Okay, thanks everyone for joining us today. My name's Allen Gong, here on the Medical Supplies and Devices team at JPMorgan. Really glad to be introducing the management team at Glaukos today. We're going to start off with some prepared remarks from CEO Tom Burns, and then we'll tag in Alex and Joe for some Q&A afterwards.
Okay, thanks.
Allen.
Good afternoon, and thank you everyone for coming today. I do want to formally introduce Joe Gilliam, who's our President and Chief Operating Officer, Alex Thurman, who's our Chief Financial Officer, and we have Chris Lewis in the back, who's our VP of Investor Relations. I'm happy and delighted to give you an update on the progress we're making in the business. To begin, talking about what we're about. Innovation is at the core of everything we do in the company, and I think that innovation has propelled us into a company that's been the maker of new markets in ophthalmology.
If you think back and look at our history, we pioneered, created, developed, and now lead the entire global MIGS marketplace. We are currently creating an entire new marketplace with procedural pharmaceuticals, led by our spearhead product, iDose. We've entered the rare disease marketplace, and we currently are captivating and moving forward a whole new marketplace on corneal cross-linking, a new procedure to arrest the progression of keratoconus.
We're beginning a nascent approach to using transdermal creams that will incorporate APIs to be able to treat anterior segment disease, something that's never been done. And then finally, we have the temerity to believe we're going to build a retinal company as well. And what we've done there is to look at TKIs, small molecules, which will be wrapped in a PLA/PLGA matrix that could deliver months of therapy versus current modalities today. And when you think about it, our whole conception and movement has been towards dropless therapies.
So topical drops have been the mainstay of anterior segment treatment within ophthalmology, and yet I think increasingly that form of therapy is viewed as anachronistic. It is inefficient. There are far better ways to approach this, and so we began several years ago to create a hybrid organization trying to draw the best of medical device and pharmaceutical together, which you know is extremely difficult. And by doing so, we've created combinatorial products that we think are going to be able to not only create new marketplaces, but give us sustainable competitive advantage for many years to come.
We're focused on platforms, so platforms that will chase big ideas and unmet clinical needs, and you may have seen this dial before. The Circle, we talk about iStent, which throws off a cascade of subsequent products, iStent, iStent inject, iStent inject W, iStent infinite. iDose is already thrown off. iDose TREX and iDose Trio, which we'll talk about in the course of the presentation. iLink, we had Photrexa, we're introducing Epioxa to the marketplace, and there'll be a third-generation sphere, which will be available in short order during the planning period.
iLution is our nascent approach, looking at transdermal drug delivery, which will be led by approaches to Demodex, mites, and the treatment of progressive myopia, and then finally retina. The important thing here is the $800 million or so we've spent in the company in R&D since 2018 has yielded a tremendous fount of new products, 12 that are commercially available and 13 that we've disclosed that are in various phases of development in clinical and regulatory approval. Just this past year, we hit over 30% market growth. It's a record quarter that we just hit, which we'll talk about.
And over the course of the 10 years, we've sustained over 20% CAGR every year. Our main and obsessive focus this next year, and really for the next couple of years to come, is going to be in two areas, changing the paradigm of treatment within glaucoma and changing the paradigm of treatment within keratoconus. Let's focus on glaucoma first. The current paradigm of therapy in glaucoma is broken. I think that's beginning to be acknowledged by the clinicians in the United States. Surgeons typically will start with topical drops.
When those fail, they go to progressive serial use of multiple medications and give ground and lose vision before they turn to more draconian late-stage procedures. This is kind of a Sisyphean approach to the treatment that we want to be able to reorder and change. If you think about it, medications work pretty well in clinical trials, but they don't work very well if patients don't take them. And so when we look at the data, 90% of patients in multiple clinical studies have shown to be non-adherent to their glaucoma medication regimen. 50% of these patients won't even fill a script after it's been drawn after six months.
So there has to be a better way. What we want to do is to have clinicians and surgeons cross the Rubicon, start to look at interventional approaches that provide 24/7 treatment for disease in order to arrest the progression of glaucoma. And that can be done either through SLT or through our procedural pharmaceuticals. And then we have a cascade as we move forward with MIGS, minimally invasive bleb surgery, and ultimately filtration surgery, which is the late-stage trabeculectomy and aqueous shunts.
The key here is to treat patients better, to arrest progressive vision loss, and to put power back into the hands of the clinician where it should be. So we've got a workhorse in order to move the market forward, and that's been the iDose TR. iDose TR has under a 505(b) designation that we had from the FDA, has the ability to be used all the way from ocular hypertension all the way through refractory glaucoma, refractory glaucoma. So you think about it, there can't be a more substantially open label than what we have with the iDose TR.
And when you look at the surveys that are being done on how well this product is working, it's being validated. Everything we see in the field is that people are seeing demonstrable reductions in intraocular pressure that are sustained in a very, very benign and safe procedure. Anchoring the back end of this approach is going to be our stents, our prosthetics, both the iStent infinite, which is indicated for patients who failed on medical and surgical therapy, and of course the iStent inject W, which is used in combination cataract procedures. We'll talk about iStent infinite.
We've just completed an open-angle clinical study where we will be pursuing an expansion of the claim for iStent infinite into mild to moderate open-angle glaucoma, and we expect to have this product available. We're targeting for the end of 2027. Let's focus on iDose TR then. Again, it's important to reflect on the data. In the phase III clinical trial, even though 23% of patients were on two or more medications to begin with, 81% of patients who had iDose were off of all medications at one year. At three years, 70% of patients were well controlled with an iDose implantation on the same or fewer medications.
New data now is showing at three years, the iDose device is non-inferior to timolol, even though we know in clinical trials that patients will take the prescribed medications far more often than they will in the real world. This is exciting new data, and you can't really see it from the slide here, but you get an idea just looking at that circle on the finger how gosh darn small this device is. It's de minimis, and yet it holds enough power to be able to deliver the prostaglandin analog and really for comparable 2,200 eye drops over that three-year period. This has been a substantial revolution in the treatment of glaucoma.
We're doubling down. Shame on us if we don't take the Herculean effort we've had to bring this product to marketplace and figure out how do we make this thing do more and be more over the course of the next several years and we already have two different products that we've disclosed, the iDose Trio, which is an applicator, which should be able to drive in-office use of the iDose device, which has been an important intentional plan of ours for very, very many years.
It should be able to deliver product through a one-millimeter incision, which is really the magic bullet for a cell-sealing incision where you can maintain intraocular pressure. You don't get dehiscence of aqueous humor that will come out the hole, and it should allow surgeons to have far more confidence in doing this in office. It'll facilitate the movement there. We've already begun a phase III clinical trial for this product. In human factors studies, where even we compare this with our own iDose applicator device, 90% of patients or of clinicians preferred this new applicator over the current applicator that we have.
iDose TREX is a cool next-generation product, which we already have in a phase II-B/III clinical trial. Just by bowing out the radius of the device, we're able to incorporate over twice the amount of medication micrograms, or approximately twice the amount that's in the iDose device. By the new math, because we're not seeing any decay of that product inside the device over the course of when it's incorporated in the eye, we expect this product could go a target of six years with a single injection.
We are already off and running with this phase II-B/III clinical trial, and when we pulled a subset of patients in phase II-A, you see the data. We're seeing 8.6 to 11 millimeter reductions in pressure. This is outstanding data by any measure. We're hopeful that it continues in the future and moves forward. These two different approaches are just two of, you'll see there, six+ . So we already have another four form factors that are under active development.
So my goal here, if we're going to build this procedural market, no one's going to take it away from us, and we're going to be able to build this, move this into the 2030s with a substantial cascade of new products that either incorporated different facets of the prostaglandin analog or use entirely new APIs to be able to treat disease. Okay? So those are all undergoing. When we look at the actual procedure itself, it's really cool. This is the new applicator that incorporates. You see it protects the sleeve, protects the device as it goes in.
Surgeon, all he has to do is to push this through the trabecular meshwork into the sclera and tap it to make sure that it's secure and in place, and those two arms that extend, that'll put that product in, will become the basis for when you want to remove that product in the future and place a subsequent product one clock hour over, so all well through, well thought through, and well advanced in clinical trials. Can't forget iStent infinite. iStent infinite in the clinical trials, over three quarters of patients had 20% or greater reductions from preoperative means.
50% of patients had 30% or greater, and so the product works. It works spectacularly well because it spans a greater distance of the trabecular meshwork to be able to access the scleral venous system and to be able to provide powerful outflow. Importantly, we did an integrity study. We compared the iStent infinite versus a very prominent competitor in this space, and we found that in that study, the iStent infinite demonstrated superior safety and efficacy. We published the six-month data. We're going to be publishing the year data shortly. This is what's going to drive this whole new marketplace.
When I look at interventional glaucoma in the practice, not only do we have the means to get surgeons and patients there with high-quality new products, but look at the size of this marketplace, 22 million eyes in prevalence and 12 million today that are diagnosed and treated. When you think about over on the left side of the slide here, there are 5 million cataract procedures that are done every year. This is the bread and butter of ophthalmic surgeons' practices. They focus all, most of their time and effort on acquiring and doing these cataract surgery patients.
And yet cataract surgery is a one-and-done procedure. It is a catch-and-release procedure. You do the eye, and the patient is gone and leaves. Here, what we're trying to convince surgeons, and we will over time, is that each one of these patients, of these 12 million eyes, has a statutory term from time of diagnosis to time of death of about 20 years. And so you have the opportunity to do multiple entries with every one of these eyes over the course of the patient's lifetime.
And in doing so, not only are you doing the best clinical practice to arrest the progression of glaucoma, but can you imagine the effect that this will have on the surgeon's practices? They're just waking up to this, and we are the ones that are shaking them loose and are going to make this happen as we move forward. One of the important things that I want to be able to tell you today is that not only do we have the ability to place this device and last for three years, but more recently, we've had some very constructive dialogue with the FDA.
So anyone who's been following this company knows that I've been quite sober and cautious about any pronouncements for our PDUFA date that is coming forward at the end of January for readministration. And what I will just tell you is that I'm very encouraged by some of the dialogue that we've had with the FDA, that by no means is this a done deal, but I will tell you that we're in a far better place than we were just several weeks ago. So what's the vision for the next 10 years?
Well, first, for the reason that I said, and one of the things I didn't mention is when I started to promote intraocular lenses in this business, surgeons were getting over $2,000 for every case. Today, they're getting $465, and every year it decreases. It's a melting ice cream cone. So surgeons are going to look for, actively look for different ways to be able to develop and sustain their practices, and IG therapy and the implantation of these devices is going to be a core reason for them to turn to. I think combination therapy has the potential to become a preferred form of therapy.
Right now, with topical therapy, 50% of the marketplace are on two or more medications. Doesn't it make sense if I'm entering the eye that I would put in an iDose and put in a prosthetic next to it, like an iStent infinite, which both have different mechanisms of action to be able to reduce intraocular pressure? It's going to happen, and we're going to lead it. We're doing now phase IV clinical studies to show the additive effect of using iStent infinite in combination with iDose versus iStent infinite alone.
In-office injectable therapy of iDose and repeat administration approval, either in the form of a successful PDUFA date or in the form of us bringing forth iDose TREX, which is going to become the de facto next opportunity for surgeons who've used iDose, will drive adoption and continue to expand this marketplace, and new sustained-release drugs like iDose TREX. You can imagine anyone sitting in the audience here, if you're diagnosed with glaucoma and you're told you can either use a medication today, you're going to need multiple medications over the course of your life.
They have multiple systemic and local side effects, or I could just wheel you down the hall where I do my LASIK procedures, put a little numbing agent on your eye, and inject this tiny implant into your eye that could last for six years and put a bullet in glaucoma. I know where my vote would be. And PE groups, which are taking a more extraordinary view and dominance of the landscape, are already seeing the value of employing this kind of mechanism, both for our clinical value and for practice efficiency value in their practices.
And finally, what I view is in the future, if we're successful moving this forward, we will create a new cadre of IG surgeons. These are people who will say, I do my cataract procedures on Monday and Wednesday. On Tuesdays and Thursdays, all I do is inject iDose, iStent infinite, and some other competitive MIGS products. I have my ODs do all the workups. They send me these patients, and I do a prescriptive form of treatment for them. It's going to happen.
It's already happened on the retinal side where surgeons are doing injections, multiple injections over the course of every day. My hope here is we create a new breed of IG surgeon and maybe create a little carpal tunnel syndrome, the fact that they'll be injecting so rapidly and so often. If I'm right, by 2035, the U.S. ophthalmologist could be performing as many interventional glaucoma procedures as cataract procedures. Today, five million cataract procedures, less than a million IG procedures. So two years ago, this would have been an absurd statement. Today, it's just merely highly controversial.
Five to seven years from now, I think this will be self-evident, and we will drive forward to make this happen. So stay tuned. And when you look at the full product portfolio we have, you can't help but be encouraged that we've met our initial mission, which was to create a portfolio of products that gave patients the best benefit to risk ratio at every stage of glaucoma, from ocular hypertension all the way through refractory disease. So let's turn now to interventional keratoconus. Interventional keratoconus is this thinning of the central cornea that happens in really kids, teenagers, and young adults.
It's a very devastating disease. It's a disease that, if left untreated, causes blindness. 20% of patients today that have keratoconus will have to undergo a corneal transplant during the course of their life. This is a rare disease that we are absolutely intentionally going to be obsessive about treating. And why? Why? Because newly diagnosed keratoconus patients today don't get treatment. Less than one in five patients who are diagnosed with keratoconus get treatment, even though it is a sight of arresting and blinding disease. There's a number of reasons for that. Poor awareness levels. It's hard to diagnose.
A lot of times an OD will see a patient, they'll see their topography, and they'll diagnose irregular astigmatism or some other corneal anomaly and not keratoconus. And even more so, what they tend to do is to treat with lenses. So either RGP or scleral lenses, they'll treat the visual dysfunction, but they don't treat the underlying morphology of the disease. And frankly, the epi-off procedure that we had previously does cause pain. And so patients are wary of having that procedure done. And certainly, we've seen that in the patients who've had the procedure done, avoiding the second eye.
If you look at the data on the left-hand side, it's just telling how much work and opportunity we have to do in this area. 13% of patients are diagnosed before the age of 18, where most of those patients already have progressive keratoconus by that age. And until they're treated, 70% of patients are already at stage two keratoconus with significant loss of vision. Interestingly, this is a disease of kids, and the average age of treatment today is 32 or 36 years old, depending upon what study that we've looked at. So we mean to make a difference. We're going to do so by introducing Epioxa.
Epioxa is an oxygen-infused new proprietary product which has a surfactant in it, which helps it drive through the corneal epithelium into the stroma where it needs to work. And what an opportunity to take a topical drug. Where else in medicine do we have the installation or the use of one topical medication or an oral agent that completely arrests a sight-threatening blinding disease, and this is what we have here with Epioxa? We've seen the clinical data. It met its burden with the FDA.
We're seeing some good reductions in Kmax, the peak of the cornea, and we think that patients will be far more willing, and surgeons will be far more willing to do this procedure on more patients. There's a number of things we need to attack to be able to get there: sites of care, engaging OD networks, etc. This takes a tremendous amount of currency and effort to do so, so when we looked at some of our colleagues in rare disease, we started to understand why they charge hundreds of thousands of dollars for treatment.
This is going to take a massive capital and a massive effort, but we are committed to do this and to create this marketplace and to increase substantially patient access. We're going to go through the normal blocking and tackling of launching a new product to put us in position when we get a J-code and target date of July of moving up next year to really start to move this marketplace in the second half of the year, and I think I'm most excited about the next generation.
I was around early with the advent and progression of LASIK, where we took an excimer laser and we took corneal topography and aberrometry, and we could actually program and be able to shape the lens to be able to create the best corrected visual acuity. Why the heck can't we do that with keratoconus? So we already have instituted a place where you take a picture of the eye, you look for the peaks, the valleys, the mountains. Those then will go into a customized algorithm for every patient as we move forward. We've already taken this through phase II data.
We very much like what we see, and it's prime for moving into phase III in short order. And finally, we plan on owning this marketplace from or building this marketplace from top to bottom. And so we are beginning a clinical trial with a product and a company called iVeena that we acquired, which is a copper sulfate drug. And the goal here, we think that many patients who have nascent or very early stage keratoconus will have the opportunity to treat with topical drops prior to doing a more standard therapy.
As I start to close, we look at the area that we're also focused in on, a spearhead of moving into transdermal treatment of APIs. The first area that we're focused in on is the treatment of Demodex mites. Tarsus has done a great job building this marketplace. This is one opportunity where we go second. We don't go first, but we think we have an opportunity.
If we can take a potent acetylcholinesterase inhibitor and put it into a cream and put it right on top of the critters, these parasites that are forming and causing inflammation and blepharitis, we think they have the opportunity to have a breakthrough product within Demodex mites treatment. It's a huge marketplace, $400 million, 25 million patients, and we've already begun a clinical trial in this effort. Finally, we look at our biodegradable implants.
For those of you who've been following us for some time, we look at what we've done in a persistent retinal vessel leakage model. With the implant of this TKI axitinib in the special formulation that we have, we're able to see now over three years of efficacy, which gives us tremendous promise moving into clinical trials. And just to let everyone know, we have just finished our phase II-A, first in human clinical trial of axitinib and expect data later this year. You can't help but look at the total portfolio and put this up against anybody within ophthalmology.
What I tell my people and my company is that if I stopped innovating today, we'd have enough commercial products to take us through potentially the mid-2030s into the late 2030s, and we're not stopping. We continue to invest. We continue to move forward. Finally, on the operational side, and I love putting this slide up, we just had a record quarter. We hit $507 million over the course of 2025. When I look at what the initial guidance or consensus was in 2026, we're looking at a 20-plus% CAGR over 10 years.
We continue to have the highest value gross margin profile of 84%, a high and healthy balance sheet of $283 million, and we diversified our company for growth and to allay risk by moving into international markets. We're now in 17 vertically integrated operations across the globe and over 300 different employees. Finally, we not only created this new state-of-the-art manufacturing site in San Clemente for the treatment of or for the production of iDose, but now we have broken ground in Huntsville, Alabama, and we will be moving forward there with a very, very substantial facility.
W hich will give us the ability to not only have belt and suspenders with our current products, but be able to manufacture some other products, proprietary products that we have both disclosed and undisclosed. So we have this mantra, we'll go first. And to me, it's not a statement of aspiration. It's a statement of fact. And it continues to guide everything we do, both now and in the future. So I thank you. And with that, we'll open it up to questions.
Thanks for that. So I guess just to kick off the Q&A, I think what's top of mind for a lot of investors is the quarter that you just pre-announced. So you ended the year a healthy step above expectations. You had nice sequential growth for your Photrexa business, which I think was a bit of a surprise. So I guess let's just start there.
I think you had previously expected that as you move towards Epioxa, you would see the Photrexa business naturally wind down. You're planning to discontinue that product once you have Epioxa out yourselves. So I guess what drove a sequential actual acceleration in Photrexa growth, contrary to your expectations?
Yeah. Good to see you all. I think from that standpoint, you'll recall what we said was we wanted to be cautious about that dynamic because, quite frankly, we didn't know coming into the quarter exactly how physicians would react, obviously the approval of Epioxa. When would they start having that conversation with their patients? And clearly, once they start having that conversation, many patients are going to want to wait for the availability of the therapy for all the reasons that Tom said. So as the quarter played out, what we saw was that physicians really continued on as usual.
So from that standpoint, they continued to treat based on their schedules and what were there. And I think more of the engagement around the Epioxa conversation we've seen start to happen as we've turned the clock into the new year. And there's a variety of indicators that we've got around that.
But in general, I think the fourth quarter continued as it was. And I think there's a handful of customers who maybe have a little bit longer time horizon to adoption of Epioxa, where they may have also purchased a little bit of Photrexa there towards the end of the year, but not something that's material enough that I'd call out as a major driver. It was pretty much another normal quarter for us on that business.
Got it, and I think just the decision to scale down Photrexa and really go all in on Epioxa. I know when Avedro was a standalone company, they were talking about it being a portfolio approach, kind of epi-off and epi-on. So why is going all in on Epioxa the right choice for you?
Go ahead. Go ahead.
Yeah. I mean, there's a variety of drivers there. And depending upon who you speak to on the clinical side, there are those physicians who feel very strongly that with availability of Epioxa, you really shouldn't be doing the epi-off procedure. And there's also many pathways to ultimately treating epi-off as a procedure, utilizing Epioxa as a form.
So it doesn't necessarily mean that there's a restriction of how physicians will actually practice medicine. At the same time, you have to overlay market access-related considerations and making sure that patients at the end of the day are getting access to what we believe is the superior therapy here. So when you put those things together, it's hard to have a path where you can have that full portfolio, if you will, of both Photrexa and Epioxa available in the bag.
But again, it does not necessarily mean that you're taking away options for the physicians to do the procedure of choice if they choose to do epi-off or epi-on, even though we believe the vast, vast majority will do epi-on.
Okay, and you laid out a very clear timeline for your strategy for getting Epioxa through reimbursement, through coverage to commercialization. But I guess just help us understand the most recent comparison that I think a lot of people are going to reach for is the trajectory you had with iDose. But from my understanding, Epioxa, especially because you're targeting a younger patient population, it's going to be a little bit different in terms of getting reimbursement and getting coverage. So can you just walk us through the differences there, the challenges, or the advantages of the keratoconus process?
Yeah. And I think the start, the fundamental premise that you should use iDose as a comparator should be set aside. It is truly apples and oranges. And the primary reason for that, as you sort of alluded to, with iDose, you're focused, especially at the launch, as you know, and how we approached it with the Medicare fee-for-service world. So much of that was driven based upon the MAC activities and getting the sort of certainty of coverage and payment there that we expected to get, and we still are in a couple of the MACs.
Very different than, I'll call it, the hand-to-hand combat, if you will, associated with dealing with a broad array of commercial payers. As you know, there's over 100 major carriers, 500 subplans, and over 5,000 plans within that. And so that process is much more of a day-to-day process of making sure that you're getting prior authorizations, that you're getting peer-to-peer conversations, that you're really manually driving the change of their standard. Now, you support that in a variety of ways.
Obviously, our payer relations team have been all over this since the day that we got the approval and the education process and the things that are there. But ultimately, this comes down to those conversations combined with physician conversations, plan by plan, medical director by medical director, where you get enough through there where they understand that the standard of care has shifted to now Epioxa, and they start to streamline that access. And that's a process that some payers will play out relatively quickly, and with others, they take a much longer process.
And some of that's by design, and some of that's by happenstance. But all you can continue to do is keep pushing forward on every single one of them, using a combination of those physicians, patients, and overall advocacy efforts, if you will, to make sure that you're getting that coverage.
I fully understand you've pointed to the other drug kind of predicates for your pricing, but when Photrexa was being priced, people were worried that $3,000-$4,000 would be too much for that procedure. You've kind of taken a step function higher, and while again, we have the predicates to kind of use as a comparator, are you concerned about sticker shock in your conversations with commercial payers? Is that something that you're seeing or that you anticipate seeing, and how do you kind of work through that?
I can talk about the here and now. You were talking about the macro. Isn't that good?
Yeah. We'll talk about the initial pricing that occurred with Photrexa was done with the early in vitro launch, and it really was for refractive conditions. It was to be able to treat low-level myopia. And so because of that, they had to price the product so that at retail level, a surgeon could get and charge $1,500-$1,600 to the patient, and the company itself would charge about $500. When Reza Zadno came in and they moved it to a J-code, they moved to $2,850, and they thought that was a big jump. I think our findings have been that at this price, you cannot be able to compete and to build a rare disease product.
Everything that we viewed from the work of Tepezza, Oxervate, and others shows that it takes an extraordinary amount of capital to be able to find, identify, recruit, and bring these patients to the table. That's the reason we made that. Now, Joe will get to the payers, but I can tell you with our customers, sticker shock occurred initially, but we spent inordinate time teaching them and bringing them through why we're doing what we're doing and why we're trying to create additional patient access in an area that we haven't been fundamentally successful moving forward today.
We're treating about 10,000 patients with Epioxa, similar to an Oxervate and a Tepezza. There are far more many patients. So what we hope to, over time, is disprove the notion that this is a rare disease. If we're successful enough and provide patient access, we may be able to get there.
I'll just add, I think we're ahead of schedule in the way I think about it. I think we think about it in the context of whether it's those initial conversations with physician customers that are there, whether it's the site of care network and getting that established for Epioxa, or as you asked the question from a payer perspective. I think it's important to take a step back sometimes and realize that ophthalmology, while it's everything to us, is about 1% of healthcare spend. And when you take a subset of that, it's easy to understand why for the vast, vast majority of these payers, it's in an unmanaged category.
And so when it's an unmanaged, relatively low cost in the aggregate because the in is so small in those patients, they tend to defer to what is accepted medical practice. And so that's why I say it's so important that what they really want to hear is that physicians say, I obviously want to treat this patient who has a sight-threatening disease with a therapy that doesn't require the debridement of the cornea and weeks, if not months, of recovery time." It seems obvious to all of us in the room, but they want to hear that directly from the provider. And so we do the seeding of that. We have those conversations.
We have our medical affairs and all the various people that do those exercises. And then ultimately, they need to hear that from the physicians or the patients themselves and go through that process. But I feel we're confident, based upon the conversations we've had today and the feedback that we've been receiving, that this is a manageable process, and it's not a matter of if they're going to cover Epioxa.
It's just a matter of the normal processes and time associated with it. And again, as I said earlier, some will move more quickly and will get earlier access, and some will take a little bit longer because of their timelines and when they update policies and different things like that. But we're well down that path.
Okay. I really wasn't expecting iDose to kind of be playing second fiddle to something this early, but I do want to talk about iDose. You put up $45 million in the quarter, which good sequential growth, but optically, it looks like it decelerated a little bit from the pace that you had from first quarter to second quarter to third quarter. So help me understand the dynamics that drove that and how we should think about the ramp through 2026 and the right exit rate to be using?
Yeah. First of all, I don't think there's anything fundamental different about what's going on and the health of the adoption, both in terms of new customers as well as what's going on there. It was another solid quarter of progress just from a macro statement. It doesn't have any impact on how we're thinking about the, I'll call it, the transition into 2026 and our expectations for what iDose can and can't achieve in that context. I think there was a couple of isolated things, and especially a little higher price points, small ins move numbers in a more material way. In this case, I think two things I would call out.
The seasonality factor associated with Medicare fee-for-service isn't the same as Medicare Advantage. So sometimes we think about it, and even collectively us, the seasonality of the fourth quarter. What we found in this quarter was a little bit that actually can work against you because what the practices do is they index towards Medicare Advantage. They had to get all those patients in before the change in the end of the year, which means they underindex a little bit on the Medicare fee-for-service.
So just in terms of the share, if you will, of procedures being done, it was a little less indexed toward our sweet spot, and that has a little bit of an impact there. I think, candidly, the other thing that we saw analytically is that whenever you're in a launch, you have short-dated, I'll call it, compensation plans and different things driving the incentives of your sales force. And the reality is we expected a little bit more of a softer third quarter because of normal summer. It didn't materialize that way.
I think as a result, we could see that there was a little bit of pull forward into the third quarter from obviously the fourth in the context of individual rep behaviors. That's very hard to control. Everybody goes through that. Normally, you have a balancing in the end of the quarter where some pull forward, some push out. In this case, we saw a net pull forward. It was a little unusual.
So I would actually argue that probably the reality is that the third quarter should have been a little bit lower than what ended up being reported, fourth quarter a little bit higher. Quite frankly, the trends in terms of the fundamentals that we see, there's really just nothing that's changed in the course of the trajectory we're on and moving through that.
Got it. So if I were to say when we look forward to 2026, that fourth quarter is the right base to maybe work off of, third quarter was a little bit stronger, but when we think about sequential improvement over the course of next year, I think the street is at around like $45 million in first quarter. You don't need to comment on that number, but is that reasonable to think that sequential improvement as you continue to make progress with other MACs, as NGS turns on? It's not an unreasonable way to think about it.
Yeah. The way I'm saying is I think that if you were looking at it from a completely clean pro forma trended analysis, the fourth quarter probably would have been a little higher than the $45 that was actually reported out. And so when you think about annualizing that, you're on a $180 million-$190 million run rate exiting the year. And I certainly think that we feel good about what that means. I mean, when you think about 2026, obviously, you've got to continue just normal blocking and tackling. Every day, new surgeons are being added, and procedures are there.
You haven't yet really seen the, I'll call it, the turn-on effect of NGS given the timing of that pro fee establishment. Most of those procedures start to turn on in the first half of this year. It's not really a fourth quarter dynamic. Although we saw growth there, usually there's a little bit of a lag.
You've got the remainder of the MACs that obviously still need to establish formal pro fee schedules, and I think importantly, we're also starting to lean a lot more into that broader, I'll call it, portfolio of commercial and Medicare Advantage lives that now enough has been out there where I think we think it's time for our customers to start being able to lean into that. We can support that, and so that's a key driver for 2026, so there's plenty of different avenues in which we achieve some of the numbers that we've seen out there amongst the various street models, and we feel confident about the path iDose is on.
Got it. We have less than a minute left, but Alex, just really quickly.
Thank you.
The gross margin side of things, especially with Epioxa coming in now, I think you can get really, really bullish on the gross margin. You clearly have a lot of opportunities to continue to invest into. You have to support the Epioxa franchise as well. But how should we think about leverage in 2026 and beyond?
Yeah. You absolutely should think, and we plan for continued leverage in the model over the course of 2026, given the factors that you just said. And a lot of investors will ask about the path to profitability. And I'll reiterate, we do believe, the three of us, that these two products will lead us down that path in the midterm, and we can kind of see a clear sight getting there.
But in the near term, I'll reiterate kind of what I've said over the last past year, which is our near-term goal is to continue to live within our means, to balance our revenue generations against the expenses and the investments we need to make, and shoot for cash flow break-even. Plus, then next step would be cash flow generation because we do have a lot of investments in this Epioxa launch that Tom and Joe have described, as well as the pipeline programs that Tom described, 13 out there. A lot of great things coming, and so we continue to reinvest in the business in the short term.
Perfect. Thank you all so much.
Thanks, Allen
Thanks.