Welcome to Glaukos Corporation's Third 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. I will now turn the call over to Chris Lewis, Vice President of Investor Relations and Corporate Affairs. Please go ahead.

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 then 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. If you still have additional questions, you may get back into the queue. 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, the 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 of 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 for their most directly comparable GAAP financial measure. So with that, I will turn the call over to Glaukos Chairman and CEO, Tom Burns.

All right. Thanks, Chris. Good afternoon. And thank you all for joining us. Today, Glaukos reported third quarter consolidated net sales of $96.7 million, up 24% versus the year ago quarter. As a result of our strong performance, we are raising our full-year 2024 net sales guidance range to $3.77 million to $3.79 million versus $3.70 million to $3.76 million previously. Our third quarter record results were primarily driven by 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 treatment by driving earlier intervention continues to build momentum as we lead and work closely with surgeons and thought leaders globally to organically drive this broader evolution in the standard-of-care for the benefit of patients. These efforts were on full display at the AAO Annual Meeting last month where the interest and excitement levels for interventional glaucoma and our technologies were high. Within our U.S. Glaucoma franchise, we delivered record third quarter sales of $51.6 million on strong year-over-year accelerating growth of 35% driven by early but growing contributions from iDose TR along with continued strong growth within our overall iStent portfolio led by iStent infinite. On the latter, the utilization of iStent infinite for glaucoma patients that have failed medical and surgical therapy continues to expand as our ongoing clinical education efforts in improving market access landscapes take hold. It is also worth noting that during the third quarter, five of the seven MACs issued final MIGS LCDs that largely align with their proposals as they establish coverage for iStent infinite that is consistent with our original reconsideration request. We look forward to their effective dates later this month as we expect it will be an important step in unlocking the remaining Medicare Advantage and commercial plan coverage for iStent infinite. That said, I should also note that with any coverage policy change, we may experience some transient turbulence as providers navigate any potential impacts associated with these LCDs. Turning to our procedural pharmaceutical franchise and iDose TR, I am pleased to report that we successfully advanced execution of our detailed launch plans for this first-of-its-kind intracameral procedural pharmaceutical that was designed to deliver glaucoma therapy for up to three years. During the third quarter, the expanded access of iDose TR to all of our sales field personnel helped support a growing number of trained surgeons and expanding utilization. More importantly, outcomes and feedback from a growing number of cases and trained surgeons continue to be very positive and reaffirm our view that with the launch of iDose TR, we are pioneering a brand new therapeutic category that has the potential to reshape glaucoma management as we know it today. A key element to this initial stage gating of our iDose TR commercial launch is market access, milestones, and reimbursement confidence, where we remain focused across a number of areas. First, our team has been hard at work partnering with our customers to ensure a smooth, efficient transition from the Miscellaneous Drug Code to the permanent J-code for iDose TR, J7355, which became effective July 1, 2024. As a reminder, this now effective J-code is expected to increase patient access and will allow us to expand training plans to future ways for surgeons and facilities over time. While there's certainly more work to do here, particularly as we expand efforts into the commercial arena over the course of 2025 and beyond, we're encouraged by the overall progress our teams are making to support increased reimbursement confidence through more streamlined and consistent J-code coverage and payment in several of the MACs to date, with more to come. Second, as anticipated, J7355 was included in CMS's latest HOPD and ASC Quarterly Update Addendums appropriately establishing pricing of J7355 at ASP plus 6% effective as of October 1st. Third, we are advancing efforts to secure professional fee coverage and payment with MACs as well as establish commercial and Medicare Advantage coverage now that the permanent J-code is effective. As noted in the past, we expect increasing adoption as reimbursement confidence is gained by our customers as we enter 2025. In addition to our commercial efforts, the launch has been supported by a growing set of clinical literature now consisting of eight different peer-reviewed publications highlighting iDose TR as a transformative new treatment alternative for patients suffering with glaucoma and ocular hypertension. We also continue to advance our dialogue with the FDA regarding the re-administration of iDose TR, and beyond that, we remain on track to commence a phase 3 clinical trial for iDose TREX, our next generation iDose therapy, by the end of 2024. Finally, I should also note that CMS issued its final 2025 facility fee and professional fee rules last Friday that largely maintained the 2024 reimbursement assignments and rates associated with our procedures and are consistent with the proposals from earlier this year. Moving on, our international glaucoma franchise delivered sales of $24.5 million on year-over-year growth of 21%. The 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 and major market in the world. Consistent with prior quarters this year, our new French CEPS agreement was favorable to our third quarter reported revenues. We remain in the early stages of expanding our IG and product portfolio initiatives globally ahead of anticipated new product approvals and expanding market access in the years to come. In the interim, we expect the trialing of new standards products in our major international markets may become an increasing headwind as we enter 2025. Finally, our Corneal Health franchise delivered sales of $20.6 million on a 5% year-over-year growth including Photrexa net sales of $17.9 million. As discussed last quarter, our third quarter results reflect the impact to Photrexa realized revenues as a result of our entry as a company into MDRP. Going forward, we continue to focus on expanding access for keratoconus patients suffering from this rare disease. Staying on Corneal Health but shifting gears to our pipeline, we were pleased to recently announce positive top-line outcomes in the second Phase 3 pivotal study for Epioxa, our next-generation corneal cross-linking therapy that met the study's primary efficacy endpoint and once again demonstrated the potential of Epioxa to halt or reduce the advancement of keratoconus, a progressive site-threatening corneal disease. These results further underscore our view that Epioxa may provide the ophthalmic community and patients with the first FDA-approved non-invasive corneal cross-linking therapy that does not require the removal of the corneal epithelium, the outermost layer of the front of the eye. We recently completed a successful clinical pre-NDA meeting with the FDA in which the Agency agreed that our clinical data package is sufficient to support an NDA submission and review. As such, results from this second Phase 3 confirmatory pivotal trial, together with the already completed first Phase 3 pivotal trial, are expected to support our anticipated NDA submission for Epioxa by the end of 2024. Beyond Epioxa, 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. We remain encouraged with the progress our teams are making across our robust portfolio of clinical and preclinical programs focused in the areas of glaucoma, retina, and rare disease. At the same time, as we've discussed, we continue to prioritize the cadence of our investments as we strive to strike the right balance of risk-based spending and our capital position now and in the future. In support of this, last month, we issued a Notice of Redemption for the remaining $57.5 million in principal amount outstanding of our convertible Senior Notes due 2027. Pursuant to the notice, we anticipate these notes to convert to common stock before the redemption date of December 16, 2024, helping to further solidify our already strong capital position through a deleveraging and de-risking of our balance sheet as well as a significant reduction in future cash interest expense. In conclusion, I am pleased with the strong commercial and development execution of our teams that have continued to demonstrate this year. We look forward to continuing to build upon the growing momentum in our business over the coming quarters and years. Our foundation is strong and we are ideally positioned to continue transforming vision for the benefit of patients worldwide. So with that I'll open the call for questions.

Our first question comes from Tom Stephan with Stifel. Please go ahead.

Great. Hey guys, thanks for the questions. Nice quarter. Wanted to start with iDose. I'll actually ask both my questions up front. First question, maybe for Tom or Joe to start. We're coming up on a year post approval of iDose. So first question, can you guys talk about sort of the top two or three learnings or discoveries during the launch. Just when you think back over the past, I guess almost, almost 12 months since approval. And then my second question is kind of a follow up to that. Maybe Joe or Alex for you. Can you talk about key qualitative sort of puts and takes looking ahead on iDose, when we think about the fourth quarter of this year in 2025 and try to dial in our models on iDose revenue. Thanks.

Sure. Thanks, Tom. It's Joe. Maybe I'll start off and the others can jump in with any incremental thoughts on your two questions. If we think back on the last year of iDose, I have to say whenever you enter into something of this magnitude, it's a challenge to forecast all the variables that are in front of you, whether those are variables from the training of your commercial organization to them ultimately leading that out to the field, the market access components and all the key milestones that are there. And I have to say we're quite proud of now looking back at where we're at, having done a really good job of executing against that plan. If you think about the most important thing from a long-term driver perspective, it really is clinical outcomes. Most importantly, we've been really pleased with results on this front so far as well as kind of the overall clinical receptivity of surgeons towards iDose TR and what that means in terms of potentially changing the paradigm as we go forward. I think that's number one. The second thing you've heard us talk about is we knew going in but the importance of reimbursement confidence to ultimately getting past the, I'll call it, initial launch phases into really the broad clinical adoption phase. From that standpoint, we continue to be ahead of progress as well. But we still have a fair amount of wood to chop as we move forward. I think that's probably the best transition into the second part of your question, which is the puts and takes as we enter into next year. I think we sit here today very confident about the team's ability to execute and continue to drive clinical adoption and interventional glaucoma overall as well as with iDose at the center of it. Alongside of that, the big things there are just opening up from a market standpoint the various, I'll call it key milestones that are in front of us. The first one is getting all of the MACs operating in a way or manner that's similar to the way several of them are today. The second thing is establishing consistent professional fee payments so there's confidence for the surgeon in terms of the economics for them associated with the procedure. And then third will be the methodical long-term deployment of the commercial and Medicare Advantage coverage that we ultimately expect to start over the course of 2025. So plenty of wood to chop. But we're really pleased with where we're at today and as we enter into the fourth quarter and certainly into 2025.

That's great color. Thanks, Joe.

Our next question comes from Lawrence Biegelsen with Wells Fargo. Please go ahead.

Good afternoon. Thanks for taking the question and congrats on a nice quarter here. Joe, I'll ask the iDose question just to back into the numbers here. We're getting to about 7.5 million this quarter and implied Q4 about 10 million. Are we in the right ballpark? And Joe, why does it look like you raised by the amount of the beat for 2024? Why did you raise by only the amount to the beat and had one follow up?

Sure. Well of course. Thanks, Larry. We agree it was a strong quarter and one where we continue to see the acceleration in the overall business as well as specifically U.S. Glaucoma. And as I think you're highlighting it was driven in large part by iDose TR. I guess what I can say here is that with that overall growth exciting out of 35% on a year-over-year basis that was driven by really a doubling of our iDose TR sales versus the second quarter, and alongside of that continued strong double-digit stent portfolio growth. So the latter probably slowed just a touch on a year-over-year basis as our commercial intensity started to focus on iDose TR as we told you it would. But overall really strong performance across both of those key drivers within the U.S. Glaucoma franchise. As it relates to the guidance side of things, I think it's probably easier to answer that question in breaking it down. So as you think about modeling out our fourth quarter, I'd probably point to a couple key things. The first one is in corneal health. We had previously mentioned that the MDRP headwind was expected to peak in the fourth quarter from a year-over-year impact perspective. So it's worth noting that we expect that this franchise will most likely be down on a year-over-year basis in the fourth quarter as we then lap those more difficult comps entering into 2025 where we expect to get back to the growth side of the equation for that franchise. On the international glaucoma front, we do expect lower growth in the fourth quarter. I think you probably have heard this from others certainly that have announced the results. More recently we've seen currency move pretty materially against the U.S. dollar entering October and you combine that with some growing competition in key markets and I think we'll see growth a bit more tepid in the fourth quarter than what we've seen over the course of the year. Finally, in U.S. Glaucoma, I think we expect to see continued acceleration for this franchise versus where we've been. We expect to see continued strong stent growth, maybe some modest headwinds, continued growth there from the LCDs and the overall commercial focus on iDose, but certainly continue to see the expansion of both iDose as well as the overall U.S. Glaucoma business. And really, you put all those together, and those are factored into the guidance that we gave for the fourth quarter, the remainder of the year.

That's helpful. Just lastly for me, the types of patients using iDose, has anything changed standalone versus combo cataract, Medicare fee-for-service, former derisk of patients, etcetera? Any changes? Thank you.

I wouldn't call out any specific changes relative to where we've been. I think as you get further into the launch, you continue to see increased utilization across all of those categories. So, as you know, we really prioritize and focus on driving standalone utilization of iDose and the overall IT message. But having said that, certainly surgeons are doing it in combination with cataract surgery as well. And from a utilization standpoint in terms of prior procedures, we see it being done after DURYSTA, after SLT. We've seen it being done in phakic eyes, pseudophakic eyes really across the full gamut, which is what you'd expect. And clearly, there'll be a lot more of that to come as we continue to move forward. From a market access or reimbursement perspective, virtually all of these are being done in Medicare fee-for-service patients. There are probably maybe a couple of exceptions to that. But we really aren't in a position yet where we're greenlighting or driving the expansion into that broader patient arena. We'll do that over the course of 2025 in a methodical fashion.

All right, our next question comes from Ryan Zimmerman with BTIG. Please go ahead.

Good evening and nice quarter. I want to appreciate, Joe, the color you just gave on Larry's answer. As I do the math on it, I'm getting kind of a low double-digit growth rate just in kind of the surgical glaucoma segment of the business, one, am I thinking about that correctly? But as I think about some of the reimbursement dynamics that we just saw Friday from Medicare. Do you see stent usage shifting in 2025 or maybe set in another way? Given what we saw for goniotomy and canaloplasty versus what was proposed, would that dampen usage of those technologies in favor of stents in your view, in 2025?

Thanks, Ryan. Well, look for, I think what you were asking in the context of low double digits with respect to the stent franchise in the third quarter. And I think that's pretty accurate and consistent with what I said in response to Larry's question. As you think about moving forward, there are always in recent quarters and years been a fair number of puts and takes on this stuff. And, I think from our standpoint, we were obviously pleased to see the affirmation of the payments and methodologies and amounts associated with our core procedures. There are puts and takes here. And so, when you think about in the professional fee standpoint, there's still a fair amount of advantage to the tissue destructive procedures in terms of the economics to the surgeon. And we'll just have to see how that plays out over the course of the year. I think in totality, our focus is on growing the overall market as fast as we can towards a more interventional approach in a much larger patient population versus necessarily worrying as much about the puts and takes associated with combo cataract utilization versus goniotomy or canaloplasty for that matter.

Okay, very helpful. And then both you and your competitor struck agreements, licensing agreements, I believe, with Ripple Therapeutics this past quarter, which was interesting to see. And I'm just wondering maybe, Tom, I don't know if you want to comment on this, but kind of how does that play into the development and timelines for next-generation iDose products given what they offer, versus maybe what you're working on internally?

Well, I'll take the first part of your question or the latter part first and that's. We're going to be entering the clinical trial for TREX, for iDose TREX by the end of this year. So I think that puts us in a very powerful position to potentially have a commercial product that's available before really any alternative glaucoma product that's available in the marketplace. We're both investing in this technology, but really for principally different reasons. AbbVie has taken the position that they would like to have a product that's really an adjacent of the DURYSTA product. It's a bioerodible that's placed in the front of the eye. And as you know, that's always going to have potential for endothelial cell loss. We've always taken the position that we want to be anchored in the front of the eye and have done so with iDose and with its subsequent generations. Our position with Ripple is to look at Ripple as an opportunity to really reach the back of the eye for proliferative retinal diseases, potentially for neuroprotection and glaucoma. We also have rights in cornea. And so we see this as a broad-based opportunity for the intravitreal implants which have been established by Eylea and Lucentis and others. We propose to move in that vein. And so there really is a bifurcation of how we're looking at this technology.

That's helpful, Tom. Thank you.

You're welcome.

Our next question comes from Matt O'Brien with Piper Sandler. Please go ahead.

Thanks for taking the questions. Just, I don't know, Joe or Tom, what you're willing to share here, but just you're talking about now opening up iDose to your entire sales force. Can you give us a sense for how that group has queued up doc training for Q4 and then how that may extend itself into 2025 in terms of utilization? And then what I'm really trying to get at is the street's modeling a pretty meaningful top-line acceleration next year, primarily driven by iDose? I mean, is that the way we should be thinking about the business for next year? Is it meaningful acceleration on the top line?

Thanks, Matt. It's Joe. I'll start off there. I think we're starting to settle into an early but consistent trend of doc expansion. I won't get into the specific numbers. What I can tell you is obviously with the establishment of the J-code that picked up pretty meaningfully in the third quarter, combined with the fact that we really opened up to our entire sales force. And so pretty much now over the last several months, we've seen a consistent trend of opening up new docs and new accounts. Clearly the next leg of that will be as we continue to establish broader, I'll call it reimbursement confidence across all of the MACs versus the handful that today are in an optimal place, followed by really the establishment of those professional fees. Remember, a significant number of these docs are tied to facilities where they may not have an economic stake. And so from that standpoint, they like what they see from a clinical perspective, but ultimately are going to want to make sure that they're being appropriately compensated for their time and effort as well. As it relates to how that translates into next year, I'm not sure much has changed in the way that we've thought about this. All of the things are kind of lining up from a market access and doctor training perspective. I think that to continue to drive strong outcomes next year for the remainder of this year. I mean, if you look at where we've been getting to here, this is our third or fourth consecutive quarter, I believe, of accelerating growth in the U.S. glaucoma franchise. I think that portends pretty well for obviously hopefully very positive outcomes for 2025.

Got it. Appreciate that. And then I did want to ask Alex about the leverage in the quarter, but I'll save that for later. I was curious about the commentary on reimplantation. I think everybody's just kind of expecting TREX to be the next iteration in terms of second implantation. But any updates from your discussions with the agency in terms of what they're looking for on the reimplantation side? And is that something that potentially could be a different kind of update here over the next several months? Thank you.

Yes, Matt, I'll be happy to take that question. And so as we've talked about, we think we have a sophisticated approach and a reason why we should be enabled and allowed to have reimplantation. Not only our approach but also the fact that, as you know, we've already done a clinical trial where we're able to do 30 odd patients where we showed a safe reimplantation of the device with really no significant material endothelial cell loss versus control. So all the basics are there. This is a conversation that we wish to have with the FDA in the final innings prior to the PDUFA date. They said they were happy to have it, but we have to move the PDUFA date back probably several months, which obviously was a nonstarter. So we're reapproaching. We have reengaged with them. We put this approach in front of them. I expect that there'll be several consecutive series of dialogue over the coming months. I would say we remain hopeful, but as we've said all along, we are not counting on this. And so that's why I like the belt and suspenders approach of having high dose TREX available in the chamber starting with our clinical trial by the end of this year.

Thanks, Tom.

Our next question comes from Allen Gong with JPMorgan. Please go ahead.

Hi. Thanks for the question. I have one on iDose and then one moving on from that, but I guess, piggybacking off some of the other questions that have been asked, just looking at the guide and the kind of the implied of, say $100 million in fourth quarter order, you talk to some of the challenges you're going to be facing OUS and corneal health. But you also pointed to continued kind of sequential growth from the core, or maybe not sequential, but core strength inside of iStent and iDose. So I guess you've given us some direction on what iDose did in the second quarter and how that grew in the third quarter. How should we think about what's contemplated in your fourth quarter guide? How much of that sequential growth is coming from iDose versus iStent?

Thanks, Allen. Yes, I tried to address it a little bit earlier, but maybe I'll reiterate a couple points around the fourth quarter and specifically on the U.S. glaucoma franchise. I think when you put the puzzle piece together, as you were starting to do on the other segments, you're going to get back to U.S. Glaucoma that shows continued acceleration and certainly quarter-over-quarter growth as well as year-over-year acceleration for that franchise. And underneath that, we continue to expect strong stent growth to continue. It may have some modest headwinds versus what we've experienced in recent quarters, including the third, driven by some volatility associated with the LCDs coming into effect later this month, as well as the general overall commercial focus that we have growing on iDose. I think when you do all of that calculus, you'll see that it implies continued expansion for iDose TR as a part of the overall launch dynamics in the fourth quarter. Yes, Allen, I'd be happy to answer that. Let's take a step back and discuss Epian, which we believe is a significant advancement resulting from years of innovation, effort, and investment on our part. The procedure is intended to be truly non-invasive and designed to reduce procedural time, which should enhance patient comfort and reduce the visual rehabilitation and recovery time. This is because we do not need to remove and debride the corneal epithelium to introduce a product into the stroma that can cross-link collagen fibrils and halt the progression of keratoconus. Epioxa is a proprietary formulation that includes a surfactant that enables penetration through the corneal epithelium. It employs a stronger UVA irradiation protocol and incorporates oxygen delivery via goggles used during the procedure. These goggles produce oxygen free radicals, which are crucial for reorienting and stiffening the collagen fibrils. I am very pleased with the data we obtained from this product; we met the primary efficacy endpoint by showing a Kmax treatment effect of one diopter in a prospectively defined mean Kmax change when comparing the Epioxa treatment arm to the sham control. These results demonstrate what we hope to see in the market. The product is effective, halting the progression of keratoconus. Due to its ability to minimize pain and accelerate visual rehabilitation and recovery, along with reducing the procedure time—sometimes to a third of what is needed for a Photrexa procedure—I believe this presents a strong value proposition for quick adoption in this rare disease category. I have stated before that this could significantly enhance the adoption rate and our ability to engage with this rare disease area over time. We are excited about this development, on track to submit our NDA by the end of this year. Additionally, as we noted earlier, the FDA has reviewed our data, and we recently met with them to confirm whether the proposed NDA content would suffice for submission. We were pleased to receive confirmation that the FDA would find the proposed clinical package adequate to support our NDA submission review. So, that's a lengthy answer to your question, but I believe this will serve as a catalyst for growth in 2026 and beyond.

All right, I think we'll go to the next caller. Our next question comes from Margaret Kaczor Andreu with William Blair. Please go ahead.

Hey everyone, it's McAuley on for Margaret tonight. Thanks for taking our question and congrats on the quarter. Heading into the quarter you mentioned the potential for a reset in the reimbursement dynamics obviously as you shifted to that J-code. So just wondering how that has trended over the last few months. Whether that be in terms of a reduction of some of those catch-up payments that you've mentioned in the past or other metrics you're looking at. And just as a quick follow-up to that, would you say you're through the majority of that potential coverage denial period or how should we think about that as you continue to knock down some of these reimbursement dynamics?

Yes, thanks McAuley. I'll try to address both of those. I think first going into the quarter we certainly expected a bit of a reset. We saw it for sure. I mean as you enter into July and August, even those folks who had done earlier procedures under the C code environment and been paid, they wanted to make sure that the machinery was working appropriately in the J-code environment. As the quarter work moved on, you saw these payments coming through. I think the way I would characterize where we're at today is really to kind of break down from a MAC perspective. And this is subjective, but I would say we currently have two MACs that are paying the J-code in a normalized and efficient manner. We have two MACs that are nearly there, but I'd like to see a little bit more evidence before I call it. And three MAC where the process remains more manual and time-consuming. Obviously that's the way the wheels of progress grind on. It's consistent with our expectations and we continue to make progress, the pacing of which will remain to be seen over the course of the quarter. But as we had said, I think from the very beginning, the goal here really was to make sure that as much of this was ironed out heading to 2025 as possible and I think we remain on track for that.

That's great. Thanks again.

Our next question comes from David Saxon with Needham. Please go ahead.

Great. Good afternoon everyone and congrats on the quarter. I'll start with iDose. Maybe can you talk about the utilization trends you're seeing for doctors using iDose? I've heard docs take varied approaches, some starting slow and some seeming to kind of jump all in. So how does it look across the cohort? And I guess has anything surprised you to either the upside or downside? And then I'll have one follow-up for Alex.

Well, thanks, David on the quarter. And when it comes to iDose, obviously we've said this before. I think it probably still is a little bit early to draw too many conclusions from utilization trends. But I think a couple of anecdotes worth noting as you think about the broader opportunity. Almost all of these docs or accounts start off slow. So to your point, I mean, nearly all of them start with a handful of cases to establish reimbursement confidence. The question is how quickly they move to that next phase where they're starting to think about it clinically. One of the most encouraging things we've seen, both evidence and results of the third quarter as well as certainly what we've experienced thus far in the fourth quarter is that as that reimbursement confidence is established in particular in the MAC regions where there's more normalized behavior, today we're seeing a growing number of surgeons adopting it into their routine clinical practice and that expansion of utilization that you would expect. And so for now, it's for those MACs where we're seeing normalized payment schedules, etcetera, it's all about driving that increased utilization day in and day out while we're still achieving reimbursement confidence and early expansion in some of the other MAC regions.

Great, thanks for that. And then for Alex, just on the P&L, specifically for iDose, I think it's been a drag. So I guess is it still a drag on gross margins? And then at what point does that flood to become accretive? And then on kind of the middle part of the P&L, is 10% still a good way to think about OpEx growth in 2024? And then given the leverage potential of iDose and how that launch is ramping, can you give us any early color on how to think about OpEx growth in 2025? Thanks so much.

You bet, David. And thanks for the question. So I'm going to try to hit them all. There was a lot there to unpack. But let's start with the gross margin. And to your point. Yes, I mean, we continue to work our way through with the iDose and the manufacturing burden that it comes with. It's still a modest headwind on our gross margin. But regardless, it's improving. Every quarter I look at it and see what is happening with the iDose revenues and that associated COGS burden. It is improving as those units start to ramp up. Our expectations are that we should start to see accretion in the margin by the end of next year. It's really all dependent upon those iDose unit volumes and manufacturing volumes, as simple as that. So we do expect that. But we were pleased to see our margin for the quarter come right in the range that we expected, which was 82% to 83%. The second question around OpEx for the remainder of the year. I think 10% is exactly the right number that we've been guiding to the whole year. If you think about seasonally, we've traditionally had a little bit of a step up sequentially in our fourth-quarter operating expense. So if you look at our year-to-date number, we're sitting at a place of, I think it's 290 year-to-date. If you just take a little bit of a step up from this quarter, you'll get right in that 10% growth rate for the full year zone. Next year's operating expense, we'll cover that when we kind of COVID our 2025 guidance plans in the next call.

Okay, great. Thanks so much, guys.

Our next call comes from Mike Sarcone with Jefferies. Please go ahead.

Hey, good afternoon and thanks for taking the questions. Just a follow up on Epioxa. Can you talk about what the reimbursement pathway would look like there once you get clearance and you start to commercialize? And I believe you could also get a J-code for this. Could you speak to some of those factors?

Yes, Mike, this is Tom. I'm happy to take that question. So let's first deal with the professional fee. The good news is we were able to extend the T-code for the professional fee, 0402T, another five years. I think that takes us to the end of 2029, which means that the Epioxa procedure will be covered. That procedure will be covered under the existing T-code, 0402T, which is by and large paying over $2,000 per procedure. The ability of a J-code. Yes, we'll have a new J-code that will be established for this premium technology that if we're successful in getting a PDUFA date in the fourth quarter of 2025, we'll look then to establish and apply for that J-code at the tail end of 2025. If you follow what happened with iDose, we'd be looking at about six months to get a J-code and get approval for that product. The difference here, the J-code that we had established for iDose, because of the Medicare fee-for-service patients that we were concentrated and focused on, we were able to enter early and to do preliminary cases under the C-code prior to the J-code and to seek and to gain and secure reimbursement. Because the Epioxa procedure is almost invariably going to be a commercial payer, we very well may wait until we have that J-code in, let's call it July of 2026. We have that solidified and that may be the beginning of the predicate for commercial launch. We're still contemplating several scenarios, but my bias would be to do so and to take that track.

Okay, great, thanks Tom. And then my second one, maybe for Alex. Could you just talk about progress and targets toward cash flow breakeven and maybe touch on how you think about profitability in the midterm?

Yes, I'd be happy to, Mike. So again, I mean, this quarter we were pleased to see we actually generated a small, modest amount of cash. So that was a great result for the quarter, but it was really around just some spending discipline and some other things. We've talked you and I and other investors around the fact that our near-term approach is not going to be with an eye to profitability, but rather cash flow breakeven. We want to get back to the point where we live within our means, so to speak, and how we used to before we entered into a very meaningful investment period getting ready for iDose. I will say that as we progress throughout the next several quarters, next year, and even the year after that, there's a very strong possibility, given iDose and its launch trajectory, you could see quarters of profitability happen and that wouldn't be a surprise to us. But it's not a signal to the community that we are turning our focus towards profitability. Rather, it's just a matter of the ebbs and flows of our revenues and our expenses. But we have such a robust pipeline that we'll continue to invest in those R&D programs and again, focus on the near term as we focus on cash.

Our next question comes from Joanne Wuensch with Citigroup. Please go ahead.

Oh, good evening and thank you so much for taking the questions. I'll just sort of toss them right up front. I think you previously talked about gross margins in 2024 in the range of 82% to 84%. I wanted to just make sure you're still feeling good about that. And then my second question is really about 2025. I recognize we're a little early for you to be giving guidance, but in looking at the consensus estimates, could you just maybe comment if you feel good, bad, or indifferent about them? Thank you.

Okay. You bet. Hey, Joanne, it's Alex. I'll take the gross margin question. I think we did start out thinking 82% to 84%, but I did narrow that range as we've gone throughout the year to 82% to 83%. We continue to feel very good about that range for this year in 2024. That narrowing of the range really had to do with what I was speaking about earlier. Just as we continue to launch iDose and have to get over the manufacturing inefficiencies that typically occur when you launch a product. That's kind of brought our margin a little bit. But we do expect accretion to happen certainly in the future and more likely at some time in the latter half of 2025 by the end of the year.

And then Joanne, obviously it's early for us to get granular in 2025, as you suggested, and I wouldn't comment on the specific numbers that the street has out there. I probably am comfortable commenting on some of the macro considerations which shouldn't come as a huge surprise. But internationally, we think about continuing to build the overall markets outside the United States anchored around interventional glaucoma and expanding the market there, hopefully achieving some key product approvals along the way. As we take our pipeline abroad and on the counter side, we expect to continue to see increasing competition, in particular in some of our key markets outside the United States. On the corneal health front, we would expect some continued headwinds associated with the Medicaid drug rebate program ahead of an Epioxa approval and launch late in the year, as Tom indicated, although I think some of those headwinds will certainly be able to lap from a year-over-year perspective the impact that we currently experienced in 2024. As it relates to our U.S. glaucoma franchise, we really expect continued momentum that primarily will be gated by our ability to establish, as I said before, predictable professional fees and our methodical expansion over the year into commercial Medicare Advantage covered lives and our sales force execution against that in terms of training doctors and expanding the utilization of iDose, and iStent infinite in that standalone patient population.

Thank you so much.

Next question comes from Richard Newitter with Truist Securities. Please go ahead.

Hi, good evening. This is actually Ravi on for Rich. Can you hear me?

Yes.

Hey, great, thanks. So just a question on going back to iDose. And part of the label is that iDose is available in OHT patients as well. I was hoping you could maybe give a little bit more color around, what kind of market addition these patients would represent to the TAM? What kind of reimbursement work maybe you need to secure to get at it? And then should we factor that in potentially to our 2025 forecast or if you're seeing any uptake right now.

Thanks. Yes, thanks, Ravi. I'll start off. And Tom may want to add some color as well. If you think about the overall market, and you specifically referenced ocular hypertension, but I'll comment more broadly. There are approximately 20 to 21 million eyes in the United States that have either diagnosed glaucoma or ocular hypertension, approximately which 13 to 14 million are diagnosed at any given time and 10 million of which are treated. So a very, very large overall opportunity. The good news, and I won't belabor the point around our prior studies, but we have a very large study that has significant data attached to treating all of those patient types up and down the disease spectrum. We would expect to utilize that as well as any incremental phase 4 type studies that we are or will do in the future to help make sure that we secure proper reimbursement coverage. I think a lot of that comes down to the individual payer types that are out there. Certainly, we have sufficient data to support this within the traditional Medicare arena and have it be on label and supported by hard and significant evidence. Oftentimes with the commercial payer, even the Medicare Advantage payer types, you have to continue to chip away at that over time with incremental data and advocacy on behalf of those patients that would like to have access with iDose up and down the disease spectrum.

Great, thanks. And maybe just one more, you kind of mentioned dialogue with the FDA around readministration. Love to get any more color beyond that if you're able to supply it.

Thank you. Yes, Ravi, I guess I would defer to my statement before is that, yes, we have had initial engagement. They have looked at the sophisticated approach we put in front of them and we remain hopeful. I don't want to go into any prognostication other than that we're not counting on the reimplantation. It certainly hasn't been a detriment in the marketplace, like to have it not counting on it. But again, like the fact that we have either wading the wings to become a de facto reimplantation product if we are unsuccessful in this early attempt.

All right, our final question comes from Steve Lichtman with Oppenheimer. Please go ahead.

Thank you. Evening, guys. You mentioned on the call today and in the past, the shift in the focus of the sales force toward iDose. Understandably. What is your latest thoughts on whether you'd look to make a bigger expansion of the rep footprint to sufficiently focus on infinite as well as the core stent business?

Yes, thanks, Steve. I don't think that our view on that has changed at all. We've said for some time to expect consistent organic expansion of our sales force, commensurate with the growth in our individual territories, both from a volume and revenue perspective. I think we have a pretty good handle on that. We have a lot of experience in our commercial organization running larger businesses in ophthalmology and a pretty good vision for where the sales force ultimately might go to. But for now and in the foreseeable future, I see that to be continued sort of organic expansion from where we're at today.

Okay, great. And then what is your latest outlook regarding timing of getting iDose pro fees established across the MACs? How should we be thinking about this in the coming quarters?

Yes, that's a great question, Steve. I think, obviously we were pleased to see the first MAC establish that professional fee, and we've been pleased to see, albeit inconsistent, but payments across really all the MACs that are consistent in the dollar amounts with what we saw in that professional fee schedule from, in this case, Meridian. Ultimately, professional fees are a volume game. And so as you get MACs providing more consistent, normalized payment on the J-code, you're able to drive volumes. Those volumes ultimately drive the adjudication of the professional fee, which drives professional fee schedules. Sometimes it will land in that professional fee schedule, and other times it'll just be that they're starting to pay on a consistent basis, a dollar amount that you count on, even if it's not on a schedule. We've said for some time that our expectation would be that if we enter into 2025, that that will become more front and center. I think that remains the case again, it may not all be that they're on actual schedules, but what we're looking for is consistent and dependable and predictable payments on professional fee side across each MAC.

Our next question comes with Morgan Stanley. Please go ahead.

Beautiful. Thank you. Just two quick ones for me, and I'll do them both upfront, if that's right. I guess wet AMD, are we still expecting some Phase I data in 2025? And then secondly, any read from DURYSTA's EU marketing authorization them withdrawing that? I know it's for very different reasons for you guys, but some of the conversion you might have had patients that were on DURYSTA going to iDose. Is there any implication there at all? Thanks.

From a DURYSTA perspective, I wouldn't read too much into it. It’s very specific to their product. I'll leave it to AbbVie to address their considerations. We have been aware from the start regarding iDose or any of our products that follow the administration of DURYSTA to be cautious about any potential adverse event profile that may arise in those patients. However, I don't believe there’s anything new we learned from that, nor does it alter our market strategies either in the U.S. or internationally. Tom, do you want to comment on what is the...

Yes, I'd be happy to. So as you know, we have begun that Phase I study of Axitinib. To remind the investor audience, this is a tyrosine kinase inhibitor, which is a small molecule to treat age-related macular degeneration. We've had this product in persistent retinal vessel leakage trials now, really going on over two years. We really like what we see. The results have been rather extraordinary in terms of efficacy. We like the precedence in the marketplace of people with or companies with similar TKIs are not showing inflammation. So this all bodes well on a product that may be able to radically change and disrupt the marketplace when and if it's available. So we have begun Phase I clinical work outside the United States, and we are in the process of enrolling patients as we speak. Our goal would be to have some data, proof-of-concept data available late in 2025, maybe going into 2026. Then, we'll see where we're at with a positive response; I think this becomes a major catalyst and opportunity for the business.

Thanks, guys.

All right, our final question comes from Anthony Petrone with Mizuho. Please go ahead.

Thanks. Maybe one on the Medicare Advantage policies you referenced earlier in the call. Maybe just a little bit on timing. Is it possible that we'll see a Medicare Advantage program for iDose TR in 2024 or are those 2025 events? And then just to revisit the idea of a rebate program, I think 20% of the patients are still Medicare fee-for-service and does the company have a strategy to deploy the balance sheet to address the donut hole for those patients? Thanks.

Sure, Anthony. I think, when it as it relates to Medicare Advantage, I want to separate between sort of policy establishment or coverage and our sort of commercial support for that in the marketplace. If you went in search today, there is quite a bit of actual coverage for iDose TR, both in the Commercial arena as well as in the Medicare Advantage arena. Our payer team has been hard at work since the product approval and done a great job of establishing coverage across that entire landscape. What we're really talking about here is our ability to deliver that to the marketplace, support that, and the complexities associated with dealing with Commercial payers and Medicare Advantage from a prior authorization standpoint as well as some of the other things that come along with those payers, something we want to make sure that we've established a solid footing with Medicare fee-for-service before we enter into it. So as I said earlier, we'll really start to turn that on in 2025 over the course of the year, and we'll do so very methodically. We don't want to get ahead of ourselves in this part of the payer landscape. We want to make sure that we do it the right way for the long term. As it relates to rebate programs, which I'll say are actually more co-pay assistance or out-of-pocket programs, those are really relegated like all pharmaceutical companies to the commercial patients out there that you can't do anything about federal-insured patients Medicare or Medicare Advantage. When you talk about the donut hole, I think we have to think about that's more of a Part D issue. For Part B patients, the vast, vast majority, 90-plus percent have supplemental or secondary insurance that covers their out-of-pocket expenses on procedures like iDose. So we do plan on having an out-of-pocket program, but it will be oriented towards those commercially covered lives.

Thank you.

All right, I will now turn the call back over to Glaukos for closing remarks.

Okay. I want to thank you all for your time and attention today, and thank you as well for your continued interest and support of Glaukos. Goodbye.