Prepared remarks
Hello, everyone, and welcome to the Outlook Therapeutics Third Quarter Fiscal Year 2026 Corporate Update Conference Call and Webcast. Note that this webcast is being recorded, and a replay will be made available on the company's website following the end of the event. At this time, I'd like to remind our listeners that remarks made during this webcast may state management's intentions, beliefs, expectations, plans or future projections. These are forward-looking statements and involve risks and uncertainties. As a result, you should not place undue reliance on any forward-looking statements. Some of the factors that could cause actual results to differ materially from those contemplated by such forward-looking statements are discussed in the periodic reports Outlook Therapeutics files with the Securities and Exchange Commission. These documents are available in the Investors section of the company's website and on the Securities and Exchange Commission's website. We encourage you to review these documents carefully. Additionally, certain information contained in the webcast relates to or is based on studies, publications, surveys and other data obtained from third-party sources and the company's own estimates and research. While the adequacy, fairness and accuracy of the completeness of or that any independent source has verified any information obtained from the third-party sources. Joining us on today's call from the Outlook Therapeutics leadership team are Bob Jahr, President and Chief Executive Officer; and Lawrence Kenyon, Executive Vice President and Chief Financial Officer. I would now like to turn the call over to Bob Jahr, President and Chief Executive Officer. Please proceed.
Thank you, operator, and good morning, everyone. We are entering a defining new chapter for Outlook Therapeutics. Only three weeks ago, the FDA approved LYTENAVA as the only FDA-approved ophthalmic formulation of bevacizumab for the treatment of wet AMD in the United States. Securing FDA approval is a transformational achievement for Outlook Therapeutics and an important development for the U.S. retina community. It significantly expands the commercial opportunity before us and positions the company to bring LYTENAVA to the world's largest retina market. For over 20 years, bevacizumab has played a central role in the treatment of retinal disease. Retina specialists know the molecule, have extensive experience using it and continue to rely on repackaged off-label bevacizumab across millions of injections annually. Until now, however, physicians in the United States did not have access to an ophthalmic formulation of bevacizumab that adheres to FDA standards from manufacturing to the practice and is developed specifically for administration in the eye. We are now changing that with the approval of LYTENAVA. We are not introducing an unfamiliar molecule or asking physicians to rethink the important role bevacizumab plays in retina care. We are providing an improved version of a treatment they have relied upon for years. Reaching this point required tremendous persistence and an extraordinary amount of work across our organization. The path to approval was not a straight line. We faced many challenges along the way. Each time our team responded, completed the necessary work and remained focused on our goal. This achievement belongs to everyone who helped to make it possible. I want to begin by thanking our employees. Many have dedicated years to this program and continued moving it forward through periods of uncertainty. Their expertise, resilience and commitment to the retina community are the reasons we are here today. I also want to thank the clinical investigators, retina physicians, study coordinators and clinical sites that participated in our development programs. Their expertise and partnership were essential throughout this journey. And a thank you to the retina community for their support and guidance as we navigated the regulatory process. Most importantly, I want to thank the patients who participated in our clinical trials, along with their families and caregivers. Clinical research cannot advance without people willing to participate, and their contributions made the approval of LYTENAVA possible. We should take a moment to recognize what has been accomplished. Securing FDA approval for a new biologic is an exceptional achievement, and everyone associated with Outlook Therapeutics should be proud of the role they play. At the same time, we should recognize that this is only the beginning of realizing our U.S. commercial opportunity. Our responsibility now is to convert this achievement into a successful and sustainable commercial launch. That will require the same determination and disciplined execution that brought us to this point. We have an FDA-approved product, a clearly defined market opportunity and a molecule that is already deeply established in retina practice. Our focus is now on building the commercial foundation required to bring LYTENAVA to physicians and patients across the U.S. The commercial opportunity for LYTENAVA begins with the size and established nature of the U.S. retina market. The total U.S. anti-VEGF retina market is estimated at approximately $8.5 billion annually. Within that market, it is estimated that there are approximately 3.6 million injections of off-label repackaged bevacizumab across retinal indications in 2025. That includes approximately 2.2 million injections associated with wet AMD. These figures demonstrate two important points. First, bevacizumab already occupies a meaningful position within everyday operations at retina practices. Second, the market has established a clear need for affordable bevacizumab treatment options. We believe this reinforces both the size and vitality of the retina market, and we believe that physicians will consider new therapies when those products offer a clear clinical, practical or economic role within their practices. LYTENAVA enters this market with a clear differentiated proposition. Biosimilars are designed to compete with their respective branded reference products. LYTENAVA addresses a different and already established area of retina care: the widespread use of repackaged off-label bevacizumab. This distinction matters. LYTENAVA is not simply another entrant within the existing branded category. It is the only FDA-approved ophthalmic formulation of bevacizumab, a molecule that retina specialists and patients already know and use extensively. Our opportunity is to provide physicians with a new treatment option that combines the familiarity of bevacizumab with the standards, oversight and product consistency associated with an FDA-approved medicine. We also recognize that treatment decisions in retina are not driven by a single factor. Decisions consider efficacy, safety, durability, patient characteristics, reimbursement, acquisition economics and physician expertise. We are, therefore, not building our strategy around the assumption that one product will replace every other option. The anti-VEGF market is large enough to support multiple therapies serving different patient and practice needs. Branded innovation will remain important. Biosimilars will provide additional choices. Our goal is to establish LYTENAVA as an important FDA-approved option within that evolving treatment landscape. Based on our market research and customer segmentation and analysis of current bevacizumab utilization, we believe LYTENAVA has the potential to generate more than $500 million in peak annual sales by 2030. That is our base case objective, not an assumption of immediate or universal adoption, and importantly assumes that repackaged bevacizumab will remain in the market. Achieving this target will require strong execution, expanding partnerships with payers, appropriate access and reimbursement, reliable commercial supply and sustained engagement with retina practices. It will also require us to listen carefully to the market and adapt as conditions evolve. We believe the opportunity is substantial, and we are approaching it with both confidence and discipline. Our immediate priority is building the infrastructure required for a successful U.S. launch. The retina market is highly concentrated, which allows us to pursue a focused commercial model. A relatively defined group of retina specialists and high-volume practices account for a meaningful share of injections. That concentration creates an efficient opportunity, but it also means our execution must be precise. We have completed extensive customer segmentation and market analysis to identify practices currently dissatisfied with current compounded repackaged bevacizumab and practices with significant current bevacizumab utilization to understand the characteristics of potential early adopters and prioritize our field engagement. Following approval, we have been refreshing that work using the latest market information, including the evolving biosimilar environment. Our commercial strategy is built around the realities of the retina practice. These are physician-administered products operating within a buy-and-bill model. Successful adoption depends on more than physician awareness. Practices need clarity around reimbursement, product acquisition, coding, inventory and patient access. That is why market access and reimbursement capabilities are central to our launch strategy. We are advancing payer engagement and preparing the infrastructure necessary to support coverage decisions. We are also planning for the submission of an application for a permanent HCPCS code by the end of the third quarter and anticipating a permanent J-code in April of next year. Commercial supply is another critical priority. We already have sufficient supply to support the launch later this year and are scaling the process required to provide a reliable commercial supply of LYTENAVA and coordinate product availability with our planned launch sequence. Reliability and consistency matter enormously to retina practices where treatment scheduling, inventory management and reimbursement are closely interconnected. We will continue to refine the timing and pace of our launch based on payer engagement, supply readiness, customer feedback and the completion of key commercial capabilities. Our approach is designed to support a measured, high-quality entry into the market and create a foundation that can scale as adoption grows. As we build that commercial foundation, we are equally focused on the strength of the clinical story we will bring to retina specialists. We are very pleased with the strong label approved for LYTENAVA. Importantly, the label is grounded in NORSE TWO, our adequate and well-controlled registrational trial, and clearly reflects the statistical significance and clinically meaningful improvement in visual acuity demonstrated in the study. In NORSE TWO, 41.7% of patients treated with LYTENAVA gained at least 15 letters at month 11 compared to 23.1% of patients treated with ranibizumab. These data will serve as a foundation of our marketing efforts and our engagement with retina specialists. We believe the strength of NORSE TWO results, together with LYTENAVA's position as the only FDA-approved ophthalmic formulation of bevacizumab for wet AMD, provides a clear and compelling clinical story. As we prepare to bring LYTENAVA to the U.S. market, we have taken a thoughtful and research-driven approach to pricing. Our objective is to support broad access while balancing the needs of patients, retina practices and payers. Patient affordability has been at the forefront of this work. We have carefully considered potential out-of-pocket costs and the financial barriers that can affect whether patients are able to begin and remain on treatment. We have also considered the operational realities of retina practices because LYTENAVA will be administered within a physician-directed buy-and-bill environment; practices need a clear and workable path for product access and reimbursement. Importantly, our strategy has been informed by extensive research across the full range of stakeholders, including payers, providers and patients. This has helped us better understand access expectations, potential barriers and the factors likely to influence adoption. The anti-VEGF market is changing, including the growing availability of biosimilars and an increasing focus on value. We have taken that evolving environment into account without losing sight of LYTENAVA's differentiated position as the only FDA-approved ophthalmic formulation of bevacizumab for wet AMD. Ultimately, our goal is to establish a pricing and reimbursement approach that supports patient affordability, broad payer access and practical adoption within retina practices. We believe this thoughtful approach will be important as we prepare for launch and work to make LYTENAVA available to the physicians and patients who may benefit from it. To that end, we expect the WAC price for LYTENAVA to fall below $500 per vial. Our target is to be competitive with biosimilars and other anti-VEGF therapies while appropriately reflecting LYTENAVA's differentiated profile. A central part of that preparation is building a commercial organization designed specifically for the retina market. We currently plan to hire approximately 30 customer-facing commercial personnel who will be focused on engaging retina specialists and practices across the U.S. These individuals will be responsible for building awareness of LYTENAVA, educating customers on its approved profile and supporting practices as they evaluate where the product may fit within their treatment approach. We also plan to hire approximately 20 field reimbursement personnel. This team will help practices understand access and reimbursement processes, navigate coverage requirements, provide clear insight into the impact of patient affordability and address operational questions associated with adopting a newly approved physician-administered product. We are intentionally placing support alongside customer engagement because we understand that clinical interest alone does not produce commercial adoption. Practices must be able to access, purchase and receive appropriate reimbursement for the product. In parallel, we are expanding our medical affairs organization. Medical affairs will lead scientific exchange, respond to medical information requests and support appropriate use in advanced evidence generation initiatives. Over time, we expect real-world evidence to become an increasingly important part of the LYTENAVA story. We want to understand how the product is being used, which patients and physicians are selecting it and how it's performing in routine clinical practice. Across each of these functions, we are recruiting people with relevant expertise in retina, specialty launch commercialization, reimbursement and buy-and-bill markets. We are also being disciplined in how we build. Our objective is not to create the largest organization. It is to create the right organization for the opportunity in front of us. We plan to align investment with our launch sequence, prioritize accounts where we believe adoption is most likely and expand our capabilities as the market develops. The remainder of 2026 will be a period of commercial preparation, market engagement and organizational build-out. We will be listening closely to retina physicians, practice administrators, payers and other stakeholders. Their feedback will help inform our positioning, our resource allocation and the pace of our commercial expansion. As we move into 2027, we expect to be in a stronger position to begin translating that foundation into broader adoption and commercial growth upon receipt of a permanent J-code expected in April of next year. Turning to Europe, we continue to make progress with the commercialization of LYTENAVA across the region. LYTENAVA is available in Germany, Austria and the United Kingdom, where we remain focused on execution, supporting physician adoption and expanding our commercial presence. In the Netherlands, we are moving forward with our national reimbursement submission and expect to launch LYTENAVA in early 2027. The Netherlands will serve as an important regional hub for distribution, and we continue expanding our European footprint. In Switzerland, our commercial partner, Mediconsult, is advancing the required regulatory and launch preparations under our exclusive distribution agreement. Mediconsult currently expects to launch LYTENAVA in Switzerland in 2027. Together, these activities reflect the continued expansion of LYTENAVA's presence across Europe and our disciplined approach to building the product's long-term commercial opportunity. A key learning from Europe that we are applying to our U.S. launch is the importance of evidence generation, preparing physicians and segmenting the market for early adoption. On a side note, our launch in the U.S. is not affected by most favored nation or reference pricing. I will now turn the call over to our Chief Financial Officer, Larry Kenyon, to provide a financial update.
Thanks, Bob. For the third quarter of fiscal 2026, we reported adjusted net loss attributable to common stockholders of $10.9 million or $0.09 per basic and diluted share compared with $15.8 million or $0.44 per basic and diluted share in the third quarter of fiscal 2025. The adjusted results exclude certain noncash and nonrecurring items, primarily changes in the fair value of our warrant liability and promissory notes as well as a loss on the extinguishment of debt in the current year period. A complete reconciliation is included in today's earnings release. We would note that European revenue is improving and last quarter saw a 46% increase in unit sales as compared to the second quarter of fiscal 2026. Fourth quarter unit sales are on track to match current unit sales despite the expected summer slowdown in Europe. As of June 30, we had cash and cash equivalents of $11.2 million. Subsequent to quarter end, we announced a $55 million public offering of common stock and accompanying warrants, representing approximately $51.1 million in expected net proceeds after underwriting discounts and offering expenses that is expected to close today. We intend to use those proceeds to support our U.S. commercial launch of LYTENAVA and for other working capital and general corporate purposes. Before concluding, I'd like to provide some guidance on our expected revenue ramp and operating expenses with the upcoming planned launch of LYTENAVA in the U.S. We expect total net revenue during the first 12 months following the U.S. launch of LYTENAVA to be between $50 million and $75 million, with Europe contributing approximately 10% to 15% of that total. We anticipate a progressive launch ramp with approximately 10% of first-year net revenues generated during the first three months, moving up to approximately 50% generated during the fourth quarter following launch. We believe the acceleration in the second half of calendar year 2027 corresponds with the permanent J-code we anticipate receiving in April of next year. To support commercialization, we expect quarterly SG&A expenses to approximately double from current levels by the end of calendar 2026, followed by an additional increase of approximately 10% during calendar year 2027. We expect R&D expenses to remain relatively steady over the next 12 months as we continue advancing our prefilled syringe. With that, I will hand it back over to the operator for Q&A.
Questions and answers
The first question comes from Julian Harrison with BTIG.
Congratulations on all the recent progress. I have a few, and I think I'll ask them all at once. First, thinking about your $500 million in U.S. sales by 2030 guidance, I understand that does assume repackaged bevacizumab is still available. I'm wondering how much upside relative to your current guide you would expect if there's maybe FDA intervention on large-scale compound pharmacy operations in the future. Is that a realistic outcome to consider at some point? And then intervention aside, can you talk more about the salient features versus repackaged bevacizumab from the prescriber and payer standpoint? And finally, you mentioned early adopters identified in your prepared remarks. So I'm wondering how many of those you've identified and what fraction of current repackaged bevacizumab use you would expect those potential early adopters to represent?
Julian, thank you for the questions, and I will try to remember them and address them. First, upside. We do have upside to the $500 million forecast. Roughly, if there is any disruption in the compounded repackaged bevacizumab market or any significant change in its availability, there is roughly just under a $300 million upside to our forecast in terms of what could potentially happen. The way we've looked at it is if there is disruption, it doesn't necessarily guarantee it all comes over to LYTENAVA. It could be split between other biosimilars. But that's our conservative estimate: just under $300 million of upside if there's a disruption in the compounded market. In terms of the early adopters, our current segmentation, which we're continually refining, indicates that there is about one-third of retina physicians, so just under 800 physicians that represent just below 50% of that $500 million opportunity. These physicians tend to only use compounded or repackaged bevacizumab due to step edits required by some payers where they have to demonstrate non-effectiveness before moving to newer branded agents. They have indicated that as soon as there's an FDA-approved option and we have reimbursement, they will move to it. So that's roughly the size of the early-adopter market: around one-third of the targets and a little under half of the potential $500 million by 2030. Regarding market share assumptions, there are 2.2 million injections of repackaged bevacizumab in the market for wet AMD alone. Our forecasting indicates that between 30% and 35% of that could be captured by LYTENAVA to achieve the $500 million by 2030 target. On the payer piece, there's a little under half the market that is commercial and fee-for-service Medicare with supplemental or Medigap, and Medicare Advantage represents a little over 35%, almost 40% of the market. Many plans require a step through compounded repackaged bevacizumab or a biosimilar prior to moving to newer branded agents. So compounded bevacizumab is widely available across the payer landscape, and in over two-thirds of cases it's required to be tried before other options, which is how we're thinking about the market access dynamic.
The next question comes from Kemp Dolliver with Brookline Capital Markets.
You referenced changes in the competitive dynamics because of biosimilars. How did that impact your forecast? Because when I look at consensus expectations, I think your expectations are still higher than what's published.
Thank you for the question. We did extensive work on our forecast, particularly given shifts earlier this year while we worked with the FDA. Everything I'm sharing assumes the following: compounded repackaged bevacizumab remains in the market; all biosimilars, ranibizumab and aflibercept biosimilars, enter on time; and there is ongoing pricing pressure for all biosimilars. We also assume that potential new modalities would be approved on time and that there is no disruption in availability for repackaged bevacizumab. I believe our forecast is conservative relative to the evolving market dynamics. We also considered the impact of the Good Days Foundation, which materially affected practices and patients in the second half of 2025 and into 2026; we assume continued pressure in that regard. We included conservative assumptions around competition, and we still see potential upsides, such as a prefilled syringe in a couple of years, and the upside if there's disruption in the compounded market as I mentioned earlier. We also expect acceleration after receipt of a permanent J-code. In short, we assumed a difficult and competitive market in our model, and our estimates reflect that conservatism.
So it sounds like you're assuming that patients who are in traditional Medicare will use compounded product because it's very inexpensive. Any upside related to that is going to be in that population?
Yes. We do not expect to convert the entire compounding market. Our commercial campaign will primarily focus on wet AMD, and there will continue to be repackaged bevacizumab use outside of wet AMD. Some practices are comfortable using repackaged bevacizumab for at least the first year of treatment as they observe outcomes or trial a treat-and-extend approach. We also anticipate slower adoption from some practices until they see the permanent J-code and how payers and Medicare Advantage plans respond. Our short answer is yes: some practices will continue to use repackaged bevacizumab over time. Our goal is to enter the market, demonstrate product quality, reimbursement and the clinical experience, and then grow from there as adoption expands and the reimbursement environment evolves.
The next question comes from Douglas Tsao with H.C. Wainwright.
Bob, could you help me understand how you're thinking about the impact from the Good Days Foundation not having availability for funding? Obviously, when we think about the price that you mentioned for many patients on Medicare, you're looking at $100 out-of-pocket versus repackaged it's as low as $10 to $15. Without the Good Days Foundation, patients will need to shoulder more of the cost. What have you heard about how the lack of funding has impacted practices' use of repackaged bevacizumab?
Doug, thank you. We've followed the Good Days Foundation situation closely. There is some support going into Good Days now but not at the level it was before. A lot of foundation support tends to flow toward more expensive, longer-acting innovative competitors, and the foundation covers a broad range of ophthalmology and retina conditions rather than being limited to wet AMD. That said, reduced foundation support raises questions around patient out-of-pocket costs for both biosimilars and compounded products. If you're looking strictly at Medicare Part B with a 20% coinsurance, the math is what you described in terms of higher out-of-pocket for higher-priced products. However, our target market includes fee-for-service Medicare with supplemental Medigap, commercial insurance and Medicare Advantage, and out-of-pocket exposure varies significantly across these segments. Practices are quite sophisticated today at assessing a patient's out-of-pocket burden and navigating support options. We will work to support patient affordability within the constraints of Medicare rules and will leverage mechanisms and resources to minimize patient and practice burden. Our pricing assumptions and strategy, including the sub-$500 WAC expectation, were made with these dynamics in mind. We also believe that converting practices to a reimbursable, FDA-approved product changes practice economics because of reimbursement for a coded, physician-administered therapy, which could offset some of the incremental out-of-pocket considerations at the practice level. Ultimately, we aim to ensure that adoption does not put an undue additional burden on patients beyond what exists today.
Can you help us understand out-of-pocket relative to the biosimilar stack?
The biosimilar environment is evolving and there is a broad range of pricing. For example, some newer entrants can carry high list prices that translate to significant 20% coinsurance for Medicare patients if no supplemental coverage is present. Ranibizumab biosimilars can be lower, with some pricing in the range of the innovator product, which would result in lower out-of-pocket compared to higher-priced branded options. Our objective is to be competitive with biosimilars and other anti-VEGF therapies while emphasizing LYTENAVA's differentiated profile as an FDA-approved ophthalmic bevacizumab. Practices manage the total value of the injection procedure, product acquisition, and ancillary services to minimize patient out-of-pocket, and they use a variety of affordability tools when necessary. We will employ the same resources and approaches to support patients and practices for LYTENAVA.
The next question comes from Ed Woo with Ascendiant Capital Markets.
Congratulations on the approval. Now that you have U.S. approval, will you be accelerating your European rollout? And is there any opportunity for entering Asia?
Thank you. Yes, we are reassessing international opportunities now that we have FDA approval in addition to our EMA package. We are looking at Latin America, elements of Asia, MENA and other regions, and we have inbound interest from potential partners in several regions. Some markets may require additional bridging studies; others may be more straightforward. In Europe, we're being strategic. One lesson we've learned in Europe is that untargeted expansion can lead to downward pricing spirals and resource-consuming tenders. We will evaluate each market by opportunity, consider whether to pursue local partners with ophthalmology experience or to go it alone, and factor in our prefilled syringe timing. A broader European expansion makes more sense when we have the prefilled syringe available, which can accelerate adoption in some markets. In short, we will pursue broader regional expansion thoughtfully, including Asia and Latin America, but our immediate focus is executing where we already are in Germany, Austria, the U.K. and the Netherlands while evaluating the right partners and timing for broader launches.
We have a follow-up question from Kemp Dolliver.
Bob, could you talk more about Europe? Results this quarter continue to show limited progress there. What do you see happening that is implied in your guidance that will drive improvement?
Yes, thank you. When I joined, I prioritized a reset in Europe to align costs with realistic revenue opportunities. We've rightsized the team relative to the opportunity and are seeing demand unit growth again after a channel fill last summer. There are specific market dynamics that have created headwinds, including compounding practices in Germany, which complicates adoption because compounding is effectively the standard of care in some settings, and stability testing requirements added complexity. In hospital markets, we're seeing good adoption and reorder behavior, which is encouraging. We are focused on unlocking structural barriers rather than just adding boots on the ground. The entrance of aflibercept biosimilars also caused some pause in adoption last year as customers awaited tender outcomes. That pricing pressure has led some biosimilar companies to not commercialize in certain markets because margins were challenged. Our approach is to be strategic: enter the right markets, consider partnerships, and avoid unnecessary price erosion. We are not quitting on Europe; we are executing more thoughtfully, improving operational execution, and expanding where the economics make sense. We will continue to look for the right partners and timing to expand.
If the U.S. can be $500 million by 2030, how should we think about the opportunity in Europe in that time frame?
I would estimate Europe is likely less than one-quarter of the U.S. opportunity in that time frame, perhaps considerably less today. Acceleration in Europe could come by late 2028 or early 2029 with the prefilled syringe program, which should help adoption, but Europe will likely face persistent downward pricing pressure. We also consider the rest of the world, including other regions where there is interest, when thinking about our total international opportunity. Overall, the U.S. will remain the dominant portion of net revenue.
Thank you. At this time, I would like to turn the call back over to Bob Jahr for closing comments.
Thank you. In closing, Outlook Therapeutics is now a commercial-stage company with an FDA-approved product. We have achieved something that required years of persistence, clinical work, regulatory engagement and organizational commitment. We should take pride in that achievement, and we do. At the same time, we understand that shareholders will ultimately measure this approval by what we accomplish commercially. Our focus is now on that execution. We have a differentiated FDA-approved product, a large and established market, millions of injections already associated with the bevacizumab molecule and a targeted strategy for reaching the retina practices most likely to adopt LYTENAVA. We are building the commercial, reimbursement, medical affairs, supply capabilities and required support for this opportunity. There is significant work ahead, but for the first time, that work is focused on bringing an improved LYTENAVA to physicians and patients in the United States. That is a position this company has worked very hard to reach, and we believe it creates the foundation of an important new chapter for Outlook Therapeutics. Thank you.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.