Glaukos Corporation

Welcome to the Gloucester Corporation Third Quarter 2022 Financial Results Conference Call. Copies of today's press release and quarterly summary document, both issued after the market closed today at www.gloucester.com. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer section. Please, if you would like to ask a question, simply press star and then the number one on your telephone keypad. If you would like to withdraw your question, again, press star and then the number one on your telephone keypad. This call is being recorded and an archived replay will be available online in the Investors Relations section at www.glowcoast.com. I will turn the call over to Chris Lewis, Vice President of Investor Relations and Corporate Affairs.

Thank you and good afternoon. Joining me today are Glacos Chairman and CEO Tom Burns, President and COO Joe Gilliam, and CFO Alex Thurman. Similar to last quarter, the company has posted a document on its investor relations website under the financials and filings quarterly 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 facts 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 has been and will continue to be provided alongside the company's earnings press release and is designed to be read by investors before the regularly scheduled quarterly conference call. As such, for this call, we will make brief prepared remarks and quickly transition into a question and answer session. It is our goal that this format will make our quarterly earnings process more efficient and impactful for the investment community going forward. 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, sales, products, pipeline technologies, our US and international commercialization, integration, and market development efforts, the efficacy of our current and future products, our competitive market position, our regulatory strategies and reimbursement for our products, 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, it may cause our actual results to differ materially from those expressed or implied by forward-looking statements. We reviewed 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.glaucos.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 and 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 Glockos Chairman and CEO, Tom Burns.

Okay, thank you, Chris. Good afternoon, and thank you all for joining us today. Today, Glockos reported third quarter net sales of approximately 71.3 million, down 1.6% year over year, on a constant currency basis. I'm pleased with our team's ongoing commitment to advance our key strategic priorities and execute our plans while navigating a challenging macroeconomic environment. As a result, we are updating our 2022 net sales guidance range to $278 million to $280 million versus $275 to $280 million previously. From a commercial perspective, we continue to be encouraged with the execution of our strategies and the resiliency of our US combo cataract franchise in the face of the reimbursement headwinds thus far in 2022. At the same time, we remain focused on innovating and expanding the site-saving tools available to surgeons to improve overall care for ophthalmic patients. Over the course of this year, we have continued to successfully expand our comprehensive, best-in-class product offering for our customers with the introduction of several novel ophthalmic technologies, including iAccess, a novel instrument with features that allow customers to perform goniotomy procedures, and iPrime, an innovative new viscoelastic delivery device. More recently, in the fourth quarter, we commenced U.S. initial commercial launch activities for iStent Infinite, our novel three-stent injectable system designed to provide foundational 24-7 ILP control for glaucoma patients uncontrolled by prior medical and surgical therapy. While this launch remains in its infancy, it represents a significant milestone for glucose and the makes market as the first ever microinvasive implantable device indicated for use as a standalone glaucoma treatment. We believe iSent Infinite will spearhead our long-held mission to create a new interventional glaucoma marketplace that seeks an alternative treatment paradigm to topical medications to advance patient care and to halt the progression of this chronic, sight-threatening disease. We are bullish on iStent Infinite's long-term prospects, but would caution conservatism as you think about near-term contributions as we navigate the ordinary course and process of securing professional fee coverage and payment from the various MACs through the first half of 2023. Our international glaucoma franchise once again delivered strong operational year-over-year growth of 24% on a constant currency basis as we execute our strategies to drive deeper penetration and broader adoption of MIGs around the globe. On a reported basis, international glaucoma sales grew 9% year-over-year in the face of continued significant and growing foreign currency exchange headwinds. And within our corneal health franchise, we are pleased to deliver a quarterly record for overall sales of 17.5 million and U.S. vitrexia sales of 14.4 million. Vitrexia sales grew 12% year over year as we continue to focus on access for keratoconus patients suffering from this rare disease. While it remains early, we've been pleased with initial signs of improvement following the investments we've been making to address sporadic reimbursement issues. Speaking of investments, let's shift gears to the development front where we continue to advance our deep pipeline. During the third quarter, we were delighted to announce positive top line data for both phase three pivotal trials of high dose TR that successfully achieved the pre-specified primary efficacy endpoints through three months and demonstrated excellent tolerability and a favorable safety profile through 12 months. The powerful Phase III results also demonstrated that 93% of slow-release, high-dose TR subjects remain well-controlled at 12 months, an encouraging trend that is further supported by the three-year results observed in our Phase IIb clinical study, in which 73% of patients remain well-controlled on a single injection of high-dose TR using the same or fewer baseline medications. These results mark a major milestone for our company and powerfully reaffirm our view that IDOS-TR can be a transformative, novel technology able to fundamentally improve the glaucoma treatment paradigm for patients. Our clinical and regulatory teams are hard at work preparing an NDA submission for IDOS-TR, and we continue to target FDA approval by the end of 2023. As for Epioxa, our Epion, our next-generation corneal cross-linking therapy for the treatment of keratoconus, following our recent pre-NDA meeting with the FDA, the agency has recommended that we run a second confirmatory pivotal trial to support an NDA submission. The agency did confirm that the completed Phase III study, which met the pre-specified primary efficacy endpoint, would support submission and be accepted for review of an NDA in conjunction with the second study. Our understanding is that the FDA's request for a second study, which was unexpected to us, was driven by earlier stage clinical studies associated with other companies' unproven therapies that generated less than favorable efficacy data. In response, we plan to commence patient enrollment for the second Phase III confirmatory study by early 2023, with targeted enrollment completion by the end of next year. Despite this delay to our previous timelines for Epioxa, we believe we remain well-positioned with our first-generation corneal cross-linking therapy for Trexa or Epioff, which remains the only FDA-approved treatment shown to slow and halt the progression of keratoconus. We are now in the midst of several new product launches and are planning for a robust cadence of new droplets platform and product introductions over the coming years that have the potential to fundamentally transform Glaucus over time and meaningfully advance the standard of care and improve outcomes for patients suffering from sight-threatening diseases. While we continue to monitor and feel the impact from extraordinary inflationary pressures and foreign currency exchange headwinds, we believe we are well-positioned with an increasingly diversified business and strong balance sheet to successfully navigate these and other potential macroeconomic uncertainties as we continue to deliver on our near-term objectives while advancing our longer-term mission to transform vision. We are and remain excited about our prospects and are confident in our ability to execute our plans in the years to come. So with that, I'll open the call to questions. Operator.