Q4 2020 Glaukos Corp Earnings Call
Welcome to the Corporation's fourth quarter and full year 2020 financial results conference call a copy of the company's press release issued after market closed today is available at Www dot.
Dot com at this time, all participants are in a listen only mode. After the speaker presentation. There will be a question and answer session to ask the question. During the session you will need to press star one on your telephone. This call is being recorded an archived replay will be available online in the Investor Relations section at Ww Dot lack whose dot com I will now turn the call over to.
Chris Lewis director of Investor Relations, and corporate strategy and development.
Thank you and good afternoon.
Joining me today of glaucoma, President and CEO, Tom Burns CFO, Joe Gilliam, and CLO, Chris Calcaterra. Following our prepared remarks, we'll open the call to questions to ensure ample time and opportunity to address everyone's questions. We request that you limit yourself to one question and one follow up if you still have additional questions you may get back into the queue. Please no.
All statements other than statements of historical facts made on this call that address activities events or developments, we expect believe or anticipate will 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 our.
<unk>, our pipeline technologies, our U S and international commercialization integration and market development efforts, the efficacy of our current and future products, our competitive market position financial condition and results of operations as well as the expected impact of the COVID-19 pandemic on our business and operations. These statements are based.
On the 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.
And 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 read today's press release and our recent SEC filings for more information about these risk factors you'll find these documents in the investors section of our website at Www Dot cloud.
<unk> Dot com.
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 cloud because of ongoing results of operations, particularly when comparing underlying results from period to period.
Please refer to these tables in our earnings press release that is available in the investors section of our website for a reconciliation of these measures to their most directly comparable GAAP financial measure.
With that I will turn the call over to glaucoma, President and CEO Tom Burns.
Thank you Chris Good afternoon, everyone and thank you for joining us today.
Before we discuss our fourth quarter results I want to spend a few minutes reflecting of the year 2020.
By all accounts of the COVID-19, global pandemic created an unprecedented the past year and challenged the conventional ways, our company's employees and customers operate both personally and professionally.
The response plans, we prioritized and implemented in 2020, including protecting the health and safety of our employees and their families.
Supporting our customers preserving jobs globally, protecting core research and development projects and maintaining our strong financial and operating position. Following the pandemic have allowed us to stay focused and advanced our key strategic priorities during uncertain times.
As a result, I believe we exited 2020 of more efficient and more capable company with fundamental prospects that have never been stronger.
As the corporate pioneer of Migs, and corneal cross linking we've been honored to partner with our customers and clinical investigators to help them navigate the rapidly changing environment through the implementation and expansion of various virtual and digital programs, including customer support.
Training case profit dream and educational initiatives.
I am confident that these efforts have helped deepen our customer relationships and prepare us for the future well beyond the COVID-19.
Finally, I want to thank these very customers for everything they're doing to serve the needs of patients worldwide during the pandemic.
Overall I am proud of our performance this past year.
Of our team's resiliency and steadfast dedication to advancing our mission to create novel platforms that disrupt conventional treatment paradigms and advance the existing standard of care and enrich the lives and treatment alternatives for patients worldwide.
In doing so we strive to create a world class Global vision care leader uniquely positioned to drive innovation across glaucoma, corneal health and retinal disease.
Within each of these areas. We are moving full speed ahead with the same pioneering discipline pipeline development expertise and skilled commercial execution that has made us the worldwide leader of the Migs marketplace today.
Our ability to execute our plans over the past year not only of illustrates our effective ongoing response to the current market environment.
It is also a reflection of the progress we continue to make towards our broader strategic vision.
Consider our key 2020 accomplishments.
We executed on our corneal health franchise integration expansion and market development plans evidenced by record new starts infrastructure sales.
Two we successfully launched the next generation Istent inject W device in the U S and select international markets.
Three we reported strong international glaucoma sales and secured new market expanding regulatory approvals in key markets, such as Australia, Japan and India.
Four we advanced key market access and reimbursement initiatives, including the creation of new category III CPT codes for Idose and Standalone mix.
Five we implement of the global systems upgrade transformation designed to support long term growth.
Six we executed financially during unprecedented times not only through encouraging sales recovery trends, but also with strong gross margins disciplined operating spending and continued preservation of our strong balance sheet bolstered by a 288 million convertible debt financing.
To further strengthen our ability to aggressively invest in our pipeline and future growth opportunities.
And last but certainly not least we advanced our industry, leading proprietary pipeline that we believe has the ability to significantly expand our addressable market opportunities beginning this year.
As most of you know our goal is to leverage our development expertise and commercial infrastructure to provide a portfolio of novel solutions that meet the full algorithm of customer needs.
Key pillar and delivering on the strategy is the continued progression of our deep pipeline.
So I'd like to spend a few minutes highlighting the exciting new clinical data shared earlier this year for two of our key glaucoma pipeline programs.
Idose TR and Istent infinite.
Starting on Idose TR are travel cross drug delivery implant, we were delighted to announce what we believe is powerful and compelling data that further underscores the potential for this technology to safely provide multiple years of sustained glaucoma pharmaceutical therapy and $24 seven compliance to <unk>.
The significant problem of patient non adherence to topical glaucoma medication regimens.
The recently announced 24 months of interim analysis of our ongoing 36 month phase <unk> trial showed compelling results with both Idose arms, continuing to demonstrate robust IOP lowering over 24 months to.
So the magnitude of approximately seven to eight millimeters of mercury or nearly 30% reductions from baseline.
The 24 months interest interestingly a subset analysis showed at least 20% of I joists subjects achieved robust average IOP reductions from baseline of at least 40%.
Importantly, these results were achieved with the single Idose implant compared to the timber will control arm that received twice daily drops over the 24 months of evaluation period, or nearly 1500 eye drops per eye.
As a reminder, idose TR is implanted into the trabecular meshwork to avoid migration through a very facile procedure in the most recent phase II data readout demonstrated a favorable safety profile with no clinically significant corneal endothelial cell loss no serious corneal adverse events and no.
Adverse events of content type of hyperemia reported to date and either idose solution of arm.
We believe there is an important unmet clinical need and strong appetite within the ophthalmic community for safe effective and durable sustained release pharmaceutical alternatives to traditional topical medications in this powerful 24 month interim data reaffirms, our excitement about the potential commercial prospects of Idose.
We continue to progress towards enrollment completely completion, and our ongoing Idose TR phase III clinical program, which will mark another critical step in bringing this technology to the market.
The 12 month phase III trial results are expected to support our anticipated NDA submission for Idose TR in 2022, and we are targeting FDA approval for this promising technology in 2023.
The powerful idose data available, thus far underscores our confidence in the potential of this novel drug delivery platform to produce future generations of sustained therapies for glaucoma and potentially other ocular diseases.
As such we continue to invest resources to expand our pharmaceutical development capabilities and to develop future Idose solutions.
With that in mind.
We are in late stage development with finalized designs for next generation Idose TR extended release implant also known as Idose T Rex, which is in a similar size and form factor to the original Idose TR is designed to provide nearly twice the drug capacity to extend efficacy durations even longer.
We will be engaging with the FDA in the near future to determine the most appropriate and expeditious regulatory pathway for this novel product.
We are also seeking additional drug classes that may be synergistically used in conjunction with the Idose platform.
Through our research and development agreement with D. Western we are currently assessing multiple rock compounds.
Which are showing positive results in animal models, and we're establishing prototype implants for lead candidates in the same models.
Rock inhibitors when used in conjunction with prostaglandin <unk> have been shown as a powerful treatment in reducing intraocular pressure in the U S pivotal studies.
Moving on to Istent infinite our three stent system designed for use in the Standalone procedure for late stage glaucoma patients. We are excited to have recently announced strong 12 months I'd E pivotal data.
That showed 76% of subjects achieved 20% of greater reduction in month, 12 mean, IOP on the same or lower medication burden with more than 50% of subjects achieving month 12, IOP reductions of at least 30%.
Subjects also achieved a 13% mean reduction in medication burden at 12 months and the safety profile of the study was highly favorable with no ex plans infections or device related in the interventions or hyponymy reported through 12 months.
When pairing the strong pivotal results with the advanced disease progression profile of the enrolled subjects that were on an average of three medications with two failed. Prior surgeries. We believe ophthalmic surgeons will view istent infinite risk benefit profile very favorably and is a compelling.
New treatment option.
We continue to target FDA approval of Istent infinite in late 2021.
Beyond these important glaucoma pipeline programs. We also remain in early preparations for the potential U S. Commercial launch of Santana Pharmaceuticals, Presser flow of Microsoft and elegant Av external surgical implant for late stage glaucoma management.
We continue to ramp up our commercial preparations for this promising opportunity ahead of an anticipated FDA approval and commercial launch.
We also recently announced that we are of late stage development of <unk> Prime a highly complementary new physical delivery device designed to be a truly minimally invasive system to further support the needs of physicians and patients.
Within corneal health, we issued a separate press release. This afternoon announcing positive phase three results for our next generation corneal cross linking I link beyond investigational therapy.
Excited to announce results from the multi center randomized placebo controlled phase III pivotal study that met the primary efficacy endpoint with statistically significant improvement in maximum corneal curvature our K Max.
<unk> is an objective measurement of the steepest steepest corneal curvature based on corneal topography, where an increasing K Max day notes corneas, Steepening and keratoconus disease progression.
At six months the.
Beyond treatment arm showed of K, Max mean improvement of <unk>, two diopters from baseline.
<unk> two of K, Max mean worsening of 0.8 Diopters from baseline in the placebo control arm, resulting in the statistically significant meaning treatment effect of one diopter meeting the study's primary efficacy endpoint.
Most importantly was that the <unk> beyond therapy demonstrated the ability to halt or reduce the progression of keratoconus, while disease progression was observed in the studies placebo control arm the.
Treatment was generally well tolerated and the majority of adverse events reported were mild and transient in nature.
These positive results underscore our view that beyond may provide the ophthalmic community and keratoconus patients with the first noninvasive bio activated drug treatment alternative designed to reduce procedure times improve patient comfort and shorten recovery times.
The positive phase III results are expected to support of U S. NDA submission in 2022, and we are targeting FDA approval for <unk> in 2023.
Beyond these near to medium term opportunities. We also continue to invest in and advance our key earlier stage R&D programs, including in dry eye and retina.
While these opportunities remain in preclinical developmental stages. We are excited with the initial progress we're demonstrating within these programs.
Our pipeline has the ability to fundamentally transform glaucoma by significantly expanding our addressable markets over time.
To enable this we have built a strong balance sheet to provide us with the financial flexibility to remain on offense as the COVID-19 related related dynamics play out by expanding our global infrastructure strengthening of our pharmaceutical expertise upgrading our enterprise systems advancing our core R&D programs and <unk>.
Supporting our clinical programs as they progress towards becoming commercial realities.
And speaking of commercial realities, we've been pleased with the strong recovery trends in our business since the peak of the pandemic the continues through the fourth quarter.
While procedure were current recovery trends remained somewhat volatile I've been encouraged by how physician offices and.
And hospitals are navigating this new normal and I'm pleased to report fourth quarter net sales of $73 2 million that exceeded our expectations across our glaucoma and corneal health franchise globally.
During the fourth quarter, we commenced an official full scale launch of the Istent inject <unk> in the U S. The istent inject W builds upon the proven foundation of our inject platform and is designed to offer of <unk> surgeons of the same established safety and efficacy of Istent inject with the added benefits design.
To optimize stent visualization streamline the implantation and deliver procedural predictability.
The early field feedback and real world results for Istent inject <unk> remained very positive and reaffirms our confidence in the commercial prospects for this important technology.
We've also launched Istent inject W. More broadly and many of our key international markets, including various European countries, Japan and Australia.
This adds to a number of 2020 accomplishments in our international glaucoma franchise that positions us well for long term growth, including Standalone indication approval in Australia.
<unk> inject W regulatory approval in Japan, Istent, and Istent inject regulatory approval in India and continued progress across many of our key market access initiatives.
Finally over the course of 2020, we made significant strides to firmly establish cornea health is the new franchise in future growth engine for our organization.
Not only are we ahead of plan on the cost savings targets, we announced at the time of the deal but more importantly, we continue to execute on our commercial strategies and market development initiatives, which include driving increased awareness of keratoconus broadly across the optometric and ophthalmic community.
Advancing the diagnosis of this important debilitating condition.
Streamlining the referral pattern from initial diagnosis to treatment.
<unk> customer friendly programs to drive new accounts starts optimizing reimbursement.
Investing in health economics to further solidify the value of corneal cross linking to the patients and health care systems.
Finally training corneal health professionals on our island per procedure.
To support this progress we continue to Opportunistically expand our U S corneal health commercial team.
We're pleased to see another new record for U S for trucks of sales established in the fourth quarter, an encouraging sign that our strategies and programs. We've introduced are resonating.
While we remain in the early stages of unlocking the combined organization's full potential we are encouraged with this performance and excited about the opportunity ahead.
So in summary, we're creating a unique vision care leader prepared to drive the robust cadence of innovation that can significantly expand our market opportunities and drive sustainable growth and profitability over the next decade.
While we of course remain cautious on the near term uncertainties associated with the COVID-19, the strong foundation and team. We built leaves me confident in our ability to execute on our plan and advance our mission to transform the treatment of chronic eye diseases for the benefit of patients worldwide.
So with that I'm going to turn the call over to Joe to discuss our fourth quarter 2020 financial results Joe.
Thanks, Tom as a reminder, I will be discussing our financial performance on a non-GAAP or pro forma basis, and we 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 as well as the Investor Relations section of our website.
<unk> net sales for the fourth quarter of 2020 were $73 2 million representing sequential growth of 13%.
Net sales grew 11% versus fourth quarter 2019 reported sales of $65 8 million and increased approximately 1% on a pro forma year over year basis adjusting for a full fourth quarter 2019 contribution of of Vidro given that transaction closed in November 2019.
These results exceeded our expectations and reflect the continued recovery despite ongoing COVID-19 related headwinds and associated volatility.
With respect of the pandemic impact it is worth noting that performance in the quarter was strong across each of our franchises, but we did experience more intra quarter volatility the normal including a more pronounced softness around the holidays in November and exiting the year than we might typically experience.
Now turning to our U S glaucoma franchise specifically.
Our fourth quarter U S. Glaucoma sales were approximately $43 7 million representing sequential growth of 12%, which we believe reflect the combination of COVID-19 related dynamics, a more stable competitive landscape and continued stable pricing.
It is also worth noting that we began to see an uptick in new doctor training during the quarter, an encouraging sign even if we're not fully back to normal yet <unk>.
Internationally, our glaucoma franchise delivered fourth quarter sales of approximately $14 6 million representing sequential growth of 15% the.
The COVID-19 impact of our international glaucoma business has varied by market, but our overall recovery in the quarter was led by Japan, Australia and the other major European markets, while the situation in Brazil, and Latin America generally remains challenging.
In corneal health fourth quarter net sales were $14 9 million representing sequential growth of 15%. The fourth quarter performance was driven by record U S per trip the sales of $12 5 million and the continued trend of strong new U S. What trucks the starts as our commercial integration and strategies continue to deliver despite the pandemic.
Shifting gears toward the remainder of our P&L, our non-GAAP gross margin in the fourth quarter was approximately 83, 4% versus 84, 7% in the same quarter in 2019, and 84, 9% in the third quarter of 2020.
This reflects the modest headwinds associated with Istent inject to Istent inject W transition.
And the sale of inventory that had been produced less efficiently during the height of the pandemic.
It is worth noting that our non-GAAP adjustments to Cogs include substantial adjustments related to of vitro acquisition accounting.
Our overall non-GAAP operating expenses were approximately $61 5 million in the fourth quarter of 2020 remaining below pre COVID-19 levels, but up 7% sequentially compared to the third quarter as we continued to reverse temporary cost saving initiatives and restore expansionary spending as the recovery warranted a trend that we would expect to continue in 2021.
Sure.
Our non-GAAP SG&A expenses in the fourth quarter were approximately $42 million up 7% sequentially compared to the third quarter, reflecting increased commercial activity and our non-GAAP R&D expenses in the fourth quarter were approximately $21 3 million up 6% sequentially compared to the third quarter as we continue to restore earlier stage pipeline pro.
Grams, and human capital investments across the organization.
We finished the fourth quarter with of non-GAAP operating loss of <unk> 4 million and of non-GAAP net loss of $1 8 million or <unk> <unk> per diluted share.
Our GAAP net loss was $10 6 million or <unk> 24 cents per diluted share for the fourth quarter of 2020.
We invested in approximately $2 1 million of capital expenditures in the fourth quarter. Now looking ahead, we expect our capital expenditures to increase substantially over the next two to three quarters as we enhance and expand our facilities in southern California, and Boston to meet our expanding development and operational needs.
As of December 31, 2020, we had cash cash equivalents short term investments and restricted cash of approximately $414 million, an increase of $16 million compared to $398 million at the end of the third quarter 2020.
Finally, let me make a few comments on the state of our markets and opportunity today and how we believe things are unfolding for 2021.
We believe the competitive landscape the pricing dynamics remained stable across each of our major business areas and as Tom mentioned earlier, our integration efforts and strategies are driving increasing penetration in corneal health alongside a successful launch of Istent inject W globally in glaucoma.
Not surprisingly the overall ophthalmic markets still faced Covid related headwinds in terms of new patient consultation visits the practice closures due to personnel testing positive and the ability of surgical practices to work fully staffed and at full capacity given enhanced safety protocols having.
Having said that we've been encouraged by improving trends on each of these fronts through the fourth quarter and thus far in 2021.
We've also been encouraged by our improving new surgeon trained trends and our increasing access the practices, albeit with restrictions that make typical day to day commercial activities challenging still.
We do recognize though that the dynamics associated with COVID-19, and its the variance remain fluid for example, as the global vaccination efforts in the ramped in late January and February It appears that some patients may be predictably electing to defer procedures until after they've been fully vaccinated. This is the short term, but relevant trend to put this in context, our performance thus far in 2021.
As we put all of this together in the context of our expectations going forward. We expect first quarter 2021, net sales to increase approximately 15% to 20% compared to first quarter 2020, which reflects our typical seasonality patterns in the first quarter trends I disclosed earlier.
Worth, noting that we believe the range of potential outcomes for the full year 2021 remained more sensitive to COVID-19, and the dynamics associated with the rollout globally of vaccines and the increasingly solid underlying fundamentals for which we have a degree of control.
<unk> said that assuming the pandemic related trends continue to gradually improve from here, we would expect our second quarter sales to increase sequentially versus the first.
And with that I'll now turn things back to Tom for a few closing remarks.
Alright, Thank you Joe.
I would like to conclude by acknowledging how proud I am of the actions of our organization has taken throughout the COVID-19 pandemic, while advancing our key strategic priorities in a rapidly changing environment.
We are focused on near term execution and excited about our long term future.
In just the next three years, we expect to have five major new product introductions.
Beyond that we have a fulsome portfolio of pipeline opportunities as we seek to build and expand upon our core micro surgical and sustained release pharmaceutical platforms.
While the ongoing pandemic may well persist through 2021, the strong foundation of team. We have built leaves me confident in our ability to execute on our plan as we strive to create a strategic vision care leader with disruptive franchises across glaucoma, corneal health and retinal disease.
And with that I'll open the call to questions operator.
Your first question the line of Andrew Brachman from William Blair.
Hey, guys. Good afternoon, thanks for taking the questions.
Tom maybe start on your items commentary from earlier this year. When you released that 24 month data you showed obviously this was in line.
Net of trial, which was the kind of in a vacuum because it ensures compliance. So maybe two questions. Here first how are you thinking about those results and sort of of more apples to apples of real World comparison, and then secondly, as we think about future reimbursement efforts here and commercialization efforts, how well do you think that dynamic is understood by payers and then ultimately use the.
Some of those products.
Well, thanks, Andrew happy to to answer your question well first of all I think when we look at the data I think the people then.
Following my comments in this area for many years. We initially said that we needed to have a product that provided consistent IOP reductions in pressure per leased six months to have a commercially viable program where product.
If we reached 12 months, we thought we had the ideal what I'm. So excited about when I look at this data is that we're now looking out of two years with average mean IOP reductions of seven to eight millimeters nearly 30% reductions in pressure from pretreatment baselines.
So this is pretty extraordinary and this is an inner cameral implant that is done with the SaaS all procedure.
It is not subject to migratory changed like Youll see with with the Rotable implants. It has the superlative safety profile, we saw minimal and the CEO of corneal cell loss with the Idose versus.
The placebo and we didn't see content type of hyperemia or hyperkalemia.
So the data is superlative, we're going to continue to track the data out for three years and see if we can get some additional hang time by following these patients out.
So I am extraordinarily pleased with the data we've been able to present and I think that gives us powerful prospects. When we do seek reimbursement going forward will be commercialized. We clearly already have a category three CPT code established for the professional fee payments side well in advance of commercial approval and then we will seek.
And generate.
A J code, which will allow US then to carve out and receive a fair value proposition for the Idose when we commercialize.
Doing all of the extensive pharma co economic work that you would expect behind the scenes, but importantly, as investors. When you look for instance at the Arista.
A erodible implant that lasts typically in the range of four to six months.
We're seeing that the J code established for that product is around $2000. So I'm not going to suggest any proportionality based on sustained release delivery, but I will tell you that that's an excellent.
Didn't and predicate for us as we established the basis for our J code when we do commercialize.
So I can't tell you how excited we are about the data the appetite in the post that exist.
The the resonating feedback we receiving from surgeons since we've introduced this data and I think it becomes the powerful platform for us to enter the next stage of our development and growth.
Great. Thanks, Thanks for that Tom and then Joe maybe one for you a little bit more granularity on the trend that youre seeing here so far in 2021.
The specific that you'd point to in terms of prevalence of COVID-19 or reopening in certain states that gives you more or less confidence here as it relates to how you think the U S market looks sort of on the other side of the post vaccination or more uniform declines of cases, thanks for taking the questions.
Yeah. Thanks, Thanks, Andrew Yeah.
We tried to say in the prepared remarks, obviously the U S dynamics remain fluid I think first and foremost as it relates to the COVID-19 trends themselves. We see the same data obviously that all of you were seeing and as it plays out here in terms of improving.
Underlying trends of the disease transmission and so we saw that really through the fourth quarter and thus far into the end of the first.
What we're seeing now is a little bit of of.
Transitory or transient impact from the vaccine rollout.
Would it be expected that that as patients are in the category that can get vaccinated. They tend to hold off a bit more on their procedures until after they have been fully vaccinated and so that's why we were trying to talk about in the context of a really strong January for us that softened a little bit in February as the vaccine Rollouts started to add to the two.
Happen.
As you think about that beyond and obviously a comment on this.
We would expect sequential improvement from here.
All else being equal with respect of Covid, it's variance in the the global rollout of those vaccines, but I think as we look forward and we've tried to resist making too many predictions about the way Covid will play out over many periods of time, but.
But sitting here, we're increasingly encouraged with the trend line that there is the emerging for the year.
Great. Thanks, guys.
Your next question the line of Matt O'brien with Piper Jaffray Jeffrey Sandler.
Hi, guys. Good afternoon. This is drew on for Matt and thank you for taking the questions.
I appreciate the color on the first couple of quarters here and I know you don't want to provide guidance for the first year or for the full year, but maybe you could help us a little bit directionally as we think about 'twenty one.
I guess in 2019, you're glaucoma business is about $230 million business is there any reason to think that 2021 can't force a little bit of growth offset 2019 figure.
Thanks drew well, obviously, we're not giving that full year guidance directly or indirectly in I think it has a lot more to do with the pace and how the vaccine rollout happens globally. The some of the dynamics that we're seeing in the U S. How they do or don't emerge in the ex U S markets, especially as vaccine.
The pickup.
There as well and the timing of all of that but what I. What I'll say is kind of what I said in the first question here.
I think we're increasingly encouraged by the trend lines that are underlying what's happening.
And if the world, including United States continues to progress the way, we're seeing it both in terms of of COVID-19, and the vaccines.
I think we're set up for hopefully incremental growth as we progress throughout the quarters of 2021.
All right understood and then obviously I just wanted to touch on the <unk>, Congrats and it looks like very good data I, just wanted to drill down a little bit more into it.
And I apologize I'm going off memory, a little bit here. So correct me, if I'm wrong, but I believe in your FBR.
The studies, you're getting a little bit closer to that two day out there mark.
Between the treatment of the Sham at six months, and then a little bit of an improvement out to a year.
Obviously at the on comes with the much improved safety profile.
But I guess, one is that an appropriate comparison and how clinically significant at that Delta and then two what role do you see the the combination of these therapies. Once you have both available. Thank you.
Now of Great questions. This is Tom.
As we look at the data it's hard to draw comparisons between the data that we see that we've just disclosed versus the earlier data would that be off because even though the patients have.
Have similar inclusion criteria.
Nearly in the <unk> study, we had patients where we we recruited more earlier intervention patients who are slower progresses. So it's hard to do an apples to apples comparison I will tell you that we're excited about the data. The fact that we can profuse oxygen on the surface of the use of surfactant to be able to drill through the <unk>.
Aneel epithelium and use of higher Uba range irradiation protocol, we are able to achieve this one day after difference versus placebo and be able to shut off progression and halt progression of the patients what I do think as I do think by removing the corneal epithelium, you will see a greater reduction in <unk>.
Max and so to answer your question I see an excellent opportunity to bifurcate and segment the market and to use <unk> in earlier stage earlier intervention, perhaps in patients.
A little more modest to moderate disease progression and then be able to reserve at the off for patients who are in more advanced stages, who need to have a not only of halt the progression, but need to have a nice of reduction in K Max moving forward. So to me it offers us a.
<unk> opportunity to bifurcate segment and be able to serve the market algorithmically much like we do on the glaucoma side, where we have different technologies for different disease stage management.
Helpful. Thank you.
Youre welcome.
Next question the line of Robbie Marcus with Jpmorgan.
Hi, This is actually Allen on for Robbie So I had a quick question on kind of the market dynamics that you saw of entering the year you highlighted that the competitive trends have stabilized, but I'm, just kind of diving a little bit deeper into that when we look back. The last we saw of quote unquote normalized trends I did look like there was quite a bit of.
Going on even though you said the market was still growing kind of healthy double digits. So when you say that stabilized how should we really think about that with respect to you know that double digit growth number and also whether or not you're still seeing any amount of competitive of erosion from like.
Both the similar Migs devices and also more in base of surge of alternatives.
Thanks, Alan It's Joe maybe I'll start and Chris if you want to add some color.
Can.
I think the way to think about the competitive landscape. Obviously, there is an awful lot of other things going on in the marketplace from Covid.
Probably will resist commenting on the specific percentages of numbers that you were referencing but I'll say this obviously if you go back a year.
We were entering into 2020, we talked on this very call.
About some of the emerging competitive landscape dynamics than what we thought that would mean for the business as it unfolded in 2020, obviously of what's happened over the course of 2020, we feel good about the way we've navigated that we feel good about the product introduction in the form of Istent inject W.
And generally our access to accounts and the relationships that we have there and what that's meant for our business. So what we're saying is is I think if you look back versus a year ago and how things have transpired, we feel like the competitive landscape of noise. If you will has settled a bit and is much more stable.
Relative to sitting here 12 months ago.
Yes, I'll add a little color as well Alan this is Chris.
I would say.
Going back a year ago, there was a lot of trying and trialing.
Going on.
And <unk>.
Since the end theres less of that.
Speaking of I've Anthos, it's been out there of the hydro has been out there for two years and we've had a very good recapture rate.
Of those accounts that had been trying that product. Additionally in July of last year, you had the and CCI edit.
The omni device that too has had an impact and then finally as Joe mentioned the Istent inject W.
He has done very well for us it has been well received by the ophthalmic community and I think all of those factors have led us to say that the competition.
Competitive environment is stable to improving.
Got you and then just a quick follow up your slated to still of launch.
Kind of first forays into the more moderate the seer air environment with micro Sean and infinite.
That's the key.
It's a market where there's already kind.
Competitive devices out there already so how should we think about your ability to really drive uptake with those products and you know whether we should expect any kind of revenue benefit in 2021 of if thats more of of 2022 story.
Hey, guys.
Sure I'm going to talk about the product itself and the first part of your question Joe will follow up with of.
The financials and so forth.
As we talk to key opinion leaders and do our channel checks on this product with those who have been in the.
Investigation of investigational stage and by the way it's also in.
In Europe at this stage it's the.
Less invasive procedure the material itself.
More biocompatible.
And there really hasnt been a lot of new products and end stage therapy glaucoma and we're excited about this product because it serves as the capstone to our overall product portfolio and our algorithm and there is a place for this product and we think that.
While the market is not as big as the combo cataract market, it's still significant and this product has the potential to really have an impact on the marketplace and we're excited to have it and we see it as an important product within our portfolio.
And in terms of the numbers Allen I think.
Obviously based upon the commentary from our partner Sandton, we continue to expect that.
Should be able to see micro shot in 2021 and as a result, we would we would hope that that has some contribution this year, we're certainly preparing organizationally for a commercial launch around that product as soon as they're able to hopefully gain approval.
But whether it comes of that product or istent infinite or any others.
There'll be a more pronounced impact of 2022, as we turned the corner there and get hopefully of full year benefit of sales.
For both Istent infinite as well as Microsoft.
Okay.
And your next question is line of Chris Cooley with Stephens.
Good afternoon, thanks for taking the questions and hope everyone is well.
Maybe just two for me.
We could start with the <unk>.
Record sales with per truck, so could you give us some additional color there what the.
Are you seeing that as a result of.
The expanded installed base I know there were some metrics that you provided at the time of the year.
Pedro acquisition announcement of just kind of curious how you track relative to that.
We're just seeing greater utilization.
Which in some select practices now the.
Better understands the therapy and have good protocols for diagnosis of employing those those patients through the channel and I've got a quick follow up.
Hey, Chris It's Chris and I'll address your question I would say, it's a combination of several factors.
I think the fact that we've expanded the sales organization, both by adding corneal health sales managers as well as integrating our existing glaucoma sales.
Sales reps into the process.
I'd say its the stabilization of reimbursement our market access team, which is clearly the best in the industry has done a fantastic job of stabilizing reimbursement.
I think it has lot to do with our marketing programs, where we've reached out to the optimistic community to identify early diagnosis and then referral patterns into the.
Those practices, who do the idling procedure I think it's.
Also the the.
Of the flexibility that we've had around the capital equipment placement.
Providing different programs to ensure that the equipment was an impediment to the sale and a lot of.
Direct to consumer campaigns, and digital campaigns and Webinars all of these things have combined to increase.
Placements as well as utilization within existing accounts.
Yes, I'd just add one quick thing to that Chris which is numerically 2020, when you look at despite the pandemic as you've heard US say I think on multiple occasions of the course of the year, we had record new starts or installations.
The systems in the U S. So the numbers back up what Chris is talking about in terms of expanding access to <unk> and then within those accounts driving incremental utilization through all of the referral networks and the things that Chris was talking about so I really think it's been a combination of both when you are when you think about building your models.
I appreciate all the color there and then just lastly for me.
I'll throw out of trouble hook here see if we can get anything but on the fourth quarter. Obviously, the operating expenses there were below pre COVID-19 levels.
And while you gave us top line guidance for the first quarter.
I just would appreciate any color you can provide about how we should think about.
The operating expenses in aggregate because we start to flow back through the year, obviously, assuming there is going to be some more travel.
Higher sales.
So hopefully with that greater commission, but just.
I'm just trying to think about that coupled with the investments youre doing any kind of commentary you can provide around expenses on the operating line would appreciate it. Thank you so much.
Sure Chris Happy to do that I think what you've seen now is a little bit of the pattern of how we're trying to manage our spending relative to the recovery <unk> seen sort of the low watermark of where we could get the business to in Q2, and then how that sort of recovery is manage it from a spending standpoint relative to the sales recovery in Q.
Three of now Q4, what I can say is that we're continue to remain extremely disciplined around how we think about spending within the organization, but as you saw in the fourth quarter and as I would expect to continue the course of 2021, we are continuing to restore the investments we're making both from a commercial standpoint as well as from an <unk>.
R&D and pipeline standpoint, they are part of the reason why we raised the capital that we did was so that we could remain.
Prudently on office through the cycle.
And we hope to continue expanding that spending.
Quarter in and quarter out here as we move forward in 2021.
Thank you.
Next question the line of Jon Block with Stifel.
Hi, This is Trevor on for John Thanks for taking my questions first one for Joe you mentioned earlier in the call. The you expect <unk> to grow sequentially over the first quarter assuming that the.
The favorable Covid trends continue United States. So just looking back a couple of years.
19 of 2018, <unk> was up around 10% versus the first quarter. So is that a good ballpark to think of after this year or is the slow more or less dramatic in any color you can give there.
Hi, Trevor Yes, that's a great question I don't know that were prepared to get quite that granular on it what I would what I would tell you is.
What youre seeing on underlying both of our fourth quarter performance of when you guys run the numbers on what we're saying for the first quarter is we've kind of gotten back to a place where we're.
Established the.
Little bit of growth on a pro forma basis basis. If you include COVID-19.
Corneal health or of Redrow in some of those legacy numbers.
We've gotten ourselves back from a market perspective in Glasgow, specifically to where we're seeing a little bit of growth and we hope to continue to expand that growth quarter in the quarter as we move forward here.
Okay, Great and then just another one on the on the guidance.
Alright, just from 2020 that is so you initially guided to $190 million debt of $140 million of U S. Glaucoma business. So if you do that a little bit of math there.
About $55 million that was arguably deferred as a result of what happened how do we think about that as being like of 'twenty 'twenty. One phenomenon just in terms of the recapture of any sort of commentary you can give there would be great.
Yes, sure I think that the recapture dynamics are going to be fairly elongated is the way. It will play out and I think thats going to be driven more by the ability of the accounts themselves to to execute on procedural volume. There's only so many hours in the day and so many days in the week that they can be doing proceed.
<unk> and bringing in these patients. So I think what we're likely to see is a more prolonged.
Market tailwind when we get on the other side of the majority of the vaccinations as well as you know hopefully of lessening in the Covid cases themselves.
Okay, great. Thank you.
Next question the line of Ravi Masri.
Aaron Berg capital markets.
Hi, how are you doing thanks for taking the question.
So I just wanted to.
Kind of if I can ask about the.
Sorry, it's kind of lost my train of thought.
Yeah.
The timing of maybe Istent in India in the market analysis that you have over there.
Can you help us maybe size that opportunity and.
Some of the penetration dynamics that you are thinking about in terms of timing of how you plan on kind of.
Getting into that arena.
And then I have a follow up thanks.
Sure Hey, Ravi This is Chris we're very pleased that we were able to secure.
Excuse me approval in India for both the Istent and Istent inject.
So we will have both products. We are currently working through the commercialization plans. It is our hope that we would initiate.
That sometime here in the near future, but beyond that we're not in a position to be able to give more details obviously given the size of the market in India.
We're very excited about it and we do understand the economic and reimbursement dynamics, there and we are bullish on what we can possibly do so more to come.
Great. Thanks, and then maybe one on <unk> beyond.
Youre talking about segmenting the market if I remember right when you'd kind of first talked about the rationale behind the <unk> and kind of a major deal market development with something that really needed to be done to generate awareness of the condition and I'm curious kind of given the timing expectations around.
The kind of approval and commercialization that your interest.
Youre shooting for now on this is this something that youre going to be kind of building in advance or is it something kind of from an investment perspective, youre going to be holding off on to drive that.
So Ravi this is Chris again, I would say that it dovetails.
We're doing all of those things now with.
With FBR.
Really of meeting.
A big investment in terms of.
Getting out outreach with the commentary and working with them to diagnose this disease earlier.
Working with reimbursement to ensure stable reimbursement all of the things I mentioned in an earlier question I think at the on comps then there'll be the added benefit of this product being less invasive than the <unk> procedure, and we will continue to invest but at that time.
There'll be more awareness of of.
Keratoconus and the treatment and the FDA approvals of <unk> and then at the on and we will be focusing more on the the.
The product itself and the fact that this should appeal to more patients of more surgeons, given the less invasive nature of that procedure.
Great. Thanks, and then maybe if I could sneak in one last one just from the rock inhibitors commentary and the kind of prostaglandin and it sounds like Youre, saying its an animal model of some of the testing right now should we think about that kind of from.
End of three year window of five year window of seven years like how to help us kind of frame when something like this could potentially come to market. Thank you.
The Ravi this is Tom and what I would tell you is that the.
The development process is probably multi year, so I'll keep it higher level.
The reason we're excited though is when we look at the additive value of rock inhibitors when used in combination with prostaglandin.
We see some really significant differences and ability to be able to reach target levels in IOP reduction that haven't been reached with other combination products. So it's one of the reasons I'm bullish on being able the hunton defined the right rock inhibitor that we can put into the idose vessel that will be of complementary combinatoria treat.
<unk> with Idose in the future I believe strongly that if we get this right that we will see the use of Idose TR in combination with Iraq, and a number of patients with either of moderate to progressive open angle glaucoma.
So it's an exciting area.
We are operating within the parameters, where we have to find a compound that has really high resilience in terms of the stability and really potent highly potent mo nano molar concentration rock inhibitor Thats why were were.
We are picking through a number of primary candidates, we will find the right one and we will advance that it will be multiyear, but when we have it it will be I think an extraordinary addition to the to the glaucoma portfolio.
Next question the line of Anthony Petrone with Jefferies.
Hi, Good afternoon, I hope everyone's doing well I have two quick ones in there based on channel checks. We've done first on the ice 10, Dolby you. Our understanding is that solution. The major feature there is as surgeon ease of use and so I'm wondering a how many istent inject users of <unk>.
Actually transitioned to W.
And do you believe W will be market expansive on the surgeon adoption and because of ease of use and then the second is on reimbursement coding. Our understanding is new coding for omni is allowing omni to be used with.
The migs stent in plants.
And that can go down the severity curve and so I'm just wondering how that's kind of play out in the marketplace. When you consider the additional reimbursement for surgeons.
In our key markets.
Hey, Anthony This is Chris let me start with W.
I think your channel checks of right.
I think people do see.
The W is a big improvement over Istent inject that is because of.
The plans being larger thats the component that is visible within the angle of the eye and with that that brings more predictability.
Well a lot of doctors, maybe haven't told you the new channel checks is that we've also improved the insertion device itself and that is made for more predictability. So we feel like.
Of this has been a big bet advancement excuse me and the acceptance level of this product has been very high and I do believe that this has helped us to recapture share and is helping to expand the market with this product and to be clear istent inject.
W is replacing Istent inject so right now in the U S. The two choices, our istent and Istent inject W.
Moving to Europe.
That's an army.
That is a visco delivery system.
There are doctors, who are utilizing this product in combination with trabecular bypass.
This is the new trend. So it is complementary to what we have some people do it in standalone as well, but the concept the areas that you expand the canal.
Place a true.
<unk> bypass device and as well.
So two separate codes, they're able to be used in harmony with each other we think the given all of the advantages of Istent inject W is the ideal trabecular bypass.
The device to be utilized with this technology of <unk>.
Because of its predictability visibility its efficacy and its superlative safety profile and perhaps even ease of use so I think that addresses your question.
Yes.
You very much I'll hop back Anthony.
This is Tom I'll, just add a few things one.
I'd like to believe this is something we foresaw so.
When we look at the NCI edits, which precluded surgeons from using the physical Kendall ostomy codes in conjunction with Goniotomy.
We presumed and thought that there'll be a natural pivot to using.
The physical kilowatts of device in conjunction with stents in this case the trabecular bypass stents. So it wasn't lost on us and so I believe we've impression now if you can see our development plan and product development plan, we now have high prime under development.
The Prime then you can fast forward and think about it and use in conjunction with.
Istent inject or or Istent infinite to treat these patients that gives us tremendous flexibility either using of this <unk> device or physical dilation device as the standalone treatment or in combination with the plethora of products that we have it's expanding our algorithm and I think it is going.
Give us the ability to.
Continue to generate robust robust growth within the glaucoma area in the future.
Very helpful. Thank you.
And your final question comes from the line of Steven Lichtman with Oppenheimer <unk> company.
Thank you hi, guys.
Just a couple from me.
Heading into 2020, you targeted 500, plus physicians trained on mix, obviously COVID-19 change that I'm wondering where you wound up coming in last year and any goals you are willing to provide on physicians trained in 2021.
Hi, Steve It's Joe Yeah, I think first with respect to the 2020 target Youre right. Obviously COVID-19 took a chunk out of that I will say without getting too specific.
We ultimately landed much closer to that number than I would have predicted back in the.
The March April may timeframe, it really speaks to.
The commercial organization of the creativity that they engaged virtually.
And bringing forward a lot of physicians, who had maybe a little extra time on their hands.
And ultimately, bringing it bringing it forward. So I think that we were encouraged by that as you heard in the prepared remarks, we're very encouraged by the fourth quarter of particular, hopefully the realization of the full year.
Of work and as we turned the corner of 2021, I think we're not giving a specific number there's too many variables there and play with Covid and the like but our guys continue to get increasing access and hopefully we can continue to drive that important market driver.
Great. Thanks, and then just secondly, you also heading into 'twenty, you had guided to the $300 million of Opex spend but.
Are you able to keep that well under in response to Covid I know you mentioned that youre going to keep a close eye on net on an opex spend given the.
The variability in the marketplace, but is that still a.
A place where we ship the number we should be sort of targeting on a run rate when when things get normalized is that or have you found some underlying cost savings that the.
Perhaps won't get you back up that $300 million in the near future.
And I think that's a fair question Steve at the.
The way I would think about that is $300 million represented.
Honestly ex Covid, where we saw that the business and our investments trending that book.
Based upon fundamentals both in terms of our commercial infrastructure expansion as well as our R&D pipeline. So I think thats still remains a pretty good bogey in terms of where the spending can go.
Where we get between our current run rate and there has more to do obviously with the pace of the recovery from of Covid standpoint, as well as the normal things right I mean anytime youre trying to bring forward exciting new technologies from a especially from a development standpoint, the pace in which some of those things click and where they increase their spending as you move into the clinic and things like that can really draw.
<unk>.
How close to get the $300 million in any given point in time, but quite clearly that's the direction that we're heading.
As you know been no significant change in our overall strategic plan and what we're trying to accomplish from an R&D standpoint.
Okay. Thanks, Jeff.
And I would now like to turn the call back over to Chris Lewis for closing remarks.
Okay. This is actually Tom I want to thank all of you for your time and attention today, We hope and trust that everyone is staying safe and we want to thank you for your continued interest in Bonkers Corp.
Bye.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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