Good afternoon, everyone. Thank you for coming today, and thank you for our panelists. We have CFO of Glaukos, Alex Thurman, here, and Chris Lewis, Head of IR. Sam Brodovsky one of the med tech analysts here at Truist. Again, feel free to come up, ask questions on the microphones, or send in anything virtually or through the QR code up here. Thank you for both coming today. I think we'll get started off with the topic du jour of iDose. I just want to start off with a higher level question here, and - a s you think about iDose, as it's starting to ramp and come into the market, where do you see that fitting into your portfolio today? And then longer term, same question: Where do you see iDose fitting into the paradigm of glaucoma treatment?
Yep. Well, thanks for having us, Sam, and happy to start out, and Chris will fill in as necessary. But I think for us, the way to think about iDose is initially to go back to what we started about 12-18 months ago, which was to try and change the whole perception in the marketplace around interventional glaucoma. You know, when the company was formed, we always knew there needed to be a better way than just drops. Drops work when patients take them, but what we know and what we found and studies have shown is that people just don't like to take the drops. They have a hard time taking the drops, they give side effects like dry eye or red eyes, and they just don't take them. So there had to be a better way.
So, you know, to try and change that paradigm from, you know, the patient presents himself with glaucoma, and the doctor automatically just writes a script and says, "Go take your drops," to doing something interventionally before that is kind of where we're headed. And we believe that iDose and iStent Infinite, those products are the gateway or foundations that can be used in that particular, you know, mindset. And we're starting to get there. So we saw great results in Q1 with iStent Infinite. And then obviously, we're just now launching iDose into that marketplace, and we think it'll play—those two will really play a really big role in the interventional glaucoma marketplace.
Great. And starting off on reimbursement for iDose, obviously a little, little different paradigm there than what we've seen more traditionally with MIGS. So just can you level set us and remind us on, you know, when should we be expecting the J-code to fully come into place? And sort of, you know, what are the next steps there as it relates to 3Q and 4Q, and how we should be thinking about that impacting docs' interaction with the product.
Yeah, so I'll take that, Sam. So, I guess first of all, for iDose, we've been really pleased with kind of, you know, all the milestones we've talked about, coming out of the approval last year. Thus far, we've executed upon in a timely fashion. And so, there's really three aspects of the iDose reimbursement structure. One is the J-code, two is the facility fee, and three is the professional fee. For the J-code, that's obviously what accounts get paid for, the cost of the device. You know, we were happy to get a J-code assigned from CMS a couple months ago. There's two big unlocking events with that J-code as we look out over the remainder of this year. One will be the effectiveness of that J-code.
That becomes effective July first, so here in a couple of weeks. The second aspect of that will be a published ASP from CMS. So you'll have two quarters of that, and that will become effective October first. And so right now, under the miscellaneous code period, it's a pretty manual process with, you know, longer payment turnaround times. Once we get that J-code effective, that will help that process. And then once you get that ASP published by CMS, that will really provide, you know, streamline, consistent, quicker turnaround payments on the J-code for our customers.
Yeah. So 4Q is really when we should be thinking about sort of an unencumbered J-code period?
Yeah, from a J-code perspective, all the pieces should be in place.
Yeah
Beginning in the fourth quarter.
Yeah, and then you'd start to talk on the physician fee there. Any updated thoughts on either timing of when we could start to see published rates there and then what those rates could come out as?
Yeah, so I think our thought hasn't changed as it comes to the professional fee. You know, we've commenced all the activities you'd hope us to in terms of the educational meetings with the MACs. As a reminder, it's a Category III code, so it's MAC by MAC from a professional fee perspective. Typically, historically, at least for some of our other technologies, that's been a 6 to 9-month type process, and so that's our expectation. So if you think about just what that implies, is that, you know, typically, that will be kind of third, fourth quarter into 2025, is our expectation in terms of when those professional fees become more consistent, dependable, and ultimately, those will get posted to the actual MAC professional fee schedules.
Great. Just to wrap up reimbursement, just any, any areas where you think there could be potential stumbling blocks or, or areas that you think you may get pushback from, from whether it's MACs or, or other players in the market that you could see issues with?
I think, well, we have a, you know, I think we're very confident in our market access capabilities and the team we've built, and I think we've proven that since pioneering the original MIGS market. There's always challenges that will arise for sure, especially as it comes to market access and reimbursement, but I think we have a thoughtful game plan that we're executing upon. And so, thus far, there's been no surprises as it comes to that. You know, as we get into, you know, after the J-code becomes effective, we'll accelerate our efforts to expand coverage into the commercial and Medicare Advantage arenas.
With that comes, you know, unique challenges and opportunities, but it's something we're focused on, and our expectation there is, is for, you know, broad coverage across all, all of those different, you know, insurers.
Yeah, and just remind us, as you're blocking and tackling different segments of the market by coverage, initially going after the sort of fee-for-service group with secondary insurance, can you just remind us size of that market and then when we can start to think Medicare Advantage and, and commercial will become more free and clear from a reimbursement perspective?
Yeah, so, the way kind of the buckets to think about when it comes to, you know, patient insurance aspects, historically, our glaucoma business has been 75-80% Medicare, 20-25% commercial. So that's probably a good starting place to think about. Over time, that could mix, shift a little bit more towards commercial as we get earlier in the treatment paradigm for glaucoma. Typically, a bit of a younger disease state than a cataract. But, you know, the 80/20 is probably a good place to think about. As you know, you know, broadly, it's about 50/50 Medicare traditional fee-for-service versus Medicare Advantage. So if you think about those, about 40/40, and then the remaining 20 is commercial.
As we think about right now, our focus, just to keep the kind of the claims process at the in these early access cases as clean and streamlined as possible, is to focus on Medicare fee-for-service patients. Some of that's for the patient economic perspective and the copay dynamics associated with that. The vast majority of those patients have either supplemental or secondary insurance to cover the vast, if not all, of that copay exposure, and so that's where we're focused right now. Like I said before, we'll accelerate those efforts into the commercial once the J-code becomes effective, you know, more in later this year into 2025, realistically. The good thing with as a patient economic perspective, on commercial patients, you'll provide copay assistance, as you know, all drug companies do.
So we'll provide copay assistance for the commercial patients, so that will, you know, be no issues on the patient economic side of things for commercial patients. And then, as is the case with a lot of other, you know, healthcare companies, the Med Advantage patient pool will probably be, you know, the last frontier, if you will, from a patient copay perspective. I think a small percentage have low to no deductible type plans, so it's not completely off-limits out of the gates. And then, you know, obviously, you'll have patients hit their out-of-pocket maximums towards the latter part of the year if they get procedures in the earlier part of the year. So we'll look to, you know, fulfill those patients towards the end of the year.
And then finally, as part of our Glaukos's patient services efforts, we will provide patient counseling and all the things you do to really educate them on, you know, the types of plans they should have with glaucoma, a lifelong progressive disease.
Got it. And then switching to the actual procedure opportunity, what are you seeing, you know, out of utilization from the early cohort of surgeons here in terms of standalone use versus combination use, and, and how are you thinking about those different segments of the market materializing over time?
Yeah. So as you know, we, you know, we launched this in the Q1, and it's kind of what we call our early access phase, where we, we had about 15 doctors that, that we focused on. They're kind of friends and family of Glaukos, but it was really their opportunity to teach and share with us as we, trained them, and so we could both share and, and gain pearls of wisdom from each other as we start to launch this product. And our initial, focus was Medicare fee-for-service, for sure, in a standalone setting, right? The, the, the idea there is when you're in a miscellaneous C-code, environment, is to keep the claim as clean as possible. And so that was what we were recommending to our doctors to do those, early cases on.
But yet, you know, we did see them if they felt it was best for the patient to do it in combination with something else, like a cataract or an I nfinite, they were free to do that. But for the time being, under the miscellaneous C-code, it makes the most sense to keep it clean and simple if we can and have that in the standalone market, and we'll continue to push that.
So do you think when, you know, call it 4Q, when the J-code's fully established, is that when we could start to see combination use ramp more fully, or, or is that more of a 25 event?
No, I think you could see it at any time, right? 'Cause to be fair, we, we've always said that, in combination with cataract surgery is a very low-hanging part of the market.
Mm-hmm.
And so, if surgeons decide to do that in combination, then we can see them do that for sure. We're not going to tell them no. But we really want to build that interventional glaucoma marketplace, like I explained at the beginning. And so our focus, in the near term, in the short term, is going to be around, you know, building that marketplace. It's such a larger opportunity, and we think it's probably a, you know, a great solution for those patients to get into an interventional type of product early on in their treatment paradigm.
Great. And so as we think about expanding beyond the initial cohort, I mean, I think we- you know, in our model, we include incremental new surgeon adds each quarter. I mean, how quickly should we be thinking about new surgeons coming on board this year, and how large of those groups should we be expecting those groups to be?
Well, here's what I'll say. You know, we, the commercial organization, planned for about 5-7 waves, different waves of releasing our training to our reps. It started with those initial 15. You know, that might have been 15 or less reps that were involved with those 15 accounts.
And then, as we've moved along, you can imagine that you might say to a rep, "Okay, each rep, of which we have between 65 and 70, pick one customer that you feel comfortable with and confident with, that you can go in there and you can learn and get your sea legs around how to train that doctor on, and then, have them do the procedure, have them go through the reimbursement process, etcetera." Again, you're gonna always have that natural governor of this miscellaneous C-code in the, in the first half of this year.
And then, to your point, once you get past that and into the second half of the year, you know, maybe you tell the rep: "Okay, now do two doctors." And then by the time you're in that fourth quarter, in the period where you have the ASP as well as the J-code, then you can really release, so to speak, those reps to say, "Okay, go out," and you've had some successes in the past now on a limited basis. Everything's all set on the reimbursement side. You've got, you know, the J-code in place, you've got the ASC payment in place. We hopefully have the majority, if not all, of the pro fees in place. Go out and train as many as you can and are ready to be trained and go from there.
Yeah.
So I'll just add to that, Sam. If you look at our history, you know, we kind of pride ourselves on taking a methodical, controlled approach, 'cause you really, out of the gate, want to just get great clinical outcomes, right? And start that foundation, you know, for surgeon training and expansion over time. So thus far, we've been really pleased with all the feedback and the outcomes we've seen from the initial cases. And to Alex's point, you kind of have a natural governor in there on some of the reimbursement developments that will happen over the course of this year to really aligns with that approach.
Mm-hmm. So first question, reasonable to assume each of those successive waves is going to be incrementally larger, at least to an extent, than prior waves?
Yes.
Then in terms of surgeon feedback from docs who aren't in the - you know, I mean, docs we speak to are very well aware of it, even if they haven't used it yet. Are you turning away docs from using it right now? And how has feedback been from surgeons outside of that, of the initial cohorts?
Yeah, I think it remains early, so obviously, you know, it's fair to say there's probably some docs that, you know, want it that haven't had access to it yet. But, you know, over the, you know, coming months and quarters, they'll have access and get trained if they want to, and that's obviously our goal. So I think that, you know, I think for us, the clinical receptivity and kind of affirmation has been really encouraging thus far in the launch for us -
Yeah
To hear that excitement. And going back to Alex's earlier point, just that broader move of interventional glaucoma, you've really started to, you know, see that at AGS earlier this year and ASCRS with kind of standing room only, you know, rooms and symposia, events. It's clear, it's catching on, and that's exciting for us 'cause like Alex said, we believe a lot of those roads ultimately come back to, you know, the foundational technologies with iDose and iStent Infinite for us over time.
Got it. Just quickly, you know, for 1Q, you sort of helped triangulate us to a, to an iDose number. Is that something you're gonna plan to do for 2Q and 3Q? And, you know, is there any point in your mind where you think iDose would be large enough that you would disclose it?
It's all to be determined, Sam, to be fair, right? We're still talking internally, how we do this, how we disclose it, what do we disclose, if anything. We've got people in one ear saying, "Give us the number." We've got people in the other ear at the same time saying, "Don't say anything. Keep it all within the U.S. glaucoma segment." So, you know, we always say, at some point, iDose will be large enough that we can't hide it so to speak. And when we get to that point, it'll be a good problem for all of us, and we'll figure out what to say.
Yeah, I'll just add, in the first quarter, just a comment we, we provided around our US glaucoma franchise was mid-teens growth in the stenting franchise. And, the reason we gave that was not necessarily to provide, you know, Wall Street a back-envelope-type way to get to the iDose number, but rather, you know, make sure you understood what really drove the performance in the first quarter, which was the stenting franchise, and specifically, you know, the continued evolution and development of iStent Infinite. And so we were really excited to see that acceleration, and that's why we, you know, led with what, you know, provided that commentary that we did.
Okay. And then shifting back to surgeon training, we assume there's about, call it, roughly 5,000 or so iStent users in the U.S. Like, prior pre-peak surgeon training numbers for iStent had been around 700-800. Technique-wise, iDose fairly similar to iStent. You know, is there any reason we, we should, shouldn't assume that peak surgeon training for iDose, when, when the ramp does begin, couldn't be higher?
No, no reason to it. I mean, quite frankly, the iStent, or sorry, the iDose procedure is our simplest and most straightforward procedure. So if you have been trained in iStent in an angle-based surgery, the training of an iDose should be, in theory, much quicker, much faster. And so we don't see, you know, any reason we couldn't get to that peak rate or maybe a little bit higher than that.
Okay. And then margin profile for iDose. I think gross margin, we assume, you know, it's a slight, slight uptick from, from the core stenting business. Help us understand how that, how a contribution margin, how that flows through. You know, you're not really needing to expand the sales force necessarily with it. Just help us understand how that impacts the business more broadly.
No, you're right. I mean, look, we do believe iDose will be accretive to the gross margin, probably sometime in 2025 as we really start to get to scale and are able to absorb the cost of the manufacturing facility that we've built, et cetera. But to your point on contribution margin, while you're right, the SG&A and it's probably not needing a large increase, what we do see is we do have a rich pipeline with lots of programs that our CEO would love to fund with the iDose dollars. And so the way I talk about it is my immediate near-term goal is to get back to cash flow breakeven, right?
Prior to COVID, if you go back in our time and look at our financials, we were always kind of what I'll call living within our means, meaning we were always slightly cash flow positive to cash flow breakeven, and we, we did that. And then we went into a period of investment where we needed to, you know, continue to fund the pipeline through COVID, and then we had to build the manufacturing facility for iDose, and we ended up building a new headquarters so we can continue expanding and playing offense during that period of time. We're kind of past that now and iDose is launching, so now is the time to get back to that living within our means, funding our pipeline, because there's a lot of potential value that can be unlocked in that pipeline.
Then, at some point, we'll get there, and there's no reason today, Sam, that our business couldn't be a 30% operating margin business. But it would come at the cost of the pipeline. So we'll continue to manage that, and my boss and I have good, healthy discussions on how much to fund and when to fund it. That's kinda the way to think about it in the near term.
Got it. Just one more on iDose, and then we'll switch to the-
Sure.
-the other. Two more, actually. First one, on replacement. Have you re-engaged the FDA on a replacement label, and when could we expect to know either way around that?
Yeah. It depends on what you mean by re-engage. Have we had discussions with the FDA? Yes. And what we're doing is having those discussions, figuring out what it is they'd like to see, and then getting the data together to present to them at some point in the future, right? 'Cause if—for those of you who follow the story, if you remember, in our pivotal trials, we did have a cohort of patients that we did, after five years, a replacement of the iDose. And so we tracked all the data around the replacement and the safety profile of that replacement procedure, etc.
Although we submitted that with our original NDA submission, the agency didn't have time to really focus on that and gave us the label that they did, which we were surprised to see, given the lack of any safety signals. And so now, yeah, we're in the process of re-engaging with that, and we'll see what happens. We're not counting on it. You know, it's not necessary for us because we have the TREX, right? The next generation iDose that's coming around the corner and should be, according to our timeline, really ready to launch and be prepared around the time that a lot of these patients will be ready for their next implantation.
Just quickly back to the cash flow comment you had made earlier, Alex.
Yeah.
Is that, is that a 25 item we could expect-
Yeah, I mean, absolutely.
Yeah.
That's when I would be looking for it, yes.
Okay. Last one on iDose. As we have for our market model, we have about 20,000 units of Durysta. You know, our feedback on iDose is more positive, I would say, than what we hear from Durysta. You know, is there anything as we think about the ramp into the market that, you know, puts and takes about how we should be thinking about the adoption curve of iDose relative to Durysta?
Well, I don't think we'd comment on any kinda unit volumes or things of that nature. But what we've said, and what we continue to say, is the way we'd launch this is very methodical, meaning that's, that segment that you covered is a segment of a perfect opportunity for a patient and a doctor to have a conversation about getting an iDose.
Somebody that's had Durysta, it's lasted three months, maybe four months, they're looking for another something to help them keep them off their drops. iDose becomes a perfect opportunity to have that conversation. They've already done an interventional procedure, so they're already past that, you know, that, that hurdle, let's call it, and, and that's one segment of the market, right? You have a bunch of other ones as well. Were you gonna say something, Chris?
I was just gonna add on the Durysta point. They launched just kind of one nuance. They launched with a Category I. They kinda piggybacked the Category I CPT code.
Mm-hmm.
So, the benefit was, it was already established, obviously, at, I think, around a $180 pro fee. With us, we've established, as you know, a, a new, you know, Category III code, and we think that's the right move, for the company and, and the procedure long, long, you know, longer term and the value creation associated with that. But it takes some time to get the pro fees established as part of that process.
Yes.
That's one thing to keep in mind if you're trying to compare the two.
Got it. Okay, switching for the last few minutes here to the Stents business. You know, clearly, Infinite had really strong 1Q. Was there any pent-up demand dynamic there with the new reimbursement levels coming into place, or was that just sorta organic strength and something we should - how much should we expect that to continue, and any puts and takes in the 1Q result there?
I think a lot of it is around the messaging around interventional glaucoma, coupled with the lift in the reimbursement rates that happened on January first. Just the continued, I think, establishment of the pro fees associated with that, that code y eah.
Got it. And then, sorry, I'll only do one on stents, but squeeze in a little flyover for the pipeline that you were talking about. You know, some really exciting assets in the pipeline that I don't think get discussed enough as it relates to the company. You know, retina in particular is one that I think is very attractive. Just how are you thinking about longer term, you know, after iDose? What, you know, what's next and what's most exciting in the pipeline for Glaukos?
Yeah, I'll mention two things. Chris, you can weigh in. I think the most near-term exciting thing that we have coming up is the Epioxa, which is the next generation Photrexa cross-linking product, right? Right now, it's a somewhat of an invasive procedure, although it works great, but it takes - procedure time's long, recovery time's long. The new Epioxa is something that is less invasive, much shorter procedure time, much quicker recovery time.
So we think it can expand the market, expand the opportunity that we have, and it allows us an opportunity to reset the market with respect to that cross-linking business. So that's one thing, and again, just to set or reset the expectations, we're hoping to do the NDA for that by the end of this year and have approval sometime next year. You mentioned the retina.
That's another exciting thing, very early stage for us, but this is a - we're in the initiation or, yeah, enrollment, I should say, of phase 1, looking at safety. It is a bioerodible that is injected in the back of the eye for wet AMD , and in our animal models, it was shown to be effective up to 20 to 24 months of use. So that obviously, the leaders on the market today are 3 to 4 months of efficacy. So if this works in humans, it's a, it's a huge shot on goal, very exciting. But again, early stage, and we're, we're very anxious to follow that phase 1 and see how it goes.
I'll just squeeze in a quick follow-up on the Epioxa component. Is there gonna be a new capital component to that? And when you say reset the market, are you referring to pricing dynamics?
Yeah, the pricing dynamics on resetting the market on the drug side, there will be a new capital piece of equipment that goes along with that drug, but we will make it very easy for existing accounts to do that.
Great.
We'll focus on the drug, not necessarily the box.
Understood. So, a little bit over here, but thank you guys for both taking the time and traveling out here and have a good rest of your conference.
Great.
Thank you very much.