Glaukos Corporation

Welcome to Glaucos Corporation's third quarter 2020 financial results conference call. A copy of the company's press release issued after the market closed today is available at www.glaucos.com. At this time, participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, please press star 1 on your telephone. This call is being recorded, and an archived replay will be available online in the Investor Relations section at www.glowcoast.com. I will now turn the call over to Chris Lewis, Director of Investor Relations and Corporate Strategy and Development.

Thank you, and good afternoon. Joining me today are Glauco's President and CEO, Tom Burns, CFO, Joe Gilliam, and COO, Chris Calcaterra. Following our prepared remarks, we'll open the call to questions. 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, our products, our pipeline technologies, our U.S. and international commercialization efforts, the efficacy of our current and future products, our competitive market position, financial condition, and results of operations, as well as the expected impact of the COVID-19 pandemic 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. You'll find these documents in the Investors section of our website at www.glowcoast.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 Glaucos' ongoing results of operations, particularly when comparing underlying results from period to period. Please refer to the tables in our earnings press release that is available in the investor section of our website for reconciliation of these measures to their most directly comparable GAAP financial measure. With that, I will turn the call over to Glaucos President and CEO, Tom Burns.

Thank you, Chris. Good afternoon, and thank you to everyone for joining us today. I'm pleased to report third quarter net sales of $64.8 million that exceeded expectations across our glaucoma and cornea health franchises globally, with momentum that continued into October. Our performance this quarter reflects the resiliency, dedication, and resourcefulness of our customers and and employees around the world who continue to steadfastly move forward during these unprecedented times. Our strong third quarter performance not only illustrates our effective ongoing response to the current market environment, but it is also a reflection of the progress we continue to make towards our broader strategic vision. Consider our accomplishments this quarter in addition to the solid revenue performance. we fortified our U.S. MIGS market leadership position with initial commercial launch activities for iCent Inject W, the next generation of our market-leading Inject platform. Two, we continued to execute on our Cornea Health franchise integration, expansion, and market development plans, evidenced by a record for Trexa sales and a record number of new Trexa starts in the U.S. during the third quarter. Three, We advanced our industry-leading proprietary pipeline that we believe has the ability to significantly expand our addressable market opportunities beginning in 2021. Four, we continue to expand and strengthen our pharmaceutical R&D capabilities, adding product development expertise while advancing numerous preclinical initiatives across glaucoma, corneal health, and retina. And five, we executed financially, not only through strong sales recovery trends but also with improving gross margins, disciplined operating spending, and continued preservation of our strong balance sheet. Let's first focus on our commercial performance, both in the U.S. and abroad, where it should come as no surprise that procedural recovery trends vary and remain dependent on localized dynamics related to COVID-19, including related governmental restrictions and the site of service for ophthalmic therapies and procedures. Joe will elaborate more on the near-term trends later, but I have been encouraged by how physician offices, ASCs, and hospitals are navigating the new normal. At the same time, patient-related and practice efficiency headwinds persist, and there's a limit to how much the system can withstand from a COVID standpoint. We are monitoring what appears to be a second or third wave in the U.S. and Europe. In particular, the response of governments and healthcare systems accordingly is and any potential impact on our customers as we move forward. Our U.S. glaucoma franchise experienced a strong recovery during the third quarter, where practices continued to improve their operational efficiency, and new patient demand increased as the COVID-19 dynamic stabilized and related restrictions eased. Things are not yet back to normal from a market perspective, but the trends were encouraging throughout the quarter into October. Our field sales professionals are slowly regaining access into accounts, and we continue to supplement these activities with well-received virtual tools and training for our Salesforce and physician customers. We've even identified opportunities to collaborate with ophthalmic practices to manage ongoing cases by virtually proctoring ongoing surgeries as part of our commitment to ensure procedural proficiency and optimal outcomes. As expected, in early October, the AMA hosted a CPT editorial panel meeting where three items related to our business were discussed and approved to move forward, including the creation of three CPT codes for IDOS and standalone MIGs and the creation of a new Category 1 CPT code for MIGs in combination with cataract surgery. We look forward to working closely with the AMA, CMS, and AAO as we navigate each of these processes going forward. I'm pleased to announce that in mid-August, we successfully launched the iStent Inject W in the U.S. to select customers, followed by an official full-scale launch in early October. The iStent Inject W builds upon the proven foundation of our Inject platform, and is designed to offer ophthalmic surgeons the same established safety and efficacy of iStent Inject with added benefits designed to optimize stent visualization, streamline implantation, and deliver procedural predictability. Thanks to our team's solid execution from a commercial and operations perspective, many of our U.S. customers have already begun using this next-generation technology. Among U.S. surgeons who are utilizing iStent Inject W, feedback and real-world results remain very positive and mirror what we've heard from markets such as Germany, where we've already introduced the W platform. Surgeons most commonly highlight the improved visualization and enhanced procedural predictability that iStent Inject W may offer, and while it remains early in the commercial launch, we are encouraged by the ophthalmic community's initial response that reaffirms our confidence in the commercial prospects for this important technology. It is our plan for this next generation product to supersede the current iStentInject device globally as regulatory approvals permit. We've also begun to launch iStentInjectW more broadly in many of our key international markets, including various European countries, Japan, and Australia. This adds to a number of recent accomplishments in our international glaucoma franchise that positions us well for long-term growth including standalone indication approval in Australia, ISTENT and ISTENT inject regulatory approval in India, and continued progress across many of our key market access initiatives. Similar to the United States, we also experienced strong recovery, revenue recovery trends in our international glaucoma franchise during the third quarter, driven by a broad-based recovery in key European and Asia-Pacific markets. Looking ahead, we have seen the more recent emerging restrictions related to COVID-19 across Europe and are monitoring these developments closely. Nevertheless, we are continuing to invest in our international infrastructure from a sales, marketing, market access, and product development perspective. Within our corneal health franchise, we also experience strong revenue recovery trends during the third quarter as we continue to execute on our corporate integration milestones, commercial strategies, and market development initiatives. We are ahead of plan on the cost savings targets we announced at the time of the deal, but more important is our progress commercially. We've continued to successfully stabilize the reimbursement dynamics associated with Fortrexa, drive increased awareness of Keratoconus broadly across the optometric and ophthalmic community, advance the diagnosis of this important debilitating condition, and train Coina Health professionals on our I-Link procedure. As evidence of our progress, the third quarter saw record highs in Fortrexa sales and number of new Fortrexa starts in the United States, an encouraging sign that our strategies and programs we've introduced are resonating. While we remain in the early stages of unlocking the combined organization's full potential, we are encouraged with this performance and excited about the opportunity ahead of us as we approach the one-year mark of the acquisition. Moving on to our pipeline, we anticipated and are planning for a robust cadence of new product introductions over the coming years that we believe have the potential to significantly expand our addressable market opportunities and drive long-term sustainable growth over time. These programs include our previously disclosed FDA approval targets for the Presser Flow Microshunt in the first half of 2021, ISTED Infinite in late 2021, and Epion and IDOS-TR in 2022, respectively. We have discussed at length on prior calls the initiatives we implemented in response to COVID and the considerations for our fully enrolled versus actively enrolled clinical trials. We continue to navigate these unique circumstances and we're encouraged by strengthening enrollment trends in September and October, but we are continuing to monitor and analyze timeline expectations for high-dose, in particular as the COVID-19 situation evolves here in the United States. We also remain in early preparations for the potential U.S. commercial launch of Santan Pharmaceuticals Presser 4 Microshunt, an elegant ad-external surgical implant for late-stage glaucoma management. We advanced our commercial preparations for this promising opportunity during the third quarter ahead of an anticipated approval and commercial launch in the first half of 2021. In addition to the exclusive distribution agreement with Santan in the U.S., we're excited to announce we recently expanded our agreement with Santan to secure exclusive sales and distribution rights for the presserfoil micro-shunt in Australia and New Zealand. We look forward to commencing commercialization plans in these markets following appropriate regulatory approvals over the coming years. Beyond these near to medium term opportunities, we also continue to invest in and advance our key earlier stage R&D programs, including in dry eye and retina. While these opportunities remain in preclinical development stages, we are excited with the initial progress we're demonstrating within these programs. Our pipeline has the ability to fundamentally transform blog posts by significantly expanding our addressable markets over time. To enable this, we have built a strong balance sheet to provide us with the financial flexibility to remain on offense as the COVID-related dynamics play out by expanding our global infrastructure, strengthening our pharmaceutical expertise, upgrading our enterprise systems, advancing our core R&D programs, and supporting our clinical programs as they progress towards commercial realities. In summary, the progress we are making to advance our key strategic priorities reflects the commitment of our teams to rapidly adjust during the COVID-19 pandemic and ensure we are executing on our plans. We are confident that the investments we're making today will drive Ball Coast forward as a unique strategic vision care leader with tremendous potential for long-term growth and profitability. So with that, I'll turn the call over to Joe to discuss our third quarter 2020 financial results. Joe.