing a fully bioresorbable prostaglandin delivery implant that is designed to be suitable for chronic dosing into pivotal programs as our next step.
Lastly, I wanted to highlight the recent addition of Dr. Adrienne Graves to our Board. Dr. Graves is well known in the ophthalmology community as both the front and back of the eye expert. As the former CEO of Santen, Inc., she successfully brought multiple ophthalmic products through development to approval and commercialization. More recently, as Chairwoman of the Board for IVERIC bio, she help lead the company through late-stage development of Zimura and the eventual $5.9 billion acquisition of the company by a cells.
With that, let me turn the call over to Rabia for a deeper discussion of our ongoing clinical trials. Rabia?

Rabia Gurses Ozden

Thank you, Antony. Beginning with OTX-TKI, we recently shared results from our multi-center, prospective, mask randomized, controlled U.S.-based clinical trial in 21 subjects, evaluating a 600 microgram OTX-TKI dose in a single implant containing axitinib with a 2 milligram of aflibercept injection 4 weeks after the implant compared to aflibercept administered every 8 weeks in controlled wet AMD subjects previously treated with anti-VEGF therapy. The trial was designed to assess the safety, durability and tolerability of OTX-TKI and to assess biological activity in subjects by measuring anatomical and functional changes of the retina. We share our most recent 12-month update in June at the Clinical Trials at the Summit 2023 meeting.
Looking at safety at each of the trials, analysis time points, 7, 10 and 12 months, we observed no drug-related Ocular or systemic series adverse events in OTX-TKI treated subjects. Turning to biological activity, OTX-TKI continued to perform well with 73% of subjects remaining rescue-free up to month 10 and 60% up to month 12. Overall, an 89% reduction in treatment burden was observed in the OTX-TKI treated subjects at 12 months. In addition, data showed subjects treated with a single OTX-TKI implant continued to demonstrate sustained best-corrected visual acuity and central subfield thickness, which was comparable with the aflibercept arm at month 12.
4 subjects received rescue therapy for the first time at month 12 and indicated, as we would anticipate, the waning of the OTX-TKI therapeutic effect and potential disease reactivation, which helps establish a re-dosing time line for patients. Overall, we believe the data highlights the potential of OTX-TKI to become a differentiated product capable of providing a durable anti-VEGF response that improves upon today's standard of care in the management of wet AMD. We look forward to initiating shortly the first of 2 planned pivotal trials.
Moving to OTX-TKI for the treatment of non-proliferative diabetic retinopathy. We announced in June the completion of enrollment of our Phase I HELIOS trial. HELIOS is a multi-center prospective masked, randomized, controlled U.S.-based trial in 22 subjects, evaluating a 600 microgram OTX-TKI dose in a single implant containing axitinib compared to a sham injection procedure.
We believe the same attributes that make OTX-TKI a compelling product candidate for the treatment of wet AMD, the ease of use of an office-based injection and potential long-term durability could establish the OTX-TKI as the first standard of care in the treatment of diabetic retinopathy. We plan to share interim 6-month data from the HELIOS trial in Q1 of 2024 and subject to this data and additional financing, we believe that we will be well positioned to initiate a pivotal clinical trial for this program as early as Q1 2024.
We are also making excellent progress with another one of our late-stage pipeline programs, OTX-TIC, our travoprost intracameral implant being developed for the treatment of patients with primary open-angle glaucoma or ocular hypertension. While there are many medications available to lower intraocular pressure, or IOP, glaucoma remains a leading cause of blindness. In fact because of unwanted side effects, improper technique or simply forgetting to take their daily drugs, we believe most patients fail to comply and may ultimately lose their vision.
OTX-TIC is being developed to close the gap between clinical trial and real-world outcomes by taking patient compliance out of the equation. This prospective multi-center masked randomized controlled U.S.-based Phase II clinical trial is evaluating the safety, tolerability and efficacy of OTX-TIC for the reduction of IOP in subjects with primary open-angle glaucoma or ocular hypertension. The trial is designed to observe the changes in diurnal-IOP from baseline at 2, 6 and 12 weeks and follow duration of IOP response over time compared to DURYSTA.
We are happy to report that the Phase II trial enrollment is now complete. We look forward to sharing Phase II top line clinical data in the first quarter of 2024 assessing the safety, efficacy, durability of OTX-TIC. I'm also very pleased to report that we have initiated a self-study to evaluate the safety of a repeat dose of OTX-TIC 26 microgram in a small subset of the subjects in the ongoing Phase II clinical trial. After receiving the repeat dose, a second implant of OTX-TIC 26 microgram, these subjects will be followed for at least 6 months after the enrollment in the sub-study to evaluate their endothelial cell health. The data on the preservation of endothelial cell health on this pilot repeat-dose sub-study could provide preliminary support that the product candidate is suitable for repeat dosing.
Regarding our ocular surface disease programs, we remain committed to the development of our 2 dry eye programs, OTX-DED, a low-dose intracanalicular insert containing dexamethasone for the short-term treatment of the signs and symptoms of dry eye disease. And OTX-CSI, a cyclosporine intracanalicular insert for the chronic treatment of patients with dry eye disease. We initiated a small study in the second quarter to evaluate the performance of OTX-DED versus placebo inserts, namely fast-dissolving collagen plugs and no inserts at all. We plan to use the results of this trial to inform the selection of a more appropriate placebo comparator for use in future clinical trials for both OTX-DED and the OTX-CSI that could potentially have de-risked the pivotal programs moving forward.
I would now like to turn the call over to Steve for a commercial update.

Steve Meyers

Thank you, Rabia. In Q2 2023, DEXTENZA recorded net product revenue sales of $15 million, which is over 14% ahead of Q1 2023 and approximately 24% higher than the same period last year. Also, in market unit volume, units sold to ambulatory surgery centers and hospital outpatient departments was up over 2,400 units from Q1 2023 and finished at 36,902 units, which represent a 36% increase over Q2 2022 and a 7% increase over Q1 2023. Importantly, this is now the third consecutive quarter DEXTENZA as recorded organic growth of end market unit sales.
We believe that DEXTENZA's growth has been anchored by its strong efficacy and safety profile. The strong clinical profile has allowed our teams to create contracted strategic account partnerships, and it's also helped increase utilization among single-site surgery centers. Additionally, our market access team has achieved exceptional market access coverage that is providing our customers with strong reimbursement confidence. These data, among others, are helping DEXTENZA continue its growth in 2023.
Now I'll provide a brief update to CMS consideration of CPT 68841, a code that describes the insertion procedure for DEXTENZA. We're hopeful that CMS will change the inequity that currently exists with the assignment of the Q1 status indicator to CPT 68841. In the ASC setting, separate payment continues to be rendered for the DEXTENZA unit itself by J1096, and we do not expect that to change. However, the Q1 status indicator assigned to 68841 means that there is no separate facility payment for the actual procedure to insert DEXTENZA.
Large ophthalmic societies, surgeons, ASC administrators and many others have a shared interest in providing the gold standard of care and many have chosen to make their voice heard by requesting CMS to change the status indicator. It is our belief that facilities should be compensated for the additional time and resources required to administer DEXTENZA, and as such, we're also strongly encouraging CMS to assign a status indicator to 68841 that would provide a separate facility payment in the ASC. We expect CMS will provide a final ruling late this year.
Finally, as Antony noted earlier, based on the DEXTENZA trends over the last several months and our first half net product revenue of $28.2 million, we now believe that the DEXTENZA net product revenue for the full year 2023 should come in at the upper end of the current $55 million to $60 million guidance range, representing potential growth at the high end of approximately 10% to 20% over 2022.
With that, let me turn the call back to Donald to discuss our financial results.

Donald Notman

Thank you, Steve. Total net revenue, which includes both gross DEXTENZA product revenue net of discounts, rebates and returns, which the company refers to as net product revenue and collaboration revenue was $15.2 million for the second quarter of 2023, an increase of approximately 24% over the second quarter of 2022 net revenues of $12.3 million and an increase of approximately 13% over first quarter net revenue of $13.4 million. For the second quarter of 2023, DEXTENZA net product revenue grew to $15 million from $12.1 million over the comparable period in 2022, while collaboration revenue increased to $0.2 million from $0.1 million.
Research and development expenses for the second quarter of 2023 were $15.1 million versus $13.1 million for the comparable period in 2022, driven primarily by an increase in expenses associated with clinical trial programs. Selling and marketing expenses in the second quarter of 2023 were $11.2 million as compared to $10.1 million for the comparable quarter in 2022, reflecting primarily an increase in field force personnel. General and administrative expenses were $8.2 million for the second quarter of 2023 versus $7.8 million in the comparable quarter of 2022, primarily due to an increase in personnel-related costs, including stock-based compensation and professional fees.
The company reported a net loss for the second quarter of 2023 of $20.7 million, or a loss of $0.26 per share on both a basic and diluted basis, compared to a net loss of $18.8 million, or a net loss of $0.24 per share on a basic basis and a net loss of $0.25 per share on a diluted basis for the comparable period in 2022. The net loss in the second quarter of 2023 included a $1.1 million non-cash item attributable to a change in the fair value of the derivative liability associated with the company’s convertible notes, decreasing total other expenses as the price of the company’s common stock decreased during the quarter. Non-cash charges for stock-based compensation and depreciation and amortization were $5.1 million in the second quarter of 2023 versus $4.8 million for the comparable quarter in 2022.
As Antony referenced, the company has just closed on an $82.5 million non-dilutive debt facility from Barings, LLC. The debt facility was fully funded at close $80 million after original issue discount and has a 6-year term. The debt is interest-only until a bullet repayment at the end of 6 years and bears interest at 1-month SOFR plus 6.75% with a SOFR floor of not less than 1.5%.
Additionally, the facility includes a royalty fee equal to $82.5 million, payable in installments equal to 3.5% of U.S. DEXTENZA net revenues until such time as Barings has received total payments, inclusive of interest payments, principal prepayment fees and royalty fee payments equal to the funded loan amount. This threshold is reduced to either 20% or 30% of the funded loan amount, depending upon the circumstances if a change of control were to occur within 12 months of the closing. And the remaining balance of the royalty fee is payable in connection with the change of control thereafter.
The debt facility also includes customary affirmative and negative covenants as well as a $20 million minimum liquidity requirement. Concurrently with the closing, we repaid our existing $25 million debt facility with MidCap and extended the maturity date of the company's existing $37.5 million convertible notes to date, 3 months following the maturity of the new debt facility.
We believe that our existing cash and cash equivalents of $66.6 million as of June 30, 2023, plus the net cash received from the borrowing under the Barings credit facility after the repayment of the MidCap credit facility and reflecting the $20 million minimum cash covenant in the Barings credit agreement will enable us to fund our planned operating expenses, debt service obligations and capital expenditure requirements into 2025. This estimate is based on our current operating plans, which includes estimates of anticipated cash inflows from DEXTENZA product sales and cash outflows from operating expenses, including clinical trials.
With the new resources available under the Barings credit facility, we have the funding to initiate the first of 2 planned pivotal clinical trials for OTX-TKI for the treatment of wet AMD. Our planned operating expenses exclude expenses necessary to complete the first of the 2 planned pivotal trials for OTX-TKI for the treatment of wet AMD and expenses to initiate the second of our 2 planned pivotal trials. For OTX-TKI with a treatment of wet AMD for any other planned trials for our other product candidates, including OTX-TKI for the treatment of non-proliferative diabetic retinopathy, which we do not intend to commence until we obtain additional financing. As of August 3, 2023, the company had approximately 79.4 million shares outstanding.
I would now like to turn the call back to Antony for some final thoughts.

Antony Mattessich

Thanks, Donald. So before opening the call up for questions, let me do a quick summary. We recorded $15 million in net sales for DEXTENZA in the second quarter, 24% over same quarter prior year and 14% sequential growth quarter-over-quarter. We believe we have the opportunity to further accelerate our growth trend for DEXTENZA if the OPPS final rules in November allow for facility payment for CPT code related to DEXTENZA insertion. We are expecting to initiate our first pivotal trial for OTX-TKI and wet AMD in the United States in the third quarter of this year. We have secured a debt facility of $82.5 million that puts the funding in place to allow us to initiate our first pivotal for OTX-TKI in wet AMD and will extend our runway into 2025.
We have completed enrollment of the HELIOS trial and plan to share that data in the first quarter of 2024. We have completed enrollment of the Phase II trial for OTX-TIC and glaucoma, and we plan to provide data in the first quarter of 2024. Additionally, we have started a pilot repeat dose sub-study within the current Phase II trial.
With that, I will turn the call over to the operator for questions.

Question and Answer Session

Operator

(Operator Instructions) Our first question is from Dane Leone of RJAs.

Dane Vincent Leone

Congrats on all the progress and momentum with the DEXTENZA launch. I think a popular focus for investors from your update today will be the go-forward clinical development pathway of OTX-TKI for the treatment of patients with wet AMD specifically. Do you think your team could please expand on the Phase III trial protocol that you're considering and highlighted in your remarks and maybe specifically discuss how the trial design and could avoid running at odds with the per USDA label treatment protocol Eylea that does recommend 3 monthly doses for wet AMD patients that are treatment naive?

Antony Mattessich

I'll hand that over to Rabia to go over the -- what we can in the clinical trial design. And clearly, we've done a lot of work, had a lot of discussions, some of which we feel we'd like to keep proprietary for a brief period of time until the trial initiates. But I'll pass it over to Rabia to further talk about what she can on the clinical trial protocol.

Rabia Gurses Ozden

Sure. First of all, I will start with the change in the FDA guidance. And I heard, Dane, you said on label use of Eylea with the 3 induction doses. What I can share is that in the most recent pivotal non-inferiority design, for example, Vabysmo or high-dose Eylea, sham injection provided in the treatment arm to mask the patients at time points where the control unreceived standard of care injections every 4 weeks or 8 weeks depending on the comparator and also the loading doses, et cetera. FDA no longer recommends sham injections, and they believe that using a sham does not provide complete masking, therefore, will elicit patient bias.
Instead of sham, they need a real injection. And if OTX-TKI go every month or bimonthly dosing regimen, then we would be able to do a standard non-inferiority design that we all used to see so far. Now the FDA clearly states in the draft guidance, its superiority designed to an injection. It could be any injection, it doesn't have to be an anti-VEGF. As long as a superiority endpoint is reached, that design is acceptable.
You may in an early like the Lucentis approval, that actually use a superiority design with no loading injections, et cetera. That what we are planning to do, instead of doing a 3-arm non-inferiority design, we're going to do which we need to show non-inferiority to on-label drug and superior to that comparator arm. We are planning to do -- our plan is to do this 2-arm superiority design. For now, the details we can share is this much. Then this initiated trial, we're going to share the details of the design with you. Does that answer your question, Dane?

Dane Vincent Leone

Yes, I don't know that provides a lot of detail. I think maybe just one follow-up just from what we're kind of getting in from investors on this. Once we get the details of the full trial design from your team as we go into starting the study, I guess some of the details that you might not be disclosing today, we could think of hoping to allow involvement into the study. I think that's where maybe some investors are struggling a little bit right now as to understanding from a clinical site in the U.S. who would kind of enroll someone to maybe not get the 3 loading doses if they're a treatment naive patients?

Antony Mattessich

Yes. We haven't disclosed whether we're going to give loading doses 1, 2 or 3 loading doses. What's changed that you might have realized -- I'm sure you recognized since we spoke last was that we looked at the superiority design. And with the design that we were working with, we believe that we would have to perform that outside of the U.S. And we've had some fantastic discussions over the last 3 months with clinical trialists in the U.S. and key opinion leaders, working on clinical trial designs that would allow us to establish superiority over a single injection of a comparator. But would be acceptable to do in the United States with, of course, patient safety being the -- of paramount importance.
What was very clear in working with these U.S. key opinion leaders was, first of all, that they are very interested in working with us. They are very eager to have a product like OTX-TKI make it to market. They deeply understood the ramifications of the FDA guidance that superiority was going to have to be demonstrated no matter which trial design we use. And we were able to work on rescue and entry criteria that allowed them to feel comfortable to be able to run those trials in the U.S. So once again, we're not saying we're not going to give induction doses. We're not saying how many or what we're going to do precisely at the moment because we'd like to hold that proprietary at least for the next -- until the trial initiates.

Operator

Our next question comes from Jon Wolleben of JMP.

Jonathan Patrick Wolleben

A couple for me on the wet AMD trial. Just wondering how you're thinking about measuring visual acuity as a primary when you'd be collecting that data and when we could be seeing data from the first pivotal? Wondering about the formulation you'd be choosing for this trial and if you're thinking about an identical design for the subsequent trial.

Antony Mattessich

Sure, I'll hand that over to Rabia.

Rabia Gurses Ozden

Yes. I will start with the visual acuity. It is clear from the draft guidance, the endpoints you can choose for wet AMD design, wet AMD pivotal studies that are listed, and there are 3 options there. And we're going to disclose which one we're going to use in our current design going forward after we initiate the study design.
Can you repeat the second part of your question, Jon?

Jonathan Patrick Wolleben

Sure. Which formulation are you guys electing to move forward here? And then if the second study is going to be identical or different anyway?

Rabia Gurses Ozden

Yes. I mean the second, our plans now are that this second pivotal would be the exactly the similar design with our current knowledge going forward. And the formulations, we have a formulation, a working formulation now. And as we disclosed before, we have a backup formulation. Maybe Antony, may want to give more color on this.

Antony Mattessich

Yes. I mean essentially, we have 2 formulations to choose from, and we have confidence in both of them. So we'll make a decision later on probably in about a month or so before we launch. But we will have IP material for both formulations.

Jonathan Patrick Wolleben

And in your prior commentary, it seemed like diabetic retinopathy is getting more and more interesting to you guys internally, but now it sounds like you're going to hold off on starting that, pending subsequent financing. Just wanted to check about how you're thinking -- do your thinking change at all with this new superiority design for wet AMD and the ability to potentially start that study as well early next year?

Antony Mattessich

Yes. With most things with biotech, you really have to choose the things you invest in. And clearly, wet AMD, now the superiority pathway is open in the U.S. to us becomes our #1 investment priority. And we've talked a lot about our sensitivity to dilution at the current stock levels that we have. So we're making no firm choices about what we fund additionally beyond this first pivotal and of course then the second pivotal that would be our primary path to market. Wet AMD, as you know, is a much larger market. I think we have a really interesting possibility to become the standard of care in that $15 billion global marketplace. So that is our #1 priority. We're still extremely excited about both diabetic macular edema and diabetic and non-proliferative diabetic disease.
But that's something that we'll make a decision later on whether we're going to fund or not. A lot of this depends on whether we are able to align with a partner by that time. The companies with whom we're speaking are all large strategic that would have an interest in not only looking at NPDR, but also DME and also a retinal vein occlusion. So there would be a number of other things that could be brought online as well, looking at the possibilities of this drug in the overall marketplace. But right now, we're deciding to fund the trial that's in front of us.

Operator

Our next question comes from Joe Catanzaro of Piper Sandler.

Joseph Michael Catanzaro

Maybe 2 on sort of design and feasibility. First on design. I know you're not disclosing whether you will include loading doses or not. But I guess when we look back at the prior experience with TKI and how it performed in patients with control that disease at baseline. What would be a reason why you wouldn't include loading doses across both arms of the study? And I have a follow-up.

Antony Mattessich

That's a fantastic question, Joe. And I'm going to choose not to answer. But certainly, we will -- we have data both in naive that are uncontrolled, and we have data in previously treated who have been controlled. And clearly, we're using all the data that we have in order to be able to anticipate the likely response to the OTX-TKI arm, and we think we've come up with a great solution, which we'll make you aware of in the relatively short future.

Rabia Gurses Ozden

Maybe if I can add, Joe. Again, to Antony's point, we are not saying we are doing loading doses or not doing loading doses. And this design is absolutely very carefully thought out with many thought leaders involved. And that's why when you see the design, you will just appreciate the way that is designed that way. When we are designing this, we told about 3 things: One is patient safety; the second is the acceptability to retina physicians in the States; and the third is to make it a good design that we show the TKI's activity at the end of the trial. Just wanted to give that color as well.

Joseph Michael Catanzaro

Okay. That's helpful. And maybe a follow-up, I guess, on feasibility. But I guess it depends on exactly what the primary endpoint is and when. But I guess I'm thinking about the rescue criteria and similarity of difference relative to what you've been using. I know there's been some discussion around setting the criteria in a way that would give TKI the best chance of success, but in a way where physicians are comfortable allowing patients to lose some degree of vision. I hope there's a question in there, but hopefully, you got it.

Rabia Gurses Ozden

Yes. I think I did, Joe. I mean that's exactly the question in everyone's mind. And it was in ours as well. This was our -- like the biggest hurdle getting to this design. That's why with respected process of disease reactivation and real-world practice patterns, they are all driven by through changes as captured by the OCT images. But the FDA's endpoint -- acceptable endpoint is vision. That's exactly what we have been working at last 2, 3 months, 4 months since the guidance came about, how we can strike a balance between what's acceptable to FDA, what is acceptable to investigators for their patients and for patient safety. And at the end, we get to the endpoint. That's exactly we spend, and we do believe we have that design.

Operator

Our next question comes from Colleen Kusy of Baird.

Colleen Margaret Kusy

Have you discussed the trial design with the FDA? And can you comment on what expectations you have around the enrollment timelines for the superiority trial? And then I have a follow-up, please.

Antony Mattessich

Sure. I'll hand it over to Rabai.

Rabia Gurses Ozden

Yes. We have extensive discussions, and communications, I should say, Colleen, with the FDA with several different design options. And we do believe the design we have now is a reasonable design to FDA, and that's exactly what we heard from them. That's why we believe in our design and also design acceptable to FDA, not just one meeting, but several communications, Type C meetings and discussions, e-mail exchanges, all of those.

Colleen Margaret Kusy

That's helpful. And any expectations on the enrollment timelines?

Rabia Gurses Ozden

I mean what we saying this is -- like, again, with our discussions with the key opinion leaders and especially for clinical trialists, this design could enroll and the patient population we are going for is actually available at this point. And that's why we do think that it should enroll under reasonable period of time.

Antony Mattessich

Yes, I think (inaudible) has had a lot of debate around how difficult it has been for them to enroll their naive trial. And we would be looking for a very different type of patient, right? We'd be looking for patients with better vision rather than what they're looking for, and we would be looking -- we would be okay with any type of lesion. So there's a much broader population in our discussions with key opinion leaders. The available naive population would be exactly the population that we would be enrolling in this trial. So our expectations are that that would enroll relatively quickly. And obviously, the largest driver of enrollment is really the number of patients. And we expect 300 evaluable patients would be able to power this trial appropriately.

Colleen Margaret Kusy

That's helpful. And then last follow-up from us. I think you mentioned that the second Phase III would be a similar design. So just to clarify, will your pivotal program include any re-dosing of OTX-TKI? And how do you think that would play out in the commercial opportunity?

Antony Mattessich

Well, the thing that's going to drive -- I'll take that last part. The thing that's going to drive our re-dosing is really the TK. I mean, this is a different paradigm than an antibody therapy. Antibodies are removed from the eye very very quickly, and you're really timing the time that it takes for disease reactivation when there's no drug present. So the idea of being able to dose more rapidly is very important from an antibody standpoint. And continuously dose therapy, it's actually the re-dosing is really -- should be driven by the TK of the product.
And we know that we can give continuous drug delivery between 9 and 12 months. That being said, there are commercial reasons why we may want to re-dose slightly earlier even though we don't think it would be necessary just to give flexibility for doctors to be able to use it if they needed to for other reasons. But I think we'd like to stay pure to the re-dosing based upon the qualities of the drug. We're not going to disclose the re-dosing of the pivotal trial today.

Operator

Our next question comes from Kelly Shi of Jefferies.

Dingding Shi

I'm curious whether the second trial of wet AMD has the same trial design as the first one? And have you discussed with the FDA on this front? And secondly, regarding the patient enrollment criteria patient baseline characteristics, is it more similar to the U.S. Phase I trial?

Rabia Gurses Ozden

Our second pivotal trial would be the same design as the first pivotal trial. That's our intention now. And at this point, for the FDA discussions, as I mentioned, we had several meetings afterwards, communications with the FDA for the current design, we're going to initiate up too. That's why our discussions with FDA just provided us that they fund this design as a reasonable pivotal design. And your last question around eligibility, whether it would be like similar to our U.S. Phase I trial. Again, we would like to disclose our design details and highlights of the eligibility and all those details after we initiate the trial, first trial.

Operator

Our next question comes from Tara Bancroft of TD Cowen.

Tara A. Bancroft

So I was hoping, can you say what time point the primary endpoint is? And if this is going to be run in treatment-naive patients, how many injections do these patients typically get in that amount of time that the primary endpoint is being measured? And I'm asking because I'm trying to get an idea like Dane and Joe said, how you'll convince patients to enroll in the trial and how you'll control for dropouts when patients progress?

Rabia Gurses Ozden

Yes. Tara, some of the things I may not be answered because of the design. But what I can say that when discussed the design -- again, this is a durability design and durability design for TKI versus a single injection. Again, loading doses or not, you will see that when we get there. But this design, to our understanding, with extensive discussions with the clinical trialists, is acceptable to design to them and also their patients.
That being said, the rapport and et cetera, with the criteria we have retreatment criteria when you see those and when you see the eligibility criteria you would see why this design and this study would be acceptable to the patients. Because all of the details -- how it would be accepted retina physicians and to patients all discussed with this top clinical trialists. And they confirm they have patients and they have patients who are enrolled in the trial.

Operator

Our next question comes from Yi Chen of H.C. Wainwright.

Chaitanya Gollakota

Congrats on the progress. This is Chait on behalf of Yi Chen. Just a quick one on TKI. When would you ideally like to initiate the second pivotal study? And then one on dry eye disease. Any comments on the dry eye disease program? I know you indicated that you initiated a small study during the quarter evaluating DED. So any comments on that would be helpful.

Antony Mattessich

Rabia, you want to handle that?

Rabia Gurses Ozden

Yes. Maybe start with DED, because I'm going to ask for a clarification for TKI. The dry eye programs, we have 2 programs in dry eye. And what we have seen, like in Phase II programs in both that we need a proper placebo because our insert intracanalicular insert, placebo insert worked really well, stayed actually in the (inaudible) course more than we expected. And that's why our CSI was inconclusive. And DED, although we showed a statistically significant sign, the symptom was not statistically significant. And the reason for our review is that the placebo arm did reel about.
What we are doing now is actually running a small trial to come up with a more proper placebo like very short life collagen plug that they would just be completely gone like in 2 to 3 days, 2 to 5 days, actually. And then like use that in our pivotal trials. We then want to start a pivotal trial before completely derisking that issue. Because we really like in our pivotals, we would like to hit both sign and symptom.
Does that answer your question, Yi, for the dry eye program?

Chaitanya Gollakota

Yes.

Rabia Gurses Ozden

And can you repeat your TKI question?

Chaitanya Gollakota

The ideal timeframe for the second pivotal study.

Rabia Gurses Ozden

I mean, we really would like to start this trial first. And you heard the finance of the trial from Antony. And then as we go along, dependent on our partnering processes or other financing, then we would start the second. For now, we are starting this first trial. And then the second trial, we're going to inform you when we get that.
Antony, do you want to add more to this?

Antony Mattessich

No, I think it's important to note that we're going to learn a lot from the initiation of this trial. We're going to learn a lot by see how quickly it can enroll. We're going to learn a lot from the mass data to be able to see how patients are doing in the trial, which would give us the confidence and the data to be able to understand when is the right time to pull the trigger on the second trial.
But what we're not going to do is commit to funding that trial until we see how the first trial is moving. So we have the appropriate discussions with other funding sources that could help us expand into a second pivotal. But we would be ready from a standpoint of clinical trial material to start very soon after initiation of the first pivotal, but we're not committing to the start time of that second pivotal yet.

Operator

Our next question comes from Caroline Palomeque of Berenberg Capital Markets.

Caroline H. Palomeque

Just wondering if you could confirm the guidance on the estimated cost of the 2 pivotal trials in wet AMD? I know you've said in the past it was somewhere between $50 million and $100 million, but then I also have seen some different numbers. Just wondering if you could just comment on that.

Antony Mattessich

The number we've been quoting is approximately $50 million per trial. So $100 million to NDA filing.

Operator

I am showing no further questions at this time. This concludes today's conference. Thank you for participating. You may now disconnect.