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What changed in GLAUKOS Corp's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of GLAUKOS Corp's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+421 added−372 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-24)

Top changes in GLAUKOS Corp's 2023 10-K

421 paragraphs added · 372 removed · 302 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

95 edited+44 added−23 removed62 unchanged
Biggest changeOur commercial solutions and development-stage product candidates include: ● MIGS products that primarily involve the insertion of a micro-scale device or drug delivery system designed to reduce intraocular pressure (IOP) by restoring the natural aqueous humor outflow pathways for patients suffering from glaucoma; ● bio-activated pharmaceuticals that are intended to strengthen, stabilize, and reshape the cornea for patients impacted by corneal ectatic disorders such as keratoconus or refractive disorders; ● transdermal pharmaceuticals that are applied to the eyelid and designed to treat dry eye, presbyopia, glaucoma and other ocular surface diseases and disorders; and ● proprietary micro-invasive, bio-erodible sustained release drug delivery implants that are designed to elute pharmaceuticals over time to improve the vision of patients impacted by retinal diseases such as AMD, DME, and RVO; Impact of the Current Global Economic Environment The global economy and the regional economies that we serve have recently experienced significant volatility including inflation, supply shortages or delays, geopolitical developments, changes in supply and demand, labor shortages and turnover, natural disasters, higher energy costs, health epidemics or pandemics (including the COVID-19 pandemic), currency fluctuations, governmental actions such as mandatory shutdowns, and other conditions which have led to disruptions in commerce and pricing stability.
Biggest changeOur commercial solutions and development-stage product candidates include: ● MIGS products that primarily involve the insertion of a micro-scale device designed to reduce intraocular pressure (IOP) by restoring the natural aqueous humor outflow pathways for patients suffering from glaucoma; ● procedural pharmaceuticals based on an intracameral drug delivery technology designed to reduce IOP by delivering therapeutic levels of glaucoma medication from inside the eye over an extended period of time; ● bio-activated pharmaceuticals that are intended to strengthen, stabilize, and reshape the cornea for patients impacted by corneal ectatic disorders such as keratoconus or refractive disorders; ● transdermal pharmaceuticals that are applied to the eyelid and designed to treat glaucoma, dry eye, presbyopia and other ocular surface diseases and disorders; and ● proprietary micro-invasive, bio-erodible sustained release drug delivery implants that are designed to elute pharmaceuticals over time to improve the vision of patients impacted by retinal diseases such as AMD, DME, and RVO; Recent Developments On December 13, 2023, we received FDA approval for iDose TR indicated for the reduction of intraocular pressure (IOP) in patients with open-angle glaucoma or ocular hypertension. iDose TR is an intracameral procedural pharmaceutical therapy designed to continuously deliver 24/7 therapeutic levels of a proprietary formulation of travoprost inside the eye for extended periods of time.
If regulatory approval for a drug is obtained, the marketing of the drug will be limited to those diseases and conditions approved by FDA and for which the drug was shown to be effective, as demonstrated through clinical studies and specified in the drug’s labeling.
If regulatory approval for a drug is obtained, the marketing of the drug will be limited to those diseases and conditions approved by the FDA and for which the drug was shown to be effective, as demonstrated through clinical studies and specified in the drug’s labeling.
Reimbursement Ambulatory surgery centers, hospitals and physician private practices that purchase our medical device products typically bill various third-party payors, such as government programs, private insurance plans and managed care programs, to cover all or a portion of the costs and fees associated with the therapeutics or procedures in which our products are used and bill patients for any applicable deductibles or co-payments.
Medical Device Reimbursement - Medicare Ambulatory surgery centers, hospitals and physician private practices that purchase our medical device products typically bill various third-party payors, such as government programs, private insurance plans and managed care programs, to cover all or a portion of the costs and fees associated with the therapeutics or procedures in which our products are used and bill patients for any applicable deductibles or co-payments.
Several iLution platform products leverage an exclusive global licensing arrangement with Intratus to research, develop, manufacture and commercialize a patented, non-invasive, transdermal drug delivery formulation designed for application on the eyelid in the treatment of dry eye disease, presbyopia, glaucoma, and other ocular surface diseases and disorders.
Several iLution platform products leverage an exclusive global licensing arrangement with Intratus Inc. to research, develop, manufacture and commercialize a patented, non-invasive, transdermal drug delivery formulation designed for application on the eyelid in the treatment of dry eye disease, presbyopia, glaucoma, and other ocular surface diseases and disorders.
Class III devices, which include our iStent products that produce the majority of our revenue, are deemed to pose the greatest risk, such as life-sustaining, life-supporting or implantable devices and devices deemed not substantially equivalent to a predicate device that the FDA has already cleared for marketing.
Class III devices, which include our iStent family of products that produce the majority of our revenue, are deemed to pose the greatest risk, such as life-sustaining, life-supporting or implantable devices and devices deemed not substantially equivalent to a predicate device that the FDA has already cleared for marketing.
Food and Drug Administration (FDA)-approved that improve aqueous humor outflow and are inserted through the small corneal incision made during cataract surgery, and are designed to treat mild-to-moderate open angle glaucoma.
Food and Drug Administration (FDA) that improve aqueous humor outflow and are inserted through the small corneal incision made during cataract surgery, and are designed to treat mild-to-moderate open angle glaucoma.
These include: ​ ● Establishment registration and device listing with the FDA; ​ ● QSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the design and manufacturing process; ​ ● Labelling, advertising and promotion regulations, which require that promotion is truthful, not misleading, fairly balanced and provide adequate directions for use and that all claims are substantiated, and also prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; ​ ● Approval of product modifications of approved devices that affect safety or effectiveness or that would constitute a major change in intended use of an approved device; ​ ● Medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; ​ ● Correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; and ​ ● Post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device. ​ The FDA has broad regulatory compliance and enforcement powers.
These include: ● Establishment registration and device listing with the FDA; ● QSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the design and manufacturing process; ● Labelling, advertising and promotion regulations, which require that promotion is truthful, not misleading, fairly balanced and provide adequate directions for use and that all claims are substantiated, and also prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; ● FDA approval of product modifications of approved devices that affect safety or effectiveness or that would constitute a major change in intended use of an approved device; ● Medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; ● Correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; and ● Post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.
The information found on, or otherwise accessible through, our website is not incorporated by reference into, nor does it form a part of, this report or any other document that we file with the Securities and Exchange Commission (SEC). ​ ​ Available Information Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Exchange Act, are available on our web site at www.glaukos.com, free of charge, as soon as reasonably practicable after the electronic filing of these reports with, or furnishing of these reports to, the SEC.
The information found on, or otherwise accessible through, our website is not incorporated by reference into, nor does it form a part of, this report or any other document that we file with the Securities and Exchange Commission (SEC). 17 Table of Contents Available Information Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Exchange Act, are available on our web site at www.glaukos.com, free of charge, as soon as reasonably practicable after the electronic filing of these reports with, or furnishing of these reports to, the SEC.
The FDA will generally conduct a pre-approval inspection of the applicant or its third-party manufacturers’ or suppliers’ manufacturing facility or facilities to ensure compliance with the FDA’s Quality System Regulation (QSR). Even after a PMA approval, the FDA may require post-approval conditions to ensure the safety and effectiveness of the device, including additional clinical studies or post-market surveillance.
The FDA will generally conduct a pre-approval inspection of the applicant’s or its third-party manufacturers’ or suppliers’ manufacturing facility or facilities to ensure compliance with the FDA’s Quality System Regulation (QSR). Even after a PMA approval, the FDA may require post-approval conditions to ensure the safety and effectiveness of the device, including additional clinical studies or post-market surveillance.
To further celebrate the rich perspectives and experiences that arise from racial, ethnic, socio-economic, sexual, gender, physical and religious diversity, in 2021 we formed the Diversity, Equity and Inclusion Forum, comprised of Glaukos employees from across the globe who serve as an advisory group to help promote our inclusive culture.
To further celebrate the rich perspectives and experiences that arise from racial, ethnic, socio-economic, sexual, gender, physical and religious diversity, we formed the Diversity, Equity and Inclusion Forum, comprised of Glaukos employees from across the globe who serve as an advisory group to help promote our inclusive culture.
Our KXL System, which delivers UVA light to a large portion of the cornea, in conjunction with our Photrexa therapy, is approved by the FDA for use in the U.S. following removal of the epithelium (often referred to as “ iLink epi-off”), a procedure familiar to ophthalmologists.
Our KXL System, which delivers UVA light to a large portion of the cornea, in conjunction with our Photrexa therapy, is approved by the FDA for use in the U.S. following removal of the epithelium (often referred to as “ iLink epi-off ”), a procedure familiar to ophthalmologists.
Our present or future products could be rendered obsolete as a result of advances by one or more of our present or future competitors or by other surgical or pharmaceutical therapy development. We must continue to develop and commercialize new products, technologies and therapies to remain competitive in the ophthalmology industry.
Our present or future products could be rendered obsolete as a result of development advances made by one or more of our present or future competitors or by other surgical or pharmaceutical therapy innovations. We must continue to develop and commercialize new products, technologies and therapies to remain competitive in the ophthalmology industry.
We compete with many companies, including divisions of companies much larger than us that may have greater resources and name recognition, and smaller companies that compete against specific products or in certain geographies. Furthermore, new product development, discoveries, and technological change characterize the areas in which we compete.
We compete with many companies, including divisions of companies much larger than us that may have greater resources and name recognition, and smaller companies that compete against specific products or in certain geographies. Furthermore, new product development, discoveries, and technological changes characterize the areas in which we compete.
Similar to the trend within the U.S., other major international markets are also moving toward more stringent regulatory frameworks for medical device and drug products. For example, in May 2017, the EU adopted a new regulatory scheme for medical devices under the Medical Device Regulation (MDR).
Similar to the trend within the U.S., certain major international markets are also moving toward more stringent regulatory frameworks for medical device and drug products. For example, in May 2017, the EU adopted a new regulatory scheme for medical devices under the Medical Device Regulation (MDR).
Our Board of Directors, through the Compensation, Nominating and Governance Committee, retains direct oversight of our human capital management process, including demographics, talent development, employee retention, material aspects of employee compensation as well as diversity and inclusion recruitment, retention and compensation efforts. Additionally, the Compensation, Nominating and Governance Committee assists management with the implementation of the Company’s diversity strategy.
Our Board of Directors, through the Compensation, Nominating and Governance Committee, retains direct oversight of our human capital management process, including demographics, talent development, employee retention, material aspects of employee compensation as well as inclusive recruitment, retention and compensation efforts. Additionally, the Compensation, Nominating and Governance Committee assists management with the implementation of the Company’s diversity strategy.
We have obtained licenses from various parties, including Intratus, Inc., Attillaps Holdings, Inc. and Iveena Delivery Systems, Inc., for patents, patent applications or other technology that we are currently or may in the future use in our R&D efforts.
We have obtained licenses from various parties, including Intratus, Inc., Attillaps Holdings, Inc., Iveena Delivery Systems, Inc. and Stuart Therapeutics, Inc. for patents, patent applications or other technology that we are currently or may in the future use in our R&D efforts.
RVO occurs when the flow of blood from the retina is blocked, often due to a blood clot blocking the retinal vein, which can result in severe vision problems. 4 Table of Contents We are developing sustained release (SR) pharmaceutical retinal platforms leveraging our expanded pharmaceutical and sustained drug delivery R&D capabilities, including Triamcinolone Acetonide SR, Multi-Kinase Inhibitor SR and Anti-VEGF SR.
RVO occurs when the flow of blood from the retina is blocked, often due to a blood clot blocking the retinal vein, which can result in severe vision problems. We are developing sustained release (SR) pharmaceutical retinal platforms leveraging our expanded pharmaceutical and sustained drug delivery R&D capabilities, including Triamcinolone Acetonide SR, Multi-Kinase Inhibitor SR and Anti-VEGF SR.
In addition, the SEC maintains a web site at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. ​ ​ ​ 14 Table of Contents
In addition, the SEC maintains a web site at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. ​ ​ 18 Table of Contents
In addition, payors continually review new products for possible coverage and existing products for changes in coverage and can, without notice, deny coverage. ​ International Regulation & Reimbursement ​ In addition to regulations in the U.S., we are subject to a variety of regulations in other jurisdictions governing clinical trials, commercial sales and distribution of our products and reporting of payments to physicians.
In addition, payors continually review new products for possible coverage and existing products for changes in coverage and can, without notice, deny coverage. 14 Table of Contents International Regulation & Reimbursement Regulation In addition to regulations in the U.S., we are subject to a variety of regulations in other jurisdictions governing clinical trials, commercial sales and distribution of our products and reporting of payments to physicians.
Keratoconus is mostly a hereditary, degenerative ectatic disease that is often first seen in 3 Table of Contents older children or young adults in which the typically round, dome-shaped cornea progressively thins and weakens, causing a cone-like corneal bulge due to normal internal pressure of the eye.
Keratoconus is mostly a hereditary, degenerative ectatic disease that is often first seen in older children or young adults in which the typically round, dome-shaped cornea progressively thins and weakens, causing a cone-like corneal bulge due to normal internal pressure of the eye.
Effective beginning in 2022 , the temporary Category III CPT codes associated with payment rates for procedures related to our iStent , iStent inject and iStent inject W products converted to permanent Category I codes for facility fee and physician fee payments furnished in both the hospital outpatient and ambulatory surgery center settings.
Effective beginning in 2022 , the temporary Category III CPT codes associated with payment rates for procedures related to our iStent and iStent inject W products, used in conjunction with cataract surgery, converted to permanent Category I codes for facility fee and physician fee payments furnished in both the hospital outpatient and ambulatory surgery center settings.
In the second quarter of 2022, we relocated our corporate headquarters, including certain administrative, laboratory, R&D and warehouse space, to three office buildings comprising approximately 160,000 rentable square feet of space located in Aliso Viejo, California (Aliso Facility). We currently intend to maintain manufacturing facilities for the iStent family of products at our San Clemente location for the foreseeable future.
In 2022, we relocated our corporate headquarters, including certain administrative, laboratory, R&D and warehouse space, to three office buildings comprising approximately 160,000 rentable square feet of space located in Aliso Viejo, California (Aliso Facility). We currently intend to maintain manufacturing facilities for the iStent family of products and iDose TR at our San Clemente location for the foreseeable future.
The iStent infinite includes three heparin-coated titanium stents preloaded into an auto-injection system that allows the surgeon to inject stents across a span of up to approximately six clock hours around Schlemm’s canal, the eye’s primary drainage channel.
The iStent infinite includes three heparin-coated 4 Table of Contents titanium stents preloaded into an auto-injection system that allows the surgeon to inject stents across a span of up to approximately six clock hours around Schlemm’s canal, the eye’s primary drainage channel.
If the device presents a “significant risk,” to human health, as defined by the FDA, the FDA requires the device sponsor to submit an investigational drug exemption (IDE) application to the FDA, showing with appropriate data that it is safe to test the device in humans and that the testing protocol is scientifically sound. 7 Table of Contents Regardless of the degree of risk presented by the medical device, clinical studies must be approved by, and conducted under the oversight of, an Institutional Review Board (IRB) for each clinical site.
If the device presents a “significant risk,” to human health, as defined by the FDA, the FDA requires the device sponsor to submit an IDE application to the FDA, showing with appropriate data that it is safe to test the device in humans and that the testing protocol is scientifically sound. 9 Table of Contents Regardless of the degree of risk presented by the medical device, clinical studies must be approved by, and conducted under the oversight of, an Institutional Review Board (IRB) for each clinical site.
Our R&D objectives are: ● to advance glaucoma patient care through continuous improvement of our MIGS technologies through our iDose and iStent platforms; ● to further enhance treatment options for keratoconus, while expanding iLink and CXL indications to include treatment for certain refractive and other corneal conditions; ● to develop dropless, transdermal pharmaceutical therapies for dry eye disease, presbyopia, glaucoma and other corneal disorders; and ● to leverage our expertise in sustained release pharmaceutical retinal platforms to identify and develop viable treatment options for retinal diseases such as AMD, DME and RVO.
Our R&D objectives are: ● to advance glaucoma patient care through continuous improvement of our iDose and iStent platform technologies; ● to further enhance treatment options for keratoconus, while expanding iLink and CXL indications to include treatment for certain refractive and other corneal conditions; ● to develop dropless, transdermal pharmaceutical therapies for glaucoma and corneal disorders; and ● to leverage our expertise in sustained release pharmaceutical retinal platforms to identify and develop viable treatment options for retinal diseases such as AMD, DME and RVO.
In February 2021, we announced topline data for the Phase 3 trial for the iLink system using Epioxa therapy for the treatment of keratoconus without the removal of the epithelium (often referred to as “ iLink epi-on ”). As a result of this Phase 3 trial, we began to prepare for an NDA submission.
In February 2021, we announced topline data for the Phase 3 trial for the iLink system using Epioxa therapy for the treatment of keratoconus without the removal of the epithelium (often referred to as “ iLink epi-on ”). As a result of this Phase 3 trial, we began to prepare for a new drug application (NDA) submission.
In connection with a transition to a permanent code, both the physician fee and facility fee associated with the procedures using our iStent infinite product will be reevaluated. In some cases, the physician fees and/or facility fees have been decreased at the time codes are transitioned from temporary to permanent.
In connection with a transition to a permanent code for procedures using our iStent infinite product in a standalone setting, both the physician fee and facility fee will be reevaluated. In some cases, the physician fees and/or facility fees have been decreased at the time codes are transitioned from temporary to permanent.
Risk Factors of this Annual Report on Form 10-K. As of December 31, 2022, we owned or exclusively licensed in certain fields of use over 300 issued patents, pending U.S. patent applications, issued foreign patents and pending foreign patent applications.
Risk Factors of this Annual Report on Form 10-K. As of December 31, 2023, we owned or exclusively licensed in certain fields of use over 400 issued patents, pending U.S. patent applications, issued foreign patents and pending foreign patent applications.
We regularly hold local volunteer events and fundraising campaigns, including approximately 25 in 2022, to encourage our employees to give back to our communities, a commitment that we further support by offering employees paid time off for charitable volunteering.
We regularly hold local volunteer events and fundraising campaigns, including approximately 21 in 2023, to encourage our employees to give back to our communities, a commitment that we further support by offering employees paid time off for charitable volunteering.
These regulatory agencies and any current or future legislation could impact our business operations, reimbursement for our products, and the healthcare environment generally, which could adversely affect our ability to 12 Table of Contents operate our business and our financial results.
These regulatory agencies and any current or future legislation could impact our business operations, reimbursement for our products, and the healthcare environment generally, which could adversely affect our ability to operate our business and our financial results.
The iStent technologies are commercially available in numerous countries, including Australia, Brazil, Canada, Japan, the United Kingdom, and a majority of the European Union (EU) members, and other countries, even though reimbursement may not always be available for all such procedures.
Some or all of the iStent family of products are commercially available in numerous countries, including Australia, Brazil, Canada, Japan, the United Kingdom, and a majority of the European Union (EU) members, and other countries, even though reimbursement may not always be available for all such procedures.
We embrace diversity in our employee recruiting, hiring, and development practices. Our workforce was made up of 38% female employees and 42% racially or ethnically diverse employees as of December 31, 2022.
We embrace diversity in our employee recruiting, hiring, and development practices. Our workforce was made up of 40% female employees and 42% racially or ethnically diverse employees as of December 31, 2023.
In response to the significant unmet needs that exist within ophthalmology we have designed commercial and development-stage solutions to provide ophthalmologists with various treatment options.
In response to the significant unmet needs that exist within ophthalmology we have designed commercial and development-stage solutions to provide ophthalmologists and other eye care professionals with various treatment options.
During 2022, of the promotions that were earned within our workforce, 41% were earned by female employees and 53% were earned by racially or ethnically diverse employees. ​ ● Inclusion and Belonging : We strive to create a work environment that emphasizes respect, fairness and dignity and do not tolerate discrimination or harassment.
During 2023, of the promotions that were earned within our workforce, 51% were earned by female employees and 52% were earned by racially or ethnically diverse employees. ● Inclusion and Belonging : We strive to create a work environment that emphasizes respect, fairness and dignity and do not tolerate discrimination or harassment.
Glaukos conducts periodic risk assessments and institutes controls intended to eliminate hazards and minimize risks. ​ ● Philanthropy and Volunteerism : We created the Glaukos Charitable Foundation to assist the company in its philanthropic endeavors. In 2022, Glaukos donated approximately $9.6 million worth of its products to assist individuals in need.
Glaukos conducts periodic risk assessments and institutes controls intended to eliminate hazards and minimize risks. ● Philanthropy and Volunteerism : We created the Glaukos Charitable Foundation to assist the company in its philanthropic endeavors. In 2023, Glaukos donated approximately $10.5 million worth of its products to assist individuals in need.
The issued patents that protect our commercial products and current product pipeline expire between 2023 and 2038 . ​ 6 Table of Contents Government Regulation Our products and operations are subject to extensive and rigorous regulation by federal, state, and local authorities, as well as foreign regulatory authorities.
The issued patents that protect our commercial products and current product pipeline expire between 2024 and 2042 . 8 Table of Contents Government Regulation Our products and operations are subject to extensive and rigorous regulation by federal, state, and local authorities, as well as foreign regulatory authorities.
We consider talent attraction, development, engagement and retention a key driver of our business success. As of December 31, 2022, we had 783 full-time employees.
We consider talent attraction, development, engagement and retention a key driver of our business success. As of December 31, 2023, we had 907 full-time employees.
If the FDA determines that we failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions: ​ ● warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties; ​ ● recalls, withdrawals, or administrative detention or seizure of products; ​ ● operating restrictions or partial suspension or total shutdown of production; ​ ● refusing or delaying requests for approvals of new products or modified products; ​ ● withdrawing 510(k) clearances or PMA approvals that have already been granted; ​ ● refusal to permit the export or import of our products; or ​ 8 Table of Contents ● criminal prosecution. ​ Drug Requirements The development and commercialization of drug products is subject to extensive regulation by governmental authorities in the U.S.
If the FDA determines that we failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions: ● warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties; ● recalls, withdrawals, or administrative detention or seizure of products; ● operating restrictions or partial suspension or total shutdown of production; ● refusing or delaying requests for approvals of new products or modified products; ● withdrawing 510(k) clearances or PMA approvals that have already been granted; ● refusal to permit the export or import of our products; or ● criminal prosecution.
The physician payment rate is left to the discretion of the regional Medicare Administrative Contractors (MACs), with each MAC separately determining coverage and no assurance that coverage and adequate reimbursement will be obtained from, or maintained by, the MACs.
The physician payment rate is left to the discretion of the regional Medicare Administrative Contractors (MACs), with each MAC separately determining coverage and no assurance that coverage and adequate reimbursement will be obtained from, or maintained by, the MACs. MACs have in the past, and may in the future, change coverage terms.
One of our more impactful volunteer events involved Glaukos employees adopting over 175 disadvantaged families globally 13 Table of Contents to help provide a more special holiday experience.
One of our more impactful volunteer events involved Glaukos employees adopting over 195 disadvantaged families globally to help provide a more special holiday experience.
Facilities, Manufacturing and Distribution Our manufacturing operations for the iStent family of products are located in an approximately 98,000 square foot campus in San Clemente, California which is comprised of two main buildings.
Facilities, Manufacturing and Distribution Our manufacturing operations for the iStent family of products and iDose TR are located in an approximately 120,000 square foot campus in San Clemente, California which is comprised of two main buildings, two suites and a warehouse.
However, in 2022, based on feedback from the FDA during our pre-NDA submission meeting, we made the decision to commence a second confirmatory Phase 3 clinical trial for iLink epi-on to support future NDA submission. We commenced patient enrollment for this trial in the first quarter of 2023.
However, in 2022, based on feedback from the FDA during our pre-NDA submission meeting, we made the decision to commence a second confirmatory Phase 3 clinical trial for iLink epi-on to support a future NDA submission.
In 2022, sales to customers inside U.S. and internationally accounted for 72% and 28% of our net sales, respectively. No single customer or distributor accounted for more than 10% of our total net sales in 2022.
In 2023, sales to customers inside U.S. and internationally accounted for 70% and 30% of our net sales, respectively. No single customer or distributor accounted for more than 10% of our total net sales in 2023.
The ability to provide products, technologies and therapies that demonstrate value, are reimbursed through government or third-party payors, improve clinical outcomes, demonstrate favorable safety profiles, and provide ease of use and reliability is becoming increasingly important for companies within ophthalmology. In glaucoma, our MIGS offerings primarily compete against Ivantis, Inc.
The ability to provide products, technologies and therapies that demonstrate value, are reimbursed through government or third-party payors, improve clinical outcomes, demonstrate favorable safety profiles, and provide ease of use and reliability is becoming increasingly important for companies within ophthalmology.
HIPAA created federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program; ● the Physician Payments Sunshine Act, which requires applicable manufacturers like us to report annually to the CMS information related to payments and other “transfers of value” made to certain healthcare providers, including physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, and certified nurse-midwives, and teaching hospitals, and ownership and investment interests held by such healthcare providers and their immediate family members; and ● federal and state government price reporting laws that require us to calculate and report certain pricing metrics to government programs, such as average sales price, where such reported prices may be used in the calculation of reimbursement and/or discounts on our marketed pharmaceutical products, and prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs; penalties may apply in some cases when such metrics are not submitted accurately and timely.
HIPAA created federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program; ● the Physician Payments Sunshine Act, which requires applicable manufacturers like us to report annually to the CMS information related to payments and other “transfers of value” made to certain healthcare providers, including physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, and certified nurse-midwives, and teaching hospitals, and ownership and investment interests held by such healthcare providers and their immediate family members; and ● federal and state government price reporting laws that require us to calculate and report certain drug pricing metrics to government programs, such as the average sales price of our Photrexa and iDose TR products, where such reported prices may be used in the calculation of reimbursement and/or discounts on our marketed pharmaceutical products, and prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs, including federal laws that require any company that participates in the Medicaid Drug Rebate Program (MDRP) also to participate in the Public Health Service's 340B drug pricing program (340B program) in order for federal funds to be available for the manufacturer's drugs under Medicaid and Medicare Part B.
The EU has also adopted increasingly stringent data protection and privacy rules that have and will continue to have a substantial impact on the use of patient data across the healthcare industry.
The EU has also adopted increasingly stringent data protection and privacy rules that have and will continue to have a substantial impact on the use of patient data across the healthcare industry. The EU General Data Protection Regulation (GDPR) became effective in May 2018 and applies across the EU.
False Claims Act liability is significant in the healthcare industry because the statute provides for treble damages and significant mandatory penalties per false claim or statement for violations (adjusted annually for inflation); ● federal and state laws and regulations that govern the collection, dissemination, security, use, disclosure and confidentiality of patient-identifiable health and other proprietary and personally-identifiable information, in particular, the Health Insurance Portability and Accountability Act of 1996 (HIPAA), as amended by the Health Information Technology for Economic and Clinical Health Act of 2009.
False Claims Act liability is significant in the healthcare industry because the statute provides for treble damages and significant mandatory penalties per false claim or statement for violations (adjusted annually for inflation); ● federal and state laws and regulations that govern the collection, dissemination, security, use, disclosure, deletion and confidentiality of patient-identifiable health and other proprietary and personally-identifiable information, in particular, the Health Insurance Portability and Accountability Act of 1996 (HIPAA), as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, as well as proposed or enacted state-level laws and regulations that create data privacy and security rights for state residents and obligations for certain entities, such as the California Consumer Privacy Act, the California Privacy Rights Act that went into effect January 1, 2023, the Virginia Consumer Data Protection Act and the Colorado Privacy Act.
In the U.S., we sell the majority of our products through a direct sales organization. Internationally, we sell our products through direct sales organizations in seventeen countries and a network of distribution partners in other markets where we do not have a direct commercial presence or maintain a modest commercial presence.
In the U.S., we sell the majority of our products through a direct sales organization. Internationally, we sell our products primarily through direct sales subsidiaries and through independent distribution partners in certain countries in which we do not have a direct commercial presence or only maintain a modest commercial presence.
Before commencing clinical studies in humans in the US, we must submit to the FDA an IND that includes, among other things, the general investigational plan and protocols for specific human studies and the results of preclinical studies. Once clinical studies have begun under the IND, they are usually conducted in three phases and under FDA oversight.
Before commencing clinical studies in humans in the US, we must submit to the FDA an investigational new drug (IND) application that includes, among other things, the general investigational plan and protocols for specific human studies and the results of preclinical studies.
Expansion to further demonstrate clinical efficacy, optimal dosage and safety within an expanded patient population. The results of drug development, preclinical studies and clinical studies must be submitted to the FDA as part of an NDA. The NDA also must contain extensive manufacturing information.
The results of drug development, preclinical studies and clinical studies must be submitted to the FDA as part of an NDA. The NDA also must contain extensive manufacturing information.
FDA completed its review for the MicroShunt PMA submission and notified InnFocus, Inc, a Santen company, of a Non-Approvable determination. We are evaluating alternate regulatory pathways for approval. As such the timing of a potential approval and U.S. commercial launch is currently unknown. We have commercialized the PreserFlo MicroShunt in Australia and Canada beginning in 2021.
FDA completed its review for the MicroShunt PMA submission and notified InnFocus, Inc, a Santen company, of a Non-Approvable determination. We are currently working with the FDA to evaluate an alternate pathway for potential approval. As such the timing of a potential approval and U.S. commercial launch is currently unknown.
(which was acquired by Alcon in January 2022), Sight Sciences and New World Medical. However, there are a considerable number of large and small companies providing more invasive surgical glaucoma technologies, laser-based therapies, and pharmaceuticals that currently provide competition or with whom we may compete should our broad clinical development pipeline be approved and commercialized.
However, there are a considerable number of large and small companies providing other surgical glaucoma technologies, 7 Table of Contents laser-based therapies, and pharmaceuticals that currently provide competition or with whom we may compete should our broad clinical development pipeline be approved and commercialized.
Corneal ectatic disorders are comprised of a class of diseases characterized by an ectatic, or misshaped, cornea. Corneal ectasia is typically caused by a weakening of the cornea, which can be due to a number of factors, including genetic causes, adverse side effects from ophthalmic refractive procedures such as LASIK, or excessive eye rubbing.
Corneal ectasia is typically caused by a weakening of the cornea, which can be due to a number of factors, including genetic causes, adverse side effects from ophthalmic refractive procedures such as LASIK, or excessive eye rubbing. We are currently targeting corneal disorders with our bio-activated pharmaceuticals including keratoconus, and corneal ectasia following refractive surgery.
Myopia, or nearsightedness, is a vision condition in which close objects are seen clearly, but objects farther away appear blurred, and is usually caused by an elongation of the eyeball or a cornea having too much curvature. Presbyopia affects nearly everyone over the age of 40 while myopia first occurs in school-age children and typically progresses until about age 20.
Myopia, or nearsightedness, is a vision condition in which close objects are seen clearly, but objects farther away appear blurred, and is usually caused by an elongation of the eyeball or a cornea having too much curvature.
Products and Pipeline We operate in one operating segment and our primary business activity is the development and commercialization of therapies across several end markets within ophthalmology. In an effort to provide greater visibility into our business, the following discussion is presented based on our three principal end markets within ophthalmology: glaucoma, corneal disorders and retinal diseases.
In an effort to provide greater visibility into our business, the following discussion is presented based on our three principal end markets within ophthalmology: glaucoma, corneal disorders and retinal diseases.
Once in place, the stents are designed to lower IOP by restoring the natural, physiological outflow of aqueous humor. iStent infinite is our first FDA-cleared micro-bypass stent indicated for use in a standalone procedure for glaucoma patients.
Once in place, the stents are designed to lower IOP by restoring the natural, physiological outflow of aqueous humor. iStent infinite is our first FDA-cleared micro-bypass stent that can be used in either a standalone procedure or in conjunction with cataract surgery for glaucoma patients uncontrolled by prior medical and surgical therapy.
The MDR became effective in May 2021 with a transition period through May 2024 at the latest (although an extension of this date has been proposed by the European Commission), and will bring significant new requirements for many medical devices, including enhanced requirements for clinical evidence and documentation, increased focus on device identification and traceability, new definitions and registration of economic operators throughout the distribution chain, and additional post-market surveillance and vigilance, which could result in substantial additional expense.
The MDR will bring significant new requirements for many medical devices, including enhanced requirements for clinical evidence and documentation, increased focus on device identification and traceability, new definitions and registration of economic operators throughout the distribution chain, and additional post-market surveillance and vigilance, which could result in substantial additional expense.
For the year ended December 31, 2022, our iStent technologies, the iStent , the iStent inject, and the iStent inject W and related accessories, which comprise our key iStent platform, accounted for approximately 76% of our net sales, while our iLink therapies accounted for approximately 24% of our net sales. Competition The medical technology and pharmaceutical industries are highly competitive.
For the year ended December 31, 2023, our iStent family of products, and related accessories, accounted for approximately 75% of our net sales, while our iLink therapies accounted for approximately 25% of our net sales. Competition The medical technology and pharmaceutical industries are highly competitive.
Our iStent, a single stent device which reduces IOP by restoring the natural physiologic pathways for aqueous humor, obtained FDA clearance in 2012 and was the first commercially available MIGS treatment solution.
Our iStent, a single stent device which reduces IOP by restoring the natural physiologic pathways for aqueous humor, obtained FDA clearance in 2012 and was the first commercially available MIGS treatment solution. The iStent inject W device includes two stents pre-loaded in an auto-injection system designed to allow the surgeon to inject stents through a single corneal entry.
We have four primary commercialized products designed to treat glaucoma: the iStent , the iStent inject, the iStent inject W , and the iStent infinite . 2 Table of Contents The iStent , the iStent inject (first generation), and the iStent inject W ( second generation ) are micro-bypass stents, approved by the U.S.
We have three primary commercialized products designed to treat glaucoma: the iStent , the iStent inject W , and the iStent infinite , collectively referred to as the “ iStent family of products”. The iStent and the iStent inject W are micro-bypass stents, approved by the U.S.
In the U.S., we also enhanced our medical benefit platform with wellness activities, incentives, and benefits including reimbursement for eligible wellness expenses, onsite biometric screening, onsite flu and COVID vaccine events, health surveys, apps and other resources to encourage and support our employees in achieving their best health. ​ ● For additional information on human capital matters, please see our most recent Sustainability Report, which is available on our website at www.glaukos.com .
In the U.S., we also enhanced our medical benefit platform with wellness activities, incentives, and benefits including reimbursement for eligible wellness expenses, onsite biometric screening, onsite flu and COVID vaccine events, health surveys, apps and other resources to encourage and support our employees in achieving their best health. ● Employee Retention : Employee retention is crucial for the success of our organization.
Our bio-activated pharmaceutical products may also offer a means of improving the vision of patients with presbyopia, myopia or other corneal diseases. ​ We have also developed our iLution platform of cream-based drug formulations that are applied to the outer surface of the eyelid for dropless transdermal delivery of pharmaceutically active compounds for the treatment of eye disorders.
We have also developed our iLution platform of cream-based drug formulations that are applied to the outer surface of the eyelid for dropless transdermal delivery of pharmaceutically active compounds for the treatment of certain eye disorders.
The FDA has recently determined that products previously regulated as drugs, which are comprised of a drug constituent part and a device part, may become subject to regulation as drug-led combination products. This may impact some of our pipeline products, such as our iDose drug-eluting implants.
The FDA has determined that products previously regulated as drugs, which are comprised of a drug constituent part and a device part, may become subject to regulation as drug-led drug-device combination products. A drug-led drug-device combination product classification, such as iDose TR received, is based on the determination of the primary mode of action of the combination product.
Research & Development We devote significant resources to our R&D efforts, which are focused on developing new products, and enhancing the effectiveness, ease of use, safety, and reliability of our commercialized products.
The focus of our retinal research and development efforts is to develop potential treatment options with a longer duration-of-effect than current standards of care products. 6 Table of Contents Research & Development We devote significant resources to our R&D efforts, which are focused on developing new products, and enhancing the effectiveness, ease of use, safety, and reliability of our commercialized products.
These products that are considered to be drug-device combination products will require review and coordination by FDA’s drug and device centers prior to approval, which may delay approval. In the U.S., a combination product with a drug primary mode of action generally would be reviewed and approved pursuant to the drug approval processes under the FDCA.
In the U.S., a combination product with a drug primary mode of action generally would be reviewed and approved pursuant to the drug approval processes under the FDCA.
Prior to expiration of a temporary code, there are two options: submit an application to convert a temporary code to a permanent code or submit an application for a five-year extension of the temporary code.
In the case of each of these seven MACs, coverage of the iStent infinite is determined on a case-by-case basis. Prior to expiration of a temporary CPT code, there are two options: submit an application to convert a temporary code to a permanent code or submit an application for a five-year extension of the temporary code.
Our pharmaceutical iLink platform uses a suite of novel single-use drug formulations that are bio-activated by our proprietary systems to address these corneal diseases. The iLink therapies, bioactivated upon the delivery of ultraviolet A (UVA) light to the cornea, induce a biochemical reaction called corneal collagen cross-linking (CXL). CXL strengthens, stabilizes and reshapes the cornea to treat corneal ectatic disorders.
The iLink therapies, bioactivated upon the delivery of ultraviolet A (UVA) light to the cornea, induce a biochemical reaction called corneal collagen cross-linking (CXL). CXL strengthens, stabilizes and reshapes the cornea to treat corneal ectatic disorders.
While the iStent, iStent inject, iStent inject W and the PreserFlo MicroShunt are categorized as Class III devices and thus would generally be subject to the more rigorous PMA approval pathway, the FDA determined that an appropriate predicate device existed for the iStent infinite and that 510(k) premarket notification would be sufficient. ​ PMA Approval Pathway In a PMA application process, the manufacturer must demonstrate that the device is safe and effective for its intended use, and the PMA must be supported by extensive data, including data from preclinical studies and human clinical trials.
While the iStent, iStent inject W and the PreserFlo MicroShunt are categorized as Class III devices and thus have been or would be generally subject to the more rigorous PMA approval pathway, the FDA determined that an appropriate predicate device existed for the iStent infinite and that 510(k) premarket notification was sufficient for clearance.
Violations of these laws, or the health care regulatory laws described above, may subject us to administrative, civil, and criminal penalties, including imprisonment of individuals, the imposition of significant fines, monetary penalties, and damages, exclusion 10 Table of Contents from participation in (or reimbursement for our products from) federal health care programs like Medicare or Medicaid, imposition of compliance obligations or monitoring, curtailment or restructuring of our operations, and damage to our reputation.
Certain states also mandate implementation of corporate compliance programs, require adherence to the medical device or pharmaceutical industry’s voluntary compliance guidelines, impose restrictions on manufacturer marketing practices, require registration or licensing of manufacturers and their sales representatives, and/or require tracking and reporting of gifts, compensation, and other remuneration to healthcare professionals and entities. 12 Table of Contents Violations of the health care regulatory laws described above; may subject us to administrative, civil, and criminal penalties, including imprisonment of individuals, the imposition of significant fines, monetary penalties, and damages, exclusion from participation in (or reimbursement for our products from) federal health care programs like Medicare or Medicaid, imposition of compliance obligations or monitoring, curtailment or restructuring of our operations, and damage to our reputation.
As in the U.S., reimbursement decisions can change, resulting in the elimination or reduction of reimbursement payments, which could adversely affect our financial results and our ability to invest in and grow our business.
As in the U.S., reimbursement decisions can change, resulting in the elimination or reduction of reimbursement payments, which could adversely affect our financial results and our ability to invest in and grow our business. 15 Table of Contents Other Regulations Our operations and many of the products we manufacture or sell are subject to extensive regulation by numerous other governmental agencies, both within the U.S. and internationally.
The ophthalmic segment of the medical technology and pharmaceutical industries is dynamic and subject to significant change due to cost-of-care considerations, reimbursement levels, regulatory reform, industry and customer 5 Table of Contents consolidation and evolving patient needs.
We believe that we compete primarily on the basis of clinical superiority supported by extensive data and innovative features that enhance patient benefit, product performance, and safety. The ophthalmic segment of the medical technology and pharmaceutical industries is dynamic and subject to significant change due to cost-of-care considerations, reimbursement levels, regulatory reform, industry and customer consolidation and evolving patient needs.
Before marketing in the U.S., a drug must undergo rigorous preclinical and clinical studies and an extensive regulatory approval process implemented by the FDA under the FDCA. Several of our pipeline products, including our iDose implants and our iLution cream-based formulations, are drug products that are subject to this regulatory approval process.
Drug Requirements The development and commercialization of drug products is subject to extensive regulation by governmental authorities in the U.S. Before marketing in the U.S., a drug must undergo rigorous preclinical and clinical studies and an 10 Table of Contents extensive regulatory approval process implemented by the FDA under the FDCA.
Whether or not we obtain FDA approval for a product, we must obtain authorization before commencing clinical trials or obtain marketing authorization or approval of a product under the comparable regulatory authorities of countries 11 Table of Contents internationally.
Whether or not we obtain FDA approval for a product, we must obtain authorization before commencing clinical trials or obtain marketing authorization or approval of a product under the comparable regulatory authorities of countries internationally. The approval process varies from country to country and the time may be longer or shorter than that required for approval in the U.S.
Failure to comply with the conditions of approval can result in material adverse enforcement action, including withdrawal of the approval. Certain changes to an approved device, such as changes in manufacturing facilities, methods, or quality control procedures, or changes in the design performance specifications, which may affect the safety or effectiveness of the device, require submission of a PMA supplement.
Certain changes to an approved device, such as changes in manufacturing facilities, methods, or quality control procedures, or changes in the design performance specifications, which may affect the safety or effectiveness of the device, require submission of a PMA supplement. Clinical Trials of Medical Devices Clinical trials are almost always required to support a PMA for a Class III device.
The second generation iStent inject W has replaced the first generation iStent inject in nearly every country in which we sell them, and now comprises the vast majority of sales globally in the iStent inject line of products. ​ In August 2022, we received 510(k) clearance for the iStent infinite indicated for use in the treatment of patients with glaucoma uncontrolled by prior medical and surgical therapy.
In August 2022, we received 510(k) clearance for the iStent infinite indicated for use in the treatment of patients with glaucoma uncontrolled by prior medical and surgical therapy.
ITEM 1. BUSINESS Overview Glaukos is an ophthalmic medical technology and pharmaceutical company focused on developing novel therapies for the treatment of glaucoma, corneal disorders, and retinal disease.
ITEM 1. BUSINESS Overview Glaukos is an ophthalmic pharmaceutical and medical technology company focused on developing novel, dropless therapies and commercializing associated products for the treatment of glaucoma, corneal disorders, and retinal disease. We first developed Micro-Invasive Glaucoma Surgery (MIGS) as an alternative to the traditional glaucoma treatment paradigm, launching our first MIGS device commercially in 2012.
The approval process varies from country to country and the time may be longer or shorter than that required for FDA approval. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country.
The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country.
We continue to provide our employees with exceptional medical and dental benefits. In the U.S. we provide vision benefits for our employees and their dependents at no cost to them. In 2022, we offered a wellness credit to all U.S. employees that provides reimbursement for certain health-related expenses such has gym memberships, to incent a healthy lifestyle.
We continue to provide our employees with exceptional medical and dental benefits. In the U.S. we provide vision benefits for our employees and their dependents at no cost to them.
Our international subsidiaries also lease facilities in Australia, Brazil, Canada, Germany, Japan and the United Kingdom. Intellectual Property The strength of our competitive position depends substantially upon our ability to obtain and enforce intellectual property rights protecting our technology both domestically and internationally.
Our KXL Systems are distributed from our facility in Burlington, Massachusetts. Internationally, we distribute our products using third-party logistics providers in the Netherlands, Germany, Japan, Australia, Canada and Brazil. Intellectual Property The strength of our competitive position depends substantially upon our ability to obtain and enforce intellectual property rights protecting our technology both domestically and internationally.
These phases generally include the following: Phase 1. Introduction into patients or healthy human volunteers and is tested for safety, dose tolerance and pharmacokinetics. Phase 2. Introduction into a limited patient population to assess the efficacy of the drug in specific, targeted indications, assess dosage tolerance and optimal dosage, and identify possible adverse effects and safety risks. Phase 3.
Introduction into a limited patient population to assess the efficacy of the drug in specific, targeted indications, assess dosage tolerance and optimal dosage, and identify possible adverse effects and safety risks. Phase 3. Expansion to further demonstrate clinical efficacy, optimal dosage and safety within an expanded patient population.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn particular, we have experienced, and may in the future experience, material financial or operational impacts as a result of COVID-19 or other public health crises, including: ● Impacts or delays to our product development efforts or regulatory clearances and approvals; ● Costs associated with protecting the health of our employees and adhering to any guidance or orders of various governmental authorities, such masking, testing, and social distancing requirements; ● Risks associated with remote work, including increased cybersecurity risk; ● Widespread staffing shortages and turnover, including in ambulatory surgery centers, and mandatory and voluntary quarantining, which may impact elective procedures; ● Outbreaks of disease in our facilities, which could require us to temporarily shut down manufacturing operations or cause a disruption to, or shortage in, our workforce; ● Patient reluctance to seek primary care from optometrists and ophthalmologists or undergo medical procedures during or following outbreaks of disease; ● Delays in shipments of our products, which could harm our customer relations and adversely impact our competitive positioning and sales, including as a result of longer lead times, delays, higher prices and unfulfilled deliveries of our supply chain and development partners, each of which we continued to experience in 2022 and anticipate will continue into the near future; ● Restrictions on the ability of our personnel to access customers and clinical sites for training and support; ● Challenges to our capacity to manufacture, sell and support the use of our products; and ● Volatility in credit or financial markets. ​ For example, restrictions on elective procedures and therapies and the closures of ophthalmic practices during the COVID-19 pandemic impacted the progress of our pipeline products, such as the slowdown in new patient enrollment in our iDose clinical trial in 2020 and 2021, which delayed the iDose approval timeline.
Biggest changeIn particular, we have experienced, and may in the future experience, financial or operational impacts as a result of COVID-19 or other public health crises which may be material, including: ● Impacts or delays to our product development efforts, including due to slowdown of new patient enrollment in clinical trials such as we experienced in our 2020 and 2021 iDose clinical trial, or regulatory clearances and approvals; ● Costs associated with protecting the health of our employees and adhering to any guidance or orders of various governmental authorities, such as masking, testing, and social distancing requirements; ● Risks associated with remote work, including increased cybersecurity risk; 19 Table of Contents ● Widespread staffing shortages and turnover, including in ambulatory surgery centers, and mandatory and voluntary quarantining, which may impact elective procedures; ● Outbreaks of disease in our facilities, which could require us to temporarily shut down manufacturing operations or cause a disruption to, or shortage in, our workforce; ● Delays in shipments of our products, which could harm our customer relations and adversely impact our competitive positioning and sales, including as a result of longer lead times, delays, higher prices and unfulfilled deliveries of our supply chain and development partners, each of which we continued to experience in 2023 and anticipate will continue into the near future; ● Restrictions on our personnel’s ability to access customers and clinical sites for training and support; and ● Volatility in credit or financial markets.
Our success will depend on our ability to retain our current management, key employees and consultants and advisors, and to attract and retain qualified personnel in the future, including by providing competitive compensation and benefit programs, flexible work arrangements, career advancement prospects and sufficient opportunities to develop leadership, managerial and other valuable skills.
Our success will depend on our ability to retain our current management and key employees, consultants and advisors, and to attract and retain qualified personnel in the future, including by providing competitive compensation and benefit programs, flexible work arrangements, career advancement prospects and sufficient opportunities to develop leadership, managerial and other valuable skills.
Any of these events could have an adverse effect on our business, operating results and financial condition. Failure to comply with data privacy and security laws could have a material adverse effect on our business.
Any of these events could have an adverse effect on our operating results and financial condition. Failure to comply with data privacy and security laws could have a material adverse effect on our business.
In some instances, we or our partners have pursued, and may in the future pursue, a regulatory clearance or approval that proves unsuccessful, such as the FDA’s recent failure to approve the PreserFlo Microshunt in the U.S. and our recent determination to conduct a second pivotal confirmatory study of our Epioxa pharmaceutical therapy based on recommendations from the FDA in pre-NDA submission meetings.
In some instances, we or our partners have pursued, and may in the future pursue, a regulatory clearance or approval that proves unsuccessful, such as the FDA’s recent failure to approve the PreserFlo Microshunt in the U.S. and our determination to conduct a second pivotal confirmatory study of our Epioxa pharmaceutical therapy based on recommendations from the FDA in pre-NDA submission meetings.
We may suffer significant setbacks in clinical trials, even after earlier clinical trials showed promising results, and failure can occur at any time during the clinical trial process.
We may suffer significant setbacks in clinical trials, even after earlier trials showed promising results, and failure can occur at any time during the clinical trial process.
We are also subject to compliance with various laws and regulations, including the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and similar anti-bribery laws in other jurisdictions, which generally prohibit companies and their agents from making bribes or other improper payments to officials for the purpose of obtaining or retaining business.
We are also subject to compliance with various anti-bribery laws and regulations, including the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and similar anti-bribery laws in other jurisdictions, which generally prohibit companies and their agents from making bribes or other improper payments to officials for the purpose of obtaining or retaining business.
Our ability to successfully commercialize and achieve market acceptance of our products, as well as compete against other therapies designed to address the same disease states, depends in significant part on adequate financial coverage and reimbursement from third party payors, including governmental payors (such as the Medicare and Medicaid programs in the U.S.), managed care organizations and private health insurers.
Our ability to successfully commercialize and achieve market acceptance of our products and compete against other therapies designed to address the same disease states depends in significant part on adequate financial coverage and reimbursement from third party payors, including governmental payors (such as the Medicare and Medicaid programs in the U.S.), managed care organizations and private health insurers.
The efficient operation of our global business depends on our information technology systems, including telecommunications, the internet, network communications, email and various computer hardware and software applications. We rely on our information technology systems to effectively manage sales and marketing data, accounting and financial functions, inventory management, product development tasks, clinical data, quality systems, customer service and technical support functions.
The efficient operation of our global business depends on our information systems, including telecommunications, the internet, network communications, email and various computer hardware and software applications. We rely on our information systems to effectively manage sales and marketing data, accounting and financial functions, inventory management, product development tasks, clinical data, quality systems, customer service and technical support functions.
It is also difficult to predict whether and how the policies and priorities of a new administration could materially impact the regulation governing our products. In May 2017, the EU adopted Medical Devices Regulation 2017/745 (MDR), which repealed and replaced the Medical Device Directive (MDD).
It is also difficult to predict whether and how the policies and priorities of a new administration could materially impact the regulation governing our products. In 2017, the EU adopted Medical Devices Regulation 2017/745 (MDR), which repealed and replaced the Medical Device Directive (MDD).
We, the clinical trial investigators, the independent review board responsible for overseeing the trial, the FDA, or another regulatory authority may suspend, delay or terminate clinical trials at any time due to a number of factors, including failure to conduct the clinical trial in accordance with applicable regulatory requirements or trial protocols, failure to demonstrate a benefit from using the product, lack of sufficient funding, medical device product malfunctions, adverse events, or to avoid exposing trial participants to unacceptable health risks.
We, the clinical trial investigators, the independent review board overseeing the trial, the FDA, or another regulatory authority may suspend, delay or terminate clinical trials at any time due to a number of factors, including failure to conduct the trial in accordance with applicable regulatory requirements or trial protocols, failure to demonstrate a benefit from using the product, lack of sufficient funding, medical device product malfunctions, adverse events, or to avoid exposing trial participants to unacceptable health risks.
Our future successes will depend, in part, on our ability to manage an expanded business, which may pose substantial challenges for our management, such as the increased costs and complexity.
Our future successes will depend, in part, on our ability to manage an expanded business, which may pose substantial challenges for our management, such as increased costs and complexity.
There can be no assurance that we will generate sufficient taxable income in the carryforward period to utilize the remaining tax attributes before they expire. 21 Table of Contents Risks Related to Indebtedness The requirement that we service our indebtedness could limit the cash flow available for our operations and have other consequences that could adversely affect our business, and we may not have sufficient cash flow from our business to pay our debt obligations.
There can be no assurance that we will generate sufficient taxable income in the carryforward period to utilize the remaining tax attributes before they expire. 25 Table of Contents Risks Related to Our Indebtedness The requirement that we service our indebtedness could limit the cash flow available for our operations and have other consequences that could adversely affect our business, and we may not have sufficient cash flow from our business to pay our debt obligations.
Any disruptions or difficulties that may occur in connection with our ERP system (whether in connection with the regular operation, periodic enhancements or upgrades of such systems, or due to cyber incidents) could adversely affect our ability to provide services, fulfill contractual obligations, file reports with the SEC in a timely manner, operate our business or otherwise affect our controls environment.
Any disruptions or difficulties that may occur in connection with our ERP system (whether in connection with the regular operation, periodic enhancements or upgrades of such systems, or due to cybersecurity incidents) could adversely affect our ability to provide services, fulfill contractual obligations, file reports with the SEC in a timely manner, operate our business or otherwise affect our controls environment.
We expect there will continue to be a number of legislative and regulatory changes to the U.S. health care system that could significantly change the statutory provisions governing the regulatory approval, manufacture and marketing of regulated products or the reimbursement thereof and may impose additional costs or 25 Table of Contents lengthen review times of planned or future products.
We expect there will continue to be a number of legislative and regulatory changes to the U.S. health care system that could significantly change the statutory provisions governing the regulatory approval, manufacture and 29 Table of Contents marketing of regulated products or the reimbursement thereof and may impose additional costs or lengthen review times of planned or future products.
While we believe we have sufficient cash to fund our operations for at least the next 12 months from the date our consolidated financial statements for the year ended December 31, 2022 are made publicly available, our ability to reach sustained profitability and generate positive cash flow in the future is highly uncertain.
While we believe we have sufficient cash to fund our operations for at least the next 12 months from the date our consolidated financial statements for the year ended December 31, 2023 are made publicly available, our ability to reach sustained profitability and generate positive cash flow in the future is highly uncertain.
Legislative or regulatory reform of the healthcare system could hinder or prevent our products’ commercial success . In the U.S. and in certain foreign jurisdictions, there have been a number of legislative and regulatory proposals to change the healthcare systems in ways that could impact our ability to sell our products profitably, if at all.
Legislative or regulatory reform of the healthcare system could hinder or prevent our products’ commercial success . In the U.S. and in certain states and foreign jurisdictions, there have been a number of legislative and regulatory proposals and adoptions to change the healthcare systems in ways that could impact our ability to sell our products profitably, if at all.
Our Charter and Bylaws provide that, unless the Company consents in writing, the Court of Chancery of the State of Delaware is the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Company or its stockholders, (iii) any action or proceeding asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our Charter or Bylaws, or (iv) any action or proceeding asserting a claim governed by the internal affairs doctrine (the Delaware Exclusive Forum Provision).
Our Charter and Bylaws provide that, unless the Company consents in writing, the Court of Chancery of the State of Delaware is the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any director, officer or 33 Table of Contents other employee of the Company or its stockholders, (iii) any action or proceeding asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our Charter or Bylaws, or (iv) any action or proceeding asserting a claim governed by the internal affairs doctrine (the Delaware Exclusive Forum Provision).
In addition, identifying the root cause of performance or quality issues, particularly those affecting third-party components, may be difficult, which increases the time needed to address quality issues as they arise and increases the risk that similar problems could recur.
In addition, identifying the root cause of performance or quality issues, particularly those affecting third-party components or other elements, may be difficult, which increases the time needed to address quality issues as they arise and increases the risk that similar problems could recur.
If one or more holders elect to convert their Convertible Notes, unless we elect to satisfy our conversion obligation by delivering solely shares 22 Table of Contents of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity.
If one or more holders elect to convert their Convertible Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity.
Finding solutions to quality issues can be expensive and we may incur significant costs or lost revenue in connection with, for example, shipment holds, product recalls and warranty or other service obligations.
Finding solutions to quality issues can be expensive and we may incur significant costs, lost revenue or reputational damage in connection with, for example, shipment holds, product recalls and warranty or other service obligations.
Additionally, we rely on a limited number of third-party suppliers, in some cases sole suppliers, to supply components for the iStent , the iStent inject models, the iStent infinite and our other pipeline products.
Additionally, we rely on a limited number of third-party suppliers, in some cases sole suppliers, to supply components for the iStent , the iStent inject models, the iStent infinite , the iDose TR , and our other pipeline products.
As a manufacturer, we have addressed and must continue to address quality issues associated with our products, including in our engineering, design, manufacturing and delivery processes, as well as issues with third-party components included in our products.
As a manufacturer, we have addressed and must continue to address quality issues associated with our products, including in our engineering, design, manufacturing and delivery processes, as well as issues with third-party pharmaceuticals or components included in our products.
As of December 31, 2022, we had $287.5 million in principal amount of indebtedness as a result of the issuance of the Convertible Notes. We may also incur additional indebtedness to meet future financing needs.
As of December 31, 2023, we had $287.5 million in principal amount of indebtedness as a result of the issuance of the Convertible Notes. We may also incur additional indebtedness to meet future financing needs.
If we fail to manage any of these challenges effectively, our business may be harmed. If we are unable to retain or recruit qualified personnel for growth, our business results could suffer. We have benefited substantially from the leadership and performance of our senior management and other key 19 Table of Contents employees.
If we fail to manage any of these challenges effectively, our business may be harmed. If we are unable to retain or recruit qualified personnel for growth, our business results could suffer. We have benefited substantially from the leadership and performance of our senior management and other key employees.
Our failure to repurchase Convertible Notes, or to pay any cash payable on future conversions of the Convertible Notes as required by the indenture governing the Convertible Notes would constitute a default under the indenture governing the Convertible Notes, which event, or the occurrence of the fundamental change itself, may lead to a default under any future credit facility or other agreements governing our future indebtedness.
Our failure to repurchase Convertible Notes, or to pay any cash payable on future conversions of the 26 Table of Contents Convertible Notes as required by the indenture governing the Convertible Notes would constitute a default under the indenture governing the Convertible Notes, which event, or the occurrence of the fundamental change itself, may lead to a default under any future credit facility or other agreements governing our future indebtedness.
If a court were to find all or any part of our exclusive forum provisions to be inapplicable or unenforceable in an action, we might incur additional costs associated with resolving such action in other jurisdictions. 29 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None. ​
If a court were to find all or any part of our exclusive forum provisions to be inapplicable or unenforceable in an action, we might incur additional costs associated with resolving such action in other jurisdictions. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Cyber incidents can include ransomware, computer denial-of-service attacks, worms, and other malicious software programs introduced to our computers and networks, including intrusions that are designed to evade detection for an extended period of time, phishing attacks, social engineering attacks, and efforts to discover and exploit any design flaws, bugs, security vulnerabilities or weaknesses, as well as intentional or unintentional acts by employees or other insiders with access privileges, intentional acts of vandalism or fraud by third 20 Table of Contents parties and sabotage.
Cybersecurity incidents can include ransomware, computer denial-of-service attacks, worms, and other malicious software programs introduced to our computers and networks, including intrusions that are designed to evade detection for an extended period of time, phishing attacks, social engineering attacks, and efforts to discover and exploit any design flaws, bugs, security vulnerabilities or weaknesses, as well as intentional or unintentional acts by employees or other insiders with access privileges, intentional acts of vandalism or fraud by third parties and sabotage.
We have funded our operations to date from the sale of equity securities, including our June 2015 initial public offering, the issuance of notes payable, cash exercises of stock options and warrants to purchase equity securities, cash generated from commercial operations and the issuance of the Company’s 2.75% convertible notes due 2027 (Convertible Notes).
We have funded our operations to date from the sale of equity securities, including our June 2015 initial 20 Table of Contents public offering, the issuance of notes payable, cash exercises of stock options and warrants to purchase equity securities, cash generated from commercial operations and the issuance of the Company’s 2.75% convertible notes due 2027 (Convertible Notes).
The occurrence of any of the foregoing could harm our reputation as a producer of high-quality products, which could adversely affect our business, financial condition or results of operations.
The occurrence of any of the foregoing could harm our reputation as a producer of high-quality products and could adversely affect our business, financial condition or results of operations.
See Item 1, Business, “Government Regulation – U.S. Regulation & Reimbursement” and “International Regulation & Reimbursement” contained in this Annual Report on Form 10-K for additional information. Payors continually review the clinical evidence for new therapies and can change their coverage policies without notice or deny payment if the product was not used in accordance with the payor’s coverage policy.
See Item 1, Business, “Government Regulation – U.S. Regulation & Reimbursement” and “International Regulation & Reimbursement” contained in this Annual Report for additional information. Payors continually review the clinical evidence for new therapies and can change their coverage policies without notice or deny payment if the product was not used in accordance with the payor’s coverage policy.
These international operations expose us and our subsidiaries and third-party distributors to a variety of risks including, without limitation, the following: ● different, and in some cases more exacting and lengthy, regulatory approval processes, regulations and laws, and pricing and reimbursement systems applicable to us, our suppliers and distributors; ● reduced or varied protection for intellectual property rights or difficulties enforcing our intellectual property rights and defending against third-party threats and intellectual property enforcement actions against us, our distributors, or any of our third-party suppliers; ● pricing pressure or longer sales and payment cycles; ● different competitive dynamics, including smaller market sizes, which we may not be able to fully appreciate before entering certain foreign markets; ● a shortage of qualified sales personnel and distributors, and the challenges of managing foreign operations; ● relative disadvantages compared to competitors with more recognizable names, longer operating histories and better established distribution networks and customer relationships; ● political and economic instability, international terrorism and anti-U.S. sentiment, or the imposition of U.S. or international sanctions that could restrict or prohibit continued business; ● changes in duties and tariffs, license obligations, importation laws and other non-tariff barriers to trade; ● scrutiny of foreign tax authorities that could result in significant fines, penalties and additional taxes; ● different cultural norms which may impact how business is conducted; ● laws and business practices favoring local companies; ● difficulties in maintaining consistency and compliance with our internal guidelines; ● difficulties in enforcing agreements and collecting receivables through foreign legal systems; ● risks of money laundering, bribery and corruption practices, off-label promotion or breach of sanction regulations by our personnel or distributors, which may be difficult for us to discover or prevent; ● failures by our third-party partners to properly assist us with local guidance on operations, financial and other reporting, accounting, tax, payroll, legal and regulatory matters; and ● the imposition of costly and complex export licensing requirements and restrictions, particularly relating to technology. ​ Additionally, we are exposed to changes in foreign currencies relative to the U.S. dollar, which are references to the differences between the foreign-exchanges rates we use to convert the financial results of our international operations from local currencies into U.S. dollars for financial reporting purposes.
These international operations expose us and our subsidiaries and third-party distributors to a variety of risks including, without limitation, the following: ● different, and in some cases more exacting and lengthy, regulatory approval processes, regulations and laws, and pricing and reimbursement systems applicable to us, our suppliers and distributors; ● reduced or varied protection for intellectual property rights or difficulties enforcing our intellectual property rights and defending against third-party threats and intellectual property enforcement actions against us, our distributors, or any of our third-party suppliers; ● pricing pressure or longer sales and payment cycles; ● different competitive dynamics, including smaller market sizes, which we may not be able to fully appreciate before entering certain foreign markets; ● a shortage of qualified sales personnel and distributors; ● the challenges of managing foreign operations; ● relative disadvantages compared to competitors with more recognizable names, longer operating histories and better established distribution networks and customer relationships; ● political and economic instability, international terrorism and anti-U.S. sentiment, or the imposition of U.S. or international sanctions that could restrict or prohibit continued business; ● changes in duties and tariffs, license obligations, importation laws and other non-tariff barriers to trade; ● scrutiny of foreign tax authorities that could result in significant fines, penalties and additional taxes; ● different cultural norms which may impact how business is conducted; ● laws and business practices favoring local companies; ● difficulties in maintaining consistency and compliance with our internal guidelines; ● difficulties in enforcing agreements and collecting receivables through foreign legal systems; ● risks of money laundering, bribery and corruption practices, off-label promotion or breach of sanction regulations by our personnel or distributors, which may be difficult for us to discover or prevent; ● failures by our third-party partners to properly assist us with local guidance on operations, financial and other reporting, accounting, tax, payroll, legal and regulatory matters; and ● costly and complex export requirements and restrictions, particularly relating to technology.
Our enterprise resource planning (“ERP”) system is integral to our ability to accurately and efficiently maintain our books and records, record transactions, and prepare our financial statements.
Our enterprise resource planning (ERP) system is integral to our ability to accurately and efficiently maintain our books and records, record transactions, and prepare our financial statements.
In addition, any change in the laws or regulations that govern the clearance and approval processes relating to our current and future products could make it more difficult and costly to obtain clearance or approval for new products, or to produce, market and distribute existing products. Inadequate or inconsistent reimbursement for our products may adversely impact our business.
In addition, any change in the laws or regulations that govern the clearance and approval processes relating to our current and future products could make it more difficult and costly to obtain clearance or approval for new products, or to produce, market and distribute existing products. 30 Table of Contents Inadequate or inconsistent reimbursement for our products may adversely impact our business.
As a result of our global operations, our revenue, gross 18 Table of Contents margins, operating expense and operating income in some international markets have been and may continue to be affected by foreign currency fluctuations.
As a result of our global operations, our revenue, gross margins, operating expense and operating income in some international markets have been and may continue to be affected by foreign currency fluctuations.
Our information technology systems are vulnerable to damage or interruption from earthquakes, fires, floods and other natural disasters, terrorist attacks, power losses, computer system or data network failures, data corruption and security breaches or other cyber-based incidents, some of which we have experienced and which we continue to monitor.
Our information systems are vulnerable to damage or interruption from earthquakes, fires, floods and other natural disasters, terrorist attacks, power losses, computer system or data network failures, data corruption and security breaches or other cybersecurity incidents, some of which we have experienced and which we continue to monitor.
In the foreign markets in which we operate, different pricing and reimbursement systems, which could result in lower reimbursement, could harm our ability to operate our business.
In the foreign markets in which we operate, different pricing and reimbursement systems, could result in lower reimbursement, harming our ability to operate our business.
Because our products are highly complex, the occurrence of performance issues may increase as we continue to introduce new products and rapidly scale up manufacturing to meet increased demand.
Because our products are highly complex, the occurrence of performance issues may increase as we continue to introduce new products and rapidly scale up manufacturing to meet 22 Table of Contents increased demand.
If we are unable to maintain our existing codes or obtain new permanent codes for procedures using our products, use existing codes for new products or obtain new reimbursement codes for our other products in development, we may be subject to significant pricing pressure, which could harm our business, results of operations, financial condition and prospects.
If we are unable to maintain our existing codes or obtain new permanent codes for procedures using our products, use existing codes for new products or obtain new reimbursement codes for our products in development, we may be subject to significant pricing pressure, that could harm our results of operations, financial condition and prospects.
Additionally, third parties could assert infringement or misappropriation claims against us with respect to our current or future commercial products and seek to invalidate one or more of our patents or trademarks.
Additionally, third parties could assert 32 Table of Contents infringement or misappropriation claims against us with respect to our current or future commercial products and seek to invalidate one or more of our patents or trademarks.
The relevant assignment provisions may not be self-executing or may be breached, resulting in ownership disputes and/or litigation. 27 Table of Contents We have many foreign patents and patent applications, and expect to pursue patent protection in the most significant markets in which we do business.
The relevant assignment provisions may not be self-executing or may be breached, resulting in ownership disputes and/or litigation. We have many foreign patents and patent applications, and expect to pursue patent protection in the most significant markets in which we do business.
The process of obtaining clearances or approvals to market our products can be expensive and lengthy, and we cannot guarantee that our current products will receive approval for additional indications or that our future products will 23 Table of Contents receive clearance or approval on a timely basis, if at all.
The process of obtaining clearances or approvals to market our products can be expensive and lengthy, and we cannot guarantee that our current products will receive clearance or approval for additional indications or that our future products will receive clearance or approval on a timely basis, or without restrictions, if at all.
The loss of services of these personnel, which could occur without notice and without cause or good reason, could prevent or delay our growth plans and the implementation and completion of our strategic objectives, or divert management’s attention to seeking qualified replacements. Our U.S. employees, including our senior management, are not subject to non-competition agreements.
The loss of services of these personnel, which could occur without notice and without cause, could prevent or delay our growth plans and the implementation of our strategic objectives, or divert management’s attention to seeking qualified replacements. Our U.S. 23 Table of Contents employees, including our senior management, are not subject to non-competition agreements.
We continue to provide a valuation allowance against a portion of these tax attributes because we believe that uncertainty exists with respect to their future realization. Utilization of these tax attributes may be subject to annual limitations under the Internal Revenue Code of 1986 (IRC) Section 382 and Section 383 if the Company experiences an ownership change.
We continue to provide a valuation allowance against a portion of these tax attributes because we believe that uncertainty exists with respect to their future realization. Utilization of these tax attributes may be subject to annual limitations under IRC Sections 382 and 383 if the Company experiences an ownership change.
See Item 1, Business, “Government Regulation – U.S. Regulation & Reimbursement” and “International Regulation & Reimbursement” contained in this Annual Report on Form 10-K for additional information about the laws and regulations which apply to us. The U.S.
See Item 1, Business, “Government Regulation – U.S. Regulation & Reimbursement” and “International Regulation & Reimbursement” contained in this Annual Report for additional information about the laws and regulations which apply to us. The U.S.
These regulations relate to, among other things, R&D, labeling, advertising, promotion, pricing, and discounts, recordkeeping, reporting, import and export, post-approval studies and the sale and distribution of our products. See Item 1, Business, “Government Regulation – U.S. Regulation & Reimbursement” and “International Regulation & Reimbursement” contained in this Annual Report on Form 10-K for additional information.
These regulations relate to, among other things, approval or clearance of our products for sale, R&D, labeling, advertising, promotion, pricing and discounts, recordkeeping, reporting, import and export, post-approval studies and the sale and distribution of our products. See Item 1, Business, “Government Regulation – U.S. Regulation & Reimbursement” and “International Regulation & Reimbursement” in this Annual Report for additional information.
As part of the regulatory application and approval process, the FDA will generally conduct a pre-approval inspection of the applicant or its third-party manufacturers’ or suppliers’ manufacturing facilities to ensure compliance with the FDA’s Quality System Regulation (QSR) for medical devices or current Good Manufacturing Practice (cGMP) regulations for drug products.
As part of the PMA regulatory application and approval process, the FDA will generally conduct a pre-approval inspection of the applicant or its third-party manufacturers’ or suppliers’ manufacturing facilities to ensure compliance with the FDA’s Quality System Regulation (QSR) for medical devices or current Good Manufacturing Practice (cGMP) regulations for drug and combination products, such as our iDose TR product.
Our failure, or the failure of our contract manufacturers, to obtain CE marks for all of our products under MDR on a timely basis, or to comply with MDR, could restrict our ability to sell our products in the EU or other parts of the world, which would have a material adverse effect on our business and financial results.
Our failure, or the failure of our contract manufacturers, to obtain CE marks for all of our products under MDR on a timely basis, or to comply with MDR or applicable European Medicines Agency regulations regarding drug products, could restrict our ability to sell our products in the EU or other parts of the world, which would have a material adverse effect on our business and financial results.
We are also subject to limitations on trade with persons in sanctioned countries. Our exposure to international markets increases the inherent risks of encountering such issues.
We are also subject to limitations on trade with persons in sanctioned countries. Our sales in international markets increase the inherent risks of encountering such issues.
However, continued growth creates numerous challenges, including, among others, new and increased responsibilities for our management team; increased competition; increased product demand which could strain our manufacturing capacity; the management of an increasing number of customer, supplier and other relationships; increased pressure on our operating, financial and reporting systems; entry into new international territories with unfamiliar regulations and business approaches; and the need to hire, train and manage additional qualified personnel.
However, continued growth creates numerous challenges, including, among others, new and increased responsibilities for our management team; increased competition; increased and, with respect to new products such as the iDose TR , uncertain product demand which could strain our manufacturing capacity or create product shortages; the management of an increasing number of customer, supplier and other relationships; increased pressure on our operating, financial and reporting systems; entry into new international territories with unfamiliar regulations and business approaches; and the need to hire, train and manage additional qualified personnel.
Data Protection Act and the U.K. GDPR, the California Consumer Privacy Act, and the California Privacy Rights Act, among others. These laws affect how we collect and use data of our employees, consultants, customers and other parties.
Data Protection Act and the U.K. GDPR, the California Consumer Privacy Act, and the California Privacy Rights Act, among others. These laws affect how we collect and use data of our employees, consultants, customers and other parties, including patients treated with our products.
Additionally, our research programs, which are expensive and time-intensive, may fail to yield product candidates for clinical development despite showing initial promise. If we are unable to successfully commercialize additional products, our business prospects would be materially affected.
Developing additional products is expensive and time-consuming. Our research programs may fail to yield product candidates for clinical development despite showing initial promise. If we are unable to successfully commercialize additional products, our business prospects would be materially affected.
Our Charter and Bylaws include provisions that: ● authorize our board of directors to issue, without further action by the stockholders, up to 5,000,000 shares of undesignated preferred stock; ● require that any action to be taken by our stockholders be affected at a duly called annual or special meeting and not by written consent; 28 Table of Contents ● specify that special meetings of our stockholders may be called only by our board of directors, the chairman of the board of directors, the chief executive officer or the president; ● establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board of directors; ● divide our board of directors into three classes, with each class serving staggered three year terms; ● provide that our directors may be removed only for cause by a supermajority vote of our stockholders; ● provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; ● specify that no stockholder is permitted to cumulate votes at any election of directors; and ● require a supermajority vote of the stockholders and a majority vote of the board to amend certain of the above-mentioned provisions and our Bylaws. ​ These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult to replace members of our board of directors, which is responsible for appointing the members of our management.
Our Charter and Bylaws include provisions that: ● authorize our board of directors to issue, without further action by the stockholders, up to 5,000,000 shares of undesignated preferred stock; ● require that any action to be taken by our stockholders be affected at a duly called annual or special meeting and not by written consent; ● specify that special meetings of our stockholders may be called only by our board of directors, the chairman of the board of directors, the chief executive officer or the president; ● establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board of directors; ● divide our board of directors into three classes, with each class serving staggered three year terms; ● provide that our directors may be removed only for cause by a supermajority vote of our stockholders; ● provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; ● specify that no stockholder is permitted to cumulate votes at any election of directors; and ● require a supermajority vote of the stockholders and a majority vote of the board to amend certain of the above-mentioned provisions and our Bylaws.
In some instances, these third parties have experienced failures to protect data privacy. Our failure or the failure of these third parties to comply with these laws or prevent security breaches of such data could result in significant liability under applicable laws, cause disruption to our business, harm our reputation and have a material adverse effect on our business.
Our failure or the failure of these third parties to comply with these laws or prevent security breaches of such data could result in significant liability, fines and penalties under applicable data privacy laws, cause disruption to our business, harm our reputation and have a material adverse effect on our business.
Our sole manufacturing location for our iStent products is an approximately 98,000 square foot campus located in San Clemente, California, where we manufacture, inspect, package, release and ship nearly all of our iStent platform products.
Our sole manufacturing location for our iStent and iDose products is an approximately 101,000 square foot campus located in San Clemente, California, where we manufacture, inspect, package, release and ship nearly all of our implanted device products.
The failure to protect either our or our service providers’ information technology infrastructure could disrupt our entire operation, resulting in decreased sales, increased overhead costs, product shortages, or loss or misuse of intellectual property or proprietary, confidential, sensitive or personal information, all of which could have a material adverse effect on our reputation, business, financial condition and operating results.
The failure to protect either our or our service providers’ information technology infrastructure could disrupt our entire operation, resulting in decreased sales, increased overhead costs, product shortages, or loss or misuse of intellectual property or proprietary, confidential, sensitive or personal 24 Table of Contents information, all of which could have a material adverse effect on our reputation, business, financial condition and operating results or result in investigations, claims and administrative penalties by regulators .
In addition, payers consistently engage in cost containment efforts, which could include efforts to decrease reimbursement levels for prescription drugs and the imposition of prior authorization for the use of our products.
In addition, payers consistently engage in cost containment efforts, which could result in decreased reimbursement levels for prescription drugs and the imposition of prior authorization for the use of our products.
We cannot predict to what extent current global economic conditions, including the continuing effects of the COVID-19 or a future pandemic, may disrupt global healthcare systems and access to our products or result in a widespread loss of individual health insurance coverage due to unemployment, a shift from commercial payor coverage to government payor coverage, or an increase in demand for patient assistance and/or free drug programs, any of which could adversely affect our net revenue.
We cannot predict to what extent current global economic conditions may disrupt healthcare systems and access to our products or result in a widespread loss of individual health insurance coverage due to unemployment, a shift from commercial payor coverage to government payor coverage, or an increase in demand for patient assistance or free drug 31 Table of Contents programs, any of which could adversely affect our net revenue.
Because of factors such as the proprietary nature of our products, our domestic and international quality control standards and regulatory requirements including the FDA’s Quality System Regulation, the European Union’s Medical Device Regulation and Current Good Manufacturing Practices regulations, we may be unable to obtain components if our component suppliers are found to be in violation of such standards and we may have difficulty quickly engaging additional or replacement suppliers for some of our critical components, which could delay or impact our business, including regulatory approval timelines.
Because of factors such as the proprietary nature of our products, our domestic and international quality control standards and regulatory requirements including the FDA’s Quality System Regulation, the European Union’s Medical Device Regulation, and Current Good Manufacturing Practices regulations, we may be unable to obtain components or quickly engage replacement suppliers, who may not have access to previous suppliers’ proprietary processes, if our component suppliers are found to be in violation of such standards, which could delay or impact our business, including regulatory approval timelines.
As of December 31, 2022, we had an accumulated deficit of approximately $464.4 million, principally costs incurred in our clinical trial, research and development (R&D) programs, our selling, general and administrative expenses, and from amortization expense related to our developed technology intangible assets included in cost of sales.
As of December 31, 2023, we had an accumulated deficit of approximately $599.1 million, principally comprised of costs incurred in our clinical trial, R&D programs, our selling, general and administrative expenses, and from amortization expense related to our developed technology intangible assets included in cost of sales.
Additionally, based upon a recent FDA determination, our pipeline products that are determined to be drug-device combination products will require review and coordination by each of FDA’s drug and device centers prior to approval, which may delay approval.
Additionally, based upon a 27 Table of Contents recent FDA determination, our pipeline products that are determined to be drug-device combination products, such as our iDose TR product, will require review and coordination by each of FDA’s drug and device centers prior to approval, which may delay approval.
We may from time to time increase the prices of our products, as we do with our Photrexa therapies.
From time to time, we increase the prices of our products, as we have done with our Photrexa therapies.
Failure to protect our information technology infrastructure against cyber incidents, network security breaches, service interruptions, or data corruption could materially disrupt our operations and adversely affect our business, operating results, or the effectiveness of our internal controls over financial reporting.
Failure to protect our information systems against cybersecurity threats, cybersecurity incidents, service interruptions, or data corruption could materially disrupt our operations and adversely affect our business, operating results, or the effectiveness of our internal controls over financial reporting.
We cannot be certain that our net operating loss tax carryforwards will be available to offset future taxable income . At December 31, 2022, we had approximately $449.1 million, $321.1 million and $10.8 million of net operating loss (NOL) carryforwards for federal, state and foreign purposes, respectively.
We cannot be certain that our net operating loss tax carryforwards will be available to offset future taxable income . At December 31, 2023, we had approximately $463.1 million, $355.3 million and $9.4 million of net operating loss (NOL) carryforwards for federal, state and foreign purposes, respectively.
Even if we are successful in developing our additional pipeline products, the success of our new product offerings is inherently uncertain and there can be no assurance that our products will receive regulatory approval or be profitable.
Even if we are successful in developing our additional pipeline products, the success of our new product offerings is inherently uncertain and our products may not receive regulatory approval, may receive approval that requires restrictive labeling, or may not be profitable.
If we cannot sell our products profitably, whether due to our own inability to comply with, or the inability of other economic operators in our supply chain to qualify under, any legislative reform, our business would be harmed.
Any changes to the limitations, calculations, or scope of these programs could negatively impact the results of our operations. If we cannot sell our products profitably, whether due to our own inability to comply with, or the inability of other economic operators in our supply chain to qualify under, any legislative reform or pricing programs, our business would be harmed.
Our primary sales-generating commercial products have been the iStent , which we began selling in the U.S. in 2012, the iStent inject , which we began selling in the U.S. in the second half of 2018, and its successor, the iStent inject W , launched in the second half of 2020, as well as our Photrexa therapies, which we acquired in connection with our acquisition of Avedro, Inc.
Our primary sales-generating commercial products have been the iStent , the iStent inject and its successor, the iStent inject W , as well as our Photrexa therapies, which we acquired in connection with our acquisition of Avedro, Inc. (Avedro) in 2019.
We cannot assure you that we will receive the requisite approvals to sell our product candidates on our anticipated timeline or at all. ​ Before we can obtain regulatory approval for any product candidate, we may have to undertake complex, time-consuming and expensive clinical testing in humans to demonstrate safety and efficacy, the outcomes of which are inherently uncertain and may never result in approved products or commercial sales.
Before we can obtain regulatory approval for any product candidate, we may have to undertake complex, time-consuming and expensive clinical testing in humans to demonstrate safety and efficacy, the outcomes of which are inherently uncertain and may never result in approved products or commercial sales.
In addition, even if holders of the Convertible Notes do not elect to convert their Convertible Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Convertible Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital. ​ The capped call transactions may affect the value of our common stock, and subject us to counterparty risk. ​ In connection with the issuance of the Convertible Notes, we entered into capped call transactions with certain option counterparties.
In addition, even if holders of the Convertible Notes do not elect to convert their Convertible Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Convertible Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.
In addition, our promotional materials, sales techniques, pricing programs and training methods must comply with FDA and other applicable laws and regulations, including the prohibition of the promotion of a drug or medical 24 Table of Contents device for a use that has not been cleared or approved by the FDA or other regulatory authorities, also known as an “off-label” use.
Any recall or product withdrawal, whether required by the FDA or another regulatory authority or initiated by us, could harm our reputation with customers, cause us to incur significant expense and negatively affect our sales. 28 Table of Contents In addition, our promotional materials, sales techniques, pricing programs and training methods must comply with FDA and other applicable laws and regulations, including the prohibition of the promotion of a drug or medical device for a use that has not been cleared or approved by the FDA or other regulatory authorities, also known as an “off-label” use.
If we experience any of these risks, our sales in non-U.S. jurisdictions may be harmed, our results of operations would suffer, and our reputation and business prospects would be negatively impacted. If the quality or delivery of our products does not meet our customers’ expectations, our reputation could suffer and ultimately our sales and operating earnings could be negatively impacted.
If we experience any of these risks, our sales in non-U.S. jurisdictions may be harmed, our results of operations would suffer, and our reputation and business prospects would be negatively impacted.
The Inflation Reduction Act requires drug manufacturers to pay rebates to Medicare if they increase prices faster than inflation for certain drugs used by Medicare beneficiaries. The expansion of inflation-based rebates may complicate our pricing strategies.
Inflation Reduction Act of 2022, which is designed to, among other things, have a direct impact on drug prices and reduce drug spending by the federal government, requires drug manufacturers to pay rebates to Medicare if they increase prices faster than inflation for certain drugs used by Medicare beneficiaries. The expansion of inflation-based rebates may complicate our pricing strategies.
The capped call transactions cover, subject to customary adjustments, the number of shares of common stock initially underlying the Convertible Notes.
In connection with the issuance of the Convertible Notes, we entered into capped call transactions with certain option counterparties. The capped call transactions cover, subject to customary adjustments, the number of shares of common stock initially underlying the Convertible Notes.
Also, when procedures associated with our products transition from temporary CPT Category III codes to permanent CPT Category I codes, the physician and facility reimbursement levels associated with the procedures using these products could be decreased, such as the decreased payment rates for procedures using our iStent -related products, in conjunction with cataract surgery, established by CMS for 2022 and 2023, as discussed earlier in these Risk Factors under the heading “Risks Related to Our Business.” Even when a permanent billing code has been assigned to a product, there is no guarantee that coverage will be provided.
Also, when procedures associated with our products transition from temporary CPT Category III codes to permanent CPT Category I codes, the physician and facility reimbursement levels associated with the procedures using these products could be decreased, such as the decreased payment rates for procedures using our iStent -related products, in conjunction with cataract surgery, established by CMS for 2022 and 2023, as discussed above.
In 2022, we relocated our corporate administrative headquarters to a new facility in Aliso Viejo, California (Aliso Facility), which is the location where we conduct substantially all of our R&D activities, customer and technical support, and management and administrative functions.
We conduct substantially all of our research and development (R&D) activities, customer and technical support, and management and administrative functions at our corporate headquarters in Aliso Viejo, California (Aliso Facility).
We may not have the ability to raise the funds necessary to settle conversions of the Convertible Notes in cash or to repurchase the Convertible Notes upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the Convertible Notes. ​ Noteholders may require us to repurchase their Convertible Notes upon the occurrence of a fundamental change at a repurchase price equal to 100% of the aggregate principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.
Noteholders may require us to repurchase their Convertible Notes upon the occurrence of a fundamental change at a repurchase price equal to 100% of the aggregate principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.
Examples include our acquisitions of DOSE Medical and Avedro, as well as our licensing of Santen’s PRESERFLO® Microshunt® (Preserflo MicroShunt), the Intratus drug delivery platform and the Attillaps and iVeena pharmaceutical compounds.
Examples include our acquisitions of DOSE Medical and Avedro, as well as our licensing of Santen’s PRESERFLO® Microshunt® (Preserflo MicroShunt), the Intratus drug delivery platform and the Attillaps, iVeena and Stuart pharmaceutical compounds and our collaboration agreement with Radius XR to market its wearable patient engagement and diagnostic system.
We may not be able to engage in any of these activities or secure desirable terms, which could result in a default on our debt obligations.
We may not be able to engage in any of these activities or secure desirable terms, which could result in a default on our debt obligations. The conditional conversion feature of the Convertible Notes, if triggered, may adversely affect our financial condition and operating results.
Our products could malfunction, cause unexpected adverse events, or experience performance problems that require review and possible corrective action by us or a component supplier, including a recall or market withdrawal. Any recall or product withdrawal, whether required by the FDA or another regulatory authority or initiated by us, could harm our reputation with customers and negatively affect our sales.
Our products could malfunction, cause unexpected adverse events, or experience performance problems that require review and possible corrective action by us or a component supplier, including a recall or market withdrawal.
Federal NOL carryforwards incurred prior to 2018 begin to expire in 2024, while federal NOL carryforwards of $241.1 million will not expire but can only be used to offset 80 percent of future taxable income. State and foreign NOL carryforwards begin to expire in 2023.
A portion of federal NOL carryforwards incurred prior to 2018 will expire annually, if unused, while $257.6 million will not expire but can only be used to offset 80 percent of federal taxable income. Additionally, portions of state and foreign NOL carryforwards will expire annually, if unused.
While none of the cyber incidents or service interruptions that we have experienced to date have had a material adverse impact on our business, financial condition or operations, we cannot assure that future incidents will not materially and adversely impact us.
While none of the cybersecurity incidents or service interruptions that we have experienced to date have had a material adverse impact on our business, financial condition or operations, the preventative measures we have implemented to date may not be sufficient to prevent, mitigate or offset a future incident that may materially and adversely impact us and the cybersecurity insurance we have obtained may or may not cover such an incident.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur additional U.S.-based and foreign subsidiaries’ leased office space, which includes small administrative offices in Australia, Brazil, Canada, Germany, Japan and the United Kingdom, totals less than 14,000 square feet. We believe our existing properties are well maintained, in good operating condition and are adequate to support our present level of operations. ​
Biggest changeWe also occupy approximately 60,000 square feet of leased manufacturing space in Burlington, Massachusetts pursuant to a lease agreement that expires on July 31, 2033. Other foreign subsidiaries’ leased office space, which includes small administrative offices in Australia, Brazil, Canada, France, Germany, Japan Singapore and the United Kingdom, totals less than 15,000 square feet.
ITEM 2. PROPERTIES The Company leases two adjacent facilities located in San Clemente, California. Each of these leases expires on May 31, 2030, and each contains an option to extend the lease for one additional five year period at market rates. The total leased square footage of both facilities equals approximately 98,000.
ITEM 2. PROPERTIES The Company leases two adjacent buildings, two suites, and a warehouse as part of its manufacturing campus located in San Clemente, California. Each of the leases for the two adjacent buildings expires on May 31, 2030, and each contains an option to extend the lease for one additional five-year period at market rates.
Additionally, the Company leases one property containing three office buildings, comprising approximately 160,000 rentable square feet of space, located in Aliso Viejo, California. The term of the Aliso Facility commenced on May 1, 2019 and continues for thirteen years. The agreement contains an option to extend the lease for two additional five year periods at market rates.
The term of the Aliso Facility commenced on May 1, 2019 and continues for thirteen years. The agreement contains an option to extend the lease for two additional five year periods at market rates. On December 18, 2018, we also purchased approximately 2.5 acres of vacant land located adjacent to the Aliso Facility for future expansion purposes.
On December 18, 2018, we also purchased approximately 2.5 acres of vacant land located adjacent to the Aliso Facility for future expansion purposes. In 2022, the Company relocated its corporate administrative headquarters, along with certain laboratory, R&D and warehouse space, to the Aliso Facility.
In 2022, the Company relocated its corporate administrative headquarters, along with certain laboratory, R&D and warehouse space, to the Aliso Facility. The Company’s San Clemente locations will continue to serve as its main manufacturing location for the foreseeable future.
Removed
The Company’s San Clemente locations will continue to serve as its main manufacturing location for the foreseeable future. Additionally, we currently occupy approximately 60,000 square feet of leased manufacturing space in Burlington, Massachusetts pursuant to a lease agreement that expires on July 31, 2033.
Added
The total leased square footage of both buildings totals 101,000. The square footage of the other suites and warehouse in San Clemente, California totals 19,000. The Company’s office building lease in Aliso Viejo, California (Aliso Facility) is one property containing three existing office buildings, comprising approximately 160,000 rentable square feet of space.
Added
We believe our existing properties are well maintained, in good operating condition and are adequate to support our present level of operations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMINE SAFETY DISCLOSURES Not applicable. ​ 30 Table of Contents PART II
Biggest changeMINE SAFETY DISCLOSURES Not applicable. ​ 37 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures. 30 ​ ​ PART II ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 31 Item 6. [Reserved] . 32 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 33 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 47 Item 8.
Biggest changeItem 4. Mine Safety Disclosures. 37 ​ ​ PART II ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 38 Item 6. [Reserved] . 39 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 40 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 53 Item 8.
Financial Statements and Supplementary Data. 48 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. 86 Item 9A. Controls and Procedures. 88
Financial Statements and Supplementary Data. 54 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. 91 Item 9A. Controls and Procedures. 92

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeStockholder returns over the indicated period should not be considered indicative of future stockholder returns. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Glaukos Corporation ​ $ 100.00 ​ $ 218.99 ​ $ 212.36 ​ $ 293.41 ​ $ 173.26 ​ $ 170.29 S&P Small Cap 600 index ​ $ 100.00 ​ $ 90.25 ​ $ 109.07 ​ $ 119.51 ​ $ 149.71 ​ $ 123.63 S&P Small Cap 600 Healthcare index ​ $ 100.00 ​ $ 109.77 ​ $ 131.87 ​ $ 173.30 ​ $ 183.28 ​ $ 134.84 This performance graph shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that section and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act or the Exchange Act. 31 Table of Contents Dividend Policy We have never declared or paid any cash dividends on our common stock or any other securities.
Biggest changeStockholder returns over the indicated period should not be considered indicative of future stockholder returns. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Glaukos Corporation ​ $ 100.00 ​ $ 96.97 ​ $ 133.99 ​ $ 79.12 ​ $ 77.76 ​ $ 141.52 S&P Small Cap 600 index ​ $ 100.00 ​ $ 120.86 ​ $ 132.43 ​ $ 165.89 ​ $ 137.00 ​ $ 156.02 S&P Small Cap 600 Healthcare index ​ $ 100.00 ​ $ 120.14 ​ $ 157.88 ​ $ 166.97 ​ $ 122.84 ​ $ 119.57 This performance graph shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that section and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act or the Exchange Act. 38 Table of Contents Dividend Policy We have never declared or paid any cash dividends on our common stock or any other securities.
The graph assumes that $100 was invested at the closing price of our common stock on the last trading day of fiscal year 2017 and all dividends were reinvested.
The graph assumes that $100 was invested at the closing price of our common stock on the last trading day of fiscal year 2018 and all dividends were reinvested.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Stock Our common stock trades on the New York Stock Exchange (NYSE) under the symbol “GKOS”. As of February 22, 2023, we had 53 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Stock Our common stock trades on the New York Stock Exchange (NYSE) under the symbol “GKOS”. As of February 21, 2024, we had 67 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe continue to provide a full valuation allowance against our other net deferred tax assets. ​ We record reserves for uncertain tax positions where we believe the ability to sustain the tax position does not reach a more likely than not threshold. ​ Results of Operations For discussion related to the results of operations and changes in financial condition for the year ended December 31, 2021 compared to the year ended December 31, 2020 refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our 2021 Annual Report on Form 10-K, which was filed with the United States Securities and Exchange Commission on February 28, 2022. 38 Table of Contents Comparison of Years Ended December 31, 2022 and December 31, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ ​ ​ December 31, ​ % Increase (in thousands) ​ 2022 ​ 2021 ​ (decrease) Statements of operations data: ​ ​ ​ ​ ​ ​ Net sales ​ $ 282,862 ​ $ 294,011 ​ (4) % Cost of sales ​ ​ 68,979 ​ 66,627 ​ 4 % Gross profit ​ ​ 213,883 ​ 227,384 ​ (6) % Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative ​ ​ 192,925 ​ 179,257 ​ 8 % Research and development ​ ​ 123,271 ​ 100,999 ​ 22 % In-process research and development ​ ​ 10,000 ​ ​ 10,000 ​ — % Litigation-related settlement ​ ​ (30,000) ​ ​ (30,000) ​ — % Total operating expenses ​ ​ 296,196 ​ 260,256 ​ 14 % Loss from operations ​ ​ (82,313) ​ (32,872) ​ 150 % Non-operating loss, net ​ ​ (16,116) ​ (16,395) ​ (2) % Income tax provision ​ ​ 766 ​ 326 ​ 135 % Net loss ​ $ (99,195) ​ $ (49,593) ​ 100 % ​ NM = Not Meaningful Net Sales Our net sales are generated primarily from sales of iStent family of products to customers and sales of Photrexa and associated drug formulations as well as KXL systems to customers.
Biggest changeWe record reserves for uncertain tax positions where we believe the ability to sustain the tax position does not reach a more likely than not threshold. 45 Table of Contents Results of Operations For discussion related to the results of operations and changes in financial condition for the year ended December 31, 2022 compared to the year ended December 31, 2021 refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our 2022 Annual Report on Form 10-K, which was filed with the United States Securities and Exchange Commission on February 24, 2023.
Products or product candidates for each of these platforms are designed to advance the standard of care through better treatment options across the areas of glaucoma, corneal disorders such as keratoconus, dry eye and refractive vision correction, and retinal diseases such as neovascular age-related macular degeneration, diabetic macular edema, and retinal vein occlusion.
Products and product candidates for each of these platforms are designed to advance the standard of care through better treatment options across the areas of glaucoma, corneal disorders such as keratoconus, dry eye and refractive vision correction, and retinal diseases such as neovascular age-related macular degeneration, diabetic macular edema, and retinal vein occlusion.
Internationally, we sell our products primarily through direct sales subsidiaries in seventeen countries and through independent distributors in certain countries in which we do not have a direct presence or maintain a modest commercial presence. The primary end-user customers for our products are surgery centers, hospitals and physician private practices.
Internationally, we sell our products primarily through direct sales subsidiaries and through independent distributors in certain countries in which we do not have a direct presence or maintain a modest commercial presence. The primary end-user customers for our products are surgery centers, hospitals and physician private practices.
Short-term Liquidity Requirements ​ Our short-term liquidity requirements primarily consist of regular operating costs, interest payments related to our Convertible Notes, R&D project funding, capital expenditures as we continue the development of our facilities and office spaces, operating and financing lease obligations and other firm purchase commitments.
Short-term Liquidity Requirements Our short-term liquidity requirements primarily consist of regular operating costs, interest payments related to our Convertible Notes, R&D project funding, capital expenditures as we continue the development of our manufacturing facilities and office spaces, operating and financing lease obligations and other firm purchase commitments.
Other significant SG&A expenses include marketing programs; advertising; post-approval clinical studies; conferences and congresses; travel expenses; costs associated with obtaining and maintaining our patent portfolio; professional fees for accounting, auditing, consulting and legal services; costs associated with our global enterprise systems; and allocated facility expenses.
Other significant SG&A expenses include marketing programs; advertising; post-approval clinical studies; conferences and congresses; travel expenses; costs associated with obtaining and maintaining our patent portfolio; professional fees for accounting, auditing, consulting and legal services; costs associated with our global enterprise systems and information systems; and allocated facility expenses.
For example, if our trading price remains above 130% of the conversion price for at least 20 trading days during the 30 consecutive trading-day period ending on, and including, March 31, 2023, holders of the Convertible Notes would have the right to convert their Convertible Notes during the calendar quarter beginning April 1, 2023.
For example, if our trading price remains above 130% of the conversion price for at least 20 trading days during the 30 consecutive trading-day period ending on, and including, March 31, 2024, holders of the Convertible Notes would have the right to convert their Convertible Notes during the calendar quarter beginning April 1, 2024.
Research and Development Our R&D activities primarily consist of new product development projects, pre-clinical studies, IDE and IND studies, and other clinical trials.
Research and Development Our research and development (R&D) activities primarily consist of new product development projects, pre-clinical studies, IDE and IND studies, and clinical trials.
We anticipate we will make determinations as to which programs and product candidates to pursue and how much funding to direct to 37 Table of Contents each program and product candidate on an ongoing basis in response to the scientific success of early research programs, results of ongoing and future clinical trials, the availability of funding resources, as well as ongoing assessments as to each current or future product candidate’s commercial potential and our likelihood of obtaining necessary regulatory approvals.
We anticipate we will make determinations as to which programs and product candidates to pursue and how much funding to direct to each program and product candidate on an ongoing basis in response to the scientific success of early research programs, results of ongoing and future clinical trials, the availability of funding resources, as well as ongoing assessments as to each current or future product candidate’s commercial potential and our likelihood of obtaining necessary regulatory approvals.
Recent Accounting Pronouncements For a description of recent accounting pronouncements, see Note 2 of the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. ​ ​ 46 Table of Contents
Recent Accounting Pronouncements For a description of recent accounting pronouncements, see Note 2 of the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. ​ 52 Table of Contents
Our future gross profit as a percentage of net sales, or gross margin, will be impacted by numerous factors including commencement of sales of products in our pipeline, or any other future products, which may have higher product costs.
Our future gross profit as a percentage of net sales, or gross margin, will be impacted by numerous factors including commencement of sales of products in our pipeline, or any other future products, which may have higher pricing, or conversely, higher product costs.
Cash Flows Our historical cash outflows have primarily been associated with cash used for operating activities such as the expansion of our sales, marketing and R&D activities; purchase of and growth in inventory and other working capital needs; the acquisition of intellectual property; and expenditures related to equipment and improvements used to increase our manufacturing capacity, to improve our manufacturing efficiency and for overall facility expansion.
Cash Flows Our historical cash outflows have primarily been associated with cash used for operating activities such as the expansion of our commercial and R&D activities; purchase of and growth in inventory and other working capital needs; the acquisition of intellectual property; and expenditures related to equipment and improvements used to increase our manufacturing capacity and improve our manufacturing efficiency and for overall facility expansion.
We expect SG&A expenses to continue to grow as we increase our global sales and marketing infrastructure and general administration infrastructure. We also expect other non-employee‐related costs, including sales and marketing program activities for new products, outside services and accounting and general legal costs to increase as our overall operations grow.
We expect SG&A expenses to continue to grow as we increase our global sales and marketing infrastructure and general administration infrastructure. We also expect other non-employee ‐ related costs, including sales and marketing program activities for new products, market access efforts, outside services and accounting services and general legal costs to increase as our overall operations grow.
While net sales may increase as we expand our global sales and marketing infrastructure and continue to increase awareness of our products by expanding our sales base and increasing our marketing efforts, historically our net sales within a fiscal year have been impacted seasonally, as demand for U.S. ophthalmic procedures is typically softer in the first quarter and stronger in the fourth quarter of a given year.
While net sales may increase as we expand our global sales and marketing infrastructure and continue to increase awareness of our products by expanding our sales base and increasing our marketing and market access efforts, historically our net sales within a fiscal year have been impacted seasonally, as demand for ophthalmic procedures is typically softer in the first quarter and stronger in the fourth quarter of a given year.
Compared to the reimbursement rates in effect for 2021, the Final Rules contained a significantly lower physician fee related to the implantation of trabecular bypass stents, such as our iStent family of products, in conjunction with cataract surgery.
Compared to the reimbursement rates in effect for 2021, the 2022 Final Rule contained a significantly lower physician fee related to the implantation of trabecular bypass stents, such as our iStent family of products, in conjunction with cataract surgery.
As of December 31, 2022, none of the conditions allowing holders of the Convertible Notes to convert had been met. These conditions are measured each quarter.
As of December 31, 2023, none of the conditions allowing holders of the Convertible Notes to convert had been met. These conditions are measured each quarter.
As a result, while we expect our R&D costs to continue to increase for the foreseeable future, we cannot estimate with any degree of certainty the costs we will incur in connection with the development of our product candidates.
As a result, while we expect our R&D costs to continue to increase for the foreseeable future, we cannot estimate with any degree of certainty the timing or the amount of costs we will incur in connection with the development of our product candidates.
For each of the years ended December 31, 2022 and December 31, 2021 our tax provision was primarily comprised of state and foreign income tax expense. Liquidity and Capital Resources Our principal sources of liquidity are our existing cash, cash equivalents and short-term investments, and generally cash generated from operating, financing and investing activities.
For the year ended December 31, 2022 our tax provision was primarily comprised of state and foreign income tax expense. Liquidity and Capital Resources Our principal sources of liquidity are our existing cash, cash equivalents and short-term investments, and generally cash generated from operating, financing and investing activities.
Litigation-related Settlement The $30.0 million cash payments we received pursuant to the terms of a Settlement Agreement dated September 14, 2021 (Settlement Agreement) are included in litigation-related settlement as a reduction of operating expenses on the consolidated statements of operations in each respective year.
Litigation-related Settlement The two $30.0 million cash payments we received pursuant to the terms of a Settlement Agreement with Ivantis, Inc. dated September 14, 2021 (Settlement Agreement) are included in litigation-related settlement as a reduction of operating expenses on the consolidated statements of operations in each respective year.
For each of the years ended December 31, 2022, December 31, 2021 and December 31, 2020, the amortization expense was $22.1 million.
For each of the years ended December 31, 2023, December 31, 2022 and December 31, 2021, the amortization expense was $22.1 million.
Our existing cash and investments include the remaining net proceeds from the Convertible Notes issued in June 2020 (after payment for the related capped call transactions), and the two $30.0 million payments received from Ivantis, Inc. during each of the years ended December 31, 2022 and December 31, 2021, which are being used for working capital and general corporate purposes.
Included within our existing cash and investments balances are the remaining net proceeds from the Convertible Notes issued in June 2020 (after payment for the related capped call transactions), and the two $30.0 million payments received from Ivantis, Inc. during each of the years ended December 31, 2022 and December 31, 2021, which have been, and are being used for working capital and general corporate purposes.
Please also see the section entitled “Special Note Regarding Forward-Looking Statements and Industry Data.” Overview We are an ophthalmic medical technology and pharmaceutical company focused on developing novel therapies for the treatment of glaucoma, corneal disorders, and retinal disease.
Please also see the section entitled “Special Note Regarding Forward-Looking Statements and Industry Data.” Overview We are an ophthalmic pharmaceutical and medical technology company focused on developing novel, dropless platform therapies and commercializing associated products for the treatment of glaucoma, corneal disorders, and retinal disease.
Selling, General and Administrative Our selling, general and administrative (SG&A) expenses primarily consist of personnel-related expenses, including salaries, sales commissions, bonuses, fringe benefits and stock-based compensation for our executive, financial, marketing, sales, and administrative functions.
Selling, General and Administrative Our selling, general and administrative (SG&A) expenses primarily consist of personnel-related expenses, including salaries, sales commissions, bonuses, fringe benefits and stock-based compensation for our executive, sales, marketing, market access, financial, legal, and other administrative functions.
Our primary uses of cash have been for selling and marketing activities, general and administrative expenses, research and development programs, and capital expenditures.
Our primary uses of cash have been for commercial activities, research and development programs, general and administrative expenses, and capital expenditures.
Components of Results of Operations Net Sales We currently operate in one reportable segment and net sales are generated primarily from sales of our iStent family of products and sales of Photrexa and other associated drug formulations, as well as our proprietary bioactivation systems and royalty income.
We currently operate in one reportable segment and net sales are generated primarily from sales of our iStent family of products, sales of Photrexa and other associated drug formulations, our proprietary bioactivation systems, and royalty income.
In addition, even if holders of the Convertible Notes do not elect to convert their Convertible Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Convertible Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital. ​ We may seek to obtain additional financing in the future through other debt or equity financings.
In addition, even if holders of the Convertible Notes do not elect to convert their Convertible Notes, we may be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Convertible Notes as a current liability rather than long-term liability, which would result in a material reduction of our net working capital.
Completion dates and costs for our clinical development programs include seeking regulatory approvals and our research programs vary significantly for each current and future product candidate and are difficult to predict.
Costs for our clinical development programs include expenses for all activities necessary for obtaining regulatory approvals. Our research programs vary significantly for each current and future product candidate and completion dates are difficult to predict.
We expense R&D costs as incurred. We expect our R&D expenses to continue to increase as we initiate and advance our development programs, including our expanding surgical and pharmaceutical development efforts and clinical trials across glaucoma, retinal disease and corneal health.
We expense R&D costs as they are incurred. We expect our R&D expenses to continue to increase as we initiate and advance our development programs, including our 44 Table of Contents expanding pharmaceutical and surgical development efforts and clinical trials across the glaucoma, corneal health and retinal disease spectrums.
Litigation-related Settlement The $30.0 million cash payments from the Settlement Agreement received during each of the years ended December 31, 2022 and December 31, 2021 are included in litigation-related settlement as a reduction of operating expenses on the consolidated statements of operations. 40 Table of Contents Non-Operating Expense, Net We had non-operating expense, net of $16.1 million and $16.4 million for the years ended December 31, 2022 and December 31, 2021, respectively.
Litigation-related Settlement The $30.0 million cash payment from the Settlement Agreement received during the year ended December 31, 2022 is included in litigation-related settlement as a reduction of operating expenses on the consolidated statements of operations. 47 Table of Contents Non-Operating Expense, Net We had non-operating expense, net of $5.0 million and $16.1 million for the years ended December 31, 2023 and December 31, 2022, respectively.
In the year ended December 31, 2021, we received $30.9 million from the exercises of stock options and purchases of our common stock by employees pursuant to our Employee Stock Purchase Plan and used $3.7 million for payment of employee taxes related to restricted stock unit vestings.
In the year ended December 31, 2023, we received $19.0 million from the exercises of stock options and purchases of our common stock by employees pursuant to our Employee Stock Purchase Plan and used $3.3 million for payment of employee taxes related to restricted stock unit vestings. Additionally, we paid $0.7 million in principal on our finance lease.
Additionally, we received $12.7 million in proceeds from our tenant improvement allowances of our Aliso Facility and paid $0.7 million in principal on our finance lease. We do not have any significant off-balance sheet arrangements or holdings in variable interest entities.
Additionally, we received $0.3 million in proceeds from our tenant improvement allowances of our Aliso Facility and paid $0.5 million in principal on our finance lease. We do not have any off-balance sheet arrangements.
The provision for volume-based rebates is estimated based on customers' contracted rebate programs and the customers’ projected sales levels. We periodically monitor our customer rebate programs to ensure the rebate allowance is fairly stated.
The provision for volume-based rebates is estimated based on customers' contracted rebate programs and the customers’ projected sales levels. We regularly monitor our customer rebate programs to ensure the rebate allowance is fairly stated. Our rebate allowance is included in accrued liabilities in the consolidated balance sheets.
For the year ended December 31, 2021, we incurred $66.6 million in core R&D expenses and $34.4 million in clinical expenses, comprised of $50.1 million in compensation and related employee expenses with the remaining $50.9 million spent on the abovementioned programs.
For the year ended December 31, 2022, we incurred $80.4 million in core R&D expenses and $42.9 million in clinical expenses, comprised of $63.1 million in compensation and related employee expenses with the remaining $60.2 million spent on the abovementioned programs.
We expect these supply challenges may continue into 2023. These challenges have occasionally led to longer lead times for, and delays and partial or unfulfilled deliveries of certain components needed for the manufacture of our products, in some cases requiring us to find alternative sources for materials.
These challenges have occasionally led to longer lead times and delays of certain components needed for the manufacture of our products, in some cases requiring us to find alternative sources for materials.
Cash, Cash Equivalents, Short-term Investments and Restricted Cash ​ Our cash, cash equivalents and short-term investments totaled approximately $352.7 million and our restricted cash totaled approximately $7.1 million. ​ Cash Flow used in Operations ​ For the twelve months ended December 31, 2022, our operating activities used $33.1 million in net cash. ​ 41 Table of Contents Senior Convertible Notes ​ Our Convertible Notes may be converted at the option of the holders at the times and under the circumstances and at the conversion rate described in Note 8 of the notes to our consolidated financial statements.
Cash Flow used in Operations For the twelve months ended December 31, 2023, our operating activities used $57.8 million in net cash. 48 Table of Contents Senior Convertible Notes Our Convertible Notes may be converted at the option of the holders at the times and under the circumstances and at the conversion rate described in Note 8 of the notes to our consolidated financial statements.
Of the total $192.9 million, we incurred approximately $125.1 million of costs associated with commercial personnel and discretionary spending during the year ended December 31, 2022 as compared to $112.4 million during the year ended December 31, 2021, with the increase primarily due to compensation and related employee expenses associated with our sales infrastructure in glaucoma and corneal health, along with increased travel, meetings and accompanying costs as business activities have reopened and expanded over the course of the last twelve months.
Of the total $224.1 million, we incurred approximately $138.0 million of costs associated with commercial personnel and discretionary spending during the year ended December 31, 2023 as compared to $125.1 million during the year ended December 31, 2022, primarily due to compensation and related employee expenses associated with growth in our commercial infrastructure in glaucoma and corneal health, along with increased travel, meetings and accompanying costs as business activities have expanded.
This ongoing product payment obligation changed as patent coverage on certain products has lapsed, and terminated entirely on the date the last of the Patent Rights expires, which was December 29, 2022. Cost of sales includes amortization of the $252.2 million developed technology intangible asset.
This ongoing product payment obligation changed as patent coverage on certain products has lapsed, and terminated entirely on the date the last of the Patent Rights expires, which was December 29, 2022.
The following table is a condensed summary of our cash flows for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, (in thousands) ​ 2022 ​ 2021 ​ ​ ​ ​ ​ ​ ​ ​ Net cash (used in) provided by: ​ ​ ​ ​ ​ Operating activities ​ $ (33,083) ​ $ 24,708 ​ Investing activities ​ ​ 44,779 ​ (58,232) ​ Financing activities ​ ​ 6,251 ​ 39,260 ​ Exchange rate changes ​ ​ (1,468) ​ (1,774) ​ Net increase in cash, cash equivalents and restricted cash ​ $ 16,479 ​ $ 3,962 ​ At December 31, 2022, our cash and cash equivalents were held for working capital purposes.
The following table is a condensed summary of our cash flows for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, (in thousands) ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ ​ ​ Net cash (used in) provided by: ​ ​ ​ ​ ​ Operating activities ​ $ (57,758) ​ $ (33,083) ​ Investing activities ​ ​ 14,095 ​ 44,779 ​ Financing activities ​ ​ 15,042 ​ 6,251 ​ Exchange rate changes ​ ​ 1,341 ​ (1,468) ​ Net (decrease) increase in cash, cash equivalents and restricted cash ​ $ (27,280) ​ $ 16,479 ​ At December 31, 2023, our cash and cash equivalents were held for working capital purposes.
We incurred net losses of $99.2 million, $49.6 million and $120.3 million for the years ended December 31, 2022 and December 31, 2021, and December 31, 2020, respectively and as of December 31, 2022, we had an accumulated deficit of $464.4 million. Recent Developments 2023 U.S. reimbursement rates On November 1, 2022, the U.S.
We incurred net losses of $134.7 million, $99.2 million and $49.6 million for the years ended December 31, 2023, December 31, 2022, and December 31, 2021, respectively and as of December 31, 2023, we had an accumulated deficit of $599.1 million. Recent Developments On December 13, 2023, we received U.S.
Our gross margin will also be affected by manufacturing or supply chain inefficiencies that we may experience as we attempt to manufacture our products on a larger scale, manufacture new products and change our manufacturing capacity or output. Additionally, our gross margin will continue to be affected by royalty expenses on current or future products associated with various licensing agreements.
Our gross margin will also be affected by manufacturing or supply chain disruptions or inefficiencies that we may experience as we attempt to manufacture our products on a larger scale, manufacture new products and change our manufacturing capacity, processes or output.
For the year ended December 31, 2022, we incurred $80.4 million in core R&D expenses and $42.8 million in clinical expenses, comprised of $63.1 million in compensation and related employee expenses with the remaining $60.2 million spent on the continued research and development, clinical studies, regulatory activities, quality assurance, clinical inventory and supplies for surgical glaucoma product candidates and pharmaceutical projects, such as a pharmaceutical therapeutic system for the treatment of keratoconus without the removal of the epithelium (often referred to as “epi-on”), iDose and our earlier stage programs for dry eye, presbyopia, retina and other therapeutic investments.
For the year ended December 31, 2023, we incurred $86.3 million in core R&D expenses and $52.5 million in clinical expenses, comprised of $77.7 million in compensation and related employee expenses, $2.8 million of which was related to increased stock-based compensation, with the remaining $61.1 million spent on the continued research and development, clinical studies, regulatory activities, quality assurance, clinical inventory and supplies for surgical glaucoma product candidates and pharmaceutical projects, such as iDose; Epioxa , a pharmaceutical therapeutic system for the treatment of keratoconus without the removal of the epithelium (also referred to as “epi-on”); and our earlier stage programs for glaucoma, corneal, retinal and other therapeutic investments.
Research and Development Expenses R&D expenses for the years ended December 31, 2022 and December 31, 2021 were $123.3 million and $101.0 million, respectively, reflecting an increase of $22.3 million or 22%.
Research and Development Expenses R&D expenses for the years ended December 31, 2023 and December 31, 2022 were $138.8 million and $123.3 million, respectively, reflecting an increase of $15.5 million or 13%.
Each of these performance obligations is expected to be recognized when the customer or patient elects to utilize the discount, which is generally within one year.
Each of these performance obligations is expected to be recognized when the customer or patient elects to utilize the discount, which is generally within one year. The impact of these programs on revenue were not material for the periods presented.
These expenses include quality assurance, material procurement, inventory control, facilities, equipment and operations supervision and management. 36 Table of Contents Cost of sales includes a charge equal to a low single-digit percentage of worldwide net sales of certain iStent products, with a required minimum annual payment of $0.5 million, which amount became payable to the Regents of the University of California (the University) in connection with our December 2014 agreement with the University related to a group of our U.S. patents (the Patent Rights).
In 2022 and 2021, cost of sales included a charge equal to a low single-digit percentage of worldwide net sales of certain iStent products, with a required minimum annual payment of $0.5 million, which amount became payable to the Regents of the University of California (the University) in connection with our December 2014 agreement with the University related to a group of our U.S. patents (the Patent Rights).
The following table summarizes our cash and cash equivalents, short-term investments and selected working capital data as of December 31, 2022 and December 31, 2021 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2022 2021 Cash and cash equivalents ​ $ 119,525 ​ $ 100,708 Short-term investments ​ ​ 233,170 ​ ​ 313,343 Accounts receivable, net ​ ​ 36,073 ​ ​ 33,438 Inventory ​ ​ 37,841 ​ ​ 23,011 Accounts payable ​ ​ 14,403 ​ ​ 7,333 Accrued liabilities ​ ​ 57,956 ​ ​ 56,027 Working capital (1) ​ ​ 371,500 ​ ​ 422,766 ​ (1) Working capital consists of total current assets less total current liabilities per our consolidated balance sheets Main Sources of Liquidity ​ We plan to fund our operations, commitments for capital expenditures and other short and long-term known contractual and other obligations using existing cash and investments and, to the extent available, cash generated from commercial operations.
The following table summarizes our cash and cash equivalents, short-term investments and selected working capital data as of December 31, 2023 and December 31, 2022 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2023 2022 Cash and cash equivalents ​ $ 93,467 ​ $ 119,525 Short-term investments ​ ​ 201,964 ​ ​ 233,170 Accounts receivable, net ​ ​ 39,850 ​ ​ 36,073 Inventory ​ ​ 41,986 ​ ​ 37,841 Accounts payable ​ ​ 13,440 ​ ​ 14,403 Accrued liabilities ​ ​ 60,574 ​ ​ 57,956 Working capital (1) ​ ​ 321,447 ​ ​ 371,500 ​ (1) Working capital consists of total current assets less total current liabilities per our consolidated balance sheets Main Sources of Liquidity We plan to fund our operations, commitments for capital expenditures and other short and long-term known contractual and other obligations using existing cash and investments and, to the extent available, cash generated from commercial operations as well as cash generated from employee stock option exercises.
We do not enter into investments for trading or speculative purposes. Our policy is to invest any cash in excess of our immediate requirements in investments designed to preserve the principal balance and provide liquidity.
We do not enter into investments for trading or speculative purposes. Our policy is to invest any cash in excess of our immediate requirements in investments designed to preserve the principal balance and provide liquidity. Operating Activities In the years ended December 31, 2023 and December 31, 2022 our operating activities used $57.8 million and $33.1 million, respectively.
Cost of Sales Cost of sales reflects the aggregate costs to manufacture our products and includes raw material costs, labor costs, manufacturing overhead expenses and the effect of changes in the balance of reserves for excess and obsolete inventory. We manufacture our iStent family of products at our facility in San Clemente, California using components manufactured by third parties.
Cost of Sales Cost of sales reflects the aggregate costs to manufacture our products and includes raw material costs, labor costs, manufacturing overhead expenses and the effect of changes in the balance of reserves for excess and obsolete inventory.
We manufacture our KXL systems at our manufacturing facilities in Burlington, Massachusetts, and we contract with third-party manufacturers in the U.S. and Germany to produce our Photrexa and other associated drug formulations. We currently intend to maintain our manufacturing facilities at our San Clemente and Burlington locations for the foreseeable future.
We manufacture our iStent family of products and iDose TR at our facilities in San Clemente, California and our KXL systems at our manufacturing facility in Burlington, Massachusetts. We contract with third-party manufacturers in the U.S. and Germany to produce our Photrexa and other associated drug formulations.
We estimate that approximately 80% of procedures utilizing our trabecular micro-bypass technologies in the U.S. are performed in the ambulatory surgery center setting and the remaining estimated 20% of procedures are performed in the hospital.
We estimate that approximately 80% of procedures utilizing our iStent family of products in the U.S. are performed in the ASC setting and the remaining estimated 20% of procedures are performed in the hospital.
For the year ended December 31, 2021, our net cash used in operating activities reflected our net loss of $49.6 million, adjusted for non-cash items of $70.7 million, primarily consisting of stock-based compensation expense of $30.1 million, depreciation $4.7 million, amortization of intangible assets of $24.9 million, amortization of lease right- 43 Table of Contents of-use assets of $4.8 million, and amortization of debt issuance costs of $1.4 million.
For the year ended December 31, 2023, our net cash used in operating activities reflected our net loss of $134.7 million, adjusted for non-cash items of $87.0 million, primarily consisting of stock-based compensation expense of $43.5 million, depreciation of $8.7 million, amortization of intangible assets of $24.9 million, non-cash lease expense of $4.3 million, amortization of debt issuance costs of $1.4 million, accretion of discount of $1.7 million and IPR&D acquired through issuance of common stock of $3.0 million.
Actual results may differ materially from these estimates under different assumptions or conditions and such differences could be material to our financial position and results of operations. 44 Table of Contents While our significant accounting policies are more fully described below and in the Notes to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe the following accounting policies to be most critical for fully understanding and evaluating our financial condition and results of operations.
While our significant accounting policies are more fully described below and in the Notes to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe the following accounting policy to be most critical for fully understanding and evaluating our financial condition and results of operations.
Income Taxes Our tax provision is primarily comprised of state and foreign income taxes. Our net deferred tax liability of $7.3 million at December 31, 2022 primarily represents the excess of our indefinite-lived deferred tax liabilities over our indefinite-lived deferred tax assets.
Income Taxes Our tax provision is primarily comprised of state and foreign income taxes offset by release of uncertain tax positions for which the statute of limitations has expired. Our net deferred tax liability of $7.1 million at December 31, 2023 primarily represents the excess of our indefinite-lived deferred tax liabilities over our indefinite-lived deferred tax assets.
Due to the relatively low production volumes of our iStent family of products and our KXL systems compared to our potential capacity for those products, a significant portion of our per unit costs is comprised of manufacturing overhead expenses.
We currently intend to maintain our manufacturing facilities at our San Clemente and Burlington locations for the foreseeable future. 43 Table of Contents Due to the relatively low production volumes of our iStent family of products, iDose TR and our KXL systems compared to our potential capacity for those products, a significant portion of our per unit costs is comprised of manufacturing overhead expenses.
Our rebate allowance is included in accrued liabilities in the consolidated balance sheets and estimated rebates accrued were not material during the periods presented. ​ Additionally, we have performance obligations related to certain customers’ right to a future discount on single dose pharmaceutical purchases in the U.S., as well as voluntary patient assistance programs to provide financial assistance to qualified patients.
Additionally, we have performance obligations related to certain customers’ right to a future discount on single dose pharmaceutical purchases in the U.S., as well as voluntary patient assistance programs to provide financial assistance to qualified patients.
The increase in international sales reflects broad-based growing demand in many key international markets for combined cataract and glaucoma procedures, the dollar-based results of which were substantially affected by unfavorable foreign exchange rates, primarily related to the Euro and Japanese Yen, during the year ended December 31, 2022 as compared to the year ended December 31, 2021. ​ Net sales of corneal health products were $68.6 million and $62.0 million for the years ended December 31, 2022 and December 31, 2021, respectively, increasing by 11%.
The increase in international sales reflects broad-based growing volume in many key international markets for glaucoma procedures, the dollar-based results of which were modestly affected by unfavorable foreign exchange rates over the course of the year, primarily related to the Japanese Yen and Australian Dollar, during the year ended December 31, 2023 as compared to the year ended December 31, 2022.
(iVeena), pursuant to which iVeena granted us an exclusive, worldwide license to manufacture and sell products incorporating certain of iVeena’s owned or controlled technologies, including certain chemical compositions, that may be utilized for the treatment of keratoconus. Pursuant to the terms of the iVeena License Agreement, we made a one-time upfront payment to iVeena of $10.0 million.
(Stuart), pursuant to which Stuart granted us an exclusive, worldwide license to develop and commercialize products incorporating certain of its owned or controlled technologies, including its ST-113 drug compound, that may be utilized to provide neuroprotection in glaucoma. Pursuant to the terms of the Stuart License Agreement, we made a one-time upfront payment of $2.0 million to Stuart.
If these delays and partial or unfulfilled deliveries persist, they could impact our ability to ship some of our products to our customers, or bring some of our pipeline products to market, in a timely manner. 33 Table of Contents Financial Overview The most important financial indicators that we use to assess our business are net sales, gross margin, operating expenses, and cash on hand. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2022 2021 ​ Net sales ​ $ 282,862 ​ $ 294,011 ​ Gross margin ​ ​ 76 % ​ 77 % Operating expenses ​ $ 296,196 ​ $ 260,256 ​ Cash, cash equivalents, short-term investments and restricted cash ​ $ 359,773 ​ $ 423,467 ​ ​ Please see Results of Operations and Liquidity and Capital Resources below for a detailed discussion of each of the above items including analysis of the fluctuations from year to year.
Financial Overview The most important financial indicators that we use to assess our business are net sales, gross margin, operating expenses, and cash on hand. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2023 2022 ​ Net sales ​ $ 314,711 ​ $ 282,862 ​ Gross margin ​ ​ 76 % ​ 76 % Operating expenses ​ $ 367,836 ​ $ 296,196 ​ Cash, cash equivalents, short-term investments and restricted cash ​ $ 301,287 ​ $ 359,773 ​ ​ Please see Results of Operations and Liquidity and Capital Resources below for a detailed discussion of each of the above items including analysis of the fluctuations from year to year.
We have determined the transaction price to be the invoice price, net of adjustments that reduce revenue, which includes estimates of variable consideration for certain product returns and warranty replacements. We only recognize revenue when it is probable that we will collect the consideration we are entitled to in exchange for the goods transferred to a customer.
Revenue recognized reflects the consideration to which we expect to be entitled in exchange for those products or services. We have determined the transaction price to be the invoice price, net of adjustments that reduce revenue, which includes estimates of variable consideration for certain product returns and warranty replacements.
The impact of these programs on revenue were not material for the periods presented. ​ Customers are not granted specific rights of return; however, we may permit returns of certain products from customers if such product is returned in a timely manner and in good condition.
Customers are not granted specific rights of return; however, we may permit returns of certain products from customers if such product is returned in a timely manner and in good condition. We generally provide a warranty on our products for one year from the date of shipment, and offer an extended warranty for our KXL systems.
For the year ended December 31, 2022, our net cash used in operating activities reflected our net loss of $99.2 million, adjusted for non-cash items of $79.6 million, primarily consisting of stock-based compensation expense of $38.6 million, depreciation of $6.7 million, amortization of intangible assets of $24.9 million, amortization of lease right-of-use assets of $4.4 million, and amortization of debt issuance costs of $1.4 million.
Additionally, changes in operating assets and liabilities resulted in a net use of cash of $10.1 million, which resulted primarily from increases in inventory of $4.8 million, increases in accounts receivable of $3.8 million, increase in other assets of $1.9 million and increases in prepaids and other current assets of $0.9 million, offset by increases in accounts payable and accrued liabilities of $1.3 million. 50 Table of Contents For the year ended December 31, 2022, our net cash used in operating activities reflected our net loss of $99.2 million, which reflected our $30.0 million Settlement Agreement payment received from Ivantis, Inc., adjusted for non-cash items of $79.6 million, primarily consisting of stock-based compensation expense of $38.6 million, depreciation of $6.7 million, amortization of intangible assets of $24.9 million, amortization of lease right-of-use assets of $4.4 million, and amortization of debt issuance costs of $1.4 million.
In addition to the amounts included in the table above, we will incur material cash obligations related to our Convertible Notes, unless we elect to deliver solely shares of our common stock to settle such conversion. 42 Table of Contents After funding the current operations of our commercial activities, the first planned use of our cash flow from operations is to provide capital funding for our R&D and clinical activities.
In addition to the amounts included in the table above, we will incur material cash 49 Table of Contents obligations related to our Convertible Notes, unless we elect to deliver solely shares of our common stock to settle such conversion.
We are also aware of similar products being developed by third parties that could enter the market and increase the competitive pressures we face. These other products could achieve greater commercial acceptance or demonstrate better safety or effectiveness, clinical results, ease of use or lower costs than our products, which could adversely impact our net sales.
These other products could achieve greater commercial acceptance or demonstrate better safety or effectiveness, clinical results, ease of use or lower costs than our products, which could adversely impact our net sales.
Our gross margin in future periods may also be impacted by other factors adversely affecting our net sales in future periods, including the impact of the COVID-19 pandemic, supply chain disruptions, the current macroeconomic environment, including inflationary pressures and fluctuations in foreign currency, and the impact of the reductions on payment rates for certain of our products and related services as a result of the 2023 Final Rules.
Our gross margin in future periods may also be impacted by other factors adversely affecting our net sales in future periods such as the impact of government pricing programs and reductions of payment rates for certain of our products and related services and inflationary pressures.
Additionally, some of our vendors are continuing to experience supply challenges, both in the acquisition of raw materials as well as due to labor shortages and disruption. As a result of these supply chain challenges and due to current inflationary pressures, we have experienced higher costs for certain components and raw materials.
As a result of these supply chain challenges and due to current inflationary pressures, we have experienced higher costs for certain components and raw materials. We expect some supply challenges and higher costs to continue into 2024.
Customers are primarily comprised of ambulatory surgery centers, hospitals and physician private practices, with distributors being used in certain international locations where we do not have a direct commercial presence. ​ We concluded that one performance obligation exists for the majority of our contracts with customers which is to deliver products in accordance with our normal delivery times.
Customers are primarily comprised of ambulatory surgery centers, hospitals and physician private practices, with independent distributors being used in certain international locations where we currently do not have a direct commercial presence.
In the year ended December 31, 2021, we used approximately $215.3 million for purchases of short-term investments, approximately $47.8 million for purchases of property and equipment, primarily related to our facilities in Aliso Viejo, California and San Clemente, California; and approximately $2.1 million related to investments in company-owned life insurance, and we received cash of approximately $206.9 million from sales and maturities of short-term investments.
In the year ended December 31, 2023, we used approximately $265.6 million for purchases of short-term investments and approximately $20.2 million for purchases of property and equipment, primarily related to our facilities in San Clemente, California; Aliso Viejo, California; and Burlington, Massachusetts.
We expect to continue our increased levels of capital expenditures into 2023 as we continue expansion of our manufacturing capacity for current and new products, improve our manufacturing efficiency and for overall facility expansion. Financing Activities In the years ended December 31, 2022 and December 31, 2021 our financing activities provided $6.3 million and $39.3 million of net cash, respectively.
We expect levels of our capital expenditures to be modestly lower in 2024 as we wind down expansion activities of our manufacturing facilities. Financing Activities In the years ended December 31, 2023 and December 31, 2022, our financing activities provided $15.0 million and $6.3 million of net cash, respectively.
The 2022 CMS physician fee and facility fee rate decreases, which were effective in 2022 and will continue into 2023 have also disrupted traditional U.S. customer ordering patterns and have resulted in our customers’ trialing of competitive products, causing reduced U.S. Glaucoma sales volumes during 2022 . Our U.S.
However, traditional U.S. revenue patterns were interrupted for us as a result of the CMS reimbursement cuts pursuant to the 2022 Final Rule. CMS physician fee payment rate decreases, which were effective in 2022 and 2023, have disrupted traditional customer ordering patterns and have resulted in our customers’ trialing and utilization of competitive products, causing reduced U.S.
We also incurred approximately $67.8 million of costs associated with general and administrative personnel and discretionary spending during the year ended December 31, 2022 as compared to $63.4 million during the year ended December 31, 2021, associated with our ongoing administrative functions and amortization of our right-of-use asset related to our long-term lease for the Aliso Facility.
We also incurred approximately $86.1 million of costs associated with general and administrative personnel and discretionary spending during the year ended December 31, 2023 as compared to $67.8 million during the year ended December 31, 2022, with the change primarily associated with increased expenses related to our ongoing administrative and support functions, inclusive of information technology and allocated facilities expenses.
Of the $6.6 million increase in net sales generated by our corneal health products, $5.6 million related to U.S. sales using direct sales operations, which was comprised of an increase of $6.0 million of Photrexa net sales partially offset by reductions of $0.4 million in U.S. capital equipment sales.
Of the approximately $9.0 million increase in net sales generated by our corneal health products, $10.0 million related to an increase in U.S. net sales of Photrexa using direct sales operations, the majority of which was positively impacted by higher realized average sales prices, as well as continued new account starts, partially offset by $0.5 million decrease in net sales related to U.S. corneal health devices.
Investing Activities In the year ended December 31, 2022 our investing activities provided cash of $44.8 million and for the year ended December 31, 2021 net cash from investing activities used approximately $58.2 million.
Investing Activities In the years ended December 31, 2023 and December 31, 2022, our investing activities provided cash of $14.1 million and $44.8 million, respectively.
Generally, we base our estimates on historical experience and on various other assumptions in accordance with GAAP that we believe to be reasonable under the circumstances.
Generally, we base our estimates on historical experience and on various other assumptions in accordance with GAAP that we believe to be reasonable under 51 Table of Contents the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions and such differences could be material to our financial position and results of operations.
As demand grows for our products, we will continue to expand global operations to meet demand through investments in our manufacturing capabilities. ​ Material Cash Requirements The following table summarizes our material cash requirements, including commitments for capital expenditures and known contractual and other obligations as of December 31, 2022, and the amount required to satisfy those requirements in future periods. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments due by period ​ ​ ​ ​ ​ Less than ​ ​ ​ ​ ​ ​ ​ More than (in thousands) ​ Total ​ 1 year ​ 1 - 3 years ​ 3 - 5 years ​ 5 years Operating and finance lease obligations $ 178,686 $ 7,798 $ 17,275 $ 17,994 ​ $ 135,619 ​ Interest payments on Convertible Senior Notes ​ ​ 35,578 ​ ​ 7,906 ​ ​ 15,813 ​ ​ 11,859 ​ ​ — ​ Firm purchase commitments ​ 40,047 ​ 38,049 ​ 1,998 ​ — ​ — ​ Total ​ $ 254,311 ​ $ 53,753 ​ $ 35,086 ​ $ 29,853 ​ $ 135,619 ​ ​ The Convertible Notes will mature on June 15, 2027, unless earlier converted, redeemed or repurchased in accordance with their terms.
Material Cash Requirements The following table summarizes our material cash requirements, including commitments for capital expenditures and known contractual and other obligations as of December 31, 2023, and the amount required to satisfy those requirements in future periods. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments due by period ​ ​ ​ ​ ​ Less than ​ ​ ​ ​ ​ ​ ​ More than (in thousands) ​ Total ​ 1 year ​ 1 - 3 years ​ 3 - 5 years ​ 5 years Operating and finance lease obligations $ 175,263 $ 9,131 $ 18,299 $ 19,260 ​ $ 128,573 ​ Interest payments on Convertible Senior Notes ​ ​ 27,672 ​ ​ 7,906 ​ ​ 15,813 ​ ​ 3,953 ​ ​ — ​ Firm purchase commitments ​ 43,843 ​ 39,371 ​ 4,472 ​ — ​ — ​ Total ​ $ 246,778 ​ $ 56,408 ​ $ 38,584 ​ $ 23,213 ​ $ 128,573 ​ ​ The Convertible Notes will mature on June 15, 2027, unless earlier converted, redeemed or repurchased in accordance with their terms.
The assessment can contain judgment when it is performed for customers with declining credit conditions or those with no history or a limited history of product sales with us. ​ We offer volume-based rebate agreements to certain customers and, in these instances, we provide a rebate (in the form of a credit memo) at the contract’s conclusion, if earned by the customer.
The assessment can contain judgment when it is performed for customers with declining credit conditions or those with no history or a limited history of product sales with us.
The duration and scope of these conditions cannot be predicted, and therefore, it is uncertain what long-term impacts these economic pressures may have on our business.
The duration and scope of these conditions cannot be predicted and therefore, it is uncertain what long-term impacts these economic pressures may have on our business. For us specifically, some of our vendors are continuing to experience supply challenges, both in the acquisition of raw materials as well as due to labor shortages and other disruptions.
Revenue is recognized when this performance obligation is satisfied, which is the point in time when we consider control of a product to have transferred to the customer. Revenue recognized reflects the consideration to which we expect to be entitled in exchange for those products or services.
We concluded that one performance obligation exists for the majority of our contracts with customers which is to deliver products in accordance with our normal delivery times. Revenue is recognized when this performance obligation is satisfied, which is the point in time when we consider control of a product to have transferred to the customer.
In-process Research and Development IPR&D expenses for the year ended December 31, 2022 totaled $10.0 million related to our iVeena licensing agreement previously discussed in Recent Developments above . IPR&D expenses for the year ended December 31, 2021 related to the amendment of our exclusive licensing agreement with Intratus, Inc. and our exclusive licensing agreement with Attillaps Holdings, Inc.
IPR&D expenses for the year ended December 31, 2022 totaled $10.0 million related to our iVeena licensing agreement.
We generally provide a warranty on our products for one year from the date of shipment, and offer an extended warranty for our KXL systems. Any product found to be defective or out of specification will be replaced or serviced at no charge during the warranty period.
Any product found to be defective or out of specification will be replaced or serviced at no charge during the warranty period.
Customers are primarily comprised of ambulatory surgery centers, hospitals and physician private practices, with distributors being used in certain international locations where we currently do not have a direct commercial presence. Net sales for the years ended December 31, 2022 and December 31, 2021 were $282.9 million and $294.0 million, respectively, reflecting a decrease of $11.1 million or 4%.
Revenue Recognition We derive our revenue from sales of our products in the United States and internationally. Customers are primarily comprised of ambulatory surgery centers, hospitals and physician private practices, with distributors being used in certain international locations where we do not have a direct commercial presence.
Impact of the Current Global Economic Environment Global and regional economies, the markets we serve and financial markets have recently experienced significant volatility including inflation, supply shortages or delays, geopolitical developments, changes in supply and demand, labor shortages and turnover, natural disasters, higher energy costs, health epidemics or pandemics (including the COVID-19 pandemic), currency fluctuations, governmental actions such as mandatory shutdowns, and other conditions which have led to disruptions in commerce and pricing stability.
Market and Business Update Impact of the Current Global Economic Environment During the last twelve months, global and regional economies, the markets we serve and financial markets have experienced significant volatility, including the impact of the macroeconomic environment, specifically inflation, supply shortages or delays, changes in supply and demand, bank failures, foreign exchange rate fluctuations and other conditions which have led to disruptions in commerce and pricing stability .
We may have ongoing milestone and royalty payment obligations depending on the success of the development, approval and commercialization of the proprietary technologies. ​ 34 Table of Contents Factors Affecting Our Performance The CMS final rules for 2022 Medicare physician fee payment rates and 2022 Medicare facility fee payment rates for services furnished in both the ambulatory surgery center and hospital outpatient settings (Final Rules) took effect on January 1, 2022.
Centers for Medicare & Medicaid Services (CMS) final rules for 2022 Medicare physician fee payment rates for services furnished in both the ambulatory surgery center (ASC) and hospital outpatient settings (2022 Final Rule) took effect on January 1, 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed4 unchanged
Biggest changeWhile we believe our cash and cash equivalents do not contain excessive risk, we cannot provide absolute assurance that in the future our investments will not be subject to adverse changes in market value. In addition, we maintain significant amounts of cash and cash equivalents at one or more financial institutions that are in excess of federally insured limits.
Biggest changeWhile we believe our cash and cash equivalents do not contain excessive risk, we cannot provide absolute assurance that in the future our investments will not be subject to adverse changes in market value Credit Risk In addition, we maintain significant amounts of cash and cash equivalents at one or more U.S. financial institutions that are in excess of federally insured limits.
To date, we have not entered into any foreign currency hedging contracts although we may do so in the future. ​ A hypothetical 10% increase or decrease in the value of foreign exchange rates relative to the U.S. dollar as of December 31, 2022 would have had an immaterial impact on our net loss. ​ ​ ​ 47 Table of Contents
To date, we have not entered into any foreign currency hedging contracts although we may do so in the future. A hypothetical 10% increase or decrease in the value of foreign exchange rates relative to the U.S. dollar as of December 31, 2023 would have had an immaterial impact on our net loss. ​ ​ 53 Table of Contents

Other GKOS 10-K year-over-year comparisons