Welcome to Glaukos Corporation's First Quarter 2024 Financial Results Conference Call. Copies of the company's press release and quarterly summary document, both issued after the market closed today are available at www.glaukos.com. This call is being recorded, and an archived replay will be available online in the Investor Relations section at www.glaukos.com.

Thank you, and good afternoon. Joining me today are Glaukos Chairman and CEO, Tom Burns; President and COO, Joe Gilliam; and CFO, Alex Thurman. Similar to prior quarters, the company has posted a document on its Investor Relations website under the Financials and filings Quarterly Results section titled Quarterly Summary. This document is designed to provide the investment community with a summarized and easily accessible reference document that details the key facts associated with the quarter, the state of the company's business objectives and strategies and any forward statements or guidance we may make. This document is designed to be read by investors before the regularly scheduled quarterly conference call. As such, for this call, we will make brief prepared remarks and transition into a question-and-answer session. To ensure ample time and opportunity to address everyone's questions, we request that you limit yourself to one question and one follow-up. Please note that all statements, other than statements of historical facts made on this call that address activities, events or developments we expect, believe, or anticipate will or may occur in the future, are forward-looking statements. These include statements about our plans, objectives, strategies and prospects regarding, among other things, our sales, products, pipeline technologies and clinical trials, U.S. and International commercialization, market development efforts, efficacy of our current and future products, competitive market position, regulatory strategies and reimbursement for our products, financial condition and results of operations as well as the expected impact of general macroeconomic conditions, including foreign currency fluctuations on our business and operations. These statements are based on current expectations about future events affecting us and are subject to risks, uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Therefore, they may cause our actual results to differ materially from those expressed or implied by forward-looking statements. Review today's press release and our recent SEC filings for more information about these risk factors. You'll find these documents in the Investors section of our website at www.glaukos.com. Finally, please note that during today's call, we will also discuss certain non-GAAP financial measures, including results on an adjusted basis. We believe these financial measures can facilitate a more complete analysis and greater transparency into Glaukos' ongoing results of operations, particularly when comparing underlying results from period to period. Please refer to the tables in our earnings press release, available on the Investor Relations section of our website for a reconciliation of these measures to their most directly comparable GAAP financial measure. With that, I will turn the call over to Glaukos Chairman and CEO, Tom Burns.

Okay. Thanks, Chris. Good afternoon, and thanks to all for joining us today. Today, Glaukos reported a record first quarter consolidated net sales of $85.6 million, up 16% versus the year-ago quarter. As a result of our strong start to the year, we are increasing our full-year 2024 net sales guidance range to $357 million to $365 million versus $350 million to $360 million previously. These record results were broad-based with 20% year-over-year growth achieved in both our U.S. and international glaucoma franchises, where we continue to accelerate efforts to expand access to interventional glaucoma tools for the benefit of physicians and patients. Our goal to advance and improve glaucoma care by driving earlier intervention continues to build momentum as we lead and work closely with surgeons and top leaders globally to organically drive this broader evolution in the standard of care. These efforts were on full display at the AGS conference in late February and more recently at the ASCRS meeting last month, where the interest and excitement levels for interventional glaucoma and our technologies were palpable. Within our U.S. glaucoma franchise, we delivered first quarter sales of $42 million on strong year-over-year growth of 20%, driven by iStent infinite and our overall iStent portfolio. Market receptivity and adoption of iStent input have remained strong as we continue to pioneer and lead the interventional glaucoma paradigm shift. In parallel, we continue to advance key market access initiatives to support consistent and dependable professional fee payment with 5 of the 7 MACs now including CPT code 0671T on the latest fee schedules. During the first quarter, we also commenced the initial phases of our controlled launch plan for iDose TR, our revolutionary microinvasive injectable therapy designed to lower intraocular pressure in patients with open-angle glaucoma or ocular hypertension. iDose TR is a first-of-its-kind intracameral procedural pharmaceutical designed to deliver glaucoma drug therapy for up to 3 years. I cannot be more pleased with how the early stages of this launch have gone. Our initial targeted wave of 15 surgeons successfully completed their initial iDose TR procedures during the first quarter, and the early feedback and outcomes have been very positive. As a reminder, these early access surgeons provide valuable insight to our training and field teams that helps optimize training and skills transfer to our sales force and surgical community, supporting our expanded training and broader launch efforts over the course of 2024. In addition to training, a key element to the stage gating of our iDose TR commercial launch is market access, where there have been several recent positive reimbursement developments designed to support fulsome coverage and payment for the iDose TR procedural pharmaceutical over time. So first, CMS assigned a unique permanent J-code for iDose TR, J7355, set to become effective on July 1, 2024. This new J-code, once effective, is expected to increase patient access here in the United States and should provide more streamlined, consistent and dependable coverage and payment for iDose TR as we advance and ultimately accelerate our initial commercial launch activities. Second, CMS has signed the CPT codes that are designed to be used to cover the procedural component of iDose TR, 0660T and 0661T to Ambulatory Payment Classification or APC 5492, effective April 1, 2024. This translates into a national average facility fee of nearly $3,900 in the Hospital Outpatient Department (HOPD) setting and more than $2,000 in the Ambulatory Surgery Center (ASC) setting. Third, we have participated in several initial education needs with MACs as part of our efforts to secure professional fee coverage and payment over the course of 2024. And fourth, we successfully entered into the Medicaid Drug Rebate Program or MDRP. And finally, fifth, we have successfully commenced early initiatives to secure coverage for commercial and Medicare Advantage plans, efforts that we plan to accelerate in the second half of 2024 after the J-code is effective. So in summary, the response we received from surgeons and the broader ophthalmic community since FDA approval and the more recent initial commercial launch activities has been overwhelmingly positive and reaffirms our view that with the launch of iDose TR, we are pioneering a brand-new category for pharmaceuticals that has the potential to reshape glaucoma management as we know it today. We are excited to now be building a strong foundation to bring this transformative technology to market and expand the treatment alternatives for patients suffering with glaucoma and ocular hypertension. Moving on, our international glaucoma franchise delivered record sales of $25.2 million on year-over-year growth of 20% on a reported basis and 21% on a constant currency basis. This strong growth was once again broad-based as we continue to scale our international infrastructure and execute our plans to drive MIGS forward as the standard of care in each region in every major market in the world. We remain in the early stages of expanding our IG initiatives globally ahead of what we hope will be supported by a healthy cadence of new product approvals and expanding market access in the years to come. And finally, our Corneal Health franchise delivered sales of $18.4 million on 4% year-over-year growth, including Photrexa sales of $15.1 million on a year-over-year growth of 7%. These first quarter results do include, in particular, the impact of our entry as a company into MDRP. These dynamics were anticipated and will continue to impact Photrexa realized revenues going forward. Shifting gears, we continue to prudently invest in and successfully advance our pipeline of novel promising platform technologies that we believe have the ability to significantly expand our addressable markets and fundamentally transform our company over time. This includes Epioxa, our next-generation corneal cross-linking therapy, for which we continue to progress towards trial completion in the second Phase III pivotal trial and remain on track for data readout in the second half of this year, supporting our targeted NDA submission by the end of 2024. We continue to make enrollment progress in several important clinical trials, including one, a PMA pivotal trial for iStent infinite in mild to moderate glaucoma patients; two, a Phase IIa study for iLution Travoprost with an initial data readout expected later this year; three, Phase II trials for iLink third-generation therapy; and four, a first-in-human clinical development program for GLK-401, our intravitreal multi-kinase inhibitor retinal program in wet AMD patients. We also remain on track to commence a Phase III study for iDose TREX, our next-generation iDose therapy by the end of 2024. Beyond these clinical activities, our development teams continue to pursue potential game-changing early-stage programs across new areas of glaucoma, retina and rare diseases. So in conclusion, I'm pleased with the strong start of the year, given our team's solid execution. I'd like to thank the nearly 1,000 Glaukos employees who remain dedicated to the work in advancing our strategic plans. We look forward to continuing to sustain and build upon the growing momentum in our business over the coming quarters and years. Our foundation is strong and our teams are energized as we are ideally positioned to continue transforming vision for the benefits of patients worldwide. So with that, I'll open the call for questions. Operator?

Our first question will come from the line of Tom Stephan with Stifel.

Maybe I'll start on the guide. Can you maybe talk about what the changes are to the construct of the full-year revenue outlook? We can begin there. And then is there any more color or I guess parameters you'd be willing to provide on what's baked in for iDose?

Sure, Tom, it's Joe. Thanks for the questions. I'll begin with the guidance. We've had a stronger-than-expected start to the year, and we're pleased to raise the full-year guidance so soon after setting it. There are a few key points worth highlighting. First, it's still early in the iDose launch, with most of the contribution expected later this year. Everything in the first quarter is on track, and we can discuss that further later on. Some of the robust stent growth we saw in the first quarter, which is strong year-over-year, is partially due to the timing of the infinite launch activities from last year, which accelerated in the second quarter. Moving into the upcoming quarters, we anticipate that competition will become a bit tougher. Additionally, the strengthening dollar and foreign exchange rates have created headwinds for many of us in U.S. reporting, resulting in an extra 200 basis points of pressure on the international side as the year progresses. Finally, as Tom mentioned earlier, we expect the MDRP-related challenges to continue for our Corneal Health franchise throughout the year. Overall, we're projecting low to mid-single-digit growth for the corneal franchise this year. The international glaucoma business is expected to see low to mid-double-digit percentage growth, while the U.S. glaucoma business may experience high teens to potentially 20% growth year-over-year. I hope this gives you a clearer picture of our current situation. Regarding your second question about iDose TR, we are still in the early stages. We were pleased to share in mid-February that we were making progress. In the second half of the quarter, we began the early access phase of our iDose launch. As Tom noted, we successfully had our initial 15 surgeons complete their cases in Q1, working closely with our sales, training, and market access teams. This methodical approach will continue as we slowly expand in Q2, leading up to the establishment of the J-code in Q3 and further acceleration in iDose-related activities and volumes anticipated for Q4.

That's great color. And then maybe switching to the pipeline. Tom, you alluded to this a bit, but we did see in your proxy that the company is developing iDose TR, which appears might be an in-office version of the implant. If you're willing to share, can you elaborate a bit of product, maybe the key details sort of the portfolio fit, I guess, and then any time lines or milestones?

Yes, I would be happy to address that, Tom. I think as we examine the evolution of our pipeline, it’s essential that we continue to find ways to develop an even more minimally invasive and straightforward procedure. Therefore, our focus is on creating a product that will be even more microinvasive than the current iDose design and have an applicator that allows us to insert the iDose product through an incision of about 1.2 to 1 millimeter. This will enable us to create a self-sealing construct or a temporal clear corneal incision, which is particularly important as surgeons transition to in-office procedures, a vital aspect of our strategic plan. We are currently developing an applicator to meet these objectives. Looking at the timeline, we anticipate a potential introduction around late 2025, which will coincide with empowering surgeons to choose in-office as well as ambulatory surgical center options.

Your next question comes from the line of Ryan Zimmerman with BTIG.

Congrats on all the progress. I want to follow up on Tom's questions. I'm sure a lot of people will be asking about iDose. But you gave us a little detail here on 15 surgeons kind of completing initial iDose TR cases. Now many of us have been diligent in this, and it would seem as though there may be more surgeons out there or at least there's a lot of excitement out there. Just to confirm, have you put iDose in the hands of more than the 15, number one? And then two, kind of how do you think about expanding that beyond that initial wave of the 15 in the second quarter until kind of that J-code is effective? And are you gaining adoption in any way or kind of holding demand before that J-code is effective?

Sure. Thanks, Ryan. I think the answer to the number of surgeons who have had access, I think a little bit you're reacting to the overall enthusiasm for iDose TR and some of the pent-up demand for folks to get trained and get going with it over the course of the year. But the direct answer is, yes, now that we're sitting here on May 1, of course, we continue to expand. We're past that. The 15 number from a surgeon training perspective was as of the end of the first quarter. So you would expect us to continue to be slowly expanding that and providing more access to folks. At the same time, we're going to do so methodically. As we talked about from the outset, I think even back to the iDose call in December, the way we will launch this product is those early access physicians expanding that very slowly and methodically over the course of the second quarter and then really starting to open that more broadly as we get into the second half of the year with the J-code being established. At the same time and in parallel, we are working with these accounts. And so simply because the surgeon maybe hasn’t completed their first case, does not mean that they're not in the funnel or if you're doing channel checks, expressing their enthusiasm because they're being trained. Their back-office administrative staff are being trained. And so we're continuing to make progress really on all those fronts as we move forward into what we think will be a pretty exciting certainly second half and most notably fourth quarter for this year with iDose.

Okay, very helpful. Joe, if you're in those accounts, I'm curious about the impact or pull-through you're seeing from the iDose effort on the base business. Could you relate this to the concept of infinite growth, especially in the U.S.? I would guess that the market isn't growing anywhere close to 20%. Are you gaining market share? Is the market growing faster now because you're dedicating more time to these accounts? It would be great if you could elaborate on the core mix business and the resulting effects from your iDose initiatives.

Yes, it's a great question. So I'll provide a little bit of color, I think, will help you triangulate in around the breakdown of the results of the first quarter for the U.S. glaucoma business. We did see our overall stent portfolio, including iStent infinite, grow in the mid-teens on a year-over-year basis. So the majority of what you're seeing now, obviously, we did have iDose TR and some of those early launch activities. But the majority of the growth that you're seeing, to the tune of mid-teens growth is coming from our stent portfolio. I think it's, of course, very hard to dissect that down to individual percentage breakdowns. But I do think it's a little bit of all of those things that you mentioned, Ryan. I think that we are growing the market because of, as Tom mentioned, we put a lot of muscle and effort into the interventional glaucoma paradigm shift. That's not something new. We've been working on that hard over the course of the last 15 to 18 months in particular, that I think you're starting to see some of the benefit of that in terms of growing the overall market certainly faster than it would be if it was still restricted to the combination cataract setting. But at the same time, I also do think we're taking a little bit of market share. And I think the fact that we're in there with multiple new exciting technologies to help expand the portfolio of alternatives for these surgeons, you can't help but benefit a little bit from that in the context of a halo, obviously associated with the overall portfolio. And so I think that is playing out a little bit as we make our way through the year so far.

Your next question comes from the line of Larry Biegelsen with Wells Fargo.

Congratulations on a really strong quarter. Joe, you raised the guidance at the midpoint, but I'm curious why the amount of the beat wasn't larger. It seems that the expected growth from Q2 to Q4 is actually below what we saw in Q1. Lastly, how should we view Q2? Are you comfortable with the consensus estimate of around $88 million?

Yes, Larry. I'll address your question in the order you asked. Regarding why we didn't raise the guidance more than we did, it's important to note that over the last two months, the situation has changed significantly compared to our initial expectations for the year. We've achieved what we anticipated and even exceeded it slightly, so we wanted our revised guidance to reflect that. However, much of this outlook is influenced by our expectations concerning iDose, which we believe will primarily impact the second half of the year. Therefore, I don’t anticipate making any drastic changes to our expectations for iDose's performance in the latter half. We are continuing to work towards seizing that opportunity. In terms of Q2, I briefly mentioned earlier that our first quarter had certain advantages. On the international front, currency conditions were more favorable than we expect moving forward. We anticipate an additional 200 basis points or 2% headwind on international growth as we enter the second quarter, largely due to the strengthening dollar. Additionally, we had a more comprehensive launch of iStent infinite in the second quarter last year, which will make year-over-year comparisons tougher as we progress into the second quarter and beyond. Considering these factors should clarify our position. Lastly, regarding seasonality, our usual patterns have been affected this year by the growth of iStent infinite and the utilization of iDose in the second half, resulting in a shift of more contributions to the later part of the year, especially the fourth quarter. To illustrate this, I would expect around 23% to 24% in Q1, 24% to 25% in Q2 and Q3, and 26% to 28% in Q4. Following this breakdown should provide a clear perspective on our seasonal expectations for 2024.

That's helpful. Joe, could you elaborate on the iDose ramp? What should we expect in terms of its progression, and what factors will contribute to a significant change in Q4? Is it related to the J-code implementation starting July 1, or do you anticipate seeing changes in Q3? It seems like the impact in Q1 was limited. What do you believe will drive adoption throughout the year?

Certainly. Our expectations are that the contribution in the first quarter was relatively small. We launched it in mid-February and provided early access, and we are on track with everything. We plan to continue expanding throughout Q2. To address your question directly, there are two major events that will significantly impact adoption. The first is on July 1 when the J-code becomes effective. There will be a lag in scheduling procedures and implementing that J-code. Then, as we approach the fourth quarter and the ASP is published, the automated payment process for Medicare will improve significantly. With the established J-code and published ASP, we anticipate a much more streamlined reimbursement process at the account level. This development is expected to be crucial for enabling surgeons to utilize iDose for all patients they deem suitable for the technology.

Your next question will come from the line of Matt O'Brien with Piper Sandler.

To follow up on Larry's question regarding the performance of iDose in Q1, you can expect numerous inquiries about iDose during this call. If I consider the core business growing in the mid-teens, excluding that, I estimate a performance around $1 million in the first quarter, which translates to over $1 million. Is that an accurate figure? This is based on just 15 doctors, as I'm trying to assess the J-code. Is that estimation close?

I'm not going to provide specific numbers, but it's clear that the U.S. glaucoma franchise is experiencing overall growth, with the stent portfolio increasing in the mid-teens year over year. As you've calculated, the data supports this. It's important to note that there were 15 implanting surgeons in the first quarter who had only about half a quarter to conduct those procedures due to our launch timing. It was encouraging to observe the enthusiasm for the patient outcomes following their initial iDose implantations. They provided us with valuable insights that help refine our training and boost confidence within our sales team, enabling them to perform better as we move forward in the coming quarters.

Got it. And then the follow-up, just on the profitability side, Joe, I think you said historically once you launched that profitability, the gross margin was good this quarter. Should we expect that to dip a little bit as iDose ramps and then improve significantly going forward? Additionally, the spending was much better than we anticipated, given all the activities around iDose in this quarter. So can we expect to see profitability start to ramp up considerably over the next 18 months?

Matt, it's Alex. I'll go ahead and take those questions. So we'll start with gross margin. We were pleased with the 83% in the quarter for sure. But as we mentioned on the last call, and I'll say it again, as you know, when you launch a new product, it's bound to see some inefficiencies in the operations as we start to ramp up that product and the manufacturing and all the costs that are associated with that. What we would tell you or what I would guide you to is some level of a range. We've always said 83%, 84%. We hope to continue to play in that range this year, but there should be or could be some volatility as we go through the next couple of quarters and iDose gets ramped up. And then we think about the margin being accretive over time with iDose for sure, and we would look forward to that accretion and seeing some of that next year. On the operating side, you're right, we were pleased with the $92 million, if I back out the IPR&D charge of $11.7 million. So that was nice. The one thing I'll just say on the expense side is that in Q1 of last year, the R&D spend was much higher than normal because we had all of the iDose pre-NDA activities that were happening as well as a large PDUFA fee payment that needed to be made. And so that kind of explains a little bit of the slowdown if you're comparing on a year-over-year basis.

Your next question comes from the line of George Sellers with Stephens.

Maybe sticking with the iDose theme. Could you just provide some additional color on maybe where you're seeing early utilization in the first quarter and also quarter-to-date here in the second quarter? If that's in conjunction with stenting procedures or another MIGS procedure? And then also what stage of the disease progression are these patients who are receiving an iDose?

George, it's Joe. I think at this point, when you're early in a product launch like this, you try to keep it as simple as possible. The more variables you introduce, the more challenging it becomes in terms of both education of the sales force as well as for the accounts and execution on their end. So as you know, and as we've said in the past, the primary goal there is for clean stand-alone utilization of iDose. Now having said that, have we seen surgeons for clinical reasons do it either in combination with cataract surgery or in combination with iStent infinite? The answer is yes, we have based upon the clinical needs of those patients. And so we will continue to monitor that and bring it forward. So I think we're really thinking very close to the playbook that we had prescribed as we drive this forward, and we'll continue to see surgeons expand the use case of iDose to go forward. Utilization itself and the trends associated with it are very different from account to account. Those accounts that have experience in billing miscellaneous costs, we've seen them really start to utilize iDose more fully. For those with a little less experience, they'll try, they'll do a handful and then wait for the payments to pull-through before they greenlight that broader adoption.

Okay. That's really helpful color. And then maybe going back to a prior question on this call. How should we think about surgeon training progressing sort of going forward? What's your capacity for number of surgeons you'd be able to train on a quarterly basis, particularly as we think about maybe the fourth quarter and into 2025?

Well, if you look back, if you think about the training from a sales force standpoint and our various products, I think the peak that we achieved was now quite some time ago, from a stent standpoint, where we were doing 700 to 800 surgeons a year. I think one of the big differences with iDose is that the majority of the surgeons that we're training have already gone through angle-based surgery. And so from that standpoint, those early cases that are really designed to teach them or reteach them the nuance of angle-based surgery, you have a lot less of that. So I think that we're going to set aggressive targets for the commercial organization to train as many doctors as possible, certainly at the beginning of the fourth quarter going to 2025. And we'll dial that in for you all as we get into that phase and we start to really see what the sales force can achieve quarter in and quarter out.

Your next question will come from the line of Allen Gong with JPMorgan.

Just one on iDose as well. You talked about how you're working via coverage from Medicare and commercial plans. A question that I've been getting is just concerns around the co-pay in areas of Medicare and commercial, where the out-of-pocket is not necessarily covered. How do you plan to address that in cases where you can provide some additional financial cushion, I suppose, and where supplemental insurance isn't as prevalent?

Yes, Allen, something that we spend an awful lot of time, obviously, thinking about and assessing and analyzing in detail as a team well before we set the price and certainly launched iDose. I'd break it down this way. Obviously, within the Medicare Fee-For-Service world, which is significant, obviously, a portion of the relevant lives here exist. The vast, vast majority of those patients actually have some degree of supplemental coverage. It can vary from a lot of different places, whether it's supplemental from Medicaid or whether it's from commercial plans or other supplemental coverage plans that they may have. So for the vast majority of those patients, you'll have really little to no out-of-pocket. The second major bucket you allude to is obviously within the commercial arena. And for that, we'll be approaching that similar to any drug launch or the vast majority of drug launches out there where we will have full co-pay assistance such that from that standpoint, patient economics will not be an impediment to the utilization of iDose in that payer arena. And the last frontier for us, and quite frankly, for most procedures and pharmaceuticals today will be Medicare Advantage, where a larger percentage of those patients have a higher out-of-pocket, both in terms of the percentage as well as the overall maximum and that's something that is not unique to obviously, iDose or Glaukos in that perspective.

Our next question will come from the line of Joanne Wuensch with Citigroup.

I have two. The first one has to do with iStent infinite. I mean that seems to be getting lost a little bit in the iDose focus. How is that doing? And what percentage of the procedures today are in stand-alone procedure versus concomitant? And then I do have to ask about iDose, and you've been seeing street models and things like that. How are you feeling about a full-year contribution for iDose? And I want to just make sure that expectations are set accordingly.

Thank you, Joanne, for your question. iStent infinite may not be as highlighted as iDose, but it remains a crucial element in our daily operations aimed at shifting the standard of care in interventional glaucoma. It's somewhat challenging to provide precise quantification since we lack sufficient data to distinguish between stand-alone procedures and those combined with cataract surgeries. However, I can affirm it was a significant growth factor for the quarter. Analyzing the numbers, our stent portfolio’s growth improved from mid-single digits throughout 2023 to mid-teens in the first quarter of 2024. The change was driven by the establishment of professional fees, and the reassignment of the APC resulted in facilities no longer operating at a loss, allowing surgeons to perform procedures they had always wanted to administer clinically. This was undoubtedly a primary driver in the first quarter, exceeding our expectations. Regarding iDose's contribution for the full year, we haven't pinpointed specifics yet because we're still in the early access phase, which will continue at least through the first half of the year. However, as we move into the third and fourth quarters, once the J-code is activated along with the ASP reimbursement, we anticipate it will become a substantial contributor to our results.

Your next question will come from the line of Margaret Kaczor with William Blair.

I'm going to add to the discussion about Infinite because it appears to be growing quite rapidly. I understand the comparisons are becoming more challenging. I know you're perhaps hesitant to focus on sequential growth, but could you provide any insight into whether the number for Infinite is increasing or remaining steady? Additionally, can you share information about penetration rates, particularly regarding usage in existing accounts compared to efforts to acquire new accounts?

Yes, Margaret, I think that from a performance standpoint, it's certainly our expectation that infinite would continue to grow sequentially just based upon the organic efforts of our sales force around driving education, awareness, and training of iStent infinite in particular, in the stand-alone setting. So I think it's absolutely our expectation that that will continue to be a growing driver of our overall business. To your point, we may have varying degrees in terms of how that translates from a year-over-year growth perspective just given comparable differences in 2023. But we absolutely expect it to be that. I think in terms of penetration, it's still really early. I mean you've heard us talk about the stand-alone opportunity measured in a couple of hundred thousand procedures for iStent infinite for patients who fail medical and surgical therapy. And so just in translating even the great results we had in the first quarter, we're still very early in the overall penetration paradigm of iStent infinite and where it can and we expect it to be utilized.

Okay. And I'll squeeze in kind of the 2 bolt-on iDose as well as just a pull up on infinite. I think at our conference, even last year, you guys have spoken about just your general enthusiasm that this is going to be a $50 million to $100 million plus business over time, maybe even faster than iDose can get there. So I don't know if you can speak to your confidence level now that both products have launched around that commentary around timing today versus last summer? And then on the iDose side, I'm not sure if you can give us any color around how the initial surgeons and clinicians are working iDose into their workflow. Are they focusing a day exclusively on iDose? Are these patients that have been waiting for a long time? And how far are these cases being booked?

I believe, Margaret, it's probably a bit early to make strong statements regarding how they're integrating it, considering our current stage in the launch process. We definitely have surgeons who are actively considering an interventional approach to patient treatment. Each of them has their own methods, but we're noticing that iDose TR is becoming a significant part of their strategies. Regarding iStent infinite and the overall market size, I don't think anything has changed. Our conviction remains strong, especially with the results we've observed this year, which likely reinforces our belief in the potential of iStent infinite as a multi-hundred-million-dollar product for us. Again, concerning the market size, there's no need to alter the approach for iStent infinite to be applied to patients who have not succeeded with medical and surgical treatments. The surgeons already exist; it's about ensuring they are trained, have access, and are appropriately considering it within their own methodologies. We are very confident about its trajectory over time.

Your next question comes from the line of David Saxon with Needham.

A couple on iDose as well. So it sounds like each of the 15 docs did about 7 or 8 in the first 2 months that iDose was commercial during the quarter. So how quickly did you see the first cohort do the second and third procedures and so on? Did they wait until they got reimbursed for the first and then do 5 or 6 more? Or was it more even over the 2 months?

Thanks, David. I believe it’s a bit too early to make that assessment. In the initial launch phase, it's common to see significant variation. Some surgeons may have already performed more procedures, while others might have completed only a few and are waiting for reimbursement. As I mentioned earlier, the primary factor influencing early adoption is their familiarity with miscellaneous codes, both from the surgeons and their staff. This understanding plays a crucial role at this stage. Over time, once confidence in reimbursement is built, the focus is likely to shift more towards discussions about the clinical aspects of how and when to implement this. For now, it largely depends on their experience with miscellaneous codes and awaiting payment.

Okay. Got it. And then you've talked in the past about the specialty pharmacy channel. So can you talk here about kind of what the process is to get that established and how long that might take? And then thoughts on how, if at all, that drives adoption further?

Yes. So specialty pharmacy channel is not new to us. Obviously, it's an important part of our business on the Photrexa side. One in which we're continuing to optimize each and every day. But it plays a very material role in the, I'll call it, distribution and channel strategy associated with Photrexa. And based upon that, the establishment of that from an iDose perspective is already there. We have all that ready. But you really don't expect to start driving the utilization within that channel until you start to turn on your commercial policies and drive that non, call it, Medicare business where the specialty pharmacy channel is most beneficial. And the second underlying layer of that, obviously, is that you're always been cultivating the relationships as the specialty pharmacy provider with the various payers that are out there. And so that process will be ongoing over the course of many years as you try to optimize the coverage within that channel to benefit those commercial patients who will rely upon it. But we're ready to go. It's much more about us really unlocking or releasing the commercial side of our iDose business before we start meaningfully making a change in the specialty pharmacy side.

Next question will come from the line of Sam Brodovsky with Truist Securities.

Just 2 quick ones on iDose and then I'll try and sneak in an international one as well. First, just any update or any color you can provide on incremental data on when we may get a replacement label or a little how those conversations with the FDA are evolving?

Yes, Sam, thanks for the question. Thanks for allowing me to engage on the question on iDose commercial. Yes, as we talked about, we have, I believe, prepared a really strong proposal to submit to the FDA. We waited, as you know, there's been a change in the guard at the FDA. And so that dust is still settling. So we will be proposing the movement towards re-administration. And really in the coming days, we're hopeful to be able to get a positive response but we're not counting on it. And I will tell you, as I said before, one of the things that investors and analysts should be reassured by is that we have TREX, which we're on track for regaining that clinical trial by the end of the year. And when you do any kind of chronology of when our expectation is to have that commercially available, as we talked about before, best case would be at the end of '27 into '28. And so any patient that is undergoing an iStent implantation typically or invariably by the end of this year or early 2025, we believe that the TREX will become a compelling offering for re-administration for those patients.

That's helpful. Are there any constraints to consider as you expand to more doctors? Specifically, is there anything that might limit how many doctors can adopt this in the coming months before the J- such as supply or other factors?

I believe that in the context of the second quarter ahead of the J-code, the situation will be similar to what we saw in the latter half of the first quarter. Some practitioners will feel more confident and will continue to adopt based on their clinical workflows while focusing on the Medicare patient demographic. Others may begin to experiment but will ultimately wait for payment before fully adopting. I do not anticipate any significant change in the second quarter regarding iDose, apart from our ongoing efforts to gradually increase access for those surgeons.

Your next question will come from the line of Anthony Petrone with Mizuho.

This is Dmitry Kotlyarov on for Anthony. Congrats again on a great quarter. So I saw on your summary, you have had some initial educational meetings with the MACs as part of your efforts to secure professional fee coverage. Can you give us any updates from these talks? Do you have better insight on the timing of when these professional fee coverage will come through? And could they come all at once from the MACs or will it be staggered? I'll have a quick follow-up.

Yes. Dmitry, I think this is ordinary course activity as we do any time we launch new products, there's an education process just to make sure those MACs who are open to being educated on a new product like iDose. They understand what it is and the procedure associated with the drug. And so we've been executing on those as an ordinary course. If you look back in the history of Glaukos as we've launched products, professional fees tend to take somewhere between 6 to 9 months on average to start being at least more consistent in what they're being paid and ultimately then be put on fee schedules, and they rarely happen all at once. They tend to happen on whatever schedule and timeline that MACs themselves individually are on versus being one fell swoop across multiple MACs at a single point in time.

Okay. And quickly on gross margin, I know you came in a little bit lower than expectations. And I know that's kind of due to the launch. And do you just see it stepping down next quarter or we see a step up next quarter and kind of through the rest of the year?

Dmitry, it's Alex. I would say it's to be determined. I suggest you consider a range of approximately 82% to 84% for the year, given the potential volatility in rolling out iDose. However, we remain confident that iDose will positively impact the gross margin over time, and we expect to see more significant effects as we close out this year and move into next year.

Your next question will come from the line of Steve Lichtman with Oppenheimer & Company.

I wanted to ask about the core U.S. glaucoma business and market. One of the things you highlighted in your summary is potential volatility from all of the MAC movement at the latter part of 2023. Are you still seeing some aftershocks from that one way or the other? And also, if you could talk about what your expectations are looking forward? Are you hearing anything with regard with what might be next on the MAC front?

Yes. I think it's been relatively quiet in the context of the impact. There's probably a modest benefit to the stent side of our business as some surgeons or practices have reevaluated the tools that are being deployed and based upon the objective data that's behind those tools. I think it's a much smaller negligible impact for the quarter versus as we spent a lot of time here talking about the growing stand-alone utilization, for example. As we go forward, its status quo for now. The MAC next steps and the timing remain unclear. But as we've said before, we do expect to hear from them again and that stance is really unchanged. And so as always, it's been the case historically, we'll continue to support the right of the physicians to make clinical decisions on behalf of their patients, if and when we see something from the MACs.

Got it. And Joe, just quickly on OpEx. Should we still target about 10% growth year-over-year, this year?

Yes, I think the easiest way to think about it is that over the next three quarters, you should anticipate some reasonable sequential increases, leading to approximately a 10% growth in operating expenses by the end of the year compared to the base in 2023, which was $360 million excluding IPR&D.

Our final question will come from the line of Michael Sarcone with Jefferies.

Just another follow-up on iDose. Going back through the first few years of the initial iStent launch, I know you talked about you had a year or 2 where you did 700 new reps trained. You also often talked about, I guess 2015, the average rep training 3 surgeons per quarter. If you think about it kind of along those metrics, do you expect that the average rep today could train more surgeons than that given that a lot of these surgeons are already trained in open-angle procedures? Or would it be something less than that because maybe they have more products in the back to sell? Just wanted to get your thoughts on how you're thinking about that metric.

I believe you captured the situation accurately. That's why I'm somewhat cautious about specifying the training pace. The positive aspect, as you pointed out, is that we are not training most of these surgeons in angle-based surgery. This means we won't need to spend as much time on some of the more challenging training elements. However, as you mentioned, we are not just rolling out a single product tier with iDose; we have a portfolio in play, and there is significant activity surrounding iStent infinite. As our representatives begin to gain momentum with iDose training and onboarding towards the end of this year and into the next, we'll need to navigate this carefully. We plan to provide more context as we clarify our expectations.

Understood. And just one quick one. You talked about you're commencing early initiatives to secure commercial coverage for iDose. If you can give us a download on any types of conversations you're having in these early days with commercial payers and what the feedback and/or receptivity is?

Yes. Those efforts are really just beginning. But there are a lot of conversations going on. In fact, there's actually a fair number of policies that have already been issued out there, even though we're not commercially trying to drive that side, coverage has started to turn on in a variety of the commercial payer and other settings around that. I think to date, what you've seen from those policies is exactly what we'd expect. And quite frankly, not all that dissimilar than if you look at the coverage policies that are out there for DURYSTA today, at which there are plenty. So in terms of the interventional foreseeable pharmaceutical approaches, I think the payer community thus far has been following the playbook that they established with DURYSTA as they think about that coverage for iDose TR.

I will now turn the call back over to the company for any closing remarks.

Okay. I want to thank all of you for your time and attention today and continue to thank you for your continued interest and support of Glaukos. And with that, goodbye.

That will conclude today's call. Thank you all for joining. You may now disconnect.