Q2 2020 Glaukos Corp Earnings Call
Yeah.
Welcome to Black Hills Corporation second quarter 2020 financial results Conference call a copy of the car companies press release issued after market close today, it's available at Www Dot Com Dot com. If you like to actually question, especially you May proceed stores that are number one on your telephone keypad.
This call is being recorded at an archived replay will be available online in the Investor Relations session section at the Www Dot Glaukos Dot com.
I will talk over to Chris <unk> director of Investor Relations and corporate strategy and about one.
Thank you and good afternoon, joining me today are blockers, President and CEO, Tom Burns CFO, Joe Gallium and COO, Chris Calcaterra. Following our prepared remarks, we'll open the call to question to ensure ample time, an opportunity to address everyone's questions request that you limit yourself to one question and one follow up if you still have additional quite.
And 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 participate well there may occur in the future of forward looking statements. These include statements about our plans objectives strategies and prospects regarding among other things are still.
Our products our pipeline technologies are U.S. and international commercialization efforts the efficacy of our current and future products are competitive market position.
So condition and results of operations as well the expected impact of the coated 19 pandemic on our business in operations.
These statements are based on current expectations about future events affecting us and are subject to risks uncertainties and factors relating to our operations and business environment, all of which are difficult to predict.
Many of which are beyond our control.
Therefore, they may cause our actual results 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.
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 comparing underlying results from period to period.
Please refer to the tables in our earnings press release that is available on the Investor 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 block as President and CEO Tom Burns.
Okay. Thank you Chris good afternoon, and thank you for joining us today.
I hope you in your families are staying healthy assays during these unique times.
Well, we talked about second quarter performance on the current trends in our business.
To provide an update on what we've been doing it got closer responses rapidly changing environment and how we're applying the lessons we've learned to advanced on our key priorities and to best serve our customers going forward.
The response plans, we prioritize we've implemented over the past several months.
Including protecting the health and safety of our employees and their families supporting our customers preserving job globally protecting core research and development projects and maintaining our strong financial operating position. Following the pandemic have allowed us to stay focused and advance our key strategic.
Priorities.
As a result.
The line fundamental prospects remain strong and we're well positioned to emerge from even stronger more efficient and more capable company as a result.
I want to recognize the resiliency the dedication in the resourcefulness of our employees around the world.
We make up the strong foundation of our disruptive franchises and glaucoma corner health and retinal disease.
Our employees have risen above and beyond the moment in new and creative ways to maintain are important work and move the company their families and their communities for.
One example of that exemplifies this effort was a successful implementation of our new tier one ERP system during the second quarter.
Thanks to the creativity hard work and sacrifice of many employees throughout Glaukos. We successfully went live on Oracle across the entire company operated in a virtual work environment during a pandemic.
This was an essential step in our ongoing preparation for future growth and important achievement organization. During these unique times.
I also want to expose our gratitude to our customers around the world remain dedicated to serving their patients.
It's clear providers are committed to adapting their practices to enhance safety measures to ensure the safe and effective treatment with the patients.
Return profile much interventions and.
And we for the fall to one side, though.
Well, we're encouraged that many of our field based sales professionals are being a lot of back into accounts to reengage with our customers in person.
The complimentary virtual engagement of physicians that and practices will endure.
With this in mind, we have invested in customer oriented webinars hosted by well respected ophthalmic surgeons designed to support doctors as they navigate this ongoing crisis.
We have developed and implemented new training educational programs using virtual platforms.
Provides valuable education resources through many peer to peer virtual settings.
We've expanded the use of remote online training modules regional conference calls virtual interact with case based tutorials and various other customer support programs.
We have identified opportunities to collaborate with a private practices to manage ongoing cases are used in a variety of digital platforms to help train new surgeons and virtually procter ongoing cases to ensure a procedural proficiency and optimal outcomes.
And we had held numerous virtual clinical investigator meetings to help assure patient compliance with clinical trial protocols and drive enrollment efforts where applicable.
Confidence that these efforts have helped deepen our customer relationships and prepare us for the future well beyond the cobot 19.
During this time, we have also maintained operational resiliency through streamline manufacturing assembly processes.
In order to consistently provide product for customers who depend on us.
I'm pleased to say that both of our main sites continue to operate during this period, albeit differently.
And our supply chains have experienced minimal disruption to date.
Moving onto our financial performance net sales in the second quarter were 31.6 million, reflecting the material disruptions for business discussed during our last call.
As healthcare system shifted resources to the treatment of Cobot 19, and government restrictions on elective procedures and therapies were implemented throughout the world.
These restrictions led to the increasing deferral of counteracted keratoconus procedures and global sales trends. So trapped in mid April and approximately 10% of levels achieved prior to the cold in 19 outbreak.
Despite the challenges associated with the ongoing pandemic and the material impact for a second quarter net sales were pleased by the financial discipline exhibited by the organization in the corner and encouraged by increasing month to month recovery in our sales trends in May and June as you are stakes in global markets began to reopen and provider.
Began to restart elective procedures.
He sales trends were experienced across our Qs glaucoma international glaucoma. According to Howe franchises, and we actually that the second quarter with a revenue run rate that was approximately 80% of pre cold it averages.
Joe will provide additional details on the spending a recovery trends later on this call.
But I want to spend a few minutes on how we see the near term market dynamics and opportunity for Glaukos.
Not surprisingly, we continue to see a variety of potential synnex scenarios over the remainder of 2020 that are highly dependent on the virus itself within our key geographies.
While the worse is behind us in the vast majority of these scenarios. It is important to note before elective procedures local market dynamics continue to matter.
Surgeons and spikes lead many patients to sheltered home, regardless of government mandates and lead to an increase in scheduled surgery cancellations and could even results in the temporary closure facilities.
The absolute level of recovery there can be achieved during the ongoing pandemic is also impacted by several downstream considerations that we are monitoring closely first.
Primary care visit stop Thomas Jefferson Ophthalmologist are key to diagnose and cataracts glaucoma and keratoconus.
New patient demand headwinds may persist as primary vision care visits are delayed or deferred.
Secondly, the sustainability and efficiency a procedural volumes can be impacted by the side of service side restrictions and operating protocols.
In general we're seeing the physician office and ambulatory surgery center settings recovering at a faster clip than hospital base procedures as you might expect.
The social just unseen and other enhanced safety procedures create a modest headwind across all sites on average.
As a reminder, all of our glaucoma technologies are used in outpatient surgeries, 80% of which in the United States are estimated to be performed.
Inventory surgery centers.
Yeah for trucks a solution for keratoconus is primarily performed in the physician's office.
Third a key element of our ability to grow the market. This new doctor training in our glaucoma franchise and new for trucks. It starts in corn health.
Well obstacles exist, we have been pleased with the trends in recent weeks as our commercial organization is beginning to deliver again on all fronts.
As you put all this together we continue to expect the multiple cobot related headwinds and Tailwinds will drive a modest recovery from here over the remainder of 2020.
That may not ultimately materialize into more normalized levels for cataract and carry cones procedures until a vaccine or therapy or therapeutic solution is in place.
Setting these colder 19 dynamics aside I'm certain that our foundation has only strengthen the recent months at the end of the today, our commercialized ophthalmic solutions address chronic diseases that only worsen as patients are left untreated.
Given the medical necessity as these interventions we remain confident most of the deferred procedures will ultimately do perform in the future as the pandemic subsides, even if remains difficult to predict the specific timing and slope of this recovery curve.
As a testament to the confidence in the future we want to reassure our stakeholders that we are continuing to invest in our future. We continue to prioritize and advance our near term clinical pipeline.
Right right know programs during the second quarter and we are gradually restoring many of our other earlier stage initiatives.
Our capital position has never been stronger to support these investments.
During the second quarter, we successfully completed an offering of convertible senior notes and cap call transactions raising total net proceeds of $242.2 million.
This successful raise fortifies, our already strong capital position and fuels us with the financial flexibility to remain on offense to invest in our near and longer term growth initiatives expand our global infrastructure strengthen our pharmaceutical expertise upgrader enterprise systems advance our core R&D program.
Funds and support our clinical programs as they progress towards becoming commercial realities.
As you know we believe we have one of the most comprehensive pipelines in ophthalmology, which consist of 13 publicly disclosed programs in various development and clinical stages and another 10, yet to be disclosed development programs also underway.
We believe these pipeline programs are robust and will support a healthy new product launch cadence with the potential to significantly expand our addressable market opportunities over the coming years.
A number of these pipeline programs are in active pivotal clinical trials, including I. significant happy on an item as TR.
For these trials, we continue to work closely with our clinical investigators in the FDA to mitigate any potential impacts due to colder 19 disruption.
Clinical trials for us than incident that beyond have already been fully enrolled although Copa 19 has caused some modest disruption and patient follow up plans. We believe the initiatives we've implemented to ensure study viability our effective.
We continue to believe that these product candidates are on track for our previously discussed FDA approval targets of late 2021 and 2022, respectively.
Fried dose Workover 19 led to a temporary pause on new patient enrollment our focus has been to really ignite enrollment momentum that we built prior to the pandemic shutdown.
We're encouraged that the majority of investigator sites are now reopening in treating patients and we continue to analyze enrollment trends and our timeline expectations for potential FDA approval in 2022.
We also remain in early preparations for the potential us commercial launch of the San Tan Pharmaceuticals, Presser flow micro shot.
An elegant have external surgical and planned for late stage clinical management.
We have already begun wrapping up our commercial preparations for this promising opportunity following Santander successful U.S.P. M&A submission announced earlier this quarter.
In addition to these new technologies that we aim to commercialize over the coming years. We're excited to announce that we recently received U.S. FD, a supplemental PMDA approval for I sense inject W.
I sense inject W builds upon the proven foundation for to central back to the might micro bypass technology.
Feature enhancements such as wider spend flange I sent to inject W. Is designed to offer a comic surgeons. The same established safety and efficacy of I spent in check.
He added benefits designed to optimize that visualization, while maintaining a truly micro scale foot footprint streamline implantation.
And delivering procedural predictability.
We're excited about the us commercial prospects for us that trajectory you based upon the profit positive market receptivity and surgeon feedback card and select international markets, where I've mentioned Jive W has already been launched including in Germany and in Australia.
This next generation product will supersede the current ice tend to inject device globally, and we intend to commercialize initial or commenced initial commercial launch activities in the US later this year.
We're also planning to commence a broader European commercial launch a license inject W. later this year. This adds to a number of recent accomplishments in our international markets that position us for long term growth, including I sent and Jack regulatory approval in Japan.
Standalone indication approval in Australia, and continued progress across many of our key market access initiatives.
On the coil how front I am extremely pleased with the integration project progress as we execute on our corporate milestones with commercial strategies.
We continue to execute on a commercial integration plans through cross functional train key account targeting and market segmentation deployment and we are seeing benefits of these efforts within market access our team in conjunction with our customers has made considerable progress as they work with providers and payers to optimize the for trucks are being.
Excellent landscape train office staff on claims and contractual processes and expand our claims program.
While we remain in the early stages of unlocking the combine organizations for potential we are encouraged with the market's receptivity to our fully integrated expanded commercial organization and the customer friendly initiatives we've introduced.
In summary, I am proud of the actions we've taken as an organization to navigate through the cobot 19 pandemic and support our customers clinical investigators and employees over these last this past several loans.
These actions leave us well positioned for strong recovery going forward and I am confident that the longer term fundamental prospects of our business remains strong as we seek to create a unique strategic vision care leader building thriving franchises in glaucoma, Kornya Hall, and retinal disease with novel therapies that do this.
We're up conventional treatment paradigms improved patient outcomes and create new robust markets and opportunities.
So with that I'll turn the call over to Joe to discuss our second quarter 2020 financial results and Joe.
Thanks, Tom as a reminder, I'll be discussing our financial performance on a non-GAAP or pro forma basis and will summarize our GAAP performance later in my prepared remarks.
I encourage each of you to review our GAAP to non-GAAP reconciliation, which can be found in today's press release press release as well as the Investor Relations section of our web site.
Similar to last quarter I will attempt to provide brief perspectives on our second quarter.
Estimates of our current operating performance and where possible build upon Tom's views on how we expect things unfold as we progress over the remainder of 2020.
Well those net sales for the second quarter of 20 study were 31.6 million.
As we discussed on our prior call procedures came to a virtual halt in nearly all of our major direct markets globally. As we entered April where we experienced a performance trough that was approximately 10% of our pre cobot levels. We were encouraged with month to month recovery trends in May and June exiting the second quarter with a revenue run rate there was approximately 80%.
Pre kind of a daily averages.
Now turning to our U.S. Lakota franchise, specifically, our second quarter U.S. glaucoma sales were approximately 18.3 million to put this in the same context as the overall business our U.S. glaucoma revenues trough in April at approximately 3% of our prior daily averages before recovering in May and June and we exited the second quarter.
At approximately 80% of our Brito the daily averages.
Internationally, our glaucoma franchise delivered second quarter sales of approximately 6.7 million.
Cobot 19 impact or international Buck on the business as vary by market, but our overall performance reached in April trough of approximately 25% of our pre cobot daily averages.
During the quarter, we experienced the most stability in Japan and the recovery we experienced in May and June was broad based with exception of Brazil, where the cobot situation remains challenging.
Our international Buck on the revenues exited the second quarter at approximately 65% up for our pre covert daily averages.
In corneal health second quarter net sales were 6.6 million the quarterly health business, which we believe benefits from a younger patient population and physician office based therapy experienced in April trough on about 20% of pre Cobra daily averages.
The second quarter performance was almost entirely driven by U.S. looks breakfast sales of 5.2 million, but we were also very pleased to see continued strength in new U.S. starts late in the second quarter and early but continued signs of a synergistic benefits of our vitro transaction.
Our final health revenues also recovered in May and June and we exited the second quarter at approximately 85% of our pre Toby Daley averages.
Going forward, we are encouraged by the recovery trends in virtually all of our key geographies and therapeutic areas, having said that we recognize the present environment remains fluid and uncertainties exist as such we remain cautious on the magnitude and pace of the near term recovery from here.
As Tom mentioned the environment in logistics for our customers from a new patient consultation and surgery perspective may have an impact and some patients, particularly the elderly may continue to wait as long as possible.
Our non-GAAP gross margin in the second quarter was approximately 78% versus 87% in the same quarter in 2019, which largely reflects the impact of fixed overhead costs that are not absorbed into inventory and the lower revenue base achieved in second quarter. It is worth noting that our non-GAAP adjustments to Cogs do include.
Substantial adjustments related to the vitro acquisition accounting.
Our overall non-GAAP operating expenses were approximately 52.3 million in the second quarter 2020 down 18% sequentially compared to the first quarter as noted in our prior call. We move quickly in late March as the Cokemaking situation unfolded to implement significant temporary cost savings initiatives our leadership in employees responded glow.
Italy and displayed strong financial discipline throughout the quarter.
Savings or a combination of discretionary and variable expenditures of course and are not necessarily meant to be permanent but were designed to preserve jobs and core R&D programs. During this period.
Going forward, we expect our operating spend levels to tick back up over the remainder of this year as we removed some of the temporary cost cutting initiatives and restore expansionary spending.
Our non-GAAP SPD expenses in the second quarter were approximately 33.6 million down 18% sequentially compared to the first quarter and our non-GAAP R&D expenses in the second quarter were approximately 18.6 million down 19% sequentially compared to the first quarter.
We finished the second quarter with a non-GAAP operating loss of 27.6 million and a non-GAAP net loss of 27.0 million or 61 cents per diluted share.
Our GAAP net loss was 39.9 million or 90 cents per diluted share for the second quarter 2020.
We invested in approximately 2.7 million of capital expenditures in the quarter lower than our initial plans as we temporarily differ a significant portion of our planned 2020 spend particularly those related to facilities expansion and consolidation.
Looking ahead, we expect our capital expenditures to increase substantially over the next four quarters as we move forward with those facilities plans.
As of June Thirtyth 2020, we had cash cash equivalents short term investments unrestricted cash of approximately 404 million, which includes total net proceeds of approximately 242 million from our senior convertible note offering and capped call transactions compared to 173 million at the end of the first quarter 2020.
As Tom mentioned during the second quarter, we completed an offering of senior convertible notes and capped call transactions. The seven year notes will bear interest at a rate of 2.75% per year and mature on June 15, 2027, unless earlier converted redeemed or repurchase.
The initial conversion price for the notes is approximately $56 a 10 cents per share baucus common stock. However in connection with the pricing of the notes we entered into a cap coal transactions and a cat price up $86, a 30 cents, which represents a premium of 100% over $43 fifteens at closing price at the time of the transaction.
Finally, we have tried to provide insights where possible and how we're thinking about the range of potential outcomes for the third quarter and the remainder of 2020, but we will not be providing updated guidance today as a specific extent or duration of the impact of the Kobin 19 outbreak on our future financial and operating results remains unknown.
With that I'll now turn things back to Tom for a few closing remarks, Tom Alright. Thanks, Joe.
The progress we are making to advance our key strategic priorities reflects the commitment of our teams to rapidly to just during the koeppen 19 pandemic and to ensure we are moving our company customers and communities forward.
While the extension duration of the current challenges are difficult to predict I am confident we will manage through the current situation with the same resiliency and effectiveness as we've managed through past challenges, leaving us well positioned for strong recovery going forward.
We continue to advance our vision to establish glaukos as a unique strategic vision care leader.
Tremendous potential for long term growth and profitability.
So with that I'll open the call to questions operator.
And at this time I'd like to remind everyone I'd like to update question. Please press Star then one on your telephone keypad again that is star one will fall. So just a month gunpowder keeney roster.
Your first question comes from the line of Brian Weinstein with William Blair.
Hey, guys. Thanks for taking the questions good afternoon.
Hi, Brad was area.
Hi, yes.
I'm curious.
What have you seen as far as.
Competitive dynamics post kind of reopening here have have.
Dynamics in the field changed either.
Hey in glaucoma or corneal how often.
Are there any different tactics that are being used or what is the basis of the competition, how has that changed and as pricing changed at all as a result of.
Actually some additional competition as well.
Hey, Brian This is Chris.
It relates to competition, you know, it's really stable and unchanged since the last time that we spoke.
For the same.
And from a pricing perspective really is similar answer it over the course of the quarter.
Very little change in pricing.
Versus the prior periods.
Great and then.
Just just to confirm my comments that you guys made on high dose and trying to I think you said reignite the momentum in the enrollment there can you talk just about where you guys were in that enrollment process prior to covert 19 and.
I think you made the comment about analyzing trends and I'm thinking about what that might mean for FDA approval. In 2022 is there a possibility that that then it's going to get pushed out a bit as a result to this where do you think you can make up fees fees.
Cost patients.
Hey, Brian This is Tom and so what I've said before I'll repeat here I mean, we were rapidly moving toward concluding the clinical trial really ahead of our expectation.
Before the transient disruption caused by coated 19 clearly that.
Shutdown the momentum we now have reengage with most of our clinical investigators are reengaged, they're facing a little bit of headwind as you can imagine a patient selection.
Seconds to return as well as serving their own needs by doing pent up cataract procedures going forward that had been in the queue.
So we're monitoring closely and we're working hard to reestablish the momentum that we had prior to covert 19.
We clearly are moving hard to be able to establish ourselves put ourselves in a position to meet that 2022 timeline.
And we're going to continue to try to reignite. This to me. This forward as fast as we can I will be watching this closely as you can imagine over the next couple of quarters and I will keep investors.
More than adequate informed.
Yes.
Okay, great. Thanks, guys.
That's correct.
Your next question comes on line of Robbie Marcus with Jpmorgan.
Hi, guys is actually Allen on for Robby.
I had a question kind of on trends going forward and a little bit of color on the quarter itself. One of the dynamics that we've seen cloud at some other medtech peers is a decent amount of strength in the quarter being driven by procedures that may have been deferred from late in March or even from earlier in the quarter. So is there.
Any color or at least qualitatively or directionally. They can provide on how much of the outperformance in the quarter came from those kind of deferred procedures versus.
Natural growth.
Hi, Alan it's Joe ill take that it Chris ones Christmas editing he can I think part of the the the qualitative caution that you here.
From us in the prepared remarks around the path forward from here is really born from the question you're asking I think.
The mix over the course the quarter not surprisingly was weighted towards the backlog of patients that had existed heading into coated.
More than the new patient flow.
Which makes sense of course, we think about it given the foot traffic trends for primary vision care visits that optometrists and ophthalmologists. So while we've been encouraged by continued week over week in month over month recovery and new patient.
Levels.
The quarter, we still saw a lot more of that backlog contribute to it than the new patient volumes.
Yes.
Got it and I guess like when we look at the results that you got from attracts obviously it looks like a very strong quarter from them.
When we look forward how has covert 19 really.
Kind of lead I guess your ability to really integrate that salesforce or would you say that other than kind of reduced physician demand as a tender handle covance integration has largely gone as planned or were there delays to that and it should we expect kind of.
Better results are like more integration benefits in back half a year in between 21. Thank you guys.
Hey, Allen this is Chris I'll address that question there were two questions in there and I'm going to start with the integration one.
We're very pleased with the integration and if anything cobot has given us the opportunity to really solidify that integration. It gave us an opportunity to really train up all the sales reps.
Both the corneal health sales managers as well is.
The Glaukos representatives it helped us from a planning perspective in terms of targeting and mapping out our strategy and then on the.
Customer side of things because that patient base is tends to be younger and it's done into clinic versus in an ambulatory surgery center or in hospital.
That business has been less impacted in the glaucoma business. So physicians were able to continue to do corneal cross linking on keratoconus patients and I think you've seen that in our numbers. So.
In short that business is doing well.
And we believe that we've integrated that business.
Two beating our needs and impact maybe even exceeding our needs from an integration standpoint, we're quite pleased.
And again, if you like to update question. Please press Star then a number one on your telephone keypad.
Your next question comes on line of met O'brien with Piper your preference that Miller.
Hi, Good afternoon, guys. This is I drew on for Matt. Thank you for taking the questions.
I just wanted to follow up a little bit on your comments on the diagnosis in the backlog.
You have a sense for whether the routine I appointments are you diagnose glaucoma, whether those have.
No started to come back at a similar pace to the deferred procedures, which have.
Admittedly bounced back a little bit quicker than than we were anticipating and then I guess I understand your comment that most of these procedures were coming from the backlog.
So do you have a sense of how much of that backlog had been worked down at all at this point.
Hi, This is Joe so I'll start by saying I think first of all with respect to backlog. It's that's what you would expect of course right I mean, I don't want to minimize the fact that.
The surgeons these practices, we're going to prioritize the backlog first given those patients were already either on the books or at present themselves to be put on the books for search for surgery, So that component of.
The overall quarter isn't a huge surprise to us.
I can't tell you exactly where they're at in terms of working through that backlog because candidly.
That's a country has been moving target as we go forward here right I mean, I think everyday that goes by.
These patients are needed treatment, so that will probably continue to persist for some period of time here going forward.
And so the comment really was just that underneath that.
We watch very closely.
And in conversations with practices and physicians in our Salesforce, what is that trend of new patients walking in the door to have vision correction or diagnosis is performing and with that we were encouraged over the course the quarter similar to what you'd expect probably what you're seeing from other companies, who would who would have exposure to.
Optometrists are the primary care channel.
I think the trends are all positive there, but they're not yet to place where they're driving the overall demand for that procedures that are getting done.
Okay that makes perfect sense and then on the reimbursement front. There are some updates out this week with patient rule and physician.
Well just curious if you feel anything's changed from your perspective or any of the competitive products, maybe some of those tissue to place displacement products in the space. Thank you.
Yes, Andrew this is Tom be happy to respond to that question. So have you seen agenda, we're actually really pleased by the agenda, that's coming out for the October Rock Committee meeting and their decisions coming out of that meeting that that could substantially the business.
I think the first is the fact that there will be consideration for an independent Standalone category three code for our trabecular bypass product line and.
If the decisions made in October that category three code should become effective in 2021, which would be prior to the potential launch advised on infants with timing could be quite quite fortuitous for us I think the important thing there too is that because it's an independent standalone categories Recode it'll be based on the full period.
At a procedure.
And as you know in the past, we havent driven towards the transition to a category one because we didnt want the hard to use to be based more on the ancillary replacement of the trabecular bypass device alone. We one of the full period outfit a procedure. So this is another major opportunity if the rock committed moves forward with a independent Standalone code Likewise in Peru.
Yes, even more importantly, you'll see as well there's consideration for an independent Standalone code for I dose and so this is something that we have head as a major target for us to establish an independent code on the CPT side or the category three code that then eventually would be consigned or.
Joined with a the Hicks picks coda J code for the for the payment of the device and this action fulfills our target or creating a separate CPT code. If it's approved and will really put us in a strong position moving forward for the commercial launch of ideas and importantly to by having to say.
Separate codes as this is the initiative and outcome of this of this work meeting will be able to future too.
It will surgeons to ducommun material treatments of using I stand to inject prosthetic devices with high dose in combination for the treatment of more moderate to advance glaucoma. So this is where we've been headed for some time you can imagine we're pleased with that and in addition to there will be a formalization is appear so decision.
On the category one code for combination cataract procedures.
That goes forward as well that will assure even more predictability and reimbursement from payers moving forward and you can be assured if that was forward as well, we'll be working with CMS and with the American Academy of Ophthalmology, So really established in to assure fear professional and facility payments over the course of the next several months so.
All in all remains to be seen I'd like what's on the agenda I think our prospects are fortuitous hopeful for some very positive outcomes for the company.
Thank you.
Your next question comes from one of Larry Biegelsen.
Good afternoon. This is Kevin on for Larry. Thanks, So much for taking the questions to follow ups the on reimbursement as well so in the outpatient proposed rule you actually have cataract cut about 10% I was curious how you're thinking about the implication to that on the dot com.
The business.
No it and it could actually be incremental for adoption as an exit some of these facilities and try to offset the cut and then I have just one follow up thank you.
Sure Hey, Kevin This is Chris this is similar to the 2020.
Proposed rule were cataract went down in combination cataract plus trabecular bypass went up so we're pleased that in the FCC.
The proposal went up 4% and in the hospital market went up 2%.
I would.
Categorized said in terms of.
The play with cataract versus deployment cataract, plus trabecular bypass is neutral to positive.
Certainly doesn't hurt us and it certainly makes a compelling argument for adoption of mix.
Thank you Chris that's helpful. And then you guys have both internet and micro shine launching in the U.S. hopefully in 2020 line do you expect both of those products to be reimbursed as soon as they're approved and is there one product where the reimbursement is more favorable amongst the two and then.
Lastly, do you plan to kind of provide some more updated economics on micro shot now that we have that visibility. Thank you very much.
Okay. So.
Kevin This is Chris I'll start with the first part.
We don't we see the incident and the micros shot as being very complementary of each other.
And we see the infinite being used prior to utilization of the micro shot.
The micro shut in terms of reimbursement Theres already established code for that.
Healthy reimbursement and it is a category one.
As it relates to the.
Incident, as Tom alluded to in his comments to the prior question.
That is something that is now on the agenda for category three code for incident, so that remains to be seen as to what that code will be and what it would be paid.
And then with respected economics, I think as we said before we'll continue to work with Santen around the degree of specificity that they're comfortable with us sharing what I will say or reiterate based on past comments is that we we are taking control of the product for the us market, which.
Typically will lead to booking the revenues fully and and then underneath that there is.
Difficult transfer price as well as some economic sharing around activity that they are performing in the U.S market. So.
We're hopeful that we've designed it in a way that it will look like a product that we would have developed on our own from a piano perspective with us booking at the entire revenues.
Thank you appreciate it.
Okay.
Your next question comes the line of Jon Block with Stifel.
Hey, guys good afternoon.
First thing for me, maybe Tom or Chris just some inject W. Is there anything there are pressured drops to improve the IP or is it strictly just more towards ease of use.
I guess as a follow on that same question what is it and tail in other words is there a retraining of the docs and I guess alters your pricing opportunities specific to inject W. American Apollo.
Okay, Hey, John this is Chris.
This was approved on the heels device stead inject and that data.
So we can't really claim that theres any idle p. drop.
What this is in enhancements I extend inject it is a product that will eventually replace extended jet.
And the product itself gives you better visibility it more predictability and that is because of the in large part a larger flange, which is the portion of the stent that sits in the anterior chamber and some enhancements to the injector itself. So we're looking forward even.
Audience for the ophthalmologist beyond what the already experienced with extended Jack and so it's just basically a product improvement and as such.
It will be priced at the same prices I said, Jeff.
Got it very helpful. In the second question, which might have two questions. Joe I thought I heard of 16, and a half Coleman number which is down roughly 65% year over year, except to gauge where you guys are the best line of sight. So maybe your thoughts on the market was the market down 65% or essentially how did you do with share do you believe and.
Good for you or maybe for you just on the risk profile that across.
Seemingly from Marci had to step back and the label you recall, that's a future opportunity for you. If it's really just sort of onetime use only thanks guys.
Hey, John.
Couldn't quite understand a number you gave but just to clarify on the U.S. glaucoma business. I think is what you're asking about that was 18.3 million in the second quarter and and so the map, maybe a little bit different than than what you were saying in terms of the sequential or year over year performance, but having said that I think tying back to what Chris said earlier.
Our sense is that through this period of time the market share dynamics have remained pretty stable. So that would imply that obviously the what we're seeing here from a performance perspective should be pretty representative of what is happening in the overall market.
And John I'd be happy to take the Derisk. The question. So as you know Dave.
An approved in there and kind of a soft launch here in the United States.
Again.
With respect and in respect to the products.
I'd like to factors and product validates the inner camera with use of across the Glenn and to be able to treat glaucoma I think that's exceedingly important for us moving forward I.
I think because it is about erodible gas limited duration can only pack so much CPI into that matrix in order to deliver the product over a period of time. So its limited generally two or three to four month duration of activity. The fact that its non anchor non anchored as you. All know has been I think troubling from from.
The perspective of some surgeons.
And the rates at the scene in terms of endothelial cell loss, and obviously that transpired and transpired into a more limited label from the FDA, which restricts its uses to a single use only so these are things that I think are going to be.
Objectively would be problematic for any company to handle moving forward I think whats important is one you've got a validation of the of the concept. There clearly is an appetite for a longer duration product to enter camera, we were seeing that in speeds in the marketplace.
Very importantly, I think most important.
Right now there is a miscellaneous J code, which is governing their pricing.
The prices that I've seen out there are fairly robust I don't want to quoted here until we actually have their J code to their their final J code in place in October, but you can imagine that will be a powerful predicate for us moving forward and how we price price our product and the value proposition. We can create for this company. So for all those reasons.
I'd like our position a lot.
On.
I'm.
Please that the launch the product I think we're in excellent.
Position to be able to commercialize their product coming here in the next several months.
Thanks.
Okay John.
Your next question comes from the line of Chris Cooley with Stephen.
Thanks for taking questions.
Do we just shift gears, a little bits and focus on colonial health for a moment.
Could you, possibly bought a some additional color there around the installed base.
Some of the maybe give some examples of what you're seeing Paas middleby its covert 19 restricted but.
What you're seeing in terms of the accounts.
Existing mix users and also.
Had.
The neonatal system in place just just looking at the 5.2 subtracts a number of the six six obviously you don't assume that they're definitely systems being absolutely sold but.
Not sure how many are being placed on some type of utilization standpoint. So some color. There would be helpful. Then I've got one quick follow up.
Sure Chris Hi, It's Joe I'll start and then Chris can can jump in here.
We obviously is a part of that we stopped giving the specific number of new starts in any given period of time, but as I indicated my prepared remarks, we actually were pleased to see that activity rebound really the ended the quarter in June and quite frankly continue to July where as our accounts were in our commercial organization.
Getting access again to to the customer base, we did start to see new starts play a role again towards into part of the quarter and ended the quarter, but beyond that we haven't given much much more specific granule color.
And Chris This is Chris and I'll add a little color to that.
I'm very pleased with how this is playing out early on when we announced the of vitro acquisition, we talked about eliminating the boxes, an impediment to the sale that's not to imply that we gave you are giving the equipment away.
Just imply that we were more focused and still are more focused on the procedural.
Component itself in the sale for truck. So it's a fairly inexpensive box to manufacture and we are taking the position.
Being aggressive and getting those boxes placed through a variety of options to the.
To the practitioner.
Anecdotally of their doctors are.
Increasing their utilization because we're knocking down the.
The barriers that and challenges that come with the newly implemented J code of the reimbursement is much more stable of right now we've got 96% of the lives out there covered and that is becoming much smoother.
Reach programs to optometry are going very well and we believe that that's leading to more patients being referred into practices that are doing this procedure. So all in all.
We feel very good about the acquisition and we feel good about the synergies of Glaukos individual together.
Really appreciate the color and then I also have apologize if this was covered earlier.
Jumping couple of calls here, but believe you mentioned that you had a trough of basically down 97%.
Versus pre coded levels back in April so to us glaucoma franchise and you exited the quarter.
Out.
80% of pre Kobin levels.
Did that may have missed this if not all all try any directional commentary you can provide there on the month of July and what you've seen transition into August I'm, assuming it's continuing to improve or stable, but any color there on the domestic welcome a franchise.
It would be appreciated thanks.
Yeah, Chris It's Joe.
It actually hadn't been asked so it will add that in there I think the trends posted in the quarter. So in July and into the very beginning part as of August a bed.
Our drivers stable to up to positive overall.
The progress has probably been more weighted towards the continued recovery internationally.
But but in all the businesses, we've seen stability to positive overall trends. So yes of course be careful.
When you think about extrapolating that you've heard our caution with respect to the Colby ability to dynamics going going forward, but we've been pleased with the stability of the trends that came out of the quarter end of existed thus far.
Thank you.
Your next question comes on line of Ravi Mehrotra quit burden bird capital markets.
Hi, guys. This is I respond for Ravi thanks for taking the questions.
So just a few follow up question in terms of recovery. So we've talked about the backlog, where we think about patients, especially new patients. So how comfortable are they coming into the office and schedule a search rates based on your conversation with physicians any color on that would be helpful.
Hey, Chris This is Chris Calcaterra, you know that that is a concern let's talk about glaucoma first where the majority of these patients are elderly and they are more susceptible to cope with 19 and so it is fair to say that some of these patients are concerned.
About coming in.
This is a procedure they can be delayed although they will need to do it.
But some of them are choosing to stay at home.
Many of them or come back and are coming back and we're encouraged by that.
But we want to be cautious as we look to the future in terms of of this recovery as relates to the corneal health side of things.
We would say that that is it.
Is not as concerning a bit the patients seem to be coming back because of the age dynamics. The majority of these patients being younger or more willing to come into the practice to get to produce the procedure done.
Yes.
That's helpful. So a follow up question on competition. So this week, we saw that you cleared the joint venture so on slide there early sense.
So and joint venture is focus on developing ophthalmology license I'm. Just wondering if you guys can talk a bit about your view on competition in general and how you think the competition the competitive landscape will evolve and how could LCOS state competitive.
Thanks.
Yeah, I think from a competitive standpoint, and the transaction your mentioned I think it's much earlier stage in Europe.
And we've been on record, we obviously, we've talked a lot of the near term competitive dynamics associated with some of the.
Devices that are playing within glaucoma surgery, I think we've talked about on the corneal health side, the sort of free running that we have there at the moment.
The good news is when when you look from a macro standpoint competitively the process to bring in new product to market is a long an expensive one right and so we have a fair amount of visibility in what is.
His downstream from from the products that are currently on market and we feel pretty confident about both our current product portfolio as well as what we've gotten a pipeline to continue to drive our business into the future.
Thank you.
Your next question comes from line of Julian wins, what city.
And doing your line is open.
Hi, This is Matt Henriksen inferred Joanne.
I'll start with the advantage litigation.
Are there any updates or commentary that you may have.
Hey, Matt I'd be happy answer this is Tom and so just to give an update to many of you are probably aware that our July or trial date, which was previously scheduled for July 20, Eightth of this year.
Due to colder 19.
Was deferred until March of next year. So.
We were prepared fully prepared to go to trial in July will be fully prepared to go to trial in March of next year. What I would say is that we've had I'd ask you to check the 10-Q for the second quarter, which will be coming out.
Materially.
You'll see that opened several motions that recently have been adjudicated by the judge in the case, we believe that these have been substantially favorable to glucose and continue to validate our confidence in our.
Approach to this trial and to Intuit's outcome and so I'd ask you to review those to see kind of where where we are at this stage, but again in the trial has been deferred now until March of next year.
Great. Thanks for that update and then my last question just on its a confirmation question are you talking about to the I dose trial that your.
Reigniting momentum.
Investigator sites are opening in their reengaging with patients, but could you confirm if any new patients have been enrolled since the sites have been reopened.
Well, yes, certainly can I mean that we certainly have enrolled new patients and so what we're really monitoring matters. The pace of how we can create and reach the inflection point, which we had generator prior to covert 19.
So our clinical team is prolific.
Recruiting in making this happen we are facing as we talked about the headwinds you'd expect patient reluctance to engage in a new trial order return and obviously this backlog in pent up demand as surgeons seek to be able to clear this.
So I am encouraged as the number of clinical investigators that have reengaged, our continued to to watch the slope that reengagement and again keep everyone adequately informed over the next couple of quarters, how we're proceeding.
That's great. Thanks for taking the questions.
You're welcome.
Your next question comes on line of Ryan Zimmerman, what BP gene.
Right, but good afternoon, thanks for taking the questions.
So I just a couple from me.
On the I sent infinite time, you talked about I think and can check correctly prolong, but being on the market I think potentially late 2021.
If I recall the trial has a 12 month endpoint.
So I'm just trying to understand the incremental time from now the follow up period.
Submission and then the mark being on the market.
Do you have an adequate a window I guess in terms of the FDA has your view for that products.
To to get to that 2021 timeline and you can correct me, if I'm wrong and some of my assumptions there on the timing.
No that's okay right and so we have stated that we are targeting approval for late 2021, and and we stay so obviously fully understanding the chronology of what it takes to get that right. So we finished enrollment for this trial as you recall October of last year.
And fast for 12 months, which is the primary endpoint for adjudication of the trial will need to to lock the database down and prepare the submission.
We'll do so on an expedited fashion and we'll submit so we're hopeful the FDA as well sees the the gravity.
Treating these late stage patients and the urgency of approval and we room.
Convinced that we can hit the target of 21 with Iceland incident.
Okay, and there's no potential for that to come earlier.
I guess my question is what are you assuming for the review of that right now.
Well I think you can yes, if you just look at the numbers that on the front have you, it's pretty easy to see but typically if you look at past.
Transactions VFD typically we'll we'll look at these and.
Approve of product after a formal submission anywhere in the six to 12 month time period.
And just for basis, Yes, we had I think we were.
Six or seven months or so.
Following them in a submission for approval for instance, and Jack.
Yes, okay. So there might be in central there because you have had some pretty quick approvals and so.
Okay, and then India.
Your next question.
Is around you and I think but a couple of Max last quarter raise their ray.
I think is noridian not mistaken and so you know one what impact maybe this is best directed for Chris what impact did that have on utilization in the midst of all this noise in the pandemic and you know where have others follow suit or any.
Commentary around.
The prophy rates from some of the mats.
Hey, Ryan this is Chris and you're correct Iridian.
Which is out here on the West coast primarily.
Raised their prophy from roughly $225 up to $325, roughly 44% increase and that happened in late March so right in the midst of Cove. It it's really been difficult.
Given all the dynamics of coded to determine what kind of impact that his head.
Having said that we believe that that will help to initiate a particularly new starts for surgeons, who are interested in nice 10 in jet and big surgery, but it's just far too early in two dynamic of a situation to determine what kind of impact that's had since it was announced.
Okay, Alright fair enough how backend thanks, thanks, taking questions.
Thank you.
Your next question comes on line up Anthony Petrobras.
Hi, Thanks, and good afternoon.
Couple of point here one on on on proceed here location, just trying to get a sense of.
Generally high level in the U.S. what percent of I spent istent inject procedures today are asked Cbres hospital inpatient. So just trying to get a sense and its cobot continues here in folks are staying out of the hospital with that presents in terms of the headwind and then on I spent.
Inject helping you you have the approval in the UK in April it looks like the label there as a standalone and cataract combo. So I just want to confirm this indeed that is the case and is that what we should expect for the U.S. as well and all of one quick follow up thanks.
Okay, Hey, Anthony this is Chris as it relates to procedures in United States.
The breakdown is roughly 85% of those procedures are done and ambulatory surgery centers in 15% are done in hospitals, which given the current situation bodes well for us.
In terms of W. It is CE Mark so was the only approved.
And.
UK, but all across Europe.
And that indication and that approval that CE Mark is for Standalone and in combination with cataract surgery, it's difficult to assess what percentage is done as a standalone and what's done.
Is a combination with cataract surgery and it varies by country.
We're quite pleased.
The launch of W. We have not released it in all of the countries.
In Europe.
But we have begun to launch it in countries beyond Germany.
And just to make sure we're clear in the last part of your question Anthony I think in the U.S. The approval is for use in combination with cataract surgery.
Like in Europe, where the CE Mark covers both ads.
Very very helpful. On last one from me would just be just looking at Infocus micro Sean in Europe. You know is that a good analog for what we should be thinking about for the U.S. launch and where share of in focus for US is trabecular like to me and other Migs just trying to get a sense of how that launches.
On for Santen. Thanks.
Yes.
Anthony This is Chris.
There's a number of differences there.
One that's being launched by Santana themselves in Europe.
To.
That market in Europe is very different than it is here in the United States. So I'm not sure that you can.
Formulate direct comparisons to the launch in Europe, it to what will be doing here in United States, it's going to be a bit different.
And thirdly, we do not have access to.
What their numbers are in Europe to even be able to comment to that.
Fair enough. Thanks again.
Okay now back to you Chris for closing remarks.
Okay. This is actually Tom and I just want to thank all of your again for your time and attention today.
We hope everyone staying safe and thank you for your continued interest and Glaukos corporations, Thanks and goodbye.
This concludes today's conference call you may now disconnect.
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