Aerie Pharmaceuticals’ (NASDAQ:AERI) Q3 2021 Earnings Conference Call November 4, 2021 5:00 PM ET
John LaRocca - General Counsel
Benjamin McGraw - Interim Executive Chairman of the Board of Directors
Thomas Mitro - President and Chief Operating Officer
David Hollander - Chief Research and Development Officer
Jeffrey Calabrese - Vice President Finance
Conference Call Participants
Annabel Samimy - Stifel
Ken Cacciatore - Cowen and Company
Louise Chen - Cantor
Francois Brisebois - Oppenheimer
Greg Fraser - Truist Securities
Good afternoon. Thank you for standing by, and welcome to the Aerie Pharmaceuticals’ Third Quarter 2021 Earnings Conference Call. [Operator Instructions]
It is now my pleasure to turn the floor over to Aerie’s General Counsel, John LaRocca. Please go ahead, sir.
Thank you, Chris. Good afternoon, and thank you for joining us. With us today are Ben McGraw, Aerie’s Interim Executive Chairman; Tom Mitro, Aerie’s President and Chief Operating Officer; David Hollander, Aerie’s Chief Research and Development Officer; Casey Kopczynski, Aerie’s Chief Scientific Officer; and Jeff Calabrese, Aerie’s Vice President of Finance and Principal Accounting Officer. Today’s call is also being webcast live on our website, investors.aeriepharma.com, and it will be available for replay as indicated in our press release.
Now, for forward-looking statements and non-GAAP financial measures. On this call, we will make certain forward-looking statements, including statements, forecasts, and observations regarding our future financial and operating performance and impacts of the COVID-19 pandemic, including our observations regarding ongoing operating expenses and net revenue per bottle. These statements will include observations associated with our commercialization of Rhopressa and Rocklatan in the United States, our collaboration in Japan and prospects for a potential collaboration in Europe. They will also include plans and expectations regarding the success, timing and cost of our clinical trials.
Additionally, we will discuss progress regarding maintaining, requesting or obtaining approvals from regulatory agencies of our products, product candidates, and implants, along with the associated business strategies regarding these products, product candidates, and implants. Finally, we will address our financial liquidity and other statements related to future events.
These statements are based on the beliefs and expectations of management as of today. Our actual results may differ materially from our expectations. Investors should carefully read the risks and uncertainties described in today’s press release as well as the risk factors included in our filings with the SEC. We assume no obligation to revise or update forward-looking statements, whether as the result of new information, future events or otherwise. Please note that we expect to file our 10-Q tomorrow. In addition, during this call, we will be discussing certain adjusted or non-GAAP financial measures. For additional disclosures relating to these non-GAAP financial measures, including a reconciliation to the most directly comparable GAAP measures, please see today’s press release, which is posted on the Investor Relations section of our website.
With that, I will turn the call over to Ben.
Thanks, John, and good afternoon to everyone. Thanks for joining us today. We had a very good quarter, and we have a number of specific items to address today. These include our third quarter results, continued progress with our growing pipeline, and additional perspective on our global strategy.
I want to begin by making five very important points: First, we have good commercial performance. You’ll hear that in Tom Mitro’s reporting of the results for the quarter. Our two commercial products are gaining market share and are consistently hitting analyst’s revenue projections. Second, we are leveraging our products via ex-US partnerships. It’s our expectation these partnerships will enhance our balance sheet and will further provide -- and I’ll provide further comment on now. Third, we have two clearly differentiated Phase III-ready products in development and a strong pipeline behind them. You’ll hear that from David Hollander. Fourth, we have a well-functioning manufacturing operation in Athlone, Ireland, and I’ll comment on that. Fifth, we’re in a good financial position and Jeff Calabrese will cover that.
I know some of you are concerned about the two departures from our senior management team. The management team we have is strong and we’re making good progress in filling those vacancies. As we’ve previously reported, we have a search opened for our CEO, and we’re now interviewing well-qualified candidates. The Board takes its fiduciary responsibility very seriously and will take the time necessary to find the person best suited to execute the responsibilities of the job. In addition, we have an active search for our CFO and we are interviewing very good candidates for that position right now.
Now I’ll turn the call over to Tom to provide an update on the US glaucoma franchise, after which David will provide an update on the pipeline, I’ll address our global activities, and Jeff Calabrese will wrap up with the financials. Okay, Tom?
Thank you, Ben. Our third quarter 2021 net revenues of $29.3 million are up 46% year-over-year and up 8% compared to the second quarter of 2021. Our September year-to-date revenues of $79.5 million are up 36% over the comparable period of 2020. With two months left in 2021, we continue to remain comfortable with the analyst consensus for the full year ‘21 net revenue. Now as you saw in our earnings release, our net revenue per bottle remained stable at $89 for the third quarter of 2021. This compares quite favorably to the $77 net revenue per bottle we experienced in the third quarter of last year and represents approximately 16% growth year-over-year. Our glaucoma franchise unit sales into wholesalers, which, of course, are the basis for our recorded revenues, amounted to 328,000 units in the third quarter of 2021. This represents a 26% increase over the third quarter of 2020.
Comparing third quarter of 2021 to second quarter of 2021, our wholesaler volumes increased by over 7%, assuming that the overall impact of COVID-19 on the industry continues to decline, we expect volumes in the balance of 2021 to continue to increase versus the first half of the year. Now as you remember, sales out data represent bottles of our products that are shipped from the wholesalers into pharmacies. This metric also continues to show strong growth. Our third quarter 2021 sales on units of 323,000 were up more than 25% or 65,000 units compared to the third quarter of 2020, with the last five months all exceeding 100,000 units. And this continues to show a significant increase from where we were at this time last year and this quarter’s numbers are more than 37% higher than our pre-COVID levels of the first quarter of 2020 providing proof that we powered through the pandemic.
Now just as we reported in our previous calls, our glaucoma franchise continued to far outperform the glaucoma market and our other branded glaucoma products. Based on IQVIA data, the third quarter 2021 total prescriptions for our franchise rose 19% or 28,000 prescriptions over 30 -- over third quarter of 2020, while the glaucoma market was up just 2% for the same period. New prescriptions for our franchise increased 20% in the third quarter of 2021 compared to the third quarter of 2020 outpacing the market growth of 1%. We believe that the continued growth in new prescriptions speaks very well for the future growth of our franchise. Now looking at the last 12 months ending September of 2021, so to be clear, that October of 2020 through September of 2021, our franchise grew by 110,000 prescriptions or 20%, while the glaucoma market declined by 1% or 430,000 prescriptions over the same period. So once again, our franchise prescription volumes grew significantly, looking at both the third quarter of this year and the last 12 months and we continue to significantly outperform the broader glaucoma market.
Now our sales representatives’ call activity continues to increase with year-to-date September 2021 call volume up 52% compared to the same period last year. Since the vast majority of physician offices now open, 90% of our physician visits are now face-to-face. The primary driver of our continued growth is the increase in number of offices that are open. Our sales force strategy remains unchanged. Our sales team is calling on the approximately 10,500 highest prescribers of glaucoma products. In July of 2020, our contract sales force began calling on the next 1,500 highest prescribers and the telesales team, which we added in June of 2020, began calling on the next 4,000 highest prescribers. As we’ve mentioned previously, these numbers may change a little from our previous calls, as some physicians are moved from one audience to another for various reasons, but all-in-all, the IQVIA data show that our market share continues to grow in each of these three audiences.
Our total prescriber count now exceeds 19,500. We currently have nearly 10,000 physicians who prescribe an Aerie glaucoma product routine each month, and approximately half of those monthly prescribers have been riding on a weekly basis. The highest prescribers of glaucoma products, which, as a reminder, on the Decile 10 and 9 prescribers, have maintained their prescribing frequency, writing more than 30 prescriptions per month. Rhopressa and Rocklatan commercial coverage, both represent 76% of covered lives. Shifting to Medicare Part D coverage, Rhopressa’s coverage is at 96%, including the low-income subsidy, or LIS patients, of approximately 4%. Rocklatan is at 84%, including the low-income subsidy, or LIS patients, of approximately 10%.
As we’ve previously mentioned, in addition to the renegotiating wholesale agreements and modest price increases, we continue to refine our rebate agreements to preserve our net revenue per bottle as well as maintain and grow the volumes of our glaucoma franchise. We’ve previously talked about our expectations regarding the stability of our net revenue per bottle and our strategy remains the same, to minimize the rebate burden while optimizing our net revenues. So as we look ahead to closing out 2021, we continue to expect an increase in selling, general, and administrative expenses to the pre-COVID-19 levels due to increase in sales and marketing costs as well as travel expenses. However, we have also indicated previously, we do not expect an increase in spending to have a material impact on net cash used in our operations.
So in summary, we continue to capitalize on the momentum we established prior to COVID. Our glaucoma products are increasingly being prescribed by many eye care practitioners. And with our current managed care coverage levels, our strategy to move monthly prescribers to weekly prescribers and our share voice initiatives and improvement in our net revenue per bottle, we continue to see the associated benefits.
So, now, Ben would like to make a comment before David covers the R&D program. Ben?
Thanks, Tom. Before David starts, I’d like to clear up a point, and I think that would be beneficial to everybody. Just before I took over as Interim Executive Chairman, the company announced the results of the Phase IIb clinical trial in dry eye. I know that some are disappointed with the results of the trial, however, others, specifically those inside the company that were involved in the trial, viewed it as a terrific study with results that were better than any they’ve seen in their many years of doing dry eye studies.
When I joined the management team, I spend a lot of time working with David and others to understand the diverse views. Here’s what I discovered. The company specified primary endpoints for the IIb trial. The hope was if the products hit those end points, the trial could serve as a pivotal efficacy trial and that would save the company time and money in the development of the product. The choice of primary endpoints for the Phase IIb trial was based on the results of a small one month Phase IIa study done by Avizorex Pharma in Spain, which was later bought by Aerie. In their trial, they used a formulation that would not be acceptable to regulatory agencies. For the Phase IIb trial, Aerie developed and tested a new formulation that would be acceptable to regulators. The small size of the Spanish trial and the change in the formulation made projection of what would be the most appropriate endpoints very difficult.
Because of the uncertainty associated with the choice of primary endpoints, the company built in multiple other endpoints that would allow it to assess what would be the most reproducible endpoints for the Phase III program because that’s exactly what a Phase II trial is for. The bottom line is that although there was uncertainty about hitting the primary end points, the team had pre-specified a full array of other endpoints to hedge against the failure against primaries.
Well, in the much larger three-month study, run by Aerie, the product did fail to achieve statistical significance on those primary endpoints that have been chosen. Because of that, I was left wondering why those involved in the study called this one of the best dry eye results they’d ever seen. It turned out the team was pleased because they had achieved reproducible data showing a significant effect on the end points that the drug would be expected to change based on its mechanism of action. In addition, they noted that the drug actually had a significant effect on a broad array validated sign and symptom endpoints. In this case, validated means end points that have either served as the basis of approval for other drugs or have been confirmed by regulatory agencies as acceptable Phase III endpoints. In the end, the drug has shown efficacy against pre-specified, validated sign and symptom endpoints and it showed this efficacy the first time it was measured, which was at week two, meaning it had a rapid onset of action and that efficacy continued through the three months of the study.
I’ll let David give you the rest of the story, but it was at this point that the divergence in assessment of study results between the insiders and those on the outside make sense. Okay, David?
Thanks, Ben. So shifting our efforts to R&D in September, as Ben noted, we reported positive top line results of our Phase IIb clinical study COMET-1 for 512, our TRPM8 agonist for dry eye. As you may be aware, the 2021 Nobel Prize in medicine was awarded for seminal work on the TRPM8 receptor, the receptor upon which 512 Act. The trial was designed as a dose-ranging Phase IIb dose-finding study to select a concentration to advance the Phase III and to determine the endpoints for future FDA pivotal studies by testing this novel MOA against a number of well-established signs and symptoms. As reported, the high-dose 0.003% concentration demonstrated statistically significant efficacy across multiple validated pre-specified sign and symptom endpoints.
In addition, 512 also demonstrated a rapid onset of action. Efficacy was observed in both signs and symptoms as early as day 14 and showed continued improvement in symptoms through day 84. Based on these results, we have defined tear production and SANDE score as the co-primary signs and symptoms endpoints for the Phase III trial. These endpoints are consistent with what would be expected from a drug with this mechanism of action. Confirmation of the COMET-1 results in our Phase III trial would clearly differentiate 512 from other topical products. We intend to initiate Phase III trials in the first half of 2022. We are planning to conduct two Phase III efficacy studies and a 12-month safety study for 512. We will confirm the regulatory path with FDA in an end of Phase II meeting in the first quarter of next year.
Now shifting our attention to the retina pipeline, we’ve completed our discussions with the US and European regulatory agencies regarding clinical and regulatory pathways for Phase III clinical trials for AR-1105, our dexamethasone sustained-release implant. We now expect to start the first Phase III clinical trial for 1105 in the first half of 2022. This date was moved into 2022 because of supply chain issues that developed through the implant applicator. As a reminder, in July of 2020, we released the Phase II top line data for 1105, which demonstrated up to six months of sustained efficacy in improving vision in patients with long-standing retinal edema secondary to retinal vein occlusion. This is a very prolonged efficacy profile compared to other injectable steroids in the markets such as Ozurdex, which generate, today, about $400 million in revenues in the US and Europe combined.
Last month, the Phase II data was presented by Dr. Michael Singer at the ASRS Annual Meeting of San Antonio. Now it is important to understand that the patients in this first-in-human study with 1105 had long-standing disease of almost three years and has been treated with five to seven anti-VEGF injections prior to receiving 1105. In general, increased severity and longer duration of disease as well as a greater number of prior treatments all mean that the patient is less likely to achieve a good visual outcome. That is why comparing retina studies is always challenging.
Nevertheless, even in this very difficult-to-treat patient population, patients improved on average eight to nine ETDRS letters. More importantly, this eight letter gain in vision was still observed at six months following a single treatment with 1105 and correlated with the reduction of over 200 microns of retinal fluid that also persisted through month six. This sustained magnitude of treatment effect lasting for at least six months, is what promises to make 1105 a standout from other products on the market. 1105 was developed using our proprietary print technology platform, which provides predictability and flexibility in manufacturing. This allows us to customized drug elution rates and create various blends of bioerodable polymers and allows for both longer treatment duration and reduced injection frequency, which were reflected in the Phase II results for 1105.
Now shifting to our globalization activities, a few weeks ago, we announced positive top line results for our Phase III clinical trial in Japan, evaluating Netarsudil versus Ripasudil, a Rho Kinase inhibitor that has roughly 5% share in the Japanese market. The results showed that Netarsudil once-daily was superior to Ripasudil’s twice-daily in lowering intraocular pressure at week four, which was the primary endpoints of the study. We are pleased to see that in addition to its once-daily dosing and strong safety profile, Netarsudilin achieved impressive IOP lowering efficacy in a population with low baseline intraocular pressure. We believe that the statistical superiority shown may suggest a bright future for Netarsudilin in the Japanese market and fulfill an unmet need for this population. We are very pleased with the results of this trial, which was completed a quarter ahead of schedule. These positive results in the low IOP population confirm our prior results indicating that Netarsudil has a unique effect in this patient population.
As a reminder, Aerie conducted this first Phase III trial as part of the collaboration agreement signed in 2020 -- now Santen will oversee the rest of the development in Japan, which consists of one additional one-month efficacy study and a 12-month safety study.
And now I’d like to turn the call back over to Ben.
Okay. Thanks, David. Shifting to Europe. We expect to announce a collaboration agreement on our marketing glaucoma products for Europe and other regions in the world before the end of ‘21, given that the glaucoma market in the top five European nations along totaled $98 million in 2020 compared to $55 million in the US Partnership in this region, will be really important for Aerie on multiple levels. First, it would be a further external validation of the commercial potential of Rhopressa and Rocklatan globally. Secondly, we believe that adding a partner to drive the sales volume from Europe would represent an excellent opportunity to increase capacity utilization at our Ireland plant. So production through the Athlone plant has increased with US sales growth. The current cost burden of this underutilized capacity there is at least $14 million annual. When combined with the potential volumes from our Japanese partnership, the European commercial partnership would position the company to expand our capacity utilization and improve our manufacturing margins.
Happy to have with me today, Jeff Calabrese, who is our VP of Finance and Principal Accounting Officer to cover financials. Jeff has played a critical role in the excellent performance of our financial team over the last few years. Jeff?
Thank you, Ben. As Tom discussed, our combined Rhopressa and Rocklatan net revenues in the third quarter of 2021 totaled $29.3 million. Our normalized gross margin for the third quarter was 92%, which is consistent with previous quarters. In addition, layered on top of cost of sales is approximately $5.4 million in overhead for the Athlone, Ireland plant associated with start-up commercial production. We expect that out of capacity number to trend downward on an annual basis as we continue to add volumes to the Athlone plant.
Our third quarter 2021 GAAP net loss was $39.7 million or $0.86 per share. When excluding the $6.6 million of stock-based compensation expense, our total adjusted net loss was $33.1 million or $0.72 per share. For the third quarter of 2021, adjusted cost of goods sold was $7.6 million and adjusted total operating expenses were $47.5 million, with adjusted selling, general and administrative expenses of $30.3 million and adjusted research and development expenses of $17.2 million.
For the third quarter of 2021, our net cash used in operating activities was $18.9 million and we had $167.6 million in cash, cash equivalents and investments as of September 30, 2021. The net cash used in operating activities of $18.9 million in the third quarter of 2021 is further improved from the third quarter of 2020, for which we reported $22.9 million in cash used. This reflects continued revenue growth and continued expense controls. Shares outstanding at the quarter end totaled $47.2 million. For additional information regarding our third quarter and prior period comparisons, please refer to today’s earnings release and our Form 10-Q, which we expect to file tomorrow.
And now I’d like to turn the call over to the operator for questions. Operator?
[Operator Instructions] Our first question comes from Annabel Samimy of Stifel. Your line is open.
Hi, thanks for taking my question. I have a couple, one, I guess, on the current performance and one on the pipeline. First, any thought to -- I know you commented on being comfortable with where consensus is, but any thought to actually setting guidance at some point given that ophthalmology practices are open, business is getting back to normal. I just want to think about what we can expect in the coming months and into 2022? And if you can provide any sense of the growth going into ‘22 in this normalized environment, that would be great.
And then for AR-15512, I know that you spoke on the symptom score, the SANDE score for the Phase III. I missed the signs. Is it going to be the same as the Phase II? And are you comfortable with having chosen the right endpoints at this point for the signs. And then finally, I guess we’ve been waiting for an EU partnership for about a year now, so what makes you comfortable that this could be done by the end of the year? And is it going to include only the glaucoma franchise or potentially the other retinal disease products?
Okay. Guidance, our goal is to provide you with guidance for the next year in the next quarterly call. With regard to 512, it’s designed to unanesthetized Schirmer and with regard to the partnership, I can just tell you that we have -- we’re very confident that this is coming. With regard to what it will include, it’s around the glaucoma products.
Did that capture everything Annabel?
Yes, and not so much description sure. Maybe just one more question, if I can. I think one of the big concerns that people have is that you’re still working toward growing your franchise and investing in SG&A, R&D, getting your pipeline events. I guess the question always is around cash and how comfortable are you that you can get this business profitable? Without any further raise, do you feel that, that EU partnership could get you there?
The EU partnership, well, so Jeff just told you we’re at 168 or so million. Now, the EU partnership takes us up by 50 to 100 more that takes away any short-term pressure. We have two Phase III-ready products that are -- that can be sources of additional cash to the balance sheet. What I can say right now about is we’re just under no pressure to do anything now at all.
Okay, great. I’ll get back in queue, thanks.
Thank you. Next we have we have Ken Cacciatore of Cowen & Company. Your line is open.
Hey, Ben, thanks for the presentation. I’m just wondering, as we look at the company, and we have a really good understanding of these products, their efficacy, their tolerability kind of the growth trajectory is fairly well known, although there’s two products, it’s basically a single-product company, so with excessive spending, without much leverage and respectfully, I’m going to disagree with your characterization of the pipeline. I think it’s far away and not nearly as valuable as you do and you haven’t yet licensed Europe, so you still hold consolidated rights. I’m just wondering why this isn’t a candidate to sell now.
It just strikes us as an ideal time, still don’t fully understand why the disagreement between you all and the previous CEO, but it just seems as if to get these products in the most patients, they’re great products, it would be better served to be with another organization. Can you talk about that and how you’re thinking as you go through a CEO search, whether we should engage in a sale process now versus stay stand-alone? Thanks so much.
Okay, Ken. Thanks for your direct comments. We will just agree to disagree on the prospects of the products. So with regard to the CEO, there wasn’t -- there was -- there’s no disagreement there. Again, we’re very clear that he had told us that it was time for him to move on. We put off and put off and put off timing for that and then just finally picked the time and move forward, that’s it. With regard to what’s the best path for the company? I understand what you’re saying completely. I’ll revert back to a point I made in the comments there. The Board takes its fiduciary responsibility very seriously, they really do. And if someone were to come with an appropriate offer we would absolutely look at it and give it the diligence that it would deserve. And so that’s just all I can say at this point.
All right, Ben. I appreciate it. Thanks so much.
Thank you. And next, Louise Chen of Cantor. Your line is open.
Hi, thanks for taking my questions here. So I had a few to follow up on some of what my colleagues have asked here. So there have been some management changes, obviously, so as a stand-alone company then, how does the Board think about Aerie’s strategic vision. You’ve got a lot of important things coming up here. And then secondly, how will you or what will you do to accelerate the growth for Rocklatan or Rhopressa? I think people have been waiting for it to really take off and it’s done well, but just we’re thinking it’s going to be bigger than it is by this point in its launch. And then just back on cash, how would you characterize your cash runway based on what you know today?
Okay. Thanks, Louise. So I’ll comment on the question about the Board because I was the Lead Director, and I’ll be the Chairman after this. I can’t add anything other than -- well, actually, so -- okay, so I’ll answer the question directly, which is we believe the prospects for the company -- we, at least the Board, believe the prospects of the company are quite good. We believe in the products that are on the market where they think they have good potential and we like the portfolio. We have two Phase III-ready products. You just don’t have many -- I mean that’s terrific for a company in this stage. So we have a good well-functioning commercial operation, a good functioning manufacturing operation in the specialty space of ophthalmology with two Phase III-ready products. That’s -- you got to admit, that’s pretty good.
With regard to acceleration of growth on Rhopressa and Rocklatan, I’ll toss that to Tom. I’ll let Tom talk about it. And then I’ll just end up on the cash. Again, that come back to where it was before, with the cash that would come from the EU deal, we’re just not under pressure to do anything from a financing standpoint and then we have additional sources of cash going forward based around the products that we already have that are Phase III ready. So we just -- financing is just not something we’re looking at it now at all.
Okay. Tom, do you want to comment about growth trajectory for Rhopressa and Rocklatan?
Sure. Thanks for the question, Louise. So I’d say two things about the growth trajectory for our glaucoma franchise. First, obviously, we got to get rid of COVID, right. As everybody knows, we certainly are here, the numbers are far lower than they have been in quite a while, which is a great thing because physicians can finally once again focus on getting the right treatment to the right patient instead of having their mind clouded with, my gosh, is my staff okay, are my patients okay, is my practice okay, all those sorts of things. So that’s great. The cloud has just -- keeps moving away, away and away.
The other big obstacle that we’ve always had since launch, of course, is managed care coverage. And as you could see from the report that we gave, our managed care coverage is in very good shape now at this point. So I think combining those two that we’ve got very good coverage and COVID is going away puts us in the situation to do very, very well from a growth standpoint. I will say one other thing that sort of ties in that managed care part, if you look back at the number of prior authorizations that have been submitted for our franchise, it’s well over 200,000. So that shows you -- well, first-off, that managed care was a real issue, but secondly, it shows you that physicians are highly interested in these products because that number, I think, is frankly unparalleled from a medication standpoint in ophthalmology. So that’s why I look are Louise. I look at it as managed care coverage improving, continuing to improve, putting us in a good position and, of course, COVID continuing to decline.
Okay. Thank you.
Thank you. Up next Jason Gerberry of Bank of America. Your line is open.
Hi. This is [inaudible] on for Jason. I had two. So one is on Japan, so you have positive Phase III, which was the first trial, so congrats on that. Just curious what’s the status of the program going forward, would it also include Rocklatan? I think you mentioned that Santen would be doing some of these studies. So is there any kind of like milestone payment associated with that. That’s the first one. And the second one is more around gross margin, when can we expect that to normalize?
Okay. So in terms of milestones, yes, if you’re asking about the Japanese partnership with Santen, yes, they are carrying the products through the remainder of the regulatory process and I think we’ve already stated previously that we will achieve royalty payments, the transfer price from manufacturing in Athlone to them for the Japanese market. Then beyond that, I’m tossing it over to Jeff.
Yes. So for -- I think your second part to that question was around normalized gross margin, so as I stated in the prepared remarks, we’re at 92%. It’s very consistent with where we’ve been each quarter of this year and I would expect that to be consistent as we finish out 2021.
Thank you. Next, we have a Francois Brisebois of Oppenheimer. Your line is open.
Thanks for taking the questions. It’s been fun to listen to how directly questions and answers have been here. Just a quick question, I think this was an answer to Annabel. You mentioned 50 to 100 potential out of a partnership. Is that with kind of milestones at all or are we speaking the $50 million to $100 million is that more of an upfront kind of characterization?
Pure cash, upfront. Yes, milestones, royalties, etc., it will be on top of that.
On top. Okay. Great. And then I think Tom had mentioned the -- in terms of the managed care and the wins, can you just help us understand here, as you say it’s getting better, maybe the comments on this call versus prior quarters, the changes that have happened here or is it pretty steady and we’re just hoping that the steadiness keeps going here?
No, I think it is -- well, thanks for the question, by the way. I think it has been pretty steady through time now, and we’re pretty much normalized where we are so that physicians don’t view our products as being hindered by managed care any longer. So I think just making sure that they understand that, but you’ve got to repeat that message over and over again so that they continue to remember about your products.
And so again, I think we’re in good shape and I think it has been pretty consistent over the last call or two. And now we just got to make sure that physicians really understand that and have a chance to focus on that, like I said, instead of focusing before on what influences COVID have on everything that they were doing.
Yes. No, absolutely. And so I thought in the past, maybe you had mentioned that there’d be some potential variability in terms of the net price per bottle kind of up and down, but overall, probably kind of an uptrend. Is that still the comment or are we pretty clear here on stability at 89, where do we stand?
Well, we’re still negotiating with specialty managed care entities and I just really can’t comment on where we are at this point. But let me put it this way, I like our prospects looking forward to the future to continue to reduce the amount of rebates that we’re paying. So I think we’ll be in pretty good shape and I think that we’ll see some more progression next year. I don’t want to say how much at this point or when, but let me -- like as I said, I think I like our chances for success in this area and we’ll be telling you more about that as next year progresses.
Okay. Great. And then I’ll just sneak in a last one, not to repeat too much what has been said but this is related to cash, but differently asked, I guess. In 2022, you got the start of a lot of programs, dry eye, pretty big trials, there is two, if not three trials here with the safety. Are any of these trials done in parallel or -- and can you just comment on maybe the potential ramp on expenses? How much would these trials cost here? So basically, are you expecting the net -- the cash burn from ops based on higher revenues to not change much, it’s been around that $20 million a quarter or based on the expenses of some of these trials that to actually start costing more here?
It sounds like guidance to me. So, yes, we are starting trials. Yes, it will be staggered. Yes, there’s long ones and short ones involved in the program.
Yes, I’ll only add to that, Ben, that right without giving guidance, and we certainly don’t do that on cash burn. But I think logically, as we have these Phase IIIs beginning the first half of 2022, it’s only logical that burn rate will incrementally increase.
Okay. All right, thank you very much.
Thank you. [Operator Instructions] We now have Greg Fraser of Truist Securities. Your line is open.
Good afternoon, folks and thanks for taking the questions. I want to follow up on the EU partnership. Is the timing there simply a matter of the negotiation process or are there other considerations like pricing discussions in Germany or other countries that would make a difference?
No, it’s just pure negotiation and yes, that’s all. Just so you know though, I mean everybody looks at this -- I’ve made this point before, as just a straight license, it’s more than that. I mean you’ll see -- when you see the deal, you’ll see it’s quite a bit more complicated than just what you’re thinking of as a straight license. But going beyond that, I’d have to get into the details of the deal, which I can’t do yet, so just wait a little bit and you’ll see.
Okay, we can wait. And then on AR-1105, are you inviting discussions with potential partners to help fund development to that product or is the plan to go alone and then consider partnerships once you have the Phase III data?
So the plan all along has been to do all the studies ourselves but taking a step back, so I’m the new guy in town and so when I came in, I ask everybody to just step back, drop your assumptions, let’s take another look at what’s best for the shareholders overall in everything. And we’re working on that, trying to figure out what’s going to be best for shareholders. I’ve not even had a Board meeting since I came in -- I mean, one of our regular Board meetings since I came into the job, so we’ve not had a chance to discuss any of this with the Board. We’ll be doing that. We’ll be informing you as soon as we -- if we make any changes in our strategy.
Got it. Thank you.
Thank you. As there are no further questions in the queue, I will turn the conference over back to Ben McGraw for closing comments.
Okay. Thanks. I’d like to end by reiterating the five points that I made at the beginning. First, we have good commercial performance. Our two commercial products are now gaining market share and consistently hitting the revenue projections. Second, we are leveraging our products via ex US partnerships, and that will enhance our balance sheet. Third, we have two clearly differentiated Phase III ready products in development, a strong pipeline behind them. Fourth, we have a well-functioning manufacturing operation in Athlone, Ireland. Fifth, we’re in a good financial position and have adequate resources to execute our business plan. We want to thank all of you for joining the call today.
This concludes today’s conference call. Thank you all for participation. You may now disconnect and have a pleasant --