EyePoint Pharmaceuticals, Inc. (EYPT) CEO Nancy Lurker on Q1 2020 Results - Earnings Call Transcript

EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT) Q1 2020 Earnings Conference Call May 6, 2020 8:30 AM ET

Company Participants

George Elston - Chief Financial Officer and Head-Corporate Development

Nancy Lurker - President and Chief Executive Officer

Scott Jones - Chief Commercial Officer

Dario Paggiarino - Senior Vice President and Chief Medical Officer

Conference Call Participants

I-Eh Jen - Laidlaw & Company

Andrew D'Silva - B. Riley FBR

Yi Chen - H.C. Wainwright

Operator

Good morning. My name is Shannon and I’ll be your conference operator today. At this time, I would like to welcome everyone to the EyePoint Pharmaceuticals First Quarter 2020 Financial Results Conference Call. There will be a question-and-answer session to follow at the completion of the prepared remarks. Please be advised that this call is being recorded at the Company’s request.

I would now like to turn the call over to George Elston, Chief Financial Officer of EyePoint Pharmaceuticals.

George Elston

Thank you, operator, and thank you all for joining us on today’s conference call to discuss EyePoint Pharmaceuticals first quarter 2020 financial results and recent corporate developments.

With me today is Nancy Lurker, EyePoint’s President and Chief Executive Officer; and Scott Jones, EyePoint’s Chief Commercial Officer. Nancy will provide a corporate overview, as well as highlight recent pipeline developments and Scott will comment on recent progress made on our commercial launches. I will close with commentary on the first quarter 2020 financial results. We will then open up the call for your questions where we will be joined by Dr. Dario Paggiarino, Senior Vice President and Chief Medical Officer.

Earlier this morning, we issued a press release detailing our financial results, as well as commercial and operational developments. A copy of the release can be found in the Investor Relations tab on the corporate website, www.eyepointpharma.com.

Before we begin our formal comments, I’ll remind you that various remarks we will make today constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. These include statements about our future expectations, clinical developments and regulatory matters and timelines, the potential success of our products and product candidates, financial projections and our plans and prospects. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent Annual Report on Form 10-K, which is on file with the SEC and in other filings that we may make with the SEC in the future. Any forward-looking statements represent our views as of today only. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligations to do so even if our views change. Therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today.

I will now turn the call over to Nancy Lurker, President and Chief Executive Officer of EyePoint Pharmaceuticals.

Nancy Lurker

Thank you, George. Good morning, everyone, and thank you for joining us. We hope those listening in today and our greater community of patients, physicians, employees and partners are staying safe and healthy in these unprecedented times. The emergence of the novel Coronavirus or COVID-19 as a global pandemic in the first quarter of 2020 has impacted almost every aspect of our society.

We want to recognize our healthcare workers on the frontlines across our country who have dedicated themselves to fighting this diseases and saving lives. Our company, plus many others in our industry has been affected by this pandemic and in large, we experienced a market reduction in customer demand for both DEXYCU and YUTIQ paused by market conditions associated with the outbreak that continues today.

However, we are encouraged by the recent reopening of surgical centers and the resumption of electrical surgeries in some regions across the country as well as retinal and uveitis practices beginning to see more patients. With normal operations starting to come back, we are working with treating physicians as they resume ordering DEXYCU and YUTIQ.

While these openings are not yet widespread across the country, these initial trends are promising for the resumption of our normal commercial operations over the coming months.

I will now turn the call over to Scott Jones, our Chief Commercial Officer to review our commercial performance in more detail. Scott?

Scott Jones

Thank you, Nancy. Let me first begin with an update on first quarter activities regarding DEXYCU, with post-operative information following ocular surgery. In March, ambulatory surgery centers began postponing cataract surgeries and temporarily closing facilities under the recommendation of public health officials and government agencies.

In an effort to reduce exposure to the Coronavirus, the Center for Disease Control and Prevention and Centers for Medicare and Medicaid Services separately recommended the cancellation or rescheduling of all elective surgeries including cataract surgeries.

Remember the majority of patients out in cataract surgery are of an older age and are considered to be at higher risk for COVID-19. Despite the expected seasonality of sales at the start of the calendar, DEXYCU trended well in January and February.

Unfortunately, the effect of COVID-19 began during the third month of the quarter of March, which is when we normally see the greatest revenue demand as ASCs buy in for the coming quarter.

As a result of customer shutdowns in March, demand for DEXYCU and corresponding revenue for the first quarter overall were negatively impacted. We recorded net product revenue for DEXYCU of $1.1 million for the period. Our team has successfully transitioned to providing virtual education and product assistance while ASCs remain closed.

And we expect to continue operating in this manner until restrictions on surgeries are lifted region-by-region. As Nancy noted, we are encouraged that some ASCs have started to reopen or resume cataract surgeries in several regions of the country. We have begun to see DEXYCU ordering in these sites and look forward to reestablishing the use of DEXYCU by these ASCs.

We remain bullish on the commercial potential for DEXYCU due to its ability to control information up to 30 days per surgery allowing physicians to send patients home with an important anti-inflammatory treatment in place and reducing the complexity of postsurgical steroid eye drop regimens.

In addition, and now importantly during the pandemic, DEXYCU delivers extended duration of therapeutic treatments from a single injection, which we believe may reduce the frequency of in-person physician follow-up visits and both physicians, as well as caregiver contact with patients face and eyes further the use of DEXYCU may also help reduce visits to busy pharmacies that surgeons utilize DEXYCU as a dropless regimen.

For these reasons, we believe the use of DEXYCU will be viewed favorably by patients and physicians with the current emphasis on social distancing.

The impact of the pandemic during the first quarter has been different for YUTIQ, which is prescribed for the treatment of chronic non-infectious posterior segment uveitis. Patient visits and treatments at physicians’ offices have continued as uveitis flares can lead to blindness if left untreated.

While some uveitis and retina specialist office have been closed due to COVID-19 pandemic, the majority have remained open but on a significantly reduced schedule. We are pleased to see more and more closed or partially closed uveitis and retina specialist office began to resume or increase their operations and we believe these trends will continue as regional restricts lift.

Product demand was strong for the first two months of the quarter, but like DEXYCU, demand was negatively impacted in March due to the COVID-19 shutdown. Although product demand for YUTIQ during the first quarter overall was due to the pandemic, order flow did continue and we recorded net product revenue for YUTIQ at $3.6 million in the period.

YUTIQ feels a critical unmet medical need and is a highly differentiated treatment option compared to existing therapies due to its ability to deliver a consistent, sustained micro doses steroid 24 hours a day for up to three years.

As with DEXYCU, we expect YUTIQ’s product profile to be a benefit to both during and after the pandemic. YUTIQ’s long duration of therapeutic profile of up to three years can potentially reduce the frequency of patient visits during the course of treatment in addition to providing anti-inflammatory control.

Our YUTIQ teams has been available virtually to support physicians by responding to their product questions and will continue to support their accounts both virtual and in person moving forward.

I’ll now turn the call back over to Nancy.

Nancy Lurker

Thank you, Scott. As Scott highlighted, we believe the extended treatment options such as DEXYCU and YUTIQ provide important benefits in potentially helping to minimize patient exposure to others during the pandemic, a factor that is especially valuable to older patients who are most at risk for COVID-19.

During the pandemic, there have been no disruptions in our manufacturing and supply chain for either products. We have supply of API or active ingredients and other associated raw materials that allow us to continue to manufacture finished products for sale. We have maintained a rotating schedule to ensure continued production with heightened safety precautions to promote social distancing.

The majority of our organization has been working remotely since the middle of March. Given the new market conditions that we were facing during the quarter, we were able to identify cost savings opportunities while continuing to drive our commercial products DEXYCU and YUTIQ forward along with the development of EYP-1901, our preclinical, anti-VEGF tyrosine kinase inhibitor, which is a six month sustained relief potential therapy for wet AMD.

In April, the company announced the cancellation or deferral of planned spending to conserve cash, as well as a reorganization of its commercial operations due to the impact of the COVID-19 pandemic. This reorganization was primarily focused on a reduction in the external contract sales organization for DEXYCU.

The company has allocated its remaining DEXYCU commercial resources, a high volume ambulatory surgery centers in key U.S. regions, while we wait for the ramp up in elective surgeries across the U.S.

We are very focused on driving revenues of two products in a cost-efficient manner, as well as advancing the EYP-1901 along in its scheduled development plans, while also conserving cash wherever possible.

Shortly, George will provide additional commentary on our cost reduction initiatives to support our balance sheet through these times. Given the unclear trajectory of the pandemic and governmental response, it’s difficult to predict product demand and revenue for the coming periods. However, our team will continue to work to educate the community about our products and visiting sites in regions where pandemic-related restrictions are lifted.

This includes our goal of securing additional volume-based agreements with ASCs and integrated healthcare networks to expand access for patients. While these conversations have primarily transitioned to virtual, they remain ongoing.

A medical affairs team continues to maintain dialogue with key opinion leaders and is pursuing engagement opportunities at major ophthalmology medical meetings that have turned virtual.

Importantly, our research and development activities for a lead development candidate EYP-1901 have continued on schedule without interruption. EYP-1901 is using our proven bioerodible Durasert technology and is being developed for the treatment of wet age-related macular degeneration or wet AMD,

The commercial prospects for EYP-1901are compelling, as we believe it has the potential to be a disruptive and beneficial product option for patients and physicians in this established attractive multi-billion dollar retinal disease market. This market, the wet AMD market has approximately $4 billion in global sales and is growing due to the ageing of our population.

It is a progressive debilitating disease and a leading cause of blindness. Frequent and short-acting injectible standards of care have significant limitations due to how painful and uncomfortable these eye injections can be for patients and more so now than ever during the pandemic with a heightened awareness around the risks of frequent office visits and the emphasis on social distancing.

EYP-1901 has the potential - has potential indications for the treatment of retinal vein occlusion and diabetic retinopathy. But for now, we are focused on wet AMD as a lead indication. Vorolanib, which is the TKI component in EYP-1901 has established efficacy signals observed in two prior human studies in wet AMD as an oral delivered therapy.

Preclinical studies of EYP-1901 administered into the eye have shown promising activity with no serious safety issues observed. We initiated GLP, otherwise known as Good Laboratory Practice toxicology studies in March and anticipate filing an investigational new drug application with the U.S. FDA later this year with a Phase 1 clinical trial to follow shortly afterwards.

We believe the six month consistent drug delivery of EYP-1901 represents a hugely differentiated product profile that can bring compelling advantages the treatment of wet AMD.

I want to close by recognizing our team at EyePoint that has come together to continue to move our operations forward in the phase of the COVID-19 pandemic. Thank you.

I also want to acknowledge the healthcare community that is working around the clock super safe, for which our team has donated personal protective equipment to area hospitals and supported relevant community service programs.

We remain dedicated to our goal of delivering innovative ophthalmic products to patients and families in need of new therapies even in these difficult times.

I’ll now turn the call over to George to review the first quarter financials. George?

George Elston

Thank you, Nancy. As mentioned earlier, we have focused on preserving our capital through these uncertain times and we will continue to monitor the COVID-19 pandemic impacts on our business and assess if further actions are needed. We anticipate product demand and corresponding revenues to continue at a decreased level through the duration of the pandemic as our customer base works towards resumption of normal operations.

I’ll now turn to the financial results included in the press release that was issued this morning. For the three months ended March 31, 2020, total revenue was $7.5 million, compared with $2 million for the three months ended March 31, 2019.

Net product revenue for the three months ended March 31, 2020 was $4.7 million, with $3.6 million for YUTIQ and $1.1 million for DEXYCU, compared to net product revenue for the three months ended March 31, 2019 of $1.2 million with $543,000 for YUTIQ and $684,000 for DEXYCU.

Net revenue from royalties and collaborations for the three months ended March 31, 2020, totaled $2.8 million compared to $785,000 million in the corresponding quarter in 2019. This was driven by a $2 million payment by our partner Ocumension for DEXYCU rights in China, Hong Kong, Taiwan and Macau.

Operating expenses for the three months ended March 31, 2020, increased to $18.9 million from $16.7 million in the prior year period, due primarily to increased sales and marketing costs and the research and development costs.

Non-operating expense, net, for the three months ended March 31, 2020 totaled $1.7 million of net interest expense, compared to $4.6 million for the prior period. Net loss for the three months ended March 31, 2020 was $13.2 million or $0.11 per share, compared to a net loss of $19.2 million or $0.20 per share for the prior year quarter.

Cash and cash equivalents at March 31, 2020 totaled $26.3 million, compared to $22.2 million at December 31, 2019. The increase was driven by the February 2020 underwritten public offering of 15 million shares of common stock at a public offering price of $1.45 per share. The gross proceeds of the offering were $21.75 million before deducting the underwriting discounts and commissions and other transaction expenses.

In April, we received a $2 million Payroll Protection Program loan under the Cares Act from the Small Business Administration. This PPP loan is enabling us to retain key commercial infrastructure and employees and avoid furloughs while we await the reopening of our customer facilities and the resumption of normal ordering and demand of our products.

With our recent cost-cutting initiatives leaving approximately $17 million in both recurring and one-time savings, coupled with recent financing, we expect that our cash on hand and projected cash flows from anticipated YUTIQ and DEXYCU product sales confirm the company’s operating plan into 2021 given our current assumptions for the duration of the COVID-19-related closures in various regions across the U.S.

Our careful management of cash should enable us to achieve some important upcoming catalysts, namely the completion of the GLP Tox Study for EYP-1901 and a deposit of the filing of an IND and the follow-on initiation of the Phase 1 study. We will continue to evaluate and pursue non-dilutive sources of capital including further ex U.S. outlicensing opportunities for both YUTIQ and DEXYCU.

I will now turn the call over to the operator for questions.

Question-And-Answer Session

Operator

[Operator Instructions] Our first question comes from Dana Flanders with Guggenheim. Your line is open.

Unidentified Analyst

Hi this is –

Nancy Lurker

Hi Dana.

Unidentified Analyst

[Indiscernible] on for Dana Flanders. Hi, I have more than a couple of questions, this morning. Firstly, in April, you announced the reorganization of your commercial operations related to DEXYCU external contract sales organization to allocate resources to high volume ASCs in key U.S. regions.

How have this geographic regions you’ve been targeting been impacted specifically by COVID-19? And do you expect some bulking deliveries as you begin to resupply ASCs going forward?

Nancy Lurker

Okay. So, thank you for your question. And let me just say that, generally speaking, across the country even for those that we targeted, they shutdown, because of elective surgeries not being allowed. So that impacted any elective surgery, any drugs used. So both the targeted ASCs where we are focused as well as those that we elected to minimize in terms of indices have all been impacted.

As we open back up, we are seeing some of those ASCs that we’ve targeted are now starting to slowly order. As for, I think you characterized it in bulk shipments, we would expect to start to see some order in, though again it’s a little hard to predict how much we would expect to see and so we start to see volumes pick up.

I do want to stress that the ASCs also are trying to figure this out and even the ones that are opening need to be careful that they don’t just throw the doors open. So, it’s going to be a gradual phased opening, because they also have to maintain social distancing, particularly in the front-office.

But we are also hearing a number of them that many of them will probably go to multiple shifts and extended hours, because they’ve got a backlog and they need to get that backlog filled. I am going to turn it over to Scott, as well to see if he wants to add anything to that.

Scott Jones

Thank you, Nancy. And I certainly agree with your comments. We were happy to actually have the first DEXYCU procedure since the COVID crisis last week in Indiana. So we are starting to see many of our key and high volume accounts start to open. We expect to have over half of our ASCs open by the middle of May and as Nancy said, they are going to be kind of figuring things out as they go and we’ll see the volume increase.

We believe that we will continue to see an uptick in orders over the next couple of months as the accounts come back online and we will continue to evaluate how we can most efficiently help our accounts get back up to speed as there will be a lot of additional train going on in these accounts. But good sign that we are starting to see many of our high volume accounts come back online both from last week, as well as over the next two weeks.

Unidentified Analyst

Okay. Great. And I have one follow-up if I may. Just regarding your anti-VEGF TKI developmental candidates, I know you’ve previously mentioned that you plan to initiate a Phase 1 as early as 2-ish 2021 just wondering if that timeline has been impacted by COVID-19. And then additionally, what specifically are you looking at in this toxicology studies that you initiated in March?

Are there any certain safety signals that you are looking to lose today based on previous Phase 1 and few studies that were run with the oral formulation? Thank you.

Nancy Lurker

Yes. Okay. So, right now, we have not been impacted at all and the reason is because, we have started those animal tox studies before the pandemic hit and these animal studies are being done by an outside CRO who are considered essential services. So they continued, obviously they are not going to sacrifice the animals in the middle of the pandemic.

So, we are quite pleased we are able to keep this going and op timeline have not been impacted. Obviously if the pandemic continues to persist at a high level meaning lockdowns either reinitiate across the country or it continues long-term, then there is a potential that our Phase 1 study initiation could get impacted.

But right now, we don’t expect that and we had no delays at all. So we are quite pleased with that. I will turn it over to Dario to just briefly give a quick answer on what we are looking for on any tox signals. Dario?

Dario Paggiarino

Yes, thank you, Nancy. Yes, the Phase 1 and Phase 2 studies conducted with this compound Vorolanib given oral. We actually were quite encouraged in terms of the ocular effects, in other words, there were really no safety issues in those studies. So, obviously, we are looking at any potential effects in the eye once the product is delivered intravitreally without inserts.

But we are not actually targeting any specific effects again on the basis of the encouraging safety in the human studies.

George Elston

Yes. This is George if I can just add to that.

Unidentified Analyst

Okay.

George Elston

This is typical GLP tox required for the regulatory filings. And then just to clarify on the timeline, as we said during the call, we expect to file the IND in the fourth quarter and start the Phase 1 shortly thereafter and we expect assuming on that same timeline data for mid next year and not starting in mid next year. Just to clarify that point.

Unidentified Analyst

Okay. Thank you very much.

Operator

Thank you. Our next question comes from I-Eh Jen with Laidlaw & Company. Your line is open.

I-Eh Jen

Hello. Good morning and thanks for taking the questions. And so, I had a few here. The first one is that, we look at the YUTIQ revenue for the first quarter, that seems to be not too far off from our projection. And so, would that – given that that you mentioned that has not been interrupted too much by the COVID-19. So, do you anticipate that the same train goes for the remaining of the year?

Nancy Lurker

Yes. Hi, I-Eh. Yes, we do. We expect, well, we expect that it will grow more because there has been an impact. So, it’s been modest – a modest impact. So, we’d know that there is still patients who have not being treated and we expect that that will pick up as retinal practices open more back up than they have.

Now, recall, they haven’t all shutdown because these patients need to continue to be treated, because this is a blinding disease and obviously, it’s critical to pay continue to get their injections. So – but nevertheless, some patients and some practices have elected not to come in and so, you have seen a reduction, but not as much certainly this how is DEXYCU.

We do expect, as I said that this is going to accelerate once we get more back to normal, because we know that there is a backlog. But we’ve been pleased with what we’ve been seeing with the acute and again, I just want to stress that the both our products, they really are well situated unfortunately in this pandemic.

But they are well situated because there is a potential that they can minimize potentially frequent office visits and certainly everything that comes with that, as well as the DEXYCU touching of the eyes, they are having to go to pharmacy to get drop prescriptions. So there is a lot of advantages to using both these products in a pandemic and post-pandemic world.

I-Eh Jen

Okay. That’s – that is very helpful. And then maybe two quick ones. In terms of you mentioned that the sales force reduction, at least the contract sales force reduction, from a housekeeping perspective, should we anticipate the swapping in sales as well as a general administrative expenditure of the first quarter co-pays are generally extrapolated for the remaining of the year. Or do you think there will be adjustment – major adjustments in that regard?

Nancy Lurker

I’ll let George answer that question.

George Elston

Sure. Hi, I-Eh. As we said in the…

I-Eh Jen

Hi.

George Elston

The fall and part of the release is, as part of the restructuring, we reduced our burn by $17 million in both one-time and annualized cost savings and so, certainly sales and marketing cost will decline versus what you saw in Q1, because this was something we initiated in April. And G&A will largely be flat. We’ve really trimmed that spending, as well.

But you should see a decline in sales and marketing spending for the rest of this year, because that was a big chunk to align with the drop-off in the expected revenue.

I-Eh Jen

Okay. Maybe just sneaking one more. There has always been the talk about the second wave of COVID. Certainly we don’t know much about what will be pan out. But just from a planning perspective, are you guys are thinking about that? And any kind of sort of back up plans or any other thoughts on that?

Nancy Lurker

Look, it’s a little hard to project. Certainly, we always have contingency plans in place should we have to revert back to a lockdown similar to what we’ve been in across the country and everything shuts down again. So, let me just answer it this way. We do have a contingency plan in place. We also are confident that we will continue to be able to operate.

We know that our investors certainly support us. And I’ll just say that, there have been discussions in the event that the country was to lockdown again and we feel confident we can continue to operate. So, George, do you want to add anything to that?

George Elston

Yes. We – as I mentioned on the all, yes, we are closely managing cash, number one. And number two, as Scott pointed out, from a commercial perspective, our team has done a lot of work to support virtually, I think certainly for YUTIQ, that’s a product that’s been needed despite the lockdowns.

And I think at some point the demand for DEXYCU surgeries is just – that will need to restart and we’ll monitor that, as we move forward.

I-Eh Jen

Okay. Great. Appreciate it and the backlog going forward.

George Elston

Thank you much.

Operator

Thank you. Our next question comes from Andrew D'Silva with B. Riley FBR. Your line is open.

Andrew D'Silva

Hey. Good morning. Thank you for taking my questions. Glad to hear everyone on the call sounds healthy. And so, sorry, if you hit on any of this. There was a large, I am trying to get into the calls. I might have missed some prepared remarks. But just to start, as it relates to the TKI opportunity, with it being a six months, can it also eventually be a three day like YUTIQ?

I am just assuming lingering fears from communicable diseases could make a longer-term option even more favorable now even in a post-COVID-19 world.

Nancy Lurker

Hi, Andy. Let me make a quick comment, and then I’ll ask Dario to add on to this. Look, right now, most physicians still want to be looking at, I’d say, ideally six to nine month option, depending on who you talk to. And why is that? Because generally speaking, they are not going to go out to three years and not three patients.

From a technology perspective, we probably won’t be able to get this out to three years just because there is some physical chemical properties associated with the API. But could we go longer? We could. We’ve elected to try to aim plus goal six months and that seems to be the sea area right now that physicians want.

And as I said, they need to keep seeing these patients regardless over – now they’ll reduce the visits, but they don’t really want to be going let these patients go nine months, ten months, a year, or longer without seeing them, just because the disease is so permanent and blinding. So, Dario, do you want to add anything?

Dario Paggiarino

Not really. I think I agree with your comments, Nancy. Yes. Thank you.

Andrew D'Silva

Okay. Thanks for the insight there and then, related to the $10 million of, I guess was qualified as other planned expenditure relationships and deferrals can you give your citing to what cuts were in there? And did you have to reverse any of the overhead reductions due to the PPP loan? Or are you just expecting to treat it as a loan and not even expect to qualify it as a grant?

Nancy Lurker

Yes. And George will take that question.

George Elston

Sure. So, as I noted earlier, when we announced the reorg, that was before the PPP loan. So, we were monitoring. Remember, as we noted on the call, we were starting to just get impacted in March from the COVID-19 shutdowns and so we announced the reorg on April 1.

And that spending was certainly across the organization weighted against the sales and marketing effort simply because, we had no activity there as those markets froze for us. And so, thinking about the $10 million of one-time and the $7 million of annualized costs, that is weighted into sales and marketing, but we – we’ve prioritized the 1901 in R&D, we took some R&D costs out and we took some G&A costs out as well.

And then regarding the PPP loan, we took that, we were very deliberate and diligent in first hour application to make sure that we qualified and on the more recent guidance to make sure that we were still within the boundaries set by SBA. And we are confident that EyePoint uniquely qualifies for this PPP program.

And we expect over the coming months and as we stated, we will be using the proceeds from that loan for the appropriate cost and we expect a significant portion of that to be forgivable. And we’ll monitor that over time.

I think guidelines have been little bit grey. But we’ve been very diligent and deliberate to make sure that we are compliant and we are hopeful that a large component of that will be forgivable.

Andrew D'Silva

Okay. I know it’s pretty volatile as it relates to the guidance on this PPP and coming out of the SBA. Do you fall – is the loan amount that you took falling underneath that threshold that they recently put from a standpoint of the dollar amount that if you are under you wouldn’t – you can be automatically audited if you are a public company?

George Elston

So, what the threshold was at $2 million and we were just over $2 million, if you read the detail behind that, I think, they said, they’ll be looking closely at compliance. And we are fine with that, because, we’ve been – as I mentioned, very diligent on that. And so, we are prepared for any questions the agency may have.

Andrew D'Silva

Okay. Great. And then, the last question for me. With the [Indiscernible] I guess now, it’s around two years, I believe a little bit less with the current pass-through status for DEXYCU. Can you help me quantify what’s the goal or the target would be with DEXYCU? I recall, you were aiming for around a $150 million for and then you noted, you felt comfortable with that, I think, even at the end of last year.

And I’d also just be curious, you referenced your working capital position into 2021 and based on certain reopening assumptions, could you just kind of educate me on what your assumptions are for the reopening as it relates to your working capital position and going into 2021?

Nancy Lurker

So, George, you can take that question.

George Elston

Sure. So, regarding pass-through, as you know, it’s – right now, it’s through April of 2022 and after this I’ll throw it back to Nancy and Scott to talk about our thoughts on a potential extension of that. And we had always looked at peak revenues, which is the top lead item you are talking about for DEXYCU in the $150 million range.

I think this pandemic and these closures have really pushed a lot of that timing out and we are revisiting long-term what does that program look like. But I think once this restarts and going to your question on the cash and working capital into next year, that modeling really assumes that the markets begin to reopen here in the second – in the latest second quarter as we are seeing it now.

If there is a slowdown in that or a second wave of closures, we are going to have to revisit it. But based upon our current assumptions on – again, cash on hand from financings and expected cash inflows from our commercial programs, we should be able to fund the company and into next year.

Andrew D'Silva

But the second half of the second quarter, you are assuming a gradual reopening, correct, not like – a late switch happening at the end of the second quarter.

George Elston

Exactly. And we wish it was late switch, but I think it was very clear as it’s going to be a very scaled slow progressive reopening and I think that will be another key to see. It was actually how quick that opens not just by region, but also by volume, as well, because of staging and other requirements. We don’t expect, for example, ASCs to go back to a 100% capacity.

I think they are going to be staging as well. And if that ends up being slower than we anticipate, we’ll come back and talk about that later this year. But where we sit today, we are comfortable about cash into next year.

Andrew D'Silva

Okay. Great. And then, you said that Nancy would touch on the pass-through puzzle extended into – I’d love to hear about that too and then that’s really that was all I had from a question standpoint. Thank you.

Nancy Lurker

Yes, without going into a lot of detail, suffice it to say that we believe that a strong chase to be made for pass-through being extended. And that’s obviously, I think it’s self-evident why we’d see pandemic. So, we are actively pursuing that and Scott is leading that effort. So, I’ll turn it to him to provide any commentary.

Scott Jones

Sure. Thank you, Nancy. So, we are actually looking at two avenues for some adjustment on this regulatory and legislative. Obviously there – we are working with a number of entities right now relative to having CMS and HHS actually freeze the clock on pass-through status, because of the public health emergency.

That’s something again that we are currently working on. And then we have long-term effort that we are actively engaged in relative to an overall regulatory and legislative strategy both for seeking permanent pass-through status, as well as, potentially a two year extension on to the current pass-through that we have.

So we have a number of different projects and we feel – I think we feel pretty optimistic that we’ll be able to extend the pass-through status in some form or passion for DEXYCU.

Andrew D'Silva

Okay. Great. Thank you very much. Be safe and best of luck closing out 2020.

Nancy Lurker

Thank you, Andy.

Operator

Thank you. Our next question comes from Yi Chen with H.C. Wainwright. Your line is open.

Yi Chen

Thank you for taking my questions. Could you let us know how many sales reps you currently have promoting DEXYCU and YUTIQ respectively?

Nancy Lurker

Yes. We have ten sales reps on DEXYCU and we have twelve on YUTIQ and we are looking to, as soon as the pandemic starts to lift more, we continue to look at adding more YUTIQ. And we will be opportunistic with DEXYCU. We want to – and of course our goal was to save capital. So we’ve paused on expanding with YUTIQ and should we see DEXYCU begin to significantly pick up, we will reevaluate if we feel that we can generate the revenues.

So we will reevaluate solely expanding on that as well, but right now we wanted to be judicious and really watch our capital, given what’s going on with this pandemic. And as we said before, DEXYCU is virtually a complete shutdown, because it was considered elective and cataract surgeries have just stopped across the board. But, with YUTIQ, it was a different story.

So that’s why we did not need to do a downsizing with YUTIQ.

Yi Chen

Okay.

Scott Jones

So, regarding..

Yi Chen

Sorry. Go ahead

Scott Jones

Just to add to that, DEXYCU is also a little bit - versus YUTIQ and that we’ve also got internal organization on the commercial team working on these volume-based agreement that we’ve talked about with ASCs, as well. So that’s an additional support beyond what we have for sales reps.

Yi Chen

Got it. Would you say that, most of the ophthalmologists prescribing YUTIQ, do have their offices are open? And could you comment on the scale of ASC that have already reopened, and you have observed thus far across the country?

Nancy Lurker

And I’ll Scott answer that.

Scott Jones

Sure. Thank you. On the YUTIQ side, I think the overwhelming majority of uveitis specialists have been and have remained open, although I would say their volume have been down somewhere between 50% and 75%. We are seeing them start to expand. I would remind you that many of the uveitis specialists are in large teaching centers.

And so, their internal restrictions and in terms of the patient flow vary pretty dramatically. And so, I think they will be a little slower to get back to 100% versus those in private practice. And we are starting to see the retina specialists getting back up to speed. Obviously, they are doing many more AMD injections at this point.

But we are starting to see an increased volume in the uveitis patients, as well. On the DEXYCU side, we are – it’s region-by-region. We, - as I mentioned, we had our first DEXYCU procedure last week in Indiana. We have more accounts coming online and then you have the southeastern states this week and next week.

And based on the latest information that we have, we’ll have around 29 of the states allowing for elective procedures over the next two weeks. And so, certainly by the 1^st of June, we believe that the majority of our high volume accounts will be back up and running in some form. And again, I think the volume is going to be a little bit lower. There is two things.

There is one, the ability of the account to get back up and running and then there is also this psychological impact of patients’ willingness to go back in at this point. So, both of those things will contribute to a little bit of the slower ramp up.

But again, we are happy to see that they are open and we are certainly supporting them virtually at this point, but we are starting to see a lot more conversations happening with our accounts and we feel good about their ability to use DEXYCU in the very near future.

Yi Chen

Got it. Thanks. Has Ocumension provided, any update on the developments of DEXYCU in Greater China?

Nancy Lurker

Yes, let me just say that, that’s since in a proprietary. They are making good progress, I’ll just say that. And I’d prefer that you speak to Ocumension directly revenue. We talked about Ocumension, but as you know, we’ve outlicensed both YUTIQ and DEXYCU to them for use in China.

I do want to say that we are seeing some usage in case, because there is a special area – it was, there is a special regulatory approval where you can deliver these drugs if they’ve been approved in Europe or the U.S. and you can deliver them in certain areas of the country and they are doing that while they wait for the full regulatory approval.

But I would just add, they’ve been a terrific partner and we are quite pleased with the relationship with them. And they are making good progress.

Yi Chen

Thank you. Last question, sort of regarding the status of the CRG loan. Do you think that they will likely waive the debt covenant related to the 2020 revenue – product revenue?

Nancy Lurker

George?

George Elston

Yes, I think, importantly, we’ve got a very strong relationship with CRG and we have been in active dialogue with them really since the COVID-19 emerged and we announced our reorg. We are working very closely with them to navigate through this and I think, both parties are interested in getting the right outcome that’s good for the company.

And we hope to come back to you on that later in Q2.

Yi Chen

Got it. Thank you.

Operator

Thank you. Our next question is a follow-up from I-Eh Jen with Laidlaw & Company. Your line is open.

I-Eh Jen

Thanks for taking the follow-up question. Just a very brief one. In terms of the collaborative R&D income of this quarter, it’s about $2 million. Is this the one-time sort of a high? Or should we extrapolate anything from this to the remaining of the year in terms of this particular item?

George Elston

Yes, that’s part of…

Nancy Lurker

Yes, let me comment and then – go ahead, George.

George Elston

Yes, that’s part of the – so let’s say, it’s a one-time upfront milestones associated with the license of DEXYCU.

I-Eh Jen

Okay. Great. Thanks a lot. I appreciate it.

Operator

Thank you. And I am currently showing no further questions at this time. I’d like to turn the call back over to CEO, Nancy Lurker for closing remarks.

Nancy Lurker

Thank you very much for your time during our call and we remain really optimistic about our future going forward despite the pandemic. I want to thank our employees who have been wonderful during this and have continued to, many of them come into our clean room and continue to produce YUTIQ, as well ensure DEXYCU is getting quality assured and produced.

So, a huge thanks to them and the R&D team, as well as continuing to move things along and now our field and commercial organization that’s remained active. So, I do want to give a great big shout out to our team.

All right. Thank you everyone. We look forward to our next call.

Operator

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.