Glaukos Corporation

Ladies and gentlemen, thank you for standing by. My name is Colby, and I'll be your conference operator today. At this time, I would like to welcome you to the Cloud Coast Corporation's third quarter 2025 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.cloudcoast.com. All lines have been placed on mute to prevent any background noise. And after the speaker's remarks, there will be a question and answer session. If you'd like to ask a question at that time, please press star, then the number one on your telephone keypad. If you'd like to withdraw your question at any time, please press star one again. Please note, this call is being recorded and an archive replay will be available online in the investor relations section at www.cloudcoast.com. I'll now turn the call over to Chris Lewis, Vice President of Investor Relations and Corporate Affairs.

Thank you, and good afternoon. Joining me is Eric Lacos, 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 type of quarterly summary. This document is designed to be read by investors before the regularly scheduled quarterly conference call. 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.S. and international commercialization, market development efforts, product approvals, the 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 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. Please review today's press release and our recent SEC filing for more information about these risk factors. You'll find these documents in the Investors section of our website at www.cloudcoast.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 CloudCoast's ongoing results of operations. particularly when comparing underlying results from period to period. Please refer to the tables on 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'll turn the call over to Glocko's chairman and CEO, Tom Burns.

Okay, thanks, Chris. Good afternoon to everyone, and thank you all for joining us today. In addition to discussing our record third quarter results today, We're also excited to provide an update on Epioxa, our groundbreaking advancement in corneal crosslinking for the treatment of keratoconus following the FDA approval that we announced last week. Let's first start with the record quarter. Today, Congress reported record third quarter consolidated net sales of $133.5 million, up 38% on a reported basis, or 37% on a constant currency basis versus the year-ago quarter. As a result of our strong performance, we are raising our full year 2025 net sales guidance range to 490 to 495 million compared to 480 to 486 million previously. Our third quarter record results reflect the sustained growth acceleration in our business driven by growing IDOS-TR adoption and utilization, along with our broader intervention of glaucoma or IG initiatives globally. Within our U.S. glaucoma franchise, we delivered record third-quarter net sales of $8.8 million on strong year-over-year growth of 57% driven by growing contributions from IDOS-TR, which generated sales of approximately $40 million in the third quarter. IDOS-TR, a first-of-its-kind intracameral procedural pharmaceutical designed to continuously deliver glaucoma drug therapy for up to three years, continues to build a commercial momentum supported by positive clinical outcomes and surge in feedback that 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. Our teams continue to make great progress in the execution of our detailed launch plans for IDOS-TR, and we're encouraged with the continuing growing momentum. Moving on, our international glaucoma franchise delivered net sales of 29.4 million on a year-over-year growth of 20% on a reported basis and 17% on a constant currency basis. This strong growth was once again broad-based as we continue to scale our international infrastructure and execute our plans to drive things forward as a standard of care in each region and major market in the world. Last month, we were pleased to commence commercial launch activities for Iceland Infinite in our key European markets at the ESCRS annual meeting in Copenhagen. Sturgeon's initial interest levels for Iceland Infinite were very high during the meeting, reaffirming our view that EU MDR certification for Iceland Infinite will help us not only maintain and grow our presence in Europe, but also advance and accelerate our broader IG initiatives globally in the years to come. Our Cornell Health franchise delivered net sales of $23.3 million on the over-year growth of 13%, including Fortrexa net sales of $20.3 million. As discussed previously, our third quarter results reflect the continued impact of Fortrexa realized revenues as a result of our entry as a company into the Medicaid Drug Rebate Program, or MDRP. Our record third quarter results reflect strong execution against our key strategic priorities and are a testament to our evolution into a more diversified ophthalmic leader with transformational growth drivers that span across multiple geographies and disease states. As we advance the standard of care in glaucoma and rare disease with IDOS-TR and non-epinosa. Beyond that, we continue to advance a robust pipeline that supports our long-term, best-in-class growth potential while remaining disciplined in capital allocation, focusing on ROI-driven investments and operational efficiency. This quarter, we saw continued gross margin accretion and maintain a strong balance sheet with $278 million in cash and no debt. Now let's shift to our corneal health pipeline. As you know, last week we were delighted to announce the FDA approval of Epilepsia, a groundbreaking advancement in corneal cross-linking for the treatment of keratoconus, a rare, sightly-threatening disease that is currently far too often undiagnosed and untreated. This approval marks a significant milestone for Glaucus and ushers in a new standard of care for keratoconus patients and practitioners with the first and only FDA-approved topical drug therapy that does not require removal of the corneal epithelium, the outermost layer of the front of the eye. As a reminder, Epioxy utilizes a proprietary combination of an oxygen-enriched novel therapeutic that is bioactivated by UV light in an incision-free procedure. This is a result of more than a decade of research focused on slowing or halting the progression of keratoconus while significantly improving patient comfort and minimizing recovery time to provide a new way forward for patients afflicted with this site-threatening rare disease. The FDA approval is based on results from two prospective multicenter, double-masked, Phase III pivotal trials that randomized a total of over 400 patients. Both trials successfully achieved their pre-specified primary efficacy endpoints and demonstrated favorable tolerability and safety profiles. Keratoconus is a debilitating eye condition characterized by progressive thinning and weakening of the cornea that is often most aggressively advancing in patients under the age of 30. If left untreated, it can lead to loss of visual function and even blindness and is one of the leading causes of corneal transplants in the United States. Approximately 90% of cases of keratoconus are bilateral, and as many as 20% of untreated keratoconus patients ultimately require a corneal transplant. Conventional keratoconus treatments, such as eyeglasses or contact lenses, address visual symptoms only and do not slow or halt underlying disease progression. Before we discuss our plans for epioxa, it's important to understand the historical journey of latrexia. our first-generation cross-linking therapy that, unlike Epioxa, requires the removal of the corneal epithelium. The FDA approval of Fetrexaz, an orphan drug, was a major breakthrough back in 2016 as it became the first and only FDA-approved pharmaceutical therapy shown to slow or halt keratoconus progression. Following our nearly half-billion-dollar acquisition of Avidro in 2019, we have subsequently deployed several hundred million dollars in commercial and R&D investments to grow our corneal health franchise, driving new clinical trials, expanding our sales force and commercial reach, strengthening market access capabilities, and enhancing patient education and support programs. These efforts have successfully resulted in Fertrex becoming the standard of care, has excellent real-world outcomes, and helped preserve our visions for tens of thousands of patients. While our disciplined commercial execution has delivered meaningful progress and our investments have made real impact on patients' lives over the past six years, the unfortunate reality is that the access to proper care still remains far too limited, evidenced by the fact that we are still only treating about 10,000 patients annually with Fortrexan today. We estimate fewer than one in five actively diagnosed unstable keratoconus patients are getting access to Fetrexa today, and many more are never diagnosed at all, an unacceptable reality for patients that we must change moving forward. To make matters worse, only 13% of treated patients are under the age of 18, which is when many patients are most vulnerable to significant disease progression and vision loss. Further, given the invasive nature and extended recovery associated with the current Petrexa procedure, many patients are likely to delay or defer treatment. We estimate that as many as 40% of confirmed cases delay or decline Petrexa therapy, including procedures involving treated patients second time. This is simply not good enough for patients, and we are determined to do better for this rare disease community. Like other rare diseases, we believe there are several key factors contributing to why keratoconus remains too often undiagnosed and untreated today, including one, lack of awareness and underdiagnosis, two, misdiagnosis and a focus on managing symptoms rather than proactively treating the underlying disease, and three, a burdensome and lengthy patient journey marked with reimbursement hurdles and fragmented care pathways. The FDA approval of Epioxa marks a pivotal moment, introducing the first incision-free treatment for keratoconus and offering a groundbreaking new therapy for patients. Just as important, it gives us the opportunity to reset and redefine our go-to-market approach to better address this sight-threatening disease and truly expand patient access. With this approval, we plan to substantially increase our investments in patient awareness and access while addressing the long-standing challenges of under-diagnosed and under-treatment that have affected this rare disease community. Our new approach includes significantly enhanced awareness, education, and detection campaigns driven by increased engagements with the optometric community to establish KC detection centers the development of a handheld KC screening device, and expanded advocacy partnerships alongside new patient education efforts to identify and reach patients earlier. To ensure patients move seamlessly from awareness to clinical diagnosis and treatment efficiently, we will establish a network of engaged ODs and MDs and committed epioxus sites of care that maintain a sense of urgency that these vulnerable patients deserve. In parallel, we will launch comprehensive patient services and support programs through our patient access liaison teams to streamline care coordination, demystify the insurance approval process, and advance covered decisions where possible. These efforts are designed to support patients and families at every stage, from awareness and diagnosis through ongoing treatment making the entire journey as seamless, efficient, and patient-friendly as possible. This approval is a culmination of unrelenting research, development, and clinical efforts, and I want to thank our dedicated employees who have put in countless hours to make this approval a reality. We are also deeply grateful to the clinical investigators and participants in the clinical trials who play instrumental roles in bringing Epioxa to the United States. Despite being a relatively young company, Glockos has invested over $1 billion in R&D over the years to develop a robust pipeline focused on chronic and rare ophthalmic diseases. Our continued investment in R&D remains best in class, underscoring our commitment to going first and advancing the standard of care for ophthalmic patients worldwide into the future. We also just broke ground on a new 200,000 square foot research development and manufacturing facility in Huntsville, Alabama to support long-term growth and innovation, including the eventual production of Epioxa. As we hope you can see from our comments today, we are very excited by the significant potential Epioxa offers to patients living with keratoconus and believe it will deliver an exceptional value to patients, providers, and the healthcare system. We've had several meaningful and informative conversations with key members of the physician and patient advocacy communities regarding this value in relation to pricing. Our approach for Epioxa reflects our commitment to responsible innovation, balancing clinical value, cost effectiveness, and patient access. These principles help inform our pricing decision, which also reflects the significant investments we've made thus far and those we plan to make going forward for this rare disease. After several years of thorough and thoughtful evaluation based on these factors and supported by a robust set of internal pharmacoeconomic and published health economic analysis, we have established a wholesale acquisition cost for Epioxa of $78,500, which represents a significantly lower price versus nearly all other rare disease drugs, including those within ophthalmology. This is particularly true when you consider that Epiox is unique as a single administration therapy that is capable of slowing or halting disease progression in the vast majority of patients that are diagnosed with this site-threatening disease. We believe this not only provides a compelling value proposition for physicians and payers, but most importantly enables us to make a fundamentally different investment in patient and provider education and awareness to enable more patients over time to be properly diagnosed and treated at a younger age to preserve their needless loss of vision. Going forward, we anticipate Epioxin will be commercially available in the first quarter of 2026 under a miscellaneous J-code with a permanent J-code established by July 2026. As with all pharmaceutical launches, initial patient access will be gated by our site of care network deployment and typical payer adoption headwinds and hurdles, but we're investing in the infrastructure, teams, and processes necessary to get Epioxa to as many patients as soon as possible in 2026 and beyond. Given the significant advance that Epioxa represents in our commitment to ensuring patients gain access to state-of-the-art incision-free treatment for this rare debilitating disease, we made the decision to discontinue for Atrexa commercial availability following a staged transition process in 2026. This transition will prioritize epioxa as the primary treatment option, reflecting its safety, efficacy, and superior patient experience. Atrexa will remain temporarily available for patients unable to access Epioxa due to coverage or geographic limitations, and will transition all remaining patients through dedicated support programs designed to minimize disruption and ensure continuity of care. As we've discussed with the launch of Epioxa, a critical focus of ours is to improve patient access to the site-saving keratoconus treatment. With that in mind, in addition to our new awareness campaign and patient support programs discussed earlier, we will also deploy a new financial co-pay assistance program for eligible patients and intend to have a comprehensive specialty pharma option available for customers at launch. Our cross-functional teams have been hard at work putting these methodical plans together for several years now. And we are ready and excited to commence execution and make a difference in the lives of these keratoconus patients. The enthusiasm and energy for this new therapy and launch is palpable throughout our organization. In summary, Epioxa represents not just a breakthrough in science, but a breakthrough in how we deliver on our promise to provide the best possible care to patients. Epioxa is more than a product. It's a reset moment and new way forward for keratoconus care. We're proud to lead the way once again in forging a new path to drive expanded patient access and enhance treatment standards. Finally, as discussed earlier, we are raising our 2025 revenue guidance to $490 to $495 million versus $480 to $486 million previously to reflect our third quarter outperformance and continued underlying momentum. We are also introducing a highly preliminary 2026 revenue guidance range of $600 million to $620 million. This preliminary outlook factors in our expectations as it relates to the continued commercial rollout for IDOS-TR, the surgical NAICS landscape, our international glaucoma franchise, as well as our corneal health franchise as we launch epioxin and transition from protrexone. We expect to refine this guidance range and provide additional commentary during our fourth quarter 2025 earnings call expected to be held in February 2026. In conclusion, our record quarter highlights the strength of our strategy and execution as we continue evolving into a diversified economic leader with multiple growth drivers. Eidos TR is already driving meaningful growth today. And we expect Epioxy will begin to contribute in 2026 and beyond as our patient-oriented initiatives take hold. Combined with our robust pipeline that spans glaucoma, rare disease, and retina in particular, along with our disciplined investment and strong balance sheet, we're well positioned to sustain our growth momentum and advance our mission to transform vision therapies for the benefit of patients worldwide. So with that, I'll open the call for questions. Thank you.