Q2 2019 Earnings Call - Acquisition of Avedro, Inc
Welcome to the conference call to discuss Glaukos corporations acquisition of Vivitrol, Inc. and the second quarter 2019 financial results, but each company released this afternoon.
A copy of the company's press releases can be found on the companys respective websites.
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 youd like to ask a question. During this time simply press Star then the number one on your telephone keypad to withdraw your question press. The pound key this call is being recorded and an archived replay will be available online in the Investor Relations section at Www Dot glucose dot com and www Dot <unk> Dot com I would now like to turn the call over to Chris Lewis glucose director of Investor Relations incorporates tragedy and development. Please go ahead.
Thank you and good afternoon.
Joining me today from Glaukos, our president and CEO , Tom Burns CFO , Joe Gilliam, and COO, Chris Calcaterra.
From a d. drew our president and CEO , President and CFO Tom Griffin.
Following our prepared remarks, we'll open the call to questions to ensure ample time, an 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 other than statements of historical facts made on this call that address activities events or developments, we expect believe or anticipate well or may occur in the future are forward. Looking statements. These include statements about our plans objectives strategies and prospects regarding among other things our sales our products our pipeline technologies, our U.S., an international commercialization efforts the efficacy of our current and future products, our competitive market position financial condition and results of operations and the proposed acquisition and transaction whether it be drugs.
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 and the proposed transaction 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 todays press releases and our recent SEC filings for more information about these risks risk factors, you'll find these documents in the investor section of the company's respective websites.
Comments, we make today about the proposed acquisition transaction with the vitro do not constitute an offer to sell or the solicitation of an offer to buy any securities nor a solicitation of any vote with respect to the proposed transaction buckets will be filing a registration statement on form S. Four with the FCC that will include a prospectus. The clock has had a proxy statement. Other veeco security holders are urged to read the proxy statement prospectus and other relevant documents documents filed with the FCC when they become available because they contain important information.
In addition, please note that to be true cloud goes into respective directors and executive officers may be deemed to be participants in the solicitation of proxies from of the drums stockholders in connection with the proposed transaction information about to be done the drills directors and executive officers is included in its Form 10-K filed with the FCC on March 20, Onest 2019, and in its form S. One registration statement filed with the FCC.
Information about glasses directors and executive officers is included in the definitive proxy statement filed with the FCC on April 17 2019.
Additional information about the participants in the solicitation of proxies will be contained in the proxy statement prospectus and other relevant material to be filed with the FCC regarding the proposed transaction.
Copies of these documents can be obtained for free on the Fccs website at Www Dot D.C. Dot Gov and the man are provided in today's press releases regarding the transaction with that I will turn the call over to Glaukos, President and CEO Tom Burns.
Good afternoon, and thank you for joining us today is truly an exciting day for Glaukos has reported record second quarter financial results.
Announced a definitive agreement whereby glaukos were well acquire be draw in an all stock transaction.
Based on our closing stock price today the deal values are the journal and approximately $26.68 per share for a total transaction value of $500 million.
This transaction peers to highly complimentary hybrid farm pharma and device organizations, combining a visual disruptive bio activated pharmaceutical solutions and R&D capabilities with Glaukos has global commercial scale proven market building and shared reimbursement expertise robust pharmaceutical and medical device R&D capabilities and extensive clinical and regulatory infrastructure.
Hi, leveraging our core strengths, we see tremendous opportunity to accelerate as equals growth potential and pipeline programs. While also strengthening our own R&D expertise to propel organic development programs forward.
Oh vitro isn't ideal strategic fit for glaukos as evidenced by the striking similarities between our two companies.
We are both transforming a salvage treatment paradigm and pioneering an entirely new market.
Michael I procedure was first to market with novel solutions backed by a considerable body of compelling clinical data.
Unlike lakos vitro has secured favorable reimbursement and developed a market expanding pipeline to extend its leadership well into the future.
Importantly, the majority of the visuals target accounts are already glaukos customers, which will enable us to use our reach and scale to accelerate utilization, although the Joe's pharmaceutical solutions.
By virtually every measure we believe blockers is uniquely qualified to fuel or the Joe's momentum, creating a durable synergistic global health franchise that should serve as a powerful growth engine capable of delivering near and long term shareholder value and helping to transform glaukos into a global pharma and device atomic leader.
We will discuss the key factors that attracted us to the drug as well as our future plans in more detail shortly but first I'll ask resure to make a few remarks.
Reza.
Thanks, Tom I too would like to express my excitement about vitro, becoming part of the Glaukos organization and the significant value. We believe the transaction creates for all of our stakeholders.
We are proud to be pioneering new treatment options for patients with coronary disease and those seeking to improve their eyesight using a single application of bio activated topic I'll make pharmaceuticals.
Our initial commercial product offering the foot drx up body wash debated topic on solution is the first and only FD approved treatments for patients suffering from progressive kill it the coldness sight threatening corneal disease characterized by progressive thinning and weakening of the cornea ultimately, resulting in vision loss keep on treated.
I have long admired glaukos and the manner in which the organization for a new path to establish the mix I believe their existing infrastructure relevant customer relationships and their proven strength in pioneering Bible, new ophthalmic markets with disruptive technologies that address important unmet clinical needs of practitioners and patients make glaukos the perfect partner to help execute on our current and future business opportunities.
Our board carefully and thoroughly reviewed the strategic and financial benefits of this opportunity and has agreed in its view that these transactions it presents a compelling opportunity for shareholders patients providers and employees.
I'm more certain than ever that I'd be Jos best days are ahead with that I'll turn the call back over to Tom.
Well, thanks, so much Rosa and we certainly look forward to welcoming you and your team to go out because.
We've been carefully evaluating our core capabilities and long term growth strategies for some time with the fundamental strength of our base business continued execution and the culmination of the complete glaucoma pipeline. We've created to address all stages of disease severity I'm confident that the time is right to implement this next major phase of our long term growth strategy.
Consider our key accomplishments this quarter, one we delivered record second quarter net sales of 58.6 million.
36% versus the year ago quarter, allowing us to increase our full year to 2019 revenue guidance to 226 to 231 million.
Two we progressed on the US commercial rollout of our next generation ice that trajectory back to remark Michael bypass device.
Thanks to our team's solid execution, we have made considerable progress on the initial conversion process and our U.S. reps are beginning to shift focus back to driving utilization and training, new surgeons, who have yet to adopt mix.
Surgeon feedback in real World results remain very positive and give us high confidence and I spend to jacks potential fuel meaningful use sales going forward.
Three we drove robust international growth of 53% year over year as we continue to see the benefits of the international investments we've made over the past several years.
Four we advanced our industry, leading proprietary glaucoma pipeline, but now addresses the full range of disease states and progression.
Five we continue to expand and strengthen our pharmaceutical R&D capabilities to advance more than 10 internal preclinical initiatives across glaucoma.
Corneal health in retina.
And six we executed financially.
Not only with continued revenue growth and outperformance, but also was strong gross margins disciplined operating investments and positive net cash flow.
With respect to our existing glaucoma pharmaceutical and surgical pipeline, we continue to execute according to our plan.
Our idea was traveling across phase three trials progressing on schedule, bringing this breakthrough technology closer to becoming a reality for the benefit of patients.
By addressing the ubiquitous problem of non compliance with topical glaucoma meds.
We continue to target a filing that after the approval in late 2021 to 2022.
We're encouraged about the early progress in our collaboration with the western another potential rock inhibitor to further leverage our high dose platform.
On the surgical side enrollment is on track in the Standalone high stent infinite five 10-K clinical trial to support a filing an FTC approval in late 2020% to 2021.
Well I said Super Super we recently locked for full pivotal data set and we will be evaluating the final data as it is received in the coming months.
Well then determine the most appropriate path forward for this product.
And in addition, we are in early preparations for the potential us commercial launch of San Tan Pharmaceuticals, microphones have external surgical implant devices, assuming FDA approval in 2020.
Microsoft is not only a compelling treatment alternative for late stage for coal management, but also marks the capstone to our glaucoma treatment algorithm.
We are poised to deliver a truly comprehensive portfolio of micro invasive surgical devices and sustained pharmaceutical therapies.
Capable providing an optimize treatments solution at each stage of glaucoma disease states severely from the earliest manifestations of the most severe and of all cobble cataract and Standalone procedures.
We believe our glaucoma pipeline platforms, if approved will create a seven fold increase in our us opportunity expanding our reach to over 4 billion eyes. During the next several years.
We're delighted with the current performance of our glaucoma business has potential to deliver long term growth.
Well it probably comes as no surprise to many of you that we've had long aspirations beyond glaucoma.
For the past few years, we've been shaping a broader growth strategy that will allow us to apply our core competencies to tackle some of ophthalmologists most challenging unmet clinical needs.
As a result of this work we've identified multiple opportunities in retinal disease, and corneal health, where chronic conditions affect large patient populations and conventional treatment options have significant shortcomings.
Our strategy is to build two new disruptive the durable franchises retinal disease and Kornya health following a similar blueprint blueprint that brought success with our glaucoma business.
Our focus is on supportive long term growth.
Our expansion plans have been carefully conceived and are based on our seasoned ophthalmic experience across multiple disciplines.
We believe this growth strategy can generate further potential risk adjustment value creation as our addressable opportunities dramatically expand from $13 billion in glaucoma to roughly 54 billion cumulatively.
Over the past several months or strategy has started to take shape as we advance promising organic program programs and broaden our pipeline opportunities.
First let's talk more about high dose one of our most important organic programs.
In addition to the phase three clinical trial progress I referenced earlier.
We are continuing to follow I dose phase Twob study subjects through three years.
Based on a late breaking Reed I'll follow up data at two years. This is for the full cohort.
Continue to demonstrate favorable idols performance and durability.
For competitive reasons, we have no current plan to publicly shared this data and of course, the phase three clinical results will be the principal determine the vital success. However.
We are extremely encouraged by the phase two be follow and what it tells us about the commercial viability of items.
In addition.
Im excited to announce today that we are in late stage development with finalize designs for next generation high dose extended release implants.
That in a similar size and form factor to the original high dose.
Our design to provide nearly twice the drug capacity to extend efficacy durations even longer.
Next let's talk about retina.
With the recent acquisition of dose medical we've established a foundation for our future retinal disease franchise.
Our new retinal R&D program includes multiple micro invasive bio erodible sustained release drug delivery platforms.
That are designed to be used in the treatment of various retinal diseases, including age related macular degeneration and diabetic macular edema.
This program's pipe primary goal is to develop treatment options capable of a meaningfully longer duration of effect that is available with current standard of care.
We believe a longer lasting approach with the potential to not only significantly reduce the treatment burden, but also potentially improved treatment efficacy could prove disruptive within these large categories.
On the corneal health front, we recently entered into a global licensing agreement with Intronis, giving us a global exclusive license to develop and commercialize their patented transdermal drug delivery platform designed for treatment of dark dry eye disease, glaucoma and other corner disorders, such as allergy blepharitis conjunctivitis and related conditions.
And Travis is patented cream based drug formulations are applied to the outer surface of the eyelid for transdermal delivery of Pharmaceutically active compounds to treat.
Hi disorders.
Early human studies of this novel delivery system have demonstrated efficacy, while limiting the side effects often associated with drugs delivered as topical eye drops.
And Travis is lead candidate will be for the treatment of dry eye disease with potential future applications for other corner disorders and glaucoma.
This agreement as a novel platform to several organic Kornya health R&D initiatives, we already have in place.
But of course, the centerpiece of our new corneal how franchising tends to be is intended to be a big drop where their team has made tremendous early progress as evidenced by revenue growth of 66%.
Through the first half of 2019 compared to the same period in 2018.
Since receiving FDA approval for the for Trex ophthalmic solution in April 2016, and commercially launching in September 2016, our major has secured more than 300 active use customer sites and its drug formulations have been used in over 25000 treatments.
There are now more than a 130 peer review publications supporting the performance of the video solutions.
On the reimbursement front of major obtained a product specific J code for check so that became effective in January 2019, and has secured broad coverage from nearly all national commercial payers facility facilitating access to approximately 95% of commercially covered lives.
Moreover, likely telcos have you drew has shown a commitment to innovation with a robust portfolio of next generation and new pipeline products that have the potential to significantly expand its addressable opportunity.
Even though keratoconus as a serious sight threatening disease and the leading cause of full thickness corneal transplants in the United States. It remains vastly under treated.
This is due primarily to 100 diagnosis and underwhelming conventional treatment options such as the high glasses or contact lenses that attempt to provide some symptom relief, but do not slow the progression of the disease.
Literature estimates that as many as 20% carry cones patients ultimately require a corneal chat transplant.
Hey, costly and invasive procedure with high failure rates in fact literature suggests that 72% of corneal grass fed within 20 years.
98% fail within 30 years.
Sadly as the disease onset is often diagnosed and teenage years keratoconus patients may require multiple transplants overwhelms lifetime.
Visuals for Treximet is the first ever bio activated ophthalmic pharmaceutical therapy and unlike antiquated approaches is the first and only treatment option approved by the FDA to actually slower halt the progression of the disease.
While adoption remains in the early stages. We believe there are tremendous opportunities to drive meaningful penetration and realize exceptional growth in this underpenetrated opportunity.
Glaukos centrifuge or similar hybrid organizations and as I said at the top of the call. There are pronounced similarities that underpin the transaction strategic benefits.
By virtually every measure glaukos is uniquely qualified to leverage its expertise to establishing mix.
In order to build to be drilled into our durable global health franchise capable of delivering near and long term sustainable growth.
Now, let's talk more about the strategic benefits. This transaction will provide first vidro fits perfectly with our commercial organization.
We plan to leverage our global commercial infrastructure established sales marketing and market access teams to accelerate market awareness development and adoption for individuals novel solutions.
More than 700 of equals 11 funders use targeted accounts, our comprehensive ophthalmology practices were glaukos maintains strong existing relationships.
This represents an immediate opportunity to leverage our relationships in these accounts to grow the awareness about keratoconus captioned capture physician mindshare tried new adoption and increase for Trex utilization.
The addition of more than 75, Glaukos sales professionals will dramatically expand the field presence sales reach and coverage of of Eagles current 17 person U.S sales fields sales field organization.
Our sales professionals have established partner like relationships through years of working with physicians and their office staff in areas such as training patient screening new technology practice integration and consumer engagement.
Following closing of this transaction, we plan to utilize our entire sales force on day one.
And overtime expand a newly created corneal health specialty sales force to accelerate commercialization.
This will also establish a commercial foundation in corneal hall for future product launches.
You will also utilize our powerful customer and payer facing market access teams, including field based reimbursement specialist experienced in coverage coding contracting claims processing and payment processes.
We plan to deploy our extensive market access capabilities to bolster our visuals payer and provider education and patient support initiatives to help drive more consistent and reliable commercial reimbursement for visuals customers and patients.
Internationally Glaukos has established direct sales infrastructure in 16 international markets will be deployed for local leadership distributor management and reimbursement.
Finally, we plan to accelerate our combined investment in the.
Trust referral channel.
The combined entity will have additional resources to further awareness in this important community optimizer relationships and improving patient care.
Second the acquisition of a visual can significantly accelerate our revenue growth trajectory as a synergistic cornerstone of our new corneal how franchise.
In the U.S. keratoconus disease affects roughly $1.1 million is representing a large and relatively untapped opportunity of $3 billion.
In addition of aegis pipeline programs refractive indications could expand this addressable market opportunity by over $23 billion.
A visual delivered 66% revenue growth through the first half of 2019 compared to the same period in 2018.
Anticipates 2019 revenues of $38 million to $41 million.
We believe that the addition of a visuals fast growing product portfolio will increase caucuses revenue growth rate in 2020.
We also believe that combined organizations global sales force and reimbursement scale can potentially drive revenue synergies further accelerating the revenue growth trajectory for the combined organization beginning in 2021.
Third. The addition of a vidro further solidifies our unique hybrid pharmaceutical and device strategy.
Both companies have a uniquely similar hybrid pharma and device profile.
That should allow for seamless integration and future organizational success.
One example of this is a visual successful achievement shipment of a combination prophy and J codes the therapy reimbursement.
This will be an important area of expertise to leverage as we embark on similar reimbursement pathways for future products, including high dose.
Fourth the respect the respective organizations will combine to strengthen our company's organic programs initiatives and R&D capabilities.
This includes what will be a highly complimentary hybrid technology and pharmaceutical organization with expanded core competencies and device optical and software engineering analytical chemistry applied research and drug delivery innovation.
These expanded pharmaceutical R&D capabilities will help fortify advance our promising internal preclinical corneal R&D programs.
In addition, the combination will allow glaukos to deploy his extensive clinical research infrastructure and global regulatory expertise that in total.
Includes more than 75 professionals and over 100 active clinical investigator sites to advance of aegis pipeline programs.
We believe our track record and expertise in bringing new innovations to the market can help strengthen in advance of visuals rich pipeline of new and next generation products that could accelerate adoption and significantly significantly expand its addressable opportunity over time.
Fifth.
We believe the transaction is attractive financially and we will create meaningful shareholder value for all stakeholders.
In addition to our expectation for this transaction to accelerate glucose is revenue growth rate in 2020, we expect this combination will generate annualized cost saving synergies of at least $15 million and be accretive to operating results and cash flow by 2021.
As we look forward from here Beatrice commitment to innovation is evident in its healthy market expanding portfolio of next generation and new pipeline products.
The first of these is the next generation bio activated pharmaceutical solution for progressive keratoconus known as SP on therapy, which is designed to shorten treatment times and improved patient comfort versus the first generation at the off therapy.
A visual completed the patient enrollment for its phase three pivotal clinical trial in May of 2019 and is targeted and is targeting data in the second half of 2020 with the FTC approval expected in late 2021 to 2022 time period.
Beyond the 3 billion us keratoconus market opportunity a vigorous leveraging this platform solutions to develop and pioneer novel single applications of bio activated topical ophthalmic pharmaceuticals.
For refractive conditions, such as presbyopia, low myopia and post cataract refractive beer, which combined our estimated estimated to have an addressable opportunity of approximately $23 billion in the United States.
A major has commenced a phase two a multi center clinical trial outside the United States to investigate the use of its novel bio activated topical pharmaceutical solution to treat patients with presbyopia refractive disorder due to aging that affects over 50 million people in the United States alone.
The results of the Phase two study are expected by the end of this year and will be used to optimize the therapeutic parameters for presbyopia and determine the appropriate use clinical and regulatory pathway.
Putting this all together, we could not be more enthusiastic about this announcement and believe the acquisition of a visual will provide a significant growth engine for our company and create meaningful shareholder value in the years to come.
So with that I will turn the call over to Joe to discuss the financial aspects of this transaction as well as our second quarter financial results Joe.
Thanks, Tom I'll first walk through the transaction terms and financial benefits followed by a summary of our second quarter financial results.
Under the terms of this agreement the vitro will merged with a subsidiary of glucose in an all stock transaction.
For every one shareholder or share vitro stockholders hold.
They will receive in exchange ratio equivalent of <unk>, 0.0, 0.365 bulk of shares which implies a per share value of $26.68.
And a total transaction value of approximately $500 million based on cloud. This is closing share price on August seven 2019.
The transaction represents a premium of approximately 42% based on both companies 60 day volume weighted average price upon closing bucko shareholders are expected to own approximately 85% of the combined company with the vitro shareholders owning the remaining 15%.
As Tom highlighted earlier, we believe this transaction is financially compelling for us.
Through the first half of 2019, the company's generated combined sales of $131.7 million, an increase of 39% compared to the same period in 2018.
As we look forward and as Tom discussed, we expect to be drove to increase our revenue growth rate in 2020, and we expect to realize revenue synergies that could further accelerate pro from pro forma revenue growth beginning in 2021.
The transaction is expected to generate annualized cost savings of at least $15 million through reducing public company and administrative costs and is expected to be accretive to operating results and cash flow by 2021.
The transaction is expected to close in the fourth quarter of 2019 subject to the satisfaction of customary closing conditions, including Hart, Scott Rodino clearance and the approval of the vitro shareholders.
Now, let's discuss our second quarter financial results.
As noted earlier net sales for the second quarter of 2019 were $58.6 million a year over year increase of 36%. The U.S. represented 82% of our sales in the quarter and international 18%.
In the U.S. second quarter, 2019 sales were $48.1 million up 32% from the same period a year ago.
US sales in the quarter, primarily benefited from continued market growth the launch of ice that inject and the competitive market developments that occurred late in the third quarter of 2018.
Outside the USA second quarter sales were $10.5 million, an increase of 53% from the same period, a year ago or 64% on a constant currency basis.
Our international business continued to outperform expectations, driven by broad based growth, including in the UK, where second quarter performance was stronger than expected, even though we continue to expect reum recent reimbursement cuts there may create future headwinds.
Our gross margin in the second quarter was 86.6% versus 85.7% in the same quarter in 2018.
Gross margins benefited from elevated Istent inject production levels associated with the US launch and initial inventory build we continue to expect our core gross margins to remain in the mid eightys percent range going forward.
SGT expenses in the second quarter rose, 31% to 37.7 million versus $28.6 million in the year ago quarter. This rise reflects higher personnel and other costs related to the ongoing expansion of our domestic and global infrastructure.
Investments associate with the ice that inject launch professional fees associated with legal services and approximately $3 million a global enterprise systems implementation expenses.
R&D expenses rose, 35% in the second quarter to $17.1 million versus $12.6 million in the same year ago period, and we also incurred a $2.2 million in process R&D charge associated with the acquisition of dose medical.
The rise in R&D expenses reflects primarily the cost of additional personnel as we expand our pharmaceutical R&D capabilities and within clinical research where in particular, the direct costs associated with the idols trial enrollment continues to increase.
We expect the transactions involving dose and trust us to add as much as $5 million of R&D expense in the second half of 2019.
We finished the second quarter with a net loss of $6.3 million or 17 cents per diluted share compared to a net loss of $5.4 million or 15 cents per diluted share in the second quarter 2018.
As of June Thirtyth 2019, we had cash cash equivalents short term investments and restricted cash of $159.2 million compared to $120.1 million. The second end of the second quarter of 2018, and 149.3 million at the end of 2018.
We now expect capital expenditures for 2019 of $5 million to $10 million given our decision to expense the cost associated with our global enterprise systems implementation and updated timing elements for our new headquarters development.
We are updating our 2019 net sales guidance to $226 million to $231 million compared to 225 to 230 million previously.
This guidance outlook takes into account the 2019 considerations, we outlined in prior calls, including our expectations for organic growth the mixed market landscape and competitive dynamics, the new Doctor training dynamics associated with our inject launch an expansion of our international sales, which we now expect to be in the range of $38 million to $40 million for the full year based on current foreign exchange rates compared to our previous range of 37 to 39.
Please note. This revised guidance does not include it assume contribution from of the drought.
And with that I will turn the call over to Tom Griffin for a review of the vitro second quarter financial results.
Thanks, Joe for the second quarter of 2019 of annual revenue grew 63% to $10.3 million compared to $6.3 million in the second quarter of 2018.
Worldwide drug revenue accounted for approximately 88% of our total revenue for the second quarter of 2019 and revenue from the United States accounted for approximately 80% of the total revenue in the second quarter of 2019.
The 4.2 million increase in us revenue drove the growth primarily from a 4.3 million increase in drug revenue driven by expanding average revenue per unit and volume of drug formulation sold.
The utilization rates strengthened in the second quarter of 2019 to 2.81 for Treximet treatments per account site per month compared to 2.1 in the second quarter of 2018.
As of June Thirtyth, two through June Thirtyth 2019, we had 332 active centers in the United States, which we estimate is a 30% penetration into our 1100 target centers.
We now expect 2019 revenues to be in the range of 38 million to $41 million.
Compared to our previous range of 37 million to $40 million, our upwardly revised outlook implies anticipated annual growth of 43% at the midpoint of the range.
I'll now turn things back to Tom for a few closing remarks.
Okay. Thanks, Tom So I'll wrap up by reminding you that our goal of glucose is to build durable disruptive franchises.
In large and growing markets, where we can leverage our core competencies and microscale surgical sustained pharmaceutical and hybrid platforms across glaucoma, Kornya health and retinal disease.
The acquisition of the Vidro combined with our promising organic initiatives and other strategic expansion plans create a hybrid pharma and device ophthalmic leader, which we believe is ideally positioned to deliver sustainable long term growth and create meaningful shareholder value for years to come.
I could not be more enthusiastic about the future of Blocos as we embark on our aspiration on mission to transform ophthalmology.
By turning the call over for questions I want to express my deep appreciation to be drones talented and dedicated employees.
We look forward to working closely with them to plan the integration and ensure a seamless combination.
So with that I'll open the call to questions operator.
Ladies and gentlemen to ask a question. Please press Star then the number one on your telephone keypad to withdraw your question press the pound key.
Your first question comes from Robbie Marcus with Jpmorgan. Your line is open.
Hi, This is actually Alan on for Robby.
I guess I guess, one question is kind of on that $15 million.
Part of the rationale for the deal really is the cross selling opportunity right. So I guess, just when it comes to generating that $15 million.
21.
Hi, Alan it's Joe Thanks for the question so with respect to the 15 million you're absolutely right in the way you asked the question I mean this is ultimately about our ability to achieve the channel synergies and drive revenue growth, especially as we get towards 2021.
On the cost savings in particular, it really comes primarily from company public company costs as well as what you'd expect on the sort of administrative side and given the current size of a vitro theres a lot of things that they continue to do that rely on third party consultants and expenses associated with that that we believe ultimately we can do in house here with our existing infrastructure Glaukos.
Got it.
And then I guess just moving on to guidance. So you know it looks like you guys raised it a little bit, but given you already raised guidance a little bit conservatively on the first quarter call. I know you said that UK was a little bit stronger this quarter.
But looking into the back half right like what's kind of like keeping you guys a little bit.
I guess, you know a little less little more conservative on the guidance front like were still concerns you there.
Yeah sure Alan It's Joe again, I'll break that down between the United States and international markets.
Internationally it quite frankly is sort of what we said on the first quarter call while in the second quarter, the UK actually performed quite well.
The cuts did happen in April and we do know that.
Over time, that's going to be a headwind to that market in particular, even though it wasn't as much of a headwind in the second quarter as we anticipated. So I think as we continue to play our way through.
The UK situation, we want to make sure that we're appropriately capturing that in our thinking about international guidance.
In the us.
We usually talk about a series of topics in the dynamics around the trends around especially with our us business.
And what I'll say sort of simply is all the trends that were we saw in the first quarter really continued in the second quarter with very little change if you will.
But having said that in the context of competitive trying and trialing.
We continue to expect to see it and it's in we continue expect to see some some growth in it and so I think as we think about the set up for the second half we want to continue to be cautious about what that could mean for our us business, even though to your point thus far in the first half we have been delighted with the results we've seen.
Got it and then sorry, just one more.
When it comes to Andrew do you think it can help with kind of a halo effect of injecting dose does that give you like a better presence in the office.
Since you have such a differentiated assets starting in fourth quarter. Thanks.
Well I'll answer that this is Tom and I think it does have an appreciable effect I mean, we'll be entering with a paradigm changing new pharmaceutical Oregon.
Ingredient into the offices were really as we think about it of the current 1100 targeted accounts vitaros approaching we are already actively addressing 700 of them. So we have intimate relationships with really the vast majority of the targeted accounts and with something that is such a paradigm changing solution that can help such an underserved market place of course, I think it's going to add value with our representatives entering into these practices.
Your next question comes from Larry Biegelsen with Wells Fargo. Your line is open.
Thanks for taking the question congrats on the deal.
Tom one on Ah vitro, Joe one on the guidance. So so Tom why is this the right time for this deal you know given your strong pipeline you know I'm sure you've you've known in vitro for a long time. So so why is this the you know the right time.
Yeah.
Yeah. Thanks, Thanks, Larry Great question, So we believe that the opportunity and the trend the timing of this transaction or a deal at this time to fortify our long term growth potential so.
Both companies have just come off record.
Second quarter revenues and we're both really strongly positioned in our respective marketplaces.
And Glaukos really has just completed its treatment algorithm and glaucoma, which is designed to to really give us sustained commercial growth and sustained competitive advantage well into the mid 2000, twentys and beyond so with the capstone agreement with Santander.
We've now capped off a full portfolio of products that treat glaucoma from its most incipient stages to late stage treatment.
So its incumbent upon me to look for long term growth potential and we believe we have the opportunity to build powerful commercial franchises within this corneal commercial class just like we've done in glaucoma.
The characteristics of the class a vastly underserved market are very very similar to what we did with mix.
Innovator as an ideal partner.
If you think about it.
Vidro has a paradigm changing technology, it's already has very very strong foundational clinical data.
The answer establishes J code and a solid reimbursement foundation, it's the first to market in this vastly underserved embryonic marketplace.
And it's being able to address with really a palpable new product to address these unmet clinical needs.
And I would say that the transaction really plays to our strengths in two major ways. One we believe we're very good at disrupting and creating new marketplaces. So I would argue that just what we've done in glaucoma.
By setting up this template in this portfolio that gives us is such a sustained quality competitive advantage, it's a challenge and an opportunity for us to do this within cornea as well and we are we have every intention to do so and then secondly, Larry if you think about the commercial fit within the organization. It is enviable.
We'll have 700 1100 accounts that are currently targeted we already call on so we'll have kind of a very very modest.
Change in bandwidth for our commercial organization and if you think about it.
What a feature has been able to accomplish was 17 representatives now with the new math will have nearly five times, the mass and muscle and commercial sales representatives hitting the marketplace and so.
For all these reasons it is the right opportunity. It is the right time and it's why we're striking now.
Perfect and then just one follow up for Joe just the cadence of growth.
In Q3, and Q4 for Standalone cloud goes given that the comps get tougher in Q4 and Joe the midpoint at the second half guidance implies growth of about 18%.
Is there any read through there how should we think about maybe puts and takes for.
2020, as we update our models here thanks for taking the question.
Sure. Thanks, Larry.
Well, let's think about this for 2019.
Obviously as we think about the remainder of the year you have to remember first the seasonality that we tend to experience right and as we've said in the past.
The first quarter can be 20% to 23% of our overall business. The Q2 Q3 tends to be about 25% of the year.
Each and Q4 tends to be somewhere in the 27% to 28% ZIP code I think thats. The most important determined when you think about the set up for the overall year, obviously we've had.
A variety of puts and takes but as we look at it I think that actually should land is back in to place it looks somewhat like that typical seasonality.
When you think about the implied growth in the second half obviously, you've got comparability.
To the second half of 2018, and as I think everyone on this call knows the the recall so she was cypass happened really.
For 2020, given that 18% implied second half growth and ill drop thank you.
Yes, no I mean, I think looking when we think about 2020, and we'll obviously get to that when we get to our fourth quarter call and in the guidance there, but I think it continues to be all about execution about the addition of new surgeons, who is our salesforce gets back to bringing in new doctors more so than converting the existing physician base and utilizing the benefit of that I think it's about the expansion of same store sales as we've talked about that we believe comes with the conversion nystedt and Jack to getting a full year benefit of that.
And then of course as Tom mentioned.
Depending on the timing of the Santen product hitting.
We could potentially have some benefit from santen in 2020, as well, but we'll we'll obviously dial that in as we know the timing or more on the timing associated with that product.
Thanks for taking the questions guys.
Thanks, Larry.
Your next question comes from Brian Weinstein with William Blair. Your line is open.
Hey, guys. Thanks for taking the question going back to the revenue synergy discussion it seems pretty obvious that there is.
Good strategic fit here, you talked about revenue synergy in 2021 and beyond why would you not be able to see anything sooner than that it would seem that maybe plug and play isn't quite the word to use your but pretty close to that thanks.
Yes, Thanks, Brian It's Joe.
And Tom or Chris can can add on here.
I think the way to think about it is it takes a little bit of time to actually organizationally make all this stuff happens so while we will be putting our full salesforce behind this day, one we know from deals like this sometimes there can be disruption right that happens during that time as well and so I think we want to make sure that we've got is we're setting expectations.
We think about 2020 as potentially having some puts and takes right as we as we navigate that and that you were confident by the time you turn the corner 2021, you should start to see the benefit of this combination the context of the ability to grow.
Above what the expectations would be on a standalone basis.
And I would just add in Savage.
Video has done a wonderful job getting the J code and putting into place commercial payer coverage you see how well defined they are and how much commercial payer coverage they have but.
Theres always a hangover right with doctors, who expressed some skepticism that that coverage and payment is available.
So it takes some it was a little bit of a Missouri show me state what's going on.
Resure can add to this as he deems fit within the commercial organization takes a little while to overcome and I can't imagine a better combined company than us.
To be fair tax that and to to make payments.
A a routine part of.
The use of trucks in the marketplace, but it will take some time.
Yes.
I'm going to have to.
I agree with what Tom is saying, we definitely have now more than 95% coverage.
And then for Trex up there is it take look for that.
All nationals are covering it all.
Most regional insurance covering there are few regionals left so those are still we need to work with them again.
Thats why we are still as Tom mentioned still need some support for.
Accounts to put those regional.
Insurance.
To pay this consistently.
Okay, and then not sure if frezza or.
Tom you guys want to join 21 to address this but just to kind of educate those of us that are going to be coming up to speed quickly innovator here can you just talk about the pharma pipeline that of age or has kind of where the company is in their various processes and how you guys think that to the two organizations together can actually help accelerate R&D and commercial well, we talked about commercialization, but just I guess, how do you guys can jointly accelerate the R&D on both sides of the house. Thank you.
Thanks, Brian I guess I'll ask Reza who has been so prominent in bringing this fulsome pipeline into reality to address the first part of the question and then I'll try to address how as a combined business, we can accelerate and move that forward. So reza.
Yes, so the first product that we see that that prove otherwise it foot tracts out that's the only SK approved for the treatment of progress et cetera, Conus, we just as Tom mentioned.
Completed the enrollment of the clinical study for the next generation treatment with a new drug.
Beyond the enrollment of that is complete.
And we are in the one year follow up on that and then then separately that phase two way is its different for every application we have a system activation system and it's on.
Corresponding drug. So these are the two studies currently in the clinic.
And as far as a combined business if you think about it.
Already the vitro has shown really strong progress in creating using both optical and scanning.
Boxes in order to.
Bio activate these pharmaceutical compounds and transform them on the surface of the it's really quite an amazing accomplishment, what they've done but.
I think when we put them and combine them with now the greater than 30.
Scientists engineers biochemist that we've been able to recruit from Allergan and other major companies.
I can't help but think we're going to add substantial intellectual capability to what we'll be able to cure to create as a combined company.
And then on the clinical side, you can imagine as a small company and typically you have a Spartan clinical group as you look to husband resources and get the highest returns and I think when we combine.
The drugs clinical group with our substantial clinical and regulatory infrastructure.
I'm very very encouraged to see.
How quickly we can attack both clinical recruitment and maybe bring these products to fruition.
Into approval on the more expedited fashion.
Your next question comes from Matthew O'brien with Piper Jaffray. Your line is open.
Afternoon. Thanks for taking the questions just one quick housekeeping one Joe what kind of color do you have on this this transaction.
This cost reduction actually does not have a collar attached to it.
Okay.
And then.
Forgive me for being blunt tier and.
With this question, but you know I think I think people are going to look at what's going on today with the in process R&D charge, you're talking more about high dose extended release now which is a newer.
A newer thing for you you're doing a vidro as well on top of that which is has a lot of.
A lot of.
Products in the pipeline. So I think what people are going to assume here that something's wrong in the pipeline with traditional iOS as you had presented or with infinite or something else along those lines. So what can you can you offer up to make us all confident that there's not some other issue with the pipeline, that's causing you to do this vidro deal or something with the core business, that's causing you to do the vitro deal.
As you're you're lapping tough comps into next year et cetera.
Well I guess, what I would say if were accused of anything we'd be accused of great ambition. Okay.
And if you look at my career here this is not anything new.
In all the rules that I've had within several companies.
I will certainly tests than challenge organizations to move forward and expedited fashion.
To create growth in as many years as I can conceive and I think that will benefit shareholders and so I want to address something that I can't.
Proof.
Or disprove.
That that kind of.
Perception, but what I can tell you is that if you think about the logic behind the company now that has really run the bell within glaucoma has a fulsome dedicated pipeline that treats all stages from incipient glaucoma to late stage glaucoma carries us through with commercial value into the 2000 Twentys and beyond.
I think its time for us to be able to look beyond into another growth. There we may be able to recreate this opportunity and recreate really prominent shareholder value.
And so thats hard to answer your question.
Okay Fair enough and then maybe something that's a little bit softer.
Just the Santen deal.
You guys have put a lot of a lot of air bars around what that's going to look like from a contribution perspective.
And 20 or beyond can you talk a little bit about that and then also on the international side was really strong again this quarter just any color there would be helpful. Thanks.
Thanks, Matt Thanks for saving the softer question for me.
So on the on the Santen side, we will have to work with our partner before we can share much more so what we've said there.
Quite frankly is let us get through them, having submitted in and where we can talk more about potential timelines and and coordinate with them around what we will and won't say publicly around the economics of that transaction.
All I can say sitting here now is what they've said, which is they expect a filing in 2019 and approval and commercialization in 2020, and we're preparing accordingly.
Alongside them.
Regarding international.
International performance, there, we really we couldn't be more pleased.
We continue to see another quarter, a broad brush broad based growth reported at 53% constant currency at 64% it was across the globe.
Our usual stalwart markets contributed meaningfully.
New Martin newer markets like Japan, and in France contributed meaningfully.
And.
And perhaps the surprise for us relative to the set up going in as I mentioned in the prepared remarks was that the UK held in there.
Much much more robustly than we anticipated coming into the quarter. So thats really kind of where we sit today from an international perspective.
And one more thing I'll add Matt as we think about you talked about the strength of our portfolio I think you heard in the prepared remarks that we now have with late breaking read out we have this view of the phase Twob data now out to two years.
This is new this is the first time reporting publicly.
And the data shows durable durable reductions in intraocular pressure and reductions in medication burden. This is exciting and this is something that should give.
Investors, even more confidence in the path and the routes that were choosing and then supplemental to that is the fact that we figured out how to have a form factor that can look and feel very close the initial I dose that holds nearly two times the the level of medication within its tiny vessel.
And so if anything I think people's confidence and strength and conviction should be buttressed by this call and by the pipeline that I'm sorry.
Very helpful. Thanks, so much.
Matt.
Your next question comes from Chris Cooley with Stephens. Your line is open.
Good afternoon, and thank you for taking the questions and let me just start by congratulating, Tom and those are both.
Potentially powerful combination you guys are putting together and look forward to seeing which do here.
Maybe first for me too.
If you wouldn't mind.
Just give us some additional color as you evaluate it.
Transaction.
Things that you were considering whether it's other the extension of exclusivity now potentially out to the 2027 period.
Competition outside the United States it hasn't at the Olin.
Offering as it stands today and of course the pipeline.
Assuming most most focus there on both low myopia presbyopia, but just maybe walk us through how you kind of waiting to see those come in three key tenants.
In evaluating the transaction and I've got one quick follow up thank you.
Okay I'll be happy to weigh in on what I found attractive about the organization as I grew to know it.
And please correct me if you want me to read address the three tenants you talked about but.
First I looked at really the pipe the the paradigm changing technology that is that is resonant and the fact that this is such a vastly sooner than embryonic marketplace. I mean, if you think about it.
Keratoconus is is dramatically under diagnosed and there had been no treatment options. So this is the first of its kind and happens to replicate what we faced with Migs entry with the first ice stent.
The pipeline is fulsome and extraordinary it offers the ability to.
To really make this a value proposition if you think about it of using a single application of a pharmaceutical.
To arrest a sight threatening disease.
And you think about that in context I get terribly excited.
As an end of one and as a potential.
A condition of having to have a corneal transplant later in life.
These are things that are powerful palpable and high valuation propositions for patients.
When I look at the strong clinical data they have I think the numbers or something like a 130 peer review studies.
These are studies that have either has been part of them and its studies that have been done the appetite for this area is extremely strong because a lot of these have been done with non granted.
Physician sponsored studies and so I know that the appetite is there and that with the right channeling that we can be able to act size access this.
When I saw that.
That vitro had created the J code to me that that offers up a print and retires or risk and offers up a proof of principle advantage. It's what we'll do with high dose. It's what I've done in my career with other products. They were successful in creating that it's going to be able to facilitate the adoption of this technology enough of the.
Formulations going forward.
The fact that their first to market is to me.
A very very high value proposition for us we're going to have open field running in combination with the vidro to be able to create an installed base that will be I think invariably difficult for any future competitor to try to unwind and I like being in that position. So what we're good at and it's what we intend to to be able to address and to achieve.
I'd like the team the team is focused.
The cultures are similar I believe that as the the transition will be relatively seamless I've done a number of these no integration is without bumps, but I can't imagine a more trusting team and a team that I'd rather work with moving forward.
So as I look at all those plus the principal opportunity of time again, we have really advanced ourselves and created this fulsome opportunity with glaucoma and to me. It gave me a time to take a deep breath and look beyond and see if I can create some significant shareholder value in other areas as we move the business forward.
I appreciate all the detail there bloomingdale.
Keep keep to along with the role also again Joe This all in.
So much going on right now.
And you just talked about $15 million incremental cost savings as we go into 2020.
Solar production more so in the corporate costs.
It seems with the added infrastructure with all the various R&D projects here you have a pipeline.
Pretty pretty formidable so how should we think about.
Additional spend may be required to run the business going forward, we're blessed with an incredibly talented team for a business of any scale, but what type of incremental investment should we be thinking about for glucose.
Now moving out since you're obviously going be folding in the late organization as well.
Thank you yeah.
Yes, Thanks, Chris It's Joe so.
First I just want to make sure. We're one quick correction on that so our expectation of the $50 million plus run rate is as we make our way towards 2021, Tom looking at some sort of every time you go through those but.
But yes, I mean, as we as we think about.
The the overall you know.
Operating expenses in investment, we're making the business the way I would answer it is this I think the.
History is that in some ways the best predictor of the future you have a pretty good sense of the way we run the organization here to date in that we've largely live within our means right. Since the time of the IPO, we've made substantial investments in the pipeline as it exists today organically.
Over the last several years, while still generating cash quite frankly than the day and again largely living within our means so while there may be periods here as we see opportunity to push forward investment and to reiterate what Tom said long term growth is our objective.
I think that our historical track record speaks for itself in the context of being able to deploy and invest in a in a prudent way.
Your next question comes from Joanne venture with BMO capital markets. Your line is open.
Hi, This is Steve on for Joanne.
Can you guys just discuss some of the market dynamics in the us in the quarter are you still expecting mid teens volume growth.
For the year and then just.
A follow up to that on.
Can you add any more color on the same store and new store sales in the quarter with the inject launch what was the sales forces the ability to go on the offense and converting new physicians in the quarter. Thanks.
Thanks, So I guess a couple of things on that first in the broader market dynamics.
The.
As I start off earlier in the call is largely unchanged from from what we saw in the first quarter.
Yeah, I think the market growth continue to kind of be in line with our expectations. We continue to track towards what we believe based on the information. We have is mid teens growth for the year.
I think.
The Cypass dynamics are unchanged in terms of the share recapture there.
The competitive landscape is largely unchanged in the context that.
We continue to see trying and Trialing and it continues to be an important.
Component of what we're seeing in the marketplace, but that so far it continues to track a little bit below of what our internal expectations had been so I think from a market perspective.
We're not really seeing much different in Q2 than what we saw in Q1 and a Chris you want to comment comment on what you're seeing within the Salesforce sure. Steve This is Chris.
I would say that the only difference from the first quarter.
Or excuse me from the first quarter in the second quarter's toward the end of the second quarter. We are now beginning to gradually.
Move towards.
Adding new docs more than we did.
Since the launch of Istent inject we have primarily been focused on.
Converting our eye stent users to Istent inject now we begin to.
Focus on increasing utilization, where same store sales growth as you asked within our existing accounts and adding more new docs as we head into the second half of the year.
Okay. Thanks for taking the question.
Yes.
Our next question comes from the line of Ravi Misra.
Hi, Thank you for taking the question.
Just.
Couple of deal and then just a couple on the pipeline.
That's kind of existing pipeline. So the you mentioned the 700 1100 of Andrew accounts I'm. Just wondering are you willing to provide any color around the 700 and kind of what percentage of your accounts that that represents so we can get a handle of how Pedro can go after.
Your market and is there any break up fee on that and I guess I'll wait.
Post the response to ask the pipeline question. Thank you.
Hey, Ravi, it's Chris I'm going to address the first part and then I'll turn it over to jure Joe about the breakup fee.
In terms of those 700 accounts. These are all accounts that were calling on in terms of what the percentages, where we have business, we're not in a position to to discuss that but as you look at that the vast majority of these accounts, which are comprehensive ophthalmologists are accounts where were already in and that is very exciting to me is quite synergistic for our people to be able to not only talk to them about glaucoma therapy, the corneal health as well. So I'd look at this is a great opportunity to leverage the two businesses I think there is a lot of synergies here and I think this will be proven out moving forward.
And Robbie on the breakup fee front theres, a customary breakup fee for a transaction of this nature.
Okay, and then if I could ask around I notice you know you you spoke somewhat about the follow up data two years.
Can you maybe help quantify that compare to what you presented back in early January around the phase two data and the 12 month data that you were seeing and then just one last one on my end just where are we on the kind of conversion from ice stand Tyson and Jack is that kind of complete or are we still kind of still in the late innings. There. Thank you.
Thanks, Robbie I'll take the first question and while I have said that.
We have the full core it into phase two b.
I've purposely kept that.
At the very top line draw of talking about durable.
Appreciable decreases in intraocular pressure and medication burden, but if you think about that what I've said from the very beginning is that we needed to have six months of delivery to have a commercial product the ideal would be a year.
And I've said that now constantly I think since our IPO.
And when I'm, telling you today is that we have data that suggest that the product is delivering intraocular pressure reductions and meaningful decreases in medication burden at two years.
So I haven't gotten and won't get more granular than that.
Phase three will be the ultimate determinant of the Idhone success, and certainly I want to be able to husband data away from potential competitors up so that they don't know the true capabilities of this product, but I will tell you that I am more than Thursday aspect and become increasingly convinced that I dose can become a very meaningful part of the glaucoma treatment paradigm.
Chris as far as the second part or we complete.
In terms of.
Converting nurestan customers to Istent inject.
We're largely through that process and.
I do want to remind everybody that that's not going to be 100% conversion Tyson and Jack.
What we've seen in other markets in Germany, Australia, Canada is roughly 90%.
Not to say that that's what it will be in the us but that gives you an idea.
What's happened in other geographies.
If you have any questions at this time superstar wanting your telephone keypad.
Our next question comes from the line of Ryan Zimmerman Zimmerman.
Great. Thanks for taking the questions I will follow up on Robin's question, a little bit maybe asking a little different way I mean, I understand that there's 1100 pounds that a v. drugs targeting and you're in 700 of those today, but from the accounts that.
Vitro has an identified Tom or reservation characterize you know of the cataract refractive surgeons that are out there today.
You know how many have interest in Cornell health or how do you know how would you characterize.
Those that maybe have a corneal oh, because ophthalmologists are a cornell putting out some audits.
Who can do this who maybe has not identified in those 700 or excuse me 1100 accounts and what that looks like over time and their ability to.
Get those revenue synergies that you're talking about 2021, and then I have a follow up question.
Hey, Ryan this is Chris and I'm going to address that one those additional accounts or refractive only or cornea only accounts.
Were there specifically focused on that and wouldn't have any crossover into glaucoma.
So we'll address that in a different manner than just with our.
Glaucoma team.
Okay understood and then.
Yeah, I think Tom you made some commentary around a secondary group of sales reps eventually so appreciating that you're gonna combine or or to leverage your existing sales force.
Into a vitaros sales channel, but maybe you could just talk about kind of the timing or when you think you could have maybe a more specialized sales force secondary to your existing sales force to that.
Yeah, I'd be happy to so what I said before is that.
Ryan We had 75 representatives that are currently.
On the street in the United States.
And that the total amount with vitro our 17.
A video has a very capable highly qualified salesforce and so what we want to be able to do is to see if we can transform that sales force into a specialized sales force of what we'll call corneal health.
And the deliveries will be a little bit different they will be really supplementing the activities of the main salesforce they'll be working strongly on utilization within practices showing practices how to find these patients how do I identify them how to sell them from the beginning opportunity into alert them to this new pharmaceutical single use preparation.
We also are quite skilled in the art it looking at OTI referral networks and trying to put all these an optometrist in concert with ophthalmology practice as we do this all the time and glaucoma.
And this corneal how salesforce will be dedicated to priming and utilizing those OTI referral networks to be able to drive both identification.
Capture adoption and utilization of the photronics of Formula So I'm highly encouraged theres, they're great people on the ground today, both individual and glucose we're going to spend some time.
Really reviewing how we can put both these sales forces together so that the synergies are powerful.
And just Tom if I could squeeze in one last one what do you see as your ideal number given that you have to have 17 today is that how undersized in their view is that sales force.
And where do you see yourselves, taking that size over time potentially.
Well I think I wouldn't comment on.
Kind of the upper scale, but what I would tell you is if you think about it.
What vitaros complex seem with 17 people is now going to be multiplied by again by the new math by five or six actually a total of over 90 combined people that are going to be able to go after.
You know the the adoption and utilization of foot traffic. So so I think if I had to say today, I think thats going to be more than ample to be able to.
To be able to achieve the desired adoption rates that will want to see within the marketplace, but like all things Ryan we'll we'll assess as we go if we need to add more representatives, we will do so.
Okay. Thanks for taking the questions.
Congrats.
Acquisition.
Okay. Thank you.
Okay. So.
Yes, so with that first I'd like to thank resin Tom.
For there.
Their diligence in this process and and really welcome their team into glucose and I'd like to thank all of you for joining us today for your time and attention and for your continued interest in Gulf Coast and now this combined entity. Thank you very much.
Thank you Tom presentation.
Thank you for your presentation and this concludes today's conference call you may now disconnect.