Earnings Call Transcript - GKOS Q3 2022

Operator, Operator

Welcome to the Glaukos Corporation Third Quarter 2022 Financial Results Conference Call. Copies of today's press release and quarterly summary document, both issued after the market closed today at www.glaukos.com. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. This call is being recorded and an archived replay will be available online in the Investor Relations section at www.glaukos.com. I will turn the call over to Chris Lewis, Vice President of Investor Relations and Corporate Affairs.

Chris Lewis, VP of Investor Relations and Corporate Affairs

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 last quarter, 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 has been and will continue to be provided alongside the company's earnings press release and 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 quickly transition into a question-and-answer session. It is our goal that this format will make our quarterly earnings process more efficient and impactful for the investment community going forward. 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: sales products, pipeline technologies, our US and international commercialization integration and market development efforts, the efficacy of our current and future products, our competitive market position, our regulatory strategies and reimbursement for our products, financial condition and results of operations, as well as the expected impact of the COVID-19 pandemic 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, it 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 the most directly comparable GAAP financial measure. With that, I will turn the call over to Glaukos Chairman and CEO, Tom Burns.

Tom Burns, Chairman and CEO

Okay. Thank you, Chris. Good afternoon and thank you all for joining us today. Today, Glaukos reported third quarter net sales of approximately $71.3 million, down 1.6% year-over-year on a constant currency basis. I'm pleased with our team's ongoing commitment to advance our key strategic priorities and execute our plans while navigating a challenging macroeconomic environment. As a result, we are updating our 2022 net sales guidance range to $278 million to $280 million versus $275 million to $280 million previously. From a commercial perspective, we continue to be encouraged with the execution of our strategies and the resiliency of our US combo-cataract franchise in the face of the reimbursement headwinds thus far in 2022. At the same time, we remain focused on innovating and expanding the sight-saving tools available to surgeons to improve overall care for ophthalmic patients. Over the course of this year, we have continued to successfully expand our comprehensive best-in-class product offering for our customers, with the introduction of several novel ophthalmic technologies, including iAccess, a novel instrument with features that allow customers to perform goniotomy procedures, and iPRIME, an innovative new viscoelastic delivery device. More recently in the fourth quarter, we commenced US initial commercial launch activities for iStent infinite, our novel 3-stent injectable system, designed to provide foundational 24/7 intraocular pressure control for glaucoma patients uncontrolled by prior medical and surgical therapy. While this launch remains in its infancy, it represents a significant milestone for Glaukos and the MIGS market as the first-ever micro-invasive implantable device indicated for use as a standalone glaucoma treatment. We believe iStent infinite will spearhead our long health mission to create a new interventional glaucoma marketplace that seeks an alternative treatment paradigm to topical medications to advance patient care and to halt the progression of this chronic sight-threatening disease. We are bullish on iStent infinite's long-term prospects, but we caution conservatism as you think about near-term contributions, as we navigate the ordinary course and process of securing professional fee coverage and payment from the various MACs through the first half of 2023. Our international glaucoma franchise once again delivered strong operational year-over-year growth of 24% on a constant currency basis, as we execute our strategies to drive deeper penetration and broader adoption of MIGS around the globe. On a reported basis, international glaucoma sales grew 9% year-over-year in the face of continued significant and growing foreign currency exchange headwinds. And within our Corneal Health franchise, we are pleased to deliver a quarterly record for overall sales of $17.5 million and US Photrexa sales of $14.4 million. Photrexa sales grew 12% year-over-year, as we continue to focus on access for keratoconus patients suffering from this rare disease. While it remains early, we've been pleased with initial signs of improvement following the investments we have been making to address sporadic reimbursement issues. Speaking of investments, let's shift gears to the development front where we continue to advance our deep pipeline. During the third quarter, we were delighted to announce positive top line data for both Phase III pivotal trials of iDose TR that successfully achieved the prespecified primary efficacy end points through three months and demonstrated excellent tolerability and a favorable safety profile through 12 months. The powerful Phase 3 results also demonstrated that 93% of slow-release iDose TR subjects remain well controlled at 12 months, an encouraging trend that is further supported by the three-year results observed in our Phase 2b clinical study in which 73% of patients remain well controlled on a single injection of iDose TR using the same or fewer baseline medications. These results mark a major milestone for our company and powerfully reaffirm our view that iDose TR can be a transformative, novel technology able to fundamentally improve the glaucoma treatment paradigm for patients. Our clinical and regulatory teams are hard at work preparing an NDA submission for iDose TR and we continue to target FDA approval by the end of 2023. As for Epioxa, our epi-on our next-generation corneal cross-linking therapy for the treatment of keratoconus following our recent pre-NDA meeting with the FDA, the agency has recommended that we run a second confirmatory pivotal trial to support an NDA submission. The agency did confirm that the completed Phase 3 study which met the pre-specified primary efficacy endpoint would support submission and be accepted for a review of an NDA in conjunction with the second study. Our understanding is that the FDA's request for a second study, which was unexpected to us, was driven by earlier-stage clinical studies associated with other companies' unproven therapies that generated less than favorable efficacy data. In response, we plan to commence patient enrollment for the second Phase 3 confirmatory study by early 2023 with targeted enrollment completion by the end of next year. Despite this delay to our previous timelines for Epioxa, we believe we remain well positioned with our first-generation corneal cross-linking therapy Photrexa, which remains the only FDA-approved treatment shown to slow and halt the progression of keratoconus. We are now in the midst of several new product launches and are planning for a robust cadence of new dropless platform and product introductions over the coming years that have the potential to fundamentally transform Glaukos over time and meaningfully advance the standard of care and improve outcomes for patients suffering from sight-threatening diseases. While we continue to monitor and feel the impact from extraordinary inflationary pressures and foreign currency exchange headwinds, we believe we are well positioned with an increasingly diversified business and strong balance sheet to successfully navigate these and other potential macroeconomic uncertainties as we continue to deliver on our near-term objectives while advancing our longer-term mission to transform vision. We are and remain excited about our prospects and are confident in our ability to execute our plans in the years to come. So with that, I'll open the call to questions, Operator?

Operator, Operator

Our first question comes from David Saxon from Needham & Company.

David Saxon, Analyst

Yeah. Hi. Good afternoon and thanks for taking my questions. Maybe just start just on the guidance in the quarter. I mean, you beat by $3 million and it seems like a lot of the strength at least relative to my model came from U.S. glaucoma, despite the reimbursement dynamics, but you only took the guide up by $3 million at the low-end. So I just wanted to ask are there any new challenges you're facing, maybe iStent cannibalization from iPRIME or iAccess, or are there any other headwinds that are just becoming more severe that's preventing you from raising the top end? And I guess related to that how should we think about trends as we go into 2023.

Joe Gilliam, President and COO

Thank you, David. It's Joe here. I'll address most of that, and if Tom wishes to add more detail, he can. I appreciate your perspective regarding guidance. We've been very satisfied with our performance during the first three quarters of this year and are proud of our team's excellent execution, despite the CMS headwinds in the U.S. and strong global competition. Our U.S. glaucoma franchise has remained quite stable, with minimal fluctuations in daily sales from July through October. The primary factor affecting us currently is currency, which likely will impact our revenue in 2022 by approximately $8 million to $9 million. This suggests that we could have reached nearly $290 million in sales this year without foreign exchange effects, which is an impressive achievement considering the challenges we've encountered. For the fourth quarter, we estimate a currency headwind of about $3 million to $3.5 million, which presents another setback sequentially. Aside from currency issues, there are several smaller factors at play, such as reduced contributions from iPRIME due to ongoing supply chain difficulties and the MAC calendar limiting our coverage for the remainder of the year. Additionally, we're facing the usual macroeconomic challenges like staffing constraints and COVID variants, which we are not exempt from. However, overall, we entered the quarter with substantial stability, except for the uncontrollable factor of foreign currency.

David Saxon, Analyst

Okay. That's helpful. And then, I wanted to ask on iDose, you're nearing NDA submission, maybe can you put a finer point on when specifically you expect to have that in. And then, I get asked a lot about the margin profile of that. I know it's an unknown just given that we don't know what the pricing could be like. So maybe can you talk about what the COGS profile would be relative to the iStent COGS? Is it kind of in line, or are there any aspects that would make it materially higher? Thanks for taking my questions.

Tom Burns, Chairman and CEO

Yeah, David I'd be happy to address the first part of your question which talks about our preparation for an NDA submission for iDose and really we're on track. So we've talked about having it at the tail end of this year and to early next year, and it appears we'll be filing for that NDA in the early part of next year. That puts us in a great position with a PDUFA filing of typically 10 months from the time we file to achieve our objective, our long-standing objective of having approval of iDose by 2023. So I probably won't get into the COGS and the issues of pricing. I've been resistant to do that for obvious reasons and competitive reasons. But I will assure the community of investors on the line, we're in a great position with a novel product that really creates an arc of innovation and the first long, truly long-standing sustained treatment for glaucoma. In this case, a highly respected company by me, Allergan, has set a predicate price of around $2,000 to $2,100 for a therapy that approximately lasts four months. And so any way you compute the order of magnitude difference in our sustained release over that predicate implant gives us a lot of room to be able to fairly price this product in the marketplace. And you can imagine the margins will follow up. And so I'll just say that we expect healthy margins. We expect a healthy position as we move forward. And more importantly, we expect in a highly innovative product that it's going to transform the treatment of glaucoma for patients and for this company as well.

Operator, Operator

Our next question comes from Ryan Zimmerman with BTIG.

Unidentified Analyst, Analyst

Hi, guys. This is Sam on for Ryan. Thank you for taking my question. Given the changes to canaloplasty reimbursement proposed and finalized for 2023, how do you expect this to shape physician behavior in terms of product usage? And then I have a follow-up too.

Joe Gilliam, President and COO

Thanks, Sam. It's Joe. Yes. I think there's been a lot of moving parts, obviously, over the last 12 to 18 months as it relates to reimbursement. Another one that on the margin, obviously, net-net probably helps the other categories around it but certainly, it's relevant when we think about our own product iPRIME and launching that more fully in 2023. So we never welcome adjustments downward as it relates to reimbursement, regardless of the category. But in this case clearly, it's a fairly sizable adjustment and something that I think all accounts and practices will take into consideration.

Unidentified Analyst, Analyst

Thank you. Then another question I have is, with your growing portfolio of products in the U.S. glaucoma franchise how will this impact forward margins as price varies among the products?

Joe Gilliam, President and COO

I think in general, what we've said for a while is that the totality of our product portfolio shouldn't significantly alter our margin profile. I don't know Alex do you want to add anything to that?

Alex Thurman, CFO

As you can see, Sam, that's exactly right. We continue to target, as we've seen historically, that 83%, 84% range and nothing in our portfolio would lead us to change that answer at this point.

Operator, Operator

Our next question comes from Tom Stephan with Stifel.

Tom Stephan, Analyst

Great. Hey, everyone. Thanks for the questions. I'll start with 2023. I think Street consensus sales points to roughly I think 12% to 13% year-over-year growth. I'm not going to ask for guidance, but can you guys help us with sort of the key fundamental puts and takes that we should be mindful of maybe in each of your three segments sort of as we head into next year?

Joe Gilliam, President and COO

Yes Tom, I'm happy to do that. It's Joe. Obviously, as you noted, we typically provide guidance on our fourth quarter call. And as of now we'd expect to do that the same way for this cycle. As far as puts and takes and maybe actually I'll start off with a slightly different variation, which is what may be an obvious statement for most but I want to make sure that the Street models kind of reflect the following as folks dial them in for 2023, even in advance of the guidance, right? The first and most prominent, which is what I mentioned earlier is that the current FX environment is reflected. Obviously, if we continue to see the Fed make moves and the dollar strengthen that we're not immune to the impact of that. As you saw in this most recent quarter, we had operational growth internationally of 24% and that translated only into 9% reported growth, given significant FX headwinds that we're actually growing as they entered the fourth quarter. So as we sit here today, I think that we have to take a fresh look at what all that means in terms of the environment heading into 2023. Again, nothing we can control on that front but something that all companies are facing. The second one is I think there are some or there's been varying degrees of iDose inclusion in the revenues for 2023. You just heard Tom talk about the timeline which is unchanged and has been that way for some time where we're targeting an approval in late 2023. So I think it's unrealistic to expect the contribution from iDose in 2023 revenues or certainly not that we would guide to come the fourth quarter call in early 2023. And the third thing I'll mention is iStent infinite, given as we've talked about for a while the six to nine-month MAC process for establishing coverage, the pro fee, etc., I think that people need to be thoughtful about the way they integrate that in their 2023 models and understand that it will be a more meaningful contributor in the second half of 2023 versus the full year. Aside from that, I think the puts and takes are around the sort of core combo-cataract franchise, how you think about that from a stenting and stent – iPRIME perspective, iAccess perspective. And then on the cornea side, it's more about blocking and tackling and hopefully, continued progress that we're making in dampening the noise around some of the commercial payer dynamics that we talked about in the last couple of calls.

Tom Stephan, Analyst

Got it. That's great color. And if I can switch to iDose. I guess up until – I think you guys are targeting full data publication of the Phase III sort of at the time of I believe approval you were hoping but can we expect any updates in the form of additional top line sort of data along the way? And then what about the strategy ahead of potential launch just from an operational perspective? I'm curious if you guys can give us a flavor for any initiatives sort of ahead of the potential launch. Thank you.

Tom Burns, Chairman and CEO

Yes, I'd be happy to address that. So as I've said before, I think it best serves the company to have really a strong peer-reviewed dataset that will come out in or around the time of launch. And so we'll be publishing a full data series set of our Phase IIb data and our Phase III data. I want to see those in combination. I want to see them hit again sometime around the time of our launch. This is a strategy I think will serve us well. And again, I think it's important we reserve that for the time when it's going to have the biggest commercial impact and not give by introducing it too early our competitors several months to counter-detail, where we don't have a field force active to be able to counter maybe some of the information that won't be construed the appropriate way. So it's the right thing to do. It will be deep. It will be thorough. It will be compelling and it will be coordinated with our launch. Now we clearly, as we go forward, there will be several conferences and there may be opportunities, where it will benefit the company and investors to see a little bit deeper into the data. I'm not opposed to that quite open, and we'll look for the right opportunities and the right data to share. What I do like is that, I believe I've given the investors really powerful indices and responder analysis which to me are the most important criteria upon which to value this product, showing that 93% of patients at one year are well controlled on this new device; 81% are well controlled on no medications. And if you think about that over 20% of patients in the entry criteria had around two or more medications. And so this to me is exciting data. It's extraordinary. It's definitely beyond what we were anticipating in the marketplace. And again we have the Phase IIb data out at three years, which we will use to our advantage with payers to be able to assure that we get appropriate coverage and payment both with MACs and at the commercial level.

Operator, Operator

Our next question comes from Margaret Kaczor with William Blair.

Unidentified Analyst, Analyst

Hey, guys. This is Mike on for Margaret today. Thanks for taking the question. So I just wanted to ask a quick one on the core iStent franchise. I just wanted to ask, what do you guys see as far as resiliency of the franchise right now? And maybe with some of the competitive trialing and reimbursement changes, what are your thoughts on market positioning right now? And can you return to growth with that core franchise in 2023?

Joe Gilliam, President and COO

Thanks, Mike. Yeah, I mean, as I mentioned a bit earlier, I think the right way to characterize the stent business, the US Glaucoma franchise overall is – has been incredibly stable, really over the course of the year, and certainly exceeded our expectations coming into it in the face of the CMS cuts on the pro fee. Even so much as in recent months, the last three or four months, July through October, we continue to see that stability. So I think that sets up a nice base as we exit 2022 and enter into 2023. Certainly, we're not going to face the same type of changing environment as we turn the corner this year as we did last. But I'll stop short of commenting on that in the context of whether that will precisely deliver what amount of growth and the like. I think you have to think about it in totality. And both in the combo-cataract segment, where we've got the core stents, but also increasingly hopefully iPRIME, as well as iAccess and iStent infinite driving those results both in combo-cataract and stand-alone there's a lot of opportunity there for us, but we've got a lot of execution both on the reimbursement side as well as on the field side to ultimately deliver in 2023.

Unidentified Analyst, Analyst

Got it. And then just wanted to ask on iLution just as a quick update, are you guys still expecting to share that Phase II data in early 2023? And then maybe on the presbyopia side specifically, what can you tell us on market receptivity for similar products in the past? And how can this compete versus others in the presbyopia market?

Tom Burns, Chairman and CEO

Okay. Well, let me give you an update first of all on iLution. So as you know, we've been running two parallel trials in dry eye, and in presbyopia using different concentrations in a normal Phase II study. And I'm really pleased to say, we've completed the enrollment for both of those studies. In fact, with dry eye, we've actually cleaned locked the data in and we're in the process of assessing that data as we speak. And in the case of presbyopia, we've completed the trial, and we're currently cleaning the data. And so why this is important is because if you looked at the clinicaltrials.gov, we gave ourselves some headroom, but we said we would have really data available by – or the clinicals done by May of 2023. So we've significantly overachieved there. So to answer your question, we have the data and I would expect that in the early part of 2023 we'll be in a position to be able to share that with you. Presbyopia is a market we continue to look at. And we're monitoring VUITY very, very clearly and very specifically. And I think that their performance will lead us to determine how we look at and how we assess the data that comes out of our trial and how it will be viewed, both from a safety and efficacy standpoint versus VUITY, to give us the ability to move forward with confidence that we'll have a product that we can show has significant safety and efficacy advantages.

Operator, Operator

Our next question comes from Larry Biegelsen with Wells Fargo.

Unidentified Analyst, Analyst

This is Charles on for Larry. A couple more on iDose. First, I mean, the early data you shared looks promising, but we obviously haven't seen it all. Can you talk a little bit about the occurrence of some of the less frequent adverse events in the Phase III studies, like endophthalmitis, cataract formation, the lack of anchoring, and if any of those could be an issue from a regulatory standpoint? And then I've got a couple of follow-ups.

Tom Burns, Chairman and CEO

Yeah, I'm happy to do that, and I appreciate the question, Charles. I mean, the data is prolific from a safety standpoint from any objective measure. When we looked at the Phase III data, we had a 3% rate of hyperemia versus rates that you see with topical prostaglandins on the order of 30% to 50%, and with more recent products that have been introduced, with rates that exceed 50% rates of hyperemia. We had zero cases of periorbital fat atrophy in this study, which has been kind of a headwind to the use of these prostaglandin analogs, which leads to the shallow lower lids. We've had a superlative record on the issue of endothelial cell counts. That's been shown in our Phase IIb data, where we followed these patients for three years and we found no clinical variation between the treatment and control. In fact, they were virtually nearly identical in terms of how we assess the two treatment patterns of endothelial cell counts. We are seeing to my knowledge, no serious adverse events within the pivotal trial of the Phase III data. So you're going to see data that, not only is compelling from an efficacy standpoint, but from a safety standpoint is going to grant clinicians the assurance that they should be looking at entering earlier in order to treat patients who are progressing despite the fact that they're on topical therapies.

Unidentified Analyst, Analyst

Thank you. And then just a quick follow-up on the iDose label. First, what are your expectations for the late iDose label in terms of duration and repeat usage, and do you think combo-cataract will be on or off label? And, is there any economic barriers to adoption in that setting?

Tom Burns, Chairman and CEO

I appreciate that question because it allows me to clarify our goals. We are looking for a broad and favorable label under a 505(b)(2) designation for the reduction of intraocular pressure in patients with open-angle glaucoma or ocular hypertension. This label is quite extensive and not defined by a specific duration of therapy. Importantly, we do not need to specify how long the treatment lasts, as this has already been assessed and demonstrated. We have conducted a robust Phase IIb clinical study that showed 73% of patients were well controlled on iDose therapy using the same or fewer medications over three years. When published alongside our Phase III pivotal data, this study will support the justification for ophthalmologists to cover and pay for the sustained drug efficacy of the iDose implant. Regarding the second part of your question, we were insightful in negotiating with the FDA to perform a small exchange study involving Phase IIb patients. This has allowed us to demonstrate the safety and effectiveness of retreating these patients with iDose implants. While we are still analyzing the data and cannot provide absolute certainty, we plan to submit this data as part of our NDA submission. Our goal is to support the continued use of iDose implants and facilitate exchanges once they have depleted their medication, creating an ongoing revenue stream.

Operator, Operator

Our next question comes from George Sellers with Stephens Inc.

George Sellers, Analyst

Congrats on the quarter. Thank you all for taking my question. So, I guess I wanted to just start by asking about the launches of the iAccess, iPRIME and iStent infinite devices. How are those launches progressing in terms of physician adoption and traction you're seeing in the market? And also are there any additional hurdles such as in relation to reimbursement for instance that we should keep in mind?

Joe Gilliam, President and COO

Thanks, George and welcome to the call in your new role. This is Joe. Let me start-off with iAccess. So iAccess, as you know, we launched earlier this year. From that standpoint, I think everything is pretty clear in terms of its utilization and how it's reimbursed based upon the procedures that the surgeons utilize with it. And from that standpoint, it continues to be one of the tools in the toolkit for our sales force going forward. It has been a nice and consistent contributor to our results certainly in the second and the third quarter, and we expect that as we move forward here. On iPRIME, it's still early. I'd say as it relates to iPRIME very little contribution in the third quarter, minimal contribution. And we'd expect a relatively minimal contribution here in the fourth quarter as we continue to iron out some of the supply chain challenges that we faced over the course of the year in trying to stand this product up. Less about, sort of, the broader market dynamics or macro dynamics, more about supply chain there. We'll get through that. And ultimately we hope that that will be a meaningful contributor to 2023 as we move forward. On iStent infinite, as you know, we most recently received clearance there. We have initiated beta launch activities as a part of that approval or clearance and really reimbursement plays a key role here. As I mentioned earlier, we've got to get through the sort of six month to nine month process that is navigating the MACs to turn on coverage and establish the pro fees. And so we're in the middle of that process now. We've got our peer-reviewed publication behind us and our teams are working closely with the MACs to establish that over the course of the first half of 2023. At the point where we've got those all established, we would expect to start being able to drive more meaningful contribution from iStent infinite really in the second half of 2023 and going forward from there.

George Sellers, Analyst

Okay. Thank you. That's helpful. And then on Epioxa, could you just give us some additional color on why the FDA is suggesting a second confirmatory study? And I apologize if I missed this, but how should we think about the updated timeline for FDA submission and approval there? And how should we also think about the cadence for any incremental costs associated with this second study? Thank you.

Tom Burns, Chairman and CEO

Yes. Great question and this is Tom. I'm happy to address. And so during a very recent pre-NDA meeting with the FDA, the FDA communicated that due to what I'll call the uncompelling efficacy results for companies who are practicing Epi-on-like procedures, they would now request that we conduct a confirmatory Phase III pivotal trial for our Epioxa drug and iLink procedure. Now it's important to note that our Epi-on procedure is very different from those that the FDA cites because our procedure includes a continuous perfusion of oxygen across the cornea during the procedure, which yields greater production of oxygen free radicals and thus thermal penetration, and that results in more extensive cross-linking and leads invariably to the efficacy results that we demonstrated in our Phase III pivotal study. So nevertheless, the FDA subsequently held firm to the position of requiring the second Phase III trial. But they did agree that our completed Phase III clinical study which met the prespecified primary efficacy endpoint would be accepted. So that's powerful as one of the two validating pivotal studies supporting our upcoming NDA submission. And clearly, we continue to build the business on the excellent safety and efficacy results of our Photrexa product and our Epi-off clinical design which I'll just remind the community is the only FDA-approved cross-linking procedure that's available today. So with respect to cost, I guess I'll ask my colleague Alex to weigh in.

Alex Thurman, CFO

Yes. Hi, George. The way to think about the cost is that we will build the cost of that second trial into our normal R&D operating expense spend and cadence and it will be absorbed and it's not going to stick out or be increased over what we normally would spend as we move forward through those periods.

Tom Burns, Chairman and CEO

I'll make one final comment. Since I've decided to move forward with the second study, we're proceeding very quickly and may be able to start a clinical trial as early as January in the next couple of months. We have fully qualified investigators ready to go. Considering the timeline, and the fact that we should be able to recruit quickly, we are likely aiming for a new FDA approval around late 2025.

Operator, Operator

Our next question comes from Matthew O'Brien with Piper Sandler.

Unidentified Analyst, Analyst

Hi. This is Phil on for Matt. Thanks for taking the question and congrats on the great quarter. I guess just for starters in terms of OpEx. I know you've discussed in the past being a $300 million to maybe $310 million OpEx company. Do you expect that moving into 2023 here as well? And is that still your expectation? And then how should we think about gross margins in this high inflationary environment? Is that 84% a good run rate moving forward? How should we think about this as we approach 2023 here?

Alex Thurman, CFO

Yes, hi Phil, this is Alex. Thank you for the question. Regarding operating expenses, we previously mentioned a range of around $310 million for this year in 2022. One point that may not have been clear in the last call is the $10 million licensing payment from last quarter, which should be included in that number since we no longer highlight it separately. It falls under our non-GAAP expenses due to new SEC regulations. Therefore, you should expect the operating expenses for 2022 to fall between $315 million and $320 million, which accounts for that $10 million upfront license payment in Q2. As for 2023, anticipate some growth in operating expenses as we progress through the year, likely seeing a quarter-over-quarter increase. A 10% growth rate is a reasonable estimate, but we will provide further details in the fourth quarter call regarding 2023. Lastly, on the gross margin, you're correct that we are maintaining a targeted range of 83% to 84% into 2023, and we expect this to remain unless we observe significant trends suggesting otherwise.

Unidentified Analyst, Analyst

That’s great. That’s it for me. Thanks so much and congrats on the quarter again.

Tom Burns, Chairman and CEO

Thanks.

Operator, Operator

Your next question comes from Allen Gong with JPMorgan.

Allen Gong, Analyst

Hey team, congrats on the quarter. So, I just had a quick one on what you're seeing so far in the fourth quarter. It clearly seems like you're weathering reimbursement and competitive dynamics pretty well. But when I think about just broader trends around staffing capacity we've heard from adjacent spaces that challenges have improved but are maybe being a bit more durable than expected. So, how does that impact your own business? Is that part of why you are taking a bit of a more conservative route to the guide?

Joe Gilliam, President and COO

Yes, Allen, it's Joe. I believe you're correct in your assessment. During October, the US franchise has shown a good level of stability, which we're happy about. However, one of the main factors we are considering is the persistent challenges posed by foreign currency and its impact on our international business and consolidated results. Additionally, we are not insulated from the broader macroeconomic factors. There are risks related to some COVID variants that are becoming more concerning as we approach the winter season. We continually hear from our customers about their struggles to maintain a sufficient number of skilled staff. This issue affects us on both the commercial and clinical sides as we work on recruitment, and we hope to see improvements as we move into next year, but it remains a significant challenge in 2022. Furthermore, we discussed earlier the launches of iPRIME and iStent infinite, which we are not heavily factoring into our fourth quarter expectations for 2022.

Allen Gong, Analyst

Got it. And then just a quick follow-up on iDose. So, fully got the message that probably limited revenues in 2023 with an approval late in the year. But when I think about 2024 how quickly can revenues from that turn on? Would you have to do a similar amount of work when it comes to reimbursement and negotiating pro fees with MACs? What needs to be done for the J-code? And just basically how quickly can that ramp once you do get the approval under your belt? Thank you.

Tom Burns, Chairman and CEO

Yes, Allen, this is Tom. I have set expectations before, and I think it's fair to say that once we receive FDA approval, we will typically be assigned a miscellaneous J-code, which will allow for some market traction, although it will be somewhat limited. In the meantime, after we obtain FDA approval, we will pursue a quarterly HCPCS panel and submit for approval at the projected rate we aim to charge for the implant. Generally, I would expect a one to two-quarter lag, with about two quarters needed to ultimately get the final J-code approved. Once we have that J-code approved, we will be fully prepared and ready to launch strongly. Therefore, I anticipate significant traction beginning in the second half of the year.

Operator, Operator

We have no further questions at this time. I will turn the call back over to the company.

Tom Burns, Chairman and CEO

Okay. Thanks for all the great questions and thanks to the investors for your time and attention today. We hope everyone is staying safe. And again always thank you for your continued interest in Glaukos. Goodbye.

Operator, Operator

This concludes the Glaukos' third quarter 2022 financial results conference call. Thank you for attending today's presentation. You may now disconnect.