Conference Transcript - GKOS 2026-11-10

Tom Steffen, Analyst — Stiefel

Okay. Good morning, everyone. Tom Steffen with Stiefel. Welcome to the 2026 Stiefel Healthcare Conference. Excited to have Glaucos here with us today, coming off a very strong Q3 print. Joe, Alex, Chris, thanks so much for joining. Thanks for having us. I'll dive right in. You know, I think we have around 30 minutes, and I'll start with that Beoxa, and Joe, I'll kick things off with you. Maybe talk about- How payer progress is tracked to date relative to, call it internal expectations, maybe specifically touching on approval rates, time to approval, kind of how that's tracking.

Joseph Gilliam, COO

Yeah, thanks, Tom. And again, thanks for having us as a part of the conference this year. So as it relates to Epioxa and our payer progress, I'd say, generally speaking, it's gone much better than what we had expected internally. I give a lot of credit to our teams, our payer relations team, our broader market access team, and the approach, our medical affairs team, and the folks who have educated these payers from a clinical perspective. You know, we obviously had a variety of scenarios as we evaluated how this would go at the beginning, but from our standpoint, it's really been a successful launch thus far from a payer perspective and a side of care perspective, as we talked about on the most recent earnings call. You know, that doesn't mean that there's not all the normal, you know, process-related headwinds that come from the payer community, especially when you have a commercially insured patient population, and so we do experience that. Most of that is normal and certainly within the realm of what we expected, but at this point, when you look at the statistics we talked about in the last call, we're really pleased with the amount of coverage we have, not just in the commercially insured patient population, but also within the Medicaid patient population. So we've really done a great job of establishing access pathways for the patients that are seeking therapy on Epioxin.

Tom Steffen, Analyst — Stiefel

Got it. That's helpful. And so, you know, I think I'll call it the near-term payer progress. You know, it does sound like it's going quite well. There's receptivity from the payers. But how do we think about, you know, intermediate-term payer risk? Is there anything we have to... Call it consider or be mindful of, particularly if. Epioxa grows rapidly from a volume standpoint, and the reimbursement dollars grow as well alongside that. Maybe talk about, you know, kind of that intermediate term payer dynamics.

Joseph Gilliam, COO

Yeah, well, I think the short and the intermediate term are somewhat similar as you grow in volumes. And I think, again, you know, as you launch a new drug, in our case, Epioxa and cross-linking, the most important thing is, remember, it already is the standard of care. Cross-linking is the standard of care. We established that with Potrexa. It's the best available alternative for patients afflicted with keratoconus today and really does, you know, slow or halt a progression of that site-threatening disease. So from that standpoint, you've always got that as your backdrop. Now, it doesn't mean that insurance carriers won't play various tactics that help to try to slow things down, and we see that already today. I mean, there's a variety of things around the timeliness in which they pay, system issues around the way they have the J-code loaded or the way they do the payments. There's a whole variety of things that are all. It's a process-oriented that can come out and can slow you in any given week, month, quarter, et cetera. And that's why your teams have to stay vigilant and on top of these insurance carriers, as well as the customers themselves. And so we expect that. I think from an overall, call it policy perspective, a lot of the policies around cross-linking have already been established. And so they can always be looking at those things and trying to make tweaks there. But it's a pretty established category from a disease perspective. And if anything, we've seen over the last several years with Potrexid now having been out there for 10-plus years, we've seen them retire some of those policies as the rate of prior authorization approvals have been quite high.

Tom Steffen, Analyst — Stiefel

Got it. Very helpful. And maybe sticking kind of near term, so hopefully I have these numbers right. $11 million in 2Q epioxysales jumped very nicely to $53 million in 3Q. Consensus I'm seeing is at around only $75 million in the fourth quarter. I think by my math, that's an increase of maybe $300 to $400,000 sequentially. Any factors we should be cognizant of with the fourth quarter that might moderate the growth curve and would result in sort of that subdued sequential growth?

Joseph Gilliam, COO

Well, first, I probably will quibble with the terminology only $75 million in the third quarter of launch for the drug, but I think it's probably a little bit early to be analyzing growth curves. I think we're still very much in the early days of this launch, and there are a lot of factors at play, including some of the stuff we already mentioned. So I think we just continue to put one foot in front of the other. You know, as we've said, you know, publicly, we have a very strong top of the funnel, right? Our site of care network is strong. The number of patients coming into our hub seeking access to therapy is strong. And that shouldn't surprise you necessarily, given the legacy of Fotrexin. This is not a new disease category. But we've got to continue to put, you know, one foot in front of the other and make sure that we're getting these patients approved and scheduled and treated and ultimately the products shipped. So I think we'll continue to make progress in the fourth quarter and how much we'll wait until we've got it done to see. I think the only thing we tried to call out around the fourth quarter specifically is we don't exactly know the end-of-the-year dynamics, and so as strong of a trend line as we are on, obviously, coming out of the third quarter, you don't know when you get into kind of that December timeframe how much of the procedures will be able to get scheduled before your benefits expire versus the types of things where insurance companies will delay and try to push you into the new year. And so, given this is our first end of the year with this drug, we want to make sure and be thoughtful about that dynamic.

Tom Steffen, Analyst — Stiefel

Makes sense. Um, sticking with Epioxa, but maybe thinking more long-term big picture, um, U.S. corneal cross-linking market at peak, you know, maybe a year or two ago, about 18 to 20,000 eyes, give or take, talked about the TAM of maybe being 50 to 100,000 eyes that could get treated annually. I guess a two-part question to start. Are those diagnosed eyes, the 50 to 100,000? And if so, What's the size of the U.S. market, maybe when factoring in undiagnosed eyes? Maybe if we could parse out that 50,000 to 100,000.

Joseph Gilliam, COO

Yeah, so first I'll validate what you said. Obviously, the sort of peak from a Photorexia standpoint, we were treating commercially between 18,000 and 20,000 eyes a year, and our objective is to get back to that as fast as we can here with the launch. When we look at broader claims data. And there's a little bit of ambiguity around exactly how physicians have coded this historically between keratoconus, severe or progressive keratoconus, and all the things in there. That's the reason why the broader estimate that we cite. But we're fairly confident that there are 50,000 to 100,000 eyes at any given point in time out there being diagnosed as severe or progressive keratoconus. Now, step two of the sort of launch dynamics is trying to go make sure you're realizing getting as many of those patients access to therapy, because if that's true, obviously, all of those should be theoretically good candidates, especially with a therapy like Epioxida. It doesn't require the debridement of the cornea and some of the dynamics around that. More broadly than that, I guess we'll find out. I can't say that we know. I do think ultimately we'll prove that this was perhaps not a rare disease, but it was actually a rarely diagnosed disease. And the investments that you've seen from us, we've announced publicly the partnership with Stephen Curry around disease awareness. He himself, having obviously had keratoconus, having keratoconus and been treated, is a big part of that. And so as we move forward here in the next year and the years to come, you're going to see a pretty significant investment from Gloucose in driving disease awareness to find out the answer to your question.

Tom Steffen, Analyst — Stiefel

Perfect. And so you mentioned wanting to get back to that $18,000 to $20,000 as quickly as possible. I mean, you know, with 50,000 to 100,000 eyes annually as maybe a TAM, you know, what does the company believe is a visible, you know, I'll say like long-term floor on the size of the U.S. corneal cross-linking market annually, and what factors are most important in getting there? Hopefully that question makes sense.

Joseph Gilliam, COO

Yeah, well, I think in the way you asked it in terms of a long-term floor, clearly the 18 to 20,000 represents that. As we look at it, there's really no reason why with Epioxa you shouldn't be treating at least the same number of patients that you were treating with Botrexa on an annual basis. We had established that over several years, so I think it's a pretty good number. And then the question becomes how much further above that to the point of what you asked before. You know, I will tell you, obviously, our internal goals are not to treat just 18,000 to 20,000 eyes. You know, we wouldn't be making the investments like we just made with Stephen Curry, like we're going to be making going forward in driving disease awareness if we thought the market was only 18,000 to 20,000 eyes. I think we think it could be materially higher, and that's the point of the 50,000 to 100,000 eye estimate that we mentioned before. We just have to prove that to ourselves. But I think clearly the floor expectations from our standpoint are something north of that $18,000 to $20,000. I'd probably start up short of getting too granular on that.

Tom Steffen, Analyst — Stiefel

That's fair. And maybe shifting gears a bit, you know, I would love to sort of hear your latest views on potential corneal crosslinking competition in the coming years, you know, and maybe what's the messaging to investors on, you know, how they should be thinking about the potential long-term impact of a new Epion corneal crosslinking player?

Joseph Gilliam, COO

Yeah, I'm sure I have any new thoughts or novel thoughts there. I mean, my view of competition generally, and here as well, is that when you have responsible competitors that are in a market at the stage that we're at, that make investments in disease awareness the way that we are, then I think rising tides can lift all boats. And I think that's the situation we find ourselves in in cross-linking. You know, if you think about what you just got done asking me, if we're just now getting started into an 18 to 20,000 eye market, a market that we think can be substantially larger, I think competition or not, we're a long way away from having a market share related conversation. And it's more about how fast can we grow that market, how fast can we find the patients that are out there afflicted with condition, and how fast can we get them treated. So I look at it that way in terms of continuing to play offense with the disease category and with Epioxa, and if additional folks come in, then we'll work alongside of them.

Tom Steffen, Analyst — Stiefel

Got it. Got it. That makes sense. And then, sort of alongside that, just on Island Gen 3, in Phase 2 studies now, I believe you said commencing Phase 3 in 2027. No, it's topo-guided custom cross-linking, but, you know, can you elaborate a bit more on kind of if and how you're trying to improve upon Epioxa with this?

Joseph Gilliam, COO

Well, I mean, I think you saw just prior to AO our announcement around the long-term data of Epioxa and some of the terrific visual acuity data alongside of that. And so I think not only are we seeing with Epioxa the ability to slow and halt progression of the disease, but the visual acuity and a decent percentage of the patients alongside of that. And so I think with the topo-guided, you know, or I'll call it custom cross-linking approach that is represented with GIM3, we hope just to build upon that really successful foundation that we've got with Epioxus. So hopefully we'll continue to see, you know, additional gains around the visual acuity side, and so that we're taking more and more patients who would not just have their disease halted, but actually get visual improvement alongside of that.

Tom Steffen, Analyst — Stiefel

Got it. Really helpful. Is that something we could see in the U.S. by 2030? Any rough timelines we should think about with iLink Gen3?

Joseph Gilliam, COO

Well, I think the only timeline that we'll commit to is what we've said publicly is we're going to enter into those pivotal trials in 2027 and try to get those enrolled as fast as possible and get that to market. I mean, obviously, we've been really encouraged by what we've seen so far from a data perspective with the Gen 3 system, and if it continues to hold up, we'll want to get that to market as fast as possible because I think patients will continue to benefit from access to the therapy. So I can't give you a timeline on the actual go-to-market date, but you've seen our timelines historically. You can probably do your own inference on that one.

Tom Steffen, Analyst — Stiefel

Maybe last one or two on Epioxa before pivoting. You have your $1 billion total revenue number out there for 2027 total company. Buy-side range of estimates for Epioxa next year, I know, is pretty wide. You talked on the call about maybe how the street got ahead of itself on Eidos, and maybe there were some learnings there. You know, is getting back to the $18,000 to $20,000 run rate for the full year in 27? Within a reasonable range of outcomes, given we know that patient volume demand is there, or, you know, again, to try to not rein in numbers, but, you know, what do you view as kind of a reasonable, I wrote down ultra upside outcome in 2027 for Epioxa, but what's kind of like a reasonable ceiling outcome here, you know, again, as we're trying to think about, you know, reasonable numbers?

Joseph Gilliam, COO

So we give guidance early for 2027, and that just gave you a window to ask these kind of questions earlier than normal. I think, obviously, we understand the, I'll call it variability in expectations from investors around Epioxide for next year. You're correct, that our giving the guidance that we did was an attempt to continue to make sure that that stays within the realm of reasonable. I appreciate your question around trying to push the upper limits. I'll be the first to say that there's a lot of scenarios here around Epioxa next year, and there are a variety of puts and takes that I think are worth considering in terms of the outcomes. We continue to make a lot of progress on the payer side, as we talked about earlier, and so as we knock that down and we streamline access and we improve on patient turnaround times to getting access to the therapy, Thank you. So I think we certainly have the right tailwinds for a successful 2027 with Epioxa, but we also just have to continue to be cognizant and thoughtful about where you started earlier in the questions, that payers will have a variety of tactics to slow that down. And if it was as simple as just driving disease awareness and having a product that works, then my answer to your question would be yes. But there's a lot more to it when you get in it, and we'll just have to see how it plays out next year. But I think I feel very good about where we're at, where we're at right now, and where we'll be at next year. I just ask investors and the buy side generally to have some patience as we continue to, I think, deliver on a pretty exceptional period of growth for the company.

Tom Steffen, Analyst — Stiefel

Perfect. Perfect. Perfect. Maybe shifting gears to Eidos, Joe, can you talk a bit about the third quarter performance? Only up somewhat slightly sequentially, and no, it's a reality, but investors don't love to hear seasonality when it's still somewhat early in this launch, particularly, you know, X fee for service. So maybe if you can discuss Eidos trends and, you know, as we sit here today, where does your long-term confidence in that product stand?

Joseph Gilliam, COO

Yeah. Well, executives don't like hearing seasonality either from the commercial organization. So I think we're aligned in that part. It is a factual reality. I mean, the third quarter is always down sequentially from an overall procedures perspective and quite materially in ophthalmology, and that's been growing in recent years. So I think any time that you can continue to grow sequentially in the face of procedure volumes being down is still a good thing. And probably what I would point more to is, again, sometimes we get a little too focused on individual short-term periods. You know, we did 53 million, I think it was, in the first quarter of EIDO sales, and we did 76 million in the third quarter. So when you look at it over the course of the six-month period, it's a pretty attractive growth profile sequentially. And so I wouldn't overread into anything in the third quarter in that regard. Having said that, you know, there continues to be, you know, always a variety of dynamics in play with the draft LCD and some of the things and noise around that at some of the individual MACs. We haven't made the progress that I would have hoped on the professional fee side with those remaining holdout MACs, right, WPS, CGS in particular, Where it'd be nice to get those turned over and get access to therapy for IDOS and streamlined reimbursement set there. But in general, no, I think we continue to do just fine. And my long-term views of IDOS as a disease-altering category product are unchanged. So I think we continue to change the standard of care for interventional glaucoma. We have a lot of voices now, I think, adding to that, which is helpful. And we continue to believe that iDose is the best therapy selection for those patients.

Tom Steffen, Analyst — Stiefel

And so thinking about, you know, kind of rest of year, Eidos guidance for 26, low $280 million range implies only a couple million of quarter over quarter growth from 3Q to 4Q. Are the same dynamics at play this year that occurred last year with busy cataract schedules, patient mix? Or are there other dynamics that would, you know, maybe limit that sequential growth in 4Q and IDOS that we should be mindful of?

Joseph Gilliam, COO

No other dynamics. We just wanted to be thoughtful about what we did experience last year to that point. I mean, we got into the fourth quarter last year. We saw that exactly as you described it. They are very busy schedules. It's very cataract dominant, and it's very Medicare Advantage dominant for all the reasons that you know. And so we just coming in and setting the guidance and expectations, we want to make sure we were at least being thoughtful about what we learned last year. And we'll see how that that plays out, obviously, as we make our way through the fourth quarter here this year.

Tom Steffen, Analyst — Stiefel

Got it. Perfect. And then maybe last one on Eidos, shifting gears a little bit, you know, CMS last week finalized its decision to, hopefully I have this right, characterizing this correctly, but bundling Eidos' J code with the CPT code once passed through expires middle of next year, I believe. So, Joe, maybe, you know, can you start by briefly explaining to us what's occurring here and then discuss the different potential outcomes and impacts?

Joseph Gilliam, COO

Yeah. Well, first of all, I'm glad you asked the question that way so I can correct the record. So CMS did not finalize anything with respect to the Eidos pass-through status next year. That will happen mid-next year as a part of that pass-through expiry. I think there was a little bit of confusion amongst investors on that. What they included in the final rule was their standard procedure language. And if you go back and look at all the drugs that are facing expiration from pass-through, they include that language almost universally, including for those drugs that ultimately achieve permanent pass-through status. So, I think it was a misunderstanding and perhaps a bit of a misread to see the final rule that way. We looked at it as exactly what we expected as a part of the process that's there. So, that's most important, first off. Now, as we get into next year, and they do evaluate that, as we know, their policy is to try to package things in the hospital setting, and so we've always factored that in as a potential outcome. The question becomes, if they do, how does that end up working, right? And so that's where we've always said there's a variety of outcomes, most of which are really not impactful or neutral to Glaucos. At that time, they can assign a proper APC assignment if they do it. They can assign a new tech APC if they do it. All those options are available based upon their calculations around it. Now, as you think about it, and I should also add, hospital volumes are quite small for us, and if there was even a remote downside scenario, we'd just work to move most of those procedures into the ASC setting that's around it. So I think, again, it comes back to most of these situations lead to a path that has minimal to no impact to glaucose as we look at it. And I just have to reiterate one thing that we always talk about with IDOS when investors are thinking about the pass-through. Unlike many of the drugs that are ancillary or supportive of a procedure, in the case of IDOS, what makes it unique? Is that it is the procedure. The drug delivery is the procedure. And so that's the key consideration around that. And you've seen that in some other things like cell therapy and gene therapy and gene editing drugs around it historically. And you can look up, you know, how those outcomes transpired for those drugs when they were passed through.

Tom Steffen, Analyst — Stiefel

Got it. So I was going to ask that. What are some of those examples of drugs in ophthalmology that achieve that permanent pass-through status that give you confidence in 27 that we can look to?

Joseph Gilliam, COO

Yeah, most of the drugs that have not achieved it are drugs that were done in combination with cataract surgery. So, for example, just managing inflammation postoperatively and things like that. The drugs that have achieved it are more the gene therapy drugs and some of the specialized drugs where, as I mentioned earlier, Luke Starno, for example, and some of the drugs like that, that the drug is the procedure.

Tom Steffen, Analyst — Stiefel

Okay, got it. And then last one here, you mentioned this seemingly is hospital only where volumes are small. I guess, like, if pass-through does expire, pass-through status does expire, it gets bundled in in the hospital, what's the contagion risk here of this expanding beyond just the hospital and into the ASC? Or is there something statutorily? You know, that would prohibit that.

Joseph Gilliam, COO

No, it really is a hospital policy primarily, and if you go back and analyze the data, I won't quote the statistic because I don't have it memorized, but the vast, vast majority of the outcomes do not impact the ASC setting. So I'd say it's a very minimal risk that that type of coding would occur.

Tom Steffen, Analyst — Stiefel

Got it. Okay, perfect. Maybe in the last five minutes, I want to shift to profitability. Woody, Alex is going to pull you in here. From an OPEX standpoint next year, qualitatively, it'd be great if you could highlight for us, I'll call it the primary incremental drivers of year-over-year investment growth in 27, whether that's, you know, as Joe mentioned, Epioxa selling and marketing, high-dose DTC, certain R&D programs, et cetera, you know, coming off a strong, profitable 3Q, getting a lot more questions specifically on the magnitude of Epioxa spend next year. in particular. So walk us through kind of just like incremental investment drivers next year. You bet.

Alex Thurman, CFO

Well, first, I'll say as much as I'd love you and want to give you all the details, we're in the middle of our budget season right now. But that being said, you can think about three things that, and you've kind of already covered them as we think about 2027 and incremental spend and operating expenses. The first one is around the DTC and digital marketing efforts to support Support the things that Joe has already talked about and patient awareness and driving identification of these patients out there that could have keratoconus. So that's kind of category number one. Category number two is around as these two launches continue to expand and increase, looking at opportunities to build or continue to enhance the commercial infrastructure, the hub and the support functions, et cetera. And so we'll look in 2027 to do that as we see these launches expand. And then the third thing is around our pipeline, you know, quite naturally, you know, the 14 disclosed programs that we have and continuing to invest in those and greenlighting, you know, certain aspects of those programs as we get into 2027 and look at that operating expense profile.

Tom Steffen, Analyst — Stiefel

Got it. That's great. And so for 26, you're guiding to, I think it was 630 million in OPEX. Street next year for 27 sits a little below 800 million, basically reflecting 25% year-over-year growth versus revenue growth based on the $1 billion of slightly below 30. So I know you're in the middle of budgeting, but I'll take a stab. Is that 25% OPEX growth like a fair place to be right now in our models? I guess within that number, are we perhaps not fully accounting for maybe some key areas of spend that, you know, we should maybe take a closer look at?

Alex Thurman, CFO

Well, I think it's a fair place to be right now. You know, as we have always said throughout this year and throughout the last couple of years, you know, we've been moving and driving towards more leverage in the model. And so a good place to be is to see that leverage in your 2027 model, absent any further granularity of detail on operating expenses that I haven't given yet. So that's a great place to start. And then, you know, we've always said, and Tom said this in his prepared remarks for the third quarter call, that, you know, we're at the point now where the company is well-positioned to drive profitability, but yet our management focus will continue to be on driving top-line growth through these investments and reinvesting in the business on both the commercial side as well as the pipeline side. So to the extent revenues exceed those expectations, you know, you can imagine that we'll, you know, adjust our operating expense pool accordingly as well.

Joseph Gilliam, COO

It's important to reiterate that, too. I want to make sure, you know, our philosophy, as Alex described it, we're not going to hold back on an investment in a given period. Obviously, we'll continue to be disciplined. I think we're already showing the operating leverage that Alex is talking about, and we'll continue to double down on the investments. But, you know, we're not going to try to manage in any given quarter the sequential profitability statistics and things like that because there's a lot of variability that Alex is trying to manage as we move forward, not the least of which is the top-line growth and how that translates to the bottom line in any given period. So just keep that in mind as we think about the model in the coming-forward quarters.

Tom Steffen, Analyst — Stiefel

Got it. And as a follow-up to that, maybe in the last minute or so, how fast, Alex, you mentioned can adjust that pool to the extent REVs exceed expectations, but how fast can you dial up SG&A if revenue is well above expectations internally? I guess I'm just curious if the OPEX budget has a relatively fixed range and therefore outsized quarterly top line upside would drop through to an extent. Maybe if you can talk through that dynamic of dialing up SG&A.

Alex Thurman, CFO

Of course. And it's a great question, right? And it goes to what I was just saying. I think if you think about SG&A, I think there are certain levers within SG&A, such as digital marketing and DTC, that you can lever up pretty fast in order to make those investments if revenues exceed expectations and we have extra capital to spend. And I think on the R&D side, though, it's kind of the opposite effect, right? So if you decide you've got excess capital and you want to deploy that towards R&D pipeline, those take a little bit slower time to ramp up. It's not going to turn on immediately. So you have scenarios where some of that excess could drop to the bottom line and some may not because you're able to spend it in a very timely manner. So the scenarios depend on what you're doing and how we're managing that.

Joseph Gilliam, COO

And that's what can create the volatility that we're talking about in any given quarter as you're playing catch-up sometimes.

Tom Steffen, Analyst — Stiefel

Got it. All right, team. I think we're out of time, but thanks so much for joining. Appreciate it.

Joseph Gilliam, COO

Thanks for the questions, Tom. Appreciate it. Thanks.