Glaukos Corporation

Welcome to Glacus Corporation's fourth quarter and full year 2020 financial results conference call. A copy of the company's press release issued after the market closed today is available at www.glacus.com. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. This call is being recorded and archived replay will be available online in the investor relations section at www.glacus.com.

blacklist.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 galapagos 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, integration and market development 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. Read today's press release and our recent SEC filings for more information about these risk factors. You'll find these documents in the investor 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 Glowcoast's ongoing results of operations, particularly when comparing underlying results from period to period. Please refer to these 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 Glocko's president and CEO, Tom Burns.

Thank you, Chris. Good afternoon, everyone, and thank you for joining us today. Before we discuss our fourth quarter results, I want to spend a few minutes reflecting on the year 2020. By all accounts, the COVID-19 global pandemic created an unprecedented past year and challenged the conventional ways our companies, employees, and customers operate both personally and professionally. The response plans we prioritized and implemented in 2020, including protecting the health and safety of our employees and their families, supporting our customers, preserving jobs globally, protecting core research and development projects, and maintaining our strong financial and operating position following the pandemic have allowed us to stay focused and advance our key strategic priorities during uncertain times. As a result, I believe we exited 2020 a more efficient and more capable company with fundamental prospects that have never been stronger. As a corporate pioneer of MIGS and colonial cross-linking, we have been honored to partner with our customers and clinical investigators to help them navigate a rapidly changing environment through the implementation and expansion of various virtual and digital programs, including customer support, training, case proctoring, and educational initiatives. I'm confident that these efforts have helped deepen our customer relationships and prepare us for the future well beyond COVID-19. Finally, I want to thank these very customers for everything they are doing to serve the needs of patients worldwide during the pandemic. Overall, I'm proud of our performance this past year and of our team's resiliency and steadfast dedication to advancing our mission to create novel platforms that disrupt conventional treatment paradigms, advance the existing standard of care, and enrich the lives and treatment alternatives for patients worldwide. In doing so, we strive to create a world-class global vision care leader uniquely positioned to drive innovation across glaucoma, corneal health, and retinal disease. Within each of these areas, we are moving full speed ahead with the same pioneering discipline, pipeline development expertise, and skilled commercial execution that has made us the worldwide leader of the NAICS marketplace today. Our ability to execute our plans over the past year not only illustrates our effective ongoing response to the current market environment, but is also a reflection of the progress we continue to make towards our broader strategic vision. Consider our key 2020 accomplishments. One, We executed on our Corneal Health franchise integration, expansion, and market development plans, evidenced by record new starts and sales. Two, we successfully launched the next generation iStent inject device in the U.S. and select international markets. Three, we reported strong international glaucoma sales and secured new market expanding regulatory approvals in key markets such as Australia, Japan, and India. Four, we advanced key market access and reimbursement initiatives, including the creation of new Category 3 CPT codes for iDOS and standalone makes. Five, we implemented a global systems upgrade transformation designed to support long-term growth. Six, we executed financially during unprecedented times, not only through encouraging sales recovery trends, but also with strong gross margins disciplined operating spending, and continued preservation of our strong balance sheet, bolstered by a $288 million convertible debt financing to further strengthen our ability to aggressively invest in our pipeline and future growth opportunities. And last but certainly not least, we advanced our industry-leading proprietary pipeline that we believe has the ability to significantly expand our addressable market opportunities beginning this year. As most of you know, our goal is to leverage our development expertise in commercial infrastructure to provide a portfolio of novel solutions that meet the full algorithm of customer needs. A key pillar in delivering on this strategy is the continued progression of our deep pipeline. So I'd like to spend a few minutes highlighting exciting new clinical data shared earlier this year for two of our key glaucoma pipeline programs, iDoseTR and iState Infinite. Starting on iDoseTR, our travel across drug delivery implant, we were delighted to announce what we believe is powerful and compelling data that further underscores the potential for this technology to safely provide multiple years of sustained glaucoma pharmaceutical therapy and 24-7 compliance to tackle the significant problem of patient non-adherence to topical glaucoma medication regimens. The recently announced 24-month interim analysis of our ongoing 36-month Phase IIb trial showed compelling results, with both IDOS arms continuing to demonstrate robust ILP lowering over 24 months to the magnitude of approximately 7 to 8 millimeters of mercury, or nearly 30% reductions from baseline over the first 24 months. Interestingly, a subset analysis showed at least 20% of IDRO subjects achieved robust average ILP reductions from baseline of at least 40%. Importantly, these results were achieved with a single IDOS implant compared to the terminal control arm that received twice-daily drops over the 24-month evaluation period, or nearly 1,500 eye drops per eye. As a reminder, IDOS-TR is implanted into the trabecular meshwork to avoid migration through a very facile procedure, and the most recent Phase II data readout demonstrated a favorable safety profile. with no clinically significant corneal endothelial cell loss, no serious corneal adverse events, and no adverse events of conjunctival hyperemia reported to date in either idosolution arm. We believe there is an important unmet clinical need and strong appetite within the ophthalmic community for safe, effective, and durable sustained-release pharmaceutical alternatives to traditional topical medications. and this powerful 24-month interim data reaffirms our excitement about the potential commercial prospects of IDOS. We continue to progress towards enrollment completion in our ongoing IDOS-TR Phase III clinical program, which will mark another critical step in bringing this technology to the market. The 12-month Phase III trial results are expected to support our anticipated NDA submission for IDOS-TR in 2022, and we are targeting FDA approval for this promising technology in 2023. The powerful iDose data available thus far underscores our confidence in the potential of this novel drug delivery platform to produce future generations of sustained therapies for glaucoma and potentially other ocular diseases. As such, we continue to invest resources to expand our pharmaceutical development capabilities and to develop future iDose solutions. With that in mind, we are in late-stage development with finalized designs for a next-generation IDOS-TR extended-release implant, also known as IDOS-T-REX, which is in a similar size and form factor to the original IDOS-TR. It's designed to provide nearly twice the drug capacity to extend efficacy durations even longer. We will be engaging with the FDA in the near future to determine the most appropriate and expeditious regulatory pathway for this novel product. We are also seeking additional drug classes that may be synergistically used in conjunction with the iDose platform. Through our research and development agreement with eWestern, we are currently assessing multiple rock compounds, which are showing positive results in animal models, and we're establishing prototype implants for lead candidates in these same models. Rock inhibitors, when used in conjunction with prostaglandins, have been shown as a powerful treatment in reducing intraocular pressure in US pivotal studies. Moving on to iStent Infinite, our three-step system designed for use in a standalone procedure for late-stage glaucoma patients. We are excited to have recently announced strong 12-month IDE pivotal data It showed 76% of subjects achieved 20% or greater reduction in month 12 mean IOP on the same or lower medication burden, with more than 50% of subjects achieving month 12 IOP reductions of at least 30%. Subjects also achieved a 13% mean reduction in medication burden at 12 months, and the safety profile in the study was highly favorable. with no explants, infections, or device-related interventions or hypotony reported through 12 months. When pairing these strong pivotal results with the advanced disease progression profile of the enrolled subjects that were on an average of three medications with two failed prior surgeries, We believe ophthalmic surgeons will view iSEN Infinite's risk-benefit profile very favorably and as a compelling new treatment option. We continue to target FDA approval of iSEN Infinite in late 2021. Beyond these important glaucoma pipeline programs, we also remain in early preparations for the potential U.S. commercial launch of Santan Pharmaceuticals Presser Flow Microshunt, an elegant ad-externally surgical implant for late-stage glaucoma management. We continue to ramp up our commercial preparations for this promising opportunity ahead of an anticipated FDA approval and commercial launch. We also recently announced that we are in late-stage development of iPrime, a highly complementary new VSCO delivery device designed to be a truly minimally invasive system to further support the needs of physicians and patients. Within corneal health, we issued a separate press release this afternoon announcing positive Phase III results for our next-generation corneal cross-linking iLink Epion investigational therapy. We're excited to announce results from the multi-center, randomized, placebo-controlled Phase III pivotal study that met the primary efficacy endpoint with statistically significant improvement in maximum corneal curvature, or KMAX, Kmax is an objective measurement of the steepest corneal curvature based on corneal topography, where an increase in Kmax denotes corneal steepening and keratoconus disease progression. At six months, the Epion treatment arm showed a Kmax mean improvement of 0.2 diopters from baseline, compared to a Kmax mean worsening of 0.8 diopters from baseline in the placebo control arm, resulting in the statistically significant mean treatment effect of one diopter meeting the study's primary efficacy endpoint. Most importantly was that the epion therapy demonstrated the ability to halt or reduce the progression of keratoconus while disease progression was observed in the study's placebo control arm. The treatment was generally well tolerated and the majority of adverse events reported were mild and transient in nature. These positive results underscore our view that Epion may provide the ophthalmic community and keratoconus patients with the first noninvasive bioactivated drug treatment alternative designed to reduce procedure times, improve patient comfort, and shorten recovery times. The positive Phase III results are expected to support a U.S. MBA submission in 2022, and we are targeting FDA approval for Epion in 2023. 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 developmental stages, we are excited with the initial progress we're demonstrating within these programs. Our pipeline has the ability to fundamentally transform Glaucos 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 becoming commercial realities. And speaking of commercial realities, we've been pleased with the strong recovery trends in our business since the peak of the pandemic that continued through the fourth quarter. While procedure recovery trends remain somewhat volatile, I've been encouraged by how physician offices, ASCs, and hospitals are navigating this new normal. And I'm pleased to report fourth quarter net sales of $73.2 million that exceeded our expectations across our glaucoma and corneal health franchise globally. During the fourth quarter, we commenced an official full-scale launch of the iSentinject W in the U.S., The iStent InjectW builds upon the proof and foundation of our Inject platform and is designed to offer ophthalmic surgeons the same established safety and efficacy of iStent Inject, with the added benefits designed to optimize stent visualization, streamline implantation, and deliver procedural predictability. Early field feedback and real-world results for iStent InjectW remain very positive, and reaffirms our confidence in the commercial prospects for this important technology. We've also launched iStent and JackW more broadly in many of our key international markets, including various European countries, Japan, and Australia. This adds to a number of 2020 accomplishments in our international glaucoma franchise that positions us well for long-term growth, including standalone indication approval in Australia, I-STENT inject W regulatory approval in Japan, I-STENT and I-STENT inject regulatory approval in India, and continued progress across many of our key market access initiatives. Finally, over the course of 2020, we made significant strides to firmly establish Cornea Health as a new franchise and future growth engine for our organization. Not only are we ahead of plan on the cost savings targets we announced at the time of the deal, but more importantly, we continue to execute on our commercial strategies and market development initiatives, which include driving increased awareness of keratoconus broadly across the optometric and ophthalmic community, advancing the diagnosis of this important debilitating condition, streamlining the referral pattern from initial diagnosis to treatment, implementing customer-friendly programs to drive new account starts, optimizing reimbursement, investing in health economics to further solidify the value of corneal cross-linking to patients and healthcare systems, and finally, training corneal health professionals on our island procedure. To support this progress, we continue to opportunistically expand our U.S. corneal health commercial team. We're pleased to see another new record for U.S. for Trexel sales established in the fourth quarter, 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're encouraged with this performance and excited about the opportunity ahead. So in summary, we're creating a unique vision care leader prepared to drive a robust cadence of innovation that can significantly expand our market opportunities and drive sustainable growth and profitability over the next decade. While we, of course, remain cautious on the near-term uncertainties associated with the COVID-19, the strong foundation and team we built leaves me confident in our ability to execute on our plan and advance our mission to transform the treatment of chronic eye diseases for the benefit of patients worldwide. So with that, I'm going to turn the call over to Joe to discuss our fourth quarter 2020 financial results. Joe.