Okay, I think we'll get started. Tom Stephan with Stifel, really excited to have Glaukos with us here today. Very pleased to be joined by Joe Gilliam, Alex Thurman, and Chris Lewis. Guys, thanks for coming.
Of course. Thanks for having us.
I'll begin with iDose TR. 3Q saw sales double sequentially. Joe, maybe to start with you, can you just level set us, talk about the key dynamics that occurred around iDose TR in the third quarter? Maybe just at a high level.
Yeah, I mean, I think from the third quarter specifically, obviously the key element was turning on the J-code first and foremost, enabling a little wider utilization across our rep base. I think big picture-wise, it's still very much the early days. And so what you see over the course of the quarter, and certainly as we continue to move forward here, is just the continued blocking and tackling of opening up, the reimbursement channels, educating physicians, and sort of just putting one foot in front of the other to start to unlock this. And I think the third quarter certainly was an example of that and a good step in the right direction.
That's great. And you mentioned kind of turning on the J-code. I guess as J-code payments started to come through throughout the third quarter, talk about kind of iDose momentum sort of in the late August, September timeframe, and what that looked like exiting 3 Q.
Yeah. Well, inherently, if you think back, I think our second quarter call was in August and we talked about dynamics there. And then obviously we exceeded those in terms of the results for the quarter, which I think, you know, inherently means that a lot of that happened later in the quarter, which is what you'd expect. So for accounts and for the surgeons that attach to those accounts, getting through that process and seeing that the process plays out the way it's supposed to and getting paid, then ultimately translating that confidence into the, you know, total office dynamic of finding these patients and scheduling them going forward, it takes time.
So as you move forward, you expect to see, you know, increasing utilization within those accounts that achieve that confidence, as well as hopefully the reps expanding in the number of doctors doing the procedure. We certainly saw that.
That's perfect, and you know, the MAC variability, that was really helpful. Some of that color you gave on the call talking about kind of five of the seven still having wood to chop, if that's maybe a fair way to characterize it. Maybe can you help us with sort of how long should we expect it to take those five MACs to get up to speed? Is it months? Is it quarters? Sort of to that level of the other two MACs?
Sure. Well, let me first start by saying we've done this before. This is no different than any launch we've had. And I think anytime you have, whether it's a procedure or a procedural pharmaceutical in this case, you go through the same process with the MACs. It's all about driving volumes. When you start, whether you've got a J-code or whether you've got a procedure code, you have to drive the volumes to get past that initial adjudication phase, which is very manual. Even with a J-code, it's still manual. They're looking at every claim. It's assigned to case managers. Eventually you drive enough volume and they've seen enough data through document requests and other things where they put it into the more, I call it automated side of the equation where it's paid on a routine and timely basis. That's the process that you go through.
Obviously for us, you know, we talked about, you know, what's transpired in Noridian and to a certain extent Novitas and being able to translate, you know, those early volumes into a more timely adjudication process. That's super encouraging. There is no statutory timeframe. All you can try to do is continue to run through those brick walls, drive the volumes. It's a lot of work on the accounts. It's a lot of work on your team, both sales and reimbursement, but you just continue to drive through that. And what I said on the call was in some of these other MACs, we may already actually kind of be there. It's hard to totally know, you know, we're not in the chain of custody on these claims. That's between the practice and the MAC.
What we do is try to help support that, make sure we're aware and monitor where these things are at. But you start to see examples of them paying in two to three weeks, but you don't have enough in to say, okay, we're in it, it's fully there.
Got it.
So it's something we continue to try to knock down every day. And hopefully, you know, on our next call, we'll have, you know, some more updates to provide.
So maybe very kind of roughly speaking, you said no statutory timeframes, but is this something with these five MACs and I won't call them headwinds, but again, getting up to speed, are we talking about this six months from now or, you know, a volume game? Two of the MACs got up to speed within, yeah, six months. Are we talking about this six months from now?
I certainly hope not. I mean, I think again, there's no statutory timeframe, and you have to separate between the facility and drug payment and establishing and putting, I'll call it the fear factor side of reimbursement confidence behind you versus the professional fee, so it's possible that you'll still be having certain conversations around, you know, elements of this, but I'm more hopeful that in that timeframe, we're starting to talk about the building blocks we're putting in place beyond fee-for-service and into the commercial Medicare Advantage arena, which obviously is an important part of our plan for next year going into 2026.
We'll definitely get to that, and maybe, you know, kind of to wrap things up on this MAC topic, on the call, you did talk about how so far in Q4, that in those more established MAC regions, you're seeing positive surge in adoption and utilization trends. Maybe to start, Joe, can you elaborate a bit on kind of what this means on the utilization side? You know, how meaningful is that pickup in volume, even qualitatively speaking, once those established kind of MACs come into the fold?
I think in some ways it's common sense if you think about it from that. This is a really large market. So when you think about, you know, even to slice it down to the 10 million or so eyes that are diagnosed and treated with glaucoma or hypertension in any given time in the U.S., we're just scratching the surface in any MAC, in any territory, anywhere you look at it in terms of driving that utilization. So what you look for is the fact that as some of the reimbursement confidence headwinds subside and doctors can focus on the clinical side of the equation, there's a lot of room for, depending on how you look, same store growth within that. We tend to call it hunting and farming.
And so what you're seeing in places like Noridian or to a certain extent Novitas is a widening in the number of doctors using the procedure, what you'd expect, as well as an increase in terms of that utilization within as they iron out how the practice flow dynamics work. And I think all these things are really ahead of clearly, you know, a much bigger push when you think about it from an insurance standpoint, when you think about it in terms of referral networks, when you think about it in terms of advertising and patient awareness, et cetera. We're still very much in, you know, the top of the first inning, if you will, in the context of this overall dynamic, even in a MAC that's paying the way they're supposed to on an adjudicated basis.
Got it. So you mentioned kind of a widening number of doctors, I guess to stick with, you know, what you see once a MAC comes up to speed. For surgeon adoption, you know, is this facilities kind of green lighting iDose TR? Is it maybe doctors just seeing profits coming through? You know, talk about sort of what the exact catalyst is from a surgeon adoption perspective.
Yeah, there's no single thing, but I would tell you that the first step you got to get through is facilities green lighting it. So, you know, it doesn't matter what the clinical desire is for a surgeon and there's strong desire and appetite for, you know, this product and for interventional glaucoma, broadly speaking. If the account is not ready to let them do it because they want to see themselves get paid, the rest of that doesn't matter much. So you've got to check through that box. They've got to see that, see it working, be educated on that, and give the green light to their doctors to do what's right clinically. Then beyond that, in terms of, you know, other motivations that can be there, there's obviously a fairly high percentage of doctors who don't participate in the facility side.
They don't have an ownership as a part of that, and so from an economic motivation standpoint, the professional fee can be another one of those items. You know, again, I go back to when it's fun is when you've sort of knocked down those barriers at the adjudication level of the claim, of the professional fee, and you can really just focus on patient awareness and the clinical decision making around the why behind interventional glaucoma in iDose. In places like Noridian, where we're there, at least for the fee-for-service population, it's a pretty fun time.
Got it. Maybe sticking with reimbursement, just on the commercial and Medicare Advantage side, that's a goal kind of starting in 2025. Maybe generally speaking, you know, how should investors be thinking about payer risk specific to commercials and Medicare Advantage? I guess in what ways could this manifest? Is it step edits? Is it realized ASP, non-coverage? Maybe if you can level set us on just how to think about any potential risks to that initiative.
First of all, anytime you're, when you go into the commercial payer arena, whether it's with directly commercial covered lives or Medicare Advantage, it's infinitely more complex. Certainly with a procedural pharmaceutical like this, you're dealing with prior authorizations, benefits verifications, and even some of the noise that ultimately comes with, you know, subsequent claims adjudication after the procedure. You have to be prepared to support that. The customer has to be well educated. And not all customers are created equal when it comes to how they, you know, handle these things. So there's certainly, that is why when we talk about this, we talk about truly crawling before we walk and before we jog, et c, at a macro level and at an individual account level.
So when you think about this in the context of drivers, I would say that's much more of a 2026 and beyond driver. What you want to do is get all those building blocks in place in 2025 to enable the customers. Behind the scenes, and this is worth noting, you know, our payer relations team has been hard at work since the day of approval. And so there's actually already, if you go out and search, a lot of coverage. And that coverage very much looks like the coverage that you see from DURYSTA and other similar type products. We just have not turned that on, so to speak, in the context of supporting it in the field because you want to establish the fee-for-service environment first.
Got it. So maybe this is for me, but you know, can you explain to us sort of how Glaukos will help surgeons and facilities navigate patient selection once non-fee for service patients enter the equation? I think right now it's a little straightforward where a doctor or a facility can see if this is a fee for service patient with a supplement and they can proceed with that patient. But as you start to kind of more turn on commercials and Medicare Advantage, how is Glaukos going to help the doctor on the front end make sure they're identifying proper patients?
Yeah, I mean, ultimately these things are the responsibility of the surgeon and the practice. You know, what you try to do is provide proper education and tools to support that. There's a whole variety of ways in terms of, you know, the information that's at their fingertips around the current coverage policies, what's there. It's one of the reasons why one of the most significant areas of investments for us in the last 12-18 months and going forward is in our field-based reimbursement support teams, our payer relation teams, et c. You want to make sure that you can answer those questions efficiently as they arise. Sometimes that question might come first to the sales team member that's there and for them to work in coordination, obviously with our reimbursement teams to try to make sure those answers are being, you know, figured out and adjudicated.
More often than not, what happens at the account level is misinformation or misunderstanding. It's not so much about like the blocking and tackling of how you actually process these things. And so it's just trying to drive best practices within that and sharing of that information around what can and can't be done.
Makes sense. For 2025, won't ask for any sort of iDose-related guidance.
We will, but.
In a different way. I'll try to get creative here. But from a cadence perspective, you know, is it best to look at the ramp throughout 2025 or kind of sequential growth as more of a linear quarter-over-quarter progression? Or could we see some type of sequential acceleration, inflection at some point, maybe after the rest of the MACs get up to speed in the near term? Maybe if you can just help us think about what the ramp might look like. It's not guidance.
Yeah, no, I mean, I look at it like this. From an operating perspective, all we can keep doing is driving the 101 different variables that can drive ultimate success for iDose TR with as much urgency and efficiency as possible. And, you know, we have so many different work streams, Tom, and, you know, some of them get more attention like the things around the MACs here and now or what it might be, but there are so many other things that you're driving to unlock and change the standard of care in a very large market. And how much of those things move the needle in any given quarter versus any given half year versus any given year can be difficult to predict.
So all you do is continue to try to knock down, if there's a barrier to patient access, knocking it down with efficiency, whether that's on the commercial side, Medicare Advantage side, or the traditional Medicare fee for service, whether that's the drug side or whether that's the professional fee side. You know, where I look forward to getting to is a point where enough of those things are in the rearview mirror that you really start to play offense with this. And with offense meaning that, you know, we and others in the industry can put more fuel into really from a commercial and DTC, if you will, perspective, changing the mindset around why intervention is the right approach for this asymptomatic progressive disease.
Got it. So if we think back to December 2023 with approval of iDose TR, the long-term 2025 and beyond for iDose TR, how have your expectations, how do they compare today versus kind of at the time of FDA approval, just based on sort of everything you've learned over the last 11 months?
Yeah. I don't know that the macro has changed. I think that as you make steps forward in a launch like this, it's more about de-risking that path. You know, the opportunity associated with interventional glaucoma and iDose by extension, the math is just the math on that in terms of the sheer size of the opportunity. What we've done is de-risk that significantly. And what I mean by that is if you look at the milestones that we laid out, establishing the facility fee, establishing the J-code, establishing of ASP-based reimbursement, making the investments in sort of the human capital side as well as everything else along that way. And then most importantly, and I think this comes out hopefully loud and clear when you do your channel checks, at the end of the day, the product's got to work. We forget that, right?
You know, we go through these studies and yeah, iDose TR was a very large study. So you have a lot of confidence from the thousand plus patients that were there across the full disease spectrum. But at the end of the day, the product's got to work. And so the thing that's been most encouraging to us is watching and getting that feedback from these surgeons who are adopting it and the, you know, post-operative, you know, results that they're seeing. That lays the foundation that for all of us who have longer-term horizons should matter most. Because any given month or any given quarter, things will move based upon things that some of which we have control, a lot of which we don't. But you know that you're headed towards something when you've got a product that delivers on behalf of the patients and for those providers.
Got it. That's great. Wanted to spend a little bit of time on iDose TREX. I think you're intending to commence the phase III later this year. Maybe to start, do we think about the trial and the targeted endpoints kind of as similar to iDose TR, maybe such as the three months of efficacy and the 12 months of safety with whatever you're able to share? Can you talk about that phase III trial for TREX?
Yeah, and there may be some nuanced differences that, you know, even more at the Tomas level in the context of the T's and the I's, but from a macro standpoint, very similar. I mean, the FDA looks at these drug trials within the glaucoma space all on a very similar basis. They have a tried and true formula where they look at these things from primary efficacy over the course of three months, and then from a procedural standpoint, they want to make sure it remains safe beyond that.
Got it. And so with this trial, is there anything, I guess, specific to it to ensure kind of readministration? Have you discussed with FDA if there's a certain way it should be structured to remove the risk of a single administration label? Or is maybe that just not as important with TRX as a 4-6 years implant?
Yeah, I probably will avoid the play-by-play in terms of some of those trial design or conversations with the FDA. I mean, obviously, you know, we've now been down this path with them in a variety of ways. And so all of that is factored into trial design and what you do and don't, you know, show and how you have cohorts to try to maximize that. And as you know, even on iDose TREX, those conversations are ongoing with the FDA around readministration. So I think that's something that we'll continue to watch. I mean, your point is valid though. I mean, at some point where you have multiple options, including ones that can last, you know, multiple years here, it becomes a little less relevant in the grand scheme of things, but still relevant. I mean, the average glaucoma patient's in a practice for 20 + years.
And so you want to have, you know, multiple tools that can help continue to hold and control that disease progression over a pretty prolonged period of time.
Got it. Maybe last one on TREX. Is there, I guess, how should we be thinking about price? You know, if this comes to market later this decade, do we think about it as kind of replacing iDose TR from a price perspective? Or does the durability and the value maybe warrant a potentially much higher price?
The durability and the, you know, the potential duration effects certainly warrant that. And it's something I think we would strive to achieve with an iDose TREX launch. I think anytime, and I'll punt on this until we're at that time, because anytime that you're faced with that, you're looking at the market conditions, the market access conditions, a whole host of things that will be variables that we'll take into consideration when we actually determine the price there. But from that perspective, you know, you have a known mechanism of action, a known drug, and now you're providing that same therapy for a much longer period of time. It certainly warrants a price premium to where we're at with iDose TR.
Makes sense. I'll move to margins and profitability. I'll actually stick with iDose TR quickly. Alex, I'll start with you. I think you've talked about iDose TR potentially being gross margin accretive in the back half of 2025. Based on ASP, I mean, can we think about peak gross margin on iDose TR as something maybe with a nine handle or, you know, talk about that kind of longer term once that fully scales?
Tom, that sounds awfully like a guidance question.
More long-term.
I'll stop. I mean, you've hit it, right? Right now, we enjoy margins in the, you know, low-to-mid 90s or low-to-mid 80s. And given the ASP of iDose TR, you know, it's fully expected that the margin should be accretive or iDose TR will be accretive of the margin over time. And we do expect if Joe does his job, which he's doing quite well, that we should start to see that accretion next year.
Got it. That's great. And Alex, I'll stick with you. For the free cash flow break-even goal in 2025, is that a full year target or is it maybe more specific to a quarter or quarters as, you know, you've talked about maybe there could be some iDose-driven volatility?
Yeah, well, let me answer it this way. I mean, look, I have a line of sight as we progress through this iDose TR launch of getting back to a point where we are getting to cash flow break-even. And that's our near-term goal. You know, we used to live in that world in the late teens prior to the big investments that we made in getting ready for iDose TR. And we want to get back to that place in time. And as you know, or a lot of you know, you know, we have a very rich pipeline and we have a CEO that's very excited about the pipeline. And so it's going to be a balancing of investments between the dollars that Joe's going to deliver on the iDose TR side versus the dollars that we want to reinvest in the pipeline through our CEO.
That's great.
That's kind of our plan.
That makes sense. I'll switch to kind of core U.S. glaucoma. And I'll start with the LCDs. I think they just went into effect in the last couple of days. Joe, I'll pivot back to you. I guess from a MIGS market perspective, how do you expect the LCDs to impact just broader market growth next year, notably given the preclusion of MIGS kind of doing stacking?
Yeah. Well, so first of all, the challenge in that is I don't think any of us have a perfect handle on how much those dynamics have already played out over the last 12 months. You know, in some ways, the proposed LCDs that happened mid-last year through, you know, the near implementation, the adjustment, the quiet period, the new coming out, et c, I think to a degree some of this has already played out in the marketplace. Having said that, I would expect that the decoupling of these procedures from an overall big, you know, picture dollars, I don't think it changes. The volumes will continue to grow at a nice clip as more and more folks intervene, combo cataract, standalone, et c. I think for combo cataract segment specifically, the dollars may shrink a little bit next year, you know, just simply because of folks.
It's hard to quantify. I also think as you've seen with our own results, that hopefully will get overcome or dwarfed by the fact that more and more surgeons are looking at this as an interventional disease. Whether it's iStent infinite or the other tools that are out there, certainly iDose being most prominent, you can see a broader growth opportunity.
That was sort of my follow-up. So if there are kind of market-related headwinds seemingly in combo cataract, do you feel confident that for Glaukos, notably iStent infinite standalone can help offset some of those market growth headwinds, whether it's share or kind of growing just interventional glaucoma?
Yeah, that's certainly the goal. You know, again, I go back to the math of this whole thing. The industry in its first phase was built upon combo cataract MIGS, which we've heard to say many times is a 500,000 procedure, you know, market on an annual basis, and you're entering into a market that's 20 + million eyes and even 10 million in terms of diagnosed and treated today, so from that standpoint, the goal would be to play through whatever noise or volatility comes with the fact that the decision-making has been taken out of the hands of the clinicians a bit, unfortunately, with these LCDs and continue to grow the market at a clip that takes care of that.
That's great. And so U.S. glaucoma, let's call it ex-iDose, grown very strongly in 2024. The back half of this year may step down a touch to, I think, the low double-digit range. And you've talked about some of the factors behind that. Do you feel that is, call it a potentially stable growth rate for that subsegment as we move into 2025, maybe as iStent infinite standalone grows to bigger numbers and maybe even an iDose halo effect takes hold? You know, talk about the sustainability of that kind of low double-digit exit growth rate.
Yeah, well, I wouldn't endorse any particular percentage or, you know, growth target as it relates to 2025. What I would say is, and you've sort of covered it, I think there are a variety of puts and takes when it comes to this. And I think that our goal, you know, we have a suite of products now that we think have robust evidence behind them, growing commercial and broader insurance coverage. And so the hope would be that the efforts around driving interventional glaucoma can certainly drive growth that exceeds any noise that comes from LCD-related impacts or otherwise. How far that takes us. And remember, in our case, we also have a competing resource challenge.
So in some ways, as more and more emphasis is understandably placed on driving iDose TR and the opportunity associated with that, that might come with periods of some volatility in terms of the results that we see on the stent side. You know, our job is to try to minimize that and keep both of them growing. And there's a variety of ways we'll do that, but it's not without some risk in terms of focus and results.
Makes sense. Maybe to wrap up on U.S. glaucoma, I think all in U.S. glaucoma, year-over-year growth is poised to accelerate for a fifth straight quarter and the fourth quarter. What is your level of confidence that trends can continue through 2025? I guess particularly as incremental year-over-year iDose dollar contribution likely picks up a bit. I feel like that's been a theme over the last couple of calls of accelerating U.S. glaucoma growth. Is that kind of the company's target moving forward?
Well, I think any company would have that target. So from that standpoint, of course, that always gets harder every year that goes by and every quarter goes by, the comps get that much more difficult. But again, I go back to the theme of what we've been talking around, and that is it's an awfully large opportunity for our industry and for us specifically. The shift towards interventional glaucoma, like I said earlier, we're in the top of the first inning. And I think that multiple companies and multiple products can win from that. And I hope that certainly we do, but it's a really big pond that we're fishing in, in doing the right thing clinically for these patients.
I hope that we're not just talking about, you know, 2025, but that we're talking about a 5-year and 10-year period of really profound, you know, growth and scaling for our company and for the glaucoma care industry, broadly speaking.
That's great. I think we have about a minute or two left. OUS glaucoma competition, you guys talked about potential trialing of new products as we enter 2025. Joe or Alex, can you elaborate a bit on that? And is that Hydrus or maybe just any more color there would be helpful?
I think there's a variety of technologies, you know, most of them that are out there that you see trying and trialing and sampling and some utilization as they come out, in particular in Europe, but to a certain extent more broadly internationally. The most prevalent is clearly Hydrus. It's with Alcon. It's in a space that we know and we believe in in terms of the trabecular microbypass stent technologies. But, you know, what we called out around 2025 is that there are a handful of the larger markets that take a little longer to get into from a market access standpoint that we expect to see, you know, Alcon enter as we exit this year and into next year. And regardless of how the longer-term market share dynamics play out there, that does take away a little bit from your growth profile entering the year.
At the same time, we're working hard to bring new products and our portfolio abroad. You know, historically that was a much more straightforward process. Now we all are subject to the new rules in Europe and that process is a little bit more opaque. So in some ways, the put or take around the international side will come down to that competitive dynamic relative to our ability to bring some of these new products in and grow that market to the next level. And we'll just have to play our way through that in 2025.
Makes sense. I'll ask one more kind of a very broad question. What do you think is more underappreciated by investors between iDose TR or the rest of the pipeline? Maybe it's both. Just your thoughts on, you know, kind of those two sides of the business.
I think it's understandable. It's a little bit of both. And I think we certainly are sober about this reality. I mean, you come from a company, we're just starting to get our sea legs in terms of the first phase of the company's evolution and combo cataract MIGS and expanding. And I know there's an awful lot of enthusiasm around this next level. And there's also a fair amount of skepticism that says, well, prove it to me. And so that's our job to do in the context of iDose TR. I think if you look at the macro opportunity associated with interventional glaucoma and the role that iDose TR can play in it, you get awfully enthusiastic about what the next 10 years can mean for the company and the industry.
And that's before layering on the things that don't spend as much time on talking about the shots on goal we've gotten in retina for Epioxa in terms of the next phase on the corneal health and rare disease side, as well as some of the other, you know, iLution platforms and things like that. There's an awful lot under the hood here that gets me excited about the next 20 years, let alone the next two. So I think.