LENZ Therapeutics, Inc. (LENZ) Earnings Call Transcript

Thank you. Second Quarter 2026 Financial Results Conference Call At this time, all participants are nearly in only mode. Following prepared remarks from management, we will conduct a question and answer session and instructions will follow at that time. As a reminder, this call is being recorded. At this time, I would like to turn the call over to Dan Chevalard, Chief Financial Officer. Please go ahead.

Thank you. Good afternoon and thank you for joining us today. My name is Dan Shovelard, Chief Financial Officer of Lens Therapeutics. We are joined today by Abe Skivel-Pennick, our President and Chief Executive Officer, Sean Olson, our Chief Commercial Officer, and Dr. Mark Odrich, our Chief Medical Officer. Before we begin, I would like to remind you that this call will contain forward-looking statements regarding LENZ's future expectations, plans, prospects, corporate strategy, regulatory and commercial plans and expectations, cash runway projections, and performance. Actual results may differ materially from those indicated by these full-of-lifely statements as a result of various important factors and risks, including those discussed in our filings with the Security and Exchange Commission and which can also be found on our website. In addition, any forward-looking statements represent only our views as of the date of this webcast and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligations to update such statements. The company encourages you to consult the risk factors contained in our SEC filings for additional detail, including our second quarter 2026 Form 10-Q, which is being filed today.

With that, I will now turn the call over to Abe. Thank you, Dan. Good afternoon, everyone. We announced several boards into the launch have a clear view of how adoption is developing. Today, I want to share the progress we're seeing for the latest data that's coming up and how those insights are shaping our priorities for the second half of the year. Q2 reflected continued, though modest, growth. Encouragingly, in July, as we launched Telehealth and expanded our existing diet and reading glasses campaign on national TV, we saw a significant increase in new patient stats and over 45% growth in month-over-month total prescriptions. We recognize that one month does not establish a trend, but these early results are consistent with the direction we hope to see. We have consistently said that the second half of the year will provide our first opportunity to assess and discuss patient persistence. several quarters into launch we have sufficient data to begin doing that what we're seeing is encouraging Since launch, more than 60% of e-pharmacy patients who have purchased FIS have purchased more than one monthly pack. as part of their initial order or through a subsequent purchase. It's important to note that the e-pharmacy is a dominant sales channel and the channel where we have access to detailed patient-level data. And looking at the more mature quarterly patient cohorts within that 60% provides a promising view of repeat purchasing and refill behavior. Among patients who first purchased this in Q4 2025 and Q1 2026 are first two causes of the launch. Purchasing behavior is tracking towards an average analyzed purchase rate of five monthly packs. And our Q2 cohort is showing a very similar pattern, though it's not yet mature enough for the same analysis. These are important proof points. Persistence is essential to building a durable patient base, and the behavior we're seeing reinforces our confidence that patients who experience the benefit of this are choosing to continue using it. It also reinforces the commercial objective in front of us. We need to continue bringing more new patients into the category and making it easier for them to move from awareness to evaluation to treatment and ultimately to continued use. That focus has shaped our work since the last call. We have concentrated on broadening consumer awareness, making this easier to introduce during routine patient conversations, ensuring patients are well-educated, and simplifying the path from initial interest to treatment. Our most recent initiatives were designed around those priorities, mental health gives consumers a convenient path to evaluation by an independent, licensed eye care professional and, if appropriate, a prescription of home delivery. Expanding our existing campaign to national TV allows us to reach a broader group of consumers with a clear message about an alternative to reading glasses. Together, these initiatives create a more direct connection between consumer interests, clinical evaluation, and access to treatment. While the July data are entirely encouraging, our focus now is on translating these signals into sustained growth. Our investments to date have helped establish this, so broad awareness on human recipes, Expand consumer demand generation and put more convenient access pathways in place. We'll use Q3 to further understand which activities are producing the greatest impact and where we can make the patient journey even simpler. And as we assess the performance of our commercial initiatives, use those learnings to inform both the mix and the level of investment for the next phase of the launch. Going forward, we will need even more discipline in how we allocate capital, concentrating resources on the activities we believe have the greatest potential to drive durable patient growth, and aligning our overall commercial investment with the skill and needs of the business, In parallel, we continue to make progress, expanding this globally. Our partnerships now span more than 20 countries across Great China, Southeast Asia, Canada, the Middle East, and Oceania. During the quarter, we entered into our fifth international commercial partnership covering Australia and New Zealand. We also have nine regulatory submissions on the review with additional submissions expected by year end. Together, these efforts are establishing the foundation for this as a global brand. In conclusion, as we enter the second half of the year, we have a clear picture of how this opportunity can build. Patient persistence reflected in both multi-fact purchasing and the refill patterns emerging on more mature cohorts provides meaningful evidence that patients who experience this see lasting value and choose to continue using it. July provided an encouraging early indication that our actions to broaden consumer awareness and simplify access are beginning to translate into stronger new patient activity. We clearly understand our path forward. Build on these signals, stay focused on execution, and invest with disciplined, biomechanical activities that drive durable growth. remain confident in the value this delivers and in the significant unmet need it addresses. Our job now is to translate that value into sustained patient growth with urgency and With that, I'll hand it over to Sean, who will provide more detail on our commercial execution.

Thank you, Abe. Good afternoon, everyone. Building on Ace comments, I'd like to spend a few minutes on our commercial strategy and the actions we're taking to support the next phase of launch. First, First, I want to reinforce what we believe is one of the most important indicators we've seen since launch, our early refill trends. While we're still in the early stages of commercialization, the persistence we're observing gives us a product foundation to build upon as we continue to focus on driving new patient starts. With that foundation in place, our focus is squarely on expanding awareness and ease of access for new patient starts. In July, we began our national TV advertising campaign to broaden patient awareness, and we partnered with our e-pharmacy provider to launch a telehealth prescribing option to ease patient access. As we evaluated the patient journey to access Viz, it became increasingly clear that the journey is more involved than most consumer products. a patient may first see an advertisement, decide to learn more, schedule an appointment, be evaluated by an eye care professional, receive a sample, and then ultimately decide whether to begin prescription therapy. At each step along that journey, there's an opportunity for patients to delay or discontinue the process. Our objective has been to simplify that experience wherever possible while maintaining an appropriate standard of clinical care. That is why I believe our telehealth initiative is an important strategic addition to our commercial model. The telehealth channel provides interested consumers a convenient pathway to be evaluated by an independent, licensed eye care professional at the moment of product interest. Let's take a moment to map out the patient journey to biz through the Telehealth channel. For example, a patient is watching TV and sees a commercial promoting Viz, and then visits Viz.com to learn more. After exploring the site, they see real patient videos and now have decided they want to try Viz and click on the Order Viz Now button. This brings them to our telehealth partners website where they start the telehealth process. Now, as I walk you through this telehealth process, there are two key components. One, the medical screener for telehealth eligibility, which was developed by ECPs, and two, the subsequent telehealth evaluation also performed by independent ECPs. So, continuing that journey, once on the telehealth site, the patient fills out a survey on their current vision symptoms and medical history, which will confirm their potential eligibility for VIZ through telehealth. This eligibility must be met to proceed with the telehealth assessments. In the case they are eligible to proceed, they are then evaluated by independent, licensed eye care professionals to determine whether this is an appropriate treatment option. If approved, their prescription is sent to the e-pharmacy partner and visits ship directly to the patient's home. We launched this initiative concurrently with our national television campaign, which is is intended to expand consumer awareness and ultimately drive adoption of this. Together, these initiatives are designed to create a more seamless path from consumer awareness to treatment initiation. While still early, we have been encouraged by the initial level of consumer engagement, which we believe is reflected in the increase in new patient starts we observed during July. At the same time, our understanding of the eye care professional channel continues to evolve. As we shared on our previous call, aided awareness of this among eye care professionals remains in the high 90% range. So unaided awareness exceeds 80%. Those metrics tell us that VIZ is well recognized within the agri-community as a treatment option for presbyopia. we believe we have successfully achieved our primary awareness objectives with ECT. However, ECP awareness alone has not consistently translated into recurring prescribing behavior. Well, over 13,000 physicians have prescribed this, and over 75% of them have prescribed multiple times. see the VIZ discussion is often being consumer initiated. As a result, we have increasingly focused our commercial investment on stimulating consumer demand, with the expectation that informed patients requesting VIZ by name will serve as an important catalyst for future continued prescription growth. Overall, we are encouraged by our recent progress, the combination of positive early patient persistence, expanded access through telehealth, and growing consumer awareness provides a foundation for the next phase of VISA's commercial growth.

With that, I'll turn the call over to Dan to review our financial results. Thank you, Sean. As both Ace and Sean had discussed, we have kicked off the second half of 2026 with the July launch of telehealth and our nationwide TV advertising campaign. These strategic initiatives were purposely designed to drive broad consumer awareness and address the key hurdles to product access by providing consumers with a safe and convenient way to be evaluated by an independent, licensed eye care professional online and directly integrated into our e-pharmacy fulfillment for home delivery. As has been mentioned, we are encouraged by the change in our recent script trends, suggesting an over 45% increase in July scripts compared to June. Reflecting on Q2, we recorded total revenues of $5.5 million, including over $1.7 million in product revenue on approximately 27,000 monthly packs sold, a 9% increase over Q1, and $3.8 million in license revenue from our ex-US global partnership agreements. Q2 license revenue included the first regulatory milestone payment under our license agreement with TEA upon submission of its new drug submission to Health Canada, in addition to the first sublicense milestone payment in conjunction with the asset purchase agreement between Everest Medicine and Cork Cell for the rights to these in Greater China. I will provide a further update on our global commercialization efforts for Biz in a moment. Turning down operating expenses are cost of sales on second quarter product revenue totaled And we continue to anticipate VIZ to trend to an approximately 90% direct product gross margin over time. Total SG&A expenses decreased to $39.4 million in the second quarter, or approximately $34.9 million adjusted to exclude non-cash stock-based compensation. On an adjusted basis, this was a 14% quarter-over-quarter decline from Q1, which was in line with our expectations given our Q1 DTC launch investment. Consistent with prior quarters, approximately 80% of our SG&A was driven by sales and marketing, with the remaining representing general and administrative expenses. Total research and development expenses remain zero in the second quarter of 2026, consistent with recent prior quarters. Our Q2 net loss per share, both basic and diluted, was $1.02 per share in the quarter on a net loss of $31.9 million. And we ended the second quarter with approximately $220 million in cash, cash equivalents, and marketable securities. Looking ahead, we will be deliberate in our capital allocation, directing our investments towards the initiatives with the greatest potential to drive new patient adoption. We believe this disciplined approach positions us to build a durable, consumer-driven franchise while maintaining a strong financial foundation. Before I hand the call back over to Abe, I wanted to take a moment to provide an update on our global licensing and commercialization efforts. As we've discussed on previous calls, we see this as a global product. And with a worldwide population of over 1.8 billion adults with presbyopia, we view the opportunity to expand our commercial footprint as an important and promising one. In Q2, we signed a commercialization agreement with Aerotex Pharmaceuticals, a leading Australian pharmaceutical company and Australia's largest supplier of medicines by prescription volume. This is our fifth ex-US commercialization partnership for VIZ, which now, including Oceana, spans Greater China, Southeast Asia, Canada, and the Middle East region. We currently have nine regulatory submissions under review, and we anticipate multiple additional submissions and potential ex-U.S. regulatory approvals by the end of this year. We remain focused on further expanding our global network in additional strategic geographies, and we look forward to reporting additional progress in the months and the quarters ahead.

With that, I'll turn the call back over. Thanks, Ben. To Klops, I'm proud of the LAMS team and the work behind the progress we discussed today. We now have meaningful evidence that patients who experience this see value and choose to continue using it. We've also been glad to see encouraging new patient activity as we broaden awareness and simplify access. Our priorities for the second half are clear. We'll build on these signals, stay focused on sustained patient growth, and align our investments with the initiatives producing the strongest results. Remain confident in the opportunity you have missed and committed to pursuing it with urgency and discipline. And with that, I'd like to open the call for questions.

We will now begin the question and answer session. To ask the question, you will need to press star then the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Stacy Kuh with T.D. Cowen. Your line is open.

Hey, good afternoon, guys, and thanks so much for taking our questions. So we have a couple. First is on the refill dynamics. We're appreciative of you giving us this level of detail, but maybe put it in the context of other presbyopia eye drops. products, what strategies is the team employing to keep these patients? So that's the first. And second, if you think about the telehealth launch, maybe speak to the level of comfort around business safety profile. And then last, I know it's still early days, but when would you expect to see nationwide TV advertising drive prescription growth? And as a reminder, just help us understand where you're prioritizing investment when it comes to commercial strategies that are working. Thanks so much.

Great. Thank you, Stacy. This is Sean. So, first on the refill dynamics, as well as the strategies we're taking to make sure that we continue to see those strong refill dynamics. So when you think of the refill dynamics, what we focused on is our e-pharmacy channel, because that's where we can see that patient-level data. And we also look at the cohorts that are the most mature. So that would be people that bought for the first time in Q4 of 25 and Q1 in 2026. And what's great about that is that we have a lot of people that bought for the first time in Q4 of 25 and Q1 in 2026. to see is of those cohorts, you know, 60% of those e-pharmacy patients have purchased more than one monthly PATH. So that includes patients who purchased multiple PATHs on their initial order, as well as patients who returned for subsequent purchases. The other thing that's important to understand is we focus on the ePharmacy channel not because we can see the data at the patient level, but it's also our dominant sales channel as well. What's great when we're looking at this data is if we look at that Q4 cohort, we're seeing on average they've now already purchased slightly more than five packs and they haven't come up on a year yet. That Q1 cohort is trending to five as well. The Q2 cohort, not yet mature enough, but we're still seeing that similar early pattern, which is grace. Now, when we think of our product, this was really important because it means we have a presbyopia product out there that works and people want to continue to refill. Obviously some of their early launches in this space. Now they're able to get early uptake, but that refill wasn't there. This we feel really speaks to the durability of our product. In terms of the strategy that we're employing to make sure that we continue to see high refill rates, I think the number one thing you really need is an eye drop that works. And we're excited that we have an eye drop that works for 10 hours. In addition to that, You know, the e-pharmacy channel allows that option to buy three months at a time at a discounted rate. And then as we've launched this telehealth channel, that also enables the opportunity to buy three months at a time, enter into an auto-renew cycle. AND YOU GET LONG DURATION AT A DISCOUNTED RATE. SO THAT'S WHAT'S GOING ON WITH THE REFILL DYNAMICS. In terms of telehealth and comfort and safety, what's great about the telehealth channel IS THAT WE HAVE GREAT SAVEGUARDS IS THAT WE HAVE GREAT SAVEGUARDS IS THAT WE HAVE GREAT SAVEGUARDS AROUND THAT CHANNEL IN GENERAL. Cell health patients are screened for corrobreness by fully licensed eye care physicians, they have to have no history of retinal complications and be an appropriate canter vis and have a recent retinal exam within the past 24 months. And then after that, still an independent eye care physician evaluates that patient history and suitability prior to prescribing this, or if they feel it's necessary, they'll actually recommend a visit to a doctor in person if they don't qualify for telehealth. IN TERMS OF THE TV CHANNEL, SO OUR TV CAMPAIGN, THAT WENT LIVE JULY 6TH. We're already seeing lists from that national TV campaign, which is great to see. And we'll expect to continue that on because of that list we've seen. We've seen it in the access to the telehealth channel because that is what announced telehealth, but we also see the list in the other channels as well.

But to other minor questions or questions in there, Stacey, I have to answer those. How do we compare against other presbyopia drops? Frankly, we don't see a lot of traction with the current ones on market. And you compare us to view the, interestingly, we're not actually selling more on a weekly or monthly basis than beauty. And importantly, if you compare the beauty retail rates at that peak, it was about 10, 12%. We're tracking at that's 42% of those people that refill that become users of this that we've always spoke about. We're very pleased to see that. And then the last question, how do we expect to adapt? Like I mentioned in my remarks, the commercial investments that we've made so far have been appropriate. It really helps establish this, build broad brand awareness, among CCPs to expanded consumer demand generation. And with the telehealth, we now have numerous access pathways in place. what we're doing now is we're move through Q3, really assessing the performance of each of those initiatives, the data that allows to continue to adapt both the mix as well as the level of investment that we feel we need for this next phase in the launch. And obviously concentrating resources where we believe we have the greatest potential to drive durable growth. All of that is big is. based on obviously the confidence we have in the value and the opportunity of this, while also remaining very disciplined in how we allocate capital as a company.

Incredibly helpful. Thank you. Your next question comes from the line of Yigal Nikomovitz with Citi. Your line is open.

Hey guys, great. Thank you for taking the questions. I also have a few here. So just first off, could you just remind us, you said I know that e-pharmacy is the majority of the revenue base, but if you could quantify or just give a little more direction on that comment. And then with regard to the retail, so obviously you have the visibility in the e-pharmacy, but in retail, I guess, are you saying that you just don't have the data, so therefore you can't track the refill dynamics and the, the persistence or is there a different conclusion as far as the persistence in the retail side of the business? And then if you could just comment a little bit on the discipline spend, where are you going to invest more or where are you going to decelerate versus accelerate? Thank you.