Stifel 2026 Healthcare Conference - GLAUKOS CORP

Okay. Good morning, everyone. Tom Steffen with Stiefel. Welcome to the 2026 Stiefle Healthcare Conference. I'm 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 Bioxa. 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. 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 site 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 is normal and certainly within the realm of what we expected but 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 commercial insurance commercial insuredpatient population but also within the Medicaid patient population so we've really done a great job of establishing establishing access pathways for the patients that are seeking therapy on epioxin. 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 now, intermediate-term pay or 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. 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, epioxin, cross-linking, the most important thing is remember it already is the standard of care. Cross-licking is the standards of care, we established that with Photrexa. 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 that they do the payments. There's a whole variety of thing that are all process-oriented that can come out and can slow you in any given you know week month quarter etc and that's why your 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 a from a 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 and if anything we've seen over the last several years with Fortrexit 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. Got it. Very helpful. And maybe sticking kind of near term. So hopefully I have these numbers right. $11 million in 2Q, Epioxa sales 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 eyes sequentially, any factors we should be cognizant of with the fourth quarter that might moderate the growth curve and, you know, would result in sort of that subdued sequential growth? 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 Photrexa and 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 product shipped. So I think we'll continue to make progress in the fourth quarter and how much we'll wait until we've 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 because 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 year with this drug, we want to make sure and be thoughtful about that dynamic. Makes sense. Sticking with epioxa, but maybe thinking more long-term, big picture, U.S. corneal cross-linking market at peak, you know, maybe a year or two ago, about 18,000 to 20,000 eyes, give or take, talked about the TAM of maybe being 50,000-100,000 guys 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 to100,000. Yeah. So first, I'll validate what you said. Obviously, the sort of peak from a Fortrexa 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 keratokonus 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 epioxa that 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 keratokonus and been treated, is a big part of that. And so as we move forward here into next year and the years to come, you're going to see a pretty significant investment from Glauco's in driving disease awareness to find out the answer to your question. 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 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. 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 1,000. I'd probably start up short of getting too granular on that. That's fair. And maybe shifting gears a bit, I would love to sort of hear your latest views on potential corneal cross-linking 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 cross-linking player? Yeah, I'm not 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 them. Got it. Got It. That makes sense. And then sort of alongside that, just on Island Gen 3, in phase two studies now, I believe you said commencing Feast 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? Sure. Well, I mean, I think you saw just prior to AO our announcement around the long-term data of Epioxia and some of the terrific visual acuity data alongside of that. And so I think not only are we seeing with epioxy 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 GYM3, we hope just to build upon that really successful foundation that we've got with epioxys. So hopefully we'll continue to see, you now, 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. Got it. Really helpful. Is that something we could see in the U.S. by 2030? Any, you know, rough timelines we should think about with iLink Gen 3? 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. Perfect. Maybe last one or two on Epioxa before pivoting. Um, you have your $1 billion total revenue number out there for 2027, um, total company, um, buy side range of estimates for Epioxin next year. I, I know is, is pretty wide. Um, You talked on the call about maybe how the street got ahead of itself on, on Eidos and maybe there were some learnings there, you know, is getting back to the 18 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 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 apiaxa but what's what's kind of like a reasonable ceiling outcome here you know uh again as we're trying to think about you know reasonable numbers so we give guidance early for 2027 and that just gave you a window to ask these kind of questions earlier than normal i i think obviously we understand the the i'll call it variability in expectations from from investors around epioxa for next year that you're correct that our our giving the guidance that we did was an attempt to continue to make sure that that stays within the realm of reasonable And while 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 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, then scenarios like you're describing of getting back to 18,000 to 20,000 start to become potentially achievable. It's just hard to know exactly in any given period of time or quarter when that will start to happen. And as I mentioned earlier, I think we've also clearly got a lot of investment in front of us around disease awareness and attracting hopefully a larger and larger patient population to drive that awareness and get them access to therapy. 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 are 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. 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, XP 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? 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 Eidos 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 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 мы continue to change the standard of care for interventional glaucoma. We have a lot of voices now, Ithink, adding to that, which is helpful. And we continue believe that IDOS is the best therapy selection for those patients. Perfect. And so thinking about, you know, kind of rest of year, IDOS 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 maybe limit that sequential growth in 4Q and IDOS that we should be mindful of? 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 plays out, obviously, as we make our way through the fourth quarter here this year. 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 IDOS's 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? 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 IDOS pass-through status next year. That will happen mid-next year as a part of that pass-though 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-though 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 already 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 an 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've just worked to move most of those procedures into the ASC settings 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 glucose 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 and around that. And what you've seen that in some other things like the 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 and when they're passed through. Got it. So I was going to ask that, you know, what are some of those examples of drugs and ophthalmology that achieve that permanent pass-through status that give you confidence in 27 that we can we can look to yeah most of the drugs that that have not achieved it are drugs that were done in combination with cataract surgery so for example just um you know managing uh inflammation post-operatively and things like that um the drugs that have achieved it or more the the gene therapy drugs and and and some of the specialized drugs where as i mentioned earlier luke starner for example and some the drugs like that, that the drug is the procedure. Okay. Okay, got it. And then last one here, you mentioned this seemingly as hospital only where volumes are small. I guess like if 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 that would prohibit that 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 but the the vast vast majority of the outcomes do not impact the ASC setting so I'd say it's a it's very minimal risk that that that type of coding would occur got it Okay, perfect. Maybe in the last five minutes, I want to shift to profitability. 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, as Joe mentioned, Epioxa selling and marketing, IDOS DTC, certain R&D programs, et cetera, coming off a strong, profitable 3Q, getting a lot more questions specifically on the magnitude of Epioxas spend next year in particular. So walk us through kind of just like incremental investment drivers next year. You bet. 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, you know, to support the things that Joe's 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. Quite naturally, the 14 disclosed programs that we have and continuing to invest in those and greenlighting certain aspects of those programs as we get into 2027 and look at that operating expense profile. 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 a fair place to be right now in our models? Or I guess within that number, are we perhaps not fully accounting for maybe some key areas of spend that we should maybe take a closer look at? Well, I think it's a fair place to be right now. As we have always said throughout this year and throughout the last couple of years, 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 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's well positioned to drive profitability, but yet our management focus will continue to be on driving top line growth through these investments and reinvesting the business on both the commercial side as well as the pipeline side. So to the extent revenues exceed those expectations, you can imagine that we'll adjust our operating expense pool accordingly as well. It's important to reiterate that too. I I want to make sure, you know, our philosophy, as Alex described it, we're not going to hold back on an investment in any 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 continues to double down on the investments. But, you now, we are not going try to manage 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. But just keep that in mind as we think about the model in the coming forward quarters. Got it. And as a follow-up to that, maybe in the last minute or so, like how fast, Alex, you mentioned, you know, 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, I don't know how to run a business, 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 kind of talk through that dynamic of dialing up SG&A. 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&E, 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. 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&B 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. And that's what can create the volatility that we're talking about in any given quarter as you're playing catch-up sometimes. Got it. All right, team. I think we're out of time, but thanks so much for joining. Appreciate it. Thanks for the question, Tom. Appreciate it to be here.