Q1 2021 Glaukos Corp Earnings Call
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Slash flow slash www dot glucose dot com I will now turn the call over to Chris Lewis Senior director of Investor Relations and corporate strategy and development.
Thank you and good afternoon, joining me today are <unk>, 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 for your request that you limit yourself to one question and one follow up if you still have additional question.
You may get back into the queue. Please note that all statements other than statements of historical facts made on this call that address activities events or developments, we expect believe or anticipate will or may occur in the future are forward. Looking statements. These include statements about our plans objectives strategies and prospects regarding among other.
Other things our sales our products 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 state.
<unk> 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 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.
Today's press release, and our recent SEC filings for more information about these risk factors.
These documents in the investors section of our website at Www Dot glaucoma 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 it's ongoing results of operations, particularly when comparing underlying results from period to period.
Please refer to the 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 Galapagos, President and CEO Tom Burns.
Thank you Chris good afternoon to everyone and thank you for joining us today we.
We hope everyone is staying safe and doing well.
As we pass the anniversary of the initial pandemic related shutdowns and reflect on this past year that has challenged all of us in extraordinary ways.
I'm confident that we have evolved into a more efficient and stronger company well positioned to advance our mission and execute our ambitious plans.
We remain focused on our near term execution as we drive new adoption and deeper penetration globally for a transformative mix and I link solutions at the same time for this company is advancing novel platforms with the goal of disrupting convention treatment paradigms, improving the existing standard of care and enriched.
Our lives and treatment alternatives for patients worldwide.
We continue to invest in and advance our fulsome pipeline based on our core platforms, where we anticipate and are planning for a robust cadence of new product introductions over the coming years that have the potential to significantly expand our addressable market opportunities.
We are confident that the investments, we're making today will drive glaucoma forward as a unique strategic vision care leader with tremendous potential for long term growth and profitability.
Today, <unk> reported first quarter net sales of $68 million up 23% versus the year ago quarter.
Joe will discuss our financial results and forward outlook in more detail later in the call, but I'll begin that discussion here by providing an update on our continued commercial progress and the market conditions overall.
Fueling our strong start for the year with solid execution on our key strategic initiatives across our glaucoma and corneal health franchises globally.
We have been pleased with the continued strong recovery trends in the market overall, and our business specifically through the first quarter and into April.
While first quarter procedural recovery trends were somewhat volatile and remained fairly variable based on geography I have been encouraged by how physicians offices and hospitals continue to net to navigate the new normal as we progress closer to a more stable market environment, leaving us cautiously optimistic.
For our ongoing improvement from here through the remainder of this year.
During the first quarter, we advanced the U S commercial rollout of the Istent inject W. Our newest mixed technology designed to offer ophthalmic surgeons. The same established safety and efficacy of Istent inject with added benefits designed to optimize stent visualization streamline implantation and deliver for.
Cedric predictability.
The feedback and real world results for Istent inject <unk> remained very positive, which reaffirms our confidence in the commercial prospects in fact 99, 8% of our inject sales in the first quarter were Istent inject W. Strong evidence of both a rapid commercial rollout progress and the overall.
Marketplace acceptance of this important technology.
The successful Istent inject W rollout, along with improving market recovery dynamics have allowed us increasing in person access to practices and accounts.
Although still on a more limited basis than before the pandemic.
As a result, we have been pleased by this.
Continued strength of our new surgeon training activities throughout the first quarter.
For the various virtual and digital programs, we've implemented over the past year aimed to support our customers. During COVID-19 also continued to be utilized in meaningful ways and I believe these efforts have helped to deepen our customer relationships over the past year and prepare us for the future well beyond COVID-19.
As a corporate pioneer of Migs, we feel it's our responsibility to help expand access to care for all patients.
As a testament to this we were delighted to launch a new patient centric initiatives in honor of World Glaucoma week in March, including a global education and awareness campaign designed to raise awareness surrounding the risk and prevalence of glaucoma.
We also partnered with eyecare institutions across the United States to offer free glaucoma screenings, we are proud to support the site saving work of the World Glaucoma Association.
Through these patient and healthcare professional education initiative <unk> and further our goal to help make safe effective and impactful glaucoma care more available to a growing patient population worldwide.
Outside the United States, we were pleased with the strong performance from our glaucoma franchise during the first quarter as we drive deeper penetration and broader adoption of mix around the globe.
International growth during the first quarter was led by the recovery in the Asia Pacific region, including Japan, and Australia in particular.
Like the U S. We also advanced the commercial rollout of Istent inject W. During the first quarter in key international markets, including Australia, Japan, and several European countries.
We believe the successful Istent inject <unk> rollout along with several recent accomplishments, including Standalone indication approval in Australia regulatory approval in India and continued progress across many of our key market access initiatives leave our international glaucoma franchise, well positioned to drive sustainable.
Long term growth.
Going forward, we plan to continue to support and grow our quality experienced or U S surgical sales teams.
While working to optimize the reimbursement coverage and payment landscapes train surgeons and leverage our compelling clinical data to grow migs adoption and drive deeper penetration in our 16 international countries, where we have a direct market presence today.
We are also evaluating and have been making initial investments in potential future direct and hybrid markets were favorable opportunities and reimbursement pathways success.
In corneal health, we have also demonstrated strong performance during the first quarter driven by exceptional year over year use for trucks with sales growth of 51% and continued healthy momentum in new U S accounts starts.
We continue to Opportunistically expand our U S corneal health commercial team to fuel the execution of our commercial strategies and market development initiatives.
<unk> 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.
Implementing customer friendly programs to drive new accounts starts.
Optimizing reimbursement.
Investing in health economics to further solidify the value of corneal cross linking to patients and health systems and.
And finally training corneal health professionals on our island procedure.
During the second quarter, we expect to officially complete our corporate integration activities with the successful transition of our corneal health franchise onto our ERP and CRM systems.
Yes.
Since the close of the acquisition roughly 18 months ago.
While we remain in the early stages of unlocking the combined organization's full potential we are encouraged with this performance and focused on the opportunity ahead.
Shifting gears to our pipeline our goal is to leverage our development expertise and commercial infrastructure to provide a portfolio of solutions based on key platform technologies that meet the full algorithm with customer needs.
From the first quarter alone, we announced several critical clinical data milestones for three of our key pipeline programs, including first.
A two year interim analysis of our ongoing three year Idose TR phase two b trial showing compelling data.
And further underscores the potential for this technology to safely provide multiple years of sustained glaucoma pharmaceutical therapy and $24 seven compliance to tackle the significant problem of patient non adherence to topical glaucoma medication regimens.
Strong 12 month, IEEE pivotal data for Istent infinite achieving its primary efficacy endpoint and surpassing our internal expectations.
And third positive phase III results for our next generation corneal cross linking I link at beyond investigational therapy.
Meeting the primary efficacy endpoint and demonstrating <unk> ability to halt or reduce the progression of keratoconus without removing the auto layer of the cornea.
Each of these important clinical achievements reaffirms our confidence in these programs and their future commercial prospects.
For Idose TR, we're pleased to announce we have completed patient enrollment and randomization in the first.
The two pivotal clinical studies that make up the phase III clinical program.
We continue to progress towards enrollment completion in the second trial and anticipate enrollment and randomization completely for this study in the second quarter.
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.
Regarding the pressure flow micro shunt in April Santana announced the delay of FDA approval.
As they continue discussions with the agency, we will continue to closely monitor any developments associated with their ongoing FDA discussions and are hopeful to have more information and direction on this front as we move forward.
For Istent infinite.
Could be we could not be more delighted with the outcome of the pivotal study we are hard at work preparing for regulatory submission over the coming months and continue to target FDA approval in late 2021.
For FBR, we have successfully completed the initial transition to our new CMO partner, which we believe will provide us with the necessary infrastructure and scale upon potential commercialization of this important technology.
We continue to target a U S. NDA submission for <unk> beyond in 2022, an FDA approval in 2023.
We also continued to advance our late stage development of <unk> Prime a highly complementary new visco delivery device designed to be a truly minimally invasive system to further support the needs of physicians and patients.
Beyond these important pipeline programs. We also continue to invest in and advance our key earlier stage R&D programs.
Including in dry eye retina, glaucoma and additional undisclosed projects.
While these opportunities remain in preclinical developmental stages, we are encouraged with the initial progress we're demonstrating within these platforms and associated programs.
One such program is our ILEC transdermal platform, where development efforts are focused on patented cream based drug formulations that are applied to the other surface for the eyelid for transdermal drug delivery in glaucoma, and various corneal disorders, including dry eye.
Further we recently announced an expansion to this platform with the addition of presbyopia as a new investigational application as well as broader future development rights within products to go along with the promising R&D work, we've completed thus far.
We aim to advance several programs using this differentiated noninvasive patient friendly therapeutic approach into clinical trials.
Our pipeline has the ability to fundamentally transform glaucoma by significantly expanding our addressable markets over time to.
To enable this we've built a strong balance sheet and are aggressively expanding our global infrastructure strengthening our pharmaceutical expertise and upgrading our systems.
I am pleased with the execution of our key strategic initiatives and believe we are well positioned to advance our mission to create novel platforms that can transform the treatment of chronic eye diseases for the benefit of 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.
A core pillar of our drive to be a world class company is an unwavering commitment to continual improvement as responsible corporate citizens.
For this point, we recently released our 2020 sustainability report that significantly builds upon last year's inaugural assessment and highlights our continued commitment and progress on environmental social and governance initiatives.
Over the course of 2020, we invested significant time and resources into better understanding what drives sustainability o'clock hosts.
Stablish seeing meaningful goals to propel us forward on ESG matters and examine how best to present, our progress to our stakeholders.
<unk> to grow and enhance our ESG policies and program is a key priority for us now and into the future and we hope our 2020 sustainability report reflects that dedication.
Finally, before turning the call over to Joe I'd like to send our sincere welcome to two exceptional women, who recently joined our board of directors, Ms. Denise Torres and Doctor Leighanna win.
With more than 25 years of management experience in pharmaceuticals medical devices and consumer healthcare Denise is a highly accomplished executive who has led significant successful business transformations, including serving most recently as chief strategy and transformation officer for Johnson <unk> Johnson's.
Global medical device business.
As a practicing emergency physician visiting professor of health policy and management at the George Washington University School of public Health and former Baltimore Health Commissioner, where she led the nation's oldest continuously operating health Department Mena is a sought after and trusted expert on a range of.
Health policy and public health issues.
Each of these extraordinary women bring a wealth of relevant experience perspective leadership and wisdom that will be invaluable to our growing global organization and we are delighted to welcome them to the glaucoma Board.
So with that I'll turn the call over to Joe to discuss our first quarter 2021 financial results Joe.
Thanks, Tom as a reminder, I will 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 as well as the Investor Relations section of our website.
<unk> global consolidated net sales for the first quarter of 2021 were $68 million representing year over year growth of 23%.
As a reminder, our sales were materially impacted in the last few weeks of the first quarter 2020, as COVID-19 related restrictions emerged.
These results to start the year exceeded our expectations and reflect the continued recovery despite ongoing COVID-19 related headwinds and associated volatility.
With respect to the pandemic impact we believe the underlying markets continued to face mid to high single digit headwinds throughout the first quarter with a pronounced softness in February due to spiking COVID-19 cases internationally as well as black vaccine rollout and severe winter weather dynamics here in the U S. But the latter was followed by a healthy rebound domestically in March.
That continued in April.
Now turning to our U S glaucoma franchise, specifically or for first quarter U S. Glaucoma sales were approximately $39 9 million representing year over year growth of 22%, which we believe reflects a combination of pandemic related dynamics, a stable competitive landscape and pricing environment and under the underlying seasonality.
Trends.
Internationally, our glaucoma franchise delivered first quarter sales of approximately $13 8 million representing year over year growth of 20%. This performance reflect growing demand in many key markets and favorable foreign exchange tailwind, which were offset by the ongoing pandemic impact in certain markets and a onetime catch up provision associated with government.
In France.
The performance for the quarter was led by our Asia Pacific region, including Japan, and Australia in particular, while the major European markets have experienced challenges associated with the pandemic such as the shutdowns in the U K and France and other restrictive actions throughout the region and unfortunately, the situations in India, Brazil, and Latin America generally remain quite challenging.
In corneal health first quarter net sales were $14 3 million representing year over year growth of 27%.
The first quarter performance was driven by U S for Otrexup year over year sales growth of 51% to $11 4 million and a continued trend of healthy new U S. <unk> accounts starts as our commercial integration and strategies continue to deliver despite the pandemic.
Shifting gears towards the remainder of our P&L, our non-GAAP gross margin in the first quarter was approximately 83, 8% versus 83, 6% in the same quarter in 2020, and 83, 4% in the fourth quarter of 2020.
This reflects continued strong gross margin performance in corneal health and glaucoma, partially offset by the modest headwinds associated with the sales glaucoma inventory that had been produced less efficiently during the pandemic and geographic mix.
It is worth noting that our non-GAAP adjustments to Cogs include substantial adjustments related to the vitro acquisition accounting.
Our overall non-GAAP operating expenses were approximately $61 8 million in the first quarter of 2021 remaining below first quarter 2020, pre COVID-19 levels and consistent with the fourth quarter spending as we continue to restore expansionary spending as the recovery warrants a trend that we would expect to continue throughout 2021.
Our non-GAAP SG&A expenses in the first quarter were approximately $40 7 million up 1% sequentially compared to the fourth quarter, reflecting increased commercial spending offset by lower administrative costs and our non-GAAP R&D expenses in the first quarter were approximately $21 1 million down 1%.
Compared to the fourth quarter as we continued to restore core R&D spending earlier stage pipeline programs and human capital investments across the organization offset in the quarter by lower clinical development costs.
We finished the first quarter with a non-GAAP operating loss of $4 8 million and non-GAAP net loss of $9 5 million or 21 per diluted share. Our GAAP net loss was $16 5 million or <unk> 36 per diluted share for the first quarter of 2021.
We also invested in approximately $17 2 million of capital expenditures in the first quarter of.
Significant increase versus prior periods as we've entered the construction phase of the enhancement and expansion of our facilities in southern California, and Boston to meet our expanding development and operational needs a trend that we would expect to continue for the remainder of the year.
As of March 31, 2021, we had cash cash equivalents short term investments and restricted cash of approximately $417 million compared to $414 million at the end of 2020.
Finally, I will make a few comments on the state of our markets and opportunity today and how we believe things are unfolding for 2021, we.
We believe the competitive landscape and 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 and glaucoma.
Not surprisingly the dynamics associated with COVID-19, and its variants remain fluid and as discussed the overall ophthalmic markets still face headwinds and volatility. Most recently in a few U S states and numerous countries around the world that have experienced what we hope is a final wave having.
Having said that we have been encouraged by the overall trends exiting the quarter, which I discussed earlier.
And as we put all this together in the context of our expectations going forward. We expect second quarter 2021, net sales to increase sequentially to approximately $70 to $72 million, which reflects our typical underlying seasonality patterns. The broader recovery trends I discussed earlier international headwinds related to COVID-19 and potential unique.
Summer holiday dynamics.
As we look forward towards the second half of 2021, assuming the pandemic trends continue to gradually improve from here as anticipated we would expect the underlying markets to normalize back to 2000 2019 levels <unk>.
Generating sequential improvements each quarter for our business over the remainder of the year.
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 where in just the next three years, we expect to have several 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 surgically and sustained release pharmaceutical platforms.
The strong foundation and 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.
So with that I'll open the call to questions operator.
Thank you as a reminder to ask a question you will need to press star one on your telephone withdraw your question press the pound key please standby level from pilot roster.
We have for first question from Brian Weinstein from William Blair. Your line is now open.
Hey, guys. Good afternoon. This is Chris <unk> on for Brian.
The first one here on the deferred cataract surgeries net from the pandemic, how should we think about the pacing.
Churning through that backlog in and the magnitude of the tailwind there.
Sure Hi, Griffith, it's Joe I'll start off and if Chris wants to add any color. He can so clearly we've talked about for a while here.
The generation of our generating of our backlog for many practices throughout the country and world I think as we look forward and think about this I think the actual playing out of that backlog will be more elongated.
You have to take into consideration the actual operating dynamics for most of these accounts, where there is still only only so many surgeons and so many hours in a day for them to be providing procedure. So I think as they work their way through it it should be a tailwind for the overall market, but one that.
Perceived over many quarters versus versus many months.
Okay, and then just one more on can you revisit the investments.
That you're going to need to commercialize more than high profile products in your pipeline.
Maybe how are you preparing for regulatory and reimbursement considerations there.
So as we think about prioritizing.
Prioritizing the commercial investments associated with our pipeline.
Theres a lot of planning going on we've talked about I think historically each one is a little bit different as we think about products like like Idose and beyond obviously those are highly synergistic with the commercial infrastructure that we have today and so while we would foresee incremental investments there whether it would be as you mentioned market assets access reimbursement marketing.
Or to a certain extent the commercial infrastructure those are highly synergistic with what we have and as we continue to sort of go beyond that.
As Tom talked about some of the other earlier stage programs, we have like the transdermal drug delivery platform at that point, you start thinking about larger scale investments in the broader infrastructure to support an opportunity like that on the pharmaceutical side.
Understood.
Just one more quick one on <unk> can you talk about how you think about segmenting the market between <unk> and <unk>, often and you anticipate the need to have a separate reimbursement code for <unk> beyond <unk>.
So maybe what does that look like and timing there.
Yes, Griffin I'm happy to address that this is Tom and so as I said before I think our positioning could fall into line. So much like we do in glaucoma, which is positioned according to disease stage severity.
So when we're looking at beyond we may position that for more earlier intervention.
Patients and with <unk>, we may position that for later stage or more progressive keratoconus patients. We don't have any direct comparisons between the two procedures, but it is our conceptual belief that FBR b off probably delivers more of a reduction in K Max versus the <unk> beyond procedure.
And so thus I think physicians will see it the same way and we would think they would want to carry both of these different procedures into the marketplace to best serve patients with regards to how we seek reimbursements I would just say we have no obligation either way, but we can choose to create a separate J code for <unk> beyond if we choose to do so.
For those decisions are under consideration and I'll advise you once one side feel that are making the appropriate decision for investors.
Great I appreciate the commentary guys. Thanks.
Okay. Thanks.
We have our next question from Matt O'brien from Piper Sandler Your line is now open.
Hi, guys. Good afternoon. This is drew on for Matt and thank you for taking the questions.
I just wanted to start off a little bit on the performance of the business as of late maybe you could kind of help us understand what youre seeing on the ground as far as what percentages of your customers are open back up to capacity.
Maybe exit rates March into April if you're willing to provide and then second part is a bit of a clarification. You mentioned that you expect your markets kind of non.
Similar to 2019 levels.
Youre glaucoma business was about $230 million business in 19.
Should I interpret that comment to mean that you expect that level of sales in 'twenty, one or should we anticipate a little growth off of that.
Sure. This is Chris I'll handle the first part in terms of.
Physicians offices being open and ambulatory surgery centers.
Facilities in the U S. I would say that they are all open.
It's a different degrees theres still.
A restraint.
Restraint on how.
Many patients can come into the practice still some headwinds in terms of how.
Reps are able to get into these practices and even into the or but that is definitely loosening up as you look across the globe you do see different scenarios here recently in France, and Germany things were really shut down because of the second wave or third wave and spike in COVID-19 cases.
And so patients are being restricted as well as reps into the practices and offices. Some of that is also occurred in Japan. All in all it continues to get better but on a global basis. There is still a headwind from these COVID-19 release related issues.
Okay, then I'll take the second part of your question first on exit rates building upon what Chris was saying.
Think for us the U S glaucoma franchise as well as corneal health in particular saw a very strong sequential improvement from what I'll call a lull in February.
Through into March and then again into April so a good trend lines. There the international glaucoma business is a bit more mixed for all the reasons that Chris was just saying I think in the Asia Pacific region, we've seen strong trending both in the fourth quarter of last year, but then again in the first quarter and that's really continued.
While on the opposite side of that spectrum, we've seen the Latin America, Brazil et cetera markets.
To struggle with COVID-19 and the related dynamics and that continued through the first quarter and has continued really through the month of April.
Meanwhile, in Europe, you see relatively mixed routine excuse me mixed results, where we saw a degree of recovery in the fourth quarter, but it's really been somewhat muted since that point as some markets and move forward in other market that has taken a step back as they handle this third or fourth wave COVID-19, depending on how you look at it.
As it relates to the 2019 comparison, and we talk about markets getting back to more normalized levels relative to 2019, you referenced I believe our results for the full year, we're talking about those those trends getting back to that level in the second half and get any more precise than that I think will be a little bit difficult. This.
Stage.
Okay, that's super helpful.
And then can you just remind us or give us an update on the CPT coding process.
Where you sit with the category one transition and then the cat threes for Standalone and Idose.
And then as far as pricing and those costs can you just remind us for the steps to that process.
What your expectations are for some of those new awards.
Some of those new codes will be price, maybe relative to your current ICM business today. Thank you.
Yes drew I'll be happy to take that one so let's first step back and remind ourselves how favorable the AMA CPT Committee was for the business and this occurred in October of last year.
A couple of major favorable developments came out of that first of all the creation of the committee of a category three Standalone code for Istent inject.
And then separate creation of a category III code for Idose and these are two major seminal events that we were seeking for some time and we were able to secure those codes and once we have those codes in place.
We are then able to really kind of aggressively pursue reimbursement at the carrier level for both of those and I can discuss that a little bit later, how we will do that.
Second major development by combining those two codes together this gives us a tremendous opportunity for our vision and the future of using Idose in combination with trabecular bypass for static procedure, which I think will become the norm for patients with more moderate to progressive glaucoma, so that sanctions and gives us the ability.
To move forward for.
The third major event that came out of that meeting was the movement from the committee to transition the category three or <unk> 91 T code into a transitional code that would combine both cataract surgery.
The implantation of a trabecular bypass device and so as we've said just to give you a status update on the professional fees side. The new category. One CPT code is referred to the AMA Rvs update Committee the committee to conduct the physician surveys in order to assign a relative value unit scale and <unk>.
For a professional fee calculation.
So that survey to our knowledge is going on as we speak and the Rug Committee will make a recommendation to CMS and CMS will publish a proposed rule and the early part of July.
On the facility side, we are working very closely as we convert from a category III to a category one with the specialty societies, including the American Academy of Ophthalmology in the Crs among others, including the American Glaucoma Society to help present, our case to negotiate facility fee.
<unk> for the hospitals and afcs that will best represent and fairly positioning these products with our customers.
And so that also that CMS proposed rule recommendation should happen in July as well.
Then once the proposed rule goes into place there'll be a commentary period and CMS will issue a final 2022 rule.
In late October early November of this year, which will be effective in January.
So as we've said before these are very very favorable developments on the whole for glaucoma.
<unk> a standalone code for for the Istent Infinite for instance will coincide with the product launch gives us great legs to be able to pursue reimbursement through a local coverage determination in each one of the Max something we've become pretty good at.
Given our history with Istent.
With other products with.
With Idose will be whole stream that until we near approval, but then we'll have the ability to as well approach the carriers on a local coverage determination basis.
And typically what the carriers do as you know they'll crosswalk this to a like category one code to determine their discretionary view of what the professional fee reimbursement for that product will be.
So again that falls within our power Alley. Once we have approval and then of course, we would seek a separate J code.
To be able to carve out the idose device.
Once we received commercial approval.
So as we've said before we on the whole are very excited about what came out of the committee. There are obviously always a variety of scenarios that can materialize when a CPT code moves from category three to one on the professional fee side, it's our expectation that payments should mostly microwave decrease versus the average pro.
Fee levels under the current category III designation largely because the.
The RBS system will view it as an ancillary procedure, rather than giving them the full perioperative component.
On the facility fee side, there is a variety of scenarios that spanned from negative to neutral to quite positive and we work very very closely with the associations to make sure that we best represent what we've accomplished and pioneering in creating this market class category.
So I think that gives you the full view for you and for investors and we look forward to continue to prosecute in any event. We are prepared to move forward and best represent the commercial interest of the business.
We have our next question from Robbie Marcus from Jpmorgan. Your line is now open.
Hey, guys. This is actually Allen on for Robbie. So I just had one quick question on kind of the quarterly cadence and then another quick follow up looking at your guidance for second quarter it looks like here.
Adding towards.
Growth over 2019 levels roughly in line with what you did in <unk>, even though as you said once you kind of had headwinds for both domestic and international and in second quarter. You know hopefully use continues to improve even if <unk> remains a bit impaired. So I guess like what's driving that obviously is prudent for income.
But is there anything specific that you would call out there that is driving that conservatism or is it just normal COVID-19 caution.
Yeah, Thanks, Alan it's Joe.
I think a little bit of both I mean, the reality is we.
We've seen positive trend lines at least once before during this pandemic as we went into call. It. The October time frame at the beginning of the fourth quarter only to see some obviously setbacks as another wave of COVID-19 kind of took over here in the U S as well as internationally.
As we continue to navigate the dynamics and watch some of the hotspots with emerging variants and the like I think it does make sense to still be a little bit on the cautious side I think the second dynamic that we're trying to factor in <unk> youll recall with seasonality in our business one of the one other aspects over the course of the middle part of the year.
The summer holiday season, both here as well as in some of the international markets and and as I think we all come out of.
This long COVID-19 stretch I think it's our expectation that people are going to take some time off and that could cause a little bit of disruption relative to traditional trends as we as we get later into the quarter.
Got it and then just a quick follow up on Idose, It's really nice to hear that you finished enrolling the first trial that you plan to finish enrolling a second trial pretty soon but when.
We expect to see top line three months efficacy data or should we kind of similar to the phase III trial wait just to see the full year.
In 2022.
Yes, so while we haven't committed either way, but I will tell you that.
I think.
I would be.
More inclined to show the three month data when we have locked it and we've analyzed it to show that to investors rather than waiting for the 12 month data.
And I think as well I'd be inclined to show the three year data from the phase II B study, because I think that'll be important when we start to gauge for launch activity of this device, which is really far exceeded our initial expectations. So I won't give you timing, but I will tell you that thats. My inclination is for the investors have a full view of the pro.
<unk>.
And commercial capability of the items product.
It's very helpful. Thank you guys.
Next is Jon block from Stifel. Your line is now open.
Hi, This is Trevor on for John Thanks for taking my question I just wanted to dig into the recent trend commentary that you laid out a little bit closer.
So on the fourth quarter, you mentioned some patients for <unk>.
Electing to defer procedures just in the context of <unk>.
Pending vaccinations that we're gonna roll out so could.
Could you maybe give us an update on how that trend has played out in the first quarter just as you know a lot of people.
Especially in the older demographics have come back for maybe at this point how does that how has that played into some of the trends that you saw across February March and April and if you could quantify that at all that would be great. Thanks.
Yeah. Thanks, Trevor it's Joe Yes, when we made that comment I think was on the fourth quarter call and it was less with respect to the fourth quarter performance in more about what we were seeing in the month of February so it clearly in particular in markets, where the vaccination efforts hit full steam out of the gate the U S. The UK et cetera.
We experienced a bit of a pause where.
It's our belief that many patients decided to wait until they were fully vaccinated go in and get their procedures and so that certainly was a factor in February it's hard to separate that.
Versus some of the other things we saw in that month, which was pretty extreme winter weather as youll recall throughout the south and in the northeast here in the United States in particular, but but those two things definitely led to a pronounced softness in that month.
And we've thankfully seen a nice recovery from that point, both in March and then again in April.
Okay great.
And then maybe just a follow up on prime.
Could you give us any comments on how you intend to position that and the market is it going be for many of you bundle with other bias or would it sort of stand out of zone.
Trevor This is Chris and we haven't really disclosed that we're excited about having yet another product in our bag and we see this as potentially as a standalone as well as complementary to our trabecular bypass products anytime you have.
For a multitude of options. It always puts you in a good position in terms of negotiating pricing contracts with <unk> and hospitals.
Great. Thanks.
Next is Scott Venezuela from Vandenberg Capital Management. Your line is now open.
Hi, Devin for Ravi in for the Bad Bank team here, Thanks for taking my questions.
I wanted to ask you in regards to COVID-19.
Normalization and surgeon training.
How do you see that playing out in second half for 'twenty, one is that kind of in line with.
The rest of the.
For the business and opening up or do you see that kind of.
Bifurcated between global and U S.
Yes. This is Chris and we Havent disclosed any specific.
Numbers.
Around physicians trained.
I will say is that things have definitely started to open up we're pleased with where we were in the first quarter and with the introduction and excitement around Istent inject W. We continued to train physicians and we would expect to do so on a go forward basis, and I think with respect to your portion of the question on the international.
<unk> versus U S. Obviously, it's an important driver for our business regardless of the geography, we continue to train doctors worldwide.
Okay, Great one quick follow up to that.
Darcy.
Expansionary I think you mentioned restoring expansionary spending.
In 2021.
Is that kind of get some color where sales force expansion.
Falls into that when you look at the new product line for example, Idose TR.
And the pharmaceutical aspect there.
How far ahead does.
It's kind of the expansion start when you look at the commercialization of that.
A year ahead, a few quarters ahead, just trying to get a idea of cadence there.
Yes, it's Joe Chris do you want to add something you can't I think it's not a 2021 with respect to the way you asked the question on Idose, that's not a significant 2021 spend other than all the things that you would imagine we're doing around health economics market access and reimbursement well in advance for.
From a commercial infrastructure standpoint, that's not something that we would.
We ended up spending much in 2021 as you start getting into 2022 and transition to 2023, you would expect a gradual uptick there as you begin to prepare for commercialization and launch both from a marketing standpoint, as well as commercial infrastructure.
The only thing I'd like to add to that is there'll be.
A good amount of leverage with our existing sales organization for items.
I know, it's a pharmaceutical product, but remember that this will be implanted.
Either in a physician suite or an ASC or hospital and so there'll be a component of that.
That will or excuse me they'll be will be utilizing our existing sales organization to a large part.
Okay. Thank you.
Next is Anthony Petrone from Jefferies. Your line is now open.
Hi, This is briana on for Anthony. Thank you so much for taking our question.
I have two questions and I'll ask them upfront.
Xanthous key trial still on track for October is my first question and then second is a follow up to some of the reimbursement question that Ross.
With items physician fee code changes from category III for category one.
Do you expect to start to be sensitive to what CMS proposals for the new physician payment level and then if so how much do you think the stock of NAV on the payment levels that are plus or minus 20% from the status quo and the 900 to 1300 dollar range.
Well, Brian I will take your first question in that regard to the <unk>.
<unk> trial.
The where the trial jurisdiction will be as Santa Ana which is in southern California.
And they've been they in Santana have indicated that they are opening up trials in may and both civil and criminal proceedings and so it's our expectation at this standpoint that we would have the trial and the trial will commence in late September Thats how were preparing.
And we remain fully confident of our position.
Based upon.
A multitude of <unk>.
<unk> that have been favorably resolved in our favor so.
That's our position at this time, we will keep investors posted if theres any changes.
And then Brian It's Joe I'll try to take a stab at the second part of that question obviously.
I wouldn't make predictions with respect to stock price movements.
On anything.
To our business, but what I can say is.
As you think about the category one code conversion.
And the physician fee that you asked about.
Clearly we have some experience here, if you think back to the dynamics around the Nordion region.
That really took hold I believe in the middle part of 2017 and only recently.
Had some recovery in that position fee and at the time, we told investors to expect debt, while we didn't welcome that pullback in the physician fee that.
What we were seeing was a modest headwind to growth as it related to that but not a significant impact to the net underlying demand and so here I think that's something people will not take into consideration as they think about any movement around the physician fee.
For this year.
The only thing I'll add to this debt is this is Chris is that trabecular bypass is becoming more of a standard of care.
And as such more and more physicians are doing it more and more patients are asking for it and so I think that plays into it as well.
We have our next question from Steven Lichtman from Oppenheimer. Your line is now open.
Hey, guys. Thanks for taking our questions. This is David on for Steve.
Just starting off with <unk>.
Slated to launch towards the end this year could you maybe just refresh us on your initial marketing function reimbursement efforts and any commercial scale for it investments necessary ahead of that launch.
Yes, I'll take the first part of this this is Chris So we're hoping for approval by the end of the year.
Wood launch shortly thereafter.
We'll come out as a category three.
Exiting the code or the category III designation in January.
Similar to what we did with Istent win that was approved in 2012.
We will be working with all the Macs and commercial payers to get.
A fulsome reimbursement both for the facility fee and for the physician fee.
We'll be likely.
To be.
Have a label that is approved for.
Advanced.
Glaucoma and that's how it will be positioned by our organization. So I would see debt that will start as a slow ramp up and we will continue to grow over time as we get more payment from these organizations.
From a market size standpoint, I would just add debt out of the gate, we see it as a couple of hundred thousand call. It 200000 potential procedures a year in the United States.
Larger than that on a global basis and over time from a market development standpoint, we'd hope to expand that and I've said in the past that that could ultimately be is largest.
Call it half a million procedures a year in the United States, depending upon how that market evolves.
Yes.
Great that's helpful and then.
Just one more on the corneal health business you.
You guys posted another strong quarter here and just curious.
Can you talk about maybe what's been driving the growth there is that more a function of greater utilization within existing accounts or extended installed base.
Yes. This is Chris I would say, it's a whole lot of things.
It is both.
Its expansion within existing accounts new starts.
The training of Ods and physicians around identifying care to patients.
It's the implementation of customer friendly programs, making it easier for them to acquire the equipment.
It's the fact that we've done a lot of work in reimbursement.
To ensure that payment is fulsome and consistent.
There's a whole lot of things in good direct to consumer campaigns, there's a whole plethora of.
Initiatives that we've put in place that I think is driving debt number.
Okay. Thank you.
No further questions at this time I'll turn the call back over to the company.
Okay, so with that I want to thank all of you for your time and attention today, we hope everyone is staying safe and thank you for your continued interest in glaucoma Goodbye have a great day.
This concludes today's conference call. Thank you for participating you may now disconnect.
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Okay.