Oyster Point Pharma, Inc. (NASDAQ:OYST) Q4 2021 Earnings Conference Call February 24, 2022 4:30 PM ET
Company Participants
Daniel Lochner – Chief Financial Officer
Jeffrey Nau – President and Chief Executive Officer
John Snisarenko – Chief Commercial Officer
Conference Call Participants
Ken Cacciatore – Cowen
Joe Catanzaro – Piper Sandler
Patrick Dolezal – LifeSci Capital
Chris Neyor – JPMorgan
Operator
Good evening and welcome to Oyster Point Pharma’s Fourth Quarter 2021 Earnings Conference Call. My name is Valerie and I will be your operator today. [Operator Instructions] At this time, I’d like to turn the call over to Mr. Daniel Lochner, Oyster Point Pharma’s Chief Financial Officer. Please go ahead.
Daniel Lochner
Good evening, everyone and welcome to Oyster Point Pharma’s fourth quarter earnings conference call for the 3 months ended December 31, 2021. This evening, we issued a press release containing our fourth quarter and full year ended December 31, 2021 financial results and recent business highlights. In addition, our earnings press release and our Form 10-K, which were filed with the SEC after the close of market today, are available on our website under the Investors & News section at www.oysterpointrx.com.
Joining us on our call today are Dr. Jeffrey Nau, President and Chief Executive Officer of Oyster Point Pharma and John Snisarenko, Chief Commercial Officer. Following Dr. Nau, Mr. Snisarenko and my prepared remarks, we will open up the line for questions.
During the call today, we will be making forward-looking statements regarding potential future events, including statements regarding Oyster Point Pharma’s potential future financial status and results of operations and our plans and potential for success relating to commercializing TYRVAYA. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. For a description of these factors, please see our annual report on Form 10-K for the year ended December 31, 2021 filed with the SEC after the close of market today.
I will now turn the call over to Dr. Jeffrey Nau, President and Chief Executive Officer of Oyster Point Pharma.
Jeffrey Nau
Thank you, Dan. Good evening, everyone and thank you for joining us on our call today to discuss our fourth quarter 2021 financial results and recent business highlights. This is a particularly exciting time for Oyster Point. This is our very first earnings call where we are pleased to be reporting partial revenues from the commercial launch of TYRVAYA Nasal Spray for the treatment of the signs and symptoms of dry eye disease in the United States marketplace. Today, you will learn more about how we are delivering these encouraging commercial results on the launch of TYRVAYA Nasal Spray.
But first, let me provide the company’s 2021 business highlights. In October of 2021, we received FDA approval of TYRVAYA Nasal Spray for the treatment of the signs and symptoms of dry eye disease. Dry eye disease is a chronic condition that impacts an estimated 38 million people in the U.S. and is growing in prevalence. The dry eye market is now being introduced to the first nasally delivered, pharmaceutical dry eye therapy, and we believe that given the high level of patient and physician satisfaction that we are seeing in the field with TYRVAYA, that significant growth remains ahead. You will be hearing more shortly from John Snisarenko, our Chief Commercial Officer, about the details of the launch of TYRVAYA Nasal Spray, but I’m happy to state that we had great partial fourth quarter commercial performance in 2021.
We are happy to report that TYRVAYA Nasal Spray had a net product revenue of $1.2 million in Q4 of 2021. In addition, we recognized $5.4 million from our license agreement with Ji Xing Pharmaceuticals. We are now entering 2022, having demonstrated the ability to achieve the successful commercialization of TYRVAYA as well as drive strong execution across multiple areas of our business, including our exclusive license agreement with Ji Xing to develop and commercialize OC-01 and OC-02 in Greater China, securing non-dilutive funding and pursuing additional treatment advancements in the clinic as well as in the R&D laboratory for patients with ophthalmic diseases.
This week, we publicly announced an early commercial win with one of the largest commercial payers. Our press release from Tuesday announced that TYRVAYA Nasal Spray is now covered by Express Scripts effective on February 19. This is a fantastic accomplishment for our market access team in achieving the addition of 26 million covered lives and more importantly, this early in our first full quarter since launch. Patients are increasingly gaining access to TYRVAYA in the U.S. for a disease state that, up until 2021, we believe, experienced very little innovation for the current large unmet need in dry eye disease.
TYRVAYA is a first-in-class cholinergic agonist nasal spray that is highly differentiated from the other pharmaceutical products in the dry eye space and includes the following potential advantages. TYRVAYA Nasal Spray has a differentiated mechanism of action as it is believed to activate the trigeminal parasympathetic pathway via the nose, resulting in increased production of basal tear film as a treatment for dry eye disease. Basal tear film is responsible for lubricating, nourishing and protecting the cornea. TYRVAYA is the only ocular surface-sparing pharmaceutical therapy for dry eye patients. For those patients with a compromised ocular surface, increasing tear production without the burden of administering a topical medication may provide a welcome method to treat their disease. For the first time, dry eye disease patients have an FDA-approved, pharmaceutical treatment option that is not administered as a topical eye drop to an already irritated ocular surface.
Although we are focused on the critical launch of TYRVAYA Nasal Spray and continue to execute plans for the life cycle development of the TYRVAYA franchise, our R&D team remains committed to multiple exciting pipeline projects aimed at bringing additional innovative therapies to address diseases like neurotrophic keratopathy and severe allergic or vernal keratoconjunctivitis. In 2022, we will continue to advance our enriched tear film gene therapy platform as well as our research and development collaboration with companies like Adaptive Phage Therapeutics.
We remain excited about the ongoing OLYMPIA Phase 2 study of OC-01 nasal spray in Stage 1 neurotrophic keratopathy. We are expecting a readout in the second half of this year. NK is a disease that is currently underdiagnosed or misdiagnosed in many patients with ocular surface disease. We feel that Stage 1 neurotrophic keratopathy could represent a meaningful indication for OC-01 nasal spray. Our vision and focus is clear. The world needs an innovative leader that can bring innovative and transformative ophthalmic disease treatments, and we aim to be that leader. We believe that we’re building Oyster Point into a best-in-class eye care company.
I would now like to turn the call over to John Snisarenko, Oyster Point’s Chief Commercial Officer, to discuss our ongoing commercial launch of TYRVAYA Nasal Spray for the treatment of the signs and symptoms of dry eye disease.
John Snisarenko
Thank you, Jeff. As we have previously communicated, the dry eye disease segment is a large market with over 17 million people diagnosed in the United States alone. Only a small proportion of these patients, approximately 2 million, are currently being treated with a branded therapeutic. And over 7 million people diagnosed with dry eye disease have tried and abandoned the other available options. We believe that TYRVAYA Nasal Spray is a new treatment option for the large patient population that exists in the dry eye disease marketplace, including the refractory patients as well as those who are newly diagnosed.
As Jeff highlighted previously, we are incredibly excited to have initiated the U.S. launch of TYRVAYA Nasal Spray on November 1. We are pleased to report that as of the quarter ending December 31, 2021, data indicates that approximately 5,500 prescriptions for TYRVAYA have been filled, written by over 1,900 unique prescribers. These encouraging metrics were achieved in less than 9 weeks from the launch, including holiday periods. In this short time, TYRVAYA is quickly establishing itself in the market as an exciting new option for dry eye patients.
Regarding market access, a core part of our commercial strategy is to promote accelerated payer adoption of TYRVAYA to the top payer organizations. Our market access team has done a great job in securing coverage for TYRVAYA with Express Scripts National Preferred, Basic and High Performance Formularies effective February 19. With this latest formulary addition, we now have coverage for a total of 43% of U.S. commercial lives for an aggregate total of approximately 84 million lives. We are incredibly pleased with this level of coverage so early in our launch, and we look forward to further growing our market access coverage in 2022.
Oyster Point remains very committed to offering comprehensive patient services that help provide access to TYRVAYA for appropriate patients. We have launched a comprehensive set of technology-driven patient services offerings aimed at enabling patients to successfully navigate the patient journey and procure TYRVAYA. Our patient support program is called TEAMTyrvaya. And for more information on this program and how to enroll, please visit the website, tyrvaya-pro.com.
We have been quite diligent with the sizing of our field force, which enables us to target 20,750 eye care practitioners, covering both optometrists and ophthalmologists and representing approximately 94% of the dry eye prescriptions in the market today, helping us in our efforts to achieve the full commercial potential of TYRVAYA. In the first 9 weeks of launch, our sales force was able to introduce TYRVAYA to more than 50% of the targeted prescriber base.
On the marketing side, we are leveraging the latest technology, including sophisticated analytics, in-person as well as virtual detailing, best-in-class digital and social media efforts and partners as well as utilizing a digital online pharmacy to enhance communication and delivery of TYRVAYA to patients. We will continue to adopt the latest media and technology-driven marketing approaches to maximize TYRVAYA’s share of voice and impact in the market.
Our focus continues to be on broad eye care provider and patient education and marketing efforts, with targeted direct-to-patient digital campaigns leveraging TYRVAYA’s differentiated MOA and nasal spray route of administration to drive a positive patient marketing experience. I am so proud of our commercial team’s collective efforts during this early phase of our launch, especially in these challenging times with the pandemic.
I will now turn the call back over to Dan Lochner, Oyster Point’s Chief Financial Officer, to discuss our fourth quarter financial results.
Daniel Lochner
Thank you, John. I will now provide a brief overview of Oyster Point Pharma’s fourth quarter financial results. Additional detail about our fourth quarter as well as our annual financial results can be found in our Form 10-K that was filed with the SEC this evening.
For the fourth quarter of 2021, Oyster Point Pharma reported a net loss of $42.1 million compared to a net loss of $22.2 million for the same period in 2020. As of December 31, 2021, cash and cash equivalents were $193.4 million compared to $192.6 million as of December 31, 2020. Based on our current business plan, we believe the company’s available cash and cash equivalents will be sufficient to fund the company’s planned operation for at least 12 months from our 10-K filing this evening.
Net product revenues for the fourth quarter of 2021 were approximately $1.2 million, following the FDA approval of TYRVAYA Nasal Spray on October 15, 2021, and our subsequent commercial launch in the U.S. in November 2021. Approximately half of the TYRVAYA net product revenue was attributable to channel building by distributors upon launch of the product. In addition, pursuant to our license agreement with Ji Xing, the company also recognized $5.4 million in milestone and license revenue following the FDA approval of TYRVAYA Nasal Spray, which includes the non-cash consideration of Ji Xing senior common shares. The company did not generate any revenues during the third – 3 months ended December 31, 2020.
Cost of product revenue for the 3 months ended December 31, 2021, was $1.5 million and consisted mainly of third-party manufacturing costs, which included pre-approval costs, reserves for inventory obsolescence and damaged goods and product royalty expense related to Pfizer. The cost of product revenue included a reserve for inventory obsolescence of $0.9 million.
The inventory manufactured prior to FDA approval of TYRVAYA Nasal Spray was charged to R&D expense. And as a result, the company expects the unit cost of product revenue will be lower until the company fully utilizes this product that was manufactured pre-FDA approval. The company started expensing pre-approval inventory in 2020 and recorded an R&D expense of approximately $4.3 million for pre-approval inventory during the year ended December 31, 2021. The company anticipates selling the remaining pre-approval inventory by the end of 2022.
The company’s sales and marketing expense increased by $21.8 million during the 3 months ended December 31, 2021, compared to the same period in 2020. The increase was primarily due to higher payroll related expenses of $11.7 million, inclusive of sales commission expense, as well as an increase in stock-based compensation expense of $0.5 million, both of which were primarily driven by onboarding a commercial field force in the second half of 2021. The company also incurred higher marketing, market access, commercial and other expenses of $10.1 million in anticipation of, and in connection with, the U.S. launch of TYRVAYA Nasal Spray.
The company’s general and administrative expenses increased by $6.2 million during the 3 months ended December 31, 2021, compared to the same period in 2020. The increase is primarily due to higher G&A expense of $3.8 million related to accounting, consulting, legal and other professional expenses incurred in connection with the credit agreement as well as the company’s transition from a clinical stage to a commercial stage company. The company also incurred higher payroll-related expenses of $2.4 million, including recruiting expense due to an increase in headcount to support an ongoing effort to commercialize TYRVAYA.
The company’s research and development expenses decreased by $6.2 million during the 3 months ended December 31, 2021, compared to the same period in 2020. The company’s decrease in R&D expense is primarily due to the company receiving FDA approval of TYRVAYA Nasal Spray in October 2021. The company expensed inventory prior to receiving FDA approval and expensed approximately $3.5 million as R&D during the 3 months ended December 31, 2020. The company also incurred a fee of $2.9 million in connection with the New Drug Application submitted to the FDA in December 2020.
The company incurred interest expense of $2.6 million during the 3 months ended December 31, 2021, primarily related to the credit agreement with OrbiMed. Interest expense included contractual interest of $1.7 million as well as non-cash expense of $0.9 million related to the amortization of loan commitment fees and accretion of other long-term debt-related costs. The company had no interest expense during the 3 months ended December 31, 2020.
Now as we turn to our outlook, for 2022, our goal is to continue to achieve broad ECP and patient experience with TYRVAYA, including both optometry and ophthalmology offices, in order to reach the total addressable dry eye market opportunity of TYRVAYA Nasal Spray. We anticipate the three large national commercial plans will make their coverage determinations by the midpoint of the year. While we await such coverage determinations, we will continue to provide patient-assisted programs to support eligible commercial patients in gaining access to TYRVAYA.
With that overview of our financials, I will now turn the call back over to the operator to open up the line for questions.
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] Our first question comes from the line of Ken Cacciatore with Cowen. Your line is open.
Ken Cacciatore
Hey, team. Looks like a really good and clean initial launch. I was wondering if you would want to help us a little bit with maybe the revenue pacing. I know consensus I believe is around $30 million. And I know there is only a few of us analysts that are formally involved in the consensus, but I think it’s around $30 million. So I was wondering if you could just kind of hold hands with that number, how we should be thinking about it? And then also, we have been doing clinician checks and getting very good feedback. But I guess you could help us, as you would have a better sense of the early retention metrics, maybe to be able to definitively let us know how you are seeing some of the retention numbers and patients returning? So those are my first two. I am going to ask one more, if I could, though. Could you talk, John, a little bit about any refinements or learnings of your patient support system, obviously, early days, but wondering if you’re already tweaking it a bit? Anything that seems to be working very well or you have needed to change? And with that, I will go back in the queue. Thanks so much.
Jeffrey Nau
Great. Thanks, Ken, for the questions and very thoughtful. So, maybe what we could do is we will just take those in order. So I’ll turn it over to Dan to just talk about the numbers for the year and then we will go into retention and have a discussion about John’s experience with the bridge programs and the different patient services?
Daniel Lochner
Yes, great. Hi, Ken. I would say on revenues, while we haven’t really provided official revenue guidance, I would say we think about it very operationally focus in terms of our sales reps that are out in the field doing a great job. And I would say the focus very early on and throughout 2022 will really be about growing that eye care practitioner count and we have goals internally for what we expect to achieve on a weekly and monthly basis. And so I think it really starts with getting those ECPs on board on a monthly sequential basis and then starting to look at what the right pattern is on an NRx basis per month and then what we then start observing on that pull-through on resell rate. And so to kind of wrap that all up, we see it sequentially building through the quarters for the entire year as we start working through that total target population that we have identified, which is roughly 20,750 targets. And I think it would be great to have John kind of speak about how we are really going after that target base and how that’s been building through the quarters. And I think what you will see, at least for Q4, we have hit about 1,900 of those ECPs in respect to the 20,750. And we will continue to really work through that population of ECPs and really build that NRx and resell rate, the TRx, and then really playing out on revenue. The other dynamic, of course, is always on gross to net. And while we are not providing official guidance on gross to net because our focus really is on that volume and share component throughout 2022, I would say there is that first half component related to the majority of patients in the first half expecting to be on that bridge program, which has a discrete impact to gross to net. And then with our guidance, which is focusing on coverage determinations for the big three PBMs by the midpoint of the year, that transition from bridge over to commercial insurance will have a positive benefit discretely on that line in relation to gross to net, which would kind of tie up to your question on kind of how revenues would flow from a price and volume perspective through the year.
John Snisarenko
Yes. Thank you, Dan. This is John. Hi Ken. You asked a question around retention rates and then refill rates. We have been very, very pleased to-date with the metrics we have been seeing in that space. Even patients that had been prescribed in early November, we started seeing early refill rates. I could quote that if you look at our blended refill rates with retail pharmacy and our digital online pharmacy, they are hovering around 64%, 65%. So, we are very pleased with patients that are coming back and getting the refills. We are getting very, very nice position as well as patient feedback, and we are hoping to continue that trend throughout 2022. I think part of that as well is your third part of your question around patient support programs, we out of the gate wanted to really employ a lot of technology around our patient services to TYRVAYA. So, we are trying to make it very easy for that patient to navigate that journey through the prior auth and benefit investigations to get them to enroll into the program through QR codes in the offices, online as well as other digital means. So, because of that, we have been getting very, very good high enrollment rates and good fill rates that come through that program. So, in terms of tweaking, we are continuing to put out more patient materials to surround sound the patient with different ways to enroll into the program. But overall, we are very, very pleased with how the program has been going. If the patient is deemed insured, but not covered, they automatically popped into our bridge program that they were appropriate patients and are able to get that script fulfilled and get experience with TYRVAYA. So, we will keep monitoring the patient services program, but so far, we have been very, very pleased.
Ken Cacciatore
Great. Thanks so much.
Jeffrey Nau
One thing I will add on, Ken, comment there is as we think about TYRVAYA as a product, when we think about the current marketplace and what it offers to patients, from an immunomodulator perspective, patients will go on a course of an immunomodulator. If they are not happy with the outcome at the end of that course, they are transitioning off, and they are likely either going on to another product or another device or another modality, but very rarely are they coming back. So, we see a very low number of patients come back to the original therapy. I think that the one thing to really keep in mind with TYRVAYA is it works so quickly to provide the patient relief, and it has such a differentiated mechanism of action that we are excited to look forward into the future to see how patients interact with the product. It’s going to be a very different interaction than you would see with an immunomodulator because I do think not only will we have solid refill rates, but we will have people coming back to the product in those later years. And so we are excited about that. And then I would – I will just throw one comment out there for my team back at the office. Our patient services program is, bar none, one of the best I have ever seen. And it is going very well in the field and so kudos to the team for putting together such a great program.
Ken Cacciatore
Great. Thanks so much.
Operator
Thank you. Our next question comes from Joe Catanzaro with Piper Sandler. Your line is open.
Joe Catanzaro
Hey guys. Thanks so much for taking my questions and congrats on the progress here. So, maybe just to follow-up, I think Dan, you mentioned you guys had some internal benchmarks, I am sure on a bunch of things. But I am wondering if you can maybe help put into context the early penetration in terms of the number of unique prescribers you have seen relative to your target ECP pool and where your early expectations were there. And then I am wondering what aspect – and maybe it’s something you just alluded to, Jeff, what aspect of the product profile do you see as resonating the most? And how do you go about fully leveraging that? Thanks. And maybe I have a follow-up as well.
Daniel Lochner
Yes. Maybe I will start with it on my end. As you saw in the press release, we had achieved 1,900 unique writers in the quarter, which is just under about 10% of the targets that we are going after with our sales force of 162 sales reps. And so I think we had great progress in the quarter just under about nine weeks. And so as we look at benchmarks of prior therapies that have come to market more recently, I think we are in a great place for where we had expected us to land. Of course, we also understood that this is a new way of treating dry eye disease, so really communicating the benefits with the nasal spray. And so I think we are quite pleased with where we landed and continue to work towards that 21,000 target count as we progress throughout the year.
Jeffrey Nau
And maybe what I will add on to – the second part of the question there is some of the things that are resonating. I think one of the things that’s really been exciting about the launch of this product is patient feedback has been really great. And so we have been excited to not only hear stories from the field, see posts on social media of patients going out on their own and talking about the product. And just really, it’s a great product to launch where you are having that patient feedback come back to the teams and to those folks that have put such hard work into getting the product out there into the marketplace because it’s really why we do this and it really drives the team. So, I think one of the things that we hear that is something that’s really encouraging is just the patients stating that they really like the profile. They like the way it’s making their eyes feel, and it’s just differentiated in the way that it’s able to be used. So, we do hear stories back of people who are unable to deliver a topical eye drop. And this is another option for them because maybe they don’t have the dexterity or they are elderly and they are just not able to put a drop into their eye, and so they are able to use nasal sprays. And the other thing that we hear in the field often is the physicians are not getting patients calling back and complaining. And so that’s also really important for us. But again, we are very early in the launch. So, we have many patients that haven’t been on the product for more than a few months. So, we are excited to see how the long-term feedback is. But for the moment, we are really encouraged by the feedback or sometimes lack of negative feedback coming back from the patients.
Joe Catanzaro
Great. And if I maybe just squeeze in a quick follow-up, I think you said you guys have maybe covered about 50% of your target ECPs. Can you maybe speak to what percent of those have been given a sample? And how soon after sampling are you seeing ECPs write a script? Thanks.
John Snisarenko
Yes. No, thank you, Joe. Great question. Part of our strategy is really to introduce TYRVAYA into the office practice with the prescriber base, the technicians, the staff that are involved with training, the patients and so on prior to actually sampling because we want to make sure that the product is taken appropriately and the patient gets the best possible experience they can with the nasal spray. So, we have handed out quite a few samples, probably over 100,000 samples since launch. But we want to make sure that we hand them out appropriately and that installation with that office has actually taken place before that sampling is initiated. So, so far that’s worked well for us because we have seen a higher proportion of patients that tried a sample, see if it works for them before they are getting into our patient hub and actually getting that prescription filled. So, that kind of connection has been very, very positive with that approach.
Joe Catanzaro
Okay. That’s helpful. Thanks again for taking my questions.
Operator
Thank you. Our next question comes from Patrick Dolezal with LifeSci Capital. Your line is open.
Patrick Dolezal
Hi. Thanks for taking the question. I am just curious how the availability of generic cyclosporine has impacted discussions with payers, if at all. Were there any modifications to negotiations with Express Scripts as that approval came to light? I am just curious if you expect any impacts going forward as you onboard other payers. And then I have a follow-up as well.
John Snisarenko
Yes. Patrick, thanks for your question. We have seen kind of early mixed reactions from the payer community on how they are going to manage the generic entry of cyclosporine. And with the early listing with ESI, they are actually covering TYRVAYA across their formularies with only a traditional with artificial tear. So, that’s what I mean by mix. Some of the payers are kind of waiting until more than one generic comes out, and they will take a look at the dry eye space or they are not really managing the dry eye space as closely. And others are going to evolve a little quicker. So, we are able to modify our approach. We are ready for a generic to be on the market or not with. And that’s the way our negotiations are going with the major PBMs. And our goal is to get access for TYRVAYA on a level playing field with the branded therapeutics. And our differentiation along with our strategic contracting will help us get there.
Jeffrey Nau
And one other comment, Patrick. As you well know, generic entry into the marketplace doesn’t change the dynamic that exists where patients cycle off many of these drugs, whether it would be for lack of effect or side effects or whatnot. And so that certainly will not change. So, we were planning on generic entry coming. I think we have been planning for a long time, but it’s been always in the back of our mind, and so the team is ready.
Patrick Dolezal
That’s helpful. Thanks. And as it relates to just drug launch surrogates, there is not a ton in the dry eye space really, but obviously, we do have these eye drops. Just curious to hear any similarities and differences that might be worth pointing out. And just if you could comment on the role of coverage and driving drug adoption in the dry eye space generally, that would be helpful. I am curious if there is a tipping point where you feel that the amount of coverage really will drive adoption, 50% if it’s a bit more. I would love to hear your thoughts there. Thanks.
John Snisarenko
Yes. Patrick, in regards to the Xiidra launch, we did see very quick uptake. Well, this was back in 2016. They had very early access to the commercial insurers, and they launched with 280-plus reps. We are very pleased with the number of reps we have and the trajectory we are seeing with TYRVAYA. We are on track in regards to the payer negotiations. And in fact, the ESI listing was an early listing for us. So, we will get to that point that we are expecting in terms of broad base of writers, the eye care professionals prescribing TYRVAYA. We just won’t be out of the gate as quickly as you saw with the Xiidra launch. I could tell you, versus the latest two launches, we are very pleased with how our trajectory is going versus kind of the more recent entries. But it was a different space back in 2016, less managed, and also they were second entry at the time after Restasis.
Patrick Dolezal
Definitely makes sense. Thanks for taking the questions.
Operator
Thank you. Our next question comes from Chris Neyor with JPMorgan. Your line is open.
Chris Neyor
Great. Thanks for taking the questions. So, first one is on me – for me is just wanted to get a bit more details on the Express Scripts contract. So, really just thinking about what’s the mix between preferred and non-preferred coverage within those 26 million lives that you had estimated. And within the Express Scripts plan, are there – is there potential for additional pickup of patients and additional contracting that would either add additional patients or move more patients towards preferred access? And for – when talking about that kind of mix – the mix of customers, what type of co-pay should we be thinking about for most of these patients? I think I have a couple of follow-ups after that.
John Snisarenko
Yes, Chris. No, thanks. In regards to ESI, whether preferred or non-preferred, in terms of access whether you are listed preferred or non-preferred, the key criteria is you have to have tried and failed on an artificial tear for all of the branded products here. So, as you mentioned in the last part of your question, the out-of-pocket is a difference between the Tier 3 and a Tier 2. And pretty appropriate patients, commercial patients, we definitely buy down that out-of-pocket to be very competitive with the leading branded product out there. So, we feel our 26 million lives that are covered are on a level playing field with regard to the leaders out there. And that – those are the majority of the larger plans within ESI, but we will continue to work with signing on some of the downstream plans that ESI covers – sorry, that Ascent covers as well and through ESI. So, the tiering for us is not a disadvantage. We feel we are going to be very competitive with the two major brand leaders out there.
Chris Neyor
Great. That’s helpful. And then you kind of touched on the refill rates and also maybe you could just discuss your confidence in being able to hit that commercial coverage for CVS Caremark and UnitedHealth by the middle of this year. And then aside from maybe overall script trends, any other KPIs that we should be watching for the launch in the coming weeks and quarters?
John Snisarenko
Yes. No, Chris. In regards to the refill rates, we have been very pleased with the kind of 60%, 65% rate of refills we have been seeing. We feel that based on the product profile as well as the services we offer to make sure that both the prescriber base as well as the patients are supported through the clinical experience with TYRVAYA. In regards to some of the other PBMs, we are in the middle of negotiations with them. We are still on track to have coverage determinations by midyear. And we are ready to negotiate whether they are going to be managing the generic space or not. We are – we feel we are going to be very, very competitive to be able to get TYRVAYA listed and get the majority of those commercial lives covered by midyear of ‘22.
Chris Neyor
Prefect. Appreciate the questions.
Operator
Thank you. And I am currently showing no further questions at this time. I would like to hand the conference back over to Dr. Nau for any closing comments.
Jeffrey Nau
Thank you, operator, and thanks to everyone for joining the call with us today. As I mentioned in my opening remarks, we are extremely pleased to announce that TYRVAYA nasal spray, indicated for the treatment of the signs and symptoms of dry eye disease, is currently in its first full quarter of launch for patients and eye care providers in the U.S. We are extremely excited for the potential of significant growth that remains ahead. Our vision and focus on bringing innovative and transformative ophthalmic disease treatments to patients and building Oyster Point Pharma into a best-in-class eye care company remains our primary goal as a company. In closing, I want to thank everybody for joining us tonight and to have a great evening.
Operator
Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.
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