Okay. Good morning, everyone. Tom Stephan with Stifel. Welcome to the 2026 Stifel Healthcare Conference. Excited to have Glaukos here with us today, coming off a very strong Q3 print. Joe, Alex, Chris, thanks so much for joining.
Thanks for having us.
I'll dive right in. I think we have around 30 minutes. I'll start with Epioxa. Joe, I will kick things off with you. Maybe talk about how payer progress has tracked to date relative to, call it, internal expectations, maybe specifically touching on approval rates, time to approval, kind of how that is tracking.
Yeah. Thanks, Tom. And again, thanks for having us as a part of the conference this year. As it relates to Epioxa and our payer progress, I would say generally speaking, it has gone much better than what we had expected internally. I give a lot of credit to our teams, our payer relations team, our broader market access team, and the approach, our medical affairs team, and the folks who have educated these payers from a clinical perspective. We obviously had a variety of scenarios as we evaluated how this would go at the beginning, but from our standpoint, it has really been a successful launch thus far from a payer perspective and a site of care perspective, as we talked about on the most recent earnings call.
That doesn't mean that there's not all the normal process-related headwinds that come from the payer community, especially when you have a commercially insured patient population. And so, we do experience that. Most of that is normal and certainly within the realm of what we expected. At this point, when you look at the statistics we talked about on the last call, we're really pleased with the amount of coverage we have, not just in the commercial insured patient population, but also within the Medicaid patient population. So we've really done a great job of establishing access pathways for the patients that are seeking therapy on Epioxa .
Got it. That's helpful. I think I'll call it the near-term payer progress. It does sound like it's going quite well. There's receptivity from the payers. How do we think about intermediate-term payer risk? Is there anything we have to, call it, consider or be mindful of, particularly if Epioxa grows rapidly from a volume standpoint and the reimbursement dollars grow as well alongside that? Maybe talk about kind of that intermediate-term payer dynamics.
Yeah. Well, I think the short and the intermediate term are somewhat similar as you grow in volumes. I think, again, as you launch a new drug, in our case, Epioxa and corneal cross-linking, the most important thing is to remember it already is the standard of care. Corneal cross-linking is the standard of care. We established that with Photrexa. It's the best available alternative for patients afflicted with keratoconus today, and really does slow or halt the progression of that sight-threatening disease. From that standpoint, you've always got that as your backdrop. Now, it doesn't mean that insurance carriers won't play various tactics that help to try to slow things down. We see that already today. There's a variety of things around the timeliness in which they pay, system issues around the way they have the J-Code loaded or the way they do the payments.
There's a whole variety of things that are all process-oriented that can come out and can slow you in any given week, month, quarter, et cetera. That's why your teams have to stay vigilant and on top of these insurance carriers, as well as the customers themselves. We expect that. I think from an overall, call it, policy perspective, a lot of the policies around corneal cross-linking have already been established. They can always be looking at those things and trying to make tweaks there, but it's a pretty established category from a disease perspective. If anything, we've seen over the last several years with Photrexa now having been out there for 10 plus years, we've seen them retire some of those policies as the rate of prior authorization approvals have been quite high.
Got it. Very helpful. Sticking kind of near term, hopefully I have these numbers right, $11 million in 2Q. Epioxa sales jumped very nicely to $53 million in 3Q. Consensus I am seeing is at around only $75 million in the fourth quarter. I think by my math, that is an increase of maybe 300%- 400% sequentially. Any factors we should be cognizant of with the fourth quarter that might moderate the growth curve and would result in that subdued sequential growth?
Well, first, I probably will quibble with the terminology only $75 million in the third quarter of launch for the drug. I think it is probably a little bit early to be analyzing growth curves. I think we are still very much in the early days of this launch, and there are a lot of factors at play, including some of the stuff we already mentioned. I think we just continue to put one foot in front of the other. As we have said publicly, we have a very strong top of the funnel, right? Our site of care network is strong. The number of patients coming into our hub seeking access to therapy is strong. That should not surprise you necessarily given the legacy of Photrexa, and this is not a new disease category.
But we have got to continue to put one foot in front of the other and make sure that we are getting these patients approved and scheduled and treated, and ultimately the product shipped. I think we will continue to make progress in the fourth quarter, and how much we'll wait until we've got it done to see. I think the only thing we tried to call out around the fourth quarter specifically is, we don't exactly know the end of the year dynamics. And so, as strong of a trend line as we are on, obviously coming out of the third quarter, you do not know when you get into kind of that December timeframe how much of the procedures we will be able to get scheduled before your benefits expire versus the types of things where insurance companies will delay and try to push you into the new year.
And so, given this is our first end of the year with this drug, we want to make sure and be thoughtful about that dynamic.
Makes sense. Sticking with Epioxa , but maybe thinking more long-term, big picture. The U.S. corneal cross-linking market at peak, maybe a year or two ago, about 18,000-20,000 eyes, give or take. Talked about the TAM of maybe being 50,000-100,000 eyes that could get treated annually. I guess a two-part question to start. Are those diagnosed eyes, the 50,000-100,000? And if so, what's the size of the U.S. market, maybe when factoring in undiagnosed eyes? Maybe if we could parse out that 50,000-100,000.
Yeah. So, first I'll validate what you said. Obviously, the sort of peak from a Photrexa standpoint, we were treating commercially between 18,000 and 20,000 eyes a year. Our objective is to get back to that as fast as we can here with the launch. When we look at broader claims data, and there's a little bit of ambiguity around exactly how physicians have coded this historically between keratoconus, severe progressive keratoconus, and all the things in there. That's the reason why the broader estimate that we cite. But we're fairly confident that there are 50,000-100,000 eyes at any given point in time out there being diagnosed- diagnosed-
Yep
as severe progressive keratoconus. Now, step two of the sort of launch dynamics is trying to go make sure you're realizing getting as many of those patients access to therapy, because if that's true, obviously all of those should be theoretically good candidates, especially with a therapy like Epioxa that doesn't require the debridement of the cornea and some of the dynamics around that. More broadly than that, I guess we'll find out. I can't say that we know. I do think ultimately we'll prove that this was perhaps not a rare disease, but it was actually a rarely diagnosed disease. The investments that you've seen from us, we've announced publicly the partnership with Stephen Curry around disease awareness, he himself having obviously had keratoconus, having keratoconus and been treated, is a big part of that.
And so, as we move forward here into next year and the years to come, you're going to see a pretty significant investment from Glaukos in driving disease awareness to find out the answer to your question.
Perfect. So you mentioned wanting to get back to that 18,000-20,000 as quickly as possible. I mean, with 50,000-100,000 eyes annually as maybe a TAM, what does the company believe is a visible, I'll say, like, long-term floor on the size of the U.S. corneal cross-linking market annually, and what factors are most important in getting there? Hopefully that question makes sense.
Yeah. Well, I think in the way you asked it in terms of a long-term floor, clearly the 18,000-20,000 represents that. As we look at it, there's really no reason why with Epioxa you shouldn't be treating at least the same number of patients that you were treating with Photrexa on an annual basis. We had established that over several years, so I think it's a pretty good number. Then the question becomes how much further above that to the point of what you asked before. I will tell you, obviously, our internal goals are not to treat just 18,000-20,000 eyes. We wouldn't be making the investments like we just made with Stephen Curry, like we're going to be making going forward in driving disease awareness if we thought the market was only 18,000-20,000 eyes.
I think we think it could be materially higher, and that's the point of the 50,000-100,000 eye estimate that we mentioned before. We just have to prove that to ourselves. But I think clearly the floor expectations from our standpoint are something north of that 18,000-20,000. I'd probably stop short of getting too granular on that.
That's fair. Maybe shifting gears a bit, would love to sort of hear your latest views on potential corneal cross-linking competition in the coming years, and maybe what's the messaging to investors on how they should be thinking about the potential long-term impact of a new epi-on corneal cross-linking player?
Yeah. I'm not sure I have any new thoughts or novel thoughts there. I mean, my view of competition generally, and here as well, is that when you have responsible competitors that are in a market at the stage that we're at, that make investments in disease awareness the way that we are, then I think rising tides can lift all boats. I think that's the situation we find ourselves in in corneal cross-linking.
If you think about what you just got done asking me, if we're just now getting started into an 18,000-20,000 eye market, a market that we think can be substantially larger, I think competition or not, we're a long way away from having a market share-related conversation, and it's more about how fast can we grow that market, how fast can we find the patients that are out there afflicted with condition, and how fast can we get them treated. So, I look at it that way in terms of continuing to play offense with the disease category and with Epioxa , and if additional folks come in, then we'll work alongside them.
Got it. That makes sense. Then sort of alongside that, just on iLink Gen 3 in phase II studies now, I believe you said commencing phase III in 2027. I know it's topo-guided custom cross-linking, but can you elaborate a bit more on kind of if and how you're trying to improve upon Epioxa with this?
Sure. Well, I mean, I think you saw just prior to AAO our announcement around the long-term data of Epioxa and some of the terrific visual acuity data alongside of that. I think not only are we seeing with Epioxa the ability to slow and halt progression of the disease, but the visual acuity in a decent percentage of the patients alongside of that. I think with the topo-guided, or I'll call it custom cross-linking approach that is represented with Gen 3, we hope just to build upon that really successful foundation that we've got with Epioxa . So hopefully we'll continue to see additional gains around the visual acuity side, and so that we're taking more and more patients who would not just have their disease halted, but actually get visual improvement alongside of that.
Got it. Really helpful. Is that something we could see in the U.S. by 2030? Any rough timelines we should think about with iLink Gen 3?
Well, I think the only timeline that we'll commit to is what we've said publicly, is we're going to enter into those pivotal trials in 2027 and try to get those enrolled as fast as possible and get that to market. Obviously, we've been really encouraged by what we've seen so far from a data perspective with the Gen 3 system, and if it continues to hold up, we'll want to get that to market as fast as possible because I think patients will continue to benefit from access to the therapy. I can't give you a timeline on the actual go-to-market date, but you've seen our timelines historically, and you can probably do your own inference on that one.
Okay. Perfect. Maybe last one or two on Epioxa before pivoting. You have your $1 billion total revenue number out there for 2027, total company. Buy-side range of estimates for Epioxa next year, I know is pretty wide. You talked on the call about maybe how the Street got ahead of itself on iDose, and maybe there were some learnings there. Is getting back to the 18,000- 20,000 run rate for the full year in 2027 within a reasonable range of outcomes, given we know that patient volume demand is there? Or, again, to try to not reign in numbers, but what do you view as kind of a reasonable, I wrote down ultra upside outcome in 2027 for Epioxa , but what's kind of like a reasonable ceiling outcome here, again, as we're trying to think about reasonable numbers?
So we give guidance early for 2027, and that just gave you a window to ask these kind of questions earlier than normal. I think obviously we understand the, I'll call it the variability in expectations from investors around Epioxa for next year. You're correct that our giving the guidance that we did was an attempt to continue to make sure that that stays within the realm of reasonable. And while I appreciate your question around trying to push the upper limits, I'll be the first to say that there's a lot of scenarios here around Epioxa next year, and there are a variety of puts and takes that I think are worth considering in terms of the outcomes.
As we continue to make a lot of progress on the payer side, as we talked about earlier. As we knock that down and we streamline access and we improve on patient turnaround times to getting access to the therapy, then scenarios like you are describing of the getting back to 18,000-20,000 start to become potentially achievable. It is just hard to know exactly in any given period of time or quarter when that will start to happen. As I mentioned earlier, I think we have also clearly got a lot of investment in front of us around disease awareness and attracting hopefully a larger and larger patient population to drive that awareness and get them access to therapy.
So, I think we certainly have the right tailwinds for a successful 2027 with Epioxa , but we also just have to continue to be cognizant and thoughtful about where you started earlier in the questions, that payers will have a variety of tactics to slow that down. If it was as simple as just driving disease awareness and having a product that works, then my answer to your question would be yes.
Right.
But there is a lot more to it when you get in it, and we will just have to see it plays out next year. But I think I feel very good about where we're at right now and where we will be at next year. I just ask investors and the buy side generally to have some patience as we continue to, I think, deliver on a pretty exceptional period of growth for the company.
Perfect. Perfect. Maybe shifting gears to iDose. Joe, can you talk a bit about the third quarter performance? Only up somewhat slightly sequentially, and know it is a reality, but investors do not love to hear seasonality when it is still somewhat early in this launch, particularly, ex-fee for service. Maybe if you can discuss iDose trends, and as we sit here today, where does your long-term confidence in that product stand?
Yeah. Executives don't like hearing seasonality either from the commercial organization, so I think we're aligned in that part. It is a factual reality. I mean, the third quarter is always down sequentially from an overall procedures perspective, and quite materially in ophthalmology, and that's been growing in recent years. So, I think any time that you can continue to grow sequentially in the face of procedure volumes being down is still a good thing. Probably what I would point more to is, again, sometimes we get a little too focused on individual short-term periods. We did $53 million, I think it was, in the first quarter of iDose sales, and we did $76 million in the third quarter.
When you look at over the course of the six-month period, it's pretty attractive growth profile sequentially, so I wouldn't over-read into anything in the third quarter in that regard. Having said that, there continues to be always a variety of dynamics in play with the draft LCD and some of the things and noise around that at some of the individual MACs. We haven't made the progress that I would have hoped on the professional fee side with those remaining holdout MACs, right? WPS, CGS in particular, where it'd be nice to get those turned over and get access to therapy for iDose and streamline reimbursement set there. But in general, no, I think we continue to do just fine, and my long-term views of iDose as a disease-altering category product are unchanged. So, I think we continue to change the standard of care for interventional glaucoma.
We've a lot of voices now, I think, adding to that, which is helpful, and we continue to believe that iDose is the best therapy selection for those patients.
Perfect. Thinking about rest of year, iDose guidance for 2026, low $280 million range, implies only a couple million of quarter-over-quarter growth from 3Q - 4Q. Are the same dynamics at play this year that occurred last year with busy cataract schedules, patient mix, or are there other dynamics that would maybe limit that sequential growth in 4Q in iDose that we should be mindful of?
Yeah, no other dynamics. We just wanted to be thoughtful about what we did experience last year to that point. We got into the fourth quarter last year, we saw that exactly as you described it. They are very busy schedules. It's very cataract dominant, and it's very Medicare Advantage dominant, for all the reasons that you know. We just, coming in and setting the guidance and expectations, we wanted to make sure we were at least being thoughtful about what we learned last year, and we'll see how that plays out, obviously, as we make our way through the fourth quarter here this year.
Got it. Perfect. Then maybe last one on iDose, shifting gears a little bit. CMS last week finalized its decision to, hopefully I have this right, characterizing this correctly, but bundling iDose's J-Code with the CPT code once pass-through expires middle of next year, I believe. Joe, maybe, can you start by briefly explaining to us what's occurring here, and then discuss the different potential outcomes and impacts?
Yeah. Well, first of all, I'm glad you asked the question that way so I can correct the record.
Perfect.
CMS did not finalize anything with respect to the iDose pass-through status next year. That will happen mid-next year as a part of that pass-through expiry. I think there was a little bit of confusion amongst investors on that. What they included in the final rule was their standard procedure language, and if you go back and look at all the drugs that are facing expiration from pass-through, they include that language almost universally, including for those drugs that ultimately achieve permanent pass-through status. So, I think it was a misunderstanding and perhaps a bit of a misread to see the final rule that way. We looked at it as exactly what we expected as a part of the process that's there. So that's most important first off.
Now, as we get into next year and they do evaluate that, as we know, their policy is to try to package things in the hospital setting, and so we've always factored that in as a potential outcome. The question becomes, if they do, how does that end up working, right? That's where we've always said there's a variety of outcomes, most of which are really not impactful or neutral to Glaukos. At that time, they can assign a proper APC assignment if they do it. They can assign a new tech APC if they do it. All those options are available based upon their calculations around it. Now, as you think about it, I should also add, hospital volumes are quite small for us.
And if there was even a remote downside scenario, we'd just work to move most of those procedures into the ASC setting that's around it. So, I think, again, it comes back to most of these situations lead to a path that has minimal to no impact to Glaukos as we look at it. I just have to reiterate one thing that we always talk about with iDose when investors are thinking about the pass-through. Unlike many of the drugs that are ancillary or supportive of a procedure, in the case of iDose, what makes it unique is that it is the procedure. The drug delivery is the procedure, and so that's the key consideration and around that.
You've seen that in some other things like cell therapy and gene therapy and gene editing drugs around it, historically, and you can look up how those outcomes transpired for those drugs when their pass-through expired.
Got it. So, I was going to ask that. What are some of those examples of drugs in ophthalmology that achieve that permanent pass-through status?
Yeah
that give you confidence in 2027 that we can look to?
Yeah, most of the drugs that have not achieved it are drugs that were done in combination with cataract surgery. For example, just managing inflammation post-operatively and things like that. The drugs that have achieved it are more the gene therapy drugs and some of the specialized drugs where, as I mentioned earlier, Luxturna, for example, and some of the drugs like that the drug is the procedure.
Okay, got it. And then last one here. You mentioned this seemingly as hospital only where volumes are small. I guess, if pass-through status does expire, it gets bundled in in the hospital, what's the contagion risk here of this expanding beyond just the hospital and into the ASC, or is there something statutorily that would prohibit that?
No, it really is a hospital policy primarily, and if you go back and analyze the data, I won't quote the statistic because I don't have it memorized, but the vast majority of the outcomes do not impact the ASC setting. I'd say it's a very minimal risk that that type of coding would occur.
Got it. Okay, perfect. Maybe in the last five minutes, Tom, want to shift to profitability. Alex, going to pull you in here. From an OpEx standpoint next year, qualitatively, it would be great if you could highlight for us, I will call it the primary incremental drivers of year-over-year investment growth in 2027, whether that is, as Joe mentioned, Epioxa selling and marketing, iDose DTC, certain R&D programs, et cetera. Coming off a strong profitable 3Q, getting a lot more questions specifically on the magnitude of Epioxa spend next year in particular. So, walk us through kind of just incremental investment drivers next year.
You bet. Well, first, I'll say, as much as I would love you and want to give you all the details, we are in the middle of our budget season right now. That being said, you can think about three things that, and you have kind of already covered them, as we think about 2027 and incremental spend and operating expenses. The first one is around the DTC and digital marketing efforts to support the things that Joe has already talked about and patient awareness and driving identification of these patients out there that could have keratoconus. So that is kind of category number one. Category number two is around, as these two launches continue to expand and increase, looking at opportunities to build or continue to enhance the commercial infrastructure, the hub, and the support functions, et cetera.
So we will look in 2027 to do that as we see these launches expand. Then the third thing is around our pipeline. Quite naturally, the 14 disclosed programs that we have and continuing to invest in those and greenlighting certain aspects of those programs as we get into 2027 and look at that operating expense—
Got it.
—profile.
Got it. That is great. And so, for 2026, you are guiding to, I think it was $630 million in OpEx . Street next year for 2027 sits a little below $800 million, basically reflecting 25% year-over-year growth, versus revenue growth based on the $1 billion of slightly below 30. I know you are in the middle of budgeting, but I will take a stab. Is that 25% OpEx growth a fair place to be right now in our models? Or, I guess within that number, are we perhaps not fully accounting for maybe some key areas of spend that we should maybe take a closer look at?
Well, I think it is a fair place to be right now. As we have always said throughout this year and throughout the last couple years, we've been moving and driving towards more leverage in the model. And so, a good place to be is to see that leverage in your 2027 model, absent any further granularity of detail on operating expenses that I have not given yet. That is a great place to start. And then, you know, we' ve always said, and Tom said this in his prepared remarks, for the third quarter call, that we are at the point now where the company is well-positioned to drive profitability, yet our management focus will continue to be on driving top-line growth through these investments and reinvesting in the business on both the commercial side as well as the pipeline side.
So, to the extent revenues exceed those expectations, you can imagine that we will adjust our operating expense pool accordingly as well.
It is important to reiterate that too. I want to make sure, our philosophy, as Alex described it, we are not going to hold back on an investment in any given period. Obviously, we will continue to be disciplined. I think we're already showing the operating leverage that Alex is talking about, and we will continue to double down on the investments. We are not going to try to manage any given quarter, the sequential profitability statistics and things like that, because there is a lot of variability that Alex is trying to manage as we move forward, not the least of which is the top-line growth and how that translates to the bottom line in any given period. So, just keep that in mind as we think about the model in the coming forward quarters.
Got it. And as a follow-up to that, maybe in the last minute or so, how fast, Alex, you mentioned, can adjust that pool to the extent revenues exceed expectations.
Yeah.
But how fast can you dial up SG&A if revenue is well above expectations internally? I guess I'm just curious if, I don't know how to run a business. Just curious if the OpEx budget has a relatively fixed range and therefore outsized quarterly top-line upside would drop through to an extent. Maybe if you can kind of talk through that dynamic of dialing up SG&A.
Of course. And it's a great question, right? It goes to what I was just saying. I think if you think about SG&A, I think there are certain levers within SG&A, such as digital marketing and DTC, that you can lever up pretty fast, in order to make those investments, if revenues exceed expectations and we have extra capital to spend. I think on the R&D side, though, it's kind of the opposite effect, right? If you decide you've got excess capital and you want to deploy that towards R&D pipeline, those take a little bit slower time to ramp up. It's not going to turn on immediately. So, you have scenarios where some of that excess could drop to the bottom line, and some may not, because you're able to spend it in a very timely manner.
So, kind of the scenarios depend on what you're doing and how we're managing that.
That's what can create the volatility that we're talking about
Right
in any given quarter, is you're playing catch-up sometimes.
Yeah.
Got it. All right, team. I think we're at time, but thanks so much for joining. Appreciate it.
Thanks.