Sight Sciences, Inc. (SGHT) Earnings Call Transcript & Summary

Well, excellent, everybody, welcome to the next session of the Citibank Healthcare Conference. If you don't know me, I'm Joanne Wuensch. We are pleased to have the management of Sight Sciences, including Paul Badawi and Tom Huang. And gentlemen, welcome.

Thank you, Joanne. Thanks for having us.

So I'd like to start with a big picture question and particularly for your company, which has been public for less than a year. What do you think has changed the most in the last year for you and the company? And how do you see the growth trajectory?

Yes. So we were obviously fortunate. Timing was great. Last summer, we went public, Joanne, as you know, delivered 1 of the most successful med tech growth medtech IPO is on record and certainly within eye care, so a big win for ophthalmology generally. Since then, we've continued to grow both our OMNI and TearCare business is very nicely revenue-wise, continue to deliver top-tier quarterly growth. We've increase the size of our OMNI commercial team with some of those proceeds. We've expanded our direct reps from 50 to 60, our strategic account managers who sell into the VA and academic institutions. We've increased those folks from 8 to 16. We've built out a stand-alone referral sales force. We call them the glaucoma clinical consultants. We had 4 last year kind of in a beta test, and we've increased that team from 4 to 20. So today, we have about 100 talented OMNI commercial colleagues in the field. So we continue to grow that business and grow the field force, and that's obviously 1 of the key uses of those IPO proceeds. We've also increased the size of our TearCare commercial team. From 10 reps to 16 reps, we have expanded indication for use we received late last year, and so we're excited to invest more heavily in that business. Again, it's in a controlled phase, and we're focused on market access there, but very good signs from the TearCare business as well. So these teams -- both teams have battled through COVID successfully and have consistently delivered above and beyond our quarterly numbers since going public joined last summer. Now on the regulatory front, for OMNI, we obviously received the expanded label in March of last year, best-in-class label for IOP lowering in all adults with primary open-angle glaucoma, regardless of lens status, phakic, combo cataract pseudophakic. As I mentioned, we expanded the label for TearCare in December of 2021. We've also built out a fully functional top caliber market access and reimbursement team. That's obviously very important for everything that we do with OMNI TearCare as well as pipeline. On the pipeline front, we initiated a number of very exciting pipeline opportunities, which include exciting iterations on our existing portfolio of OMNI and TearCare, but also kicking off the development of new products addressing potentially even bigger opportunities, and we'll be able to share more about that later this year. So overall, Joanne, we feel really good about how we've evolved over the past year since going public, we feel like we're today a much more well-oiled product development and product commercialization machine, excited about all of the growth opportunities ahead of us, continuing to expand OMNI use in combo cataract makes procedures continuing to develop a much larger mild-to-moderate stand-alone glaucoma market and continuing to make progress with TearCare and market access and reimbursement. And lastly, pipeline development, which is coming in right behind that.

You've been busy. I do need to spend a little bit of time on the pandemic and how you think that has impacted your the company, your revenue growth. I mean from a headline perspective, as you said, you're delivering, but I have to believe that there is some COVID impact in there? How would you quantify that?

Yes, sure. I'll take that one. It is a little bit hard to quantify, but we have definitely seen impacts, both in 2021 and obviously in 2020 as well. But in the more recent past, we did see some impacts from the Delta variant over the summer and going in -- but baiting towards the third quarter, as the third quarter was ending. And most recently, like a lot of our competitors and the economy as a whole, we saw a pretty big slowdown in volume in the last couple of weeks of December going into January. Now it feels like a lot of that has subsided, but there isn't -- we don't have a crystal ball on when or if another variant is we wanted to crop up, but COVID is very much on the top of our minds. And I think we've done a really good job of managing through it over the past 2 years.

And would you say that there's a backlog of patients? Or would you not use that phrase.

I think it's hard to call it a backlog. I mean we know that there are patients who need to be treated that put off getting the procedure. So we don't have a list of 300 patients that deferred their procedure. But we do expect that volume to -- we do expect those patients will need to be treated because their glaucoma isn't going to go away.

Okay. I want to spend a little bit of time talking about the broader MIGS market. And I appreciate that it's too -- it too, on a market level, has been impacted by the pandemic. But how do you think about that market, market growth, development? And anything else you'd like to sort of add.

Sure. Paul, do you want to take that or do you want me to take that?

Go forward, Tom?

Yes, sure. We think that the broader the -- we like to -- first of all, we like to think of the MIGS market as an entirety, not -- we don't like to break it up between combo cataract and stand-alone because that's been a pretty unnatural division based on the indications for the pioneers in this space. But we think that there is tremendous room for growth and for educating surgeons and optometrists and primary care ophthalmologists about the possibilities for earlier interventions for glaucoma patients who are not being controlled on their medication. Paul, would you feel free to add to that?

I think that's it, Tom.

But to sort of grind down just a little bit, do you think it's a market that grows double digits, high single digits, mid-teens. Is there a way to quantify how you think about that over time?

Sure. I mean the most recent forecast we've seen and which is borne out by our personal experience, the market looks like it's going to grow from the low to high teens overall. We think that the stand-alone segment of the market is underrepresented and coming from a lower base, so that's going to grow at a much faster rate. And outside the U.S., a similar phenomenon as well, where it's coming from a lower base, and we expect higher growth in our overseas markets.

And can you remind us what percentage of your procedures today are stand-alone and versus a combination procedure? And how do you see that evolving over time?

Sure. We still see that in around the 20% range. We're trying to get better numbers as we go forward. But that's not been the easiest thing to do. When you know that, it's a huge priority for us and for investors to understand how that market is developing. And please rest assured that we are doing our best to track that down. We are continuing to see that -- we expect that mix to grow up maybe 5 to 10 points per year over the next couple of years. But it's really a matter -- it's really going to be a function of how well we can execute our market development plan.

Yes. Joanne, we've just begun to like invest meaningfully there. As you know, the development of the stand-alone market begins with training surgeons on OMNI. And the fastest way to get the largest number of surgeons trained on OMNI is in the existing combo cataract market. So we've historically been focused on that and done a very nice job building a very nice surge in customer base in combo cataract. And now, as I had mentioned, with the sales force dedicated to educating the referral providers, our glaucoma clinical consultants that we just expanded to 20 of those reps, just met a lot of them at our National Sales Meeting 2 weeks ago, very talented group. So we're excited for them to get into the office-based eye care providers, optometrists and ophthalmologists and educate them on the stand-alone OMNI option and that there's a surgeon performing OMNI in both combo cataract and stand-alone in the area and that patients who are on meds don't need to be on meds forever. They can get referred out to -- for mild-to-moderate OMNI stand-alone surgery.

So when you train physicians, as you said, to get them started on combination first, do they then need to come back and be trained again for stand-alone?

No. It's -- the procedure is pretty straightforward and intuitive. You're using the same decision that you would use for a cataract procedure. So there isn't any need to train somebody -- you're actually probably a little bit easier to do a stand-alone surgery since you don't have to worry about the cataract extraction.

Yes, it's the same -- Joanne, it's the same surgeon. It's the same device, it's the same procedure. It's just a different patient right? So building, developing the stand-alone market is all about market education of both the surgeons, the referring providers as well as the patients. We have initiatives underway on all of those fronts. And it's about getting those stand-alone patients to the existing OMNI surgeon, who's currently treating primarily in combination with cataract.

Let's talk a little bit about physician training. How has that been tracking over previous quarters and how do you see sort of -- I don't know, if I want to call it backlog, a pent-up demand, maybe we'll just call it future scheduling.

Yes. I mean our ability to train physicians is really a function of the size of our territory-based reps who are the ones who primarily go in and handle the training. And we have seen -- 1 of the bigger disruptions over -- due to COVID limiting access to facilities in addition to the facilities themselves being closed and patients not wanting to pursue procedures during times of high infection rates. So we have seen our ability to access and train surgeons who had been impacted by that. And we've also had issued -- we've also had some continuity issues where we want our sales reps to be able to train with the surgeons for their first 10 procedures. And if the schedules get thrown out of whack, it can have some impact there. But we are having a very consistent rate of new customer adoption and surgeon training over the past 6 to 9 months.

Excellent. I want to spend a little bit of time unless there's something else about the market you want to talk about before we switch away from sort of big market issues.

I think that's it.

That's it. Okay. Good. I do want to spend a little bit of time on reimbursement. And last year was a big year for reimbursement and ophthalmology. And can you remind us how all of that sort of shook out for you? And what it may or may not mean as you think about 2022?

Tom, do you want me to take it? Or do you want to take it?

Sure up to you. I'll start on [indiscernible].

Yes. So on the reimbursement front, -- there's 2 ways to look at reimbursement if you're looking at Sight Sciences. One is reimbursement and economics within the existing combo cataract market. And the other way, which is maybe even more important is reimbursement in the stand-alone segment. And the economic comparators as it relates to reimbursement are different in those 2 segments. So in the Combo Cataract segment, where we compete primarily against bypass stents. There's 2 considerations: the professional fee and facility fee just to summarize. We do ask our surgeons to do more work and circumnavigate the canal to address all 3 points of resistance and do so for up to 360 degrees. For that increased surgical work, there's a higher professional fee. So that professional fee moving from 2021 to 2022, the professional fee advantage of our circumferential procedures widened. And on the facility fee side, the implants have had device-intensive status for several years now, so they've enjoyed a better facility fee. So that -- moving from 2021 to 2022 there were some changes there in net-net, our facility fee disadvantage narrowed. So professional fee advantage widened, facility fee disadvantage narrowed. That's in combo cataract. In the stand-alone segment, when we think -- when you think about site and reimbursement, the closest economic comparator is stand-alone, the OMNI stand-alone is stand-alone cataract surgery. And in both the professional fee and facility fee side of things, OMNI stand-alone enjoys an advantage.

So based on your understanding of talking with physicians and your relationships, which are deep in the industry, -- with all of that information, what's the doctor to do? Like how does a facility and a physician decide when he or she wakes up in the morning, how they're going to allocate their time.

Yes. So in combo cataract, we think we keep educating the combo cataract market on how OMNI is differentiated clinically, how it can address all 3 points of resistance in the outflow system to reduce IOP. It has a reputation for being a very efficacious mix. And so we will continue educating the market on OMNI and the clinical data that comes with OMNI. We expect to continue to grow in combo cataract. On stand-alone, yes, I think it's all about -- Joanne, it's about education. This market has to happen. The state of affairs and stand-alone, the state of affairs of patients being prescribed more than a med maybe 2 meds, 3 meds, 4 meds as the disease is progressing and potentially waiting on meds until it's too late, is unacceptable. So that's our job to do. It's our job to educate the market. The research we've done so far suggest that doctors and patients would be very interested in a stand-alone mild-to-moderate surgical intervention. If it existed, it does exist now on label with OMNI, and it's about us investing, investing the resources to make sure everyone understands that the state of affairs is not okay, that OMNI stand-alone does exist and that there are over 1,000 OMNI-trained surgeons that are ready to perform stand-alone OMNI surgery.

Okay. So you brought up a couple of really interesting points. And when I think about this, you mentioned exact education, clinical a state of affairs. How have you changed maybe changes around work. How do you shift that knowledge base, which would drive utilization?

How do we educate the referral community to drive the surgeons? Yes so...

Yes. How do you teach patients? How do you teach physicians? How do you change the phrase, state of affairs? How do you change that?

So we continue to -- we have a very strong stand-alone clinical data that supports its use, number one. Number two, we continue to generate more and more compelling stand-alone clinical data so expect additional publications this year. It's that clinical data. This is what you can get. This is what you can deliver for your patient if you use OMNI in mild-to-moderate stand-alone glaucoma. That clinical data is what is the foundation of this effort. Now we have to have resources, which is that glaucoma clinical consultants team, which we've expanded just now from 4 to 20 reps, they're going into all of the office-based providers who see the millions of standalone glaucoma patient candidates, and they're educating these referring providers on OMNI stand-alone and that clinical data. And they're educating them on the fact that there are many OMNI train surgeons in the area, and this is what you get clinically instead of -- when you think about prescribing that second med to your patient, instead of that, think about OMNI. So we need that message to become pervasive and we're going to drive it. On the patient front, educating the patient is critical. We have done some market research, patients do want to hear about this. They don't love being on drops. They don't like -- they don't like the regimen, difficulty with compliance, ocular surface irritation, patients don't love being on multiple drops or they're not good at it. Either way, the state of affairs for patients is not okay, and they want to hear about this. So we're educating them. We'll continue to develop programs to allow us to reach more and more patients. But we put those 2 things together, educating the stand-alone patient, educating the referring provider who sees this stand-alone patient and makes the decision to either prescribe another med or send them off for stand-alone OMNI surgery. It's a very compelling model. We just have to connect the dots and send more and more patients to our existing surgeon customer base.

So -- and this is a question not stand-alone specific, but just broadly on the MIGS market, there are certain med tech markets where 1 product success means another product cannot succeed. And then there are some markets where they're being of 4, 2, 3 participants. What is the MIGS which one is the MIGS market. first or the second.

I think the MIGS market is a very exciting both combo cataract as well as stand-alone. They're both very exciting markets that I think can support multiple successful products and companies. We obviously hold ourselves to the highest bar and expect to lead both of those categories. But these are large growing markets that, of course, can and should support multiple players.

Yes. sorry, 1 example is glaucoma is a progressive disease, and we've seen that some patients that have been treated with competing products have had their IOP and their disease progression worsen over time. And those patients have already been treated for cataract surgery, so they can't go back and get another stent on label. So those customers would be great standalone patients for us.

Okay. Do you find physicians are willing to spend time on training and on education? Or is just the day-to-day of surviving and getting through the pandemic enough?

Well, I mean, a key component of our training, there is sometimes sent outside the OR, getting physicians comfortable with the procedure. But most of the hands-on training time is the 10 procedures that -- their first 10 procedures that our reps help to proctor and get physicians completely up the learning curve. So there is a lot of interest to be trained in new technologies that can help their patients, absolutely.

Okay. You mentioned that there is some additional publications this year. Can you share with us from a clinical standpoint, what we can be expecting over the next 12 months?

Yes. So a couple of OMNI publications, some nice exciting studies. We have Tray, which is a review of patients who have received OMNI as a stand-alone procedure pseudophakic patients post-cataract surgery. Those are patients who received a bypass stent at the time of cataract surgery, whose IOPs are no longer controlled -- so those patients receiving OMNI as a stand-alone pseudophakic procedure, very compelling clinical data there. We're excited to get that published. That's a large and growing subset of this stand-alone market. ROMEO2, so ROMEO1 was the study multicenter U.S. trial, combo cataract as well as stand-alone data that we used to support that amazing label expansion from March of last year. we're extending that with a study we're calling ROMEO2. So more of those patients, more follow-up, longer duration of follow-up. Again, OMNI stand-alone and combo cataract. So expect that. SAHARA, we haven't talked much about TearCare, but that's another exciting part of our business. And we're running that study right now. That's a large randomized controlled trial TearCare versus RESTASIS. It's a 2-year study. There's a 6-month superiority endpoint. And then we cross over all of the RESTASIS patients to TearCare and then follow them for 2 years to show durability of TearCare treatment effect. That study of 300 patient study is enrolling nicely. Our target is to get it fully enrolled by the end of third quarter this year. And so by -- hopefully, by midyear 2023, we would have an update on that 6-month endpoint. we're obviously very excited about that and feel very good about it.

Okay. So just to level set us. We have trade data being presented this year. We have ROMEO2 data being presented this year and we have the SAHARA data being presented 2023.

That's right. There will be other publications. Those are the ones that kind of stand out as exciting. Tom, I don't know if you've got thoughts on any others.

Yes. I mean we are -- we will be publishing 2 articles based on our first prospective MIGS trial called GEMINI in the first half of this year, and we'll also be publishing our goal OLYMPIA, which was our first TearCare RCT.

Okay. So both of those will get published this year.

Yes.

In the first half?

Yes, it looks like the first half.

Looks like the first half. Okay. And for people who want to get up to speed or want to see the data being presented, is that at ADA? Is that at ASCRS level set us on that idea?

Yes. We'll be -- we'll have a clinical presence, ASCRS first, AAO later in the year. We'll be at AGS, American Glaucoma Society coming up, I believe, next week where we'll be presenting some data. So AGS, ASCRS, AAO, we'll be there, and we'll have a clinical presence.

okay. And we'll look at that.

And some of those papers might also the encore presentations at ASCRS as well. So look out for that, we happen to be available now.

Right. TearCare, you mentioned that. I don't -- it doesn't get a lot of play time update us on how that progresses towards revenue -- more meaningful revenue contribution.

Yes. We're -- so Joanne, I don't know if you recall, but the strategy for TearCare is focused, unlike OMNI, it's focused less on revenue growth, even though we're growing nicely and we're going to continue to invest in it. and more on market access. So it's a unique longer-term focused strategy, SAHARA is kind of the key driver of that strategy, but also the commercial activity within the field. All of the activity is commercial, even though we're generating revenue and expect to continue to grow revenue our commercial presence has an eye on market access. So we're trying to ensure that our activity has high market access quality that we're getting on the radar of payers at they're understanding TearCare, they're understanding how it's being used. They're understanding how patients who are unsuccessful on RX who still come back suffering signs and symptoms of dry eye are being treated with TearCare. So that activity, we think, is the most value-enhancing activity as opposed to revenue growth. That being said, doctors love TearCare. Patients love TearCare. And with the expanded label, we can train and promote more effectively our previous label just was really limited to heating. Now with our expanded label that was based on our OLYMPIA RCT data, we can educate and train the market more effectively on TearCare. So we are making investments in terms of our sales force. We -- as I mentioned, we grew -- just recently grew that team from 10 reps to 16 reps. There is a lot of excitement and demand for TearCare. So we want to be able to satisfy, but we're doing it in a controlled way. Again, we'll continue to invest prudently and expand that sales force as we go. But over the coming years, the value for TearCare will be driven more by our market access progress than revenue growth. Eventually, once we have market access in place -- it will be all about accelerated revenue growth like it is today with OMNI.

So market access translates to reimbursement.

Yes.

Yes. I think given the time frame of the SAHARA trial, that would lead you to 2025 reimbursement.

That's right.

Is there a chance of a interim look at the data and maybe accelerating that?

There is. So our -- it's a 2-year trial until the 2025 year that you mentioned, that's the full 2-year full study that shows, hopefully, assuming success, superiority to RX as well as a nice durability of treatment effect of TearCare, but -- we think the 6-month endpoint is going to be important. That's the superiority check. And so if you figure our study complete enrollment by the end of the third quarter this year, by the end -- or by the middle of 2023, we should have a view on superiority or not. We obviously are bullish from the many cases we've done in the field today. And then we'll publish that. We'll publish the 6-month date. And I think that should be enough to have some healthy discussions at least with a subset of payers. We're having discussions right now with payers. We can't commit to anything, but we're making sure that they're aware. There is early interest, but it's impossible to predict how and when we might get coverage beyond like -- it's a lot more predictable when we have that pivotal RCT data in hand.

And it sounds like you have so much going on, but I have a feeling I'm missing a couple of things, at least. I mean I was looking at my notes before we got on the phone, there's a -- there's a PRECISION trial, there's a DAGR trial. There's a TRIDENT trial. For investors who are like, wait, there's too many out there. What are the ones that can really move the needle to adoption?

So yes, you named several RCTs. I think those 2 are the right ones. We have the TRIDENT RCT, that's our European stand-alone trial, OMNI versus bypass stents. That study will serve 2 purposes, market access or reimbursement. In Europe, there are a handful of countries where we're commercial now, very nice early adoption. KOLs are loving OMNI in Europe into select countries. But there are a number of countries where there isn't adequate coverage and payment for OMNI yet. So that study, that RCT will serve clinical marketing purposes as well as market access or reimbursement purposes. And then in the U.S., we have a sister trial to TRIDENT, which is called PRECISION. That's also Omni versus bypass stents, but that 1 is in combination with cataract where that's the on-label use of the bypass stents. That study We'll, obviously, clinical marketing, 1 product, 1 procedure versus another will be helpful. But it's also the other takeaway from the PRECISION trial as 1 of the arms is a canaloplasty alone arm, right? So it's a 3-arm trial, OMNI, canaloplasty and trabeculotomy, in combo with cataract is 1 arm, then we have OMNI canaloplasty alone in combination with cataract is a second arm and then iStent inject in combination with cataract. That canaloplasty-alone arm, we're excited about. We see OMNI has so much functionality in a 360 canaloplasty and up to a 360-degree trabeculotomy, that canaloplasty alone will expand the use case, right, the on-label use case for OMNI doctors we've seen, maybe if the patients are more mild, they feel like canaloplasty alone might be sufficient. And so we want to rigorously clinically evaluate canaloplasty alone. We're doing it through a large IDE. And we're excited, if successful, that we expand the use case for OMNI to be able to be on label for both canaloplasty alone as well as canaloplasty followed by trabeculotomy

Okay. When we think about other applications of the technology, what should we be looking for?

Applications for OMNI?

Just in general, in your ophthalmology house?

Yes. For OMNI, we're focused right now, continuing to grow in combo cataract developing mild-to-moderate stand-alone. I'd say in the future, where might OMNI go. One day, we would hope that MIGS with OMNI becomes a first-line treatment right? We don't -- we think there's an opportunity if 1 can deliver a consistently safe, reliable and highly efficacious surgical option. Why not intervene surgically, minimally invasively first and have meds come in as a rescue. So we would love after we are in parallel as we're developing the stand-alone market. to also work to flip the treatment paradigm on its head entirely with Omni First and Meds as rescue.

Excellent. As we're running out of time here, time does go quickly, is there anything else you want to make sure that either I or investors understand that you think people might be overlooking?

I think, and Tom, you can add to this. I think the most important thing, we've proven our ability to innovate disruptively with both OMNI and TearCare. We've proven our ability to commercialize with excellence with both OMNI and TearCare. And I think that's a very powerful combination in-house disruptive innovation with in-house commercial excellence. There aren't many companies that kind of have both. And we've got just imagine all the possibilities that our pipeline is going to bring. So we'll be ready to talk more about that in due course. But OMNI and TearCare were developed in-house -- we've got some really exciting things. Our bar is really high for us to get excited and I can tell you that we're very excited.

Excellent. Well, Paul and Tom, thank you so much for joining us this morning, almost this afternoon. And I know you have a full day ahead of you. So speak with you soon.

All right. Thanks a lot, Joanne. Good to see Okay.

Thank you.

Okay. Bye-bye.