Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Glaukos Corp (GKOS, Financial) reported record second-quarter consolidated net sales of $95.7 million, up 19% on a reported basis and 20% on a constant currency basis.
- The company raised its full-year 2024 net sales guidance range to $370 to $376 million from the previous $357 to $365 million.
- Strong growth was driven by both US and international glaucoma franchises, with US glaucoma sales reaching $49.8 million, a 26% year-over-year increase.
- The iDose TR launch is progressing well, with positive feedback from early cases and the establishment of a unique permanent J-code expected to increase patient access.
- The international glaucoma franchise delivered record sales of $26.1 million, a 17% year-over-year growth on a reported basis and 21% on a constant currency basis.
Negative Points
- The company faces challenges with the Medicaid Drug Rebate Program (MDRP), which is expected to impact the Cornea Health franchise, particularly in the fourth quarter.
- There are uncertainties related to the FDA's decision on the re-administration of iDose, which could affect future growth.
- The third quarter is expected to be a transition period for iDose TR due to the J-code implementation, potentially dampening immediate growth.
- The company anticipates potential growth headwinds in its Stent portfolio as the sales force focuses more on the iDose TR launch.
- Currency fluctuations and competitive launches in international markets pose ongoing challenges.
Q & A Highlights
Q: Any comments on 2Q '24 sales contribution or instead maybe any color on the base is growth in US glaucoma, if you prefer to give that? And then if you could also comment on 3Q trends you're seeing with the J-code now in place, that would be fantastic.
A: Thanks, Tom, and thanks for the comments. I'll start with the overall US glaucoma performance. Growth once again accelerated in the second quarter to 26% year-over-year, driven by mid-teens growth from our iStent portfolio and better-than-expected contributions from iDose TR. As for the third quarter with the J-code in place, we continue to be positive about our US launch progress. However, Q3 is a bit of a reset moment as we transition to the J-code, and we expect increasing adoption as reimbursement confidence grows over the remainder of 2024.
Q: If I dial in maybe 16%, 17% growth in the core US glaucoma business, I'm arriving at around, call it, $9 million of iDoses. Is that fair? And then my follow-up would just be on profitability for breakeven on a cash flow basis at some point in 2025 for the total company.
A: I don't think the math quite shakes out that way. We won't comment on a specific number for iDose, but the overall growth profile of the business is driven by mid-teens growth of the iStent portfolio and larger-than-expected contributions from iDose. On profitability, our goal is to get back to cash flow breakeven and start generating cash, with 2025 being a key year as iDose ramps up.
Q: Why wouldn't growth be higher in the second half, given the ramp of iDose? And is your commentary on the J-code earlier implying that iDose sales are not expected to go up sequentially in Q3?
A: We are super pleased with the first half of 2024 and raised our full-year guidance. For the second half, normal Q3 seasonality, FX headwinds, and MDRP impacts on our Corneal franchise are considerations. For iDose TR, we want to be cautious as we clear market access hurdles, which may dampen some of the performance seen in the iStent portfolio in the first half. The third quarter is a transition period with the J-code, and we expect increasing momentum in Q4 and into 2025.
Q: Can you provide an update on the implanting surgeon base in Q2 and the adoption rate of iDose?
A: We opened up our early access program to our entire US glaucoma sales force in the second quarter, and we saw significant progress. However, practices comfortable with the miscellaneous drug code are still a headwind. We will get a better handle on the trending and decide how to communicate that as we move through the year and into 2025.
Q: What are your conversations with the FDA regarding the re-administration potential with iDose? Do you need a trial for that?
A: We have submitted a reconsideration request and will begin an active dialogue with the FDA. We don't need additional clinical trial information. We are presenting a compelling case based on existing data. However, we are cautious and not counting on it. If successful, iDose TREX, our next-generation high-dose therapy, could become the de facto device for re-administration.
Q: Are you seeing competitive switches from other treatments to iDose? Where is iDose shaping up in the treatment paradigm?
A: It's a bit early to make grand calls, but we expect iDose to be an early option for intervention in stand-alone patients regardless of disease severity. Each surgeon will have a different view on the algorithm, but the overall interventional glaucoma shift is towards more proactive therapy, benefiting iDose TR and Glaukos.
Q: Can you elaborate on what you meant by a reset in the third quarter? When do you expect to get to a full launch for iDose?
A: The J-code is an important component, but not the only one. As we get into Q4 with the J-code and published ASP, and as professional fees are established, we expect more accounts to open up. The third quarter is a transition period, and we expect growing momentum in Q4 and into 2025.
Q: How should we think about the domestic glaucoma revenue segment for the remainder of 2024? Should we expect mid-teens growth in the base stenting business and incremental growth from iDose?
A: We saw mid-teens growth in the first half, but as our team increasingly focuses on iDose TR commercialization, it could create some growth headwinds for the broader portfolio. For the full year, expect low single-digit growth for Corneal, low to mid-teens growth for international glaucoma, and high 20s to nearly 30% growth for US glaucoma.
Q: What is driving the strong growth in OUS MIGS, and what is the timeline for bringing iDose outside the United States?
A: The strong growth is due to the blocking and tackling of our teams across markets and new product introductions and approvals. We are still in the early stages of changing the standard of care. For iDose TR, we are evaluating various international markets and will be cautious about the timing of market entries outside the US.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
