Q3 2019 Earnings Call
Welcome to Glaukos corporations third quarter 2019 financial results Conference call.
A copy of the company's press release issued after the market close today.
Well, both at Www Dot Glaukos Dot com.
At this time, all participants are in listen only mode.
After the speakers presentation, there will be a question and answer session.
To ask a question. During this session you will need to press star one on your telephone.
This call is being recorded an archived replay will be available online and the Investor Relations section at Www Dot Glaukos dotcom.
I'll now turn the call over to Chris Lewis Director of Investor Relations and corporate strategy and development. Please go ahead.
Thank you and good afternoon, joining me today, our Glaukos, President and CEO , Tom Burns CFO , Joe Gilliam NCL, Chris Calcaterra, following our prepared remarks, well open the call into question to ensure ample time, an opportunity to address everyone's questions. We request that you limit yourself to one question and one follow up if you.
We'll have additional questions you may get back into the Q.
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 well or may occur in the future are forward looking statements.
These include statements about our plans objectives strategies and prospects regarding among other things our sales or products. Our pipeline technologies are U.S., an international it commercialization efforts the efficacy of our current and future products are competitive market position financial condition and results of operations and the proposed.
Acquisition transaction with the vitro. These statements are based on current expectations about future events affecting us in are subject to risks uncertainties and factors relating to our operations and business environment in the proposed transaction all of which are difficult to predict in many of which are beyond our control. Therefore, they may cause our actual result.
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 Investor section of our website at Www Dot Glaukos dotcom.
Well I was issued a press release on August seven announcing the proposed acquisition transaction with a b drew comments, we make today about the Pembroke proposed transaction with the vitro do not constitute an offer to sell or the limitation up an offer to buy any securities nor solicitation of any boat with respected the proposed transaction.
Chris has filed a registration statement on form S. Four with the FCC that includes a prospectus of Blocos and a proxy statement of the vitro security holders are urged to read the proxy statement prospectus and other relevant documents filed with the FCC because they contain important information.
In addition, please note that have you drew blocos and the respective directors and executive officers may be deemed to be participants in the solace solicitation of proxies from of the drill stockholders in connection with the proposed transaction information about to be Joe's directors and executive officers is included in its Form 10-K filed with the FCC on March.
21st 2019 units form S. One registration statement filed with the FCC information about five Kostas directors and executive officers is included in its definitive proxy statement filed with the FCC on April 17th 2019 additional information about the participants in the solicitation of proxies are contained in the proxy statement.
Perspective, and other relevant materials to be filed with the FCC regarding the proposed transaction copies copies of these Trent documents can be obtained for free on the Fccs website at Www Dot FCC Dot Gov.
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 is ongoing results of operations.
Particularly when comparing underlying results from period to period.
Please refer to these tables in our earnings press release as well as the investors relations section of our web site for a reconciliation of these measures to their most directly comparable GAAP financial measure with that I will turn the call over to Glaukos, President and CEO , Tom Burns. Okay. Thank you Chris Good afternoon, and thank you for joining us today.
As I'm sure you're aware by now we announced a definitive agreement to acquire or be drilled in conjunction with her last earnings call.
The transaction is progressing inline with our expectations and we continue to expect the deal to close in the fourth quarter of this year.
Earlier today, a vigorous issued a press release with their strong third quarter financial results, but we will focus today's prepared remarks, and our Q any discussion primarily on Glaukos third quarter results and for your plans given the transaction has not yet closed.
Glaukos today is pioneering new market opportunities across glaucoma, corneal health and retinal disease.
We are building these disruptive and durable franchises and large and growing areas of ophthalmology by leveraging our core competencies and micro scale and hybrid pharmaceutical research in market development.
We believe our proven strength and building new atomic segments with disruptive technologies that address important unmet clinical needs of practitioners in patients paired with our continued investment to drive new innovation leaves us ideally positioned to deliver near and longer term sustainable growth.
Our solid third quarter performance is a reflection of the progress we continue to make towards this goal consider our key accomplishments. This quarter. One we delivered third quarter net sales of 58.5 million up 33% versus a year ago quarter, allowing us to increase our full year 2009.
Team revenue guidance to 229 to 232 million.
Two we fortified our us market leadership position as our reps have begun to shift primary focus back to driving utilization and training new surgeons. Following the conversion over installed base for my sense I sense inject our next generation trabecular My micro bypass device.
Sorry, we drove robust constant currency international growth of 55% year over year as we continue to see the benefits of the international investments we have made over these past several years.
Before we advanced our industry, leading proprietary glaucoma pipeline that now addresses the full range of disease States and progressions.
Five we continue to expand and strengthen our pharmaceutical R&D capabilities to advance more than 10 internal preclinical initiatives across glaucoma, Kornya health and retina.
And six we executed financially not only with continued revenue growth in our performance, but also with strong gross margins disciplined operating investments and positive net cash flow.
Let's first focus on our strong commercial performance both in the U.S. and abroad.
Thanks to our team solid execution with the conversion of our installed base of trained surgeons from ice to entice them to inject over this past year. Our us reps are beginning to shift focus back to driving utilization of existing accounts and training, new surgeons, who have yet to adopt mix.
While remains early in the process. We are encouraged with the level of interest Bryce engine, Jack from surgeons, who have yet to adopt mix.
Among us surgeons, who are utilizing I sense inject feedback in real world results remain very positive and give us high confidence that I sense injects potential to fuel meaningful use sales going forward.
This was on full display at recent suicidal annual meetings, including the European Society of cataract and refractive surgeons in September and the American Academy of Ophthalmology last month, where the performance of our technologies, including Istent inject were highlighted in numerous sonic surgeon presentations and symposia.
These data add to our robust body of clinical evidence that is unparalleled in the makes category and now consist of 128 clinical peer reviewed studies supporting the performance over technologies that have been performed at numerous global clinical investigational sites, including a total of 49 studies on I start to inject or multiple.
Based on therapy.
We're also pleased to report another quarter of strong performance in our direct international markets driven by broad based core market growth.
Going forward, we plan to continue to support and to grow our quality experienced or U.S. surgical sales teams.
While working to optimize the reimbursement coverage and payment landscapes trained surgeons and leverage our compelling clinical data to grow makes adoptions and drive deeper penetration.
In addition to the 16 international countries, where we have a direct market presence today and continue to add resources. We're also evaluating and making initial investments and potential future direct and hybrid markets were favorable market opportunities and reimbursement pathway as exist.
While we remain bullish about our long term or us growth opportunities. It's important to remember takes time to pioneer completely new market in each of these international countries and potential unforeseen setbacks may arise through these early market building phases.
We expect with respect to our existing glaucoma pharmaceutical and surgical pipeline that is designed to address all stages of disease severity and has the potential to significantly expand our addressable market opportunities overtime, we are executing according to our plan.
I don't travel Prost phase three trials for grist is progressing on schedule, bringing this breakthrough technology closer to becoming a reality for the benefit of patients by addressing the ubiquitous problem of noncompliance with topical glaucoma medications, we continue to target a filing an FDA approval in late 2021 to 2022.
In addition to the phase three clinical trial enrollment progress in the phase to be followed data, we announced on our last earnings call that showed favorable performance and durability through two years.
We're also in late stage development with finalize designs for next generation I dose extended released implants that in a similar size and form factors and original I dose are designed to provide nearly twice the drug capacity to extend efficacy durations even longer.
We are encouraged with the continued progress in our collaboration with the western on a potential rock inhibitor to further leverage our idaho's platform and on the surgical side, we recently announced the achievement of an important milestone with the completion of patient enrollment in the Standalone, Iceland infinite clinical study to support a filing an FDA approval.
By 2021.
For our sense Supra Weve contemplate we've completed and initial examination of the pivotal data set.
While we have not yet seeing the level of safety concerns that led to the recall of the Cypass product. We have established an enviable track record for micro Invasiveness and safety as a company and therefore believe it is prudent to follow the patients in our study for an expanded extended period of time since the cypass issues did not emerge more.
Fully until later stages of patient follow up accordingly for this reason as well as other benefit to risk assessments and changing market dynamics, we have decided not to pursue a PMA filing at this time. Please note that this change has no material impact on our financial outlook for 2019 or beyond.
And in addition, we are in early preparations for the potential us commercial launch of San Tan Pharmaceuticals, micro shunt add external surgical implant device, assuming FDA approval in 2020, but micro Sean is not only a compelling treatment alternative for late stage glaucoma management, but also marks the capstone.
On to our glaucoma treatment algorithm.
We are poised to deliver a truly comprehensive portfolio of micro invasive surgical devices and sustain pharmaceutical therapies.
Capable of providing optimize treatments solution at each stage of glaucoma disease severity from the earliest manifestation to the most severe and both combo cataract and Standalone procedures.
We believe our glaucoma pipeline platforms, if approved will create a sevenfold increase in our us opportunity expanding our reached over 4 million eyes. During the next several years.
We are delighted with the current performance of our glaucoma business and its potential to deliver long term growth.
In addition to our abiding focus on glaucoma, we remain ambitious and seek to improve the treatment alternatives and quality of life for people suffering with corneal disorders and retinal diseases.
To accomplish this we are expanding the size and depth of R&D teams investing in state of the our technical equipment, forming strategic partnerships and making targeted acquisitions that complement our organic initiatives in core strengths.
First let's talk about the cornerstone of our new corneal health franchise, which is intended to be of hydro.
This proposed transaction peers to highly complimentary hybrid pharma and device organizations, combining a visual disruptive bio activated pharmaceutical solutions and R&D capabilities with Glaukos has global commercial scale proven market building and shared reimbursement expertise robust.
Nickel and medical device R&D capabilities, and extensive clinical and regulatory infrastructure.
By leveraging our core strengths, we see tremendous opportunity to accelerate a vitaros growth potential and pipeline programs, while also strengthening our own R&D expertise to propel organic development programs going forward.
We believe a vidro is an ideal strategic fit for Glaukos and we look forward to fueling a vitaros momentum to create a durable synergistic global Kornya health franchise that should serve as a powerful growth engine for our company going forward.
Our experienced team is prepared to execute a fulsome integration plan of upon closing, which we continue to anticipate in the fourth quarter of this year.
Also on the corneal health front Glaukos is developing a patented noninvasive transdermal drug delivery platform designed for use in the treatment of dry disease, glaucoma, and Cornell disorders, such as allergy blepharitis conjunctivitis and related conditions.
Early human studies of this novel delivery system have demonstrated efficacy, while limiting the side effects often associated with drugs delivered as topical eye drops.
This novel drug delivery platform adds to several organic corneal health R&D initiatives that we already have in place.
And moving on to retina.
Retinal R&D teams are developing multiple micro invasive bio erodible drug delivery platforms.
Designed to treat age related macular degeneration, diabetic macular edema and other retinal diseases.
We have three primary sustained release development projects were advancing that include an anti VEGF protein a small molecule multi kinase inhibitor and a steroid the goal of these preclinical programs is to provide retinal specialists and their patients with novel sustained pharmaceutical treatment options that offer a meaningful.
A meaningfully longer duration of effect than the current standard of care.
As a result of the notable progress were making on all fronts of our business and as we turned the corner towards 2020, we remain committed to the key investments, we're making across the business, notably with the build out of our new headquarters facilities implementation of global Enterprise systems and continued expansion of our pharmaceutical.
Andy capabilities.
Most importantly, we've been fortunate to attract top tier leadership talent with deep expertise across various specialties and will continue and to invest in our people to enhance our internal infrastructure and capabilities.
So we believe these investments will help fuel our continued growth and solidify the foundation from which our franchise can significantly expand overtime as we transition into a global ophthalmic hybrid pharmaceutical in surgical leader.
So with that I'll turn the call over to Joe to discuss our third quarter financial results Joe.
Thanks, Tom beginning this quarter, I will be including non-GAAP or adjusted basis metrics to describe the highlights of our financial performance given our potential acquisition of of Euro and other nonrecurring items I will also summarize our GAAP performance later in my prepared remarks I encourage you to review the GAAP reconciliation of these non-GAAP measures, which can be found in today's.
Press release as well as the Investor Relations section of our web site.
As noted earlier net sales for the third quarter of 2019 were 58.5 million a year over year increase of 33%.
The U.S. represented 81% of our sales in the quarter and international 19%.
In the U.S. third quarter 2019 sales were 47.6 million up 31% from the same period a year ago you a sales in the quarter, primarily benefited from continued market growth the launch of ice that inject and the competitive market developments that occurred late in the third quarter 2018.
Outside the U.S. third quarter sales were 10.9 billion, an increase of 46% from the same period, a year ago or 55% on a constant currency basis, our international business continued to outperform expectations driven by broad based growth.
Our gross margin in the third quarter was 86.8% versus 86.3% in the same quarter in 2018 gross margins benefited from elevated istent inject production levels associated with the US launch and initial inventory built we continue to expect our core gross margins to remain in the mid 80% range going forward.
non-GAAP SDMA expenses in the third quarter rose, 17% to 36.2 million versus 31 million in the year ago quarter. This rise reflect higher personnel and other costs related to the ongoing expansion of our domestic and global infrastructure and investments associated with ice that inject launch.
R&D expenses rose, 31% in the third quarter to 17.3 million versus 13.2 million in the same year ago period. The rise in R&D expenses reflects primarily the cost of additional personnel as we expand our pharmaceutical R&D capabilities development programs and within clinical research where in particular the direct cost.
Associated with the I don't trial enrollment continues to increase.
During the quarter, we also incurred a 1.5 million dollar in process R&D charge associated with the licensing agreement with and try to us.
We finished the third quarter with a non-GAAP net loss of 3.8 million or 10 cents per diluted share compared to a non-GAAP net loss of 5.9 million or 17 cents per diluted share in the third quarter of 2018.
I will now summarize our GAAP results.
GAAP net loss was 13.5 million or 37 cents per diluted share for the third quarter of 2019, compared with a GAAP net loss of 6.6 million or 19 cents per diluted share in the third quarter of 2018.
The adjustments between GAAP and non-GAAP net income are outlined in quantified in our earnings press release issued today and include costs associated with our enterprise systems integration patent litigation and related matters, a vitro acquisition and integration related costs and in process R&D charges.
As of September Thirtyth 2019, we had cash cash equivalents short term investments and restricted cash of $161.8 million compared to $137.8 million at the end of the third quarter 2018, and 149.3 million at the end of 2018.
We are increasing our 2019 net sales guidance to 229 to 232 million compared to 226 million to 231 million. Previously this guidance outlook takes into account. The 2019 considerations, we have outlined on prior calls, including our expectations for organic growth the mixed market landscape and competitive dynamics.
The new Doctor training dynamics associated with our inject launch and expansion of our international sales, which we now expect to be at least 41 million for the full year based on our current foreign currency exchange rates compared to our previous range of 38 to 40 million.
Please note. This revised guidance does not include any assume contribution from a vidro.
With that I'll now turn things back to Tom for a few closing remarks, okay. Thanks, Joe I'll wrap up by reminding everybody that our goal at Glaukos says to build durable disruptive franchises in large and growing opportunities, where we can leverage our core competencies in microscale surgical sustained pharmaceutical and hybrid platforms across glaucoma.
Corneal health and retinal disease are promising organic initiatives paired with our strategic expansion plans combined to create a hybrid pharma and device ophthalmic leader, which we believe is ideally positioned to deliver sustainable long term growth and to create meaningful shareholder value for years to come.
We're confident that the investments, we're making today will drive new innovation of disruptor therapies to serve the vision care needs of physicians and their patients for many years to come so with that I'll open the call two questions operator.
As a reminder to ask a question you will need to press star one on your telephone.
Please be advised to limit your questions limit yourselves to one question and one follow up.
If you would like to withdraw your question you May press, the pound or how sticky.
Our first question comes from Brian Weinstein with William Blair. Your line is open.
Hey, guys, sorry for the background noise I'll try and talk quickly here.
For the guidance on the Q4 guide I think you'd only implies about 1 million dollar sequential Bob.
So would have been different than where sort of the.
Guidance reset after last call. So can you just talked about.
If there's anything that was maybe stronger in Q3, and maybe a little weaker in Q4, just kind of the back half dynamics, there and then I'll ask a follow up here in the second thanks.
Sure Brian It's Joe let me I'll start that often if Tom occurs when I add anything they can to that so when we think about the fourth quarter really the second half.
As you can imagine is we're working our way through the year I can say kind of the following first.
From a pricing standpoint things have remained pretty stable over the course of the year and nothing really changed in terms of our expectations there for the fourth quarter.
Second we think about the overall kind of market development.
And growth.
What we're experiencing nothing's really changed there either from what we what we have suggested over the course of the year in as we think about the fourth quarter were still solidly on track for mid teens market growth.
Yes, I think when you'd the one thing that would probably be is shifting pieces and it's a small relative number here is we have to take into account our latest assumptions around the trying and trialing.
Of hydrous.
The timing of the reps gradual shift back to treating new surgeons, how much of that will impact the fourth quarter versus 2020 et cetera, and as we dial that in we obviously landed on the guidance. We did both for the overall companys performance as well as the U.S.
Got it and then I know your guide in February but can you just give us a little bit more detail about some of the factors that we should be considering.
We're adjusting our model for next year for Standalone Qualcomm's and also the combined entity.
Yes, sure Thanks, Brian so.
You said it in the context of 2020, obviously, we'll give that guidance more formally when we get to the Q4 call in late February as we think about the primary puts and takes if you will the big buckets here.
Redrow and it'd be drew integration I'll come back to that and in a second.
The obviously timing of Santana Microsoft launch.
Probably most importantly in combo cataract glaucoma.
I think we expect.
Fair amount of more of the same continued international growth.
Sitting here today, we'd have expectations of continued stable pricing certainly the reimbursement.
That's come out for 2020 would suggest that should be the backdrop for the market.
And then I think in the U.S specifically.
While there is the competitive trying and trailing as we sit here today, which is still in the early days of our reps getting back to playing offense.
I think we do believe that the U.S. migs market growth.
Of at least mid teens in 2020 should should be achievable for us. So I think thats a big Big picture you know as you think about a fee drove.
And again, we'll get a lot more detail on this when we get to the fourth quarter call.
I think the if were successful in closing that transaction I would just.
Suggested folks are our conservative when thinking about it you know weve Tom has been pretty clear about some adjustments will make to the go to market strategy, especially on the capital equipment side and what that can mean from a modeling standpoint. So I was just encourage folks not to get ahead of us on on that we will give a lot more education, we get to that fourth quarter call.
Okay. Thanks, guys.
Thanks, Brian .
Our next question comes from Robbie Marcus with JP Morgan Your line is open.
Hey, this is actually Allen on for Robby.
Had a quick one you kind of old committed to be competitive disruption that kind of start playing out near the end with third quarter and I guess given that this for the foreseeable future is going to be kind of the situation. I was wondering if we should expect maybe little bit of benefit in fourth quarter and maybe if it is bigger benefit in 2020.
Especially given the kind of read through that might have to the Santa Microsoft. Thank you.
Yes, I am assuming Allen you're are you referring to the to the.
The xin recall and how that what that could mean for santen and the Microsoft.
And even just like kind of like a read through maybe to inject I know, they're not apples to apples in terms of the patient population, but any potential benefit that you could call out.
Hey, Allen this is Chris and thank you for your question.
You know this indication present is very different than it is for us to interested in check and we really don't view that product is a competitive threat or.
Working in our space there may be some small upside but.
For all intents and purposes, we don't see that is an upside benefit for us.
Yes.
Got it and then I guess I had a quick follow up on high dose I know you reiterated your timelines for kind of that.
Approval on May 2021, early 2022 and that the trials on schedule I guess when it comes to maybe seeing formal presentation or update on either the phase two or the phase three data do you have any additional color on when we might have that.
Well again this is Tom and my code would be consistent with my past statements them.
And that is we really presented a full some.
Review of the interim cohort data.
At the meeting of JP Morgan in January of 2018, and I also gave a.
A fundamental review of the topline data to your data that we had late breaking.
Analysis of the last.
For the last quarterly earnings call.
And I think what I've said, all along is that we're in the privileged position of being able to husband. This data as we approach launch and so.
Sure proprietary reasons and to make sure and for competitive reasons, we'll continue to evaluate but it's our intention right now to to not publish this data.
For.
For the foreseeable time, and we'll continue to weight on the phase three data, which again is going to be the most compelling and most important to the commercial launch of the those product.
Our next question comes from Larry Biegelsen with Wells Fargo. Please go ahead. Your line is open.
Hi, This is actually Kevin partially on for Larry Good afternoon, guys and thanks, so much for taking the questions.
The first one is I wanted to tease out a little bit more on the trailing headwind from events in 2019 and 2020, you said in the in the prepared remarks that that was.
Is baked into 19 guidance than you said that the company probably has 20 sales reps earlier this year.
The question really is any update on competitive dynamics in the field you would call out different on in Q3 versus what you're seeing heading into Q4 in 2020.
Thank you.
Hey, Kevin This is Chris someone to address this up front and then I think Joe will add some comments.
Yeah.
Hi, just to the best of our analysis excuse me advances to the best of our knowledge has similar in the mid Twentys to upper 20 sales reps. So theyve added some.
And as a result of that you're seeing more trying and trailing.
In the third quarter than you did in the first half of the year things are largely in line with what we expected.
But because of this there was a bit more.
More of a headwind from a competitive standpoint during the quarter and with more people I would expect that to continue through the remainder of the year.
With all that said we continue to be.
Very pleased with the performance of ice 10 inject.
The fact that we're now moving through.
Our strategy of upgrading our existing I stent users.
To ice stunt inject in moving more towards adding new docs in increased.
Increasing utilization within our existing accounts and play more offense, we're very pleased with the results of this strategy and we continue to see new doctors, who had been on the sidelined with migs coming in and training I stand inject because of the elegance of the procedure of Straightforwardness of the precise.
Feature and certainly the efficacy of the procedure.
And then Kevin I'll, just I'll just add on there if you think back to our some of our prior calls in our commentary here and we said really in the first half that.
Hi, Ventas or hydrous had been a little bit behind what our expectations were coming in into the year I'd say it that in the in the third quarter. It really it appears they finally kind of got their salesforce. The size, we were expecting them to have coming into earlier in the year.
As Chris mentioned that does come with more trying and trialing inherently but but no real shifted how we view the dynamics in the context of the into 2019 here 2020, or the long term regarding the marketplace dynamics.
Okay excellent guys. That's super helpful. If I could shift actually to just squeezing in an international question.
I wanted to gauge what you guys are seeing on volumes after the UK facility reimbursement cod.
And then be kind of what are you doing to reverse these cod.
If you are doing anything and then you had mentioned on the last call that you are pretty early in France.
Can you talk about what type of opportunity the French market represents an abuse.
Bump from that this quarter. Thank you very much.
Okay. Kevin This is Chris some im going to start this on I think Joe as some commentary afterwards, but.
We did see in impact of the cutting the tariff.
In the UK, we see it is a modest headwind, but we would expect more of a pronounced headwind through the subsequent quarters.
They are coming up.
In terms of what we're doing.
We're working with the ophthalmic leaders in the societies in.
Other organizations within the UK to try and get and secure a more appropriate tariff and we're hopeful that that will happen, but you never know.
These things can take some time, so theres efforts in place to try and get that tariff back to a more reasonable a number that.
In terms of France.
We're very excited about what's going on there. It's early stage, but we've been very pleased with the real results. So far we have expanded the team a bit and we will continue to follow the same blueprint there that we've utilized throughout.
The rest of the World and we'll continue to.
Add resources is necessary to drive the business there they were one of our top contributors.
In the international market as Joe mentioned, it was broad based but in terms of.
Countries that were new to.
The.
But growth noticeable growth, France, certainly was one of those.
And I'll just tell this AD from a financial perspective.
What Chris said, we definitely saw all the headwind to growth emerge in the UK over the course of third quarter, and and would expect that to persist at least through the end of the year and into the beginning of next.
But thankfully the third quarter as you see from our results we were able to overcome that through the contributions of most of our established countries in particular.
With the addition, now of France in Japan in a more meaningful way.
Perfect. Thank you so much guys.
Our next question comes from Matthew O'brien with Piper Jaffray. Please go ahead. Your line is open.
Hi, guys, it's Adam on for Matt Congrats on a quarter and thanks for taking the questions.
My first question is just on the Q3 performance in the U.S. was just hoping to get a better sense for.
What drove the U.S. growth in the quarter between utilization at existing centers and and unique new account adds and I think you've talked about some pricing benefit from the conversion to.
Senate Jack So just was hoping to frame all that up and then I had a follow up.
Sure Hi, Adam It's Joe I'll start off the guys could add in any additional color when it comes the third quarter.
Candlestick candidly it was a lot more of the same from what we've seen over the course of this year right.
Sort of market development side of things continue to be kind of inline with where we expect them in that mid teens.
Range.
Pricing dynamics remain pretty stable I'd say, if any of them there might have been a very modest sequential headwind in pricing in the us primarily because of pricing dynamics around legacy ice that normalizing some contracting efforts competitive dynamics on on the margin et cetera, but very modest.
I think when you think about whats contributor driving that it's sort of what you'd expect it. It's a shift from what was probably more of a same store sales driven exercise.
Heading into the year into the first half to now up more of a volume mix, it's driven by both.
The reps getting back out there and playing offense and adding new doctors.
Combined with with with same store sales.
Growth, having said that it's as I said earlier, it's still early days right I mean, the reps are out there doing it we're encouraged by the funnel we're encouraged by their activities.
You'd expect to see more of that benefit play out in 2020 than 2019, but so we are encouraged by what we're seeing out there in the field.
That's really helpful. Joe Thanks, and then for my follow up just a question on micro Sean I was hoping to get your thoughts on the topline results from the US pivotal trial, where the safety and efficacy data inline with expectations and then just from a timing standpoint, sansone I think release quarterly results today and from what I.
Until the company is not yet made the DNA submission. So is that correct and I think I heard you say on this call launch timing in 2020, so should we be thinking about the back half the year. Thanks for taking the questions guys.
Yes, I'd be happy too and this is Tom So let's talk first about the topline results from Santana and I'll give you our perceptions and not sand tens but.
We really like the data that we saw with the micros, Sean to do you think about at the FDA require them to be able to compare micros, Sean against Tribeca like to me, which really is a herculean predicate.
But you're back you like to me is the gold standard and it is the obligation of the sponsor to comply with the fees.
Rules and so they chose to go forward on the basis to two to conduct the clinical study when you look at the data I like what I see we're looking at really deep reductions in intraocular pressure on the order of eight to nine millimeters from pretreatment means we're looking at baseline post operative pressure.
There's a 14.2 millimeters.
33% reductions in intraocular pressure and significant reductions on the order of 81% in medication burden.
So when I look at fees.
Compared them to the nearest kind of cousin in terms of competitors and I get very bullish about what the opportunity is in the marketplace and so when you look at the data I think you have to look at it from a dual standpoint, not only in terms of efficacy versus the predicate of trabecular victory, but also in terms of safety.
In terms of safety I think the results for Microsoft were seller. If you look at the results there the the rates of Hypotony and corneal bleeds leaks and other sequentially were really de minimis compared to what we see with with trabecular Jeremy.
So I think that will benefit to risk will be what comes under the contemplation of the FDA and we're hopeful that these data become the basis for an FDA approval in terms of timing.
Again, Santana said, they're looking to file this pmeight by the end of this year. So I think by every expectation what I've guided the street two is to not expect say an approval any earlier than late next year. So I would continue to stay with that as the as the guidance, but we remain very bullish in it.
Again as you do your channel checks and I would encourage all every investor on the phone to do so.
Hold as some glaucoma specialist and ask them about this Microsoft product, we really do believe it's going to be a compelling alternative for late stage refractory patients.
That's very helpful. Thanks.
You're welcome exam.
Again, if you would like to ask a question. Please press star one on your telephone.
Our next question comes from Jon Block with Stifel. Please go ahead. Your line is open.
Great. Thanks.
Good afternoon, guys I think maybe I'll just start off.
Joe This one might be for you, but in this year in 2019 price was part of the equation due to like the late 18 rollout of inject and I'm not asking for the amount, but just want to take a step back curious if price is going to be a component to the overall 2020 equation as we start to show to sharpen our pencils and think about our models for for next year.
Yes, John it's Joe.
I think as we've sort of said all along from a price perspective. It was a very modest premium there's puts and takes in that right. So some of that comes with expensive some price degradation potentially on the ice that side right. So when you think about on a blended basis you have to have to look at that in fact of that in if you think about the remainder of 2019 and even.
Into 2020, I think price plays a much lower and potentially.
Not really a driver of the overall growth I think sitting here now our expectations in the fourth quarter would be that prices in a relatively stable place from a year over year over year perspective, and as I mentioned that there's a handful of things that are contributing that but primarily it's that normalization of the legacy ice and pricing money Europe .
Year basis, as well as contracting and competitive dynamics that would put us there.
Okay and.
Our next I'm, just going to stick with a personnel.
Tom we'd you're going to holding those docomo guys and they certainly are excited for Microsoft for what Thats worth but also in the PNM, Joe Im doing sort of real time, math, which is always dangerous I'm backing into a fourth quarter US rep number of about 49 to 50 mail, which is up 10% year over year, what would be about 26% of your overall use.
Number for the year, which is a bit below 27%, I guess, where I'm going with it is a 10% growth in the 26 instead of 27 I guess first is in the right ballpark and two is slightly below that 27, just due to some of the competitive dynamics that you alluded to earlier thanks guys.
Yes, Thanks, John I mean, I think couple of things first you did unpack a fair amount there. So let me try to go through it. The first thing when you when you look at it from an a year over year growth perspective in the fourth quarter.
19, you have to factor in that you'll recall, we indicated previously that we saw at least the million dollar benefit in the fourth quarter of 18 from restocking associated with with the inject launch.
But other than that I think as we as I alluded to earlier.
Anything it continues to be pretty much ordinary course for us in the context of pricing in the context of market development activities in the overall kind of expectation for mid teens market growth.
The one thing that it is I alluded to are we talked about in more detail earlier is that the now slightly larger commercial organization advantest trailing trying trying and trailing associated with that.
And we'll make sure we continued to be cautious with respect to what that means in terms of the near term dynamics, even if it doesn't really change our view over the medium or long term.
Okay fair enough thanks for divest.
Thanks, John .
And our next question comes from Ryan Zimmerman with BP.
Please go ahead your line is open.
Hi, Thanks, This is sam onto our Ryan.
Just.
First question on something is rolling out.
Crs with the I sent in Jack can you.
Commented on plans to bring that to the U.S. and what impact you're seeing on the European business from that.
Hey, Sam this is Chris and thank you for your question.
We are just in the early stages of rolling that out in a controlled manner in Europe .
Our plans are too.
Hopefully gain regulatory approval in us in other countries sometime next year and it would launch it sometimes thereafter, so it's really too early to say on how things are going in Europe . We just started.
At our approach would be to file with the FDA and other agencies across the world and launch sometime thereafter.
I wouldn't really consider this to be a material item in the context of how we view 2019 2020.
This is this is an ordinary course product enhancement that we've been planning for some time not something significant way, we think about it from a forecast for modeling standpoint exactly.
Great. Thanks, and then just.
With the reps going back on offense, you're going to characterize what percentage do you target dot population.
Utilizing injector I stand right now on how much longer ramp to they have before you're close to getting close to penetration. Thank you.
So as we.
Target new physicians, almost always that's going to be with the istent inject versus I spent.
As debts the product at most of them, we'd like to try for all the reasons that we've described before.
Straightforward nature of the procedure.
Lot of these doctors who have not.
I am Thunder Migs bandwagon.
Our looking for that product because it does have a higher ease of use better efficacy because there's two stance.
So the majority if not almost all of the new starts or Istent inject.
And I think Chris has been on the record quite a bit that ultimately in the market in the us being a different we would expect 80% to 90% of of the volume to come from inject.
We're not there yet, but but we are getting pretty close making considerable progress.
There are no further questions at this time I will now turn the call back over to the presenters for closing comments.
Okay I want to thank everyone for your time and attention today and thank you for your continued interest in Glaukos Goodbye and have a good day.
This does conclude today's conference call. Thanks, again for participating and you may now disconnect.