Q3 2023 Glaukos Corp Earnings Call

Hello, and welcome to the Glaucoma Corporation third quarter 2023 financial results Conference call.

The company's press release and quarterly summary document both the issued after the market close today are available at Www Dot glaucoma dotcom.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If.

He would like to ask a question. During this presentation simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again press Star one.

Call is being recorded and an archived replay will be available online in the Investor Relations section at Www Dot Guac coats Dotcom I will now turn the call over to Chris Lewis, Vice President of Investor Relations and corporate Affairs.

Thank you and good afternoon, joining me today are glucose chairman and CEO, Tom Burns, President and CFO, Joe Gilliam and CFO Alex Thurman.

The prior quarters. The company has posted a document on its investor relations website under the financials and filings quarterly results section titled Quarterly summary.

This document is designed to provide the investment community with a summarized and easily accessible reference document that details the key effects associated with the quarter. The state of the Companys business objectives and strategies and any forward statements or guidance. We may make this guidance document is designed to be read by investors for.

Their regularly scheduled quarterly conference call as such for this call. We will make brief prepared remarks and transition into a question and answer session to ensure ample time and opportunity to address everyone's questions. We request that you limit yourself to one question and one follow up if you still have additional questions you may get back into the queue. Please note that all statement.

Other than statements of historical facts made on this call that address activities events or developments, we expect believe or anticipate will or may occur in the future are forward. Looking statements. These include statements about our plans objectives strategies and prospects regarding among other things our sales products pipeline technologies and clinical trials.

U S and international commercialization market development efforts efficacy of our current and future products, our competitive market position regulatory strategies and reimbursement for our products financial condition and results of operations as well as the expected impact of general macroeconomic conditions, including foreign currency fluctuations 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, and our recent SEC filings for more information about these risk factors you'll find these documents in the investors section of our website at Www Dot cloud cause dotcom. Finally, please note that during today's call. We will also discuss certain non-GAAP financial measures, including results on an adjusted basis. We believe these.

Financial measures can facilitate a more complete analysis and greater transparency into glucose is ongoing results of operations, particularly when comparing underlying results from period to period.

Please refer to the tables in our earnings press release available in the Investor Relations 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 glaucoma, Chairman and CEO Tom Burns.

Okay. Thanks, Chris Good afternoon, and thank you all for joining us today.

Today, <unk> reported third quarter consolidated net sales of approximately $78 million up 10% versus the year ago quarter.

These third quarter results reflect continued strong performance and execution across our key franchises globally.

Given these results and our latest forward outlook, we are raising our 2023 net sales guidance range to $370 million to $310 million versus $304 million to $308 million previously.

From a commercial perspective strong execution of our key strategies within each of our core franchises drove the solid performance.

Our U S. Glaucoma franchise, we delivered sales of $38 1 million on growth of 2% year over year as we experienced more pronounced seasonality headwinds in August.

Offset by continued strength in July and September.

Consistent with prior quarters, we continue advancing istent infinite ahead of establishing formal Mac coverage and payment on.

On that front, just last week WPS one of the seven Macs published an updated migs LCB with our future effective date of December 24, 2023 that provides coverage for istent infinite consistent with FDA approval and our reconsideration request.

We are pleased with this final outcome as it relates to Istent infinite.

But we're disappointed and other aspects of the LCD that severely restricts clinical decision discretion for surgeons fighting a sight threatening disease.

Looking ahead, the remaining six Mac have all taken preliminary steps to assess istent infinite coverage, including for <unk> proposed LCD and two with local coverage articles.

We continue to monitor the various Mac processes and policies as they advance and are ultimately finalized in the future as we remain supportive of expanding broad access to interventional glaucoma tools for physicians and for patients.

While we await the release of Cms's 2020 for final rules, we remain encouraged that as part of the 2024 proposed rule. The CPT code used to cover Istent infinite in Standalone procedures.

<unk> was lifted to APC $5 92 in the APC assignment for combined cataract plus trabecular bypass procedures.

99% and 669 91 was proposed to move to a newly restructured APC $5 93 in.

If finalized as proposed we do believe these changes while positive for our customers and our procedures may create some transient disruptions to ordering patterns in late 2023, Ive had ahead of becoming effective on January one 2024.

Moving on our international Glaucoma franchise delivered sales of $20 3 million on strong broad based year over year growth of 23% on a reported basis and 20% on a constant currency basis.

This strong growth was once again broad based as we continued to scale, our international infrastructure and execute our plans to drive mix forward as a standard of care in each region in every major market in the world.

While we focused on our near term execution. We are also accelerating efforts to support one of our founding missions that glaucoma.

Which is to advance glaucoma care by driving intervention of therapies earlier in the treatment paradigm for glaucoma disease and in turn pioneering a new standalone market over time.

We continue to lead and work closely with surgeons and thought leaders globally to organically drive this broader evolution in the standard of care, including through numerous events at the <unk> annual meeting in Vienna in September and the interventional glaucoma consortium in Salt Lake City in October.

These efforts will once again be on full display at the upcoming <unk> annual meeting being held in San Francisco This weekend.

And finally, our corneal health franchise delivered record sales of $19 7 million on 12% year over year growth, including for trucks, our record sales of $17 million on a year over year growth of 18% as.

As key strategic initiatives implemented throughout the past year continued to take hold.

Part of this important business.

Similar to our U S glaucoma franchise, our U S corneal health business experienced more pronounced seasonality headwinds in August offset by strength throughout the remainder of the quarter.

Shifting gears to the development front, we continue to prudently invest and successfully advanced our robust pipeline of novel promising platform technologies that we believe have the ability to significantly expand our addressable markets and fundamentally transform our company over time.

Starting with Idose, we continue to be encouraged as we work closely with the FDA and their ongoing NDA review process.

During the third quarter, we successfully completed the required pre approval inspection or <unk>.

Of our new state of the art hybrid pharmaceutical manufacturing facility.

Facility, notably with no 43 observations.

For a company going through this type type of rigorous pharmaceutical review for the first time I could not be more pleased with this unblemished outcome and we'd like to recognize our operations development and quality teams that drove this result.

Based on our productive mid cycle review meeting with the with the agency held in August we remain confident in the agency's decision by the <unk> date of December 22nd.

2023.

Alongside this our teams are increasingly advancing preparation and planning efforts to support the Idose commercial launch targeted for early next year, including a robust set of peer reviewed literature is expected to be published over the remainder of this year and into 2024.

A robust publication plan includes four manuscripts that have already been submitted to leading journals and at least five others that are planned for submission.

Shifting gears to Abbvie Axa or next generation corneal cross linking therapy, we continue to advance patient follow up in the second phase III pivotal study and remain on track for our targeted NDA submission by the end of 2024.

Beyond <unk>, we recently commenced a PMA pivotal study for Istent infinite.

In the mild to moderate glaucoma population and expect to begin first in human clinical development for one of our retina programs along with the Phase Iia study for <unk> Travoprost by year end, respectively.

So as you can see we have a lot to be excited about when it comes to the significant potential value that we believe our pipeline programs may create.

At the same time and as we have discussed we continue to prioritize the cadence of our investments as we strive to strike the right balance of risk based spending and our capital position now and in the future.

We're pleased to see evidence of this again in the third quarter as.

As our non-GAAP SG&A and R&D operating expenses grew at a modest 1% sequentially, reflecting some of the adjustments we've made.

In our earlier stage pipeline programs as we continue to prioritize our resources ahead of the anticipated Idose commercial launch early next year.

So in conclusion I am pleased with the continued execution of performance in our business as we continue to successfully advance our mission to truly transform vision by pioneering novel drop was platforms that can meaningfully advance the standard of care and improve outcomes for patients suffering from sight threatening chronic eye diseases.

Our foundation is strong and we are well positioned as we enter into what should be a transformational transformational period for our company in the years ahead.

So with that I'll open the call to questions operator.

Perfect. Thank you at this time I would like to remind everyone in order to ask a question press.

Star then the number one on your telephone keypad will pause for one moment to compile the Q&A.

All right. Our first question comes from the line of Tom Tom.

Tom Please go ahead.

Great Hey, guys. Thanks for the questions.

I wanted to start off with the LCD is maybe if we assume the remaining four Max aligned with WPS.

Can you guys just talk first about the ways our company from a strategic perspective is aiming to capitalize on any of the changes or just potential uncertainty that probably will ramp in the market.

Next year, and then maybe qualitatively how should we be thinking about any sort of net tailwind for glaucoma.

Next year from the LCD.

Hey, Tom Thanks for the questions it's Joe.

I'll start off on this one.

From a from a macro standpoint, I think really I would reiterate some of what Tom said in the prepared remarks.

First and foremost at least in the first LCD that we've seen from WPS.

We would likely expect to see from at least the other four Max that that seem to be in a similar place is most importantly coverage for istent infinite.

For us it really starts there and that was the totality of our efforts around this and trying to make sure that patients were getting access to istent infinite.

As intended and thankfully on that front WPS.

And hopefully other ltd's establish that proper coverage that we requested for Istent infinite.

Beyond that obviously, we're disappointed in the context that the.

The activity or the or the final LCD as drafted.

Really take the step towards removing that clinical decision, making from the clinicians hands and so.

In our.

For us.

It's going to be something that we have to work on for some time.

So to make sure that we can play our part in getting those decision making capabilities back in the hands of the surgeons, who are making the call on behalf of their patients.

As you think about it.

For US you ask quantitatively, how we think about it I think.

In 2023, and the remainder of this year, we expect some short term ordering volatility.

Winds if you will in December, especially.

As some accounts may may prioritize.

Non stent based procedures ahead of the final effective dates for a variety of reasons, but most importantly, probably burning off any inventory that they have on their shelves ahead of a change in policy like this.

And as we turn into 2024.

I will say is we're evaluating the impact and we're going to continue to do so as these other lcd's are finalized I think I would I'd, probably just say I would caution investors in the interim.

The WPS LCD. It does contain a lot of puts and takes as it relates to our product portfolio and we really have to go through the totality of that before we can comment with any more specificity on what it may or may not mean for 2024 and beyond.

Got it and maybe one quick follow up when you talk about kind of the short term volatility are you starting to see that our or.

Or I guess, what's informing that view and then maybe I can get one more quick follow up.

Yeah.

Yes.

Yes, I wouldn't say that we're seeing it in that way. This is more of a anticipation thing I think anytime you go into a change in reimbursement policy like that and we've seen this in the past where things are adjusted.

The customers themselves have to adjust what they're either treatment algorithms are or the stock they have on their shelves.

We're not going to sit around and.

And.

Hold that inventory.

Pass those effective dates as what you would expect and so as they get closer to that date.

Certainly would anticipate that they will use that inventory up they'll go to more of adjusted time kind of ordering process and then they'll they'll adjust as the new year starts to unfold and they've changed whatever algorithms they have from a treatment perspective.

Got it and maybe I'll call. This question <unk>.

But pivoting to Idose I wanted to ask about just stock trainings.

Joe or Tom any sense, you can give us for how to think about the ramp in 2024 will be kind of deliberately methodical early on as you work through establishing full reimbursement and then what's kind of a reasonable annual cadence of Doctor training in the first couple of years sort of as we refine our models we looked back.

At the Istent training ramp there were periods early on that.

Train 700, 800 physicians per year and Thats when <unk> were much less well established by now you have.

0.2, as it relates to the pace of training is reimbursement itself. So.

As you transition from a miscellaneous code to a permanent J code as you start to establish more regular and recurring payment on the professional fee.

And even the facility fee side associated with with Idose, more and more surgeons and their practices will be ready willing and able to be trained and so those things also play a role in this.

You referenced historical statistics, and they're they're accurate I think at our peak we were training.

Somewhere between 700 $800 a year.

On the ice and technologies first generation a lot of which was teaching them angle based surgery as we move forward I think that that lift on the angle will be a little bit less so.

So we would have expectations that as we hit a steady run rate that we can train.

Doctors and that 7800.

Historical run right.

With idose, but but to get more specific than that tarred until we really get at that stage of of the of the deployment.

Very helpful. I'll keep it to one next time thanks guys.

Thanks up.

Alright. Our next question comes from the line of Ryan Zimmerman from BTG, Brian. Please go ahead.

Alright, I'm gonna I'm gonna stick to the rules here.

The one in the follow ups the number one I'm going to ask for Tom Tom you're in the process I think of having conversations with FDA about labeling the idols.

I don't know, what you're comfortable saying, but but what can you say in terms of kind of wearing or add in in the early read on what the label could look like fried us.

Yeah, right I'm happy to respond and as you I think you stated earlier. These these would be highly preliminary and most of these would be based on our debriefing from them. It's like a review that we had.

Here.

So what I will tell you as we have yet to receive a draft label.

So as we said previously while we're confident in the strength and robustness of our clinical data you.

You never know for sure where the label will land and whether the F. D. A review the data using the same prism as we do until that process is finalized.

And what I will tell you is that we remain confident that for attracting towards the proof of date of December 22nd, but that's really as far as I can can assure you at this point.

Okay.

Sure I will have to wait until the 22nd of December.

Second question for me just with Al Qaeda is likely finalized from what we saw WPS. The other week I'm less concerned with how this impacts your surgical business and more interested in how you think about a derisking. The idose launch next year. So how does it change your calculus on idol and what you need to achieve next year I mean, when we spoke kind of <unk>.

Order your messaging that second half twenty-four really would be the inflection fry dose, but I have to imagine that this does take some pressure off of the first half of the year. Because there is some benefit that will come from the L. C. D. As in so how has that in the past week, maybe shifted you're thinking.

On the Kaden serai dose texture.

Yeah, right I I I think.

I don't know if I would make that far of a leap in the context of the L. C. D. As it relates to Idose I I think the key drivers of Idose 2024 go back to a little bit more of what I said previously, it's really going to come down to the pace in which we can enter we're comfortable training these doctors and the pace in which you establish.

<unk> predictable recurring reimbursement, particularly on the facility and the Profi side alongside of that so you want to you want to get through the miscellaneous.

J a C code phase you want to get through the initial stages of determining regular and recurring professional fees and that you're gonna get paid on the on the facility side I think those are the things that ultimately shift a lot more of the shifting from the from the walk into the to the jogging to the run to the back half of the year Ver.

The first half you know it it is possible that across all of our portfolio.

They'll be incremental demand associated with procedures and would that'd be stinting, but I think idose, probably won't benefit from that until certainly is that later in the year going into 2025.

Okay. Thanks for taking the questions.

Thanks for asking.

Alright. Our next question comes from the line of <unk> from Wells Fargo. Larry. Please go ahead.

Hi, This is Charles on for Larry Thanks for taking my question and congrats on the nice quarter or.

Or just follow up on the L. C. D. Again, so I appreciate what you're talking about there is there's puts and takes before and so I'll maybe wanted us to follow up on to make sure you understand that the positives and negatives of that so that's on the positive side, I mean, I spend infinite and maybe the competitive procedures like now.

Plasty Goniotomy, maybe some of that was sent to pick up some of those but on the negative side sounded like we read that <unk> are only covered as a second line therapy <unk>.

Which seems to eliminate the stacking of multiple makes procedures is.

<unk> those the puts and takes you're talking about for first there can you confirm that and then I have a follow up.

Okay, Yeah, Charles I think first and foremost anytime you have a policy like this there's always some inherent ambiguity in it that's the first line I mean, I I think exactly how the the Max will adjudicate. These policy changes will matter over the course of the next several years.

And that's hard to always know from you know the literal reading of of a policy that comes out like this so I think that's that's one factor that folks have to take into consideration.

Operator: Hello, welcome to the Glacos Corporation, third quarter 2021 financial results conference call. Copy that the company's press release and quarterly summary document, both issued after the market close today, are available at www.glacos.com. I'll line to them and place them here to prevent any background noise.

You know you you referenced obviously some of the adjustments that that they're proposing or finalizing his Rosa canal plasty. Some the shifts on the Goniotomy side when it comes to the combining of of procedures is corrected WPS L. C. D does restrict the clinical decision, making as it relates to the combining of these of these <unk>.

Operator: After this speaker's remarks, there will be a question and the answer session. If you would like to ask a question during this presentation, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star 1.

Seizures, and we think it restricts the options that surgeons have in the fight against what's a multifactorial disease using tools that have company mechanism of action that is one of the puts and takes it have to be considered here and and and certainly as an offset to any pickup.

Operator: This call is being recorded in an archive replay, which will be available online in the Investor Relations section at www.glacos.com.

Sure that you might anticipate associated with the restrictions that are being placed on canal plasty and goniotomy and something that we're going to take our time to assess from an overall standpoint.

Christopher Lewis: I will now turn the call over to Chris Lewis, vice president of Investor Relations and Corporate Affairs. Thank you and good afternoon.

Christopher Lewis: Join in me today, our Glacos Chairman and CEO Tom Burns, President and CEO Joe Gilliam, and CEO Alex Thurman. For the murder of prior quarters, the company has posted a document on its investor relations website under the financials and filings quarterly results section titled Quarterly Summary. This document is designed to provide the investment community with a summarized and easily accessible reference document that details the key effects associated with the quarter, the state of the company's business objectives and strategies and the need for statements for guidance we may make.

Okay. Thank you and then just a quick follow up on the LCD more as it relates to Idose. So I'd also wasn't specifically mentioned the L. C D, but it looks like.

I mean that they're asking for more just.

Just more better data like they want 24 months publish data for a broad label.

Can you tell us when glucose would have 24 month data published for Idose and do you think pays to be data will be good enough to meet qualifications or we need these three three data and.

Christopher Lewis: This guidance of this document is designed to be read by investors for their regularly scheduled quarterly conference call. As such, for this call, we will make brief prepared remarks and transition into a question and answer session. To ensure ample time and opportunity to address everyone's questions, we request that you limit yourself to one question and one follow-up. If you still have additional questions, you may get back into the queue. Please note that all statements, others in statements of a smurcle-fax made on this call that address activities, events or developments we expect.

And just lastly liked it seems like with a lemonade and stacking wood I mean would that mean, a physician will not be able to do and I spent plus idose and get covered for it.

Thanks for the question.

I'll start in Tom May want to comment on this one as well I I think as it relates to Idose first and foremost it's not covered by this L. C. D. It's a a pharmaceutical as you know and at this stage is not within the purview of the L. C. D that that was released by WPS.

Christopher Lewis: Believe or anticipate will or may occur in the future are forward-looking statements. These include statements about our plans, objectives, strategies and prospects regarding among other things are sales, products, pipeline technologies and clinical trials. U.S, and international commercialization, market development efforts, efficacy of our current and future products are competitive market position, regulatory strategies and reimbursement for our products. Financial condition and results of operations, as well as the expected impact of general macroeconomic conditions, including foreign currency fluctuations on our business and operations.

So I think that's a different conversation entirely.

And so we have to take that into consideration there.

As you you you.

I think through the line to sort of that broader the evidence.

I guess, what I would say is I'm not sure that we will have ever if we're fortunate to get approval as we expect that will ever have launched a product that has more evidence behind it then idose well at the time of the commercial launch you've heard Tom referenced on prior calls the sheer number of of peer reviewed publications that we <unk>.

To have the totality of that evidence the you know a number.

Christopher Lewis: These statements are based on current expectations about future events affecting us and our 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 in a recent SEC filings for more information about these risk factors.

A number of patients within it.

As well as the long term evidence that's contained within it you'll recall that we've already shown.

Multiyear evidence in support of Idose out of our phase two studies and ultimately we will expect to do the same overtime out of our phase III study. So I think the overall evidence there we feel stacks up pretty good against any.

Christopher Lewis: You'll find these documents in the investor's section of our website at www.glowcos.com. Finally, please note that during today's call, we will also discuss certain non-gap financial measures, including results on an adjusted basis. We believe these financial measures can facilitate a more complete analysis and greater transparency into glucose as ongoing results of operations, particularly when comparing underlying results from period periods.

Request that may come from any player, including the Max Yep, and I would just add I mean think about it the phase two be data we've carried out now hopefully with some prescience now after three years.

Christopher Lewis: Please refer to the tables and our earnings press release available in the investor relations section of our website for a reconciliation reconciliation of these measures to their most directly comparable gap financial measure.

And those three years date as we all know show that 70% of those patients are controls on the same or fewer meds versus the current standard of care from a topical standpoint, timolol, which was 46 and so.

The data as profound as robust and we believe that it will in any discussions with any payers in the future.

Thomas Burns: With that, I will turn the call over to Glaukos Chairman and CEO Tom Burns. Okay, thanks, Chris, good afternoon and thank you all for joining us today. Today Glaukos reported third quarter consolidated net sales of approximately 70 million up 10% versus the year ago quarter. These third quarter results reflect continued strong performance and execution across our key franchises globally. Given these results and our latest forward outlook, we are raising our 2023 net sales guidance range to 307 to 310 million versus 304 to 308 million previously.

Will serve us admirably to be able to to receive fair and.

And prompt payment.

Great that helps and again congrats on a nice quarter.

Charles.

Alright, and our next question comes from the line of Matthew O'brien from Piper Sandler Matthew. Please go ahead.

Hey, this is Phil on format. Thanks for taking our questions for stars on glaucoma trends, specifically what was it about August that led to that pronounced seasonality and and how would that seasonality trending in queue for and as it relates to guidance, what's baked in to that sequential step down in revenues is it more a function of.

Thomas Burns: From a commercial perspective, strong execution of key strategies within each of our core franchises drove the solid performance. Within our U.S, glaucoma franchise, we delivered sales of 38.1 million on growth of 2% year over year as we experienced more pronounced seasonality headwinds in August, offset by continued strength in July and September. Consistent with prior quarters, we continue advancing I spent infinite ahead of establishing formal Mac coverage and payment. On that front, just last week, WPS, one of the seven Macs published an updated Mac LCD with a future effective date of December 24, 2023 that provides coverage for I spent infinite consistent with FDA approval and our reconsideration requests.

Working down that competitive inventory ahead of these L. P. DS taken effect or is it really more of pausing in front of <unk> final rule.

Yeah, I think well first in the context of the third quarter.

What we saw in August was perhaps a new normal in the context of seasonality, but it was a little bit of an aberration versus what we've seen in the.

Last couple of years I think it was more similar.

Frankly, what we saw back in 2019 in terms of seasonality than what we've seen in 20 through 2022 and it really was just a softening of demand it was across all of our U S procedures glaucoma and colonial health.

Pretty similar fashion.

And in both of those franchises were offset by strength in both July and September.

Thomas Burns: We are pleased with this final outcome as it relates to I spent infinite, but we're disappointed at other aspects of the LCD that severely restricts clinical decision discretion for surgeons fighting a fight, threatening disease. Looking ahead, the remaining six Macs have all taken preliminary steps to assess I spent infinite coverage, including four through proposed LCDs and two with local coverage articles. We continue to monitor the various Mac processes and policies as they advance and are ultimately finalized in the future as we remain supportive of expanding broad access to intervention of glaucoma tools for physicians and for patients.

Strength that to your question has continued in October.

When you think about how that translates into our you know 2023 guidance, we try to take into consideration a variety of variables as we exit the year I commented on some of them.

Clearly, we expect some potential short term ordering pattern volatility and headwinds in December within our U S. Glaucoma franchise, that's both because of the potential final LCD effective dates, but also associated as Tom mentioned in the prepared remarks with the 2024 final CMS rule and the increase facility fee payments as you enter into 2024.

We expect there could be a little bit of disruption as folks hold off on procedures. The end of the year to do them in the first quarter where they'll.

Thomas Burns: While we await the release of CMS's 2024 final rules, we remain encouraged that as part of the 2024 proposed rule, the CPT code used to cover I spent infinite in standalone procedures. O671T was lifted to APC 5492, an APC assignment for Combined Care Act Plus, Tobacula bypass procedures. 66989 and 66991 was proposed to move to a newly re-structured APC 5493. If finalized as proposed, we do believe these changes, while positive for our customers and our procedures, may create some transient disruptions to ordering patterns in late 2023 of ahead of becoming effective on January 1, 2024.

Being paid a more fulsome payment.

We also expect some sequential FX headwinds based upon where that's been trending and our international glaucoma business that.

It could be a little bit of incremental headwind in the fourth quarter and we may also experience some potential.

Ordering disruptions at the end of the year round R and R. U S Porno health business.

We're gonna make a a variety of moves their operationally this quarter.

In anticipation of a potential idose launch in early 2024 several of those operational things that we're gonna be putting in place in this quarter can impact areas like customer service and our pair relation team priorities that they could create a little bit of disruption on the corners side as well.

That's helpful and then jumped again.

Just to give you one that doesn't focus on <unk> can you speak further about that agreement with Stewart Therapeutics and maybe the timeline for that S. P 113 drug candidate.

Thomas Burns: Moving on, I run a national glaucoma franchise delivered sales of 20.3 million on strong broad-based year-over-year growth of 23% on a reported basis and 20% on a constant current. Agency Basis. The strong growth was once again broad basis. We continued to scale our international infrastructure and execute our plans to drive makes Ford as a standard of care in each region and every major market in the world. While we focus on our near term execution, we're also accelerating efforts to support one of our founding missions at Glaukos, which is to advance glaucoma care by driving intervention of therapies earlier in the treatment paradigm for glaucoma disease and in turn pioneering a new stand-alone market over time.

Yeah, I'd be happy to address that so Stewart has a very novel compound.

It's been a very nascent preparation, but we'd like.

The data that we saw and some of the the preclinical analysis.

What Stuart has and what we hope to contemplate as a fullest injection.

That could aid substantially in neural protection and glaucoma.

Which as many of you know it was kind of a Holy Grail can you actually preserve the ganglion cells in the back of the eye given the fact that as repeatedly being assaulted by the pressure associated with glaucoma. So it is a a novel compound proprietary.

Thomas Burns: We continue to lead and work closely with surgeons and thought leaders globally to organically drive this broader revolution in the standard of care, including through numerous events at the ESCRS annual meeting in Vienna in September and the interventional glaucoma consortium in Salt Lake City in October. These efforts will once again be on full display at the upcoming ADO annual meeting, being held in San Francisco this weekend. And finally, our Corneo Health franchise delivered record sales of 19.7 million on 12% year-over-year growth, including for Trexler record sales of $17 million on a year-over-year growth of 18%.

It's very early like I like to say terribly exciting terribly early.

Pharmaceutical system both.

But again it's.

It again is it.

Further validates the fact that we go first we're making an effort here to break ground in a whole new area of glaucoma treatment and were whole purpose. This advances into a into a formidable clinical trial.

Thanks, so much.

Alright. Our next question comes from the line of Jillian, which Joanne. Please go ahead.

Thank you very much for taking the question and then come back from the corner.

Thomas Burns: As key strategic initiatives implemented throughout the past year continue to take hold in support of this important business. This is a monetary U.S, glaucoma franchise, our U.S. Corneo Health business experience, more pronounced seasonality, headwinds in August, offset by strength throughout the remainder of the quarter. Just in garrison, the development front, we continue to frequently invest in successfully advance our robust pipeline of novel, promising platform technologies that we believe have the ability to significantly expand our addressable markets and fundamentally transform our company over time.

I'd like to talk about something a little bit less exciting which is expensive I did not hear an update maybe on what you think your operating expenses could be and then as you think about product launch. This is the time of year that we start thinking about 2024.

How do you sort of dovetailed preparing and then launching everything that you've got in your pipeline, including I guess.

<unk>. Thank you.

He joined this is Alex I'll start with the operating expense question. So I mean first of all we were pleased to see the operating expenses for the quarter come in as they did just shy of $87 million, which was only modestly 1% sequentially. So we were happy with that again as we've talked about in the past.

Thomas Burns: Starting with AIDOS, we continue to be encouraged as we work closely with the FDA in their ongoing NDA review process. During the third quarter, we successfully completed the required pre-approval inspection or PAI of our new state-of-the-art hybrid pharmaceutical manufacturing facility, notably with no 43 observations. For a company going through this type of rigorous pharmaceutical review for the first time, I could not be more pleased with this unblemished outcome. We would like to recognize our operations, development and quality teams that drove this result.

Okay.

Focused on making the initial adjustments to our pipeline anticipation of items and basically trying to allocate our resources towards that as we prioritize our balance sheet and capital allocation you asked about the fourth quarter.

Opex and so basically what I would guide you to do at this point is we would expect a modest sequential increase in the fourth quarter to what we saw in this quarter, which is actually in line with what we've seen.

And the path typically from it if you want to call. It a seasonality standpoint, the fourth quarter tends to rise up a little higher than the third quarter that should put us.

Thomas Burns: Based on our productive mid-cycle review meeting with the agency held in August, we remain confident in the agency's decision by the Padoofa date of December 22, 2023. Alongside this, our teams are increasingly advancing preparation and planning efforts to support the AIDOS commercial launch targeted for early next year, including a robust set of peer-reviewed literature expected to be published over the remainder of this year and into 2024. Our robust publication plan includes four manuscripts that have already been submitted to leading journals and at least five others that are planned for submission.

For total for the year somewhere around what we had guided to you which was a 10 or a little over 10% increase from last year again, excluding all of the IP R&D charges.

And then as it relates to I think the second part of your question Jan which I'm not sure if that was more towards the expense side or the overall planning, but yeah. We were.

<unk>, we've been in product launch planning mode for quite some time [laughter], we're now getting into the into the.

The finer points of what that means from Ah expense perspective going in the next year, how we balance that against other priorities.

Thomas Burns: Shifting gears to AppiAXA, our next generation corneal cross-winking therapy, we continue to advance patient follow-up in the second Phase III Pivotal study and remain on track for our targeted NDA submission by the end of 2024. Dei-Dos and Epi-Oxah, we recently commenced a PMA pivotal study for ice and infinite, in the mild to moderate glaucoma population and expect to begin first in human clinical development for one of our retinal programs, along with a phase 2A study for dilution travel process by year and respectively.

We do have a lot going on thankfully, we think there's a lot of opportunity with those up with with each of those and so we're gonna be putting quite a bit behind ice an infinite as we enter into 2024 with hopefully more fulsome reimbursement covered.

And then ultimately idose on the commercial side, while we continue to invest in.

What we think is a pretty full pipeline of rich opportunities.

Just to push it that is a 10% increase annually in 2024, a reasonable starting point or is it much higher than that given.

Thomas Burns: So as you can see, we have a lot to be excited about when it comes to the significant potential value that we believe our pipeline programs may create. At the same time, and as we have discussed, we continue to prioritize the cadence of our investments as we strive to strike the right balance of risk-based spending in our capital position now and in the future. We are pleased to see evidence of this again in the third quarter as our non-GAPSGNA and R&D operating expenses grew at a modest 1% sequentially, reflecting some of the adjustments we've made in our earlier stage pipeline programs as we continue to prioritize our resources ahead of the anticipated I-Dos commercial launch early next year.

Everything else.

I think we'll comment on that Joanne when we get to the next quarter's call and we talk about our guidance in 2024, and what the operating expense profile would look like.

That's fine thank you.

Yep.

Alright, our next call comes from the line of David Sachs them from Needham David. Please go ahead.

Great. Good afternoon, guys and thanks for taking my questions.

Maybe I'll start with a quick one on Idose. So you guys. Obviously completed the inspection in mid cycle review in August.

You mentioned.

A draft labels so.

When do you expect to receive that in Wendy when you do is that something you're going to share with the investment community.

Thomas Burns: So in conclusion, I am pleased with the continued execution of performance in our business as we continue to successfully advance our mission to truly transform vision by pioneering novel, droplets platforms that can meaningfully advance the standard of care and improve outcomes for patients suffering from site-threatening chronic eye diseases. Our foundation is strong, and we are well positioned as we enter into what should be a transformational period for our company in the years ahead.

Then aside from that any other milestones to call out before December 22nd.

Hey, David I'm happy to answer that so we would expect to receive the draft labeling in the near term let's call. It the next several days.

And that began to process and that process is the FDA gives their best estimate of what they say the labels should be based upon the data they're reviewing.

And then ordinarily and routinely there are there is provision for response.

Operator: So with that, I'll open the call to questions. Operator? Great. Perfect. Thank you. At this time, I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad. We'll pause for one moment to compile the Q&A. All right.

From the company to shape that label or if it's a contestant to the extent that they disagree with the fda's position, so there'll be period of negotiation.

Which will occur prior to produce the date and the final we hope favorable FDA Clarence.

And I think as you can probably in respect that that will be something that will be done privately and that we won't share.

Thomas Stephan: Our first question comes from the line of Tom Stefan. Tom, please go ahead. Great. Hey, guys. Thanks for the questions.

Prior to to the producers eight.

Targeted Clarence.

Thomas Stephan: I want to start off with the LCDs. Maybe if we assume the remaining formats aligned with WPS. Can you just talk first about the ways the company from a strategic perspective is aiming to capitalize on any of the changes or just potential uncertainty that probably will ramp in the market next year? And then maybe qualitatively, you know, how should we be thinking about any sort of net talent for glucose next year from the LCDs?

Okay got it thanks.

And so I get to know other milestones after that and then I'll just or my my second question in here.

In the document you posted it looks like you got a present press.

<unk> study starting in the first half of next year.

Does this address the concerns FDA had raised previously.

Then.

What's your estimate on timing to potential approval of that product. Thanks, so much.

Thomas Burns: Hey, Tom. Thanks for the questions. Let's go.

Thomas Burns: I'll start off on this one. You know, from a macro standpoint, I think, you know, really I would reiterate some of what Tom said in the prepared remarks. First and foremost, at least in the first LCD that we've seen from WPS and what we would likely expect to see from at least the other formats that seem to be in a similar place. This is most importantly coverage for ice and infinite. For us, it really starts there and that was the totality of our efforts around this and trying to make sure that patients were getting access to ice and infinite as intended.

Well I'd be happy to address as best I can I mean, I wouldn't I put it is saying that we've taken a more I believe a novel approach and re looking at how we might evaluate the safety and efficacy of the press reported device given are substantial experience in the area. So we've had those.

Discussions were finalizing an I D E B FDA.

We are encouraged that will reach a conclusion a successful conclusion, the opening up that study and beginning to study that that product in the early part of next year certainly within the first half.

Thomas Burns: And thankfully on that front WPS and hopefully the other LCDs established that proper coverage that we requested for ice and infinite. You know, beyond that, obviously we're disappointed in the context that the activity or the final LCD as drafted really takes a step towards removing that clinical decision making from the clinician's hands. And so, you know, in our for us, that's going to be something that we have to work on for some time to try to make sure that we can play our part in getting those decision making capabilities back in the hands of the surgeons who are making the call on behalf of their patients.

This will be a second part of the Apple and I think with our informed.

Kind of skill.

Skill in the art.

We hope to be able to bring in to a successful conclusion I wouldn't I wouldn't comment on too.

Too many things will will enter into when we could potentially commercialized such as rate of adoption in clinical enrollment et cetera, but I will tell you that I feel very confident we'll be able to start that study in the first half of next year.

Alright, Thank you and our next question comes from the line of Alan Gunk from J P. Morgan Alan Please go ahead.

Hi, Thanks for the question I just had you know a quick one on the kind of Minders timing I understand you can't you can't really share. The details then they take a review meeting, but you sound confident on December timeframe and I guess.

Thomas Burns: Constance. As you think about it for us, you know, you asked quantitatively how we think about it. I think, you know, in 2023 and remainder of this year, we expect some short-term ordering volatility, you know, headwinds if you will, in December especially as some accounts may, may prioritize, non-spent-based procedures ahead of the final effect of dates for a variety of reasons. But most importantly, probably burning off any inventory that they have on their shelves ahead of a change in policy like this.

He was wondering relative to kind of your past interactions yesterday your past <unk> meetings like do you feel better or worse roughly in line I'm just asking because we you know we've seen some FTA approval is getting pushed out and delayed with reasons that are kind of not visible to us.

A side of the table. So just curious if there's any chance I can provide home. It gives you that kind of confidence.

Yeah, I guess I.

Thomas Burns: And as we turn into 2024, you know, I would all say we're evaluating the impact and we're going to continue to do so as the other LCDs are finalized. I think I would probably say that I'd caution investors in the interim as the WPS LCD, it does contain a lot of puts and takes as it relates to, you know, our product portfolio. And we really have to go through the totality of that before we can comment with any more specificity on what a mayor may not mean for 2024 beyond.

I'll be happy to give.

As best a reasonable assurance as I can from everything that I'm aware of.

The mid cycle review and searching for any potential impediments that might come up between now and the final conclusion I feel.

Pretty confident that we are going to be able to to move towards and we're tracking towards that date for the F. D. A review of.

December 22nd.

Got it and then just.

Another question, you know I understand that and we don't want to talk about trying to hearing for too much now, but when we just think about the growth of the next market kind of X idose, there's clearly been quite a few puts and takes over the last few years. Hopefully 2024, you know there's gonna be some bumpiness with the with the L. C DS in the reimbursement changes.

Thomas Stephan: Got it. Maybe one quick follow-up. When you talk about kind of the short-term volatility, are you starting to see that? Or I guess what's informing that view, and then maybe I can get one more quick follow-up. Yeah, I wouldn't say that we're seeing it in that way. This is more of an anticipation thing. I think any time you go into a change in reimbursement policy like that. And we've seen this in the past where things have adjusted.

But how should we think about stable market growth going forwards. Thank you.

Yeah Allen.

Thomas Stephan: Obviously, the customers themselves have to adjust what their treatment algorithms are or the stock they have on their shelves. Most are not going to sit around and and and can hold that inventory pass those effective dates is what you'd expect. And so as they get closer to that date, we certainly would anticipate that they'll use that inventory up. So go to more of a Justin time kind of ordering process and then they'll they'll adjust as you know, the new year starts unfold and and they've changed whatever algorithms they have from a treatment perspective. Got it.

I'm not sure that 2024 is perhaps the right measurement period, because we're obviously going to be making our way through all the puts and takes associated with these shifts on the.

L C D front from the various Max.

I think we've we've certainly settled in that aside from maybe some of the moving parts. There that we're talking about an underlying market that continues to grow in a in a in a healthy.

Fashion as Migs becomes increasingly the standard of care in combination cataract.

Our expectation would be that from a macro standpoint that starts to accelerate in the coming years again, as we drive our technologies, including Idose, an ice an infinite into a much much larger patient population that served by the intervention will glaucoma approach and Standalone patient. So I think 2024 may be a pure.

Unknown Executive: Maybe I'll call this question to be.

Thomas Burns: But pivoting to idos. I want to ask about just dock train days. Joe or Tom any sense you can give us for how to think about the ramp in 2024 will be kind of deliberately methodical early on as you work through establishing full reimbursement. What's kind of a reasonable annual cadence of doctor trainings in the first couple years sort of as we were fine our models we looked back at the I stand training ramp.

<unk>, where some things settle out in the context of of what procedures are being done where the net effect of which as we said well we'll comment once we got some.

Some additional work done on that front, but overall I think that we're headed to a more favourable environment from a macro standpoint, because we're gonna be going after a much larger market.

Thomas Burns: They were periods early on that I think you you know trained 700 800 physicians per year and that's when mixed were much less well established. But now you have what 5,000 classmates trained doctors. So for idos is it reasonable to think doctor trainings could approach a thousand per year for the first couple years. Thanks for taking the questions. No problem. I mean, stuck three in for one. But we'll we'll go ahead and honor it. I thought it's all good.

Alright, Thank you and our next question comes from the lines of Stephen Wichmann from Oppenheimer. Steven. Please go ahead.

Hi, guys. This is run on for Steve.

Congrats on the quarter I just wanted to ask another question on the city and it was just.

Sure one hopefully since I've <unk>.

Everything is.

Thomas Burns: From a doctor standpoint we're going to take the same approach we've always taken and so I wouldn't say even just a beginning I'd say for the entirety of 2024. We're going to be methodical as it relates to driving to proletive outcomes in the case of the doctors that were that we're training on idos. We've always done it that way now. Obviously in those early days let's call it in the you know the first half of the year.

<unk> <unk> you can think about maybe as in a positive since you know your competitors will probably lose much more business.

Do you guys see also a possible <unk>.

L C D <unk> in general and how do you guys think about this new balance.

Thanks.

Thomas Burns: That'll be even more the case and that we'll go out to a handful of surgeons that we know work well in these early stage training situations. Make sure that we've nailed down the training algorithm for our sales force before we start to expand from from there. I think the other you know, key gating item that I would point to is it relates to the pace of training is reimbursement itself. So as you transition from a miscellaneous code to a permanent j code.

Yeah, right I mean, I I think that's at the heart of some of what we were answering earlier is the tradeoff here that you have is how much the L. C D itself.

Or similar L. C DS will restrict or constrained the market over the short term again back to what I, just said I don't think over the long term it will be as relevant as we're going obviously after a much larger patient population, but in the short term.

The question is one of our share relative to market growth and those dynamics as as a shake out with all the various puts and takes in 2024.

Thomas Burns: As you start to establish more regular recurring payment on the professional fee and even the facility beside associated with with idos. More and more surgeons and their practices will be ready willing and able to be trained. And so those things also play a role in this. You know you reference historical statistics and that though they're accurate I think at our peak we were training. So number between 700 800 docs a year on the i sent technologies.

I think we're we're confident that ultimately this should be at least a neutral.

To slightly positive for our technologies because of the amount of evidence is behind him and that was validated as a part of this L. C D. But it's very difficult at this stage to quantify that particularly based upon a single LCD that's come out thus far and WPS.

Thomas Burns: First generation a lot of which was teaching them angle Bay surgery. As we move forward I think that that lift on the angle will be a little bit less. So we would you know have expectations that as we hit a steady run rate that we can train. You know more doctors than that 700 you know historical run rate with idos. But but to get more specific and that's hard until we really get at that stage of the of the deployment.

Okay and just <unk>.

<unk> I think nobody asked about this under and I dose is.

Obviously, you guys kept marketed yet.

Will you be Guy, who will you be targeting trying to promote it as an office space procedure or is that something that does not part of the plan.

Thomas Stephan: Very helpful. I'll keep it to one next time. Thanks, guys. Thanks up.

Okay around I'm happy to address that and so as we start from the beginning I think just fill it philosophically where ignostic to where the product the sight of services that where it's views, but we do understand.

Ryan Zimmerman: All right, our next question comes from the line of Ryan Zimmerman from D.T.I.G. Ryan. Please go ahead.

Ryan Zimmerman: All right, I'm going to stick to the rules here and ask just the one in the follow up.

Thomas Burns: So number one, I'm going to ask her, Tom, Tom, you're in the process, I think of having conversations with FDA about labeling the I does. I don't know what you're comfortable saying, but what can you say in terms of kind of where you're at and the early read on what the label could look like for I does. Yeah, right. I'm happy to respond. And as you, I think you stated earlier, these would be highly preliminary.

And there will be some advantages moving into an office environment and so what are some position than proposal will be there has to work with societies work with the Max over the course of 2024 into 2025.

To create kind of a relative workout scale.

Of what a non facility payment should be <unk>.

And then get the Max onboard.

Be able to reimburse at that level and so this will be an ongoing process. It is something that will be committed to over time, and we want to give surfing the ability to have the alternative of doing the product.

Thomas Burns: And most of these would be based on our debriefing from the mid cycle review that we had mid year. So what I will tell you is we have yet to receive a draft label. So as we said previously, while we're confident in the strength and robustness of our clinical data, you never know for sure where the label will land and whether the FDA will view the data using the same prism as we do until that process is finalized. So what I will tell you is that we remain confident that we're tracking towards the producer date of December 22nd. But that's really as far as I can, I can assure you at this point.

E S C, which we expect will be the dominant used for some time into the an office setting and then I can assure you as well. So we continue to work on programs that will continually aid our ability to to.

To move into that in office facilities.

Alright, thanks, guys.

Okay.

Alright, Thank you and our next question comes from the line of Anthony <unk> from Missoula, Anthony. Please go ahead.

Ryan Zimmerman: Okay, Sarah, I will have to wait till this 22nd of December.

Thomas Burns: Second question for me, just with the LCDs likely finalized from what we saw with WPS the other week. I'm less concerned with how this impacts your surgical business and more interested in how you think about it, de risking the I does launch next year. So, you know, how does it change your calculus on I dose and what you need to achieve next year? I mean, when we spoke kind of mid quarter, you know, you were messaging that second half 24 really would be, you know, the inflection for I does.

Thanks screen congrats on a on a good quarter you're in a good momentum maybe just two quick ones one on ice that infinite one on.

Those on <unk> you mentioned in your prepared comments here on the quarter.

Have a mild to moderate label expansion study going on and so you.

How long does that study when will it be completed month, we see data on that and then quickly on Idose. When we think about label what should we be thinking about in terms of just duration of implant right. So the pivotal study at a three month primary endpoint at 12 months secondary endpoint that the company I believe is data out to five years.

Thomas Burns: But I have to imagine that this takes some pressure off of the first half of the year because there is some benefit that will come from the LCDs. And so, you know, how has that in the past week, maybe shifted your thinking on the cadence for I dose next year? Yeah, Ryan, I think I don't know if I would make that far of a leap in the context of the LCDs, the right to I dose.

So how should we be thinking about just the range of scenarios on duration of the implant for idose. Thanks.

Okay.

The first part of the question Anthony and Yes, we began the clinical study with the iceberg incident and this was.

Thomas Burns: I think the key drivers of I dose in 2024 go back to a little bit more of what I said previously, it's really going to come down to the pace in which we can and are comfortable training these doctors. And the pace in which you establish predictable recurring reimbursement, particularly on the facility in the profile side alongside of that. So you want to you want to get through the the miscellaneous J or C code phase.

Our calculus to move this product into the earlier intervention and treatment and to supplement our whole intervention Homer.

Philosophy and programming so that protocol will consist of both fake and superficial patients that.

That will fall under the descriptor of some mild to moderate open angle glaucoma. So we have a label now that physicians iced an incentive for patients who failed a medical and surgical prior therapy. This will allow us to open up the ability to use infinite in the earliest phases.

Thomas Burns: You want to get through the initial stages of determining regular recurring professional fees and that you're going to get paid on the on the facility side. I think those are the things that ultimately shift a lot more of the, you know, shifting from the from the walk into the to the jog into the run to the back half of the year versus the first half. You know, it is possible that across all of our portfolio. There will be incremental demand associated with procedures, whether that be stinting, but I think I dose probably won't benefit from that until certainly later in the year going into 2025.

A treatment for the treatment of glaucoma, and we think will be a nice.

Both supplemental and Combinatoria alternative to the iOS device.

Second question could you repeat that again.

It would be on duration of implant label for <unk> you know your primary study at a three month end point, yet 12 months secondary endpoint, but I believe the company is reference data on the implant out to five years. So there's a wide range of scenarios. There just any high level thinking on what the duration of the implant.

Ryan Zimmerman: Okay, thanks for taking the questions.

Lawrence Biegelsen: Alright, our next question comes from the line of Larry Biegelsen from Wells Fargo. Larry, please go ahead. Hi, there's Charles on for Larry. Thanks for taking the question and congrats on the nice quarter. We'll just follow up on the LCD again. So I appreciate what you talked about. There's there's puts and takes before and so maybe wanted to follow up on just make sure you understand the positives and negatives of that.

For ideas can be yes.

So let me address that again happy to the remember the primary efficacy endpoint in the basis for our approval will be a three months determination of the idose to show noninferiority versus topics of them, along and you've seen the data and I think we can all agree that we have we have a high degree of confidence that it'll.

Lawrence Biegelsen: So on the positive side, I mean, I stand in it and maybe the competitive procedures like canal plastique, going out of me, maybe some of those stents pick up some of those, but on a negative side, it sounded like we read that stents are only covered as a second-line therapy, the language seems to eliminate the stacking of multiple mixed procedures. Is that those the puts and takes you're talking about for first there can you confirm that and then then I have a follow up.

Least we'll have a reasonable argument to tourists to assure FTE approval and moving forward.

There is no longer term.

Pivotal and point.

For the Idose device, what we've done.

Prior to the F. D. A pivotal was to conduct this robust phase two data that we carried out for three years.

It will be the basis for how're approach payers for how well this product work longer term and I think we'll be assured does that data I think pairs will be assured with that data that the product does indeed provide substantive coverage for patients all the way up to three years, when you're talking about the five year data remembered that was a cold.

Thomas Burns: Okay, yeah, Charles, I think first and foremost, anytime you have a policy like this, there's always some inherent ambiguity in it. That's the first line. I mean, I think exactly how the the max will adjudicate these policy changes will matter over the course of, you know, the next several years. And that's hard to always know from, you know, the literal reading of a policy that comes out like this. So I think that's that's one factor that folks have to take into consideration.

Set of patients from the phase two the study that were exchanged so 33 patients were we pulled from that the reconsulted to have an exchange of the of the idols device and it was there that we came up with some pretty pristine data on endothelial selloffs to show that the exchange.

Thomas Burns: You know, you you referenced obviously some of the adjustments that that they're proposing or finalizing is really the canal plastique, some of the shifts on the go on the anatomy side. When it comes to the combining of procedures, it's correct, the WPS LCD does restrict the clinical decision making as it relates to the combining of these of these procedures. And, you know, we think it restricts the options that surgeons have in the fight against what the multifactorial disease using tools that have commonly mechanism of action.

Can be done with reasonable safety and security.

[noise]. Thank you.

Alright, and our next question comes from the line of George Sellers from Stevens George. Please go ahead.

Hey, good afternoon, and thanks for taking the question.

Maybe just one quick one for me, but could you just remind us thinking back to to 2022 and the end of 2021, how your market share of makes procedures in the U S shifted some some reimbursement changes.

Thomas Burns: That is one of the puts and takes that have to be considered here and certainly is an offset to any, you know, pickup of share that you might anticipate associated with the restrictions that are being placed on canal plastique and go on the anatomy and something that we're going to take our time to assess from an overall standpoint. Okay, thank you. And then just a quick follow up on an LCD more as it relates to I does.

And do you have a sense for for where that share with.

Yeah, George Joe I mean, if you look back at our results in 2022 on our U S. Glaucoma franchised pretty consistently every quarter, we were down about 15% of of your on a 50% a year over year basis.

Thomas Burns: So I does wasn't specifically mentioned LCD, but it looks like I mean that they're asking for more just more better data like they want 24 month published data for a broad label. You tell us when glucose would have 24 month data published for I does and do you think that these two B data will be good enough to meet qualifications or we need these three three data and and just lastly like that seemed like with eliminating the stacking this would I mean, would that mean a physician would not be able to do an ice spent plus I does and get covered for it.

I think that gives you a pretty good sense of at least in that time period, the share ship that that occurred.

Beyond that I don't have the data in front of me in terms of where that wind, but I would say that the lion's share of that went to some combination of either.

Plassey procedures or or goniotomy procedures, depending upon surgical preference.

Okay, great. Thanks for that color no I'll leave it at just one thank you all for the time.

Thanks, George Thanks charge.

Alright at this time there are no further questions I'll turn it back over to the company.

Thomas Burns: Thanks for the question. I'll start and Tom may want to comment on this one as well. I think as it relates to I does first and foremost, it's not covered by this LCD. It's a pharmaceutical as you know, and at this stage is not within the purview of the LCD that was released by WPS. Yes, so I think that's a different conversation entirely and so we have to take that into consideration there.

Okay. So I want to thank all of you again for your time and attention today and we always thank you for your continued interest and support of glucose.

<unk> Goodbye.

That does conclude today's call have a pleasant day.

[music].

Thomas Burns: As you you I think drew the line to sort of that broader the evidence. I guess what I would say is I'm not sure that we will have ever if we're fortunate to get approval as we expect that will ever have launched a product that has more evidence behind it than I dose will at the time of the commercial launch. You've heard Tom reference on prior calls the sheer number of peer reviewed publications that we expect to have the totality of that evidence, the, you know, a number of patients within it, as well as as the long term evidence that's contained within it, you'll recall that we've already shown multi-year evidence and support of I dose out of our face.

Thomas Burns: There's two studies and ultimately we'll expect to do the same over time out of our phase three studies. So I think the overall evidence there we feel stacks up pretty good against any request that may come from any payer including the math. Yeah, and I would just add I mean think about it the phase to be data we've carried out now hopefully with some questions now out the three years and those three years data as we all know show that 70% of those patients are controlled on the same or fewer meds versus the current standard of care from a topical standpoint, Timilow, which was 46 and so the data is profound it's robust and we believe that it will in any discussions with any payers in the future will serve us admirably to be able to to receive fair and and prompt payment. Great that helps and again congrats on a nice quarter, Charles.

Matthew O'brien: All right our next question comes from the line of Matthew O'Brien from Piper Stanley Matthew please go ahead.

Thomas Burns: Hey this is Phil on for Matt thanks for taking our questions for stars on on glove coma trend specifically what was it about August that led to that pronounced seasonality and and how is that seasonality trending in Q4 and as it relates to guidance what's baked in to that sequential step down and in revenues is it more a function of working down that competitive inventory ahead of these LPDs taking effect or that really more a pausing in front of CMS's final rule. Yeah I think well first in the context of the third quarter what we saw in August was perhaps a new normal in the context of seasonality but it was a little bit of an aberration versus what we've seen in the last couple of years.

Mmm.

[music].

Yeah.

[music].

Mmm.

Thomas Burns: I think it was more similar quite frankly to what we saw back in 2019 in terms of seasonality than what we've seen in 2020 through 2022 and it really was just a softening of demand. And it was across all of our US procedures glaucoma and corneal health in a pretty similar fashion and in both those franchises were offset by strength in both July and September strength that to your question has continued in October.

[music].

Thomas Burns: When you think about how that translates into our you know 2023 you know guidance we try to take into consideration a variety of variables as we actually the year I commented on on some of them clearly we expect some potential short term you know ordering pattern volatility and headwinds in December within our US glaucoma franchise that's both because of the potential final LCD effective dates but also associated Tom mentioned in the prepare remarks with the 2024 final CMS rule and the increased facility repayments as you enter into 2024 we expect there could be a little bit of disruption as folks hold off on procedures the end of the year to do them in the first quarter where they'll be more paid them were full from payment. We also expect some sequential effects headwinds based upon where that's been trending in our international glaucoma business that could be a little bit of incremental headwind in the fourth quarter and we may also experience some potential ordering disruptions at the end of the year around our in our US corneal health business as we're going to make a variety of moves there operationally this quarter in anticipation of a potential you know idos launch in early 2024.

Mmm.

Mmm.

[music].

Yeah.

Okay.

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Thomas Burns: Several of those operational things that we're going to be putting in place in in this quarter can impact areas like customer service and our pair relation team priorities that they could create a little bit of disruption on the corneus side.

Unknown Executive: Well, that's helpful.

Thomas Burns: And then just to give you one that doesn't focus on I does, can you speak further about that agreement with Stewart therapeutics and maybe the timeline for that SP 113 drug candidate? Yeah, we have to address that. So Stewart has a very novel compound that's very, it's in a very nascent preparation, but we'd like the data that we saw in some of the preclinical analysis. And what Stewart has and what we hope to contemplate is is a bolus injection that could aid substantially in neural protection and glaucoma, which as many of you know is kind of a holy grail.

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Thomas Burns: Can you actually preserve the ganglion cells in the back of the eye, given the fact that it's repeatedly being assaulted by the pressure associated with glaucoma. So it is a novel compound proprietary. It's very early, like I like to say terribly exciting terribly early, Stewart pharmaceuticals was both. But again, it's, it's, it's, it again, it's further validates the fact that we go first, we're making an effort here to break ground in a whole new area of glaucoma treatment.

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Thomas Burns: And we're hopeful to just advance into a, into a formable clinical trial. Thanks so much.

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Joanne Wuensch: All right, our next question comes from the line of Joanne, which Joanne, please go ahead. Thank you very much for taking the question and congrats on the quarter. I'd like to talk about something a little less exciting, which is expenses. I did not hear an update maybe on what you think your operating expenses could be. And then as you think about a product launch, this is the time of year that we start thinking about 2024. How do you sort of dovetail preparing and then launching everything that you've got in your pipeline, including I do not just this year, but next.

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Alex Thurman: Thank you. Hey, Joanne, this is Alex. I'll start with the operating expense question. And so I mean, first of all, we were pleased to see the operating expenses for the quarter come in as they did just shy of 87 million, which was only. Up modestly, one percent sequentially. So we were happy with that. And again, as we've talked about in the past, we've been very, you know, focused on making initial adjustments to our pipeline and patient of idios and, you know, basically trying to allocate our resources towards that as we prioritize our balance sheet and capital allocation.

Alex Thurman: Yes, about the fourth quarter op-ex. And so basically what I would guide you to do at this point is we would expect a modest sequential increase in the fourth quarter to what we saw in this quarter, which is actually in line with what we've seen in the past, typically from if you want to call it a seasonality standpoint, the fourth quarter tends to rise up a little higher than the third quarter.

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Alex Thurman: That should put us for total for the year somewhere around what we had guided you, which was a 10 or a little over 10% increase from last year, again, excluding all of the IPR and D charges. And then it relates to, I think the second part of your question, Joanne, which I'm not sure if that was more towards the expense side or the overall planning, but yeah, we're obviously, we've been in product launch planning mode for quite some time.

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Alex Thurman: We're now getting into the finer points of what that means from an expense perspective, going in the next year, how we balance that against other priorities. We do have a lot going on. Thankfully, we think there's a lot of opportunity with each of those. And so, you know, we're going to be putting quite a bit behind ice and infinite as we enter into 2024 with hopefully more full-sum reimbursement coverage. And then ultimately, idos on the commercial side, while we continue to invest in what we think is a pretty full pipeline of rich opportunities.

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Joanne Wuensch: Kennedy. So just to push a bit, is a 10% increase annually in 2024 a reasonable starting point? Or is it much higher than that given everything else? I think we'll comment on that. Joanne, when we get to the next quarter's calling, we talk about our guidance in 2024 and what the operating expense profile would look like.

Joanne Wuensch: That's fair.

Yeah.

Unknown Executive: Thank you.

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David Saxon: All right.

David Saxon: Our next call comes from the line of David Saxon from David. Please go ahead. Great.

David Saxon: Good afternoon, guys. And thanks for taking my questions.

Thomas Burns: Maybe I'll start with a quick one on I do. So you guys obviously completed the inspection and mid-cycle review in August. You mentioned a draft label. So, you know, when do you expect to receive that and when when you do, is that something you're going to share with the investment community? And then aside from that, any other milestones to call out the forward December 22nd? Yeah, David, I'm happy to answer that.

Thomas Burns: So we would expect to receive the draft labeling in the near term. Let's call it the next several days. And that begins the process. And that process is the FDA gives their best estimate of what they think the labels should be based on the data that they're reviewing. And then ordinarily and routinely there are there is provision for response from the company. To shape that label or to contest it to the extent that they disagree with the FDA's position.

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Thomas Burns: So there'll be a period of negotiation, which will occur prior to the pedophadate and the final. We hope favorable FDA clearance. And I think as you can probably respect that that will be something that will be done privately and that we won't share. Prior to the pedophadate targeted clearance. Okay. Got it. Thanks. And so I guess no other milestones after that.

Thomas Burns: And then I'll just throw my second question in here.

Okay.

Thomas Burns: In the document you posted, it looks like you got a preser flow, preser flow study starting in the first half of next year. Did this address the concerns that the head raised previously? And then what's your estimate on timing to potential approval of that product?

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Thomas Burns: Thanks so much. Well, I'll be happy to address it as best I can. I mean, I wouldn't I put it as saying that we've taken a more I believe a novel approach and relooking at how we might evaluate the safety and efficacy of the preser flow device given our substantial experience in the area. So we've had those discussions. We're finalizing an IBE with the FDA and we are encouraged that we'll reach a conclusion a successful conclusion to open up that study and beginning to study that that product in the early part of next year, certainly within the first half.

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Thomas Burns: This will be a second bite of the Apple and I think with our informed kind of skill in the arts, we hope to be able to bring it to a successful conclusion. I wouldn't I wouldn't comment on date too many things will will enter into when we could potentially commercialize such as rate of adoption and clinical enrollment, etc. But I will tell you that I feel very confident we'll be able to start that study, in the first half next year.

Thomas Burns: All right. Thank you.

Allen Gong: And our next question comes from the line of Allen Gong from JP Morgan Allen. Please go ahead. Hi, thanks for the question. I just had, you know, a quick one on the kind of lidar's timing. You know, I understand you can't really share the details than the tech review meeting, but you know, you sound confident on the December time frame. And I guess, you know, I was wondering, relative to kind of your past interactions with your past municipal meetings, like do you feel better or worse, roughly in line?

Allen Gong: I'm just asking because we've, you know, we've seen some FDA approvals getting pushed out and delayed with, you know, reasons that are kind of not visible to us on this side of the table. So just curious, if there's anything you can provide, I don't want to give you that kind of confidence. Yeah, I guess I'll be happy to give as best a reasonable assurance as I can from everything that I'm aware of, given the mid-cycle review and searching for any potential impediments that might come up between now and the final conclusion. I feel pretty confident that we're going to be able to move towards and we're tracking towards that date for the FDA review of December 22nd.

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Thomas Burns: Got it. Come in just another question. You know, I understand that we don't want to talk about 2020 for too much now, but when we just think about the growth of the MIGS market kind of XI dose, there's quite a few puts and takes over the last two years, you know, hopefully 2024. You know, there's going to be some bumpiness with the LCDs and the reimbursement changes, but how should we think about stable market growth going forward?

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Thomas Burns: Thank you. Yeah, Alan, I'm not sure that 2024 is perhaps the right measurement period because we're obviously going to be making our way through all the puts and takes associated with these shifts on the LCD front from the various Macs. I think we've certainly settled in that aside from maybe some of the moving parts there that we're talking about, you know, an underlying market that continues to grow in a healthy you know, fashion as MIGS becomes increasingly the standard of care in combination cataract.

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Thomas Burns: Our expectation would be that from a macro standpoint, that starts to accelerate in the coming years again as we drive our technologies, including I dose and I send infinite into a much, much larger patient population that's served by the interventional, you know, glaucoma approach in standalone patients. So I think, you know, 2024 may be a period where some things settle out in the context of what procedures are being done where, the net effective, which is we said, we'll comment once we've got, you know, some additional work done on that front. But overall, I think that we're headed to a more favorable environment from a macro standpoint because we're going to be going after a much larger market.

Thomas Burns: All right, thank you.

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Stephen Lichtman: And our next question comes from the line of Stephen Litchman from Oppenheimer. Stephen, please go ahead. Hey guys, this is Ron on for Steve from Grassland the Quarter.

Ron: I just wanted to ask another question on the LCD and it was just It's a short one, hopefully, since everyone else has asked everything is, I know following the LCDs, you can think about maybe as a net positive since your competitors will probably lose much more business or do you guys see also a possible trade-offs and as this LCD might shrink the market for a major general? And how do you guys think about this new balance?

Okay.

Ron: Thanks. Yeah, Ron, I mean, I think that's got the heart of some of what we were answering earlier is that the trade-off here that you have is how much the LCD itself or similar LCDs will restrict or constrain the market over the short term. Again, back to what I just said, I don't think over the long term it'll be as relevant as we're going obviously after a much larger patient population. But in the short term, the question is one of share relative to market growth and those dynamics as they shake out with all the various puts and takes in 2024.

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Ron: I think we're confident that ultimately this should be at least a neutral to slightly positive for our technologies because of the amount of evidence behind them and that was validated as a part of this LCD, but it's very difficult at this stage to quantify that, particularly based upon a single LCD that's come out thus far in WPS.

Thomas Burns: Okay, and just once I'll help and I think nobody asked about this. I'm dear and I dose is, you know, obviously you guys can't market it yet, but will you be targeting or trying to promote it as an office-based procedure or that's something that is not part of the plan? Yeah, Ron, I'm happy to address that. And so as we've said for the beginning, I think just still philosophically we're agnostic, you know, to where the product is, the site of services and where it's used.

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Thomas Burns: But we do understand and there will be some advantages moving into an office environment. And so what our supposition and proposal will be there is to work with societies, work with the Macs over the course of 2024 into 2025 to create kind of a relative workup scale of what a non facility payment should be and then get the Macs on board to be able to reimburse at that level. And so this will be an ongoing process.

Thomas Burns: It is something that will be committed to over time. And we want to give surgeons the ability to have the alternative of doing the product within the ASC, which we expect will be the dominant use for some time into the in office study. And then I can assure you as well that we continue to work on all programs that will continually aid our ability to move into that in office facility. Thank you. All right.

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Thomas Burns: Thank you. And our next question comes from the line of Anthony Patrone from the zoo group. Anthony, please go ahead. Thanks, Greg. Congrats on a good quarter and a good momentum. Maybe just two quick ones. One on ice, then infinite one on idose. On ice, then infinite, you mentioned in your prepared comments here on the quarter that you have a mild to moderate label expansion study going on. And so, you know, how large is that study?

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Thomas Burns: One will it be completed once we see data on that and then quickly on on idose. When we think about label, what should we be thinking about in terms of just duration of implant, right? So, the pivotal study at a three-month primary endpoint, you had a 12-month secondary endpoint, that the company, I believe, has data out to five years. So, how should we be thinking about just the range of scenarios on duration of implant for idose?

Thomas Burns: Thanks. Okay, that's the first part of the question, Anthony. And yes, we've begun the clinical study with the ice and infinite. And this was our calculus to move this product into the earlier intervention and treatment and to really supplement our whole intervention of glaucoma philosophy and program. And so, that protocol will consist of both a psychic and pseudo-fake patients that will fall under the descriptor of the mild to moderate open anger glaucoma.

Thomas Burns: So, we have a label now that positions ice and infinite for patients who failed on medical and surgical prior therapy. This will allow us to open up the ability to use ice and infinite in the earliest phases of treatment for the treatment of glaucoma. And we think we'll be a nice, both supplemental and combinatorial alternative to the idose device. A second question, could you repeat that again? It would be on duration of implant and label for idose.

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Thomas Burns: You have, you know, your primary study at a three-month endpoint, you had a 12-month secondary endpoint, but I believe the company has referenced data on the implant out to five years. So, there's a wide range of scenarios there. There's just any high-level thinking on what the duration of the implant for idose could be. Yes, let me address that again. Happy to the, remember, the primary efficacy endpoint in the basis for our approval will be a three-month determination of the idose to show not inferiority versus topical temelol.

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Thomas Burns: And you've seen the data. And I think we can all agree that we have a high degree of confidence that at least we'll have a reasonable argument to assure FDA approval moving forward. There is no longer-term pivotal endpoint for the idose device. What we've done prior to the FDA pivotal was to conduct this robust phase two data that we carried out to three years. That will be the basis for how we'll approach pairs for how well this product works longer term.

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Thomas Burns: And I think we'll be assured that that data, I think pairs will be assured with that data, that the product does indeed provide substantive coverage for patients all the way out to three years. When you're talking about the five-year data, remember that was a cold set of patients from the phase two B study that were exchanged. So, 33 patients were, we pulled from that that reconsented to have an exchange of the idose device. And it was there that we came up with some pretty pristine data on entity of cell loss to show that the exchange can be done with reasonable safety and security. Thank you.

George Sellers: All right, and our next question comes from the line of George Sellers from students. George, please go ahead. Hey, good afternoon, and thanks for taking the question. Maybe just one quick one for me, but could you just remind us, thinking back to 2022 and the end of 2021, how your market share of mixed procedures in the US shifted some reimbursement changes? And do you have a sense for where that share went?

George Sellers: Yeah, George, Jo, I mean, if you look back at our results in 2022 on our US glaucoma franchise, pretty consistently every quarter, we were down about 15% of a year, on a 15% on a year of your basis. I think that gives you a pretty good sense of at least in that time period, the share shift that occurred. Beyond that, I don't have the date in front of me in terms of where that went, but I would say that the lion's share of that went to some combination of either Canal Flassy Procedures or Goniotomy Procedures, depending upon, you know, surgical preference.

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George Sellers: Okay, great. Thanks for that color, and I'll leave it at just one. Thank you all for the time. Thanks, George. Thanks George. All right, at this time there are no further questions. I'll turn it back over to the company.

Operator: Okay, so I want to thank all of you, again, for your time and attention today, and we always thank you for your continued interest and supportive blog posts. So with that, goodbye. That does conclude today's call. Have a pleasant day.

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