LENZ Therapeutics, Inc. Common Stock 2026 Q3 Earnings Call

Good morning, and thank you for joining us today. My name is Dan Chevallard, Chief Financial Officer of LENZ Therapeutics. We are joined today by Afschin Skjalm Paddock, our President and Chief Executive Officer, Shawn Olsson, our Chief Commercial Officer, and Dr. Marc 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 forward-looking statements as a result of various important factors and risks, including those discussed in our filings with the SEC, 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. With that, I'll now turn the call over to Afschin.

Thank you, Dan. Good morning, everyone. Today's results mark an important step forward for LENZ and VIZZ. In the third quarter, we saw more than 50% growth in both product revenue and total prescriptions, with strong momentum continuing into the fourth quarter. On October 1st, we marked the one-year anniversary of the VIZZ launch. Over the past year, we've built important foundations, gained valuable insights into what drives adoptions, and importantly, drove encouraging momentum from our consumer-focused initiatives. This last quarter, we continued to see that consumer demand generation is a key driver of growth. Expanding our Tired of Reading Glasses to national TV enabled us to reach a broader group of consumers with a clear message around an alternative to reading glasses.

Our newly established telehealth channel also gives interested consumers a convenient path to evaluation by an independent licensed eye care professional and, when appropriate, a prescription with home delivery. Together, these initiatives have helped establish a more seamless path from awareness to evaluation, treatment, and continued use. As I mentioned, the results were more than 50% growth in product revenue and total prescriptions in the third quarter, with strong momentum carrying into the early weeks of Q4. We have built a strong foundation with eye care professionals. VIZZ awareness now exceeds 90%, with more than 15,000 prescribing ECPs. At the same time, our launch experience has shown that physician awareness alone is not sufficient to drive adoption at the pace we want. The strongest growth response has come when consumer demand generation is paired with convenient access.

All of this is giving us greater clarity on the commercial model best positioned to support durable growth in this category. Based on what we have learned, we announced a strategic reorganization designed to align LENZ with this consumer-led commercial model. Going forward, consumer marketing will be the emphasis of our U.S. commercial strategy, with a much smaller and more focused sales and medical team maintaining important KOL, ECP, and trade relationships. This is an evolution of our launch strategy, not a change in our commitment to LENZ. The reorganization concentrates our people and capital on the activities that are demonstrating the clearest connection to patient acquisition and sales growth. It also creates a more efficient structure for the business we are building. As part of this transition, we expect our organization to move to approximately 40 employees, and we expect overall operating expense to decrease by more than 50%.

We are targeting 2027 operating expenses of approximately $70 million-$75 million, with more than 70% of our projected spend allocated to our consumer-driven sales and marketing strategy. We strongly believe this focused model gives VIZZ the opportunity to reach more patients, expanding this emerging category and building a durable business. With that, I will hand it over to Shawn, who will provide more detail on our commercial execution.

Thank you, Afschin. As mentioned, we are one year into launch and have had measurable progress in three key areas: eye care professionals, consumers, and access. With ECPs, we have driven awareness of VIZZ to above 90%, achieved more than 15,000 prescribing ECPs, and over 75% of them have prescribed more than once. With consumers, we've launched our national campaign and have continued to optimize ad placement to support VIZZ's continued growth. On access, VIZZ is operating well and growing in all channels. VIZZ is now available through retail pharmacies, the ePharmacy, and since July, telehealth, giving patients several ways to access VIZZ. This broader campaign and the additional telehealth channel have been the key drivers of the 50% quarter-over-quarter TRx growth in Q3. Impressively, we have done that with Q3 working media spend broadly in line with Q2.

Looking at the performance of VIZZ, the presbyopia eye drop category is still in its infancy. We are focused on growing this market, and it is clear that VIZZ is the leader in this developing category. Since approval and launch through Q3, we have distributed more than 4 million vials, including samples and commercial products, and sold approximately 110,000 packs. This makes VIZZ the number one selling presbyopia eye drop in the U.S. since its approval. Furthermore, based on the 2026 TRx data from Symphony, VIZZ has 94% market share in the U.S. Building a new category takes time and therefore a disciplined allocation of commercial resources. The more than 50% growth in Q3 showed us what the consumer campaign can do, and that is where we will concentrate our efforts.

Consumer marketing will take the lead in our commercial strategy and receive a larger share of our commercial investment, including continued national television and digital advertising on the channels that deliver the strongest return. As we look towards our year two commercial focus for ECPs, our foundational awareness of VIZZ is built, and we are moving from one-on-one detailing to broad ECP engagement through marketing, supported by a small team focused on key opinion leaders, speakers, national and state level support. This keeps VIZZ top of mind in the eye care community while allowing us to direct more resources towards consumer demand, which will be our primary focus. We believe this is the right commercial model for durable growth. With that, I will turn the call back over to Af.

Thank you, Shawn. Before handing the call over to Dan to discuss our financial results and outlook, I also want to address the leadership transition we announced. After nearly six years leading LENZ and more than 25 years in biotech, I have decided to transition from my role as President and CEO, effective December 1st, 2026, to be able to devote more time to other passions. This is a deeply personal decision, and it comes at a point when I feel confident in the direction of the company. We have built an important foundation for VIZZ, and we have greater clarity on the commercial model ahead, and we are aligning the organization around the opportunity in front of us. Dan and I will work closely together through December 1st to implement the reorganization, ensure continuity, and position him for success as Interim Chief Executive Officer.

I have full confidence in Dan's ability to lead LENZ through its next phase. He knows the business inside out and has been closely involved in building the foundation for our commercial growth. Together with Shawn, Marc, and the full leadership team, he is well prepared to lead LENZ through its next phase, and I look forward to continuing to support him, the team, and the board as a strategic advisor. I am very grateful to the LENZ team, our past and present employees, and our board of directors for their support throughout this journey. I am proud of what we have accomplished together, encouraged by the momentum we are seeing, and confident in LENZ's future. With that, I would like to hand the call over to Dan.

Thank you, Af. I would like to start by saying thank you for all of your contributions to LENZ, and I look forward to your continued guidance as we work through your transition. Your leadership has left a lasting mark on LENZ, on me, and the team we have built together. I am humbled by the confidence placed in me by Af and the board of directors to step into this role. I am encouraged by our momentum. Our priorities are clear, and we are focused on executing in this next phase at LENZ. As both Af and Shawn have discussed, early results from the July launch of telehealth and our nationwide TV advertising campaign have been encouraging, as evidenced by a sequential increase of over 50% in product revenue in Q3 over Q2, with meaningful script growth observed across distribution channels.

Impressively, our telehealth channel contributed more than 50% of the incremental scripts this quarter. Reflecting on Q3, we recorded total product revenues of $2.6 million, driven by over 38,000 paid scripts, representing a 50% and 51% sequential increase over Q2, respectively, and maintaining our consistently strong gross to net ratio of approximately 93%. In addition, we recorded $800,000 in license revenue related to the recognition of a portion of the upfront payment received from our commercialization agreement with Arrotex Pharmaceuticals signed in late Q2. I will provide a further update on our global commercialization efforts for VIZZ in a moment. Turning now to operating expenses, our cost of sales on third quarter product revenue totaled $0.5 million, and we continue to anticipate VIZZ to trend to an approximately 90% product gross margin over time.