Glaukos Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 2, 2023

There are 14 speakers on the call.

Operator

Welcome to Glaukos Corporation's 2nd Quarter 2023 Financial Results Conference Call. Copies of the company's press release and quarterly summary document, both issued after the market closed today, are available at www.glaukos.com. After the speakers' remarks, there will be a question and answer session. This call is being recorded and an archived replay will be available online in the Investor Relations section at www.glaukos.com. I will now turn the call over to Chris Lewis, Vice President of Investor Relations and Corporate Affairs.

Speaker 1

Thank you and good afternoon. Joining me today are Glaco's Chairman and CEO, Tom Burns President and COO, Joe Gilliam and CFO, Alex Thurman. Similar to prior quarters, the company has posted a document on its Investor Relations website under the Financials and Filings Quarter Results section titled Quarterly Summary. This document is designed to provide the investment community with a summarized and easily accessible reference document that details the key effects associated with the quarter, the state of the company's business objectives and strategies and any forward statements or guidance we may make. This document is designed to be read by investors before the regularly scheduled quarterly conference call.

Speaker 1

As such, for this call, we will make brief prepared remarks and transition into a question and answer session. To ensure ample time and opportunity to address everyone's questions, we request that you limit yourself to one question and one follow-up. If you still have additional questions, you may get back into the queue. Please note that all statements other than statements of historical facts made on this call that address activities, events or developments we expect, Believe or anticipate will or may occur in the future are forward looking statements. These include statements about our plans, objectives, strategies and prospects regarding among other things our sales, products, pipeline technologies and clinical trials, U.

Speaker 1

S. And international commercialization, market development efforts, efficacy of our current and future products, competitive market position, regulatory strategies and reimbursement for our products, financial condition and results of operations as well as the expected impact of general macroeconomic conditions, including foreign currency fluctuations on our business and operations. These statements are based on current expectations about future events affecting us and are subject to risks, uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Therefore, they may cause our actual results to differ materially from those expressed or implied by forward looking statements. Review today's press release and our recent SEC filings for more information about these risk factors.

Speaker 1

You'll find these documents in the Investor section of our website at www.glaukos.com. Finally, please note that during today's call, we will also discuss certain non GAAP financial measures, including results on an adjusted basis. We believe these financial measures can facilitate a more complete analysis and greater transparency into Cloudcast's ongoing results of operations, particularly when comparing underlying results from period to period. Please refer to the tables in our earnings press release available in the Investor Relations section of our website for a reconciliation of these measures to the most directly comparable GAAP financial measure. With that, I will turn the call over to Glaukos' Chairman and CEO, Tom Burns.

Speaker 2

Okay. Thanks again, Chris. Good afternoon to all and thank you all for joining us. Today, Glaukos reported record 2nd quarter consolidated net sales of $80,400,000 up 11% versus the year ago quarter. These 2nd quarter results reflected record sales and continued strong performance across our international glaucoma and corneal health franchises, alongside the reemerging growth in our U.

Speaker 2

S. Glaucoma franchise, driven by the initial commercial launch of Icedent Infinite. I'd like to congratulate the dedication and performance of our teams around the globe We remain committed to their work and to advancing our key initiatives. Given our solid second quarter and our latest forward outlook, we are raising Our 2023 net sales guidance range to $304,000,000 to $308,000,000 versus the $295,000,000 to $300,000,000 previously. From a commercial perspective, strong Execution of key strategies within each of our core franchises drove our record quarter.

Speaker 2

Within our U. S. Glaucoma franchise, where we delivered sales of $39,600,000 which grew 4% year over year and 13% sequentially, We continue to advance iStent infinite ahead of establishing formal MAC coverage and payment. On that front, 5 of the 7 MAX have issued proposed LCD reconsiderations that if finalized would provide coverage for iStent infinite consistent with FDA approval and based upon our coverage reconsideration requests. In total, all 7 MAX have taken preliminary steps to assess iStent infinite coverage through either proposed LCDs or temporary LCA updates.

Speaker 2

Further, we continue to support Expanding broad access to intervention of glaucoma tools for physicians and will closely monitor the various MAC policies and processes as they advance and are ultimately finalized in the future. We were also encouraged to see as part of the CMS' 2024 proposed rule, the CPT code used to cover iStent infinite and standalone procedures, 671T has been lifted to APC 5,492 from APC 5,491. We are pleased with this Initial proposal and believe, as we have stated in the past, that it more appropriately reflects the cost of infinite and similar stand alone procedures. Separately, CMS also proposed to move the APC assignment for combined cataract plus trabecular bypass procedures 66,989 and 66,991 to a newly restructured APC 5,493, which we also believe appropriately reflects the claims history as CMS stated in the proposed rule. If finalized, these changes will go into effect January 1, 2024.

Speaker 2

As mentioned earlier, Our international glaucoma franchise delivered record sales of $22,300,000 on a strong broad based year over year growth of 25% on a reported basis and 27% on a constant currency basis. As we continue to scale our international infrastructure, We are increasingly driving MIGS forward as a standard of care in each region and every major market in the world. While we focus on our near term execution, we are also accelerating efforts to support one of our founding missions at Glaukos, Which is to advance glaucoma care by driving intervention of therapies earlier in the treatment paradigm for glaucoma disease and in turn pioneering a new standalone market over time. We continue to lead and work closely with surgeons and thought leaders globally to organically drive this broader evolution in the standard of care, including through numerous events at the ASCRS Annual Meeting in May and more recently at the World Glaucoma Society biannual meeting in Rome in June. And finally, Our Corneal Health franchise delivered record sales of $18,500,000 on 11% year over year growth, including Protexxa record sales of $15,900,000 on year over year growth of 18% as key strategic initiatives implemented throughout the past year continue to take hold in support of this important business.

Speaker 2

Shifting gears to the development front, we continue to prudently invest in and successfully advance our robust pipeline of novel promising platform technologies that we believe have the ability to significantly expand our addressable markets and fundamentally transform our company over time. During the Q2, we announced FDA acceptance of the previously submitted NDA for iDose TR, marking another Important step in bringing this game changing therapy one step closer to patients. We continue to be encouraged as we work closely with the FDA and their ongoing review process as we progress towards the agency's established PDUFA goal date of December 22, 2023. Alongside this, our teams continue to make nice progress with the preparation and planning of the iDose commercial launch targeted for early This year, including a robust set of peer reviewed literature expected to be published over the remainder of this year and into 2024. Turning to the corneal health pipeline.

Speaker 2

During the Q2, we completed enrollment in the 2nd Phase 3 confirmatory trial for Epiaxa, are next generation corneal cross linking therapy for the treatment of keratoconus. This expeditious enrollment completion, which occurred in less than 6 months from trial commencement earlier this year is a testament to the favorable risk benefit profile of this next generation therapy as well as our team's hard work in bringing this important rare disease therapy one step closer to patients suffering from keratoconus, is a sight threatening corneal disease. We look forward to following these patients' outcomes as we target NDA submission for Beoxa by the end of 2024. As you can see, we have a lot to be excited about when it comes to the significant potential value that we believe our pipeline programs may create. At the same time, as we discussed last quarter, we continue to prioritize the cadence of our investments as we strive to strike the right balance of risk based investments and our capital position now and in the future.

Speaker 2

As evidence of that, our non GAAP SG and A and R and D operating expenses in the 2nd quarter moderated to 6% year over year growth, reflecting some of the initial development adjustments we've made in our earlier stage pipeline programs as we continue to prioritize are resources ahead of the anticipated iDose commercial launch early next year. So in conclusion, I'm very pleased with the record quarter and building momentum in our business as we continue to successfully advance our mission to truly transform vision by pioneering novel droplets platforms that can meaningfully advance the standard of care and improve outcomes for patients suffering from sight threatening chronic eye diseases. So with that, I'll open the call for questions. Operator?

Operator

Our first question will come from the line of Tom Stephan with Stifel. Please go ahead.

Speaker 3

Great. Hey, guys. Thanks for the questions. First one, I'll start with Eidos. I guess big picture, in your guys' minds, what does the successful launch in 2024 look like?

Speaker 3

The rest of you hear different numbers, I think $50,000,000 has been cited as a year one number, but even if it's rum reading more in the $30,000,000 to $40,000,000 range, is that a decent starting point or benchmark as we try to refine our models for year 1 iDose now that we're getting much closer to it hitting the market. But just any guardrails for how to think about 2024 iDose would be very helpful.

Speaker 4

Hey, Tom, it's Joe. I'll start and Tom may want to add some color commentary at the end too. As we think about iDose and obviously I'm not going to Comment on the specifics of the guardrails of any given number. How will we define success? I think we're going to define success in a couple of different ways.

Speaker 4

First, the more broad theme of continue to drive the interventional glaucoma mindset and really the need and reason for intervening with these safe and minimally invasive technologies. Specific to the launch, you've been around the story long enough to know that our focus is on making sure that we deliver the right kind of Training and the right kind of outcomes for surgeons out of the gate. So we're going to prioritize doing this the right way And doing it the right way both from the surgeon's perspective as well as ultimately in achieving the optimal sort of reimbursement outcomes and everything else that go to drive long term success over any particular quarter or target number for the year. Obviously, you know we're enthusiastic about what iDose means for our future and we're going to make sure we put the right building blocks

Speaker 3

And then to pivot to Infinite, maybe a 2 parter, but Any trends you can speak of with Infinite to date and maybe even into 3Q? Just momentum With that product here in the U. S, any color you can provide would be very helpful. And then in terms of the facility fee proposal, Really encouraging to see, I think, over a doubling of the ASC facility fee. Can you just talk about what That could mean in 2024 for the product.

Speaker 3

Maybe more specifically, do you think there's a good opportunity to take some price on that product?

Speaker 4

Thanks. Thanks, Tom. So I think first just in terms of the broader trends of Iceton Infinite, we continue to be really pleased with the momentum here. As we wind our way through the formal MAC and coverage process both with in the Medicare side as well as the commercial side as the payer side, To see the early utilization and adoption the way we've seen it is really particularly encouraging when you put it in the context of where Where we're at on the reimbursement side, which with as you know, 5 of the 7 MAX having proposed draft LCDs for coverage, That's largely aligned with our formal coverage request and the products label and the other 2 having addressed it via local coverage articles or LCAs. We're making our way through that process, but it's still early.

Speaker 4

And so the momentum we're seeing around ICE and Infinite Its utilization speaks a lot to the potential need for a product like this in the marketplace, even though we're still Working our way through the formalities of achieving proper coverage from the various MAC and commercial payers for that matter. I think as it relates to the facility fee in 2024, you heard Tom reference in the prepared remarks that We're obviously pleased to see the proposed rule as it relates to the facility fee for Infinite and combo cataract for that matter. And as you know, it's pretty consistent with what we've said historically we would expect given on the data that we see, but sometimes it takes some time to work through the process. And so to be here with the proposed rule, we're obviously pleased in what that means for 2024. As you know pricing and it really gives us the heart of that second question.

Speaker 4

Pricing of product is it's multifactorial in terms of product attributes, your overall portfolio, Competition and yes reimbursement. And so what I can say is that I think the proposed changes if they're finalized will thankfully enable facilities that do these site saving procedures to receive appropriate reimbursement that makes the procedure economically feasible for them. And I think patients end up benefiting at the end of that.

Speaker 5

Got it. Thanks, Chuck.

Operator

Your next question will come from the line of Ryan Zimmerman with BTIG. Please go ahead.

Speaker 6

Hey, guys. Thanks for taking my questions and nice results here. I guess I want to ask first on guidance. If you look at kind of where the guidance is going based on results, and Joe, you know where I'm going with this question, It implies it's kind of a step down on an absolute dollar basis in the back half of the year relative to what is historically a Strong seasonal Q4. So any color here on kind of your thought process?

Speaker 6

And the second part of the question is just what impact from the proposed LCDs and the other 2 MAX have you seen in numbers in this Quarter in the Q2 and kind of what effect has that had kind of on physician behavior? And then I have a follow-up.

Speaker 4

Sure, Ryan. Obviously, expected it in that context. I think, well, let me start first. Obviously, it was a high quality First half and the second quarter from an execution standpoint, it exceeded our expectations across the board. When you think about 2023 for us, it really remains all about building the strongest foundation possible ahead of what we think will be a Pretty transformational period for our company going forward with infinite iDose and EpiOXA.

Speaker 4

So we had a good start in the first half, but we have a lot of work in front of us We continue to lay that foundation. I think at the outset of the year, we were pretty clear, we wanted to walk before we ran as it relates to guidance. And I think the update we're giving here today probably reflects of us starting to jog to use the same analogy. What have we tried to reflect and what's included

Speaker 7

in that? I'll try to give a little bit

Speaker 4

of color here. We try to reflect obviously the encouraging first half trends that you pointed to and what that could mean. We've also tried to factor in the fact that from as we look across the landscape and you all see this even more than we do The healthcare procedure trends broadly feel pretty healthy and maybe even a bit elevated in the first half as some of the Staffing constraints that had been an issue in 2022 started to ease a bit and that enabled accounts to work through their backlog. So Our guidance, that we're reporting for today assumes more of a normalization of that reality in the second half. It also assumes that we've really not included any material benefit from the finalized LCDs in 2023, particularly as it relates to ISN Infinite.

Speaker 4

And this ties a little bit into the second part of your question, which I'll get to in a second. But what we've really assumed is that we remain in a steady state. We can talk about it more in the context of the LCD process, but there's no certainty in terms of exactly when those will be finalized. And once we know that, we can obviously better quantify the potential impact that has, especially the release sites in Infinite. We have to factor in the summer seasonality, which we always do globally in Q3 in particular.

Speaker 4

And that's been more pronounced in recent years coming out of COVID. And then the ongoing competitive dynamics, including from Alcon as well as some of the more invasive but profitable procedures. And that really ties into the second part of your question. I think the LCDs as proposed, I wouldn't say we've seen much of an impact at all from those in the context of what's happening here and now in the marketplace. They're proposed.

Speaker 4

They haven't changed any of the coverage rules for these products. And so until they do, I would expect that surgeons largely continue to operate as they have been on the basis of the reimbursement and the coverage that exists today.

Speaker 6

Okay. Very thorough on that. I'm going to squeeze in one more. Just Tom, you talked about moderating And I thought that was an interesting comment given kind of we're about to prepare for what is arguably one of the biggest products in the company's history And a launch around that. And so I think the earlier question kind of talked about what is a successful launch, but maybe on the other side of the P and L, I mean, What does moderating spending mean in terms of how you go to market and sell iDose from a commercial standpoint?

Speaker 2

Yes, great question. Happy to answer it, Ryan. So when I talk about moderating, we're talking about an extensive array of organic development programs that we've been really blessed to have in the organization as we're carrying these forward. And so That obligates me and compels me to prioritize and use our capital in the best way to establish benefits of risk and optimal return on investment And so that's what we're doing. So I wouldn't be draw the wrong conclusions.

Speaker 2

I would tell you that we have tremendous Capital that we'll employ towards the significantly successful our target launch of iDose. That is a question of timing. Expect some of that to occur later this year and on into 2024. And so we understand The order of magnitude that this launch could be for the company. And so I can assure you that we'll make the necessary capital and put

Speaker 7

the necessary capital behind this launch, to make

Speaker 2

it a success. We have secured capital behind this launch to make it a success.

Speaker 6

Understood. Thank you.

Speaker 4

Thanks, Brent. Thanks, Brent.

Operator

Your next question comes from the line of Larry Biegelsen with Wells Fargo. Please go ahead.

Speaker 8

Hi, this is Charles on for Larry. First, congrats on the nice quarter. First question, a quick follow-up on guidance. Wondered if you could give a little thoughts on the quarterly cadence of sales through the back half of twenty twenty three. I know you mentioned I know you mentioned a little summer seasonality, so I don't know if that's implying that Q3 little lower and Q4 is a bit of a step up, but maybe some thoughts on that.

Speaker 8

And then I have a quick follow-up on iDose.

Speaker 4

Yes, Charles, I think that's you hit it with really the way you asked the question. If you look, Implied the guidance is that the second half looks somewhat like the first half and that the I think the summer seasonality dynamic that we've seen in recent years Itself out here in the Q3. The last month of the quarter tends to drive a lot as people return back to doing procedures in In a fulsome way on a global basis, we'll see how that plays out. But at this point, yes, I would expect that the Q3 sees a bit of a downtick from that summer And then that recovers in Q4.

Speaker 8

Great. And then a follow-up on iDose. So do you still expect no restrictions on repeat procedures upon approval? And then Also, you said you plan to work towards reimbursement for Eidos in the office setting. How long do you think that could take after launch?

Speaker 8

And do you think that's

Speaker 9

a big catalyst for adoption?

Speaker 2

Yes, Charles, I'll be happy to take those. So your first question was on whether or not we expect to be restricted at all in exchange. And so we've answered this before and continue To express confidence that that won't be an imposition for us. And if you recall our exchange study that we did by re consenting patients In the Phase 2b study, we had 33 patients that we were following over 5 years and we saw no real substantive differences between treatment and control. And so we feel confident that we will not have a restriction going into that study.

Speaker 2

Now with regards to how we will go to launch, I guess it's important that we take this in a twofold way. 1, I want to provide CytoSurface offerings for surgeons to be able to do the iDose both in the office and certainly in the ASC. Recall that as we get to launch, we will be approaching MAX to establish an appropriate professional fee. There'll be an assignment to an APC that will then be typically we'll see that over the first half of the year. On the drug payment side, You will recall we'll have a miscellaneous C code at launch and we'll file for a HCPCS code, which in my experience and others typically takes Two quarters to be able to get a former J code.

Speaker 2

That J code will apply to both ASCs and to in offices. And so when we talk about in office use, which we believe will become an important part of the use of iDose over time, What we'll need to do is to establish non facility payment and that's done by approaching the MAX individually, We will need to get society specialty, society support, KOLs. And what we'll do is we'll develop a practice expense workup, which will be the basis for which these MAX will be able to consider what the professional fee will be for non facility payment in office. And as you recall, typically that professional fee payment is higher in the non facility because there is no are in the non facility because there is no facility payment. So the professional fee we expect will exceed the professional fee on the ASC side.

Speaker 2

This is something that happens serially. It happens case by case as we go forward with the MAX. So it will be something that will occur over time. But as I've said now, probably since we've had our IPO, this will be an important component longer term to give the physicians the ability To use in office as a site of service for what we believe will be a game changing technology.

Speaker 5

Great. Thank you. Welcome.

Operator

Your next question comes from the line of George Sellers with Stephens. Please go ahead.

Speaker 9

Thanks for taking the question and congrats on a great quarter. Sticking with iDose, you've obviously had some success with iStent infinite Adoption despite working through some of the reimbursement processes with the MAX. But I'm just curious as it relates to iDose, is there anything we can kind of Take from that commercialization of iStent infinite and apply to the expected commercialization of iDose. And I know we're still waiting on And it's a little bit more complicated than infinite in a lot of ways. But what could demand for iDose look like prior to reimbursement fully coming together and how do you expect that to sort of progress?

Speaker 4

Yes. I mean, I think it's Hard to draw a direct line between the experience with one product versus the next given they have different labels and different indications and different Patient populations that they're targeting, I think the thing that you can take from Infinite is Our commitment to doing it the right way to being methodical in the way we launch these products and the way that we train our surgeons and the way that we make our way through the reimbursement process. Over a couple of decades, we've earned a lot of experience in going through these process of launching new products into white spaces. And I think iDose in some respects will be another example of that as we go forward. I think we There's enough variables in play there that we'll address what we expect for 2024, for example, when we get to our guidance for that year versus getting ahead of that Now at this point.

Speaker 9

Okay. That makes sense. Maybe switching gears a little bit. You also recently announced An agreement with RadiusXR. And I'm just curious if you could give some additional details on that deal.

Speaker 9

Any incremental costs you're expecting this year associated with that? And then also maybe what's assumed from that in the current guidance?

Speaker 4

Yes. So, I'll start reverse order. I think from an expense standpoint, it's pretty immaterial. I wouldn't call anything out. I think you agree.

Speaker 4

Correct. And from a guidance perspective, yes, it's factored in there. I wouldn't call that as a particular material driver of the guidance at this stage. But what really is behind Radius and why we're doing it is, we've talked about some time about our role In pioneering these markets and growing the markets and part of that is trying to make sure that we're helping to democratize Testing and screening in a way that identifies these patients and helps them wherever they're first presenting themselves from a site of service standpoint, Whether it be an optometrist, whether it be retail optometrist like a Walmart optical or ultimately, obviously in the MD setting that they're getting access to technologies that can efficiently and easily test them for these site threatening diseases and hopefully identifying them more early and getting them the kind of care that they need and deserve sooner rather than later. Today as it stands, as you know, and many of these optometry centers in particular alongside of even some ophthalmologists, they're limited in terms of the diagnostic Capabilities are when and where they actually deploy the diagnostic technology they have to really test these patients.

Speaker 4

And so our hope is that by Putting some incremental muscle behind a technology that we think is truly best in class and radius that we can help democratize and really drive that Screening and Diagnostics side of the equation.

Speaker 9

Okay. That's really, really helpful. Thank you all for the time and congrats again.

Speaker 4

Thanks, George.

Operator

Your next question comes from the line of Joanne Wuensch with Citi. Please go ahead.

Speaker 7

Good afternoon and thank you for taking the questions. I'm curious about 2 things. One is, at what stage are you comfortable sharing with us what the ASP is for iDose because we've heard a number of different numbers tossed around. And then the second question I have is your OUS MIGS Is really strong. And I'm curious whether or not there's pent up demand or a new region you opened up, any stocking.

Speaker 7

And would you be surprised if this didn't continue for the remainder of the year? Thank you.

Speaker 2

Thanks, Jeriann. I'll take the first part of the question. So with regards to high dose pricing, We are still contemplating what that price will be. And as I've said all along, we're being highly contemplative. We're looking at Markov transition probability analysis, burden of illness analysis, I'm factoring in what derisked the charge Over $2,000 in a J code for 4 months of therapy.

Speaker 2

And I'm also looking at surgical pharmaceuticals, Both on the anterior segment side and on the retinal side, which I think will guide me in the basis for what I think will be a fair and compelling price. I would expect you not to hear that price until we are FDA approved. And so we'll be contemplating that. We'll take our time. We'll make sure we get it right.

Speaker 2

And then some short time after FDA approval, you will hear and we'll disclose Pricing for

Speaker 4

iDose. And on the international side, it really was another standout Record quarter, 27 percent constant currency growth year over year and 6%, I think, percent sequentially. It was broad based Joanne across all of our regions and really I think reflects that strong execution by our teams globally. If you think about it, we're really pioneering a change in standard of care in each of these markets just like we've been doing in the U. S.

Speaker 4

For some time. And all of the various markets that we're in today are in a little bit different stage of that. And all the things that you know we've done here to build the mix marketplaces that Exist today in terms of the broader support, both from the community, the surgical treatment algorithms, The reimbursement dynamics in each of these, all these markets are a little different place. And so we're still making our way through Really building in virtually all of the markets we're in, we're still very much in the growth phase of that business. We didn't Adding new regions or any unique drivers here, I think probably at the beginning of 2022 from a growth standpoint, there was still a little bit of Lag effect, a couple of the regions still felt a little touch of COVID.

Speaker 4

They probably had those numbers a little depressed from a year over year growth standpoint. But all in all, we couldn't be more pleased with the execution of the team. I do expect that similar to what we talked about in terms of the macro guidance, You'll probably see a little bit more normalization. I think the same dynamics that have been playing true here in the U. S.

Speaker 4

From Staffing levels and getting back to business to normal and clearing some of the backlog, inherent in our guidance is We'll see a little bit of normalization there in the second half, not just in the U. S. But globally. So we would expect that that business From a growth perspective, we've come in a bit in the second half relative to what we've experienced thus far in the first.

Speaker 7

Thank you.

Operator

Your next question will come from the line of Matt O'Brien with Piper Sandler. Please go ahead.

Speaker 4

Hey, this is Phil on for Matt. Thanks for squeezing us in at the end and congrats on another great quarter. Just for starters and I don't want to belabor the point here, but Laying the groundwork for an early 2024 launch of Idaho. How are those conversations with docs going as far as using the Currently available miscellaneous J code and what I'm really trying to get at is that requires that pre auth process. So are docs aware of how that process works and what might early utilization look like there?

Speaker 4

Sure, Phil. I think A couple of things first. You can imagine that given iDose has not yet received approval, There really aren't conversation specific to Eidos as it relates to the Reimbursement and how the dynamics with miscellaneous codes and all those various things go specific to the product. The vast majority of our customers have been through this 4 in some capacity, some are better at that process than others. All I can tell you is that we're Very prepared for that part of the launch and educating our customers as we go through that, getting them comfortable with how that will work.

Speaker 4

Ultimately, as you can expect, many of them will want to see it and see themselves do it successfully. So we do expect that they themselves We'll walk a bit before they run as I like to say, but it's something we're prepared to take care of and educate at launch on a customer by customer basis. But Getting ahead of it and their knowledge today, is more based upon their broader experience in the industry than it is specific to Eidos. That's helpful. And then just one follow-up on R and D.

Speaker 4

I noticed and I know you called out some initial development adjustments And some earlier stage pipeline programs and I don't think I heard anything specifically called out there. I just wanted to check if there was any impact

Speaker 10

Hey, Phil, this is Alex. I'll just kind of Comment on that and it goes kind of what Tom was earlier speaking about, which is we have sat down as we looked at our capital We looked at our pipeline. We looked at the iDose launch and what we needed to invest in for that activity. And so we've started to make decisions around allocating those resources appropriately in order to really fulsomely prepare for and invest in the iDose launch That's coming up. I don't think we've gotten much more granular than that.

Speaker 4

Yes, I don't think we've said anything specific to Any individual programs, but you can imagine that the iDose franchise remains a top priority for us, not just the 1st generation, but I heard you referenced T Rex and The extended release portion of that and we continue to move forward full steam ahead on that front. Makes sense. Thanks so much.

Operator

Your next question comes from the line of David Saxon with Needham. Please go ahead.

Speaker 5

Hi, guys. This is Joseph on for David. Maybe one on iStent. In terms of adoption For iStent infinite, are you seeing attraction from new docs to Glaukos or is The adoption primarily centered around current iStent inject users?

Speaker 4

Yes, Joseph, I think you're always going

Speaker 7

to see a little bit of

Speaker 4

that, but you got to put it in the context of the stage of where we're at. I think at this stage, The majority, if not the vast majority of that adoption utilization expansion, the standalone utilization, etcetera, is happening within customers that have been Glaukos customers for some time, that tends to be how you launch these things Anyway, and I think it's true with Icedent Infinite. Now as we continue to move forward and establish reimbursement coverage, we certainly hope that it will expand more, Particularly in the glaucoma community where this product should be well received and for folks who may today spend their time a little bit more in the late stage procedures, Tubes and TRAS and other devices that work at that stage, you hope that obviously they'll start to adopt Iceton Infinite as The coverage really picks up on the reimbursement side and they're able to run free.

Speaker 5

Okay. Fair enough. Makes sense. Maybe a bigger picture question. With the products you have approved today, What would you kind of say your long term growth profile is?

Speaker 5

What do you think The glaucoma business can grow longer term. You talked about perneal health growing 8% to 12%. Is that still kind of your thinking or As reimbursement starts to get more specific, could there be upside to that?

Speaker 4

Well, I think there's a couple of different parts that within your question, specifically the Corneal Health business, I think We continue to think about that as a at the moment a high single digit type growth franchise. We're encouraged by what we've seen so far in the first half. We'll need to see a little bit more from that business before we upgrade that if you will in terms of our growth expectations. But I think more importantly, the macro question that For asking, to me it's hard at our stage to put a number out there and say we think we can grow X. The reality is that we've been operating in both sides of our business, U.

Speaker 4

S. Glaucoma and corneal health and for that matter international glaucoma inside of still relatively small markets versus what we're about to start embarking on. When you think about the size of the combo cataract Opportunity relative to what we can potentially achieve as we drive the interventional glaucoma change in standard of care if you will And the sheer number of patients who can benefit from that mindset relative to the combo cataract setting, I think we're very it's why We're very excited about what this next chapter means for Glaukos and where we're going to go. And I think in a similar fashion, EpiOXA represents that same type of of transformational moment, if you will, for us on the Kornea side as we get closer and closer to hopefully that approval and launch. So We have a lot of reason for optimism about what that long term growth trajectory looks like.

Speaker 4

We're swimming in a much larger and Deeper Ocean as we move forward here and I think that's going to hopefully benefit us and you all shareholders.

Speaker 5

Okay, great. Thank you very much. Thanks for taking our questions and congrats on a great quarter.

Operator

Your next question will come from the line of Steve Lichtman with Oppenheimer. Please go ahead.

Speaker 11

Hi, guys. This is Ron on for Steve. Congrats on the quarter. Just wanted to ask you guys, On your earnings desk, you mentioned potential normalization of procedure volumes in the second half of the year, following what may have been work done over the backlog in the first half. So Can you guys talk about a little bit about what you're hearing from the field on that front and where you think we are in terms of the backlog?

Speaker 4

Yes, Ron. I think in some ways it's what we're not hearing from the field. And so if you think about it last year And we called this out on several of our calls. What we were hearing from doctors in the field was a fair amount of feedback around Staffing levels and constraints and the turnover and the inability to hold and retain a fulsome staff that enabled, For example, doctors who have 2 OR base to work in both simultaneously, you were pretty consistently hearing that theme. And I think as we turn the corner into this year and certainly we've made it along, we've heard less and less of that, if at all, quite frankly.

Speaker 4

I'm sure it obviously still exists in pockets, It's less pronounced. And I think the broader point around procedure trends and the backlog is almost More of a macro one, when we look across the landscape and obviously you cover a lot of different industries and companies and we saw this in the Q1, you see it again in the second, It feels like in general procedure volumes have been pretty robust and I think that why I can't point to any specific Number or item in ophthalmology or within mixed procedures, in general, it feels like folks have been back to work And they've been working their way through and net net, they're making their way through whatever backlog tended to exist. It's impossible to know exactly when that will normalize, but We felt like it made more sense to make the assumption that whatever elevation existed in the first half that it may not continue in the second half. And If it does, obviously, that will accrue to all of

Speaker 6

our benefits.

Speaker 11

That's great. And just one small follow-up on iDose. Do you guys think there's any chance that a panel will be called for this or is it already too late for that to happen? Thanks.

Speaker 3

Hey, Ron, I'm happy

Speaker 2

to take that question. So this is, it's been asked a few times before, but happy to address it again. We currently do not believe that there'll be an advisory panel that will be requested. And so Yes. Right now, we're moving towards our PDUFA date.

Speaker 2

Everything is on track, going very well. We just finished A pre approval inspection, which we believe went very, very well and we'll expect a Final written confirmation of that in the next few weeks. And as well, the FDA is meeting CDRH for a mid cycle review and we'll expect to receive some interim questions, which will hopefully put us And really advantageous position going into the PDUFA date. And so the short answer to your question is no. We don't expect that there'll be an advisory panel.

Speaker 11

Thanks guys. Congrats again.

Operator

Your next question comes from the line of Alan Gong with JPMorgan. Please go ahead.

Speaker 12

Hi, team. Congrats on the good quarter. I think a lot of the questions have been asked already, so I'll just keep it to 1. But when I think about iDose, I fully understand that it's And it's kind of hard to predict the success. But when I think about the competitive landscape, the fact that there is a Somewhat comparable product, the profiles are clearly very different, but somewhat comparable product on the market already.

Speaker 12

How should we really think about maybe iDose benefiting from that as a secondary player, whether or not we might see competitive dynamics from that early or if it is more just about expanding the market

Speaker 2

I'm happy to take the first part of this, Joe answers as you will. But Alan, I would just tell you that I really don't see Dorista as something that I would take a lot of comparability towards. I mean you've got a product that is Bioerodible that is lasting a period of 4 months relatively short period of time has shown a relatively high rate of endothelial cell loss, which restricts its use to a one time use And throws off relatively high rates of hyperemia as well due to its Gaussian profile of release Versus a product such as what we have, which is showing basically a safety profile where we have no endothelial or limited To minimal endothelial cell loss that we see and a 3% rate of hyperemia and a product that you Seeing in the Phase IIb clinical trial that in 70% of patients is controlling glaucoma at 3 years. And so I don't see a lot of comparability between the two products. I don't take a lot of use Derista as a predicate.

Speaker 2

I think where Derista serves our interest Is the fact that they did establish a J code at $2,100 for 4 months of therapy. I think that will serve us well Going into the pricing for this product, I will tell you this, given some of the limitations of DERISTA, I might draw some high optimism That even with these limitations in place, there has been a relatively strong appetite at least for the concept of intracameral drug delivery. Joe? Yes, I'd just add,

Speaker 4

I think the two things that benefit us in the iDose launch, one specific to RISTA, one not. I think anything today that's helping drive that interventional glaucoma mindset is a positive. As we continue to think about driving that change in standard of care, the fact that Jurista and Allergan and their reps have been out talking about that alongside all of the efforts that were in muscle that we're putting behind that as you know. I think that continues to hopefully turn the broader industry towards what we think is the optimal course of care for these patients. And the second thing is obviously it's less about any competitor, I think it's more about just the state of the industry.

Speaker 4

You think back to when Glaukos first launched MIGS and with iStent, there were a lot of basic blocking and tackling even in the combo cataract setting that the company had to go through around reeducating and teaching surgeons surgical techniques that a lot of them hadn't done since the residency. And so as we go into any of these things, whether it's iCine, Infinite or iDose, the good news is that now surgeons Understand much more fulsomely the angle based surgery and the various technical aspects. And so it's much more about The features and benefits, the safety profile as Tom is talking about the individual product and what that use case is for the appropriate patients that are on label. So I think that we enter into it with a far more educated marketplace in terms of interventionalism and we're going to obviously do our part to drive that forward even faster.

Speaker 13

Maybe 2 quick ones. One is On the core MIG space, I'm just wondering if you have any views on how it could shape up into next year, If non implantable MIGS procedures are become a non covered procedure across Certain MAC territories next year. So how do you see the core space evolving if that scenario plays out? And then the second one real quick would just be on The iDose label, is there anything of note just on the latest views from Glaukos on how you're thinking about duration of the implant? What can be included in the label for duration on iDose?

Speaker 13

Thanks.

Speaker 4

Okay. I'll start and then Tom can jump in on the second part around iDose. I think as it relates to The proposed LCDs and outcomes, we're prepared for any scenario there that emerges And I'm not sure I would hazard a guess at this stage nor attempt to quantify it because there's so many different factors that could play out as these things are finalized hopefully in the coming months if not quarters. Our focus is on building a healthy and growing market, that benefits patients. And we think Supporting surgeons making clinical decisions and not payers is optimal in that regard.

Speaker 4

And so really at the end of the day, if Take a long term view, I think we would all agree that getting interventional glaucoma, iStent infinite and iDose Right is probably far more material to our future than those near term dynamics. And while I understand and appreciate the question, I think That's where, our focus is at.

Speaker 2

And Anthony, I'm happy to address the second part of your question. So with regards to the label, Again, we are under a 505(2) regulatory path. And so the likely label that in our expectation would be that it would say something effect of for the reduction of intraocular pressure and ocular hypertension and open angle glaucoma patients. So a significantly wide open label, which will be based really on the 3 month non inferiority primary efficacy endpoint that we established in the pivotal trial. We do not expect the label to specify our extended duration.

Speaker 2

For that, I think we've been prescient in extending the Phase 2b study out to 3 years. That will become the important component that 3 year, 3 cohort study we did with the Phase 2b will allow us to approach payers to be able to

Operator

I'll now turn the call back over to the company for any closing remarks.

Speaker 2

Okay. Thanks to everybody for all your time and attention today. We thank you for your continued interest and support in Glaukos. Thanks and goodbye.

Operator

That will conclude today's conference call. We thank you all for joining and you may now disconnect.

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Earnings Conference Call
Glaukos Q2 2023
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