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

Good afternoon, ladies and gentlemen, and welcome to the LENZ Therapeutics Second Quarter 2026 Financial Results Conference Call. [Operator Instructions] As a reminder, this call is being recorded. At this time, I would like to turn the call over to Dan Chevallard, Chief Financial Officer. Please go ahead.

Thank you. Good afternoon, and thank you for joining us today. My name is Dan Chevallard, Chief Financial Officer of LENZ Therapeutics. We are joined today by Eef Schimmelpennink, our President and Chief Executive Officer; Shawn Olsson, our Chief Commercial Officer; and Dr. Marc Odrich, our Chief Medical Officer. Before we begin, I would like to remind you that this call will contain forward-looking statements regarding LENZ's future expectations, plans, prospects, corporate strategy, regulatory and commercial plans and expectations, cash runway projections, and performance. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors and risks, including those discussed in our filings with the Securities and Exchange Commission and which can also be found on our website. In addition, any forward-looking statements represent only our views as of the date of this webcast and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligations to update such statements. The company encourages you to consult the risk factors contained in our SEC filings for additional detail, including our second quarter 2026 Form 10-Q, which is being filed today. With that, I will now turn the call over to Eef.

Thank you, Dan. Good afternoon, everyone. We are several quarters into the launch, we have a clear view of how adoption is developing. Today, I want to share the progress we're seeing, what the latest data are telling are us, and how those insights are shaping our priorities for the second half of the year. Q2 reflected continued, though modest, growth. Encouragingly, in July, as we launched telehealth and expanded our existing Tired of Reading Glasses campaign on national TV, we saw a significant increase in new patient starts and over 45% growth in month-over-month total prescriptions. We recognize that 1 month does not establish a trend, but these early results are consistent with the direction we hope to see. We have consistently said that the second half of the year will provide our first opportunity to assess and discuss patient persistence. Now several quarters into launch, we have sufficient data to begin doing that. And what we're seeing is encouraging. Since launch, more than 60% of e-pharmacy patients who have purchased VIZZ have purchased more than 1 monthly pack, either as part of their initial order or through a subsequent purchase. It's important to note that the e-pharmacy is a dominant sales channel and the channel where we have access to detailed patient-level data. And looking at the more mature quarterly patient cohorts within that 60% provides a promising view of repeat purchasing and refill behavior. Among patients who first purchased VIZZ in Q4 2025 and Q1 2026, our first 2 quarters of the launch, purchasing behavior is tracking towards an average annualized purchase rate of 5 monthly packs. And our Q2 cohort is showing a very similar pattern, though it's not yet mature enough for the same analysis. These are important proof points. Persistence is essential to building a durable patient base, and the behavior we're seeing reinforces our confidence that patients who experience the benefit of VIZZ are choosing to continue using it. It also reinforces the commercial objective in front of us. We need to continue bringing more new patients into the category and making it easier for them to move from awareness to evaluation to treatment and ultimately to continued use. That focus has shaped our work since the last call. We have concentrated on broadening consumer awareness, making VIZZ easier to introduce during routine patient conversations, ensuring patients are well-educated, and simplifying the path from initial interest to treatment. Our most recent initiatives were designed around those priorities. Telehealth gives consumers a convenient path to evaluation by an independent, licensed eye care professional and, if appropriate, a prescription with home delivery. Expanding our existing campaign to national TV allows us to reach a broader group of consumers with a clear message about an alternative to reading glasses. Together, these initiatives create a more direct connection between consumer interest, clinical evaluation, and access to treatment. While the July data are undoubtedly encouraging, our focus now is on translating these signals into sustained growth. Our investments to date have helped establish VIZZ, build broad awareness among ECPs, expand consumer demand generation, and put more convenient access pathways in place. We'll use Q3 to further understand which activities are producing the greatest impact and where we can make the patient journey even simpler. And as we assess the performance of our commercial initiatives, we'll use those learnings to inform both the mix and the level of investment for the next phase of the launch. Going forward, we will need even more discipline in how we allocate capital, concentrating resources on the activities we believe have the greatest potential to drive durable patient growth, and aligning our overall commercial investment with the scale and needs of the business. In parallel, we continue to make progress expanding VIZZ globally. Our partnerships now span more than 20 countries across Greater China, Southeast Asia, Canada, the Middle East, and Oceania. During the quarter, we entered into our fifth international commercial partnership covering Australia and New Zealand. We also have 9 regulatory submissions under review with additional submissions expected by year-end. Together, these efforts are establishing the foundation for VIZZ as a global brand. In conclusion, as we enter the second half of the year, we have a clear picture of how this opportunity can build. Patient persistence reflected in both multi-pack purchasing and the refill patterns emerging on more mature cohorts provides meaningful evidence that patients who experience VIZZ see lasting value and choose to continue using it. July provided an encouraging early indication that our actions to broaden consumer awareness and simplify access are beginning to translate into stronger new patient activity. We clearly understand our path forward. Build on these signals, stay focused on execution, and invest with discipline behind the activities that drive durable growth. We remain confident in the value VIZZ delivers and in the significant unmet need it addresses. Our job now is to translate that value into sustained patient growth with urgency and discipline. With that, I'll hand it over to Shawn, who will provide more detail on our commercial execution.

Thank you, Eef. Good afternoon, everyone. Building on Eef's comments, I'd like to spend a few minutes on our commercial strategy and the actions we're taking to support the next phase of launch. First, I want to reinforce what we believe is one of the most important indicators we've seen since launch, our early refill trends. While we're still in the early stages of commercialization, the persistence we're observing gives us a solid foundation to build upon as we continue to focus on driving new patient starts. With that foundation in place, our focus is squarely on expanding awareness and ease of access for new patient starts. In July, we began our national TV advertising campaign to broaden patient awareness, and we partnered with our e-pharmacy provider to launch a telehealth prescribing option to ease patient access. As we evaluated the patient journey to access VIZZ, it became increasingly clear that the journey is more involved than most consumer products. A patient may first see an advertisement, decide to learn more, schedule an appointment, be evaluated by an eye care professional, receive a sample, and then ultimately decide whether to begin prescription therapy. At each step along that journey, there's an opportunity for patients to delay or discontinue the process. Our objective has been to simplify that experience wherever possible while maintaining an appropriate standard of clinical care. That is why I believe our telehealth initiative is an important strategic addition to our commercial model. The telehealth channel provides interested consumers a convenient pathway to be evaluated by an independent, licensed eye care professional at the moment of product interest. Let's take a moment to map out the patient journey to VIZZ through the telehealth channel. For example, a patient is watching TV and sees a commercial promoting VIZZ, and then visits vizz.com to learn more. After exploring the site, they see real patient videos and now have decided they want to try VIZZ and click on the Order VIZZ Now button. This brings them to our telehealth partner's website where they start the telehealth process. Now, as I walk you through this telehealth process, there are 2 key components. One, the medical screener for telehealth eligibility, which was developed by ECPs, and two, the subsequent telehealth evaluation also performed by independent ECPs. So continuing that journey, once on the telehealth site, the patient fills out a survey on their current vision symptoms and medical history, which will confirm their potential eligibility for VIZZ through telehealth. This eligibility must be met to proceed with the telehealth assessments. In the case they are eligible to proceed, they are then evaluated by independent, licensed eye care professionals to determine whether VIZZ is an appropriate treatment option. If approved, their prescription is sent to the e-pharmacy partner and VIZZ is shipped directly to the patient's home. We launched this initiative concurrently with our national television campaign, which is intended to expand consumer awareness and ultimately drive adoption of VIZZ. Together, these initiatives are designed to create a more seamless path from consumer awareness to treatment initiation. While still early, we have been encouraged by the initial level of consumer engagement, which we believe is reflected in the increase in new patient starts we observed during July. At the same time, our understanding of the eye care professional channel continues to evolve. As we shared on our previous call, aided awareness of VIZZ among eye care professionals remains in the high 90% range, while unaided awareness exceeds 80%. Those metrics tell us that VIZZ is well recognized within the eye care community as a treatment option for Presbyopia. And we believe we have successfully achieved our primary awareness objectives with ECPs. However, ECP awareness alone has not consistently translated into recurring prescribing behavior. While over 13,000 physicians have prescribed VIZZ, and over 75% of them have prescribed multiple times, we see the VIZZ discussion is often being consumer-initiated. As a result, we have increasingly focused our commercial investment on stimulating consumer demand, with the expectation that informed patients requesting VIZZ by name will serve as an important catalyst for future continued prescription growth. Overall, we are encouraged by our recent progress. The combination of positive early patient persistence, expanded access through telehealth, and growing consumer awareness provides a foundation for the next phase of VIZZ's commercial growth. With that, I'll turn the call over to Dan to review our financial results.

Thank you, Shawn. As both Eef and Shawn have discussed, we have kicked off the second half of 2026 with the July launch of telehealth and our nationwide TV advertising campaign. These strategic initiatives were purposely designed to drive broad consumer awareness and address the key hurdles to product access by providing consumers with a safe and convenient way to be evaluated by an independent, licensed eye care professional online and directly integrated into our e-pharmacy fulfillment for home delivery. As has been mentioned, we are encouraged by the change in our recent script trends, suggesting an over 45% increase in July scripts compared to June. Reflecting on Q2, we recorded total revenues of $5.5 million, including over $1.7 million in product revenue on approximately 27,000 monthly packs sold, a 9% increase over Q1, and $3.8 million in license revenue from our ex-U.S. global partnership agreements. Q2 license revenue included the first regulatory milestone payment under our license agreement with Théa upon submission of its new drug submission to Health Canada, in addition to the first sublicense milestone payment in conjunction with the asset purchase agreement between Everest Medicines and CORXEL for the rights to VIZZ in Greater China. I will provide a further update on our global commercialization efforts for VIZZ in a moment. Turning to our operating expenses, our cost of sales on second quarter product revenue totaled $0.3 million. And we continue to anticipate VIZZ to trend to an approximately 90% direct product gross margin over time. Total SG&A expenses decreased to $39.4 million in the second quarter, or approximately $34.9 million adjusted to exclude non-cash stock-based compensation. On an adjusted basis, this was a 14% quarter-over-quarter decline from Q1, which was in line with our expectations given our Q1 DTC launch investment. Consistent with prior quarters, approximately 80% of our SG&A was driven by sales and marketing, with the remaining representing general and administrative expenses. Total research and development expenses remained 0 in the second quarter of 2026, consistent with recent prior quarters. Our Q2 net loss per share, both basic and diluted, was $1.02 per share in the quarter on a net loss of $31.9 million. And we ended the second quarter with approximately $220 million in cash, cash equivalents, and marketable securities. Looking ahead, we will be deliberate in our capital allocation, directing our investments towards the initiatives with the greatest potential to drive new patient adoption. We believe this disciplined approach positions us to build a durable, consumer-driven franchise while maintaining a strong financial foundation. Before I hand the call back over to Eef, I wanted to take a moment to provide an update on our global licensing and commercialization efforts. As we've discussed on previous calls, we see VIZZ as a global product. And with a worldwide population of over 1.8 billion adults with Presbyopia, we view the opportunity to expand our commercial footprint as an important and promising one. In Q2, we signed a commercialization agreement with Arrotex Pharmaceuticals, a leading Australian pharmaceutical company and Australia's largest supplier of medicines by prescription volume. This is our fifth ex-U.S. commercialization partnership for VIZZ, which now, including Oceania, spans Greater China, Southeast Asia, Canada, and the Middle East region. We currently have 9 regulatory submissions under review, and we anticipate multiple additional submissions and potential ex-U.S. regulatory approvals by the end of this year. We remain focused on further expanding our global network in additional strategic geographies, and we look forward to reporting additional progress in the months and the quarters ahead. With that, I'll turn the call back over to Eef.

Thanks, Dan. To close, I'm proud of the LENZ team and the work behind the progress we discussed today. We now have meaningful evidence that patients who experience VIZZ see value and choose to continue using it. We've also been glad to see encouraging new patient activity as we broaden awareness and simplify access. Our priorities for the second half are clear. We'll build on these signals, stay focused on sustained patient growth, and align our investments with the initiatives producing the strongest results. We remain confident in the opportunity we have in VIZZ and committed to pursuing it with urgency and discipline. And with that, I'd like to open the call for questions.

[Operator Instructions] Your first question comes from the line of Stacy Ku with TD Cowen.

Good afternoon, guys. We have a couple. First is on the refill dynamics. We're appreciative of you giving us this level of detail, but maybe put it in the context of other Presbyopia eye drops products. What strategies is the team employing to keep these patients? So that's the first. And second, if you think about the telehealth launch, maybe speak to the level of comfort around VIZZ's safety profile, that's the second. And then last, I know it's still early days, but when would you expect to see nationwide TV advertising drive prescription growth? And as a reminder, just help us understand where you're prioritizing investment when it comes to commercial strategies that are working.

Great. Thank you, Stacy. This is Shawn. So, first on the refill dynamics, as well as the strategies we're taking to make sure that we continue to see those strong refill dynamics. So when you think of the refill dynamics, what we focused on is our e-pharmacy channel, because that's where we can see that patient-level data. And we also look at the cohorts that are the most mature. So that would be people that bought for the first time in Q4 of '25 and Q1 in 2026. And what's great to see is, of those cohorts, 60% of those e-pharmacy patients have purchased more than 1 monthly pack. So that includes patients who purchased multiple packs on their initial order, as well as patients who returned for subsequent purchases. The other thing that's important to understand is we focus on the e-pharmacy channel not because we can see the data at the patient level, but it's also our dominant sales channel as well. What's great when we're looking at this data is if we look at that Q4 cohort, we're seeing on average they've now already purchased slightly more than 5 packs and they haven't come up on a year yet. And that Q1 cohort is trending to 5 as well. The Q2 cohort, not yet mature enough, but we're still seeing that similar early pattern, which is great. Now when we think of our product, this was really important because it means we have a Presbyopia product out there that works and people want to continue to refill. Obviously some of the early launches in this space, they're able to get early uptake, but that refill wasn't there. This we feel really speaks to the durability of our product. In terms of the strategy that we're employing to make sure that we continue to see high refill rates, I think the number one thing you really need is an eye drop that works. And we're excited that we have an eye drop that works for 10 hours. In addition to that, the e-pharmacy channel allows that option to buy 3 months at a time at a discounted rate. And then as we've launched this telehealth channel, that also enables the opportunity to buy 3 months at a time, enter into an auto-renew cycle, and you get long duration at a discounted rate. So that's what's going on with the refill dynamics. In terms of telehealth and comfort with safety, so what's great about the telehealth channel is that we have great safeguards around that channel in general. So telehealth patients are screened for appropriateness by fully licensed eye care physicians. They have to have no history of retinal complications and be an appropriate candidate for VIZZ and have a recent retinal exam within the past 24 months. And then after that, still an independent eye care physician evaluates that patient history and suitability prior to prescribing VIZZ or if they feel it's necessary, they'll actually recommend a visit to a doctor in person if they don't qualify for telehealth. In terms of the TV channel, so our TV campaign, that went live July 6. We're already seeing lift from that national TV campaign, which is great to see. And we'll expect to continue that on because of that lift we've seen. We've seen it in the access to the telehealth channel because that is what announced telehealth, but we also see the lift in the other channels as well.

There's 2 other minor questions or questions in there, Stacy, I'm going to answer those. How do we compare against other Presbyopia drops? Frankly, we don't see a lot of traction with the current ones on market. And you compare us to VUITY, interestingly, we're now actually selling more on a weekly or monthly basis than VUITY. And importantly, if you compare the VUITY refill rates at that peak, it was about 10%, 12%. We're tracking at that 42% of those people that refill that become users of VIZZ that we've always spoke about. We're very pleased to see that. And then the last question around how do we expect to adapt? Like I mentioned in my remarks, the commercial investments that we've made so far have been appropriate. It really helped establish VIZZ, build broad brand awareness among ECPs, truly expanded the consumer demand generation. And with the telehealth, we now have numerous access pathways in place. What we're doing now as we move through Q3, really assessing the performance of each of those initiatives, generating the data that will allows to continue to adapt both the mix as well as the level of investment that we feel we need for this next phase in the launch. And obviously concentrating resources where we believe we have the greatest potential to drive durable growth. All of that is based on obviously the confidence we have in the value and the opportunity of VIZZ, while also remaining very disciplined in how we allocate capital as a company.

Your next question comes from the line of Yigal Nochomovitz with Citi.

I also have a few here. So just first off, could you just remind us, you said your e-pharmacy is the majority of the revenue base, but if you could quantify or just give a little more direction on that comment. And then with regard to the retail, so obviously you have the visibility in the e-pharmacy, but in retail, I guess, are you saying that you just don't have the data, so therefore you can't track the refill dynamics and the persistence, or is there a different conclusion as far as the persistence in the retail side of the business? And then if you could just comment a little bit on the disciplined spend, where are you going to invest more or where are you going to decelerate versus accelerate?