Three days in 2018—June 25, Aug. 29 and Nov. 14—highlighted the blockbuster year experienced by Glaukos Corp. and its shareholders.
Those dates also explain why we’ve chosen Glaukos Chief Executive Thomas Burns as our Business Journal’s executive of the year in the healthcare sector.
On June 25, the San Clemente-based ophthalmic medical device maker announced it obtained Food and Drug Administration approval for its second generation iStent device to treat glaucoma, a major cause of blindness.
The iStent Inject Trabecular Micro-Bypass System—roughly the size of an eyelash—may be the smallest medical device ever approved by the FDA, the company said.
The product represents the next iteration of development for the company—a pioneer in what the industry calls minimally invasive glaucoma surgery, also known as MIGS.
Its initial iStent product essentially created a new category of products, an implantable micro stent designed to treat glaucoma by lowering intraocular eye pressure.
Burns recalled that prior to initial FDA approval for its first generation iStent device in 2012, when the company surveyed a roomful of glaucoma specialists, only 15% of them said they’d be interested in the procedure.
Now, about 86% of glaucoma specialists said they were using the device or would seek to use it.
“It’s absolutely amazing,” Burns said of the transformation in industry acceptance for the product.
June 25 also marks a pair of anniversaries for Glaukos.
The company received FDA approval of its iStent and went public on the New York Stock Exchange three years later. Since its initial approval, it’s been implanted in 400,000 eyes worldwide. The newest version of iStent is about one-third the size of the 2012 version of the product.
Beyond a smaller size, medical experts said that the results of the new technology are significant.
“The results of the U.S. trial, along with those of numerous international peer-reviewed studies, confirm that iStent inject provides predictable, clinically significant IOP [intraocular pressure] reductions with an excellent safety profile through an elegant, micro-invasive procedure with minimal tissue disruption,” Thomas Samuelson, a surgeon at Minnesota Eye Consultants and an investigator in the iStent inject’s pivotal trial, said in the company’s press release, announcing the latest version of iStent.
Competitor Crash
In 2015, Glaukos (NYSE:GKOS) began trading on the New York Stock Exchange at $18 a share—on June 25, of course.
Its market value hovered around the $1 billion mark for much of that time, until the second big day of 2018 occurred.
On Aug. 29, one of Glaukos’ main competitors in the MIGS sector, Alcon, a unit of Novartis AG, pulled its CyPass Micro-Stent from the market, citing a lack of efficacy.
Shares of Glaukos jumped 40% in the trading session immediately following the news, adding about a billion dollars to the company’s value.
Despite a dip in December and an overall weak stock market, Glaukos’ shares still stand about 30% above where it was at the start of August, and nearly triple that of its 2015 initial public offering.
The stock price gains of this year also come amid growing revenue for Glaukos, which employs about 210 people in Orange County, and 400 people companywide.
Revenue has risen about fourfold from $45.6 million in 2014 to an estimated $175 million to $177 million last year.
Consensus revenue expectations for 2019 are about 27% revenue growth, according to William Blair & Co. Analyst Ryan Daniels, who named Glaukos as his top pick for this year.
“We want to select a company that would have a number of catalysts throughout the year and both a first- and second-half story to tell, even if those stories are different, Glaukos hit the mark on these parameters and consistently rose to the top of our list in our discussions,” he wrote.
Moving North
The third big day of 2018 came on Nov. 14, when the company disclosed plans to move into new and larger headquarters—a three-building, 160,000-square-foot facility in Aliso Viejo. The new campus will triple the size of Glaukos’ local operations.
The deal is the largest office lease of the year in Orange County. It also provided a sign of growing confidence about the company’s future and plans for expansion in the area.
The culture the company plans to build at the new campus includes a “feeling of family, an inclusive small-company environment that values integrity, transparency, real-time communication, active entrepreneurship, execution and innovation,” Burns said.
He said Aliso Viejo will house research and development, quality, clinical and administrative operations. It plans to keep its 86,000-square-foot space in San Clemente, using it primarily for manufacturing. It plans to make both drugs and devices on-site.
Burns said the company will be hiring, adding that the Aliso Viejo site has the capability to hold another 50,000-square-foot of facility on land it bought last month.
The new lease takes effect later this year.
Proven Record
Burns, who has been chief executive since 2002, “has a proven record of building successful medical device and pharmaceutical businesses and creating successful new markets in ophthalmology,” according to the company’s proxy.
He has more than 25 years of direct ophthalmic management experience across a range of ophthalmic medical devices, pharmaceuticals and over-the-counter products.
Prior to joining Glaukos, Burns was president of Eyetech Pharmaceuticals Inc., which was acquired by OSI Pharmaceuticals Inc. In the 1990s, he was senior vice president at Chiron Vision Corp., which was acquired by Bausch & Lomb, and then as vice president, global strategy and general manager, refractive surgery, of Bausch & Lomb.
Burns, who has a B.A. from Yale University, has also served as an entrepreneur in residence at Versant Ventures Management LLC.
He owns 2.38 million shares, or about 6.6% of Glaukos, which were worth about $125 million at press time.
Three’s a Charm
Keep an eye out for the company come every June 25?
Certainly, if Burns delivers on his promise to transform the device maker into a hybrid device and pharmaceutical player that treats glaucoma.
The current treatment for glaucoma, the second leading cause of blindness in the world, according to World Health Organization, is to lower intraocular pressure.
The number of global glaucoma patients, 60.5 million in 2010, is expected to increase to almost 80 million by 2020, according to estimate from BrightFocus Foundation, a nonprofit that supports research in Alzheimer’s disease, macular degeneration and glaucoma.
Drugs dominate the more than $5 billion global glaucoma market, according to industry estimates.
Burns said the challenge with medication is patient compliance. The company plans to transform glaucoma treatment by combining existing drugs with its surgical devices, he said.
The immediate iteration of its drug-and-device model is its iDose delivery system, comprised of filling an iDose stent with a special formulation of travoprost, a drug that reduces eye pressure.
Burns said it uses drugs already approved by the FDA. The drug making challenge lies in the re-engineering of the drug to make a proprietary compound that is powerful enough to sustain active and effective intraocular pressure treatment over the duration of the implantation using minimal drug volumes.
“It’s very, very difficult to miniaturize the drug,” he said.
IDose is in a third-phase trial now and the company expects FDA approval in 2021 or 2022.
Glaukos does not intend to stop at drug delivering stents.
Its goal is to create “pharmaceutical, surgical and diagnostic platforms that provides drop-less approaches” in managing glaucoma and other ocular diseases, according to an investor presentation in November.
