Company Presentations: Glaukos

Well, good afternoon. I'm delighted to be here today and present an overview of Glaukos to you and this emerging new surgical category that you've just heard about from Ike called MIGS, micro-incision or microinvasive glaucoma surgery. I want to talk to you today about how Glaukos will plan to shape this new market class both now and in the future.

So, first a little bit about Glaukos. We're a privately held company formed in January of 2001. We currently have 40 employees and we spent the better part of the last decade developing this whole portfolio of MIGS devices as well as preparing the commercial landscape for the introduction of MIGS devices, which we think will add appreciably to the standard of care in glaucoma. We've been able to really attract a superlative group of investors, as you can see. Gil mentioned he's on our board. Bill Link is our chair. With this investment group, we've been able to raise $126 million of enterprise capital to date to advance this business.

So with that capital, we've moved the goalposts a bit. We've been able to develop two trabecular bypass stents which will restore physiologic outflow in the treatment of glaucoma, and a suprachoroidal stent. We hope to be able to use these devices either alone or in combination to provide the framework for a treatment algorithm to serve the full range of glaucoma care from most mild to most severe. We were able to achieve an FDA panel recommendation for approval. We got a 7 to 1 vote to move our product forward towards final approval in July of 2010, and we think our FDA approval is imminent. We've also been able to approach the FDA and enter into two broad pivotal trials for our second and third generation products. We're currently conducting two 500-patient clinical trials for our second generation product and our third generation product. We're already in an expanded clinical phase for our second generation product and we're in the first phase with our third generation product.

We've also made considerable progress on reimbursement. For many of the venture capitalists involved here, you know what a hard road that is. We have approached and working with CMS have already been able to carve out two CPT codes, a category 3 codes for reimbursement for physicians: 0191T for our trabecular bypass stent, 0253T for our suprachoroidal stents. We've also crosswalked our trabecular bypass stent to an APC code for the facility, 673, which will give ample provision for facilities to get reimbursement upon launch as well as for Glaukos to get paid for their device. One of the unique things we did as well was we approached the FDA and we got a category B2 designation as part of the clinical trials, and that allowed us to charge for the stent as part of the clinical trials and going forward. So over the past several years, we've actually been charging our investigators for the stent, not to make a profit for sure, but to establish a series of charges for CMS to contemplate and for the federal Medicare contractors to contemplate so that when we launch, we'll have coverage. We estimate that we will have 60% of Medicare lives covered at launch by virtue of this process. So pretty extraordinary that when we launch, we're going to be able to get physicians to be paid for their devices.

We've got a broad and expanding IP estate. We've spent considerable time over the last decade really carving out strong IP and formidable IP to protect the trabecular bypass and the suprachoroidal ab interno approaches. And finally, we've had the privilege of being a category leader in this marketplace. Ike has defined fully what microinvasive glaucoma surgery is. It's an ab interno is the gateway. All procedures to date have had to carve on the cornea or on the conjunctiva and on the sclera to be able to enter the anterior chamber and begin outflow in the eye. With these new devices, we use either the pre-existing cataract incision or we use a corneal paracentesis. We're able to place these devices safely, have high efficacy with rapid visualization. This new categorization really limits this category to really a few select companies.

But the market need is profound. If you look at what's happened in surgical glaucoma, especially for those of you who have either moved the market in refractive and cataract surgery over the last 20 years, we've seen material changes and advancements in technology within retina. In the last 10 years, we've seen substantive and substantial changes. But within glaucoma, the dial has virtually been unmoved. It's been glacial change. If you think about it, the modern trabeculectomy procedure was first performed in 1967 by a UK surgeon called Cairns, and the first aqueous shunt was developed by Molteno in 1969. So with the exception of a few of our most recent entries, there's been little to no change in glaucoma surgery since the Vietnam War.

So the need is substantial and we think that translates into bullish projections for how we'll do in this marketplace. There's a $4.5 billion global marketplace for surgical and pharmaceutical glaucoma, and industry veterans such as Bill Freeman here from Market Scope think that MIGS will take a substantial portion of that pie here in the planning period. He sees MIGS devices getting up to a half a billion dollars in sales.

So where are our target opportunities? They're in the trabecular bypass and in the suprachoroidal space. If you see here, we've got two flows here on the left representing the conventional outflow. Morton Grant did work over several decades which showed that the primary resistance to outflow in the eye is through the conventional outflow pathway, about 75%, with the remainder coming through the uveoscleral pathway. So our goal is to provide benefits to be able to restore physiological outflow in both of those spaces to be able to treat glaucoma and get pressures down to invariably low pressures for really all patients.

Let's take a closer look here. This is a scanning electron microscopy shot of an enucleated eye with the iris removed, and you can see the trabecular meshwork band here, which is kind of a collagen latticework that surrounds Schlemm's canal 360 degrees around the front of the eye. In the normal state, the trabecular meshwork is semi-permeable to flow and allows the aqueous humor that's produced by the ciliary body at a constant rate to flow out at a constant rate into the body. But in glaucoma, the trabecular meshwork becomes impermeable to flow. So we need to be able to open up patent channels and restore physiologic outflow. Behind the trabecular meshwork is Schlemm's canal. Schlemm's canal is like a storm sewer system. It has collector channel ostia that are at its base membrane that are kind of like manholes that feed the episcleral venous system, which is a piping system that takes fluid from inside the eye into the body, and that's how the eye regulates its intraocular pressure.

So our first approach is to provide patent openings through plumbing in the trabecular meshwork and bypass that organ in order to reestablish physiologic outflow. And then secondly, you'll see right past the ciliary muscle attachment is this area formed by the sclera and by the choroid that we call the uveoscleral pathway. So if we can fenestrate through that ciliary muscle attachment with a device, we'll drive fluid through scleral diffusion into the supraciliary space to reduce intraocular pressure.

So let's take a look at the technology. If you look at the technology, this is the smallest device that's ever been implanted into the body. This really is a device that's created at the cusp of micro-machining. You see the iStent device on the current shunt. That's a shunt that's used in later stage treatment of advanced glaucoma. You get an indication of the size by the juxtaposition. If you look at the actual analogy here, our device is about 1/5000th the volume of the nearest cousin of this aqueous shunt called the Ahmed valve. So it really is at the forefront of micro-machining. A tiny device that can still provide for effective treatment.

This is a closer look at the device itself. You can see that it's about 1 millimeter there. I should say the device is 1 millimeter in length. It's made out of non-ferromagnetic titanium. It's highly biocompatible. You'll see a tiny trephining tip at the proximal end of the device that allows us to carve through the trabecular meshwork and provide the means to enter into Schlemm's canal. And you see kind of the underbelly of the device. There's a trough, and that's to protect the tiny collector channel ostia underneath so that we have unimpeded flow from the anterior chamber into Schlemm's canal. Finally, you see the snorkel at the closest end to you. That's a lumen shroud that will advance into the anterior chamber and provides for the instantaneous flow of aqueous humor into Schlemm's canal.

So vital, if we can run the first video. This will be redundant to Ike's, but there'll be kind of a twist at the end. The surgeon here has already used a corneal paracentesis, has gone from a temporal position to nasal. He's placed the device in. This is actually Ike's video that you've seen before. You can see we finally tap that in. It's held in place by a series of retention arches in the juxtacanalicular matrix. These do not move after placement. This is the second stent that's in place. You can see the translucent band of epithelium. And then as we look here, this is an important twist at the end here. Ike has injected trypan blue into this pressurized anterior chamber. And you can see the outflow system here in the eye lighting up with blue, showing that you're getting instantaneous outflow of aqueous humor.

Our second device is an axisymmetric device. It is six times smaller than the first device. It has a mushroom head that has four egress holes. So this mushroom head sits in Schlemm's canal. Regardless of its disposition, it's going to provide bilateral flow. And this device is really interesting in that it has been able to be injected multiply through a 27-gauge insertion system. We call this PEZ, from the candy that a lot of us grew up with. And we can load as many stents as we want to. We're currently under an evaluation with two stents to place these in the trabecular meshwork in Schlemm's canal in the eye. What's interesting here is that these stents are actually fired predictably into Schlemm's canal to really facilitate the procedure for the surgeon. So if we could run that video, the second procedure, one has already been placed. You're going to see this stent, similar type of approach from temporal clear across the eye. There's a leading trephinating tip. No, that's the third one. Can you run the second?

Okay. So you see the trephine tip of this device. Literally this device is fired in at a predictable rate into the canal. Two devices have already been implanted. And here Ike is putting trypan blue in front of these devices. This will give you a better view of actually how this works here in vivo in an actual patient. Watch the nasal section of the sclera light up with aqueous humor that's beginning to flow.

Finally, we have our suprachoroidal device. This is a 4mm polyimide device that's placed in the suprachoroidal space. If you could run that video. This is placed in a similar fashion from temporal to nasal. These again are tiny corneal paracentesis, and this is placed below where the trabecular bypass devices are placed, but you can see it in situ here providing instantaneous flow into the supraciliary space.

So creating a new market class takes tremendous heavy lifting in terms of clinical trials. And for those venture capitalists in the room, you know how difficult these are to enroll and to fund. This small company now has 18 clinical trials going on globally. Over 4,000 patients are in well-controlled clinical trials for the stent devices. And we're currently tracking over 2,800 patients in well-controlled studies. A seminal study that we did in advance of our US FDA approval. This is a pivotal study done in the United States. We took 240 patients that were having concurrent cataract surgery that had mild to moderate glaucoma, were on one to three medications. They were randomized one to one to either undergo cataract surgery alone or cataract surgery plus iStent. And we washed these patients out of all their medications. So their preoperative pressures had to be between 22 and 36 millimeters of mercury. The study's primary efficacy endpoint was to assess the proportion of patients that achieve pressures under 21 with no help from medications. In this study, 72% of the iStent plus cataract patients achieved that level versus only 50% of cataract surgery alone. So substantial p-value and a 20% treatment effect. Likewise, we looked at proportional analysis of patients that had pressure reductions of IOP of greater than 20% from preoperative baselines, and again the stent plus cataract surgery almost a 20% treatment effect versus cataract surgery alone and a high statistical p-value.

One of the important things to note too is that we wanted to look at what the medication burden was to achieve these target pressures. Importantly, if you looked at the one-year endpoint, the iStent actually had only 15% of patients on medications at one year versus 35% of cataract surgery alone. So with a simple straightforward procedure at the end of a cataract case, we were able to reduce or eliminate medications. We think that that's a tremendous value proposition for patients.

How am I doing on time? Okay, I'm going to go right here to the MIGS study group. This is a prolific group of elite surgeons that we've recruited to do studies in Armenia. And here we've looked at a study where we put two stents in the eye. These were phakic eyes, patients uncontrolled on one medication that were washed out to 24 millimeters in pressure. After two stents have been placed in the eye, pressures were 13.6 at one year with only three of those patients on medications. What's important to note is that 75% of these patients achieve 15 millimeter or better pressures with no help from medications.

So over 4,000 clinical subjects enrolled to date in a host of countries. Another thousand planned in US IDE trials, and we have seven of the 10 presentations on glaucoma. Monday's sessions will be on Glaukos products and technology. As I conclude here, I wanted just to let you know that MIGS has attracted attention outside of ophthalmology. The Wall Street Journal did a full analysis of companies that had less than billion dollar valuations. They looked at over 5,000 companies, evaluated them on technology, the senior management team, investor profile, and the ability to raise money. Out of those 5,000 companies, Glaukos was rated 19 by the Wall Street Journal's analysis. So, we're a company that's been privileged to be involved and to lead with a variety of firsts, and we hope to receive our first PMA approval here at this meeting in Chicago. Thanks for your time.