Q2 2021 STAAR Surgical Co Earnings Call
Good day, ladies and gentlemen, thank you for standing by welcome to the STAAR Surgical's second quarter financial results Conference call. During today's presentation, all parties will be in a listen only mode. Following the presentation. The call will be opened for questions.
The question. Please press the star followed by the 1 on you touched on the phone. If you are using speaker equipment today. Please lift the handset before making your selection. The skol is being recorded today Wednesday August for 'twenty 'twenty 1.
At this time of would like to turn the conference over to Mr. Brian Moore, Vice President Investor Media Relations and corporate development Force STAAR surgical.
Thank you operator, and good afternoon, everyone.
Thank you for joining us on the STAAR surgical conference call. This afternoon to discuss the company's financial results for the second quarter ended July <unk> 2021 on.
On the call today are Caren Mason, President and Chief Executive Officer, and Patrick Williams, Chief Financial Officer.
The press release of our second quarter results was issued just after 4 P. M. Eastern time and is now available on staar's website at Www Dot STAAR Dot com.
Before we begin let me quickly remind you that during the course of this conference call. The company will make forward looking statements. We caution you that any statement that is not a statement of historical fact is a forward looking statement. This includes remarks about the company's projections expectations plans beliefs and prospects.
Statements are based on judgment and analysis as of the date of this conference call and are subject to numerous important risks and uncertainties that could cause actual results to differ materially from those described in the forward looking statements.
The risks and uncertainties associated with the forward looking statements made on this conference call and webcast are described on the Safe Harbor statement in today's press release as well as staar's public periodic filings with the FCC.
Except as required by law STAAR assumes no obligation to update these forward looking statements to reflect future events or actual outcomes and does not intend to do so.
In addition to supplement the GAAP numbers, we have provided non-GAAP adjusted net income and adjusted earnings per share on sales in constant currency.
We believe that these non-GAAP numbers provide meaningful supplemental information and are helpful in assessing our historical and future performance.
A table reconciling the GAAP information to the non-GAAP information is included in today's press release.
Following our prepared remarks, we will open the lines of questions from publishing analysts.
We ask analysts limit themselves to 2 initial questions then re queue with any follow ups.
We thank everyone in advance for their cooperation with this process.
And with that I'd now lets turn the call over to Caren Mason, President and CEO of STAAR.
Thank you Brian Good afternoon, everyone and thank you for joining us on today's call. This afternoon, we reported record results for the second quarter of 2021 and business momentum in all of our major markets globally accelerated from the already robust levy.
<unk> in the second half of 2020, and the record breaking levels free reported to you on our call for the first quarter of 2021, Mike.
My Thanks, once again to the entire STAAR team and particularly those in manufacturing and our commercial organization for tremendous results in the second quarter and first half of 2021.
In the second quarter of 2021, we continue to significantly outperform the industry averages by achieving strong ICL unit growth globally, including China up, 65%, Japan up 95% South Korea up.
57% APAC distributor markets up 88 per cent Indy.
173%, Spain up of 118%, Germany up 65 per cent European distributor markets up 81%, the middle East and North Africa up 378 per cent and the U S. A.
255 per cent.
As compared to the prior year quarter.
All told global ICL unit growth for the second quarter of 2021 was up 79% year over year, which drove company net sales growth up 77% year over year to $62.4 million.
In China, the largest market for refractive surgery in the world. The busy implant season began in earnest in June we kicked off the season with new exciting and innovative marketing campaigns.
Of the marketing campaigns were designed to amplify the message of glasses free visual freedom with our lenses and to increase Evo ICL brand awareness among our target demographics.
1 marketing campaign, where we supported our largest customer was an evo 5 K running event co branded with the popular video game theme.
Several weeks of mall based it for advertisements and other promotions lead up to and surrounding the 5 K run which was held at the Oriental Sports Center in Shanghai.
The day of the 5 K, our customer head on site Evo patient education supported by Us.
And the ophthalmology consultations, including eye exams available to the runners and spectators. This 5 K run marketing campaign in China resulted in more than 3 million media impressions further elevating awareness of our Evo lenses.
Our China business is also benefiting from many of our customers who have created our plan to create additional evo operating rooms and train additional surgeons to increase ICL implantation capacity.
As an example, there are now 5 Wow vision Evo clinics in China, which only offer evo ICL lenses to their patients. The operator of the clinics has a stated goal of opening at least 5 new Evo only clinics each year as we move forward.
In Spain, our Evo ICL lenses achieved record breaking levels of units sold with unit growth up 118% year over year for the second quarter.
We observed certain refractive femtosecond laser vision correction procedures being de emphasized by surgeons. Despite the fact that several L. D C companies and providers discounted their offerings debt levels greater than we have previously observed in.
In contrast, our of premium the Evo family of lenses allowed our surgeons in their clinics to maintain premium pricing during the second quarter due to the differentiation and benefits associated with our lens technology.
Remove the ability excellent night vision and no dry eye syndrome, just to name a few.
We anticipate surgeons in Spain, and globally will increasingly focus on premium lens based business and greater revenue per procedure.
During the quarter, we continued the controlled rollout of our Veeva lens and select surgeons implanted more of our lenses in our targeted early presbyopia market for patients who are generally ages 45 to 55.
We believe that surgeons efforts to define best practices in terms of patient education selection and the implantation will serve patients surgeons and us well in the future as we prepare for broader commercialization.
Regulatory pathway work towards marketing approval of the Viva lens outside of European geographies also continues.
In the U S. Trade shows are resuming in early July STAAR leadership attended and participated in the octane Oc Ophthalmology technology summit in the Southern California.
It was the first in person conference from many of those in our industry since the first quarter of 'twenty 'twenty.
In July we attended the American European Congress of Ophthalmic surgery, a coast meeting the.
The S. T R S annual meeting and the ice salaried or conference and S. E. R. S. As many of you know these in person meetings and trade shows are an important component of advancing our commercialization strategies.
It is encouraging that these meetings have resumed and even more encouraging that staar's lenses were highlighted at these events prominently and positively.
Also in the U S. The F. T. A received in late April our U S clinical trial data from marketing approval of our Evo family of myopia lenses.
Our submission is now under our customary interactive F D. A review.
We will not provide further comment on the process with the F D a until permitted and prudent to do so.
We continue to anticipate pending FDA approval that our Evo family of myopia lenses will be available to the U S market in the fourth quarter of this year.
As we look ahead of the growth opportunity for STAAR remains significant.
In June of third party independent research firm named STAAR, the fastest growing company in ophthalmology, among the list of peers, including all of the publicly traded ophthalmology companies with which many of you are already familiar.
We anticipate surgeon focus globally on higher dollar of patient pay procedures, such as our ICL may grow, particularly as we consider the recent headwinds associated with reimbursed ophthalmic procedures.
If we are correct our sales opportunity may broaden to the large number of cataract surgeons in the U S. For example is more than double the number of refractive surgeons, we currently target.
As we look to the second half of 'twenty 'twenty..1 we are mindful that COVID-19 is still with us and that we have an upcoming cold and flu season in the northern hemisphere.
However, we remain confident our surgeons and their patients will want to secure of visual freedom with our Evo lenses similar to our experience since the pandemic began.
Further given the accelerating sales momentum of we achieved once again in the second quarter and our visibility into the key drivers of growth in several major markets in the second half of 'twenty 'twenty 1.
We are today, increasing our net sales outlook for the full year fiscal 'twenty 'twenty 1.
For the full year fiscal 2021 we now expect total net sales to be in the range of $227 million to $230 million up from our previously provided outlook of $215 million to $217 million that we share it on.
The fifth.
The higher sales outlook, we are introducing today represents a growth rate at the midpoint of approximately 40% year over year.
I will now turn the call over to Patrick to discuss our financial performance in more detail Patrick.
Thank you Karen and good afternoon, everyone.
Total net sales for Q2, 2021 were $62.4 million up 77% as compared to $35.2 million of net sales in Q2.2020 and.
And up 23% on a sequential basis from Q1.2021.
The year over year increase of net sales for Q2.2021 was attributable to global ICL sales growth, which was up 93%.
We anticipate robust levels of ICL unit growth from Q3, and Q4 that would exceed 30% year over year when combined with our strong first half results for 2021 informs the increased sales outlook for full year fiscal 2021 day.
And then just outlined.
Looking at historical pre Covid sales trends.
Now expect Q3 total net sales to be in the range of $57 million to $58 million.
In terms of product mix ICL sales represented 95 per cent of total company net sales for Q2.2021, and the other product represented 5 per cent.
As a reminder, our other product sales primarily consists of our epic or cataract I O L and injectors business with.
Which sort of only certain markets globally.
It makes the of Icl's for Q2 was higher than recent trends due to $28.5 million higher ICL sales in the quarter and approximately $1.3 million of lower other product sales, which are primarily low margin of injectors.
We continue to anticipate other product sales will be approximately $15 million for the full year 2021, which is contemplated in our full year sales outlook.
Gross profit for Q2, 'twenty, 1 was $49.2 million or 78, 9% of net sales as compared to gross profit of $24.4 million or $69.4 per cent of sales for Q2, 2020, and $39.1 million or 77, 1% of net sales the Q1.2002.
The 1.
The year over year on sequential increase in gross margin is due to the higher mix of ICL, which command a higher margin than our other products business.
In addition for the year over year comparison, there was $1 million of period costs recorded in Q2.2020 as a result of our voluntary COVID-19 related manufacturing pause, which concluded on April 26.2020.
For the second half and full year 2021, we now expect gross margin to be in the range of <unk> 75 per cent to 77% due to a higher mix of other product sales.
Moving down the income statement total operating expenses for Q2, 2021 were $38.6 million or 61, 8% of net sales as compared to $25.5 million or $72.4 per cent of net sales in Q2, 2020, and $31.7 million or 62.4 per cent of net sales for Q1.2020.
1.
Taking a closer look at the components of operating expenses G&A expense for Q2, 2021 was $11.4 million compared to $7.8 million for Q2, 2020 and $10.2 for Q1.2021 the.
The year over year increase in G&A is due to increased compensation related expenses corporate insurance and facilities costs. The.
Sequential increase in G&A expenses was primarily due to compensation related expenses.
We expect quarterly DNA to continue to be between $10 million and $11 million a quarter for the balance of 2021.
Selling and marketing expense was $18.9 million for Q2, 2021 compared to $10.3 million for Q1, 2020, and $13.2 million for Q1.2021.
Increase in selling and marketing expense from the prior year was due to increased compensation related expenses advertising and promotional activities and trade shows and travel expenses.
The increase from Q1, 2021 was due to advertising and promotional activities and compensation related expenses.
We expect Q3, and Q4.2021, selling and marketing to be approximately $17 million per quarter.
Research and development expense was $8.3 million in Q2, 2021 compared to $7.3 million per Q1, 2020, and flat with $8.3 million for Q1.2021.
The increase in R&D expense was primarily due to compensation related expenses, partially offset by lower expenses associated with the U S. Evo clinical trial.
We continue to expect R&D for 2021 to be approximately $9 million per quarter for the balance of 2021.
Operating income in Q2, 2021 was $10.7 million or 17, 2% of net sales as compared to the operating loss of.
$600000 or negative 1.8 per cent of net sales for Q2.2020 the.
The improvement in operating income is due to higher sales and leverage on fixed and variable operating expenses during the quarter.
Net income in Q2, 2021, with $8.6 million or <unk> 17 per diluted share compared to a net loss of $1.2 million or negative <unk> <unk> per share or a loss of 3 cents per share in Q2.2020.
The company's effective tax rate for Q2, 2021, and the 6 months ended July <unk> 2021 was approximately 20 per cent.
For the second half of fiscal 2021, we expect our effective tax rate to be approximately 25% to 30%.
On the non-GAAP basis, adjusted net income for Q2, 2021 was $13.5 million or 27 per diluted share compared to adjusted net income of $1.4 million or the <unk> per diluted share in Q2.2028.
A table reconciling the GAAP information to the non-GAAP information is included in today's financial release.
Turning now to our balance sheet, our cash and cash equivalents as of July <unk> 2021 totaled $173.1 million.
Up $26 million compared to $152.5 at the end of the fourth quarter of 2020.
The increase in cash from the fourth quarter is attributable to $13.1 million in cash generated from operations and approximately $14.1 million on proceeds from the exercise of stock options.
Partially offset by $5.7 million on capital expenditures.
For the full year 2021, we continue to anticipate total capex spending to be in the range of 15 million to $20 million.
Finally star will be participating in several investor conferences and events in the coming weeks, including the.
The Canaccord growth conference on.
On August 10.
The UBS Med Tech Investor event in Laguna Beach, California on August 12.
As Steven non deal Road show on August 17.
The Piper Sandler West Coast field trip in Dana point, California on August 24.
And the Morgan Stanley Annual Global Healthcare Conference on September 14.
We look forward to speaking with many of you at these events.
And this concludes our prepared remarks, operator, we are now ready to take questions.
As a reminder to ask the question you will need to press star 1 on your telephone to withdraw your question press the pound key.
If it was like to ask the question Press Star then the number 1 on your telephone keypad. Please stand by while we compile the Q&A roster.
Your first question comes from the line of Anthony Petrone from Jefferies. Your line is open you may ask your question.
Yeah.
Thank you and good afternoon, everyone. Congratulations on another another strong quarter here.
I think caren I'm intrigued by the comments in Spain.
Just sort of the comparison of the laser vision correction.
And it looks like the that ICL is sort of gaining ground.
In a in a larger way and moderate myopia patients. So maybe across the 2 core regions, where we've seen outsized growth, China and Europe, just to recap on the dynamics between.
The laser vision correction.
The variety of procedures that are out there from refractive surgery and the ICL and it just seems that ICL is now certainly gaining.
On an outsized proportion of even moderate myopia patients. So just to recap there and all of a follow up.
Sure. Thank you very much Anthony.
We have.
Put into play for probably 3 years now of <unk>.
On.
On the more moderate of miles as a real opportunity for surgeons in terms.
Moving them from the laser vision correction procedure, which may have some issues around nice finish on on dry eye syndrome.
And also with our land the advantaged from visibility and not in any way impacting the cornea.
And so when we work with.
Our customer base.
Now a lot of studies that support that in the lower mine, the ICL has equal or better patient satisfaction.
And surgeons are delighted by the patient response.
So we then marry that to the fact that the economics associated with this premium procedure.
Outstanding and so you put those together and what we're finding is many surgeons around the world off of their patients of the ICL.
Regardless of of lower diopter correction need and for the reasons I previously mentioned the.
The patients are excited about having does the advantages. So you marry that to our business model on the superior and you get the growth we are enjoying.
That's helpful and then.
The couple of flow this would be just on the the complexion of the mix in China specifically.
When you think of sphere and toric, just just how that played out in the quarter. It seems like that kind of shifted a bit.
And then we'll sneak 1 in on the U S. FDA saw just just kind of curious I know that there was a couple of data out there. The 100 day interim meeting and then obviously its 100 day of 180 day limit as to a final ruling on the PMA supplement.
So just kind of thinking about those 2 dates in particular do you think there'll be an interim meeting just going over sort of high level questions on submission or should we be thinking that.
Looking at October as sort of the final drop dead day, Thanks, again and congratulations.
Thank you Anthony so yeah, we had.
What I would kind of shed her head of exceptional Q2.
In China in terms of share of demand and Tor demand.
Our mix there was definitely beneficial for STAAR.
And where we are starting obviously to see Q3 after 1 month.
And you know we had the best month in history in China.
And the mix was to our advantage.
Okay.
With regard to the FDA.
The bottom line is that the FDA is following the procedures as required and the process as we expected and some of this result of that we are in a customary interactive review.
That kind of comment on the 100 days on the 180 days at this point in time and I can tell you that we are very pleased with the level of interaction on communication with the FDA.
Thank you again congrats.
Welcome.
The next question comes from the line of Andrew Backman from William Blair. Your line is open.
Hi, good afternoon, and thanks for taking the questions congrats on the quarter.
Maybe to start here on the U S market and certainly appreciate all of the commentary that you provided so far thats been helpful. But I guess more specifically as we sit here on what could sort of the the cusp of approval in Q4 can you just maybe provide us with some thoughts on how you're thinking about revenue building for that launch throughout 2020.
Are there any sort of predicate devices and we should be comping against here just trying to get some level of framework around your expectations there.
Well, we just came off of what we considered a very successful a person ask Trs meetings, where we met with the number of.
Key opinion leaders surgeons from around the United States and many of them in major markets with very strong and well earned reputation for excellence.
And.
What we are talking to them about is the transformation opportunity with the Evo.
Getting approved and what were hearing back from surgeons is tremendous enthusiasm.
On to build their practices around the ICL.
Of course, the Evo version.
So when you think about the predicate device we are of the original when the only.
In terms of having an extraordinary implantable lens that provides such excellent decision.
Just quick story, we just Scott.
On the Sunday morning on was greeted with an amazing E mail from a doctor who.
Who was fearful that she would have to potentially give on her ability to practice medicine due to her very severe myopia and the stigma is on <unk>.
And after having suffered through a lot of challenging visits with surgeons over the years and having been in a situation where.
She did not want to replace her healthy.
Lance natural crystalline lens.
She discovered us.
She had the surgery shoe is driving the next day and the headline from her with thank you for saving my career.
So this is the kind of of device that we so proudly are fortunate enough and blessed enough to represent so.
We're very much looking forward and so are the surgeons to us getting approval from the United States market.
Andrew if I could.
When we think about the contribution of revenue. We're obviously very excited about U S. Evo as you outlined and of course Veeva as we continue that controlled rollout but.
We can't forget the fact that the bulk of our growth is really coming from where we are in the current market is right now and thats really going to drive the revenue over the next.
Several quarters here and so we're excited about that and of course when U S. Evo comes online.
Karen and I on the rest of the management team of talked about the ability to grab market share much like we did in China, a few years back and so we're very focused on that and how that can be a big catalyst as we move forward through the intra.
The introduction of that product and commercialization in the U S.
That's great. Thanks, Thanks for all of that color on the reelect of store count.
Maybe just secondly, and again sticking on the U S market here for a second I think in the past few of sort of talked about of <unk>.
Agreements with centers throughout the U S could you maybe just sort of describe those relationships in a bit more detail and sort of the type of customers, who the who those customers are are they.
More independent practices or high volume users of opinion today. Thanks.
So our customer base, that's developing in the United States, It's everything from the 1.
Practitioner to multiple surgeons on our practice to those that are part of the chain.
And each strategic agreement is designed and developed uniquely for the needs of that particular practice.
What our normal components are a strong commitment for growth usually 30% plus.
On a combined effort.
More digitally really kind of reinventing website doing digital marketing.
Working on also other types of media to promote the.
On the fact that ICL is available.
We also are doing more and more of ground.
Supporting the surgeons with helping them build the stories of their happiest patients.
And there is also a opportunity for the practice.
To determine the mix so their business models get adjusted and then we help support them in terms of helping them get started paying potentially from a marketing or advertising.
Well as working with them on patient education. So I think the bottom line is.
These strategic agreements, which we started in China.
In 2016, our the way, we work and the way our customers are truly satisfied and happy with STAAR.
Great. Thank you.
Thank you.
Your next question comes from the line of Bill <unk> from Canaccord Genuity. Your line is open.
Hey, this is real Hong on for Bill. Thanks for taking my questions. The congrats on the amazing quarter.
I just wanted to touch on Evo Veeva on Europe.
Any significant additional learnings that you all of her from the limited market release, how many countries are you in now and what are you expecting a full market release.
The kind of going on the what do you need to see commercially to go at the moment.
So we are making progress with the.
On vivo rollout.
We are in multiple countries.
Identified surgeons in 4 countries that we believe will be champions for Veeva.
We're going to be writing a lot of the <unk>.
<unk>.
We have <unk>.
Experienced as we hoped.
A lot of interactions with multiple patient types, those who have some residual accommodation of those who are most interested in near vision. The do you want to retain their inotropic.
Distance vision.
What we are trying to do as the understand how to make sure the lenses profitably used for each of those patient types.
Because of Covid and because of the recovery work that a number of practices have been doing evidenced by our Q2 volume I have to say that our presbyopic program with is controlled rollout is absolutely producing for us the results in terms of learning.
<unk> that we want.
But we're not of volume level, yes, we're on.
I feel that we're ready to go fully commercial we have more work to do.
And so as the result of that we are weighing the merits of instead of having a full term rollout in October where now there are.
Some concerns that Crs, maybe more virtual event in person and this lens in terms of learnings and training we want to do in person as we've said repeatedly.
So we'll kind of hold on the exact timing.
Of the rollout, but we are very excited let me tell you. This is a good launch and we are of high level, we believe patient satisfaction with the number of surgeons happy with per month.
Great and thanks for that color and the only other question I had was.
Especially in China, and Japan, how should we think about the potential for the Covid Barry on the business.
Well you know we have updates weekly with our team on the ground in every country.
And today, we talked to the team from China.
And what we found out is that Oh.
All of the 30 cities that have some type of lockdown.
They are limited Lockdowns and there is only 1 eye hospital in the eye clinic that has suspended procedures for 2 weeks every where else in the larger provinces in tier 1 cities and tier 2 cities there is no debt.
As a matter of fact as I said earlier in the call. We just we're happy to have a record month for our first months of the busy season in China. So it's looking good.
In Japan during the Olympics and with some of the concerns of a very conservative Japanese government in terms of.
Fear around making sure that all appropriate precautions are taken there.
Then for the first time, a little bit of.
Less than expected.
Lenses implanted in the last week or so, but we expect net after the Olympics and with the normal when you net Japan, so well handles and our Japanese customers. So well continue to do implants, but that will be back to normal.
Okay.
Great. Thanks for taking my questions Youre.
Youre welcome.
Again, everyone. If you would like to ask the question Press Star then the number 1 on your telephone keypad.
The next question comes from the line of Steve Lichtman from Oppenheimer. Your line is open.
Hi.
Actually take the the on for Steve Thanks for taking our question.
Just maybe 1 for me.
Relative to the anticipated approval of Evo and the.
The U S.
I'm curious what do you see happening to the current vision busy in the ICL lenses. Following approval of Ebola do you expect most of the surgeons to switch over to the new lenses following approval.
We will discontinue selling.
Current <unk> ICL lens.
If and when the Evo is approved Thats whats happened in every market because the elimination of the peripheral iridotomy procedure is so valued it show great for patients on surgeon that usually there is very little interest in the older version on the left.
Okay got it thank you.
Youre welcome.
Next question comes from the line of Ryan Zimmerman from <unk>. Your line is open.
Take care of Patrick Thanks for taking the questions really impressive this quarter I guess, maybe to start a few from me number 1 Karen you talked about the June busy season on the particularly in China.
On July <unk>.
What's your expectation for how long that businesses in May of last and is that any different from what we've seen maybe historically just given some of the dynamics between COVID-19 that we saw last year.
At this point as of this morning in our discussions on August started out as strongly as July delivered.
But if you look at typically your strongest month is July and then August is good and it starts to taper off towards the end of August and you're pretty much done by mid September So I don't think that.
There is kind of be much variation of that this year from last year and unless of course, there's more of restrictions associated with Covid right now.
There is no.
Visible now predicted.
The change in that normal cycle.
Okay.
And then.
The strength that you are saying.
And that was kind of hitting on this earlier, but as we think about.
The market.
And refractive surgery.
How much of your growth, whether it's the U S or Europe, or China, or wherever you know the U.
The tribute to converts from laser vision correction versus expansion of the market of the broader refractive market that maybe you're driving specifically.
That's a great question and I'm not sure we have a full handle on it to be honest.
We know that the <unk>.
Sure Sarah usually as time has gone on offered their choice.
If we also know that patients come in sort of may only want ICL.
And so what would be important to understand as those who would say no co laser vision only wanting ICL those would be the expansion of the market.
So I think you know.
From our vantage point, we expect that when the U S. The second largest market in the world has approval for Evo Youre going to have a global expansion just like China has been building a really strong evo market and Chinas numbers have gone up while laser vision was pretty much in the <unk>.
Single digits.
So I think over time, we're going to see a global.
The expansion of these procedures that really wrap around evo.
At this point I really can't give you what the breakdown would be.
Okay. If I could just squeeze 1 more in just the share just talked about the vivo a bit and 1 of the comments that you made I was struck by was just marketing approval outside of the specific geographies that you're in already.
I know youre still on this kind of a controlled launch in Europe, but but what's giving you that confidence or kind of where are you targeting and Wayne if you could share with us.
Banning the vivo marketing on approval beyond the existing European countries today, Thanks for taking the question.
Welcome and we definitely have been seeking regulatory approval outside of Europe.
On a number of markets and when we do they fall commercial.
The release of this product we will also released the 2 of those markets.
In addition to Europe that have approved the product and we expect those approvals.
Thank you.
Yeah.
Your next question comes from the line of Jim Sidoti from Sidoti and company. Your line is open.
Hi, good afternoon, thanks for taking the questions.
I know, you're probably a little reluctant to talk about.
U S sales.
Once you get approval, but can you talk a little bit about what you anticipate your R&D spend there'll be once the approval comes through on that continue to be at this level or you think that drops off.
No I think we're going to continue to see it as I said on my prepared comments around that $9 million of quarter.
Although we don't have the Evo clinical U S trial anymore as we talked about other things go into R&D like the clinical like the regulatory we want to continue.
To the child really the.
Benefits of Evo out there few peer publications et cetera, and then of course as we mentioned many times, we continue to look at iterations of.
Of the lens, whether that'd be the material from the column of standpoint, or other things that we can do to continue to enhance so I think weighted decent run rate right now and that will continue.
And how about sales and marketing do you anticipate the big investment in sales and marketing once approval is received.
Yes, I think you can expect debt as we said for the balance of this year, we sat around 17 ish, maybe $1 billion.
A quarter for Q3 and Q4.
As we've talked about the way the brand awareness in the direct to consumer has really evolved over the last decade or so it's very cost effective now as you go down the path of of.
Of Influencers and things of that nature, and so but we're excited about U S. We know that it is going to.
Lift all countries as we build brand awareness here, but.
But I will tell you that we're also prudent about the investments we make but yes, you can expect debt, we will look to increase from sales and marketing as the U S comes on board, but that will result in what we believe will be a very robust topline.
Okay and then finally, if you could just repeat what you said about gross margin for the remainder of this year, sorry, I didn't catch debt.
No problem.
So we had another good quarter of gross margins, primarily due to product mix as we start selling more of our iOS in the second half of this year, we expect gross margins of between 75% to 77%. The reason why there is the 200 basis point range. There is really it's predicated on products.
Thanks.
If we end up doing more ICL does the mix, where we're sitting at 90% plus then clearly we'll be closer to that 77% gross margin.
And that's why I gave that that large range.
Okay understood. Thank you very much.
Of course.
The last question comes from the line of Bruce Jackson from Benchmark Company. Your line is open.
Hi, Thanks for taking my question.
Looking at the.
The launch of Evo in the United States, 1 of the limiting factors, sometimes can be the training of the physicians, maybe you could talk to us a little bit about.
Of course.
So you have in place to make sure of the doctors get changed quickly and are there any.
Could that be a rate limiting factor for you.
Thanks for the question, Bruce and training of U S surgeons.
Is already scoped to meet the surgeons, who have the larger requirement in terms of growth.
And then to move from market to market to make sure that we get everyone trained in a timely fashion.
So all of that is done the training materials are done the training videos are done this certification requirements have been approved.
So we have a what we think on very robust plan with some really excellent team that's ready to go. So we do not see that as a limiting factor to get the lens out to those who wanted it and who are prioritized by their demand needs over the initial weeks and months of the role of.
<unk>.
Okay, Great and then.
Follow up question, if I may.
<unk> also partnered with some physicians to test out some some marketing.
On messaging with outdoor advertising et cetera.
Do you have also of programs in place to help the physicians market the.
Evo to the patients.
Yes, we have extensive options and opportunities.
That surgeons can work with us on to have their patients profile to have their practices profile to have their website updated and to have a full media outreach from multiple sources some of them local some of the national it's all built into the way.
That we build the partnership so all of that's ready to go.
Alright Super Thank you very much.
Thank you very much for calling in for example.
So as there are no further questions at this time I would like to turn the call back to Caren Mason for closing remarks.
Thank you for your participation on our call today, we look forward to speaking with many of you on the days and weeks ahead. We appreciate your interest and investment in STAAR surgical. Please take good care of all the best of all of you.
This concludes today's conference call. Thank you for participating you may now disconnect.
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