Stifel 2026 Healthcare Conference - GLAUKOS CORP

Financial Performance:

• Epioxa revenue surged to $53 million in Q3 2026, up significantly from $11 million in Q2, with Q1 sales at $53 million and Q3 at $76 million showing strong six-month sequential growth.
• IDOS sales growth is positive despite Q3 seasonality; full-year 2026 guidance is maintained at the low $280 million range.
• Company targets total revenue of approximately $1 billion by 2027, driven by the ramp-up of Epioxa.
• Operating expenses (OPEX) guided at $630 million for 2026; 2027 OPEX is expected to grow ~25% year-over-year to support top-line growth, with potential flexibility to adjust spending if revenue exceeds expectations.
• The company is transitioning toward a more leveraged model but prioritizes top-line growth and reinvestment over managing sequential quarterly profitability metrics.

Guidance and Future Outlook:

• Management anticipates a strong 2027 for Epioxa, with a long-term floor of 18,000 to 20,000 treated eyes annually, potentially expanding to a Total Addressable Market (TAM) of 50,000 to 100,000 eyes.
• Payer progress for Epioxa is tracking better than internal expectations, with strong coverage established in both commercial and Medicaid populations.
• Q4 growth dynamics may be moderated by end-of-year insurance benefit expirations and administrative delays, a common seasonal trend in ophthalmology.
• Eidos is expected to continue changing the standard of care for interventional glaucoma, with confidence in its long-term trajectory despite seasonal volume fluctuations.
• The company plans to increase investment in disease awareness (e.g., Stephen Curry partnership) and commercial infrastructure in 2027 to drive patient identification and treatment access.

Business Segments and Product Lines:

• Epioxa (Keratoconus): Currently in early launch stages; strong payer acceptance and site-of-care network performance. The product is positioned as the standard of care for cross-linking, requiring no corneal debridement.
• Eidos (Interventional Glaucoma): Maintains strong long-term confidence; growth is driven by expanding the standard of care rather than just market share battles.
• iLink Gen 3 (Topo-guided Custom Cross-linking): Phase 2 studies are underway with pivotal trials (Phase 3) planned to commence in 2027. This product aims to improve upon Epioxa by offering visual acuity gains in addition to halting disease progression.
• Pipeline: Investment continues across 14 disclosed programs, with potential greenlighting of new aspects in 2027.

Market and Competitive Landscape:

• Management views the corneal cross-linking market as one where "rising tides lift all boats," believing that competition and increased disease awareness will expand the total market rather than fragment it.
• Current focus is on market creation and identifying the large pool of undiagnosed or rarely diagnosed keratoconus patients, rather than engaging in share-related conversations.
• No new competitive threats are viewed as immediate risks to the launch trajectory, given the established standard of care for the disease category.

Risks and Challenges:

• Payer tactics such as payment delays, J-code loading issues, and prior authorization hurdles remain a persistent headwind requiring constant vigilance.
• Seasonal slowdowns in Q4 due to patient benefit expirations and insurance carriers delaying procedures into the new year.
• Uncertainty regarding the speed of adoption to reach the 50,000–100,000 eye TAM, dependent on successful disease awareness campaigns and payer access improvements.
• Potential CMS policy changes regarding pass-through status for Eidos, though management believes the impact will be minimal as the majority of procedures are shifting to Ambulatory Surgery Centers (ASCs).

Management Commentary and Tone:

• Management expressed high confidence in Epioxa's launch performance, crediting the payer relations, medical affairs, and market access teams for exceeding expectations.
• Tone is optimistic but cautious regarding short-term quarterly volatility, emphasizing patience and long-term market development over immediate run rates.
• Leadership reiterated a disciplined but aggressive reinvestment strategy, refusing to cap spending on growth drivers even if it impacts short-term profitability.
• Corrected market misconceptions regarding CMS bundling rules, clarifying that current final rule language is standard for all expiring drugs and does not negatively signal immediate Eidos pass-through loss.

Analyst Questions and Answers:

• Q: Intermediate-term payer risk as volumes grow? A: Risks are primarily process-oriented (timeliness, coding) rather than policy changes; cross-linking is established as standard of care, reducing the likelihood of restrictive policy shifts.
• Q: Q4 growth moderation factors? A: End-of-year dynamics where patients delay procedures until the new year due to benefit expirations; management advises caution in analyzing growth curves so early in the launch.
• Q: Market size and competition? A: Current treatable volume is ~18k-20k eyes (historical Photrexa peak), but true TAM is estimated at 50k-100k; competition is viewed as collaborative for market expansion.
• Q: Eidos pass-through status impact? A: CMS did not finalize Eidos pass-through loss; even if bundled in hospitals, the procedure is moving to ASCs where impact is minimal; Eidos is distinct because the drug is the procedure.
• Q: 2027 OPEX drivers and flexibility? A: Drivers include DTC marketing, commercial infrastructure, and R&D; SG&A levers like digital marketing can be ramped up quickly if revenue exceeds expectations, while R&D ramp-up is slower.

Other Key Points:

• Disease Awareness: Significant investment in awareness campaigns, exemplified by the partnership with Stephen Curry, is planned to address the "rarely diagnosed" nature of keratoconus.
• Procedural Shift: Management is actively shifting Eidos procedures from hospital settings to ASCs to mitigate potential CMS bundling risks.
• Visual Acuity: iLink Gen 3 is specifically designed to not only halt disease progression but also improve visual acuity, differentiating it from current standard therapies.
• Budget Season: Company is currently finalizing the 2027 budget, confirming the ~25% OPEX growth trajectory but noting potential for dynamic adjustments based on revenue performance.