Q2 2021 Glaukos Corp Earnings Call
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Welcome to Black Hills Corporation's second quarter, 2021 financial results conference call a copy of the Companys press release issued after the market close today is available at www dot glaucoma dot com or H T T P colon.
Forward Slash forward slash www dot glaucoma dot com.
At this time, all participants on a listen only mode.
After the speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press star 1 on your telephone.
It is being recorded and an archive.
Replay will be available online in the Investor Relations section at Www Dot glaucoma dot com or H T. T. P. Colon boy slash forward Slash Www dot glaucoma dotcom.
I'll now turn the call over to Chris Lewis Senior director of Investor Relations and corporate strategy and development.
Now begin your conference Sir.
Thank you and good afternoon, joining me today on Galapagos, President and CEO, Tom Burns CFO, Joe Gilliam, and CFO, Chris Calcaterra.
<unk> remarks, well open the call to questions.
On time and opportunity to address everyone's questions. We request that you limit yourself to 1 question and 1 follow up.
You still have additional questions you may get back into the queue.
Note that all statements other than statements of historical facts made on this call net address activities events or developments, we expect believe or anticipate may occur in the future are forward looking statements.
It's about our plans objectives strategies and prospects regarding among other things our sales force.
Products, our pipeline technologies, our U S and international commercialization integration on market development efforts the efficacy on our current and future products, our competitive market position reimbursement for our products financial condition and results of operations as well as the expected impact on the COVID-19 pandemic on our business and operations.
These statements are based on current expectations about future events affecting us and are subject to risks uncertainties and factors relating to our operations and business environment.
All of which are difficult to predict 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.
Review today's press release on 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 <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 price is ongoing results of operations, particularly when comparing underlying results from period to period.
Please refer to the tables on our earnings press release and is available on the investors section of our website for a reconciliation reconciliation of these measures to their most directly comparable GAAP financial measure.
With that I will turn the call over to <unk>, President and CEO Tom Burns.
Thank you Chris Good afternoon, and thank you all for joining US today, we hope everyone is staying safe and doing well.
Primary new markets the right way as we've done in mix with transformative technologies that disrupt conventional treatment paradigms and improve the standard of care for the benefit of patients is not easy and often requires herculean efforts since launching our original istent flagship product in 2012, we have overcome.
Any obstacles, along the way, including navigating often complex and changing regulatory and reimbursement environments.
Thanks Louise since those early days, we've grown from a 1 product for our Columbus centric, primarily domestic organization into a global diversified hybrid drug and device ophthalmic leader with 4 FDA approved products, a robust near and long term pipeline of promising novel therapies across.
Our glaucoma corneal health and retinal disease franchises, a significantly larger global infrastructure and a strong balance sheet and we have attracted incredible people to our team along the way.
We are.
Unapologetically ambitious and confidence in our future.
We continue to execute on other things within our control, but before we discuss our record second quarter and overall progress I will spend some time addressing the centers for Medicare and Medicaid services or CMS has proposed rules for calendar year 2022, including some background and detail on.
Plans during the ongoing open common period.
What it means for glaucoma share the proposed rules remain unchanged.
On July 13th and 19 <unk>.
<unk> published its proposed calendar year of 2022, Medicare physician fee and facility fee schedules respectively.
These proposed 2022 rules update the payment policies physician fee and facility payment rates and other provisions for services furnished under the Medicare physician fee schedule and both the <unk> and ASC settings.
The issuance of these proposed rules is followed by a 60 day public comment period, which will culminate in cms's release other respective final rules by November 2021 for implementation in the U S. On January 1.2022.
Therefore, the proposed rules are subject to change.
Let's start with a quick background of our current procedural terminology for CPT process to date.
The U S.
In 2008 with the approval of the American Academy of Ophthalmology, we applied for and received a temporary category 3 CPT code <unk> hundred 90, <unk> to describe the insertion of devices such as the I spent using mix procedures.
Since then we've extended our category III code successfully but it was scheduled to expire in 2023 with.
With this in mind, we have been anticipating and preparing for the conversion of 191 fee into a category 1 CPT code for some time.
In October 2020, the conversion process was made official when the American Medical Association CPT editorial panel approved the creation of 2 new category, 1 CPT codes for 2022.
<unk> hundred 60, <unk> ex 1.669 ex too to cover the insertion of acres per drainage devices, such as ours when used in combination with cataract surgery.
The CMS 2022 proposed rules include physician fee and facility fee payment rates for these 2 new category 1 CPT codes.
Including 669 ex too for non complex cataract extraction in combination with the insertion of an aqueous journeys device and 669 ex 1 for complex cataract extraction in combination with the insertion of an acreage drainage device.
CPT code 66, 9 ex 2 and $6 Nymex 1 will replace category III code of 191.2 years. The primary code to the physicians hospitals finance fees were use to seek reimbursement utilizing glucose as trabecular micro bypass technologies.
Including for our Istent, Istent inject and Istent inject W devices when used as approved in combination with cataract surgery.
Starting on the physician fee often referred to as the professional or protein, which is the right surgeons are paid directly for doing a procedure. The proposed rule indicated through 2022 physician fee per CPT code 606, 9 ex 2 of approximately $565, representing an incremental physician fee.
Payment of approximately $34 above non complex cataract surgery alone.
This compares to a median physician fee today for <unk> of approximately $350, which as a category III CPT code as price independently by each Medicare administrative contractor or Mac.
Moving to the facility fee, which is the payments of the facility receives to cover the cost of a procedure, including the cost of the devices used.
The proposed rule indicates for 2022 facility fee payment rate in the ASC setting for CPT codes 669, ex 2.606 9 ex 1 of $2500.16 compared to the combined ASC facility fee under the existing category III code today of $33.53.
Our proposed reduction of $837.
We estimate that approximately 80% of procedures utilizing their trabecular micro bypass devices in the U S are performed in the ASC setting.
For the remaining 20% of procedures performed in the <unk> setting the proposed rule indicates that 2022 facilities.
Payment rate for CPT code 606, 9 ex to 650 <unk> ex 1.
$4019, an increase of $101 over today's current atrial PD facility fee of.
$3900.18.
We are extremely disappointed with Cms's proposed 2022 rates for the new category, 1 code to cover our sight saving trabecular micro bypass technologies when used as approved in combination with cataract surgery.
While we had expected the professional fee under the new category, 1 code to most likely decrease versus category 3 levels. Given the procedure is valued as ancillary to the primary cataract procedure. The proposed 2022 levels are well below our expectations and the ranges that were contemplated in our internal and.
External generated analyses.
For the facility fee, we had expected and communicated a wider range of potential scenarios, including positive neutral or negative potential outcomes and the proposed 2022 ASC facilities needed represents the downside scenario.
Clearly these proposals are unexpected on welcome and on the latest example of our current system that often seems to be value and discourage innovation.
We believe Cms's proposed rates do not appropriately consider the associated pre and post operative work training component timed nor surgical scale required for implanting on micro bypass technologies, which as a reminder of the smallest medical devices ever approved by the FDA and supported by approximately 200.
Peer reviewed publications that highlight the technology's favorable safety profile and efficacy outcomes.
In fact, 1 could argue the proposed rule.
Economically incentivize.
Utilization of less efficient and more invasive procedures that we believe lack robust long term safety and efficacy clinical data.
In many ways, we believe the proposals punish ophthalmic surgeons, who utilize our elegant facile technologies.
Through a proficient implant procedure and will inevitably.
<unk> caused a reduction in patient access to these sites saving technologies.
So where do we go from here with CMS, we were organized and prepared for downside scenarios heading into the proposed ruling and our efforts are already well underway. These efforts include a comprehensive and coordinated response in partnership with key societies patient advocacy groups ophthalmic surgeons and lobbying groups we.
We are well into engagement with leading ophthalmic and ASC societies, including the American Academy of Ophthalmology, The American Society of cataract and refractive Surgeons American Glaucoma Society, the ophthalmic outpatient surgery Society, and the ambulatory Surgery Center Association.
We are encouraged by the full commitment. These societies have made in advocating for change to Cms's proposal in order to protect patient access to enable surgeons to provide the highest quality of care as.
As you might expect in our situation. There are several key issues that will we will need to tackle in a response to CMS both on the professional and facility fees side.
While we cannot guarantee.
We cannot make any guarantees regarding the final outcome. We can say that we are fully committed to exploring every option during the public comment period in hopes that medical providers and facilities across our network are paid appropriately for conducting these types of procedures and ensuring their collective voices heard by CMS.
Regardless of the final rule outcome, we must plan strategically for scenarios, where the proposed rates are finalized which could result in headwinds to our newest combo cataract to make business, both from a volume and pricing perspective.
Joe will provide more details here later on the call.
If I've learned anything since the outset of Covid, it's that our employees and teams at <unk> are resilient, we have an unwavering commitment to doing things the right way supported by real science robust clinical evidence and an unrelenting focus on patients with.
We do remain steadfast in our commitment to advance our long term mission to transform the treatment of chronic eye diseases for the benefit of patients worldwide are people balance sheet and diversified growth drivers position us as we move forward to take on this challenge as well as those we will face in the future.
Shifting gears to our second quarter results. We are pleased to report second quarter net sales of $78.1 million up 147% versus the year ago quarter and 15% sequentially.
Fueling our strong second quarter results with solid execution on our key strategic initiatives across our glaucoma and corneal health franchises globally paired with the continued strong recovery trends in the market overall, and our business specifically through the second quarter and into July.
We remain focused on our near term execution as we drive new adoption and deeper penetration globally for transformative mix on island solutions, along with advancing our market expanding our robust pipeline and R&D programs.
Given the significant negative impact COVID-19 had on demand for elective medical procedures last year, comparing sales versus pre pandemic levels. In 2019 provides 1 of the more relevant measures of performance.
On this comparison and adjusting to include a regional sales in the prior comparable period. Our total net sales grew more than 13% in the second quarter of 2021 compared to pro forma 2019 levels driven by strong growth in international glaucoma on a 56% in corneal health a.
49% these.
These 2 franchises accounted for roughly 41% of our total second quarter 2021, net sales up from approximately 30% prior to the pandemic in the second quarter of 2019, we are pleased with the strong momentum and increasing growth contributions we are experiencing from both of these emerging franchises.
International glaucoma growth during the second quarter was broad based across the European and Asia Pacific regions were continuing to invest in our expanding teams around the globe as.
As we drive deeper penetration and broader adoption of Migs.
Around the world.
Corneal health growth during the second quarter was driven by record in U S with trucks sales of $12.6 million and continued healthy momentum in the 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.
That are being well received.
It's also worth noting that the strong capital position. We have built allows us to remain on offense when it comes to investing in our future.
As a testament to this we continue to invest in and advance our fulsome pipeline based on our core novel platforms, where we anticipated on our planning for a robust cadence of new product introductions over the coming years.
Debt have the potential to significantly expand our addressable market opportunities and fundamentally transform glaucous overtime.
We're hard at work preparing for an Istent infinite regulatory submission and continue to target FDA approval around the end of this year.
As a reminder, CMS is 2022 proposed rule includes an ASC facility fee payment of $25.16 per the new category III CPT code flow ex <unk> T, which we anticipate will be used in the future to cover Standalone Migs technologies, such as Istent infinite if approved.
We also continued to advance our late stage development of <unk> Prime a highly complementary new <unk> delivery device designed to be truly minimally invasive system to further support the needs of our physicians and patients.
Regarding the presser flow micro shrunk, we announced a new licensing agreement with Santander in the second quarter.
That increases our responsibilities in the United States and expand our territories to include the U S, Canada, Latin America, Australia, and New Zealand.
FDA discussions regarding the U S submission remains ongoing and at the moment. The FDA is obtaining additional input from glaucoma surgeons to ensure a complete evaluation of the clinical data submitted in the PMA.
In the meantime, we are preparing for future commercial launches in Canada, and Australia, given the recent regulatory approvals in both geographies.
During the second quarter, we also completed patient enrollment and randomization in both of the 2 pivotal clinical studies that makeup the idose TR phase III clinical program.
The 12 month phase III trial results are expected to support our anticipated NDA submission for Idose TR in 2022, and we continue to target FDA approval for this promising technology in 2023.
For <unk>, we successfully completed the transition to our new CMO partner and continue to target a U S. NDA submission in 2022 and FDA approval in 2023.
Beyond these important near to medium term pipeline programs. We are also continuing to invest in and advance our key earlier stage R&D programs, including in dry eye retina. So on.
Coma 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 and.
Total to advance a number of these programs into the clinic over the next 12 months.
In conclusion, I'd like to reiterate our commitment to challenge the conventional way of thinking by driving meaningful innovation for the benefit of patients as we aspire to build a world class company and Im confident we have the right people strategy infrastructure pipeline and balance sheet to execute our plans and deliver on.
On our future aspirations.
So with that I'm going to turn the call over to Joe to discuss our second 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 second quarter of 2021 were a record $78.1 million representing year over year growth of 147% and sequential growth of 15%.
As a reminder, our sales were materially impacted in the second quarter of 2020 due to COVID-19 related restrictions.
As Tom mentioned earlier on a pro forma basis, our second quarter 2021, net sales increased 13% compared to the second quarter of 2019.
We were encouraged with the continued COVID-19 related recovery trends in many key markets globally, including the U S. During the second quarter, having said that we're monitoring closely the recent developments with the Delta variant that have created isolated but growing disruptions in the U S and abroad.
We acknowledge the risks this poses to the overall market recovery dynamics, but we remain cautiously optimistic as to the magnitude of this latest potential global pandemic development.
Now turning to our U S glaucoma franchise, specifically, our second quarter U S. Glaucoma sales were approximately $46.3 million representing year over year growth of 154% and a sequential growth of 16%, which we believe reflects a combination of pandemic related dynamics of <unk>.
<unk> combination cataract current competitive landscape and pricing environment and underlying seasonality trends.
Internationally, our glaucoma franchise delivered second quarter sales of approximately $16.4 million representing year over year growth of 145% sequential growth of 19% and 56% growth compared to the second quarter of 2019. This performance.
<unk> reflects the growing demand in many key markets throughout our European and Asia Pacific regions, which were offset by the ongoing pandemic impact in Latin America in particular.
In corneal health second quarter, net sales were $15.4 million representing year over year growth of 133% and sequential growth of 8%. The second quarter performance was driven by U S per trucks, our record sales of $12.6 million on year over year sales growth of 143% and sequential growth of 11% along with a.
<unk> trend of healthy new use per trucks account starts as our commercial integration strategies continue to deliver on.
Our second quarter 2021, corneal health net sales were up approximately 49% on a pro forma basis compared to the second quarter of 2019 net sales of $10.3 million.
Shifting gears towards the remainder of our P&L, our non-GAAP gross margin in the second quarter was approximately 84, 4% versus 78, 2% in the same quarter in 2020, and 83, 8% in the first quarter of 2021.
This reflects continued strong gross margin performance in corneal health and glaucoma versus prior periods that had been impacted by pandemic headwinds.
It is worth noting that our non-GAAP adjustments to Cogs include substantial amounts related to the vitro acquisition accounting.
Our overall non-GAAP operating expenses were approximately $67.8 million in the second quarter of 2021, an increase versus the second quarter of 2020 and first quarter of 2021, as we continue to restore expansionary spending as the recovery warrants a trend that we would expect to continue moving forward.
Our non-GAAP SG&A expenses in the second quarter were approximately $43.6 million up 7% sequentially compared to the first quarter, reflecting increased commercial spending offset by lower administrative costs and our non-GAAP R&D expenses in the second quarter or approximately $24.1 million up 14% sequentially compared to the first quarter as.
We continue to restore our 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 also recorded a onetime in process R&D charge of $5 million in the second quarter associated with the <unk> licensing transaction for our presbyopia.
We finished the second quarter with a non-GAAP operating loss of $1.8 million and non-GAAP net loss of $5.1 million or <unk> 11 per diluted share. Our GAAP net loss was $17.5 million or <unk> 38 per diluted share for the second quarter of 2021.
We invested approximately $11.4 million of capital expenditures in the second quarter, which as expected remains elevated versus historical levels and we've advanced through the construction phase of the enhancement and expansion of our facilities in southern California, and Boston to meet our growing development and operational need a trend that we would expect to continue for the remainder of 2021.
As of June 32021, we had cash cash equivalents short term investments and restricted cash of approximately $428 million compared to $414 million at the end of 2020 and $417 million at the end of the first quarter 2021.
As we look forward I will first make a few comments on the state of our markets and opportunity today and how we believe things are unfolding for the remainder of 2021.
As it relates to COVID-19, we were encouraged by the overall trends during the quarter, which I discussed earlier, but the situation remains fluid given the emerging potential challenges associated with the Delta variant.
We remain optimistic but would caution conservatism as you consider any potential impact that may have on electric procedure markets throughout the remainder of 2021, particularly as we head towards the fall and winter months.
Beyond Covid, we believe the competitive landscape and pricing dynamics have remained stable across each of our major business areas as evidenced by our second quarter results.
As we put all that together in the context of our expectations going forward. We are providing 2020 on net sales guidance of 285% to $290 million, including our expectation for third quarter net sales to be in the range of $72 million to $74 million.
This guidance takes into account, our typical underlying seasonality patterns COVID-19 related trends and risks and potential U S combo cataract glaucoma headwinds on 2 fronts.
Competitors seeking to Opportunistically capitalize now on the relative economics associated with Cms's 2022 proposed ruling and the potential impact in the fourth quarter should those proposed rules to be finalized in early November.
As you look beyond 2021 and into next year.
I will note that we continue to refine detailed assessments on RN to analyze the potential volume and pricing impacts to our combo cataract U S glaucoma franchise, assuming various scenarios, including if the proposed rules are finalized.
We will continue to monitor the trends and provide more specific commentary once a final rule was available and analyzed.
In the meantime, there can be no guarantee that these proposals will change and we are aware of the initial diligence.
<unk> and estimates of the potential impact of volumes and pricing that many of you in the research community have already performed and published some form.
Which based on the research we've seen would imply a 2022 U S combo cataract glaucoma sales range of $90 million to $110 million.
To be clear this is not formal guidance, but rather other acknowledging these perspectives directly or indirectly exist based on your own publications and is an attempt by us to accurately translate that diligence into a potential 2022 U S combo cataract glaucoma sales range for investors.
With that I'll now turn things back to Tom for a few closing remarks.
Okay. Thanks, Joe.
So in closing I'd like to reiterate our conviction in our long term vision.
We are resolutely committed to building <unk> into a leading company in ophthalmology.
We'll continue to invest in this vision in order to scale, our team and to drive innovation, which we believe are foundational pillars to long term value creation for all stakeholders.
We understand the difficulty of forecasting our U S combo cataract glaucoma business with precision in the short term.
There are many unsettled variables that may influence performance in significant ways.
While we are highly disappointed in the initial CMS proposals and.
And we understand that with the resulting uncertainty can be disconcerting for investors, who want to take this opportunity to underscore our continued confidence in our future.
We pioneered the mixed market and are going to fight hard for it but.
But our ambitions go well beyond this category.
Funding from our U S combo cataract Istent franchise has enabled us to build a pipeline with the breadth and magnitude that may be unmatched in this industry.
And while swing factors in the U S reimbursement may significantly impact our existing U S combo cataract glaucoma business, we believe that our foundation remains strong and that our pipeline has game changing potential.
We believe that this near term noise gives us the opportunity to again focus your attention on our near and long term vision and would encourage investors to evaluate closely our U S. Glaucoma commercial execution, thus far in 2021 the growth in scale of our international glaucoma, and corneal health franchises and study of the pipeline.
And we are confident that many of you will come to the same conclusions and enthusiasm we have for the future of glaucoma irrespective of the final U S combo cataract reimbursement.
Outcome from CMS so on.
With that I'll open the call to questions operator.
Ladies and gentlemen, as a reminder, if you would like to ask a question. Please press Star then the number 1 on your telephone keypad.
Again that is star 1.
And our first question is from the line of Andrew Blackman with William Blair.
Okay.
Yes, good afternoon, thanks for taking the questions.
So I guess to start certainly appreciate all the commentary that you provided on the reimbursement side of things in your thoughts there, but I guess just to take a step back with all of the different variables. The plan. There can you maybe just talk about sort of your thought process on.
Now a right time to provide some initial thoughts around what 2022 might look like and I guess related to that and maybe just elaborate a bit on some of the assumptions that you are putting into play that for those figures.
Yes.
Hi, Andrew It's Joe Thanks, I think that's a fair question and I'll start with the.
Why 2022, now I think we certainly understand that.
Situations like this creates uncertainty for investors.
And we acknowledge that many of you in the research community community have done.
On a lot of hard work and preliminary diligence on the potential impact survey as Doc calls et cetera, and as a result, we also know that these obviously these perspectives exist.
But in many cases, they haven't been translated accurately or are maybe at all.
<unk> into numbers, because it's difficult to do so.
So candidly we wanted to be helpful.
At least provide some accuracy and certainty around the implied math on implications from the streets initial work on the CMS proposal.
When you think about.
The numbers that we share in the prepared remarks.
$90 million to $110 million.
It really utilize a range of volume impact assumptions from the survey the Doc calls and the observations that you all published.
Okay.
And your next question is from the line of Chris Cooley with Steven.
Good afternoon, and thank you for taking my questions.
And greatly appreciate Tom all your color about the efforts to reverse order to improve on the proposed rates go ahead and do 2022.
Just for me so if I could maybe here in the immediate short run and then 1 longer term question.
Joe I'm, just kind of curious if implicit in your guidance for the full year, if you're assuming any type of deceleration in your domestic mixed business here in the back half as.
Surgeons potentially start to transition or as you alluded to I believe in your prepared comments.
You know some type of more aggressive marketing there and if so you could just maybe help us better quantify that vs kind of volume growth that was clearly a record quarter here and the and the 2 Q.
I have just 1 follow up after that thank you.
Yeah, I'll start Christmas and then let you turn it back to the other questions you've got so.
Hi, Stentor, iced tea and inject.
Based upon the proposed reimbursement code and the data behind infinite and similarly, if I could add kind of a 2 part there.
I was intrigued by your your commentary on and tried US you know there with the with the 5 million I I P. R and D charged during the quarter I don't recall that being the timeline previously and just would appreciate maybe just a mental reminder, there the wind that's suppose that that time line for the and tried ice presbyopia.
Correct. Thanks, so much.
So Christmas is criticism of the first part enjoying on the second part is released too isn't it.
There is you know.
As a standalone product.
Oh.
Stated that we are looking to get approval sometimes on the.
Towards the end of the year.
In terms of reimbursement, we don't feel will be affected by what's been published visit proposed rule for Tibet.
2 of my best in combination with cataract surgery.
Oh by just being a standalone product it will be evaluated such will not be seen as an ancillary product.
Therefore.
We expect.
Have more wholesome reimbursed.
Firms of how doctors used to that will be up to the doctors.
We are expecting.
Labeled as likely to be advanced glaucoma.
Or refractory glaucoma, we will be conducting face were studies.
For that product that will be for mild moderate.
Payers will have the ability or the decision.
To make in terms of how they take for that based on the data but.
But we won't be able to market.
Beyond what the label is which we think will likely be.
Answer refractory glaucoma.
Does that answer your question.
Yeah. Thank you.
I am happy to take the second part of the question. So we look at those fulsome pipeline that we talked about and you can all see.
See it kind of.
Simple before you and what other things that we find most promising as proprietary novel cream that we've been license from <unk>.
Which contains kind of or protect proprietary blend of pilocarpine and caffeine is a free speculating agent.
And when you combine these together we seem great promise an early pilot pilot studies when we use this trans Germany, just by placing on the island.
For the treatment of dry I.
And then when you see what we've done we've already expanded the use of that product.
The further and licensing of the presbyopia claim.
And so we expect using this combination in this proprietary cream that we may have the opportunity to open up.
And this product really towards the end of this year or certainly in the early part of next year. So already this test case unfolds before you.
Make no mistake, we are as good as we think we can be with this with this technology will be looking for other opportunities to treat and Terry segment disease.
Moving and cream, we think will dramatically improve patient compliance.
Can have good pharmacokinetic release, which may provide for a day in the lead which could give us extra hang time as we approach. Some of these disease states. So it's just 1 of the novel platforms that we're investing in which we think can command.
Very very promising future for the company and.
And Chris I'll finish it off with on the day $5 million reference. So that's in process R&D right on charging associated with the upfront amount that we paid to address associated with the expansion of the license into presbyopia Tom.
Tom mentioned.
And the next question is on the line of Mat O'brien, what type of Sandra.
Hey, guys. This is on for Matt. Thank you for taking the questions and I appreciate the the transparency on all aspects of business here.
And I do on to start off on the proposed Asce reimbursements.
There's a another my Tech company out there golf on those to a new code and was assigned a default 31% device offset as well.
And they said publicly that day that helps increase that right by providing Tms what invoice day.
So I guess the question is 1 is that a pathway for Ya and then to shed your decision to incorporate this creating your guidance reflect on indication of the likelihood of that rate will be higher than normal.
So.
We're not going to be able to comment on what the likelihood of that is we're planning for the.
Worst case scenario.
And that being was the proposed rules would be.
Really irresponsible bus per day the.
The likelihood of that happening.
I think what we could say is that we are working with the societies to come up with a comprehensive program to be able to improve the both the professional fee and the facility fee.
And it's clear that we don't want to get new tactics now probably might do that but we think that these these.
Post rules are non unanticipated, but they are unwarranted and on welcome.
And you can imagine the amount of efforts on we'll put in fierce effort to being able to modify remedy and to improve our position both on the professional fee side and on the ASD facility side.
Okay.
[noise] helpful.
And then I I understand you said you use the range of outcomes.
Under that $90 million to $110 million scenario.
But maybe you could add a little bit on on.
All depend on those pricing cuts would have to be episodes rates increased in the final rule.
May be relative.
<unk>.
Thank you.
Yes.
I guess a couple of things in the 90 to 110 million as we indicated that really assumes the proposed rules that have been put out by CMS last month.
Are confirmed in November as the primary cases underneath that $90 million to $110 million.
With respect to the pricing scenarios you have to think about it on in the AFC setting in the pricing associated within the AFC for those Medicare patients as we said the proposal decreases the reimbursement reimbursement vs 2021 levels by at least $837.
Significant portion of which we would expect that potentially impact our pricing.
Well thank you.
And the next question is on the line and Robbie Marcus with J P. Morgan.
Hey, guys. It is Alan on karate saving a subway from reimbursement for a second.
Just diving into kind of what you are seeing COVID-19 as you highlighted is a little bit of conservatism that you.
Are you a bit into numbers, which I think is definitely appropriate.
How much like upside do you think there could be.
From.
Patients coming back how much of a pattern.
From that quarter, how much do you think it's still kind of on collapsed on the table.
Yes, hi on it's Joe.
I think there's a couple of things imported on that question. The first 1 is I think the bladder backlog remains and physicians and practices are working their way through that I think that was certainly part of the second quarter dynamic and as we said in the past I think something that all else being equal would play out over many quarters of time and perhaps even years.
As these physicians work their way through it.
I think the the secondary component of that is.
What we saw on the quarter was more stability in recovery in the us and Europe, and Asia, and while Latin America continues to struggle as they navigate the pandemic.
Certainly saw encouraging progress towards I'll call. It normalization vs. The 2019 levels, we may not have been perhaps fully back yet. We obviously noted commentary from other Catholic volume still were below 2019 levels, but we were encouraged by the trend within the second quarter and how that translated into our results.
I think as you go forward the second half all comes down to the variance and the on call at human in public health response to them both on the U S and globally and as we've all learned along the way that's fairly hard to predict some of what we've been seeing in recent weeks is not particularly encouraging yet.
Have been we have been encouraged by other continued momentum on the business.
Got it and then just kind of looking towards the pipeline.
[laughter].
On property here.
Looking at even more important as the kind of the forward looking out for your company. So how should we really think about what you need to do to lay the groundwork for a successful launch there we'll get the day and once you have the approval on hand, and just in terms of the competition on on the market how to testify the items.
Common future. Thanks.
Thanks.
Yeah, I'd be happy to address that so idose as you know you've seen the face to be data and the phase 2 the data shows demonstrable reductions in pressure using idose on 70 millimeters, all the way out to 2 years.
And we continue to track that data now and that seems to be the data out to 3 years and so we're hopeful that we will see continuity even beyond 2 years and as you recall I said from the beginning that we need to have a 6 month implant sustained efficacy and plan to provide a commercially viable product and if I had a year I thought that would be.
So think about.
Bits of what we have now available for patients given.
Given the day to receiving the fees to be which has to be obviously validated by our phase III data, we have something that can be truly game changing for patients. So.
So what do we do in the meantime on in the meantime, we prepare and we lay the groundwork for an injectable procedure that can provide months, perhaps years of therapy overtime.
Using this product vs.
What are your analysis burden of illness.
Scenarios quality of life scenarios to be able to justify payment and as I said before it's a highly useful predicate that Arista has.
<unk> with Allergan, establishing nearly a 2000 dollar reimburse payment.
For a product in inter camera bio rotable device typically last 4 months up to 6 months, so I like our ability to be able to operate from that to be able to establish a price a fair minded price that we think can exact true value in the marketplace.
So then we'll get into how we launch and how we bring it out and I think how we've done this <unk> on how we built this entire category is testament to what we'll do here moving to a standalone drug device, so stay tuned, but I'm highly optimistic of where and how we will do with this procedure.
And your next question is from the line of Jon Block with Stifel.
Thanks, guys good afternoon.
The $837 decline in the ASC that we need a big magnitude of a reversal to get into all of it back so.
What's good enough in other words, if you were to get a 2 to $300 reversal of a 2 to $300 price discount does that get you in your opinion on where you need to be from a competitive standpoint, Tom you just talked about at length.
You've got a safe device, it's got great risk reward it simple too.
Go ahead and do the procedure from a dock perspective with good pressure drops. So when you talk to the physicians and your customers is there a threshold where the docs might look past a couple of hundred box and you feel like you can fight the fight without maybe not necessarily being exactly at parity.
Hey, Jon, It's Joe and Chris or Tom can also add and I don't think we would set a bogie like that or determined a minimum threshold I think obviously every dollar helps on the equation, whether it's in the context of our pricing or getting different accounts over the transom on something like this but I <unk>.
Wouldn't draw a line of sand as debt at this dollar amount as the specific target that we need to achieve.
Okay.
Maybe just to pivot.
And I'll stick with.
Glaucoma broadly.
Would you expect any sort of spillover effect then it might be an odd question, but spillover effect from the U S and internationally and I get it the reimbursement is clearly different.
You look to the U S margin is thought of as the leader as the standard of care and so when you think about international glaucoma business has done well and ramped strongly do you expect any sort of.
Total or effect in that franchise, and if not Joe with a really strong balance sheet with key opportunity to maybe accelerate investments in other.
Outside of the business.
Yes, John I would say just to answer your question directly we don't see a silver affect every market is unique the reimbursement situations are unique the clinical data on efficacy that we've generated and the experience. We've got a surgeons in each of those communities continues to move forward positively irrespective of what reimbursement or other dynamics happening in the United States.
And accelerating investments show with the balance sheet that you have in some of these other franchises.
Well I think we've been doing that for some time I mean, if you take a step back on the international business.
We were a small player in a couple of markets in 2017, and we made a very significant investment and a lot of countries in the course of 2017 and 18 and we've never stopped.
In terms of adding <unk>.
Commercial personnel and marketing personnel and attached to that in addition to that and I think that will continue to move forward as we go forward here.
Alright, thanks for the time guys.
Thanks, Tim.
Your next question is from the line of Ravi Misra with Baron capital.
Okay, and sorry Ravi.
I appreciate you taking the question.
Current want to stick to the pipeline discussion has well.
And I would.
You've given a lot of color color into that.
In regards to.
So 1 just trying to get IBSA mindset strategically on a few things.
Cash capital allocation.
Think about the rest in 'twenty 1.
Let's focus on.
We bought on the reimbursement.
Where are you thinking about kind of shifting is any shifts to kind of R&D.
Leaning out on Opex anywhere else that we should think about and then also looking forward to 2022 in regards to the pipeline I know you talked about.
But.
Other strategic investments you're looking for maybe in the corneal staining licensing anywhere else just trying to get an idea where your guidance mindset.
Yes. Thanks.
So I would say it this way we have a compelling pipeline, both near and long term when it when it comes to the <unk>.
Spending that we're making on R&D I.
I think we will continue to drive that forward.
<unk>, we have a history of prudently reinvesting in our business based upon the scale, but in the.
<unk> like this the opportunity that is attached to our pipeline both over the short medium and long term is just too great to ignore and so I think obviously within reason you would expect that we would continue to ultimately invest in that and drive that forward.
Across the board.
As you think about some of the other areas I think Tom on different calls and reiterated today has talked about the areas, where we're investing and it's not just in <unk>.
Infinite I prime pressure flow Idose.
It's in the transdermal delivery cream for 4 corneal health, it's in retina and all the other areas around it. So we've got a lot of efforts going on that we think individually and collectively on our game changing for glaucoma and we're going to continue to invest in them.
Okay, Great and just a quick follow up to that.
In regards to the impact of competition I think you'd noted in guidance that it was contemplated in your 2021.
Just curious is that sort of discussions that youre, having current conditions.
Hearing.
About that.
Other thought was that physicians.
If you have interest in patients kind of stock on the pipeline for 2020 line. So they can get GAAP.
Full reimbursement and get it done so just curious on that front.
Yes, I think we've taken as a full range of scenarios into consideration when we think about the guidance that we set that has some puts and some takes as it relates to both the third and fourth quarter and on outline those a little bit earlier, so I think.
We considered that what youre, describing around the fourth quarter and taking that into consideration with the guidance we gave.
Okay. Thanks.
Thank you.
And your next question is from the line of Joanne <unk> with Citi.
Hey, guys. This is Anthony on for Joanne Thanks for taking our questions I just have 2 quick ones up on them upfront.
Is there any istent infinite.
Revenue baked into guidance for this year, and then back to <unk> quickly.
Comments on Thats still 2022, I think that was the last 1 we heard bearish line on that.
Thanks.
Quick follow up would be if we assume.
All unchanged on CMS proposals, how seamlessly do you think there could be a switch to standalone from combo. Thanks a lot.
Hey, Anthony this is Chris and I'll address the first part in terms of 1 of the competitors having.
The expanded indication on their label, we really haven't seen any change of behavior.
From either the physician or the facilities in that regard.
They are out there.
And as we've mentioned before.
Many of those cases are being done in combination with trabecular bypass.
I'd, probably just add that I am not so sure in that same vein that theres been a share shift as you suggested I think we've seen a pretty stable combo cataract market environment, you have to remember when you're thinking about.
Canal flat year, Frisco dilation debt.
Number 1 question how much that's being done a combo cataract standalone, but number 2 in combo cataract, how much is being done in combination with <unk> like alright, injectors injector revenue. So I think it's a little bit of an apples and oranges comparison, sometimes when you look at those those results.
As you think about moving forward 2022 on your comment around the shift from combo cataract stand alone I think.
A bit more difficult in B C.
Getting that what youre, saying, there is the ability to sort of decoupled the procedures and do.
Cataract surgery, and then subsequent Migs procedure and I think we feel thats relatively unlikely.
Thanks Thats helpful.
And the next question is from the line of Ryan Zimmerman with BP.
Alright, Thank you squeezing me in so.
Based on our Chris.
I think back to your comments about.
The term tissue disruptive for some of the on previous Cisco delivery devices.
Certainly carried on the more negative connotation, but now that <unk> kind of moved up to 1 of the prime positions in the pipeline I guess on how is your view changing around.
Core on call it the tissue destructive procedures space.
Separate from this store delivery and what you may or may not contemplate for the treatment of glaucoma with those types of devices.
Hey, Brian It's Chris and I think there is a clear distinction here.
We're talking about visto delivery or dilution, while we're not talking about the second component of what army has which was the goniotomy portion of their procedure.
Are you a goniotomy procedure.
The tissue destructive procedures non we do not see this low dilation is tissue destructive cheated.
Okay.
Okay.
Okay.
Just a follow up to that.
I appreciate that but is your view of quote unquote tissue destructive procedures changed in terms of maybe your interest in being a part of that or having that in combination with some of your existing products.
Ryan This is Tom I guess I would say that if anything it confirms our position from the very beginning which is high benefit to risk calculus micro invasive technologies and so here, we do see that there will probably will be.
By adding to the arm armamentarium of surgeons to be able to fiscal dilate the canal.
Either alone as a stand alone or in combination with our <unk>. We think that gives a very micro invasive non tissue destructive kind of purity of message.
Will best serve patients both from a safety and an efficacy profile. So if anything <unk>.
We're moving forward with the fact that we are using fiscal duration, we think the appropriate way independent of the goniotomy tissue destructive procedure really confirms our philosophy from the start.
Okay I appreciate that Tom and then just lastly, I think it was kind of asked before Joe but.
Understand the 90 to 110.
Indicative of combo. The key question I think people are going to ask for 2019 is what percentage of physicians do you guys anticipate are.
Now a day of communist as converts to Standalone, whether it's decoupled or not just the interest level on physicians and doing standalone.
And how you think about that conversion our ability to convert your existing customer base to that methodology.
Yes.
Alright, I think they're 2 completely different concepts. When you think about them, it's really not about that conversion of the combo cataract market into a standalone market. The combo cataract market will be what it will be as we move forward here.
But part of your question around the Standalone market. Obviously, we're enthusiastic about the long term opportunity associated with stand alone procedures led by Istent infinite and as we've said in the past when it comes to 2022 ore or a post approval period, there's going to be a stretch where we're going around and.
And securing the professional fee payments with the Max 1 by 1.
And we've obviously seen the facility fee proposal from CMS around it so as those things all come together and we're able to train the surgeons on a stand alone procedure.
On the heels of that we're very encouraged by what it can mean for our business in the years to come.
Okay I'll leave it there.
Thanks for taking the questions I appreciate all the color.
Thanks Ryan.
The next question is on the line of Steve Lichtman with Oppenheimer.
Hi, Thanks for taking on a question. This is David on for Steve.
Just on Idose when can we expect to see clinical.
Clinical data for that do you still expect.
Public any 3 months.
<unk> results around sometime this year.
Yes, so just to update that as we speak.
To kind of validate what I've said before is we are looking to probably disclosed some additional data in the first half of next year and that would be in really 2 forms 1 would be the.
Recurring data from the phase III, <unk> study, which will be out to 3 years and so we would expect to be able to disclose that to investors. We also have the opportunity to disclose the 3 month data in the pivotal studies now having said that I will tell you that we're currently in consultation with the FDA and we may take an opportunity to unmask the data.
<unk> dose at 1 year, which would give us some opportunity to be able to establish a longer term claims no guarantee there, but something we're consulting with the FDA on and so if that does transpire then clearly we would be.
Offering data on the Idose pivotal trial at a later date.
Okay.
Helpful and then just drop on IP.
Can you talk about.
To what degree this product will be marketing expanding.
On your positioning as more of our earlier intervention.
<unk> product.
Well I can give you the color and just say if you look at at the on having if we have a product that.
Is designed to reduce procedure times really improve patient comfort and really shorten.
Covered times per patient and for those on the phone. It utilizes a proprietary novel drug formulation stronger EBITDA irradiation protocol and as part of this procedure, we deliver oxygen directly to the <unk>, which has resulted in these profound results, where we see halting.
Progression.
Keratoconus versus control and where we met the primary endpoint moving forward so on.
Won't be able to quantify for you, but I think it's fair.
Fairly intuitive that when this is introduced this will become a very.
Peeling component for patients to be able to undergo the procedure really with a drug <unk> capitalized on the surface of the eye that can arrest the progression of a sight threatening disease. So I think it'll be kinetic I think it will be powerful over time, and we're very very much looking forward to the introduction of that beyond 2023.
Okay, great. Thank you.
And there are no further questions I will now turn the call back over to Glaucoma Corp.
Thank you Tabitha. Thank you all for your time and attention today, we hope everyone is staying safe and thank you again for your continued interest in glaucoma Goodbye.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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Your line.