Q3 2024 Earnings Summary
- Strong Growth in U.S. Glaucoma Franchise Driven by iDose TR Adoption: The U.S. glaucoma franchise delivered accelerating growth of 35% year-over-year, primarily driven by early but growing contributions from iDose TR, along with continued strong growth in the stent portfolio. iDose TR sales doubled compared to the second quarter. Management expects this momentum to continue into 2025, potentially leading to meaningful top-line acceleration. , ,
- Positive Clinical Outcomes and Surgeon Receptivity of iDose TR: Clinical outcomes and feedback from surgeons on iDose TR have been very positive, indicating strong potential to reshape glaucoma management. As reimbursement confidence is gained, especially with MACs providing consistent payment, a growing number of surgeons are adopting iDose TR into routine clinical practice, leading to expansion of utilization. ,
- Promising Pipeline with Upcoming Catalysts: The company reported positive top-line outcomes in the second Phase III pivotal study for Epioxa, their next-generation corneal cross-linking therapy, which met the study's primary efficacy endpoint. An NDA submission for Epioxa is expected by the end of 2024. Additionally, the initiation of a Phase I clinical trial for Axitinib in wet AMD is underway, with proof-of-concept data expected in late 2025, representing a significant future growth driver. ,
- Manufacturing inefficiencies due to the launch of iDose TR are narrowing gross margins. The gross margin guidance has been narrowed from 82%-84% to 82%-83% due to these inefficiencies, with accretion from iDose TR not expected until the end of 2025.
- Reimbursement challenges for iDose TR remain. Only 2 Medicare Administrative Contractors (MACs) are paying the J-code efficiently, 2 MACs are close but require more evidence, and 3 MACs have manual and time-consuming processes. Expansion into Commercial and Medicare Advantage patients is not expected until 2025, potentially limiting near-term revenue growth.
- The International Glaucoma franchise is facing increasing competition and expects lower growth in the fourth quarter and into 2025 due to currency headwinds and competitive pressures in key markets.
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iDose Revenue Growth
Q: Is top-line acceleration in 2025 driven by iDose?
A: Management expects continued revenue acceleration in 2025, primarily driven by iDose TR. In the third quarter, overall growth accelerated to 35% year-over-year, driven by a doubling of iDose TR sales versus the second quarter. They anticipate strong outcomes next year as reimbursement confidence grows and doctor adoption increases. -
iDose Revenue and Guidance
Q: Are we in the right ballpark on iDose revenue estimates?
A: Analysts estimated $7.5 million for iDose this quarter and $10 million implied for Q4. Management acknowledged strong iDose sales driving growth acceleration to 35% year-over-year, with iDose TR sales doubling versus Q2. They did not provide specific revenue numbers but confirmed strong performance and expect continued acceleration in Q4. -
Reimbursement Dynamics for iDose
Q: How are reimbursement dynamics trending post J-code shift?
A: Management experienced a reset in reimbursement dynamics after shifting to the J-code. Currently, 2 MACs are paying the J-code in a normalized manner, 2 more are nearly there, and 3 MACs remain manual. Progress is being made, and they expect continued improvement heading into 2025. -
Gross Margins and iDose Impact
Q: Is iDose still a drag on gross margins?
A: Yes, iDose remains a modest headwind on gross margins. However, as iDose unit volumes and manufacturing ramp up, margins are improving each quarter. Management expects iDose to start contributing positively to gross margins by the end of next year. -
Epioxa Approval and Growth Outlook
Q: Confidence in Epioxa approval and its growth outlook?
A: Management is confident in Epioxa (Epi-on) approval, having met the primary efficacy endpoint in trials. They plan to file the NDA by the end of the year. Epioxa offers advantages over existing treatments, potentially reducing procedure times and improving patient comfort. They believe it will be a catalyst for growth in 2026 and beyond. -
iDose Reimplantation Discussions
Q: Any updates on iDose reimplantation discussions with FDA?
A: Management has reengaged with the FDA regarding reimplantation of iDose . They have presented a sophisticated approach and remain hopeful but are not counting on approval . If unsuccessful, they have iDose TREX entering clinical trials by the end of the year. -
Cash Flow Breakeven and Profitability
Q: Progress towards cash flow breakeven and profitability?
A: The company generated a modest amount of cash this quarter due to spending discipline. Their near-term focus is on achieving cash flow breakeven rather than profitability. With the iDose launch trajectory, there could be quarters of profitability in the next several quarters. -
Sales Force Expansion Plans
Q: Any plans to expand the sales force significantly?
A: Management plans to continue organic expansion of the sales force commensurate with territory growth. They foresee consistent growth rather than a significant expansion. -
Market Expansion to OHT Patients
Q: How significant is the OHT patient market for iDose?
A: There are approximately 20–21 million eyes in the U.S. with diagnosed glaucoma or ocular hypertension. With 10 million treated eyes, expanding into OHT patients represents a large market opportunity. Reimbursement work is ongoing, and management expects to utilize existing data to support access. -
iDose Utilization Trends
Q: What are the utilization trends among doctors using iDose?
A: Most doctors start with a few cases to establish reimbursement confidence. In regions with normalized payments, there's a growing number of surgeons adopting iDose into routine practice, leading to expected utilization expansion. -
Ripple Therapeutics Licensing Agreement
Q: How does the Ripple Therapeutics agreement affect iDose development?
A: The Ripple agreement is for developing treatments targeting the back of the eye, such as proliferative retinal diseases. Glaukos is using it to develop intravitreal implants, not directly impacting next-generation iDose products. -
Stent Usage and Reimbursement Changes
Q: Will reimbursement changes shift stent usage in 2025?
A: Management acknowledges that reimbursement dynamics may affect stent usage. There are potential shifts due to professional fee differences favoring tissue-destructive procedures. However, their focus remains on growing the interventional glaucoma market overall. -
Wet AMD Pipeline Data
Q: Are we still expecting Phase I data for wet AMD in 2025?
A: Yes, Phase I trials of their tyrosine kinase inhibitor for wet AMD are ongoing. Management expects proof-of-concept data to be available in late 2025 or early 2026. -
Reimbursement Pathway for Epioxa
Q: What is the reimbursement pathway for Epioxa?
A: Epioxa will be covered under existing T-code 0402T, paying over $2,000 per procedure. They plan to establish a new J-code for the product, expected around July 2026. Commercial launch may wait until the J-code is established. -
2025 Consensus Estimates
Q: How does management feel about 2025 consensus estimates?
A: It's early to provide specifics, but management is comfortable with macro considerations. They expect continued momentum in U.S. glaucoma, potential headwinds internationally due to competition, and impacts from MDRP in Corneal Health. -
DURYSTA EU Withdrawal Implications
Q: Any implications from DURYSTA's EU withdrawal for iDose?
A: Management does not see significant implications. The withdrawal is unique to DURYSTA, and Glaukos remains focused on their own strategies. -
OpEx Growth and Operating Leverage
Q: How should we think about OpEx growth in 2025?
A: Management expects consistent operating expense growth, similar to prior years. They will provide detailed guidance in the next call. -
Medicare Advantage Timing
Q: Will Medicare Advantage coverage for iDose occur in 2024 or 2025?
A: While some coverage exists, the focus will be on methodical expansion into Medicare Advantage over 2025. They will start turning it on gradually next year. -
Gross Margin Guidance Confirmation
Q: Is gross margin guidance of 82%-84% still on track?
A: The range has been narrowed to 82%-83%, and management feels good about achieving it. Margin accretion is expected in the future, likely by end of 2025. -
Reimplantation Color with FDA
Q: Any more color on reimplantation discussions with FDA?
A: Management reengaged with the FDA, presented their approach, and remains hopeful. They are not counting on approval but have iDose TREX as a backup entering clinical trials by year-end.