Glaukos Corporation

Welcome to Glowcoast Corporation's third quarter 2024 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.glowcoast.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 session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. This call is being recorded and an archived replay will be available online in the investor relations section at www.gloukos.com. I will now turn the call over to Chris Lewis, Vice President of Investor Relations and Corporate Affairs. Please go ahead.

Thank you and good afternoon. Joining me today are Galapagos 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 quarterly results section titled quarterly summary. This document is designed to provide the investment community with a summarized guidance we may make. This document is designed to be read by investors before some regularly scheduled quarterly conference call. As such, for this call, we will make brief prepared remarks and transition into a questions 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 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.S. and international commercialization, market development efforts, 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. You'll find these documents in the investor relations section of our website at www.globcos.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 Globcos' ongoing results of operations, particularly when comparing underlying results from period to period. Please refer to the tables and earnings press release available in the investor relations 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 Glocos Chairman and CEO, Tom Burns.

Okay, thanks, Chris. Good afternoon, and thank you all for joining us. Today, Glocos reported record third quarter consolidated net sales of $96.7 million, up 24% versus the year-ago quarter. As a result of our strong performance, we are raising our full year 2024 net sales guidance range to 377 to 379 million versus 370 to 376 million previously. Our third quarter record results were primarily driven by both our U.S. and international glaucoma franchises, where we continue to accelerate efforts to expand access to interventional glaucoma tools for the benefit of physicians and patients. Our goal to advance and improve glaucoma treatment by driving earlier intervention continues to build momentum as we lead and work closely with surgeons thought leaders globally to organically drive this broader evolution in the standard of care for the benefit of patients. These efforts were on full display at the AAO annual meeting last month where the interest and excitement levels for interventional glaucoma and our technologies were high. Within our U.S. glaucoma franchise, we delivered record third-quarter sales of $51.6 million on strong year-over-year accelerating growth of 35%, driven by early but growing contributions from high-dose TR, along with continued strong growth within our overall iStent portfolio, led by iStent Infinite. On the latter, utilization of iStent Infinite for glaucoma patients that have failed medical and surgical therapy continues to expand as our ongoing clinical education efforts in improving market access landscapes takes hold. It is also worth noting that during the third quarter, five of the seven MACs issued final MIGS LCDs that largely align with their proposals as they establish coverage for iStent Infinite that is consistent with our original reconsideration request. We look forward to their effective dates later this month, as we expect it will be an important step in unlocking the remaining Medicare Advantage and commercial plan coverage for Iceman Infinite. That said, I should also note that with any coverage policy change, we may experience some transient turbulence as providers navigate any potential impacts associated with these LCDs. Turning to our procedural pharmaceutical franchise and IDOS-TR, I am pleased to report that we successfully advanced execution of our detailed launch plans for this first-of-its-kind intracameral procedural pharmaceutical that was designed to deliver glaucoma therapy for up to three years. During the third quarter, the expanded access of IDOS-TR to all of our sales field personnel helped support a growing number of trained surgeons and expanding utilization. More importantly, outcomes and feedback from a growing number of cases and trained surgeons continue to be very positive and reaffirms our view that with the launch of IDOS-TR, we are pioneering a brand new therapeutic category that has the potential to reshape glaucoma management as we know it today. As you know, a key element to this initial stage gating of our IDOS-TR commercial launch is market access milestones and reimbursement confidence. where we remain focused across a number of areas. First, our team has been hard at work partnering with our customers to ensure a smooth, efficient transition from the miscellaneous drug code to the permanent JCOM for high-dose TR J7355, which became effective July 1, 2024. As a reminder, This now effective J-code is expected to increase patient access and will allow us to expand training plans to future ways of surgeons and facilities over time. While there's certainly more work to do here, particularly as we expand efforts into the commercial arena over the course of 2025 and beyond, we're encouraged by the overall progress our teams are making to support increased reimbursement competence through more streamlined and consistent J-code coverage in payment in several of the MACs to date, with more to come. Second, as anticipated, J7355 was included in CMS's latest HLPD and ASC quarterly update addendums, appropriately establishing pricing of J7355 at ASP plus 6% effective as of October 1st. And third, we are advancing efforts to secure professional fee coverage and payment with MACs. as well as establish commercial and Medicare Advantage coverage now that the permanent J code is effective. As noted in the past, we expect increasing adoption as reimbursement confidence is gained by our customers as we enter 2025. In addition to our commercial efforts, the launch has been supported by a growing set of clinical literature now consisting of eight different peer-reviewed publications highlighting IDOS-TR as a transformative new treatment alternative for patients suffering with glaucoma and inocular hypertension. We also continue to advance our dialogue with the FDA regarding the re-administration of IDOS-TR. And beyond that, remain on track to commence a phase three clinical trial for IDOS-T-REX, our next generation IDOS therapy by the end of 2024. Finally, I should also note CMS issued its final 2025 facility fee and professional fee rules last Friday that largely maintain the 2024 reimbursement assignments and rates associated with our procedures and are consistent with the proposals from earlier this year. Moving on, our international glaucoma franchise delivered sales of $24.5 million on year-over-year growth of 21%. The strong growth was once again broad-based as we continue to scale our international infrastructure and execute our plans to drive MIGS forward as the standard of care in each region and major market in the world. Persistent with prior quarters this year, our new French CEPS agreement was favorable to our third quarter reported revenues. We remain in the early stages of expanding our IG and product portfolio initiatives globally ahead of anticipated new product approvals and expanding market access in the years to come. In the interim, we expect the trialing of new competitive products in our major international markets may become an increasing headwind as we enter 2025. And finally, our corneal health franchise delivered sales of 20.6 million on a 5% year-over-year growth, including protrexa net sales of 17.9 million. As discussed last quarter, our third quarter results reflect the impact to protrexa realized revenues as a result of our entry as a company into MDRP. Going forward, we continue to focus on expanding access for keratoconus patients suffering from this rare disease. Staying on corneal health but shifting gears to our pipeline, we were pleased to recently announce positive top-line outcomes in the second Phase III pivotal study for epioxa, our next-generation corneal cross-linking therapy. that met the study's primary efficacy endpoint and, once again, demonstrated the potential of epioxa to halt or reduce the advancement of keratoconus, a progressive site-threatening corneal disease. These results further underscore our view that epioxa may provide the ophthalmic community and patients with the first FDA-approved noninvasive corneal cross-linking therapy that does not require the removal of the corneal epithelium, the outermost layer of the front of the eye. We recently completed a successful clinical pre-NDA meeting with the FDA in which the agency agreed that our clinical data package is sufficient to support an NDA submission and review. As such, results from this second phase three confirmatory pivotal trial together with the already completed first phase three pivotal trial are expected to support our anticipated NDA submission for Epioxa by the end of 2024. Beyond Epioxa, we continue to prudently invest in and successfully advance our 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. We remain encouraged with the progress our teams are making across our robust portfolio of clinical and preclinical programs focused in the areas of glaucoma, retina, and rare disease. At the same time, as we've discussed, we continue to prioritize the cadence of our investments as we strive to strike the right balance of risk-based spending and our capital position now and in the future. In support of this, last month we issued notice of redemption for the remaining $57.5 million in principle amount outstanding of our convertible senior notes due 2027. Pursuant to the notice, we anticipate these notes to convert to common stock before the redemption date of December 16, 2024, helping to further solidify our already strong capital position through a deleveraging and de-risking of our balance sheet, as well as a significant reduction in future cash interest expense. In conclusion, I am pleased with the strong commercial and development execution of our teams, that have continued to demonstrate this year. We look forward to continuing to build upon the growing momentum in our business over the coming quarters and years. Our foundation is strong and we are ideally positioned to continue transforming vision for the benefit of patients worldwide. So with that, I'll open the call for questions. Operator?