Glaukos Corp (GKOS) Q1 2021 Earnings Call Transcript

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Glaukos Corp (GKOS 2.54%)
Q1 2021 Earnings Call
May 5, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Welcome to Glaukos Corporation's First Quarter 2021 Financial Results Conference Call. A copy of the company's press release issued after the market close today is available at www.glaukos.com or http://www.glaukos.com. [Operator Instructions] This call is being recorded and an archived replay will be available online in the Investor Relations section at www.glaukos.com or http://www.glaukos.com.

I will now turn the call over to Chris Lewis, Senior Director of Investor Relations and Corporate Strategy and Development.

Chris Lewis -- Senior Director, Investor Relations, Corporate Strategy and Development

Thank you, and good afternoon. Joining me today are Glaukos President and CEO, Tom Burns; CFO, Joe Gilliam; and COO, Chris Calcaterra. Following our prepared remarks, we'll open the call to questions. 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 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, our products, our pipeline technologies, our U.S. and international commercialization, integration and market development efforts, the efficacy of our current and future products, our competitive market position, financial condition and results of operations as well as the expected impact of the COVID-19 pandemic on our business and operations. These statements are based on current expectations about future events affecting us and are subject to risks, uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control.

Therefore, it 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.glaukos.com. Finally, please note that during today's call, we will also discuss certain non-GAAP financial measures, including results on an adjusted basis. We believe these financial measures can facilitate a more complete analysis and greater transparency into Glaukos' ongoing results of operations, particularly when comparing underlying results from period-to-period. Please refer to these tables in our earnings press release that is available in the Investors section of our website for a reconciliation of these measures to the most directly comparable GAAP financial measure.

With that, I will turn the call over to Glaukos President and CEO, Tom Burns.

Thomas W. Burns -- President, Chief Executive Officer

Thank you, Chris. Good afternoon to everyone, and thank you for joining us today. We hope everyone is staying safe and doing well. As we passed the anniversary of the initial pandemic-related shutdowns and reflect on this past year that has challenged all of us in extraordinary ways, I'm confident that we have evolved into a more efficient and stronger company, well-positioned to advance our mission and execute our ambitious plans. We remain focused on our near-term execution as we drive new adoption and deeper penetration globally for transformative MIGS and iLink solutions. At the same time, this company is advancing novel platforms with the goal of disrupting conventional treatment paradigms, improving the existing standard of care and enriching the lives and treatment alternatives for patients worldwide.

We continue to invest in and advance our fulsome pipeline based on our core platforms, where we anticipate and are planning for a robust cadence of new product introductions over the coming years that have the potential to significantly expand our addressable market opportunities. We are confident that the investments we're making today will drive Glaukos forward as a unique strategic vision care leader with tremendous potential for long-term growth and profitability.

Today, Glaukos reported first quarter net sales of $68 million, up 23% versus the year ago quarter. Joe will discuss our financial results and forward outlook in more detail later in the call, but I will begin that discussion here by providing an update on a continued commercial progress and the market conditions overall. Fueling our strong start to the year with solid execution on our key strategic initiatives across our glaucoma and corneal health franchises globally. We have been pleased with the continued strong coverage trends in the market overall and our business specifically through the first quarter and into April. While first quarter procedural recovery trends were somewhat volatile and remain fairly variable based on geography, I have been encouraged by how physicians offices, ASCs and hospitals continue that to navigate the new normal as we progress closer to a more stable market environment, leaving us cautiously optimistic for our ongoing improvement from here through the remainder of this year.

During the first quarter, we advance the U.S. commercial rollout of iStent inject W, our newest MIGS technology designed to offer ophthalmic surgeons the same established safety and efficacy of iStent inject with added benefits designed to optimize stent visualization, streamline implantation and deliver procedural predictability. The feedback and real world results for iStent inject W remain very positive, which reaffirms our confidence in the commercial prospects. In fact, 99.8% of our inject sales in the first quarter where iStent inject W, strong evidence of both our rapid commercial rollout progress and the overall marketplace acceptance of this important technology.

The successful iStent inject W roll-up along with improving market recovery dynamics have allowed us increasing in-person access to practices and accounts, although still at a more limited basis than before the pandemic. As a result, we have been pleased by the continued strength of our new surgeon training activities throughout the first quarter. The various virtual and digital programs we've implemented over the past year aimed to support our customers during COVID-19 also continue to be utilized in meaningful ways and I believe these efforts have helped to deepen our customer relationships over the past year and prepare us for the future well beyond COVID-19.

As a corporate pioneer of MIGS, we feel it's our responsibility to help expand access to care for all patients. As a testament to this, we were delighted to launch a new patient-centric initiatives in honor of World Glaucoma Week in March, including a global education and awareness campaign designed to raise awareness around the risk and prevalence of glaucoma. We also partnered with high care institutions across the United States to offer free glaucoma screens. We are proud to support this life saving work of the World Glaucoma Association through these patient and healthcare professional education initiatives and further our goal to help make safe, effective and impactful glaucoma care more available to a growing patient population worldwide.

Outside the United States, we were pleased with the strong performance in our glaucoma franchise during the first quarter as we drive deeper penetration and broader adoption of MIGS around the globe. International growth during the first quarter was led by a recovery in the Asia-Pacific region, including Japan and Australia, in particular. Like the U.S., we also advanced the commercial rollout of iStent inject W during the first quarter in key international markets, including Australia, Japan and several European countries. We believe the successful iStent inject W rollout, along with several recent accomplishments including stand-alone indication approval in Australia, regulatory approval in India and continued progress across many of our key market access initiatives, many of our international glaucoma franchise well positioned to drive sustainable long-term growth.

Going forward, we plan to continue to support and grow our quality experienced OUS surgical sales teams, while working to optimize the reimbursement coverage and payment landscapes, train surgeons and leverage our compelling clinical data to grow MIGS adoption and drive deeper penetration in our 16 international countries where we have a direct market presence today. We are also evaluating and have been making initial investments in potential future direct and hybrid markets where favorable opportunities and reimbursement pathways exists.

In corneal health, we have also demonstrated strong performance during the first quarter, driven by exceptional year-over-year U.S. Photrexa sales growth of 51% and continued healthy momentum in new U.S. account starts. We continued to opportunistically expand our U.S. corneal health commercial team to fuel the execution of our commercial strategies and market development initiatives, including driving increased awareness of keratoconus broadly across the optometric and ophthalmic community, advancing the diagnosis of this important debilitating condition, streamlining the referral pattern from initial diagnosis to treatment, implementing customer friendly programs to drive new account starts, optimizing reimbursement, investing in health economics to further solidify the value of corneal cross linking to patients and health systems, and finally, training corneal health professionals on our iLink procedure.

During the second quarter, we expect to efficiently complete our corporate integration activities with the successful transition of our corneal health franchise onto our ERP and CRM systems. [Technical Issues] since the close of the acquisition roughly 18 months ago. While we remain in the early stages of unlocking the combined organization's full potential, we are encouraged with this performance and focused on the opportunity ahead.

Shifting gears to our pipeline, our goal is to leverage our development expertise through commercial infrastructure to provide a portfolio of solutions based on key platform technologies that need the full algorithm of customer needs. In the first quarter alone, we announced several critical clinical data milestones for three of our key pipeline programs, including first, a two-year interim analysis of our ongoing two year iDose TR Phase 2b trial showing compelling data, and further underscores the potential for this technology to safely provide multiple years of sustained glaucoma pharmaceutical therapy and 24/7 compliance to tackle the significant problem of patient non-adherence to topical glaucoma medication regimens. Second, strong 12 month IDE pivotal data for iStent infinite, achieving its primary efficacy endpoint and surpassing our internal expectations. And third, positive Phase 3 results for our next-generation corneal crosslinking iLink Epi-on Investigational Therapy, meeting the primary efficacy endpoint and demonstrating at the Epi-on's ability to halt or reduce the progression of keratoconus without removing moving the outer layer of the corneal.

Each of these important clinical achievements reaffirms our confidence in these programs and their future commercial prospects. For iDose TR, we are pleased to announce we have completed patient enrollment and randomization in the first of the two pivotal clinical studies that make up the Phase 3 clinical program. We continue to progress toward enrollment completion in the second trial and anticipate enrollment and randomization treatment for this study in the second quarter.

The 12 month Phase 3 trial results are expected to support our anticipated NDA submission for iDose TR in 2022 and we are targeting FDA approval for this promising technology in 2023. Regarding the pressure flow MicroShunt, in April, Santen announced the delay of FDA approval as they continue discussions with the agency. We will continue to closely monitor any developments associated with their ongoing FDA discussions and are hopeful to have more information and direction on the strength as we move forward. For iStent infinite, we could be -- we could not be more delighted with the outcome of the pivotal study. We are hard at work preparing for regulatory submission over the coming months and continue to target FDA approval in May, 2021.

For Epi-on, we have successfully completed the initial transition to our new CMO partner, which we believe will provide us with the necessary infrastructure and scale upon potential commercialization of this important technology. We continue to target a U.S. NDA submission for Epi-on in 2022, and an FDA approval in 2023. We also continued to advance our late-stage development of iPrime, a highly complementary new digital delivery device designed to be a truly minimally invasive system to further support the needs of physicians and patients.

Beyond these important pipeline programs, we also continue to invest in and advance our key earlier stage R&D programs, including in dry eye, retina, glaucoma and additional undisclosed projects. While these opportunities remain in preclinical developmental stages, we are encouraged with the initial progress we're demonstrating within these platforms and associated programs. One such program is our eyelid transdermal platform where development efforts are focused on patented cream-based drug formulations that are applied to the outer surface of the eyelid for transdermal drug delivery in glaucoma and various corneal disorders including dry eye.

Further, we recently announced an expansion to this platform with the addition of presbyopia as a new investigational application as well as broader future development rights with Intratus to go along with the promising R&D work we've completed thus far. We aim to advance several programs using this differentiated non-invasive patient-friendly therapeutic approach into clinical trials. Our pipeline has the ability to fundamentally transform Glaukos by significantly expanding our addressable markets over time. To enable this, we've built a strong balance sheet and are aggressively expand our global infrastructure, strengthening our pharmaceutical expertise and upgrading our systems.

I'm pleased with the execution of our key strategic initiatives and believe we are well positioned to advance our mission to create novel platforms that can transform the treatment of chronic eye diseases for the benefit of patients worldwide. In doing so, we strive to create a world-class global vision care leader uniquely positioned to drive innovation across glaucoma, corneal health and retinal disease. A core pillar of our drive to be a world-class company is an unwavering commitment to continual improvement as a responsible corporate citizens. To this point, we recently released our 2020 sustainability report that significantly builds upon last year's inaugural assessment and highlights our continued commitment and progress on environmental, social and governance initiatives.

Over the course of 2020, we invested significant time and resources into better understanding what drives sustainability of Glaukos, establishing meaningful goals to propel us forward on ESG matters and examine how best to present our promise to our stakeholders. Continuing to grow and enhance our ESG policies and program is a key priority for us now and into the future, and we hope our 2020 sustainability report reflects that dedication.

Finally, before turning the call over to Joe, I'd like to send a sincere welcome to two exceptional women who recently joined our Board of Directors, Ms. Denice Torres and Dr. Leana Wen. With more than 25 years of management experience in pharmaceuticals, medical devices and consumer healthcare, Denice is a highly accomplished executive who has led significant successful business transformations, including serving most recently as Chief Strategy and Transformation Officer for Johnson & Johnson's Global Medical Device business. As a practicing emergency physician, visiting professor of health policy and management at the George Washington University School of Public Health, and former Baltimore Health Commissioner where she led the nation's oldest continuously operating health department, Leana is a sought after and trusted expert on a range of health policy and public health issues. Each of these extraordinary women bring a wealth of relevant experience, perspective, leadership and wisdom that will be invaluable to our growing global organization and we are delighted to welcome them to the Glaukos Board.

So, with that, I'll turn the call over to Joe to discuss our first quarter 2021 financial results. Joe?

Joseph E. Gilliam -- Chief Financial Officer, Senior Vice President, Corporate Development

Thanks, Tom. As a reminder, I will be discussing our financial performance on a non-GAAP or pro forma basis and will summarize our GAAP performance later in my prepared remarks. I encourage each of you to review our GAAP to non-GAAP reconciliation, which can be found in today's press release as well as the Investor Relations section of our website. Glaukos global consolidated net sales for the first quarter of 2021 were $68 million, representing year-over-year growth of 23%. As a reminder, our sales were materially impacted in the last few weeks of the first quarter 2020 as COVID-related restrictions emerged.

These results to start the year exceeded our expectations and reflect the continued recovery despite ongoing COVID-19-related headwinds and associated volatility. With respect to the pandemic impact, we believe the underlying markets continue to face mid to high single-digit headwinds throughout the first quarter with a pronounced softness in February due to spiking COVID cases internationally as well as like a vaccine rollout and severe winter weather dynamics here in the U.S. with the latter was followed by a healthy rebound domestically in March that continued in April.

Now turning to our U.S. glaucoma franchise specifically, our first quarter U.S. glaucoma sales were approximately $39.9 million, representing year-over-year growth of 22%, which we believe reflect the combination of pandemic-related dynamics, a stable competitive landscape and pricing environment and underlying seasonality trends. Internationally, our glaucoma franchise delivered first quarter sales of approximately $13.8 million, representing year-over-year growth of 20%. This performance reflects growing demand in many key markets and favorable foreign exchange tailwind which were offset by the ongoing pandemic impact in certain markets and a one-time catch up provision associated with government rebates in France.

The performance in the quarter was led by our Asia-Pacific region, including Japan and Australia in particular, while the major European markets have experienced challenges associated with the pandemic, such as the shutdowns in the U.K. and France and other restrictive actions throughout the region. And unfortunately the situations in India, Brazil and Latin America generally remain quite challenging.

In corneal health, first quarter net sales were $14.3 million, representing year-over-year growth of 27%. The first quarter performance was driven by U.S. Photrexa year-over-year sales growth of 51% to $11.4 million and a continued trend of healthy new U.S. Photrexa account starts as our commercial integration and strategies continued to deliver despite the pandemic. Shifting gears toward the remainder of our P&L, our non-GAAP gross margin in the first quarter was approximately 83.8% versus 83.6% in the same quarter in 2020 and 83.4% in the fourth quarter of 2020. This reflects continued strong gross margin performance in corneal health and glaucoma, partially offset by the modest headwind associated with the sale of glaucoma inventory that had been produced less efficiently during the pandemic and geographic mix.

It is worth noting that our non-GAAP adjustments to COGS include substantial adjustments related to Avedro acquisition accounting. Our overall non-GAAP operating expenses were approximately $61.8 million in the first quarter of 2021 remaining below first quarter 2020 pre-COVID levels and consistent with the fourth quarter spending as we continued to restore expansionary spending as the recovery warrants, a trend that we would expect to continue throughout 2021. Our non-GAAP SG&A expenses in the first quarter were approximately $40.7 million, up 1% sequentially compared to the fourth quarter, reflecting increased commercial spending offset by lower administrative costs. And our non-GAAP R&D expenses in the first quarter were approximately $21.1 million, down 1% sequentially compared to the fourth quarter as we continue to restore core R&D spending, earlier stage pipeline programs and human capital investments across the organization offset in the quarter by lower clinical development costs.

We finished the first quarter with a non-GAAP operating loss of $4.8 million and non-GAAP net loss of $9.5 million or $0.21 per diluted share. Our GAAP net loss was $16.5 million or $0.36 per diluted share for the first quarter of 2021. We also invested an approximately $17.2 million of capital expenditures in the first quarter, a significant increase versus prior period as we've entered the construction phase of the enhancement and expansion of our facilities in Southern California and Boston to meet our expanding development and operational needs, a trend that we would expect to continue for the remainder of the year. As of March 31, 2021, we had cash, cash equivalents, short-term investments and restricted cash of approximately $417 million compared to $414 million at the end of 2020.

Finally, I will make a few comments on the state of our markets and opportunities today and how we believe things are unfolding for 2021. We believe the competitive landscape and pricing dynamics remain stable across each of our major business areas. And as Tom mentioned earlier, our integration efforts and strategies are driving increasing penetration in corneal health alongside a successful launch of iStent inject W globally in glaucoma. Not surprisingly the dynamics associated with COVID-19 and variance remain fluid and as discussed, the overall ophthalmic markets still face headwinds and volatility, most recently in a few U.S. states and numerous countries around the world that have experienced what we hope is a final wave.

Having said that, we have been encouraged by the overall trend exiting the quarter, which I discussed earlier. And if we put all this together in the context of our expectations going forward, we expect second quarter 2021 net sales to increase sequentially to approximately $70 million to $72 million, which reflects our typical underlying seasonality patterns, the broader recovery trends I discussed earlier, international headwinds related to COVID and potential unique summer holiday dynamics. As we look forward toward the second half of 2021 assuming the pandemic trends continue to gradually improve from here as anticipated, we would expect the underlying markets to normalize back in 2019 levels, generating sequential improvements each quarter for our business over the remainder of the year.

And with that, I'll now turn things back to Tom for a few closing remarks.

Thomas W. Burns -- President, Chief Executive Officer

All right. Thank you, Joe. I would like to conclude by acknowledging how proud I am by the actions of our organization has taken throughout the COVID-19 pandemic on advancing our key strategic priorities in a rapidly changing environment. We are focused on near-term execution and excited about our long-term future, where in just the next three years we expect to have several major new product introductions. Beyond that, we have a fulsome portfolio of pipeline opportunities as we seek to build and expand upon our core microsurgical and sustained release pharmaceutical platforms. The strong foundation and team we have built makes me confident in our ability to execute on our plan as we strive to create a strategic vision care leader with disruptive franchises across glaucoma, corneal health and retinal disease.

So, with that, I'll open the call to questions. Operator?

Questions and Answers:

Operator

Thank you. [Operator Instructions] We have our first question from Brian Weinstein from William Blair. Your line is now open.

Griffin Soriano -- William Blair -- Analyst

Hey, guys, good afternoon. This is Griffin on for Brian. First one here, on the deferred cataract surgeries from the pandemic, how should we think about the pacing of churning through that backlog and the magnitude of the tailwinds there.

Joseph E. Gilliam -- Chief Financial Officer, Senior Vice President, Corporate Development

Sure. Hi, Griffin. It's Joe. I'll start off and then if Chris will add any color he can. So, clearly we talked about for a while here the generation -- the generating of the backlog for many practices throughout the country and world. I think as we look forward and think about this, I think the actual pulling out of that backlog will be more elongated. You have to take into consideration the actual operating dynamics for most of these accounts, where there is still only so many surgeons and so many hours in a day for them to be providing procedure. So I think as they work their way through it, it should be a tailwind for the overall market, but one that proceeds over many quarters versus many months.

Griffin Soriano -- William Blair -- Analyst

Okay. And then just one more, can you revisit the investments that you're going to need to commercialize some more high-profile products in your pipeline. Maybe, how are you preparing for regulatory and reimbursement considerations there?

Joseph E. Gilliam -- Chief Financial Officer, Senior Vice President, Corporate Development

So as we think about prioritizing the commercial investments associated with our pipeline, there is a lot of planning going on. We've talked about, I think historically, each one is a little bit different. As we think about product like iDose and Epi-on, obviously those are highly synergistic with the commercial infrastructure that we have today. And so while we would foresee incremental investments there, whether it'd be as you mentioned market access reimbursement, marketing or to a certain extent the commercial infrastructure. Those are highly synergistic with what we have. And as we continue to sort of go beyond that and as Tom talked about some of the other earlier stage programs we have like the transdermal drug delivery platform, at that point you start thinking about larger scale investments and the broader infrastructure to support an opportunity like that on the pharmaceutical side.

Griffin Soriano -- William Blair -- Analyst

Understood. And then just one more quick one on Epi-on. Can you talk about how you think about segmenting the market between Epi-on and Epi-off and do you anticipate the need of a separate reimbursement code for Epi-on, so maybe what does that look like in timing there.

Thomas W. Burns -- President, Chief Executive Officer

Yeah. Griffon, I'm happy to address that. This is Tom. And so, as I said before, I think our positioning could fall in the lines, much like we do in glaucoma which is position according to disease stage severity. So when we're looking at up at Epi-on, we may position that for more earlier intervention patients and with Epi-off we may position for later stage or more progressive keratoconus patients. We don't have any direct comparisons between the two procedures. But it is our conceptual beliefs that Epi-off probably delivers more of a reduction in Kmax versus the Epi-On procedure. And so that's I think physicians will see it the same way and we will think they want to carry both of these different procedures into the marketplace to best serve patients. With regards to how we seek reimbursements, I would just say we have no obligation either way, but we can choose to create a separate J-code for Epi-on, if we choose to do so. Those decisions are under consideration and I'll advise you once I feel that I making the appropriate decision for investors.

Griffin Soriano -- William Blair -- Analyst

Great. Appreciate the commentary, guys. Thanks.

Thomas W. Burns -- President, Chief Executive Officer

Okay. Thanks, Griffin.

Operator

We have our next question from Matt O'Brien from Piper Sandler. Your line is now open.

Andrew Stafford -- Piper Sandler -- Analyst

Hi, guys, good afternoon. This is Drew on for Matt, and thank you for taking the questions. I just wanted to start out a little bit on the performance of the business as we play. Maybe you could kind of help us understand what you're seeing on the ground, sorry, what percentages of your customers are open back up to capacity, maybe exit rates March and April if you're willing to provide? And then second part is a bit of a clarification, you mentioned that you expect your markets to kind of normalize to 2019 levels. Your glaucoma business was about $230 million of our business in '19. So should I interpret that comment to mean that you expect that level of sales in '21 or should we anticipate a little growth off of that?

Chris M. Calcaterra -- Chief Operating Officer

Drew, this is Chris. I'll handle the first part. In terms of physicians, the offices being open and ambulatory surgery centers and facilities, in the U.S., I'd say that they're all open to different degrees. There still a restraint on how many patients can come into the practice, still some headwinds in terms of how reps are able to get into these practices and even into the OR, but that is definitely loosening up. As you look across the globe, you do see different scenarios. Here recently in France and Germany, things were really shutdown because of the second wave or third wave and spike in COVID cases, and so patients are being restricted as well as reps into the practices in offices. Some of that is also incurred in Japan. All in all, it continues to get better, but on a global basis there is still a headwind from these COVID-related issues.

Joseph E. Gilliam -- Chief Financial Officer, Senior Vice President, Corporate Development

Okay. And then I'll take the second part of your question. First on exit rates building upon what Chris was saying, I think for us, the U.S. glaucoma franchise as well as corneal health in particular saw a very strong sequential improvement from what I call a lull in February through into March and then again in the April. So a good trend lines there. The international glaucoma business is a bit more mixed for all the reasons that Chris was just saying. I think, in the Asia-Pacific region, we've seen strong trending both in the fourth quarter of last year, but then again in the first quarter, and that's really continued. While on the opposite side of that spectrum, we've seen the Latin America, Brazil, etc. are markets continue to struggle with COVID and the related dynamics and that continue through the first quarter and has continued really through the month of April.

Meanwhile, in Europe, you see relatively mixed particularly mixed results where we saw a degree of recovery in the fourth quarter, but it's really been somewhat muted in that point as some markets had move forward and other markets had taking a step back as they handle this third or fourth wave of COVID depending on how you look at it. As it relates to the 2019 comparison and we talked about market is getting back to more normalized levels relative to 2019, you referenced obviously our results for the full year, we're talking about those trends getting back to that level in the second half and to get into more precise than that I think will be a little bit difficult to stage.

Andrew Stafford -- Piper Sandler -- Analyst

Okay, that's super helpful. And then can you just remind us or give us an update on the CPT coding process, where you sit with the Category I transition and then the Cat III is for stand-alone in iDose? And then as far as pricing of those codes, can you just remind us of the steps to that process and what your expectations are for some of those new codes we priced maybe relative to your current ISM business today? Thank you.

Thomas W. Burns -- President, Chief Executive Officer

Yeah. Drew, I'll be happy to take that one. So let's first step back and remind ourselves how favorable the AMA CPT committee was for the business and this occurred in October of last year. Couple of major favorable developments came out of that. First of all, the creation of the committee, while the Category III stand-alone code for iStent inject, and then separate creation of a Category III code for iDose, these are two major seminal events that we were seeking for some time and we were able to secure those codes. And once we have those codes in place, we are then able to really kind of aggressively pursue reimbursement in procurement level to both of those and I can discuss that a little bit later how we will do that.

Second major development by combining those two codes together this gives us a tremendous opportunity for our vision in the future of using iDose in combination with the trabecular bypass prosthetic procedure, which I think will become the norm for patients with more moderate to progressive glaucoma, so that sanctions and gives us the ability to move forward. The third major event that came out of that meeting was the movement from the committee to transition to Category III 0191T code into a transitional code that would combine both cataract surgery and the implementation of our trabecular bypass device.

And so as we said, just to give you a status update on the professional fee side, the new Category I CPT code is referred to the AMA RVS update committee, the RUC committee to conducted physician surveys in order to sign a relative value units scale and into a professional fee calculation. So that survey to our analysis going on as we speak and the RUC committee will make a recommendation to CMS and CMS will publish a proposed rule in the early part of July.

On the facility side, we are working very closely as we convert from a Category III to Category I with the specialty societies including the American Academy of Ophthalmology and ASCRS among others including the American Glaucoma Society to help present a case to negotiate facility fee reimbursement for the hospitals and ASCs that will best represent and fairly position the products with our customers. And so that also that CMS proposed rule recommendation should happen in July as well. And then once the proposal goes into place commentary period and CMS will issue a final 2022 rule probably in late October early November of this year, which will be effective in January.

So as we've said before, these are very, very favorable developments on the whole for Glaukos. Having a stand-alone code for the iStend infinite for instance will coincide with the product launch gives us great legs to be able to pursue reimbursement through our local coverage determination in each one of the MIGS, something will become pretty good at given our history with our stents and with other products. With iDose we will be whole hosting that until we near approval, but then we'll have the ability to as well approach the carriers on a local coverage determination basis. And typically what the carriers do, as you know the crosswalk this two unlike Category I code to determine their discretionary view of what the professional fee reimbursement for that product will be.

So again that falls within our power alley once we have approval and then of course we would seek a separate J-code to be able to carve out the iDose device once we receive commercial approval. So as we've said before, we on the whole are very excited about what came out of the committee. There obviously always a variety of scenarios that can materialize when a CPT code moves from Category III to I. On the professional fee side, it's our expectation that payment should might be decrease versus the average pro-fee levels under the current Category III designation, largely because the RVS system will view it as an ancillary procedure rather than giving them the full preoperative component.

On the facility side, there's a variety of scenarios that spend from negative to neutral to quite positive and we work very, very closely with the associations to make sure that we best represent what we've accomplished in pioneering and creating this market class category. So I think that gives you the full view for you and for investors, and we look forward to continue to prosecute in any event we are prepared to move forward and best represents the commercial interest of the business.

Operator

We have our next question from Robbie Marcus from JP Morgan. Your line is now open.

Allen Gong -- J.P. Morgan -- Analyst

Hey, guys, this is actually Allen on for Robbie. So I just had one quick question on kind of the quarterly cadence and then a quick follow up. Looking at your guidance for second quarter, it looks like you're guiding toward growth over 2019 levels roughly in line with what you did in 1Q. Even though, as you said, 1Q kind of had headwinds to both domestic and international and in second quarter, hopefully, U.S. continues to improve even OUS remains a bit impaired. So I guess like what's driving that obviously is prudent or conservative, but is there anything specific that you would call out there that is driving that conservatism or is it just normal COVID-19 caution?

Joseph E. Gilliam -- Chief Financial Officer, Senior Vice President, Corporate Development

Yeah, thanks, Allen, it's Joe. I think a little bit of both. I mean, the reality is we've seen positive trend lines at least once before during this pandemic as we went into call it the October time frame, at the beginning of the fourth quarter only to see some obviously setbacks is another wave of COVID kind of took over here in the U.S. as well as internationally. So as we continue to navigate the dynamics and watch some of the hotspots with emerging variance and alike I think it does make sense to still be a little bit on the cautious side. I think the second dynamic that we're trying to factor in, you'll recall with seasonality in our business, one of the aspects over the course of the middle part of the year is this summer holiday season both here as well as in some of the international markets. And as I think we all come out of this long COVID stretched, I think it's our expectation that people are going to take some time off and that could cause a little bit of disruption relative to traditional trends as we get later into the quarter.

Allen Gong -- J.P. Morgan -- Analyst

Got it. And then just a quick follow-up on iDose, it's really nice to hear that you finished enrolling the first trial about you plan to finish enrolling the second trial pretty soon, but when do -- should we expect to see top-line three months efficacy data or should we kind of similar to the Phase 2 trial wait just to see the full year, like in 2022?

Thomas W. Burns -- President, Chief Executive Officer

Yeah. So, well, we haven't committed either way, but I will tell you that I think I would be more inclined to show the three month data when we have locked it and we've analyzed it to show that to investors rather than waiting for the 12-month data. And I think as well, I'd be inclined to show the three-year data from the Phase 2b study, because I think that'll be important when we start to gauge the longevity of this device, which has really far exceeded our initial expectations. So I won't give you timing, but I will tell you that that's my inclination so investors have a full view of the performance and commercial capability of the iDose product.

Allen Gong -- J.P. Morgan -- Analyst

It's very helpful. Thank you guys.

Operator

Next is Jon Block from Stifel. Your line is now open.

Trevor Brown -- Stifel, Nicolaus & Company -- Analyst

Hi. This is Trevor on for Jon. Thanks for taking my questions. I just wanted to dig into the recent trend commentary that you laid out a little bit closer. So in the fourth quarter you mentioned some patients were electing to prefer procedures just in the context of the impending vaccinations that are going to roll out. So could you maybe give us an update on how that trend has played out in the first quarter just as a lot of people especially in the old demographics of become vaccinated at this point. How does that -- how has that played into some of the trends that you saw across February, March and April? And if you could quantify that at all that'd be great. Thanks.

Joseph E. Gilliam -- Chief Financial Officer, Senior Vice President, Corporate Development

Thanks, Trevor, it's Joe. Yeah, when we made that comment, I think it was in the fourth quarter call and it was less with respect to the fourth quarter performance and more about what we were seeing in the month of February. So, it clearly, in particular markets where the vaccination efforts hit full steam out of the gate, the U.S., the U.K. etc. We experienced a bit of a pause where it's our belief that many patients decide to wait until they are fully vaccinated to go in and get the procedures and so that certainly was a factor in February. It's hard to separate that versus some of the other things we saw in that month, which was pretty extreme winter weather, as you will recall throughout the south and in the northeast here in the United States in particular, but those two things definitely led to a pronounced softness in that month and we've, thanks, we've seen a nice recovery from that point both in March and then again in April.

Trevor Brown -- Stifel, Nicolaus & Company -- Analyst

Okay, great. Yeah. And then maybe just a follow-up on IPRIME, could you give us any comments on how you kind of position on the market, is it going be something you bundle with other advisor so where it sort of standout on its own.

Chris M. Calcaterra -- Chief Operating Officer

Trevor, this is Chris. And we haven't really disclosed that. We're excited about having yet another product in our bag. We see this is potentially as a stand-alone, as well as complementary to our trabecular bypass products. Anytime you have the multitude of options, it always pursuing a good position in terms of negotiating pricing contracts with ASCs and hospitals.

Trevor Brown -- Stifel, Nicolaus & Company -- Analyst

Great, thanks.

Operator

Next up is Ravi Misra from Berenberg Capital Management. Your line is now open.

David Beckel -- Berenberg Capital Markets -- Analyst

Hi, it's Dave in for Ravi for the Berenberg team here. Thanks for taking my questions. I wanted to ask you in regards to the COVID normalization and surgeon training, how do you see that playing out in second half of '21, is that kind of in line with the rest of the business and opening up or do you see that kind of bifurcating between global and U.S.?

Chris M. Calcaterra -- Chief Operating Officer

Yes, this is Chris. And we haven't disclosed any specific numbers are around physicians trained. What I will say is that things have definitely started to open up. We're pleased with where we were in the first quarter and with the introduction. And excitement around iStent inject W, we continue to train physicians that we would expect to do so on a go-forward basis. And I think with respect to your portion of the question on the international versus the U.S. obviously, it's an important driver for our business regardless of the geography. We continue to train the doctors worldwide.

David Beckel -- Berenberg Capital Markets -- Analyst

Okay, great. One quick follow-up to that. In regards to expansionary, I think you mentioned restoring expansionary spending in 2021, is that -- trying to get some color where sort of expansion falls into that when you look at the new product line for example iDose TR and the pharmaceutical aspect there. How far ahead does kind of the expansion start when you look at the commercialization? Is that a year ahead, few quarters ahead, just trying to get a idea of cadence there.

Joseph E. Gilliam -- Chief Financial Officer, Senior Vice President, Corporate Development

Yeah, it's Joe. Chris, you want to add something you can. I think it's not a '21 with respect to the way you asked the question on iDose that's not a significant '21. It's been other than all the things that you would imagine we're doing around health economics and market access and reimbursement well in advance. From a commercial infrastructure standpoint, that's not something that we would -- we end up spending much in 2021. As you start getting in 2022 and transition to 2023, you would expect a gradual uptick there as you began to prepare for commercialization and launch both from a marketing standpoint as well as commercial infrastructure.

Chris M. Calcaterra -- Chief Operating Officer

The only thing I'd like to add to that is, there will be a good amount of leverage with our existing sales organization projects. I know it's a pharmaceutical product, but remember that this will be implanted either in a physician suites or in the ASC or hospital and so there'll be a component that will, or excuse me, that'll be will be utilizing our existing sales organization to a large part.

David Beckel -- Berenberg Capital Markets -- Analyst

Okay. Thank you.

Operator

Next is Anthony Petrone from Jefferies. Your line is now open.

Briana Warschun -- Jefferies -- Analyst

Hi, this is Briana on for Anthony. Thank you so much for taking our questions. I have few questions and I'll ask them upfront. Is the Ivantis trial still on track for October, is my first question. And second is a follow-up to some of the reimbursement questions that were asked. So with the iStent physician fee changing from Category III to Category I? Do you expect the stock to be sensitive to what CMS proposals for the new physician payment level? And then, if so, how much do you think the stock could move on the attainment of all that are plus or minus 20% from the status quo and the $900 to $1300 range.

Chris M. Calcaterra -- Chief Operating Officer

Well, Briana, I'll take your first question and that's regarding of the high Ivantis trial. The -- where the trial jurisdiction will be in Santa Ana, which is in Southern California and they in Santa Ana have indicated that they're opening up trials in May in both civil and criminal proceeding. And so, it's our expectation at this standpoint that we would have the trial and the trial will commence in late September. That's how we're preparing. And we remain fully confident of our position based upon multitude of motions that have been favorably resolved in our favor. So that's our position at this time. We will keep investors posted if there's any changes.

Joseph E. Gilliam -- Chief Financial Officer, Senior Vice President, Corporate Development

And then, Briana, it's Joe. I'll try take a stab at the second part of that question. Obviously, I wouldn't make predictions with respect to stock price movements on anything related to our business. But what I can say is, as you think about the Category I code conversion and the physician fee that you asked about, clearly, we have some experience here, if you think back to the dynamics around the new region that really to call that believe in the middle part of 2017 and only recently had some recovery in that physician fee. And at the time we told investors that expect that while we didn't welcome that pullback in the physician fee that what we were seeing was a modest headwind to growth as it relates to that, but not a significant impact to the net underlying demand. And so here I think that's something people let's take into consideration as they think about any movement on around the physician fee later this year.

Chris M. Calcaterra -- Chief Operating Officer

The only thing I'll add to this that, this is Chris, is that trabecular bypass is becoming more of a standard of care, and as such more and more physicians are doing it, more and more patients are asking for it and so I think that plays into it as well.

Operator

We have our next question is from Steven Lichtman from Oppenheimer. Your line is now open.

David -- Oppenheimer -- Analyst

Hey, guys, thanks for taking our questions. This is David on for Steve. Just starting off with iStent incident slated to launch toward the end the year, could you maybe just refresh us on your initial market of functions, reimbursement efforts and any commercial scale for investments necessary ahead of that launch?

Chris M. Calcaterra -- Chief Operating Officer

Yeah. I'll take the first part of this. This is Chris. So we're hoping for approval by the end of the year. We would launch shortly thereafter. It will come out as a Category III. We're expecting code or the Category III designation in January similar to what we did with iStent when that was approved in 2012, but we will be working with all the max and commercial payers to get a fulsome reimbursement both for the facility fee and for the physician fee. It will be likely to be have a label that is approved for advanced glaucoma and that's how it will be positioned by our organization. So I would see that that will start as a slow ramp-up and we will continue to grow over time as we get more payment from these organizations.

Joseph E. Gilliam -- Chief Financial Officer, Senior Vice President, Corporate Development

I think from a market size standpoint, I would just add that out of that we see it as a couple of hundred thousand, call it 200,000 potential procedures a year in the United States, the larger than that on a global basis. And over time from a market development standpoint, we hope to expand that, and I've said in the past that that could ultimately be as large call it 0.5 million procedures a year in the United States depending upon how that market evolves.

David -- Oppenheimer -- Analyst

Great, that's helpful. And then just one more on the corneal health business, you get yet another strong quarter here and just curious, can you talk about maybe what's been driving the growth there? Is that more a function of greater utilization within existing accounts or expanding install base?

Chris M. Calcaterra -- Chief Operating Officer

Yes, this is Chris. I would say it's a whole lot of things. It is both. It's expansion within existing accounts, it's new starts, it's the training of ODs and physicians around identifying keratoconus patients, it's the implementation of customer-friendly programs, making it easier for them to acquire the equipment. It's the fact that we've done a lot of work and reimbursement to ensure that payment is fulsome and consistent. There is a whole lot of things and good direct to consumer campaigns. There is a whole plethora of initiatives that we put in place that I think is driving that number.

David -- Oppenheimer -- Analyst

Okay. Thank you.

Operator

No further questions at this time. I turn the call back over to the company.

Thomas W. Burns -- President, Chief Executive Officer

Okay. So with that I want to thank all of you for your time and attention today. We hope everyone is staying safe, and thank you for your continued interest in Glaukos. Goodbye. Have a great day.

Operator

[Operator Closing Remarks]

Duration: 54 minutes

Call participants:

Chris Lewis -- Senior Director, Investor Relations, Corporate Strategy and Development

Thomas W. Burns -- President, Chief Executive Officer

Joseph E. Gilliam -- Chief Financial Officer, Senior Vice President, Corporate Development

Chris M. Calcaterra -- Chief Operating Officer

Griffin Soriano -- William Blair -- Analyst

Andrew Stafford -- Piper Sandler -- Analyst

Allen Gong -- J.P. Morgan -- Analyst

Trevor Brown -- Stifel, Nicolaus & Company -- Analyst

David Beckel -- Berenberg Capital Markets -- Analyst

Briana Warschun -- Jefferies -- Analyst

David -- Oppenheimer -- Analyst

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