LENZ Therapeutics, Inc. (LENZ) Earnings Call Transcript & Summary

So again, welcome, everyone, to Citi's Back to School Biopharma Conference in Boston. It's day 2. I'm Yigal Nochomovitz, biotech analyst here at Citi. The next session is with a great company called LENZ Therapeutics. We've been covering them for, I guess, over a year now, 1.25 years. We have the CEO, Eef Schimmelpennink. Eef, welcome. Thank you so much.

Thanks, Yigal. Thanks for having us.

Obviously, you've had a lot going on, to say the least, including an FDA approval a week ahead of schedule. So maybe we could just start out, talk about the product a little bit, it's called VIZZ. What the launch plans are? What the opportunity looks like? And how things -- you see things evolving over the next few quarters?

Absolutely. And again, thanks for having us. Back to school, I wish. But everything that we got going on, it feels like back to school. Now we do have a lot going on, as you say. So maybe just super brief. I think most of the people in the room and listening in are well aware of what we're doing. But the CliffsNotes version is that we've developed an eye drop that treats presbyopia. Presbyopia is the loss of your near vision that happens to all of us as we age. So you become 45, you'll start to see many of us hold our phones further away from our face, so having a difficulty reading a menu at night. That's because your lens hardens. And what we've developed in this eye drop is actually a way to restore your near vision without impacting your distance vision through an eye drop. So think of this as you wake up in the morning, brush your teeth, put your eye drops in and for the full workday, your near vision is back. So that's the product that we developed. And as you said that we got approved by the FDA late July, earlier than our PDUFA date. So very pleased with that. And we're pleased to have, at that moment, been able to reveal the brand name VIZZ. So we're currently in, I would say, beyond prepping for the launch, we are launching now, and I'm sure we're going to double-click on what that means in a second.

Okay. Well, tell us a little bit more detail about exactly the plans because a lot's going to happen over the next weeks and months. There's going to be samples, and then you're going to do various phases of the marketing rollout. So kind of can we double-click into what some of those steps are, and when they're going to happen and sort of how you're going to move from the initial outreach to eventually the social media, the influencers and things of that nature?

Yes. Yes. So important to understand with this product that it's a script, obviously, FDA approved, you need a doctor to write a script with the self-pay products, and it's a huge market. It's 128 million presbyopes out there. So it takes a lot of dedication and very strong execution to obviously roll a product like this out. So we unpacked that a little bit and actually going to take us back to late last year when a 10-person MSL force was out, already starting to have those doctors-to-doctor conversations, educating the 15,000 or so doctors that we're targeting on a Aceclidine because that's our active ingredient. And as MSLs, they could actually obviously have that discussion with them. So that's where we started to lay the groundwork. They're explaining how important it is to get to a small pinhole pupil, what our data was like and how -- and that's key to our product, how it's ciliary sparing, which means it doesn't impact the distance vision. So those three messages were key to get out there. Then we were confident in the approval. We're very pleased with how we work with the FDA. So we actually hired our sales force, if you will, at risk. So by July 1, ahead of the PDUFA date, we had a full sales force onboard. So think about 100 reps, 88 in field and about 12 or so inside sales. They are targeting those same 15,000 doctors. So we started to train them up. And then once we have the approval, we actually were able to train them on the label. So that happens immediately after the approval, and that sales force is out there now as well, obviously, detailing the product to doctors. That's when it's a good moment to maybe pivot into the commercial strategy that you've asked about. So a three-pronged commercial strategy. First tier there is to make sure or get doctors to recommend us, that is that sales force. So that's a sales force out there, like I said, the 88, that are really detailing the product now to doctors, making sure they understand what this is, how it's different, what they can expect, when its used, telling them about the clinical data and then indeed, giving them the samples. And we'll talk about the samples in a little bit. So that's going to give them that confidence in how the product works, what they need to tell their patients and how to write the product. It will take the remainder of the year to rebuild that confidence with the doctors. And then in Q1 of next year, we will turn on to DTC. We know that this is a market that's very easily -- easy to motivate. We all -- once you're at that age, you know what this means. You're not going to be talking about presbyopia, but you'll talk about blurring in vision and wanting to take your life back. So that's what that campaign is going to be all about, and that will start to activate people that maybe normally don't go to an optometrist or people that are frustrated with their reading glasses. So that's the second part of the strategy. And yes, we'll have influencers, and I know that you've got your own list of favorites that we should put in. We're not ready to obviously share any names yet, so I just want to preempt that question. At the right moment, we'll talk about them, and we're sure that's going to be a name that's going to resonate very well with a lot of people. And then the third part of that strategy is what we call seamless journey to use. So that means that we want to make it very simple for a consumer to go from your visit to your optometrists to your 5-day sample to then getting the product delivered to your home, and you can actually start using it.

Okay. All right. So a lot to dig into there. So on the 15,000, it would be helpful if you could just describe who these 15,000 are because when I've done channel checks and asked people about the competitor, which we talked about at some point, VUITY, I mean, apparently, there, they kind of had the -- they inverted it, and they are really spending too much time with ophthalmologists and not enough time with optometrists and opticians, and you're obviously taking a very different approach. So can you kind of walk us through that?

Yes. Absolutely. So there's a lot of things that we could learn from VUITY, which was the product that was launched by AbbVie about 3 years or so ago now. And one of the things is, we can actually look at the data and see who actually prescribed VUITY. VUITY failed because the product didn't work and nobody refilled. But if you look at that early launch in the first 6 months or so, they had a phenomenal launch. But what we saw was that about 80% of the scripts actually gets written by optometry, which is not unlogical if you think about it, like that's the entry point for something like this. However, AbbVie VUITY, they had VUITY in the back with their glaucoma medicines, which is obviously ophthalmology. So that call point was mostly ophthalmology, but still despite, they were not being in the optometry office. They were still able to drive those scripts. So if you think about what that means for us, with that knowledge, we obviously inverted, to your point, our strategy. So 80% of the call point of the sales calls will be optometry, calling on what's the first 4 deciles in a 10 deciles, obviously, setup. So that's where the sales force will go, like 12,500. And then the 2,500 that are more in the white space will be inside sales. Those are the people that were the highest prescribers of VUITY, but also of other products. So yes, very different setup there, really focused on where you'll find these consumers, which is mostly optometry.

And then maybe walk us through also just the mechanics because obviously, when I speak to clients about you guys, everyone is actually quite interested and they have very specific questions about how could I get it and what are the samples. So how does it actually work? I mean, you go in, you get a -- tell us how it works and what's the process.

Absolutely. So let's talk about the patient journey. So important to know is that there's already 40 million presbyopes just annually being seen in optometry. So that's those -- that's just a patient group or a consumer group that's sitting there. So 250 on average per month per doctor in those 15,000 that we're targeting.

That are already on some...

They are not just therapy, that are just coming in because they have a distance vision correction that needed to wear contact lenses or -- and they are then aging in to being presbyopic. So those are the people that we don't have to find there. So let's start with a person like that. He or she comes in complaints about their near vision, so they get their test and goes "Yes, your near vision is not good." So you already know that, and they're frustrated with their reading glasses or they're aging into it. And they go, "Something is wrong with my eyes." And the doctor, in a much more polite way, and I'm going to say "It is, yes, you're getting old. This is just part of what's happening." And then at that moment, a doctor will offer up, "Hey, this is alternative solution that you have to reading glasses or bifocals, which is an eye drop. Do you want to try it?" It's a free sample 5 days that somebody will then walk away with. Very important is that, that will go hand-in-hand with a script. So we want that doctor to, at that moment, also write a script, we -- even though we are in both channels, so both e-pharmacy and retail channel, we'll try to get them to e-pharmacy. And you literally walk out the door with your 5-day sample and a text message on your phone that's saying, "There you go, thank you for your interest in this. Hope enjoy your sample. Here's your script." you're filling your credit card details, your address, you click yes, and it shows up on your doorstep 5 days later. So that's how simple and seamless that's going to be. E-pharmacy, we can do a 1 month or a 1 pack for $79. You can also buy 3 months for effectively $66 a pack or $198 for that 3 pack.

Okay. So now you talked about some of the DTC turning on in 1Q. I do get that question, the choice of doing that in 1Q versus sooner was carefully taken obviously. So just can you walk us through the pacing there in terms of why that's strategic to do it then?

Absolutely. So you want to make sure that the doctors are actually prepared and know what this product does, that they're comfortable with it, and you need to give them a couple of months to get there. So that's what Q4 is all going to be about they'll have their samples. We want them to use it on 10, 20, 30 patients. They're probably going to use it on themselves before you send that bolus of new patients. There's nothing more frustrating for a doctor than have patients asking for a product that they're not aware of. It's very embarrassing if you were to come in and go, "Hey, doctor, can you write me this?" And they go, "Write you what?" Now so we're putting a lot of effort in making sure that, that is a good process and that we give them that time, and that's why we feel that if you take about a quarter or so for that, we have a 3-week call cycle. So in a quarter, each of those doctors will have been seen by our reps, let's call it, about 3, 4 times.

So you mentioned sort of the headline number, the 128 million, but your focus -- and that's a big number, but you're focused on certain segments there, which are you expect to be good high adopters would have affinity for this type of product, based on certain demographics that you've discussed. Can you go through that?

Absolutely. So important to understand is that this product works effectively for everyone. So that's what we've seen in our trial. We have a very broad inclusion criteria from 45 to 74 years of age, very different reflection, so different distance vision corrections. So it's almost an all-comer study. So that's 128 million people out there. From a commercial point of view, from a marketing point of view, you want to segment that because like that's just a very broad group to go after. Now if you look across that group, what the interest in a presbyopia eye drop is, it's about 60%. That's incredibly high to begin with. So across that group, there's very high interest. So I think across that group, you'll start to see usage. But from a how do you target groups within the -- within that we've looked at different groups that over-index. Now you're thinking about 80%, 90-plus percent of people of interest in use. And the 3 groups would be people that wear contact lenses, so they've chosen to be glasses-free. They're from age 20, 25 on, have contact lenses because they don't want to wear glasses. And now they turn 45, and they realized that my near vision is going. There's not a good contact lens alternative. There's both bifocal contact lenses, but they work for very few people. So they're now forced to actually go into glasses. With this eye drop, they can continue to wear their contact lenses for distance correction and the eye drop for near vision. So that's one group that is very -- is over-indexing significantly. Second group would be people that have had LASIK. Similar story. They've paid back in the day, $5,000 or so per eye to be glasses free, and they now claim it that LASIK is wearing off, which is not the case, like the distance vision is still okay because of the LASIK. But then near vision, again, through presbyopia, is being impacted. Same thing with this eye drop, they can continue to be glasses-free. And then the third group is what we call like the active aging group, the people that care about their looks, care about their active lives. That's the group that just doesn't want to be seen with glasses because it doesn't fit their lifestyle, doesn't fit their look. Again, each of those groups, you can target very easily. Those will be the early adopters. It doesn't mean that those will be the only users.

And when you think about sort of the categories or the types of usage patterns, I could imagine there would be people that would be using it basically all the time because they love it. And then there may be people that see it as something to do in certain situations, social events or whatever it happens to be. So how does that all work out in terms of your assumptions for what would be like the run rate of use on a per patient basis?

No, great question and in my mind, the key question towards our success. And this is where frankly, if we look at the data that we have from people that have used the product, whether it's in our clinical trials, we've had hundreds of people obviously on the products. When you ask them do you want to continue to use the product, 75% say absolutely. So that's -- again, it's a very high number. So it's something that you would normally see. And then when you ask them how often do you see yourself use it, they are saying 4 to 7 days a week. So they're basically in that camp, where you're saying, what you mentioned is like if this works, why would I not use it every day. So that number would equate to about 10 refills a year. We want to be obviously very conservative in that approach. That's basically us slashing that number. So rather than saying 10 refills, let's assume it's 5 refills. Now we've not heard a lot of patients that say, "Oh, this is a great drop for -- if I go out at night." That doesn't seem to be what people are looking for. They're looking for an all-day solution. But again, we're being very conservative. So that's a 42% refill rate or 5 fills a year.

Okay. Well, you mentioned the all-day aspect a few times, so I want to make sure we cover the -- how that's potentially differentiated versus -- and we talked about VUITY. So -- but there are a few others. There's this Qlosi, and there's another drug from Tenpoint that's moving forward. So can we just go through the competitive dynamics and where you see the differentiation? Obviously, with VUITY, as you point out, the efficacy just wasn't there. And by lunchtime, it was kind of not working super well. Yes. So what -- how do you fit into the competitive landscape? And what's the value proposition versus the specifically these other ones?

So how we talk about it, and that's -- we try to do it without any arrogance is that we really see this as a category of one. So it's very clear what consumers want. So once-a-day eye drop, that works for your full workday, works for almost everyone, and it's very comfortable. So against those 4 parameters, if you just clearly look at the data, it's just a very clear difference. Let me very briefly go over how we stack up against VUITY. So from a very simple way of saying it, we're at least 3x more efficacious. If you look at our 30-minute efficacy, we're in the 70% range for 3-line gains, which is the FDA endpoint. We're in the high 90s for 2-line gains, which is sort the [ 20/40 ], which means you can go without reading glasses, compared that to like a 22%, 23% for VUITY. So at least 3x more efficacious, at least 3x more longer in duration. VUITY lost efficacy in one of the clinical trials at 3 hours. And that's why most people say, yes, it works like 2.5 hours, maybe 3. At 10 hours, we still have [ 0001 ] p values. So that was the last time point that we've measured. And then the other thing is that we tested in, like I said earlier, a very broad patient population. So not only focused on [ inotropes ], which is what you see most other products do, but truly -- so [ inotropes ] are people that do not have distance vision correction, but this is across a broad population. So that's how we're different than VUITY. And VUITY failed not because people didn't want an eye drop, but VUITY failed because it didn't deliver. There was a lot of enthusiasm on 150,000 people out there that tried it. But we're, frankly, disappointed, and I was one of them, it doesn't really work. So if you compare -- and I'm not here to talk about other products, but if you compare us against VUITY and then the other two that you've mentioned, you see that Qlosi is twice-a-day drop in exactly the same profile as VUITY, and you see the same thing for [ Pyricol ]. So we welcome competition, but it's hard to see because it's proven by VUITY that that's a profile that consumers don't want. So we're focused on our success and driving it clearly as we are launching now.

So -- and then let's talk about the name because you spent obviously a lot of time thinking about the branding and the simplicity of the message, and not just the name but the whole sort of aspect of the branding, the website, everything that envelops that whole message. So just talk about the process of how you arrived at this name.

No, we're very pleased with that. It's one of only a handful of single-syllable names that's been approved by the FDA over the last 15 years. So that's not by accident. So we started the branding process probably 2.5 years ago, now maybe 3 years ago, always with this vision of we don't want your standard pharmaceutical product and product marketing and a name that sounds like it's coming straight out of the chemistry book. So from the beginning, we've worked with the right companies to say we want something that's really that category 1, that's really that lifestyle brand that we want to build and a name that fits that. So when we -- when this was on that list early on, it tested incredibly well. The name recollection is off the charts. If you basically tell people 20 names. And then at the end of the day, you ask them, which one do you still recall, VIZZ comes out, immensely high. And we went in with only one name to the FDA, and we got that approved or conditionally approved probably 18 months or so ago now. So we've been obviously keeping it on the rep since while we were developing the whole thing. I'm just extremely pleased with it. The feedback has been great. Like we're not doing any marketing yet. But if you look at what's on Instagram, the TikTok and the other channels, it's already -- people are picking it up. It's resonating.

Well, you're doing a lot of good things because I actually get your marketing because I signed up, and I'm already getting the e-mails. Like every 2 weeks, I get an e-mail from you about this. So something is working well. All right. And then talk about the -- so you're launching the -- when is -- the samples are coming -- how specific did you say? Like when...

We're very confident that we'll have samples in October. Let me just explain a little bit what's driving that gap between approval and October because we get that question sometimes on, "Hey, is something wrong?" Nothing Is wrong. This is really just logistically driven, very different than oncology launches that I've done and many of us in the room here have done, where you need a couple of thousands, usually vials, which are easily to hand pack. These are in the tens of thousands, hundreds of thousands. So we couldn't prepack this, like this is too much to pack at risk because you know that the FDA, last minute, will also always ask a change in your labeling and the one that we always -- and again, it was good to work with the FDA. So let's say, the one that we use often as an example of what they change is literally the day before approval or so they came with. If you look at our packaging, it says 1.44% concentration. They felt that there wasn't enough room between the decimal point and the 1 and the 4. So they wanted that to change by like 1/10 of a millimeter, which means you change that, and all your packaging changes again. So we waited until that was all done with final labeling. So that's all done now. That's all printed, and we are packaging now. We've already -- we started producing bulk as early as April of last year. So we're sitting on a lot of bulk products that's now just being packaged, that will go through the logistics and then show up at the pharmacy.

You get that question. And I get the question just in terms of what to expect for the fourth quarter because that will be, I assume, a sample-heavy period and not necessarily one that's going to reflect the revenue potential or even the beginning of the revenue potential. Is that accurate or fair?

No, that's how we think of it. Think of this truly as this is the quarter that we want to use to establish that confidence with doctors that this is a product that works, that the patients like. And I think how that will go with most doctors is that they will try themselves, they will try it on a handful of patients, then a handful will go to 10 or 15. And then once that confidence is there, that's when they will start to widely prescribe. So that's how we think about Q4. And we're frankly looking forward to that, obviously.

And then a couple of other things, importantly with regard to manufacturing. You talked about -- I think you first mentioned it at the R&D Day back in New York regarding obviously, the question on manufacturing and where it's manufactured and what customs has said about your product. So remind everyone about that because we're very front-footed about that, either by design or by some luck. I'm not going to...

We like to think by design, and maybe the government helped us a little bit. But yes, I've never had so many questions about tariffs in my career. But if you think about the product, the APIs or [indiscernible] U.S. manufactured all the IP that's in the U.S. companies, obviously, U.S. We then ship the API to Germany to actual -- the company that invented this blow-fill-seal container technology, they'll do the fill, finish, and then it gets shipped back. So that's just, I would say, normal course of business about a year ago, a little bit over a year ago as we were thinking about our commercial supply chain. We're already engaged with the U.S. authorities and the custom authorities and border groups. We feel this is an American-based product. And they agreed. So we have all that in place. So that's the -- by design. And then maybe the by-luck thing is that obviously, what was it, late last year, early this year when the whole tariff discussion starts to [Audio Gap].

Yes. Okay. And then as far as some other little sort of odds and ends, as far as storage, I mean, this is something where you can take it with you for your day or you -- and it doesn't -- it can -- you can keep -- you should keep it in the fridge when you're not -- for the doses you don't need for that day, but it can be portable and can stay at room temperature.