Great. Good afternoon, everyone. Tom Stefans, Stifel MedTech. Really excited to have the Glaukos team here with us today. Joe, Alex, Chris, thanks for attending again.
Yeah, thanks for having us, Tom.
Yeah, thanks.
All right, I think I'll jump right in. A lot of different topics to touch on. I'm going to kick things off with Epioxa. Just on the price, a surprise, I think a positive surprise. Joe, maybe to start with you, talk about just kind of the key factors that ultimately led you to price Epioxa where you did.
Yeah. First, I have to acknowledge it's actually really nice to start off one of these sessions talking about our corneal health business and the Epioxa opportunity for both us and the patients that will benefit from it. From a pricing standpoint, it's not a moment in time. As you can imagine, there's years of kind of research and work that goes into any decision around pricing. Ultimately, it really comes down to trying to establish the right level of pricing to provide value to both patients and providers and the payer system, as well as the sort of overall dynamic.
You factor in a lot of things, but most of those come back to the efforts and the investment you have to make to bring a new product to market, combined with what it takes to obviously drive patient education, patient awareness, and ultimately access to your therapies. I think sometimes when you're looking at a rare disease condition like this, or certainly a rarely diagnosed one, you just forget about the numbers associated with this. There are 5 million cataract procedures done a year in the United States. We treat about 10,000 patients with Photrexa today. All of those investments you're making to get a product to market, as well as ultimately to get that education awareness, is spread over a much smaller end.
Candidly, you want to do everything you possibly can to maximize that patient awareness and the provider education and access to the therapy. That is not an inexpensive endeavor.
Do we think about that latter point as sort of a customer acquisition cost dynamic, where the elevated pricing maybe can help fund that in potentially increasing that 10,000 number?
I mean, maybe from a Wall Street perspective, I mean, that's not the way that we think about it internally. It's more about, are we doing everything within our power to make sure that what's effectively like a needle in a haystack patient, that you're finding them, that you're elevating that awareness and education and diagnosis, if you will, to a point where they can actually get access to a medical doctor who can diagnose them and get them treated. And then ultimately, how are you supporting them in that journey to make sure they get access to that therapy is how we look at it. Yeah, I mean, to a certain extent, if it's Alex or myself or the team, we're thinking about what is that cost of doing that? As you say, customer acquisition cost, but what is the overall cost of doing that?
Are we able to achieve a pricing outcome that enables us to do what maximizes that opportunity? Downstream of that, I sure hope that the result of this is that over time, we're able to find a whole lot more patients. Like I've said numerous times, I think we said on the call, ultimately, I don't know if this will be proven to be a rarely diagnosed disease or a rare disease. What I know is that today, it's a rare disease. Quite frankly, by definition, it's an ultra rare disease when you think about only treating 10,000 patients a year. A lot of that's being masked by the fact that they're misdiagnosed, underdiagnosed, or not ultimately being pushed through to be treating the disease instead of treating the symptoms, which are the things that plague it today.
Got it. Got it. I guess how should we be thinking about gross to net at a high level with Epioxa? What are some of the key factors to consider? Just wondering what you feel is maybe a good ballpark net ASP that investors should be thinking about.
It's a great question. There are really three buckets, I'll call them, of the gross to nets, Tom, that you and investors should be thinking about. The first one is within keratoconus, there's a fairly significant amount of Medicaid patients in that demographics. As you know, with a Medicaid patient, they get a statutory discount of 23% as one of the gross to nets. The second one is when we sell Epioxa into a 340B public hospital system. Those also get that same statutory 23% discount as well. That's a gross to net. The last, and really an important piece, is the fact that with commercial patients that have out-of-pocket dynamics, we're going to offer a zero cost to them, meaning we will cover that out-of-pocket burden for the patient to ensure that they do get the access that Joe was talking about.
We'll cover that up to the out-of-pocket maximum, the federal out-of-pocket maximum next year. That becomes a gross to net as well.
I think if I build upon that, over time, we'll realize a bit more of that. Clearly, out of the gate, access to Medicaid and different areas of that will be a little bit more challenged. We certainly are going to be putting the investment in to try to unlock as many opportunities for those patients to get access to the care. We also would expect that individual payer dynamics. A lot of times when people think about pharmaceuticals, whether it's rare disease or otherwise, you think about it in terms of the pharmacy side of that. Often the kind of rebates and various things you have to pay to get access within a channel. It's a little different in buy and bill pharmaceuticals and certainly within rare disease.
I do expect that over time, we may see a little bit of that, I'll call it a growing gross to net deduction. It'll be up to us to continue to make sure you all are educated kind of on where we're at on that paradigm or that life cycle over the years to come.
Okay. Makes sense. I guess our initial physician checks, it's early, but they have suggested, I'll say, some shock and frankly, some unrest at the Epioxa price. Obviously, drug pricing, very hot topic in the news. Can you talk about just your level of confidence that maybe headline risk will not become a meaningful dynamic here, notably given Photrexa is going to be discontinued as well?
Yeah. I think a couple of things on that. First and foremost, the way you finished it, as a company, you have to go back to, are you making decisions around this for the right reasons and the right way? For us, I can tell you that everything about what we evaluated and what we did around establishing the Epioxa pricing was about putting the patient first. That's not just a tagline or a slogan. Legitimately going through line item by line item of what we felt like it was going to take to find these patients, make them aware, ultimately help them get access to the therapeutic, and what that means when you're dealing with that needle in a haystack patient population, and then make decisions off of that. I think that the why there is so important.
That is also what ultimately carries through when you have conversations with physicians. Were we surprised in any way, shape, or form that certain physicians or groups might have a more significant reaction than others? No. You anticipate that when you go into it. What matters is then what you do to meet them, have that conversation, explain that why behind that. Ultimately, even if you agree to disagree around the puts and the takes on that, that they have at least heard from you. I think initially, sometimes you will see just because of a headline. As our teams engage with many of those physicians, and ultimately even folks like myself engaging where it is necessary or appropriate to make sure, I am confident that more often than not, we will be just fine.
Ultimately, I will tell you, we've now been at this a couple of weeks, obviously, since the earnings call. I have been really pleased by the receptivity, broadly speaking. That is not to suggest there are not folks who are more concerned about the price or the dynamics around it. More broadly speaking, the number of folks who want to be a part of the care network, if you will, and continue to treat these patients, and looking forward to helping us elevate that disease awareness and education efforts that we are going to make those investments in.
Got it. Makes sense. And then maybe finishing up here on reimbursement, sort of. So building up iDose reimbursement with the MACs, it's taken some time and been a bit of a non-linear path. I guess how should investors think about the buildup of Epioxa coverage and reimbursement when comparing that to the iDose experience?
Yeah. First, as a macro, and I probably do not need to say it to anybody in this room or the 3D, I mean, anytime you are dealing with healthcare reimbursement of any type, I would never go into it with an expectation of a linear path. I do not think such a thing exists within our healthcare system, certainly in the United States today, or very close to it. In this case, it is a very different dynamic from iDose to Epioxa, with both sides having pluses and minuses, right? If you think back, and obviously, you have lived it as well as we have, Tom, the iDose patient population tends to be an older demographic, leans much more directionally towards the Medicare patient population. As a result, the fee-for-service community and the MACs associated with that.
There are a different set of dynamics around the way that they assess and ultimately streamline, if you will, coverage both on the drug, the facility, and then more recently, our focus around the professional fee elements of that that are elongated. In the case of the Epioxa launch, you're talking about a patient population that is virtually all either commercial lives or Medicaid, because most patients who are afflicted with keratoconus see that activity and loss of vision accelerating from the age of, call it, 10 to 30, 35 years of age, which tends to fall into that demographic.
What's different is rather than dealing with six or seven Medicare administrators, you're dealing with 100 major insurance groups, 5,000 plans within that, which gives you both opportunity in individual one-off situations, but is also a much larger undertaking over the course of a sustained period of time to make sure that you're landing both the education and awareness for them, but then ultimately getting to the place where they're streamlining as much as they ever will. One truth in rare disease is that you rarely ever get to a place where it's a truly managed category, where they've got clear set guidelines and policies in the same way they would for, say, glaucoma or cataract surgery. Simply because, again, think about what I just said. If you have 5,000 plans, we're treating 10,000 patients.
The average plan, it's not how it really works out, but the average plan would see two patients a year. They're not going to have a person dedicated to that, overall, the same level of policies associated with it that you would have in a much larger disease category. We'll always be in that battle, if you will, around continuing to try to improve patient access in the commercial arena.
Got it. Super helpful. Then shifting to volumes for Epioxa, a couple more here. In the U.S., you mentioned 10,000 patients, maybe close to 20,000 eyes, sort of at maybe at peak. I guess how quickly do you think you can get back to that with Epioxa alone, obviously assuming 2026 volumes are going to be down somewhat notably?
Yeah. I think remember, the volumes that you all see as investors, based on what we report, are the volumes where we've actually sold that unit and gotten that as a part of that treatment. I think in parallel with what we're talking about, you tend to see a lot of incremental access through your free product programs in various ways. You do want to make sure that patients, wherever you possibly can, excuse me, are getting access to that care. It's not as if the same implied kind of in our guidance, some of the conversations around the pullback in volumes associated with Epioxa means that that's exactly how many patients will be getting access to the drug itself.
As I think about it longer term, clearly, our goal in making the investments that we're making is to not just drive levels at that where we've been at the, call it, 18,000, 19,000, 20,000 eyes, but to meaningfully expand that. There are, based upon our data, about 5x that in terms of actively diagnosed at any given time, patients who have either uncontrolled or unstable keratoconus. The question for me is exactly as you described, how quickly can we get back to kind of level set in terms of treating patient volumes? And then how quickly can we make a meaningful difference in going after the next 10,000, the next 20,000 patients that we know are out there? When you talk to the physicians and you ask them, you'll hear it all the time.
There's a general belief that there's so much more keratoconus out there than what is being diagnosed, detected, and ultimately treated. It's our job to go out there and find those patients and get them. Certainly, 2026 will be a transition year. I think we'll make a lot of progress. We'll get on the other side of the J code as individual customers get their contracts in place and updated and all the things associated with that. We'll level set on kind of where we're at heading into 2027. I'm certainly hopeful that as you kind of get past that one to two-year mark that you're getting back to a place where you've got kind of level set market access, in which case it really comes about your fishing activities, if you will, and trying to go find those patients.
Got it. Last one here. Which peak U.S. sales opportunity do you view as larger between Epioxa and iDose?
Yeah. I think over the long haul, it's hard not to say iDose simply because you're talking about a market with 21 million potential ocular hypertensive and glaucomatous eyes that you're going after, that from a shift in standard of care, there's a lot of belief in interventional glaucoma. And even if you focus on the 12 million-13 million eyes that are actively diagnosed and treated at any given time in the United States, that is 2.5x the size of cataract that I referenced earlier. From an overall ophthalmic opportunity to do what's right for these patients clinically, and obviously the benefit for us and I think multiple companies in the space to do that, it's hard not to see that being the larger overall peak just because of the in of the patients.
I do strongly believe to the earlier points, if you do the math on getting back to treating these kind of level of patients as well as expanding that over time, clearly Epioxa is going to be another major growth driver for us in the years to come right alongside of that. I think to the point of even you asking those questions at the beginning on that front and not having gotten to iDose yet, I see there being multiple things that can propel the company forward.
Got it. Moving to iDose. The CAC coming up shortly this afternoon. What's the company's base case expectation for how, I'll say this all plays out among the different potential outcomes from an LCD standpoint? What's kind of base case for Glaukos?
Yeah. I think when you think about base case, and I've said this a couple of times throughout today, I think there's an element here that I understand from an investor perspective in terms of trading dynamics that can happen around anything that's more about supply and demand as people figure out what truth is versus fiction. From our standpoint, nothing about this really changes the way we think of the base case going forward. There are clearly things that they can present over time that are hurdles to patient access that we have to overcome. You have to come back to what are the foundational layers of any product when you're going after market access, whether that be Medicare or whether that be commercial or Medicare Advantage. It comes back to what data do you have? What evidence do you have to support the clinical shift?
When you look at the studies that we've put forward, both in terms of level one, FDA controlled, et cetera, the amount of data associated with iDose coming in, the FDA label attached to that, right, and what that means in terms of what truly is actually on label versus off label, and what that all means, I have a high degree of confidence that when you get to the end of that rainbow, there's going to be pretty broad patient access that's there. We are investing in multiple level one studies we were before this CAC mini ever came up to make sure that we supported and buttoned that up. When you have a product that works as well as iDose does, whether it's on its own or in any various forms, ultimately, it doesn't really change our view of the 10-year time horizon.
If you look at it in terms of the one-year time horizon, most of the path outcomes of today's conversation will happen amongst the CAC members and would play themselves out over the course of 2026. I am not so sure it really changes meaningfully our view, even on the 2026 expectations that we have. Clearly, when we set the guidance on the last call, we were aware of the CAC meeting when we put that guidance out there for our 2026 estimates.
Got it. So investors are reacting to this. There's concern about potential LCDs. I mean, is the street overreacting? Are they properly reacting, underreacting? How confident are you this won't ultimately have a significant impact on iDose? It sounds like the 10-year long-term view, very confident it could be limited.
Yeah. I mean, I'm very confident over the course of that period of time. I wouldn't speculate on, I mean, investing is what you all do for a living, and whether it's an overreaction, underreaction, all that, I'll leave to the experts that do that for a living. I think from our standpoint, and I sort of alluded to this on our call, and I'll say it again today, I think in any of these scenarios, it's not as simple as negative or positive. There are things embedded in each one. I mean, if you think about iDose, even if they came out with some of the restrictions, I think that some investors fear around that.
Assuming we were not able to mitigate those through data or whatever it might be, you are still talking about hopefully establishing proper access with the other 30% of Medicare lives that have not to date been properly covered through professional fees and otherwise. You are maybe having a bit of a restriction on 30%-40% of the ones that are today while you are extending that out. By law, if an LCD came into place, you are now bringing Medicare Advantage into play because they statutorily have to then cover the product that is being provided by overall Medicare. There is a handful of opportunities associated with that same thing. Even if I do not think that is personally the most likely outcome of it all, I think it is not as black or white in terms of positive or negative in either way.
Ultimately, anything that we can do to establish more clear and streamlined answers for our physicians and for our patients so that we can start really focusing on driving forward access for these folks, I think is a net positive when you think about it over a 10-year time horizon. Ultimately, you would always expect that you might face these types of things, whether it's from commercial payers or Medicare. It's just a question of when and what do they look like and how much education and process do you have to go through to get to the right place.
Got it. Last one here on kind of the CAC LCD stuff. One fear among investors has been that a CAC was not really expected this early in the launch and that this could be a signal of payer scrutiny around iDose's price. Your reaction or thoughts to that?
Yeah. I do not think this is really, so when you think about it from the Medicare side, it tends to be less about price than that and more about them making sure that products and volumes attached to them are properly being utilized. I mean, when we have conversations or other constituents with medical directors or whatever, the good news is in the Medicare system, they want patients to have access to therapies that will impact them positively. They simply want to make sure that it is being done in a way that is actually in line with the label and/or other accepted medical practices and things there. That is an educational journey for them.
I don't think this is as much about price or some of those types of things as it is that you have a new product by evidence of your own surveys that were done last year and coming this year, et cetera, where there was a lot of clinical enthusiasm. Why is that? The clinical enthusiasm is because the product works really well. For doctors who've had access to it and seen what that means for their patients, you can imagine that there's a fair amount of frustration when the system is still not properly adjudicating their claims, paying them any professional fee economics let alone the same, that there's some degree of standards around what should be accepted versus not.
I think part of their own advocacy and perhaps even our own on behalf of them has led this group of MACs to say, well, let's figure it out then, right? Let's make sure that we are doing this the right way, that it's in line with where it should be. That is what I think led to this broader conversation that they're going to have.
That makes sense. To wrap up here, how does your confidence in iDose pricing today compare to when you launched?
Unchanged. Yeah. I do not think from a pricing standpoint, I think we are where we need to be based upon all the work we did in advance for all the same reasons what we talked about on the Epioxa pricing. I will not repeat them. We are at a place now where we are every day chipping away at incremental patient access and making progress as you have seen. We look forward to continuing to do that.
Got it. A few more on iDose in the last seven minutes here or so. More near term, belief street sits at $44 million in 4Q iDose revenue. That'd be up only $4 million sequentially, I think. In 3Q, you grew $9 million quarter- over- quarter despite seasonality headwinds. Seasonality should be a tailwind in 4Q. Aside from, I think you mentioned the cataract scheduling dynamic on the call, why else would sequential growth not be at least $9 million that you saw in 3Q?
There's always a fascinating quarter over quarter triangulation game in that.
I got to try.
You guys are so good at trying to pin us in on around that. I think obviously in the real world, it's a whole lot more difficult to have in any given quarter or any given period of time that level of precision in terms of the way it really comes out. The bigger picture here is this is the first, I'll call it seasonal fourth quarter where we've actually had a degree of a run rate business. I said on the call that it's a little hard for us to know going in how much of that seasonal variance we've experienced in the past in combo cataract MIGS will play itself out in benefiting versus being, I'll call it a headwind for iDose. It's exactly as I described it.
I mean, when you go into that, if you were doing, if this was just another combo cataract product, I'd say, okay, clearly the normal seasonality with increasing cataracts, you should see a degree of that pattern play out here. When you're doing the majority of those procedures in standalone glaucoma and the fourth quarter is a heavy cataract calendar, there's a practical reality of OR time. Are you competing for that? Seeing how that plays out is something that, candidly, you have sort of your best thinking that goes into it, but you have to sort of see that really play out for yourself. It may ultimately be that the patterns that existed before in combo cataract MIGS are not the same seasonality patterns that you saw, that you see in standalone glaucoma care, at least for the short term.
Eventually, you'll get back to the same reality, which is why this fourth quarter is busy because people's benefits are expiring and they're out of pockets, so they tend to get a lot of procedures done the fourth quarter. I think that'll eventually get there, but we may not see that same pattern here for the short term.
Okay. So nothing else you would call out that would drive lower?
Not really. I mean, I think the only other thing I would say is that inherent in the third quarter was an exceptional quarter of progress in a seasonal period where people take vacations and they're not in the OR and you have sometimes even some of your larger earlier adopters are out for periods of time and that does have a, so that really exceeded our expectations.
I think whenever you have that level of outperformance, you also always wonder a little bit, was there an element there that maybe some procedures were stolen from the fourth quarter and got in the third and things that when you have a higher price point, it does not take very many units of that truth to actually have a material variance in terms of what maybe on a normalized basis would have been in the fourth instead of the third and all that kind of stuff. We just tried to be thoughtful about all that in setting expectations and we will see how it plays out.
Got it. A couple more on iDose. Joe, you kind of alluded to this earlier, but what did initial 2026 revenue guidance assume from an iDose CAC LCD standpoint?
I would say we obviously knew that the CAC meeting was happening when we set that. Inside of our guidance is now a lot of different puts and takes, including everything we've been talking about with Epioxa. I think we tried to do our best job of factoring in various scenarios and what it might mean for all the constituent parts, including the Stent franchise, iDose, and certainly Epioxa or Photrexa in setting that guidance. I said a different way, I don't foresee something coming out of the conversations happened today that would adjust our view of the 2026 estimates. If we were ever going to make adjustments positive or negative on that, it'd be much more about what we're seeing in the real world as we make our way through next year than sitting here today kind of from the press box.
Okay. So no kind of additional color on what the expectation is from, I guess, an LCD standpoint if we potentially.
We don't forecast that way. Whenever we set our guidance, we look at multiple scenarios. We look at scenarios that involve where there's no action. We look at scenarios that there is an action that's positive. We look at scenarios where the actions are negative. We kind of try to put all those things together across what I'll call as the bell curve of scenarios and make sure we're being appropriate and setting early guidance within those range of outcomes.
Got it. Okay. Great. Maybe last one on iDose in the last minute or two. As we think about 2026 incremental iDose revenue drivers, two dynamics for us come to mind. One being the MACs outside of Noridian, Novitas, and First Coast kind of coming up hopefully fully up to speed, NGS already there. The second being commercials and Medicare Advantage. Between kind of those two buckets of potential incremental revenue growth drivers, which of the two do you sort of foresee as being more impactful next year toward iDose revenue growth on an incremental basis?
Yeah. I think about it in the context of the lower hanging fruit of those two things operationally and in terms of, I'll call the ease of realization of revenues, certainly falls in the fact that the majority of this year's revenue was generated on the heels of the MACs that represent 50% of the lives in the Medicare world in the U.S. By turning on NGS, which adds another 20%, by hopefully at some point here turning on those remaining three and getting the professional fees ironed out, you've sort of doubled, I'll call it a little bit, the near-term addressable opportunity even while you're doing all the normal things of building a market and training doctors and all the stuff that's there. I feel a higher degree or probability of success ratio around the contribution from that to 2026.
Having said that, we now have our sea legs underneath us a little bit in the context of commercial Medicare Advantage, what that means for individual customer contracting and ultimately doing the right things to provide that access. We have now customers who are opening that up as a part of it. You can see that in some of the claims things that I know you all look at. I expect us to start really turning up our efforts around getting to a place where for customers they're thinking purely about treating patients and a lot less about at first insurance and then treating patients, which is not a place that any physician wants to be in and we do not want them to be in either.
I do think you'll see a lot more from us in terms of our efforts around driving incremental utilization in those payer populations.
Got it. Great note. And team, thank you.
All right.
Thanks.