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Sunday, May 12, 2024

Glaukos’ Tiny Medical Devices Fuel Expansion for Ophthalmology

On a hilltop overlooking Camp Pendleton, some of the world’s smallest medical devices are being made.

About 225 employees of Glaukos Corp. (NYSE: GKOS) peer into microscopes, constructing daily hundreds of eye stent devices that are smaller than the dot in this “j.”

“We make micro-scale implants for the treatment of glaucoma,” Matt Young, senior vice president of Global Operations, told the Business Journal during a tour of the facilities.

“We’ve been told it’s the smallest device ever approved by the FDA.”

Microscopic in size, the company’s products, dubbed the iStent, are often used in conjunction with cataract surgery for the reduction of intraocular pressure.

While small in size, the success of its product is emblematic of big developments for the growth of Aliso Viejo-based Glaukos, whose market value is approaching $5 billion, making it the most valuable public company in Orange County’s expansive ophthalmology industry, a sector that includes scores of device makers, drug companies and artificial lens manufacturers with operations here.

Glaukos’ shares are up nearly 100% from year-ago levels, and not too far off their all-time high.

There’s room for more growth, according to analysts.

“Our checks indicate commercial iDose procedures began as recently as last week and—despite strong recent outperformance by the stock—we argue further upside in GKOS shares exists from current levels,” Stifel analyst Thomas Stephan wrote in a February note to investors, boosting his target price to $110 with a buy rating.

Glaukos ranks No. 13 on this week’s Business Journal list of OC’s largest medical device makers, by local employee count (see list, page 18).

About 454 of its 949 employees work at its facilities in Orange County.

MIGS Pioneer

Founded in 1998, Glaukos pioneered the now well-established microinvasive glaucoma surgery (MIGS) marketplace.

Tom Burns, its chief executive since 2002, was, in the 1990s, general manager of Chiron Vision Corp., founded by the well-known local ophthalmology investor Bill Link. After joining Glaukos as a director in 2001, Link served 20 years before retiring as its chairman in 2021 and was replaced by Burns.

Trials on the iStent began in 2005 and it won Food and Drug Administration approval in 2011, followed by a smaller iStent in 2017.

“The analogy would be cardiovascular stenting but for the eye,” Young said. “These are placed in the trabecular meshwork, and they open that meshwork to get fluid flowing through the eye and that helps to reduce pressure, which is what glaucoma is.

“We do our best to minimize footprint of the product and placement in the eye.”

Medication Delivery

About 15 years ago, Burns asked his scientists if they could invent a device like iStent, to deliver medication.

About 80 million patients worldwide suffer from glaucoma, with 5 million having lost their vision. Research shows 90% of patients are non-compliant with topical medication use and 50% purposely discontinue their medication within six months. Worse, only about 7% of eyedrops can reach the affected area.

“There’s a high rate of non-compliance—it’s a complex dosage,” Glaukos Chief Development Officer Tomas Navratil told the Business Journal earlier this year.

“These topical eyedrops have host of disadvantages.”

In 2012, Glaukos began a decade of clinical trials on what it now calls iDose TR, an ocular implant designed to treat open-angle glaucoma and ocular hypertension.

Doctors implant the iDose, which is made from medical-grade titanium and is about half-a-millimeter wide and 1.8 millimeters long. Once implanted, 75 micrograms of a proprietary formulation called travoprost continuously elutes into the anterior chamber via membrane-controlled diffusion.

Travoprost is 25,000 times more concentrated than a typical glaucoma medication.

Hence, instead of a typical thousands of eyedrops administered per eye over a several-year period, a patient only needs to receive “one administration” of iDose with its formula that is secreted into the affected area 24/7 for up to three years.

Glaukos estimates the potential U.S. market is 1 million eyes.

A big moment occurred on Dec. 14 when the FDA approved iDose TR. Shares jumped 25% that day.

“The FDA approval of iDose TR represents a significant milestone for Glaukos following an extensive pioneering journey since the inception of the original idea nearly 15 years ago,” Burns said in a statement.

“We believe iDose TR can be a transformative, novel technology able to fundamentally improve the treatment paradigm for patients with open-angle glaucoma or ocular hypertension.”

Glaukos on Feb. 21 reaffirmed its 2024 forecast that revenue will rise 13% to 17% to $350 million to $360 million. It has a compounded annual growth rate topping 30% in the past decade. It plans to release first quarter results on May 1.

Expanding Facilities

Since 2018, Glaukos Corp. (NYSE: GKOS) has spent more than $600 million on research and development on iDose TR and other innovations, representing more than 30% of its revenue.

Altogether, it has built out 134,000 square feet for iDose TR manufacturing. Part of that was a new, 64,000-square-feet building at its San Clemente complex, which totals about 210,000 square feet.

Glaukos has another 160,000 square feet at its Aliso Viejo headquarters campus, where it moved to in 2022.

Matt Young, senior vice president of Global Operations, who has worked in medical devices his entire career, including at Irvine-based Edwards Lifesciences Corp., showed the Business Journal a two-minute video that condensed a yearlong construction process that was completed last year.

The buildings contain ISO Class 7 and Class 8 clean rooms, which are a couple steps below the Class 5 used to make semiconductors.

The new building, which has massive air conditioning units, has several measures to keep it clean such as air-lock pass boxes to ship finished products out the door. One passageway has an airlock where passersby wait until large sliding doors are open to maintain a consistent air pressure; employees have nicknamed it the “Star Trek doors.”

Many employees take off their street clothes to wear clean scrubs. They often spend hours looking at microscopes and have machines that can weigh travoprost drops that last up to three years in an eye. Much of the machinery was designed in-house.

The company is gearing up for iDose shipments by training surgeons in the first half this year, receiving procurement codes and accelerating its marketing to be at full speed by the end of this year. It’s also developing 14 products to treat areas like dry eye, keratoconus and presbyopia.

The San Clemente facility plans to hire another 30 employes in the coming year.

“There’s a lot going on,” Young said.

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