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What changed in GLAUKOS Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of GLAUKOS Corp's 2023 and 2024 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 2024 report.

+392 added−422 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-23)

Top changes in GLAUKOS Corp's 2024 10-K

392 paragraphs added · 422 removed · 297 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

110 edited+23 added−51 removed40 unchanged
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.
Biggest changeIn 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. ​ Our commercial solutions and development-stage product candidates include: ​ ● 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; ● 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; ● 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, demodex blepharitis, and other ocular surface diseases and disorders; and ● proprietary micro-invasive, bio-erodible posterior 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 age-related macular degeneration (AMD), diabetic macular edema (DME), and retinal vein occlusion (RVO).
Reimbursement is obtained from a variety of sources, including government-sponsored and private health insurance plans, and combinations of both. Some countries require additional clinical data, or may impose additional obligations, such as payment of rebates, before granting or expanding coverage and reimbursement for our products.
Reimbursement is obtained from a variety of sources, including government-sponsored plans, private health insurance plans, and combinations of both. Some countries require additional clinical data, or may impose additional obligations, such as payment of rebates, before granting or expanding coverage and reimbursement for our products.
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.
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 rare 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.
To the extent applicable, these and other similar legislation or regulations will reduce the prices we can charge, and impact the rebate amount we must pay on sales of our products subject to those laws or regulations, particularly on sales to our customers if they qualify as covered entities eligible to receive the discounted 340B ceiling price.
To the extent applicable, these and other similar legislation or regulations will reduce the prices we can charge, and impact the rebate amount we must pay on sales of our products subject to those laws or regulations, particularly on sales to our customers if they qualify as covered entities eligible to receive the discounted 340B program ceiling price.
The MicroShunt is an ab-externo device being developed for treatment of glaucoma where IOP is uncontrolled with maximum tolerated medical therapy or where progression of the disease warrants surgery. Santen submitted a Pre-Market approval (PMA) application to the FDA in June 2020. In April 2022, the U.S.
(Santen) the PRESERFLO MicroShunt. The MicroShunt is an ab-externo device being developed for treatment of glaucoma where IOP is uncontrolled with maximum tolerated medical therapy or where progression of the disease warrants surgery. Santen submitted a Pre-Market approval (PMA) application to the FDA in June 2020. In April 2022, the U.S.
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.
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 12 Table of Contents 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.
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.
We have obtained licenses from various parties, including Intratus, Inc., Attillaps., 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.
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.
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, the United Kingdom, 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.
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.
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.
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.
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. ​ 7 Table of Contents 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.
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.
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. ​ 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.
Presbyopia affects nearly everyone over the age of 40 while myopia first occurs in school-age children and typically progresses until about age 20. 5 Table of Contents 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.
Presbyopia affects nearly everyone over the age of 40 while myopia first occurs in school-age children and typically progresses until about age 20. ​ 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.
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, 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. ​ 17 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. 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.
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 ​ 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.
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.
The MDR brings 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.
We provide healthy snacks at all of our headquarters locations, and at certain sites we have implemented “Wellness Wednesdays” to provide shoulder massage services to our employees to enhance their well-being.
We provide healthy snacks at all of our headquarters’ locations, and at certain sites we have implemented “Wellness Wednesdays” to provide shoulder massage services to our employees to enhance their well-being.
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.
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 extensive regulatory approval process implemented by the FDA under the FDCA.
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.
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. ​ 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 international subsidiaries also lease facilities in Australia, Brazil, Canada, Germany, Japan and the United Kingdom. In the United States, we distribute our iStent family of products directly from our campus in San Clemente, California, or from a third-party distribution center located in Memphis, Tennessee. Our iDose TR and Photrexa products are distributed using third-party logistics providers.
Our international subsidiaries lease facilities in Australia, Brazil, Canada, Germany, Japan and the United Kingdom. ​ In the U.S., we distribute our iStent family of products directly from our campus in San Clemente, California, or from a third-party distribution center located in Memphis, Tennessee. Our iDose TR and Photrexa products are distributed using third-party logistics providers.
One of our more impactful volunteer events involved Glaukos employees adopting over 195 disadvantaged families globally to help provide a more special holiday experience.
One of our more impactful volunteer events involved Glaukos employees adopting over 200 disadvantaged families globally to help provide a more special holiday experience.
In 2022, we implemented an automated charitable giving platform that allows employees to donate to the Glaukos Charitable Foundation, or any other 501(c)(3) charitable organization, through payroll deductions. ● Training and Development: Employees receive regular development feedback through quarterly management check-ins during which they are encouraged to cultivate new skills and opportunities.
We also have implemented an automated charitable giving platform that allows employees to donate to the Glaukos Charitable Foundation, or any other 501(c)(3) charitable organization, through payroll deductions. ● Training and Development: Employees receive regular development feedback through quarterly management check-ins during which they are encouraged to cultivate new skills and opportunities.
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.
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, the Virginia Consumer Data Protection Act and the Colorado Privacy Act, among other states.
Employees at all levels are eligible for discretionary cash bonuses. To align employees with the organization’s performance, all U.S. employees are eligible to receive new hire and annual awards of restricted stock units.
Employees at all levels are eligible for discretionary cash bonuses. To align employees 16 Table of Contents with the organization’s performance, all U.S. employees are eligible to receive new hire and annual awards of restricted stock units.
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.
The iStent infinite product 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.
Our corneal disorder pipeline, if approved, would vastly expand our competition to numerous large companies such as AbbVie Inc., Alcon and Johnson & Johnson, as well as some small companies that provide medical technology and pharmaceutical therapies for several areas including dry eye and refractive conditions.
Our anterior segment pipeline, if approved, would vastly expand our competition to numerous large companies such as AbbVie Inc., Alcon, Inc. and Johnson & Johnson, as well as some small companies that provide medical technology and pharmaceutical therapies for several areas including dry eye and refractive conditions.
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.
We regularly hold local volunteer events and fundraising campaigns, including approximately 30 in 2024, 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.
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.
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, among other things: ​ ● warning letters, fines, injunctions, consent decrees, civil penalties and criminal prosecution; ● recalls, withdrawals, or administrative detention or seizure of products; 10 Table of Contents ● operating restrictions or partial or total suspension 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.
Failure to comply with the conditions of approval can result in material adverse enforcement action, including withdrawal of the PMA approval.
Failure to comply with the conditions of approval can 9 Table of Contents result in material adverse enforcement action, including withdrawal of the PMA approval.
In furtherance of our commitment to internal pay equity and pay transparency, Glaukos conducts a global annual pay equity analysis to evaluate compensation distribution, which analysis is also conducted in connection with new hires and promotions. Despite the difficulties presented by COVID-19, in recent years we expanded our global benefits programs, including broadening our employee assistance program globally.
In furtherance of our commitment to internal pay equity and pay transparency, Glaukos conducts a global annual pay equity analysis to evaluate compensation distribution, which analysis is also conducted in connection with new hires and promotions. In recent years we expanded our global benefits programs, including broadening our employee assistance program globally.
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.
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. ​ We have also licensed from Santen Pharmaceutical Co., Ltd.
Our R&D efforts in our retinal franchise are focused on treating AMD, DME, RVO, and other retinal diseases. AMD is a progressive disease that occurs when the macula, the central portion of the retina, is impaired, which can result in severe vision problems.
Our research and development (R&D) efforts in our Retinal XR platform are focused on treating AMD, DME, RVO, and other posterior segment retinal diseases. ​ AMD is a progressive disease that occurs when the macula, the central portion of the retina, is impaired, which can result in severe vision problems.
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.
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 voluntary flu and COVID vaccine events, health surveys, apps and other resources to encourage and support our employees in achieving their best health.
Participation in the MDRP requires us to calculate and report certain pricing metrics to the government, comply with certain pricing limitations any pay a rebate to each state Medicaid program for our covered products based on utilization of our products by Medicaid beneficiaries.
Participation in the MDRP requires us to calculate and report certain pricing metrics to the government, comply with certain pricing limitations and pay a rebate to each state Medicaid program for our covered products based on utilization of our products by Medicaid beneficiaries. Any company that participates in the MDRP must also participate in the 340B program.
Health Care Regulatory Laws Additional laws and regulations also govern our business operations and products in the U.S., including among others: ● the federal health care Anti-Kickback Statute which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, lease, order, arrangement for, or recommendation of, items or services for which payment may be made, in whole or in part, under federal health care programs; ● the federal civil False Claims Act prohibits, among other things, knowingly presenting or causing the presentation of a false or fraudulent claim for payment of government funds, or knowingly making, using, or causing to be made, a false record or statement material to a false or fraudulent claim to avoid, decrease or conceal an obligation to pay money to the federal government.
In each of these areas the FDA and other regulatory authorities have broad regulatory compliance and enforcement powers, including the power to withdraw approvals. ​ Health Care Regulatory Laws ​ Additional laws and regulations also govern our business operations and products in the U.S., including among others: ​ ● the federal health care Anti-Kickback Statute which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, lease, order, arrangement for, or recommendation of, items or services for which payment may be made, in whole or in part, under federal health care programs, which impact our interactions with healthcare professionals; ● the federal civil False Claims Act which prohibits, among other things, knowingly presenting or causing the presentation of a false or fraudulent claim for payment of government funds, or knowingly making, using, or causing to be made, a false record or statement material to a false or fraudulent claim to avoid, decrease or conceal an obligation to pay money to the federal government.
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.
Our procedural pharmaceutical product competes with AbbVie Inc. However, there are a considerable number of large and small companies providing other 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.
In January 2022, we commenced patient enrollment in Phase 2 clinical trials of two investigational drug candidates for the treatment of signs and symptoms of dry eye disease (GLK-301) and presbyopia (GLK-302). In January 2023, we announced promising initial Phase 2a results for GLK-301.
In 2022, we commenced patient enrollment in Phase 2 clinical trials of two investigational drug candidates for the treatment of signs and symptoms of dry eye disease (GLK-301) and presbyopia (GLK-302).
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.
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.
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 the U.S. we provide vision benefits for our employees and their dependents at no cost to them.
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.
Several iLution platform products leverage an exclusive global licensing arrangement 5 Table of Contents 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 anterior segment ocular surface diseases and disorders. ​ In September 2021, we entered into a licensing agreement with Attillaps Holdings, Inc.
We also offer commercially a proprietary bio-activated pharmaceutical therapy for the treatment of a rare corneal disorder, keratoconus, that was approved by the United States (U.S.) Food and Drug Administration (FDA) in 2016. We are developing a portfolio of platforms to support ongoing pharmaceutical and medical device innovations.
We also offer commercially a proprietary bio-activated pharmaceutical therapy for the treatment of a rare corneal disorder, keratoconus, that was approved by the United States (U.S.) Food and Drug Administration (FDA) in 2016.
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.
CXL strengthens, stabilizes and reshapes the cornea to treat corneal ectatic disorders. ​ Our KXL System, which delivers UVA light to a large portion of the cornea, in conjunction with our Photrexa therapy, was approved by the FDA in 2016 for use in the U.S. following removal of the epithelium (often referred to as “ iLink epi-off ”), a procedure familiar to ophthalmologists.
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.
For the year ended December 31, 2024, our iStent family of products, iDose TR, and related glaucoma accessories accounted for approximately 79% of our net sales, while our iLink therapies accounted for approximately 21% of our net sales. ​ Competition ​ The medical technology and pharmaceutical industries are highly competitive.
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).
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.
Our Board of Directors, through the Compensation, Nominating and Governance Committee, retains direct oversight of our human capital management process, including executive succession planning, talent development, employee retention, material aspects of employee compensation as well as inclusive recruitment, retention and compensation efforts.
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.
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.
In December 2023, we received FDA approval for iDose TR, indicated for the reduction of IOP in patients with open-angle glaucoma or ocular hypertension. iDose TR is a first-of-its-kind, 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. iDose TR is intended to improve the standard of care by addressing the ubiquitous patient non-compliance issues and chronic side effects associated with topical glaucoma medications.
We have commercialized the PRESERFLO MicroShunt in various countries including, but not limited to, Australia, Canada and Brazil. ​ iDose Sustained-Release Pharmaceuticals ​ In December 2023, we received FDA approval for iDose TR, indicated for the reduction of IOP in patients with open-angle glaucoma or ocular hypertension. iDose TR is a first-of-its-kind, intracameral procedural pharmaceutical therapy designed to continuously deliver therapeutic levels of a proprietary formulation of travoprost inside the eye for extended periods of time. iDose TR is intended to improve the standard of care by addressing the ubiquitous patient non-compliance issues and chronic side effects associated with topical glaucoma medications. ​ iDose TR was initially launched in a controlled manner during the first quarter of 2024.
We also established a cross-departmental Safety Committee to communicate safety information to their respective teams, act as their department’s liaison to bring up safety concerns or questions, and work to improve safety within the organization.
We also established a cross-departmental Safety Committee to communicate safety information to their respective teams, act as their department’s liaison to bring up safety concerns or questions, and work to improve safety within the organization. Glaukos conducts periodic risk assessments and institutes controls intended to eliminate hazards and minimize risks.
The FDA regulates, among other things, product safety, efficacy, manufacturing, advertising, labeling and safety reporting. Medical Device Requirements Each medical device commercially distributed in the United States requires one of the following: (i) exemption from or clearance under a 510(k) premarket notification; (ii) approval under a PMA application; or (iii) approval of a de-novo classification petition.
The FDA regulates, among other things, product safety, efficacy, manufacturing, advertising, labeling and safety reporting. ​ Medical Device Requirements ​ Each medical device commercially distributed in the United States requires one of the following: (i) exemption from or clearance under a 510(k) premarket notification; (ii) approval under a PMA application; or (iii) approval of a de-novo classification petition. ​ The FDA classifies medical devices into one of three classes—Class I, Class II or Class III—depending on the degree of risk associated with each medical device and the extent of manufacturing and regulatory control needed to ensure its safety and effectiveness.
Additionally, the bio-activated therapy used with our crosslinking device to treat keratoconus in international markets, which is currently classified as a medical device in the EU and certain other countries, could be reclassified as a drug product, which would impose an entirely new regulatory framework on us and our contract manufacturers for this product, and compliance may prove costly and difficult or may not be achievable at all.
Additionally, the bio-activated therapy used with our 14 Table of Contents crosslinking device to treat keratoconus in international markets, which is currently classified as a medical device in the EU and certain other countries, could be reclassified as a drug product, which would impose an entirely new regulatory framework on us and our contract manufacturers for this product, and compliance may prove costly and difficult or may not be achievable at all. ​ 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.
In addition, certain countries have adopted transparency legislation that requires us to report contracts with or payments made to physicians in those countries and many have enacted anti-kickback laws and regulations, which generally prohibit the offer, receipt, or payment of remuneration in exchange for or to induce the use of our products.
In addition, certain countries have adopted transparency legislation that requires us to report contracts with or payments made to physicians in those countries and many have enacted anti-kickback laws and regulations, which generally prohibit the offer, receipt, or payment of remuneration in exchange for or to induce the use of our products. ​ 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.
We are significantly dependent on our patent and other intellectual property rights and the failure to protect such rights could negatively impact our ability to sell current or future products or prohibit us from enforcing our patents or other intellectual property rights against others. For additional information see the section titled Risks Related to Our Intellectual Property within Item 1A.
We are significantly dependent on our patent and other intellectual property rights and the failure to protect such rights could negatively impact our ability to sell current or future products or prohibit us from enforcing our patents or other intellectual 8 Table of Contents property rights against others.
In the U.S., physicians are typically paid separately from the facility for surgical procedures involving our products. Physician fee payment rates for products covered by temporary CPT codes are set by the multi-state, regional contractors, or Medicare Administrative Contractors (MACs), of which there are currently seven, that are responsible for administering Medicare claims.
Physician fee payment rates for products covered by temporary CPT codes are set by the multi-state, regional contractors, or MACs, of which there are currently seven, that are responsible for administering Medicare claims.
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.
In December 2023, we commenced a first-in-human clinical trial for our retinal intravitreal multi-kinase inhibitor designed to treat wet AMD patients. ​ 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. ​ 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 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.
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.
A considerable portion of our R&D investment includes clinical trials and the collection of evidence that provide data for use in regulatory submissions and required post-market approval studies involving applications of our products. We expect our R&D and clinical expenditures to increase as we continue to devote significant resources to clinical trials and regulatory approvals of our pipeline products.
A considerable portion of our R&D investment includes clinical trials and the collection of evidence that provide data for use in regulatory submissions and required post-market approval studies involving applications of our 6 Table of Contents products.
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.
Internationally, we sell our products primarily through direct sales subsidiaries but also through independent distribution partners in certain countries in which we do not have a direct commercial presence or only maintain a modest commercial presence. In 2024, sales to U.S. and international customers accounted for 70% and 30% of our net sales, respectively.
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.
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 Alcon, which acquired Ivantis Inc., Sight Sciences and New World Medical.
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.
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. ​ 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.
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.
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.
As a condition of having our iDose TR product covered under certain federal healthcare programs such as Medicare and Medicaid, we are required to participate in the MDRP with respect to all of our pharmaceutical products.
We have also obtained temporary Category III CPT code for the professional fees associated with CXL procedures done in a physician office setting. ​ As a condition of having our iDose TR product covered under certain federal healthcare programs such as Medicare and Medicaid, we are required to participate in the MDRP with respect to all of our pharmaceutical products.
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.
Several of our products, including our recently-approved iDose TR implants and our pipeline iLution cream-based formulations, are drug products that are subject to this regulatory approval process. ​ 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.
During a study, the sponsor and any clinical investigators are required to comply with the applicable FDA requirements. After a trial begins, the sponsor, the FDA or the IRB could suspend or terminate a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits.
After a trial begins, the sponsor, the FDA or the IRB could suspend or terminate a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits. ​ Post-Market Regulation ​ After a device is approved for marketing, numerous and pervasive regulatory requirements continue to apply.
The MDR became effective in May 2021 and the European Commission approved an extension of the transition period through 2028 for qualifying products.
For example, in May 2017, the EU adopted a new regulatory scheme for medical devices under the Medical Device Regulation (MDR). The MDR became effective in May 2021 and the European Commission approved an extension of the transition period through 2028 for qualifying products.
The United Kingdom has adopted the UK Data Protection Act 2018, a substantially equivalent version of the GDPR.
The EU General Data Protection Regulation (GDPR) became effective in May 2018 and applies across the EU. The United Kingdom has adopted the UK Data Protection Act 2018, a substantially equivalent version of the GDPR.
We currently conduct R&D activities primarily in the U.S. but continue to expand our clinical capabilities to sites internationally. Sales and Marketing Our global sales efforts and promotional activities are currently aimed at ophthalmic surgeons and other eye care professionals. Our primary customers include ambulatory surgery centers, hospitals and physician private practices.
Sales and Marketing ​ Our global sales efforts and promotional activities are currently aimed at ophthalmic surgeons and other eye care professionals. Our primary customers include ambulatory surgery centers (ASC), hospitals and physician private practices. In the U.S., we sell the majority of our products through a direct sales organization.
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.
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. ​ 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.
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 December 2024, we announced submission of our New Drug Application (NDA) to the U.S. FDA 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 ”).
I n the U.S., there are distinct billing codes that are used by healthcare providers to report the provision of medical procedures and the use of supplies for specific patients to payors. There are different categories of Current Procedural Terminology (CPT ® ) codes (Category I, II and III) based on the procedure or supply.
In the U.S., there are distinct billing codes that are used by healthcare providers to report the provision of medical procedures and the use of supplies for specific patients to payors.
Any company that participates in the MDRP also must participate in the 340B drug pricing program (the “340B program”). The 340B program, which is administered by the Health Resources and Services Administration, requires participating companies to agree to charge statutorily defined covered entities no more than the 340B “ceiling price” for covered outpatient drugs.
The 340B program, which is administered by the Health Resources and Services Administration, requires participating companies to agree to charge statutorily defined covered entities no more than the 340B “ceiling price” for covered outpatient drugs. The 340B program ceiling price is calculated using a statutory formula, which is based on pricing data calculated under the MDRP.
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.
Government agencies internationally also regulate public health, product registration, manufacturing, environmental conditions, labor, exports, imports, bribery and corruption and other aspects of our global operations. ​ 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.
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.
Some or all of the iStent family of products are commercially available in numerous countries, including certain members of the European Union members, the United Kingdom, Japan, Australia, Canada and Brazil, and other countries, even though reimbursement may not always be available for all such procedures. ​ In August 2022, we received FDA 510(k) clearance for the iStent infinite indicated for use in the treatment of patients with glaucoma uncontrolled by prior medical and surgical therapy.
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.
We are currently targeting corneal disorders with our bio-activated pharmaceuticals including keratoconus, a rare disease, and corneal ectasia following refractive surgery. ​ 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. ​ Corneal ectasia following refractive surgery is a serious complication that involves the cornea becoming weakened following a refractive procedure, such as LASIK, with symptoms similar to naturally occurring keratoconus.
Reimbursement – Commercial Insurance Plans In the U.S., no uniform policy of coverage and reimbursement exists among third-party commercial payors; coverage and reimbursement can differ significantly from payor to payor.
Our participation in the MDRP affects our profitability through the need to increase our overall Medicaid rebate liability and the obligation to charge reduced prices to covered entities. ​ Reimbursement – Commercial Insurance Plans ​ In the U.S., no uniform policy of coverage and reimbursement exists among third-party commercial payors; coverage and reimbursement can differ significantly from payor to payor.
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.
No single customer or distributor accounted for more than 10% of our total net sales in 2024.
We may, from time to time, choose to acquire or license additional patents and patent applications, or we may choose to abandon, sell, or license certain Company patents and patent applications, depending on our needs.
We may, from time to time, choose to acquire or license additional patents and patent applications, or we may choose to abandon, sell, or license certain Company patents and patent applications, depending on our needs. The issued patents that protect our commercial products and current product pipeline expire between 2025 and 2043. ​ Government Regulation U.S.
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.
Human Capital Management ​ Glaukos is committed to developing a comprehensive, cohesive and positive employee experience. We consider talent attraction, development, engagement and retention a key driver of our business success. As of December 31, 2024, we had 995 full-time employees.
Corneal ectasia following refractive surgery is a serious complication that involves the cornea becoming weakened following a refractive procedure, such as LASIK, with symptoms similar to naturally occurring keratoconus. Refractive vision errors, or the inability of the cornea to properly focus light, are prevalent in the U.S. and abroad and include disorders such as presbyopia and myopia.
Refractive vision errors, or the inability of the cornea to properly focus light, are prevalent in the U.S. and abroad and include disorders such as presbyopia and myopia.
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.
For additional information see the section titled Risks Related to Our Intellectual Property within Item 1A. “Risk Factors” of this Annual Report on Form 10-K. ​ As of December 31, 2024, we owned or exclusively licensed in certain fields of use over 500 issued patents, pending U.S. patent applications, issued foreign patents and pending foreign patent applications.
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.
We have three primary commercialized micro-scale surgical device 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 designed to treat mild-to-moderate open angle glaucoma through the restoration of the natural physiologic outflow pathways for aqueous humor.
As a result, this change impacted the NDA submission for iDose TR , and may affect some of our pipeline products, such as future iDose platform drug-eluting implants. These products that are considered to be drug-led drug-device combination products will require review and coordination by both the FDA’s drug and device centers prior to approval, which may delay approval.
These products that are 11 Table of Contents considered to be drug-led drug-device combination products will require review and coordination by both the FDA’s drug and device centers prior to approval, which may delay approval.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe are subject to healthcare fraud and abuse, anti-kickback, false claims and transparency laws and regulations, among others, which are enforced by federal, state and international governments with respect to our marketing, training, customer arrangements, discount, rebate and pricing programs, product bundling, financial arrangements with physicians, patient assistance programs, reimbursement support services, and other practices.
Biggest changeHowever, if the FDA determines that our promotional materials, sales techniques, pricing programs or training constitutes promotion of an off-label use or encourages over-utilization of our products or use of our products in combinations that are not indicated or appropriate, it could request that we modify our materials, techniques, programs or training or subject us to enforcement actions. 27 Table of Contents We are subject to healthcare fraud and abuse, anti-kickback, false claims and transparency laws and regulations, among others, which are enforced by federal, state and international governments with respect to our marketing, training, customer arrangements, discount, rebate and pricing programs, product bundling, financial arrangements with physicians, patient assistance programs, reimbursement support services, and other practices.
Item 1A. Risk Factors The risks discussed below are not the only ones facing our business but do represent those risks that we believe are material to us. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also harm our business.
Item 1A. Risk Factors The risks and uncertainties discussed below are not the only ones facing our business but do represent those risks that we believe are material to us. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also harm our business.
Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA, state or foreign regulatory authorities, which may include, among other things, warning letters, fines, injunctions, recalls, refusals to grant or delays in granting requests, civil fines and penalties, operating restrictions, withdrawal of approvals and even criminal prosecution.
Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA, or state or foreign regulatory authorities, which may include, among other things, warning letters, fines, injunctions, recalls, refusals to grant or delays in granting requests, civil fines and penalties, operating restrictions, withdrawal of approvals and even criminal prosecution.
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.
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, pricing and reimbursement systems, and rebate requirements 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.
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.
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 (cGMP) 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.
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.
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 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.
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.
Inflation Reduction Act of 2022 (IRA), 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.
We and our suppliers are subject to extensive post-marketing regulatory requirements including post-marketing studies, and failure to comply with applicable requirements in a timely manner could subject us to enforcement actions, including recall or product approval withdrawals. Compliance with applicable regulatory requirements is subject to continual review and is monitored rigorously through periodic inspections by the FDA.
We and our suppliers are subject to extensive post-marketing regulatory requirements and failure to comply with applicable requirements in a timely manner could subject us to enforcement actions, including recall or product approval withdrawals. Compliance with applicable regulatory requirements is subject to continual review and is monitored rigorously through periodic inspections by the FDA.
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.
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, Stuart and Ripple pharmaceutical compounds and our collaboration agreement with Radius XR to market its wearable patient engagement and diagnostic system.
To implement our global business strategies we have made, and expect to continue to make, significant investments in R&D activities, clinical studies, expanding our manufacturing capabilities, growing our sales and marketing organization, engaged in market access activities, enforcing and defending our intellectual property rights, acquiring companies or in-license products and intellectual property, building our general and administrative infrastructure, and obtaining regulatory clearance or approval to commercialize our pipeline product globally and expand our existing products into international markets or products We expect our expenses will continue to increase as we pursue these objectives.
To implement our global business strategies we have made, and expect to continue to make, significant investments in R&D activities, clinical studies, expanding our manufacturing capabilities, growing our sales and marketing organization, engaging in market access activities, enforcing and defending our intellectual property rights, acquiring companies or in-license products and intellectual property, building our general and administrative infrastructure, and obtaining regulatory clearance or approval to commercialize our pipeline product globally and expand our existing products into international markets or products We expect our expenses will continue to increase as we pursue these objectives.
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).
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 32 Table of Contents 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).
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.
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 30 Table of Contents commercial payor coverage to government payor coverage, or an increase in demand for patient assistance or free drug programs, any of which could adversely affect our net revenue.
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.
See Item 1, Business, “Government Regulation – U.S. Regulation & Reimbursement” and “International Regulation & Reimbursement” contained in our 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.
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.
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, 2024 are made publicly available, our ability to reach sustained profitability and generate positive cash flow in the future is highly uncertain.
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.
The loss of services of these personnel, which could occur without notice and without cause, could prevent or delay our growth plans and the 22 Table of Contents implementation 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 340B ceiling price is calculated using a statutory formula, which is based on pricing data calculated under the MDRP. Additionally, the U.S.
The 340B program ceiling price is calculated using a statutory formula, which is based on pricing data calculated under the MDRP. Additionally, the U.S.
In 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.
In particular, we have experienced, and may in the future experience, financial or operational impacts as a result of such 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; ● Widespread staffing shortages and turnover, including in ambulatory surgery centers, and mandatory and voluntary quarantining, which may impact elective procedures; 18 Table of Contents ● 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 2024 and some of which we 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.
For example, in 2022 the CMS’ payment rates significantly lowered the Medicare physician fee payment rates and slightly lowered the Medicare facility fee payment rates related to the implantation of trabecular bypass stents, such as our iStent family of products, in conjunction with cataract surgery, furnished in the ambulatory surgery center (ASC) setting, which we believe disrupted traditional customer ordering patterns and resulted in our customers’ trialing and utilization of competitive products, causing reduced glaucoma sales volumes in the U.S. in 2022 and 2023.
For example, in 2022 the CMS’ payment rates significantly lowered the Medicare physician fee payment rates and slightly lowered the Medicare facility fee payment rates related to the implantation of trabecular bypass stents, such as our iStent family of products, in conjunction with cataract surgery, furnished in the ambulatory surgery center setting, which we believe disrupted traditional customer ordering patterns and resulted in certain of our customers’ utilization of competitive products, causing reduced glaucoma sales volumes in the U.S. in 2022 and 2023.
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 .
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 or result in investigations, claims and administrative penalties by regulators .
Continuation or worsening of these unfavorable global and regional conditions could have a material adverse effect on our operations, including through foreign exchange rate headwinds, higher operating expenses and lower operating margins, and cause us to need to seek additional capital, which may not be available to us on favorable terms or at all. ​ In recent years, unfavorable economic conditions have also adversely impacted several financial institutions, including some financial institutions with whom we have banking relationships, and some banks have recently failed and gone into receivership.
Continuation or worsening of these unfavorable global and regional conditions, or similar new events or crises, could have a material adverse effect on our operations, including through foreign exchange rate headwinds, higher operating expenses and lower operating margins, and cause us to need to seek additional capital, which may not be available to us on favorable terms or at all. ​ In recent years, unfavorable economic conditions have also adversely impacted several financial institutions, including some financial institutions with whom we have banking relationships, and some banks have recently failed and gone into receivership.
Additionally, the period of orphan drug exclusivity with respect to our Photrexa pharmaceutical therapy expired in April 2023, which could allow competitive products to enter that market. 21 Table of Contents As our growth strategy turns increasingly global, we are, and will continue to be, subject to a variety of risks associated with our international operations, which could adversely impact our results of operations and financial condition.
Additionally, the period of orphan drug exclusivity with respect to our Photrexa pharmaceutical therapy expired in 2023, which could allow competitive products to enter that market. ​ 20 Table of Contents As our growth strategy turns increasingly global, we are, and will continue to be, subject to a variety of risks associated with our international operations, which could adversely impact our results of operations and financial condition.
Additionally, we cannot predict how our participation in, or how future CMS guidance or rules governing, MDRP will affect our profitability (including the potential for increases in our overall Medicaid rebate liability and the obligation to charge reduced prices to covered entities).
Further, we cannot predict how our participation in, or how future CMS guidance or rules governing, MDRP will affect our profitability (including the potential for increases in our overall Medicaid rebate liability and the obligation to charge reduced prices to covered entities).
If the supply and/or manufacture of our principal revenue-producing products, the iStent family of products, and our Photrexa therapies, is materially disrupted, it may adversely affect our ability to manufacture products and could reduce our gross margins and negatively impact our operating results.
If the supply and/or manufacture of our principal revenue-producing products, the iStent family of products, our Photrexa therapies, or the iDose TR is materially disrupted, it may adversely affect our ability to manufacture products and could reduce our gross margins and negatively impact our operating results.
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.
Our sole manufacturing location for our iStent and iDose products is an approximately 120,000 square foot campus located in San Clemente, California, where we manufacture, inspect, package, release and ship nearly all of our implanted device products.
If banks and other financial institutions with whom we have banking relationships enter receivership or become insolvent in the future, we may be unable to access, and we may lose, some or all of our existing cash and cash equivalents to the extent those funds are not insured or otherwise protected by the FDIC . ​ Public health crises, such as the COVID-19 pandemic, have adversely affected, and could in the future adversely affect, our business, results of operations, financial condition, liquidity, and cash flows. ​ We are subject to risks associated with public heath crises, including those related to the COVID-19 pandemic.
If banks and other financial institutions with whom we have banking relationships enter receivership or become insolvent in the future, we may be unable to access, and we may lose, some or all of our existing cash and cash equivalents to the extent those funds are not insured or otherwise protected by the FDIC . ​ Public health crises, such as the COVID-19 pandemic, have adversely affected, and could in the future adversely affect, our business, results of operations, financial condition, liquidity, and cash flows. ​ We are subject to risks associated with public heath crises, such as those experienced due to the COVID-19 pandemic.
Our ability to make scheduled payments of the principal and interest on, or to refinance the amounts payable under, our current or future indebtedness, including the Convertible Notes, while still making necessary investments in our business, will depend on our operating and financial performance, including our ability to generate sufficient cash flow from operations, which may be subject to economic, financial, competitive and other factors beyond our control.
Our ability to make scheduled payments of the principal and interest on, or to refinance the amounts payable under, future indebtedness while still making necessary investments in our business, will depend on our operating and financial performance, including our ability to generate sufficient cash flow from operations, which may be subject to economic, financial, competitive and other factors beyond our control.
From time to time, we increase the prices of our products, as we have done with our Photrexa therapies.
From time to time, we increase the prices of our products, as we have previously done with our Photrexa therapies.
The capped call transactions are expected generally to reduce the potential dilution of our common stock upon any conversion of the Convertible Notes or at our election (subject to certain conditions), offset any cash payments we are required to make in excess of the aggregate principal amount of converted Convertible Notes, as the case may be, with such reduction or offset subject to a cap.
The capped call transactions were expected generally to reduce the potential dilution of our common stock upon any conversion of the Convertible Notes or at our election (subject to certain conditions), offset any cash payments we would be required to make in excess of the aggregate principal amount of converted Convertible Notes, as the case may be, with such reduction or offset subject to a cap.
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.
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 lengthen review times of planned or future products.
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.
Because our products are highly complex, the occurrence of 21 Table of Contents performance issues may increase as we continue to introduce new products and rapidly scale up manufacturing to meet increased demand.
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.
In connection with the issuance of the Convertible Notes, we entered into capped call transactions with certain option counterparties. The capped call transactions initially covered, subject to customary adjustments, the number of shares of common stock initially underlying the Convertible Notes.
As a condition of having our recently-approved iDose TR product covered under certain federal healthcare programs such as Medicare and Medicaid, we are required to participate in the Medicaid Drug Rebate Program (MDRP) with respect to all of our pharmaceutical products, which requires us to calculate and report certain pricing metrics to the government, comply with certain pricing limitations any pay a rebate to each state Medicaid program for our covered products based on utilization of our products by Medicaid beneficiaries.
As a condition of having our iDose TR product covered under certain federal healthcare programs such as Medicare and Medicaid, we are required to participate in the MDRP with respect to all of our pharmaceutical products, which requires us to calculate and report certain pricing metrics to the government, comply with certain pricing limitations and pay a rebate to each state Medicaid program for our covered products based on utilization of our products by Medicaid beneficiaries.
Additionally, cybersecurity threats and the techniques used in cyberattacks change, develop and evolve rapidly, including from emerging technologies, such as advanced forms of AI and quantum computing.
Additionally, cybersecurity threats and the techniques used in cyberattacks change, develop and evolve rapidly, including from emerging technologies, such as advanced forms of artificial intelligence (AI) and quantum computing.
Our failure to successfully commercialize the iDose based upon these or other factors could materially adversely impact our net sales, our business or our financial condition. ​ Unfavorable global and regional conditions have adversely affected, and could in the future materially and adversely affect, our business, results of operations, financial condition, liquidity, and cash flows. ​ Recent geopolitical conflicts, natural disasters and the COVID-19 pandemic have led to or exacerbated certain unfavorable global and regional macroeconomic conditions, including inflation, volatility in the financial and credit markets, higher interest rates and capital costs, labor shortages, increased energy costs, and currency fluctuations, which have had, and could continue to have, an adverse effect on the global economy, the regional economies that we serve and our business, results of operations, financial condition, liquidity and ability to access our existing cash, cash equivalents and investments.
Our failure to successfully commercialize the iDose TR based upon these or other factors could materially adversely impact our net sales, our business or our financial condition. ​ Unfavorable global and regional conditions have adversely affected, and could in the future materially and adversely affect, our business, results of operations, financial condition, liquidity, and cash flows. ​ Recent geopolitical conflicts, natural disasters and public health crises, such as COVID-19, have led to or exacerbated certain unfavorable global and regional macroeconomic conditions, including inflation, volatility in the financial and credit markets, higher interest rates and capital costs, labor shortages, increased energy costs, and currency fluctuations, which have had, and could continue to have, an adverse effect on the global economy, the regional economies that we serve and our business, results of operations, financial condition, liquidity and ability to access our existing cash, cash equivalents and investments.
In addition to uncertainties surrounding coverage policies, there are uncertainties regarding appropriate reimbursement for the procedures associated with our new products like iAccess, a precision blade, iPRIME, a viscoelastic delivery system, and iStent infinite as well as sporadic volatility in reimbursement levels of existing products, including our Photrexa therapy and the procedures associated with our existing products, such as our iStent family of products.
In addition to uncertainties surrounding coverage policies, there are uncertainties regarding appropriate reimbursement for the procedures associated with certain of our products like iAccess, a precision blade, iPRIME, a viscoelastic delivery system, and iStent infinite and iDose TR , as well as sporadic volatility in reimbursement levels of existing products, including our Photrexa therapy and the procedures associated with our existing products, such as our iStent family of products.
We have asserted and may in the future need to assert claims of infringement against third parties to protect our rights, or to invalidate or challenge the intellectual property rights of a third party, including those rights owned by our competitors.
We have asserted and may in the future need to assert claims of infringement against third parties to protect our rights, or to invalidate or challenge the intellectual property 31 Table of Contents rights of a third party, including those rights owned by our competitors.
Any company that participates in the MDRP also must participate in the 340B drug pricing program (the “340B program”). The 340B program, which is administered by the Health Resources and Services Administration, requires participating companies to agree to charge statutorily defined covered entities no more than the 340B “ceiling price” for covered outpatient drugs.
Any company that participates in the MDRP also must participate in the 340B program. The 340B program, which is administered by the Health Resources and Services Administration, requires participating companies to agree to charge statutorily defined covered entities no more than the 340B “ceiling price” for covered outpatient drugs.
In addition, some of our software systems are cloud-based data management applications, hosted by third-party service providers whose security and information technology systems are subject to similar risks.
In addition, some of our software systems are cloud-based data management 23 Table of Contents applications, hosted by third-party service providers whose security and information technology systems are subject to similar risks.
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.
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.
As a result, the coverage determination process is often time-consuming and costly and requires us to provide scientific and clinical support for the use of our products to each payor separately, with no assurance that coverage will be obtained or will be maintained once it is obtained.
Therefore, coverage for our products can differ significantly from payor to payor. As a result, the coverage determination process is often time-consuming and costly and requires us to provide scientific and clinical support for the use of our products to each payor separately, with no assurance that coverage will be obtained or will be maintained once it is obtained.
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.
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.
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.
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 continue to monitor and expect may experience in the future.
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.
Portions of federal NOL carryforwards incurred prior to 2018 will expire annually, if unused, while $322.8 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.
Its commercial success will depend upon a number of factors, including physician adoption of the use of this product, our ability to manufacture product in volumes sufficient to meet customer demand, marketing in compliance with label restrictions, satisfactory patient outcomes, particularly at the outset of our commercial launch, product pricing, duration of efficacy, and the availability of commercial payor coverage and adequate reimbursement for the product.
Its ultimate commercial success will depend upon a number of factors, including physician training on and adoption of the use of this product, establishment of consistent reimbursement, our ability to manufacture product in volumes sufficient to meet customer demand, marketing in compliance with label restrictions, satisfactory patient outcomes, particularly as we continue our commercial launch, product pricing, duration of efficacy, and the availability of commercial payor coverage and adequate reimbursement for the product.
Centers for Medicare & Medicaid Services (CMS) or MACs, commercialization of our new and existing products and the marketing of competitive products, results of clinical research and trials, regulatory approval requirements and timings, legislative changes affecting our products, variances in the sales terms, an increase in demand for our patient assistance and/or free drug programs, supply chain and inventory management, shortage of raw materials, seasonality in the timing or volume of customer orders and the length of our sales cycle, which varies and may be unpredictable.
Centers for Medicare & Medicaid Services (CMS) or Medicare Administrative Contractors (MACs), commercialization of our new products, the marketing of competitive products, results of clinical research and trials, regulatory approval requirements and timings, legislative changes affecting our products, variances in the sales terms, an increase in demand for our patient assistance and/or free drug programs, supply chain and inventory management, shortage or increased cost of raw materials, seasonality in the timing or volume of customer orders, the length of our sales cycle, and reductions in revenue associated with our participation in Medicaid Drug Rebate Program (MDRP), which varies and may be unpredictable.
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.
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.
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.
As of December 31, 2024, we had an accumulated deficit of approximately $745.4 million, principally comprised of costs incurred in our clinical trials, R&D programs, our selling, general and administrative expenses, and from amortization expense related to our acquired developed technology intangible assets included in cost of sales.
While we expect to continue to derive a significant portion of our net sales from the iStent, the iStent inject models, the iStent infinite and the Photrexa therapies, as well as our iDose TR product, which was recently approved by the FDA, it is important that we continue to build a more complete product offering.
While we expect to continue to derive a significant portion of our net sales from the iStent, the iStent inject models, the iStent infinite and the Photrexa therapies, as well as our iDose TR product, which was approved by the FDA in December 2023 and which we began commercializing in a controlled manner in February 2024 , it is important that we continue to build a more complete product offering.
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.
In addition, any change in the laws or regulations that govern the clearance and approval processes 29 Table of Contents 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.
This activity could impact the market price of our common stock. The option counterparties to the capped call transactions are financial Institutions, and we are subject to the risk that any or all of them might default under the capped call transactions. Our exposure to the credit risk of the option counterparties is not secured by any collateral.
The option counterparties to the capped call transactions are financial institutions, and we are subject to the risk that any or all of them might default under the capped call transactions. Our exposure to the credit risk of the option counterparties is not secured by any collateral.
Interest payments, fees, covenants and restrictions under agreements governing our current or future indebtedness, including the indenture governing the Convertible Notes, could have significant consequences, including the following: impairing our ability to successfully continue to commercialize our current or future products; limiting our ability to obtain additional financing on satisfactory terms; increasing our vulnerability to general economic downturns, competition and industry conditions; requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness; inhibiting our flexibility to plan for, or react to, changes in our business; and diluting the interests of our existing stockholders if we issue shares of our common stock upon conversion of the Convertible Notes.
Interest payments, fees, covenants and restrictions under agreements governing future indebtedness could have significant consequences, including the following: impairing our ability to successfully continue to commercialize our future products; limiting our ability to obtain additional financing on satisfactory terms; increasing our vulnerability to general economic downturns, competition and industry conditions; requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness; and inhibiting our flexibility to plan for, or react to, changes in our business.
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).
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 19 Table of Contents equity securities, cash generated from commercial operations and the issuance of the Company’s 2.75% convertible notes due 2027 (Convertible Notes), which were fully exchanged, converted or redeemed in 2024.
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.
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.
We have been advised that the option counterparties or their respective affiliates have established initial hedges of the capped call transaction, and may modify their hedge positions by entering into or unwinding various derivative transactions with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the Convertible Notes (and are likely to do so on each exercise date of the capped call transactions, which are expected to occur during the 40 trading day period beginning on the 41st scheduled trading day prior to the maturity date of the Convertible Notes, or following any termination of any portion of the capped call transactions in connection with any repurchase, redemption or early conversion of the Convertible Notes).
We have been advised that the option counterparties or their respective affiliates have established initial hedges of the capped call transaction, and may modify their hedge positions by entering into or unwinding various derivative transactions with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the Convertible Notes, or following any termination of any portion of the capped call transactions in connection with any repurchase, redemption or early conversion of the Convertible Notes.
Any failure to adhere to applicable regulations could harm our business, financial condition and operating results. Our medical devices, drugs, drug/device combination products and other products are subject to extensive government regulation in the U.S. by the FDA, state regulatory authorities and foreign regulatory authorities in the countries in which we conduct business.
Our medical devices, drugs, drug/device combination products and other products are subject to extensive government regulation in the U.S. by the FDA, state regulatory authorities and foreign regulatory authorities in the countries in which we conduct business.
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.
Additionally, our pipeline 26 Table of Contents products that are determined to be drug-device combination products, such as our iDose TR product, requires review and coordination by each of FDA’s drug and device centers prior to approval, which may delay approval of our future products.
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.
We cannot be certain that our net operating loss tax carryforwards will be available to offset future taxable income . At December 31, 2024, we had approximately $527.5 million, $437.0 million and $6.5 million of net operating loss (NOL) carryforwards for federal, state and foreign purposes, respectively.
Additionally, the facility fee payment rates for the standalone procedure that hospitals and ambulatory surgery centers will use with Glaukos’ iStent infinite product, were lower than anticipated for 2022 and were not significantly modified by CMS for 2023 facility fee payment rates.
Additionally, the facility fee payment rates for the standalone procedure that hospitals and ambulatory surgery centers will use with Glaukos’ iStent infinite product were lower than anticipated for 2022 and were not significantly modified by CMS for 2023 facility fee payment rates, which had an adverse impact on procedural iStent family product volumes and our revenues and net income.
Any disruption of this nature or increased expense could harm our commercialization efforts and adversely affect our operating results. Our corneal health Photrexa therapies are produced by a small number of contract manufacturing organizations. The systems that bio-activate our Photrexa therapies are primarily manufactured in Burlington, Massachusetts.
Any disruption of this nature or increased expense could harm our commercialization efforts and adversely affect our operating results. Our corneal health Photrexa therapies, and our Epioxa pharmaceutical therapies, which are not yet approved by the FDA, are produced by a small number of contract manufacturing organizations.
At December 31, 2023, we had federal and state R&D credit carryforwards of approximately $43.8 million and $25.0 million, respectively. Portions of federal and $4.4 million of state credits will expire annually, if unused, while $20.6 million of state credits carry forward indefinitely.
At December 31, 2024, we had federal and state R&D credit carryforwards of approximately $48.2 million and $28.6 million, respectively. Portions of federal and $4.6 million of state R&D credits will expire annually, if unused, while $24.0 million of state R&D credits carry forward indefinitely. Additionally, at December 31, 2024, we had California economic development credit carryforwards of $3.0 million.
If our facilities, or those of our third-party manufacturers or suppliers, fail to meet the QSR or cGMP regulations, as applicable, or other standards required by the FDA, we could experience a delay in obtaining the necessary regulatory clearances or approvals to commercialize our pipeline products, which could have a material adverse effect on our business and financial condition and results.
If our facilities, or those of our third-party manufacturers or suppliers, fail to meet the FDA’s Quality System Regulation or cGMP regulations, as applicable, or other standards required by the FDA, we could experience a delay in obtaining the necessary regulatory clearances or approvals to commercialize our pipeline products, which could have a material adverse effect on our business and financial condition and results. ​ We have ongoing responsibilities under FDA regulations and applicable foreign laws and regulations and we may also be required to seek additional regulatory approvals to modify our approved products or their manufacturing processes or indications, which may entail significant time and expense.
The occurrence of any one of these events could have an adverse effect on our business, financial condition, operating results or cash flows and ability to satisfy our obligations under the indenture governing the Convertible Notes and any other indebtedness.
The occurrence of any one of these events could have an adverse effect on our business, financial condition, operating results or cash flows.
If either of our San Clemente or Aliso Facility suffers a crippling event or a natural disaster such as an earthquake, fire or flood, this could materially impact our ability to operate.
If either of our San Clemente or Aliso Facility suffers a crippling event or a natural disaster such as an earthquake, fire or flood, or if we lose insurance coverage for or are unable to renew insurance on these facilities, as some California residents have experienced, this could materially impact our ability to operate.
Any material disruption to the manufacture of these corneal health products could also adversely affect our operating results and clinical efforts. We have incurred significant losses since inception and our operating results can be unpredictable and may fluctuate significantly from quarter to quarter, requiring substantial capital and operating expenditures for our business to operate and grow.
We have incurred significant losses since inception and our operating results can be unpredictable and may fluctuate significantly from quarter to quarter, requiring substantial capital and operating expenditures for our business to operate and grow.
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.
When this occurs, the time and financial resources required to obtain FDA or other regulatory approval may substantially increase or new competitive products could reach the market faster than our product candidate, which could materially adversely impact our competitive position and prospects. ​ 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.
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.
Additionally, any recall or product withdrawal, whether required by the FDA, another regulatory authority or initiated by us, could harm our reputation with customers, cause us to incur significant expense and negatively affect our sales. In addition, our promotional materials, sales techniques, pricing programs and training methods must comply with FDA and other applicable laws and regulations.
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).
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.
Please read the cautionary notice regarding forward-looking statements under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Risks Related to Our Business The commercial success of our recently-approved iDose TR is dependent upon multiple factors, the failure of any one of which could materially impact the prospects of this product and our business. ​ Our iDose TR travoprost intracameral implant was approved for sale in the U.S. by the FDA in December 2023.
Risks Related to Our Business The commercial success of our iDose TR is dependent upon multiple factors, the failure of any one of which could materially impact the prospects of this product and our business. ​ Our iDose TR travoprost intracameral implant was approved for sale in the U.S. by the FDA in December 2023 and we began commercializing the product in a controlled manner in February 2024.
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.
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 capped call transactions may affect the value of our common stock, and subject us to counterparty risk.
The scope and enforcement of each of the laws applicable to our business and products is uncertain and subject to rapid change in the current environment of healthcare reform.
The scope and enforcement of each of the laws applicable to our business and products is uncertain and subject to rapid change in the current environment of healthcare reform. Responding to a government investigation is time and resource intensive, and may cause harm to our business and reputation even if we are able to successfully defend against it.
To the extent available, we intend to use these NOL and credit carryforwards to offset future taxable income and/or income tax liabilities associated with our operations.
Utilization of these tax attributes may be subject to annual 24 Table of Contents limitations under IRC Sections 382 and 383 if we experience an ownership change. To the extent available, we intend to use these NOL and credit carryforwards to offset future taxable income and/or income tax liabilities associated with our operations.
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.
Risks Related to Indebtedness If we incur future indebtedness, our obligation to service the 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.
We can provide no assurances as to the financial stability or viability of the option counterparties. Risks Related to Our Regulatory Environment Our business, products and processes are subject to extensive regulation both in the U.S. and abroad and it can be costly to comply with these regulations.
Our business, products and processes are subject to extensive regulation both in the U.S. and abroad and it can be costly to comply with these regulations. Any failure to adhere to applicable regulations could harm our business, financial condition and operating results.
Our exposure will depend on many factors but, generally, an increase in our exposure will be correlated to an increase in the market price subject to the cap and in the volatility of our common stock. In addition, upon a default by an option counterparty, we may suffer more dilution than we currently anticipate with respect to our common stock.
Our exposure will depend on many factors but, generally, an increase in our exposure will be correlated to an increase in the market price of our common stock, subject 25 Table of Contents to the cap and in the volatility of our common stock. We can provide no assurances as to the financial stability or viability of the option counterparties.
Additionally, the bio-activated therapy used with our crosslinking device to treat keratoconus in international markets, which is currently classified as a medical device in the EU and certain other countries, could be reclassified as a drug product, which would impose an entirely new regulatory framework on us and our contract manufacturers for this product, and compliance may prove costly and difficult or may not be achievable at all.
We are also subject to the EU’s Medical Devices Regulation (MDR), which could result in substantial additional costs of compliance. In addition, our products could be reclassified in international markets, which would impose an entirely new regulatory framework on us and our contract manufacturers and compliance may prove costly and difficult or may not be achievable at all.
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.
These economic development credits can only be used to offset California taxable income and begin to expire in 2028, if unused. 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.
Responding to a government investigation is time and resource intensive, and may cause harm to our business and reputation even if we are able to successfully defend against it. Additionally, resolution of any such investigation may require agreement to onerous corporate integrity agreements or other compliance or reporting requirements, which may negatively affect our business.
Additionally, resolution of any such investigation may require agreement to onerous corporate integrity agreements or other compliance or reporting requirements, which may negatively affect our business. Legislative or regulatory reform of the healthcare system could hinder or prevent our products’ commercial success .
Other post-market requirements on our products include establishment registration and device listing, quality system and good manufacturing requirements, reporting of adverse events and device malfunctions, product tracing, reporting of corrections and removals (recalls), labeling requirements, and promotional restrictions. Under FDA regulations, combination products are subject to the quality system and good manufacturing requirements applicable to both drugs and medical devices.
Other post-market requirements on our products include reporting of adverse events and device malfunctions, product tracing, reporting of corrections and removals (recalls), labeling requirements, and promotional restrictions. See Item 1, Business, “Government Regulation – U.S. Regulation & Reimbursement – Post-Market Regulation” in this Annual Report for additional information.
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.
We may in the future incur indebtedness to meet future financing needs.
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The COVID-19 pandemic has had, and could continue to have, an adverse effect on our business, results of operations, financial condition, liquidity and cash flows. Other future public health crises may also have a negative impact on our business.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeManagement may consult with outside 34 Table of Contents consultants, such as legal counsel or cybersecurity advisors, in assessing risks and developing mitigation plans. Both the Audit Committee and the full Board regularly receive reports from such outside experts in response to emerging or higher risk areas.
Biggest changeThe severity of risks is measured based upon the potential adverse impact that could result, the immediacy of 33 Table of Contents the threat and the availability of mitigating factors, among other elements. Management may consult with outside consultants, such as legal counsel or cybersecurity advisors, in assessing risks and developing mitigation plans.
At least twice a year, the Audit Committee receives a report from the head of Information Technology of our cybersecurity threat risk management and mitigation strategy covering topics such as data security posture, results from third-party assessments, progress towards pre-determined risk-mitigation-related goals, our incident response plan, and potentially material cybersecurity threat risks or incidents, as well as the steps management has taken to respond to such risks.
At least twice a year, the Audit Committee receives a report from the head of Information Security of our cybersecurity threat risk management and mitigation strategy covering topics such as data security posture, results from third-party assessments, progress towards pre-determined risk-mitigation-related goals, our incident response plan, and potentially material cybersecurity threat risks or incidents, as well as the steps management has taken to respond to such risks.
These members of management are informed about and monitor the prevention, mitigation, detection, and remediation of cybersecurity incidents through their management of, and participation in, the cybersecurity risk management and strategy processes described above, including the operation of our incident response plan. 36 Table of Contents
These members of management are informed about and monitor the prevention, mitigation, detection, and remediation of cybersecurity incidents through their management of, and participation in, the cybersecurity risk management and strategy processes described above, including the operation of our incident response plan. 35 Table of Contents
New software is evaluated for risk and approved by our internal Software Approval Board before purchase or installation on our systems. 35 Table of Contents We formed a Software Approval Board, which is made up of cross-functional members from Quality, Internal Audit, Information Security, Business Systems, and R&D, to help determine risk and impact of any potential newly proposed software.
New software is evaluated for risk and approved by our internal Software Approval Board before purchase or installation on our systems. We formed a Software Approval Board, which is made up of cross-functional members from Quality, Internal Audit, Information Security, Business Systems, and R&D, to help determine risk and impact of any potential newly proposed software.
Our cybersecurity risk management and strategy processes, which are discussed in greater detail above, are led by our Legal department and our Internal Audit department, working with our IT department.
Our cybersecurity risk management and strategy processes, which are discussed in greater detail above, are led by our Legal department and our Internal Audit department, working with our GTS department.
In such sessions, the Audit Committee generally receives information describing current and emerging material cybersecurity threat risks, and describing the company’s plans to mitigate those risks, and discusses such matters with our head of IT and other members of senior management. Potentially material cybersecurity threat risks are also considered during separate Board discussions of important matters like enterprise risk management.
In such sessions, the Audit Committee generally receives information describing current and emerging material cybersecurity threat risks, and describing the Company’s plans to mitigate those risks, and discusses such matters with our head of GTS and other members of senior management. Potential material cybersecurity threat risks are also considered during separate Board discussions of important matters like enterprise risk management.
To provide for the availability of critical data and systems, maintain regulatory compliance, manage our material risks from cybersecurity threats, and to protect against, detect, and respond to cybersecurity incidents, we undertake the activities listed below: ● closely monitor emerging data protection laws and implement responsive changes to our processes; ● conduct annual cybersecurity training for all employees and contractors who use our systems; ● conduct regular email phishing testing exercises for all employees to enhance awareness and responsiveness to such possible threats; ● require employees, as well as contractors who have access to our systems or the data of our employees or customers, to treat information as confidential; ● schedule tabletop exercises to simulate a response to a cybersecurity incident and use the findings to improve our processes, technologies and incident response plan; and ● carry cyber risk insurance that provides protection (as specified in the applicable policies) against certain potential costs and losses arising from a cybersecurity incident.
To provide for the availability of critical data and systems, maintain regulatory compliance, manage our material risks from cybersecurity threats, and to protect against, detect, and respond to cybersecurity incidents, we undertake the activities listed below: ● closely monitor emerging data protection laws and implement responsive changes to our processes; ● conduct annual cybersecurity training for all employees and contractors who use our systems; ● conduct regular email phishing testing exercises for all employees to enhance awareness and responsiveness to such possible threats; ● require employees, as well as contractors who have access to our systems or the data of our employees or customers, to treat information as confidential; ● performed internal audits of our use of single sign-on and multifactor authentication for key information systems; ● schedule tabletop exercises to simulate a response to a cybersecurity incident and use the findings to improve our processes, technologies and incident response plan; and ● carry cyber risk insurance that provides protection (as specified in the applicable policies) against certain potential costs and losses arising from a cybersecurity incident.
Third-party risks are included within our enterprise risk management assessment program, which is discussed above. In addition, cybersecurity considerations affect the selection and oversight of our third-party service providers. We perform diligence on high-risk third-parties that provide us software or have access to our systems or highly sensitive information, and monitor cybersecurity threat risks identified through such diligence.
In addition, cybersecurity considerations affect the selection and oversight of our third-party service providers. 34 Table of Contents We perform diligence on high-risk third-parties that provide us software or have access to our systems or highly sensitive information, and monitor cybersecurity threat risks identified through such diligence.
We are not aware of any material cybersecurity incidents that have occurred in the last three fiscal years, and the expenses we have incurred from cybersecurity incidents were immaterial. This includes penalties and settlements, of which there were none.
We are not aware of any material cybersecurity incidents that have occurred in the last three fiscal years, and the expenses we have incurred from cybersecurity incidents were immaterial, including penalties and settlements, of which there were none. Governance Cybersecurity is an important part of our risk management processes and an area of increasing focus for our Board and management.
Governance Cybersecurity is an important part of our risk management processes and an area of increasing focus for our Board and management. Board Oversight The Audit Committee of our Board is responsible for the oversight of risks from cybersecurity threats.
Board Oversight The Audit Committee of our Board is responsible for the oversight of risks from cybersecurity threats.
These senior leaders conduct an evaluation of the severity of these identified risks and any changes to this risk level or the Company’s mitigation efforts since the prior evaluation. The severity of risks is measured based upon the potential adverse impact that could result, the immediacy of the threat and the availability of mitigating factors, among other elements.
These senior leaders conduct an evaluation of the severity of these identified risks and any changes to the risk level or the Company’s mitigation efforts since the prior evaluation.
We also have specific cybersecurity risk assessment processes which help identify our cybersecurity threat risks, including a comparison of our processes to industry standards as well as periodic third-party assessments of our programs. We compare our Information Security Program with industry standards including the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF) and ISO 27001.
The Audit Committee of the Board regularly receives reports from such outside experts in response to emerging or higher risk areas. We also have specific cybersecurity risk assessment processes which help identify our cybersecurity threat risks, including a comparison of our processes to industry standards as well as periodic third-party assessments of our programs.
If impact is present, the appropriate departments, key employees, and executive management team members are notified as part of the incident response process.
We also maintain written incident response and security policies that seek to ensure we are protected and ready to respond should a security incident occur. Incidents are investigated and analyzed for potential impact. If any potential impact is determined to present, the appropriate departments, key employees, and executive management team members are notified as part of the incident response process.
Removed
In order to enhance internal expertise, members of our Information Technology (IT) department maintain various cybersecurity-related certifications. We also maintain written incident response and security policies that seek to ensure we are protected and ready to respond should a security incident occur. Incidents are investigated and analyzed for potential impact.
Added
We compare our Information Security Program with industry standards including the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF) and ISO 27001. In order to enhance internal expertise, members of our Global Technology Systems (GTS) department maintain various cybersecurity-related certifications.
Added
Third-party risks are included within our enterprise risk management assessment program, which is discussed above.
Added
Members of this team include a Certified Information Systems Auditor (CISA), a Certified Information Security Manager (CISM), a Certified Data Privacy Solutions Engineer (CDPSE), Certified Information Systems Security Professionals (CISSP), as well as members of ISACA and ISC2 industry organizations.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 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.
Biggest changeEach of the leases for the two adjacent buildings expires on May 31, 2035, 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 buildings totals 101,000. The square footage of the other suites and warehouse in San Clemente, California totals 19,000.
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.
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.
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.
In 2022, the Company relocated its corporate administrative headquarters and marketing functions, along with certain laboratory, R&D and warehouse space, to the Aliso Facility. The Company leases two adjacent buildings, two suites, and a warehouse as part of its manufacturing campus located in San Clemente, California.
We 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.
The Company’s San Clemente locations will continue to serve as its main manufacturing location for the foreseeable future. We 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. Our remaining foreign subsidiaries’ leased office and warehouse space totals less than 35,000 square feet.
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.
ITEM 2. PROPERTIES 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, and serves at the Company’s global headquarters. The term of the Aliso Facility commenced on May 1, 2019 and continues for thirteen years.
We believe our existing properties are well maintained, in good operating condition and are adequate to support our present level of operations.
In December 2024, we reached agreement with the city of Huntsville, Alabama to develop a new 200,000 square foot R&D and manufacturing facility. We expect construction to begin in 2026. 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. ​ 37 Table of Contents PART II
Biggest changeMINE SAFETY DISCLOSURES Not applicable. ​ 36 Table of Contents PART II

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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 12/31/2018 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.
Biggest changeStockholder returns over the indicated period should not be considered indicative of future stockholder returns. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Glaukos Corporation ​ $ 100.00 ​ $ 138.17 ​ $ 81.59 ​ $ 80.19 ​ $ 145.93 ​ $ 275.27 S&P Small Cap 600 index ​ $ 100.00 ​ $ 109.57 ​ $ 137.26 ​ $ 113.35 ​ $ 129.09 ​ $ 137.90 S&P Small Cap 600 Healthcare index ​ $ 100.00 ​ $ 131.41 ​ $ 138.98 ​ $ 102.25 ​ $ 99.53 ​ $ 102.90 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.
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.
The graph assumes that $100 was invested at the closing price of our common stock on the last trading day of fiscal year 2019 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 21, 2024, we had 67 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 19, 2025, we had 46 holders of record of our common stock.
We anticipate that we will retain all available funds and any future earnings, if any, for use in the operation of our business and do not anticipate paying cash dividends in the foreseeable future.
Dividend Policy We have never declared or paid any cash dividends on our common stock or any other securities. We anticipate that we will retain all available funds and any future earnings, if any, for use in the operation of our business and do not anticipate paying cash dividends in the foreseeable future.
Added
ITEM 6. [RESERVED] ​ 37 Table of Contents

Item 7. Management's Discussion & Analysis

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

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Biggest changeComparison of Years Ended December 31, 2023 and December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ ​ ​ December 31, ​ % Increase (in thousands) ​ 2023 ​ 2022 ​ (decrease) Statements of operations data: ​ ​ ​ ​ ​ ​ Net sales ​ $ 314,711 ​ $ 282,862 ​ 11 % Cost of sales ​ ​ 75,575 ​ 68,979 ​ 10 % Gross profit ​ ​ 239,136 ​ 213,883 ​ 12 % Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative ​ ​ 224,068 ​ 192,925 ​ 16 % Research and development ​ ​ 138,768 ​ 123,271 ​ 13 % Acquired in-process research and development ​ ​ 5,000 ​ ​ 10,000 ​ (50) % Litigation-related settlement ​ ​ — ​ ​ (30,000) ​ (100) % Total operating expenses ​ ​ 367,836 ​ 296,196 ​ 24 % Loss from operations ​ ​ (128,700) ​ (82,313) ​ 56 % Non-operating loss, net ​ ​ (5,027) ​ (16,116) ​ (69) % Income tax provision ​ ​ 934 ​ 766 ​ 22 % Net loss ​ $ (134,661) ​ $ (99,195) ​ 36 % Net Sales Net sales for the years ended December 31, 2023 and December 31, 2022 were $314.7 million and $282.9 million, respectively, reflecting an increase of $31.8 million or 11%.
Biggest changeResults of Operations For discussion related to the results of operations and changes in financial condition for the year ended December 31, 2023 compared to the year ended December 31, 2022 refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our 2023 Annual Report on Form 10-K, which was filed with the United States Securities and Exchange Commission on February 23, 2024 Comparison of Years Ended December 31, 2024 and December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ ​ ​ December 31, ​ % Increase (in thousands) ​ 2024 ​ 2023 ​ (decrease) Statements of operations data: ​ ​ ​ ​ ​ ​ Net sales ​ $ 383,481 ​ $ 314,711 ​ 22 % Cost of sales ​ ​ 94,027 ​ 75,575 ​ 24 % Gross profit ​ ​ 289,454 ​ 239,136 ​ 21 % Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative ​ ​ 261,166 ​ 224,068 ​ 17 % Research and development ​ ​ 136,425 ​ 138,768 ​ (2) % Acquired in-process research and development ​ ​ 14,229 ​ ​ 5,000 ​ 185 % Total operating expenses ​ ​ 411,820 ​ 367,836 ​ 12 % Loss from operations ​ ​ (122,366) ​ (128,700) ​ (5) % Non-operating loss, net ​ ​ (23,235) ​ (5,027) ​ NM ​ Income tax provision ​ ​ 771 ​ 934 ​ (17) % Net loss ​ $ (146,372) ​ $ (134,661) ​ 9 % ​ Net Sales Net sales for the years ended December 31, 2024 and December 31, 2023 were $383.5 million and $314.7 million, respectively, reflecting an increase of $68.8 million or 22%.
There can be no assurance that we will be able to obtain additional financing on terms acceptable to us, or at all and although we have been profitable for certain periods in our operating history, there can be no assurance that we will be profitable or generate cash from operations.
There can be no assurance that we will be able to obtain additional financing on terms acceptable to us, or at all and although we have been profitable for certain periods in our operating history, there can be no assurance that we will be profitable or generate cash from operations in future periods.
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.
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, amortization of lease right-of-use assets of $4.3 million, and amortization of debt issuance costs of $1.4 million, accretion of discount $1.7 million and IPR&D acquired through issuance of common stock of $3.0 million.
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).
In 2022, 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).
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 paid $0.9 million in principal on our finance lease. 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.
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
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. 50 Table of Contents
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.
We currently intend to maintain our manufacturing facilities at our San Clemente and Burlington locations for the foreseeable future. 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.
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.
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. 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.
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.
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 49 Table of Contents obligation is satisfied, which is the point in time when we consider control of a product to have transferred to the customer.
MACs have in the past, and may in the future, change coverage terms, and there can be no assurance that coverage and adequate reimbursement will be obtained from, or maintained by, the MACs. The U.S.
MACs have in the past, and may in the future, change coverage terms, and there can be no assurance that coverage and adequate reimbursement will be obtained from, or maintained by, the MACs.
Our IPR&D for the years ended December 31, 2023, December 31, 2022 and December 31, 2021 totaled $5.0 million, $10.0 million and $10.0 million, respectively, relating to one-time upfront payments and stock issuances associated with our exclusive licensing agreements with various third-parties, whereby we were granted the exclusive, worldwide licenses for certain technologies that are in development.
Our IPR&D for the years ended December 31, 2024, December 31, 2023 and December 31, 2022 totaled $14.2 million, $5.0 million and $10.0 million, respectively, relating to one-time upfront payments and stock issuances associated with our exclusive licensing agreements with various third-parties, whereby we were granted the exclusive, worldwide licenses for certain technologies that are in development.
We also received cash of approximately $303.1 million from sales and maturities of short-term investments and used approximately $3.2 million related to investments in company-owned life insurance.
We also received cash of approximately $247.2 million from sales and maturities of short-term investments and used approximately $3.2 million related to investments in company-owned life insurance.
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.
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, 2024 and December 31, 2023 our operating activities used $61.3 million and $57.8 million, respectively.
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.
While our significant accounting policies are more fully described below and in the Notes to our consolidated financial statements in Part II, Item 8 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.
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.
Short-term Liquidity Requirements Our short-term liquidity requirements primarily consist of regular operating costs, 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.
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.
We also expect other non-employee ‐ related costs, including sales and marketing program activities for new products, market access efforts, outside services, accounting services and general legal costs to increase as our overall operations grow.
In the year ended December 31, 2022, we used approximately $59.3 million for purchases of short-term investments, approximately $30.3 million for purchases of property and equipment, primarily related to our facilities in Aliso Viejo, California; Burlington, Massachusetts; and San Clemente, California; and approximately $1.0 million related to investments in company-owned life insurance, and we received cash of approximately $135.2 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, approximately $20.2 million for purchases of property and equipment, primarily related to our facilities in Aliso Viejo, California; Burlington, Massachusetts; and San Clemente, California; and approximately $3.2 million related to investments in company-owned life insurance, and we received cash of approximately $303.1 million from sales and maturities of short-term investments.
Physician fee payment rates for products covered by temporary Current Procedural Terminology (CPT) codes are set by the multi-state, regional contractors, or Medicare Administrative Contractors (MACs), of which there are currently seven, that are responsible for administering Medicare claims.
Physician fee payment rates for products covered by temporary Current Procedural Terminology (CPT) codes, such as our iStent infinite and iDose TR products, are set by the multi-state, regional contractors, or Medicare Administrative Contractors (MACs), of which there are currently seven, that are responsible for administering Medicare claims.
For each of the years ended December 31, 2023, December 31, 2022 and December 31, 2021, the amortization expense was $22.1 million.
For the year ended December 31, 2024, the amortization expense was $22.2 million and for each of the years ended December 31, 2023, December 31, 2022, the amortization expense was $22.1 million.
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.
Research and Development Our research and development (R&D) activities primarily consist of new product development projects, pre-clinical studies, Investigational New Drug studies, and clinical trials.
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.
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, ​ ​ 2024 2023 ​ Net sales ​ $ 383,481 ​ $ 314,711 ​ Gross margin ​ ​ 75 % ​ 76 % Operating expenses ​ $ 411,820 ​ $ 367,836 ​ Cash, cash equivalents, short-term investments and restricted cash ​ $ 323,648 ​ $ 301,287 ​ ​ 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.
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.
For the year ended December 31, 2024, we incurred $84.6 million in core R&D expenses and $51.8 million in clinical expenses, comprised of $79.9 million in compensation and related employee expenses, $2.0 million of which was related to increased stock-based compensation, with the remaining $56.5 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 next generation iDose products ; 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.
As of December 31, 2023, we had net working capital of $321.4 million, which indicates that our current assets are sufficient to cover our short-term liabilities.
As of December 31, 2024, we had net working capital of $374.7 million, which indicates that our current assets are sufficient to cover our short-term liabilities.
Additionally, our gross margin will continue to be affected by amortization of Avedro developed technology intangible assets, and by royalty expenses on current or future products associated with various licensing agreements.
Additionally, our gross margin will continue to be affected by amortization of Avedro developed technology and Celanese Agreement intangible assets, the impact of rebates associated with government and commercial programs and by royalty expenses on current or future products associated with various licensing agreements.
Our annual growth rate of net sales for the year ended December 31, 2023 was negatively affected by approximately 145 basis points, primarily related to the Japanese Yen. For the year ended December 31, 2022, net sales of our international glaucoma business were negatively impacted by approximately 960 basis points, primarily related to the Euro and Japanese Yen.
For the year ended December 31, 2023, net sales of our international glaucoma business were negatively impacted by approximately 145 basis points, primarily related to the Japanese Yen.
We are not currently able to fully track expenses by product candidate. Acquired In-Process Research and Development Our acquired in-process research and development (IPR&D) expenses generally relate to acquisitions of technologies that management determines do not have any alternative future uses.
We are not currently able to fully track expenses by product candidate. Acquired In-Process Research and Development Our acquired in-process research and development (IPR&D) expenses generally relate to acquisitions of technologies that management determines are not a business combination and do not have any alternative future uses. Future costs to develop these assets are expensed as R&D when incurred.
In the year ended December 31, 2022, we received $9.2 million from the exercises of stock options and purchases of our common stock by employees pursuant to our Employee Stock Purchase Plan and used $2.7 million for payment of employee taxes related to restricted stock unit vestings.
In the year ended December 31, 2024, we received $53.2 million related to our Capped Call Unwind Agreements, $46.8 million from the exercises of stock options and purchases of our common stock by employees pursuant to our Employee Stock Purchase Plan and used $6.6 million for payment of employee taxes related to restricted stock unit vestings.
Our gross margin was approximately 76% for each of the years ended December 31, 2023 and December 31, 2022. Selling, General and Administrative Expenses SG&A expenses for the years ended December 31, 2023 and December 31, 2022 were $224.1 million and $192.9 million, respectively, reflecting an increase of $31.1 million or 16%.
Our gross margin was approximately 75% and 76% for the years ended December 31, 2024 and December 31, 2023, respectively. Selling, General and Administrative Expenses SG&A expenses for the years ended December 31, 2024 and December 31, 2023 were $261.2 million and $224.1 million, respectively, reflecting an increase of $37.1 million or 17%.
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.
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 expanding pharmaceutical development efforts and clinical trials across the glaucoma, corneal health and retinal disease spectrums. Costs for our clinical development programs include expenses for all activities necessary for obtaining regulatory approvals.
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.
The following table is a condensed summary of our cash flows for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, (in thousands) ​ 2024 ​ 2023 ​ ​ ​ ​ ​ ​ ​ ​ Net cash (used in) provided by: ​ ​ ​ ​ ​ Operating activities ​ $ (61,318) ​ $ (57,758) ​ Investing activities ​ ​ 47,831 ​ 14,095 ​ Financing activities ​ ​ 91,540 ​ 15,042 ​ Exchange rate changes ​ ​ (3,017) ​ 1,341 ​ Net increase (decrease) in cash, cash equivalents and restricted cash ​ $ 75,036 ​ $ (27,280) ​ ​ At December 31, 2024, our cash and cash equivalents were held for working capital purposes.
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.
As a result of these supply chain challenges and ongoing inflationary pressures, we have experienced higher costs for certain components and raw materials.
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 .
Market and Business Update Impact of the Current Global Economic Environment 39 Table of Contents During the last twelve months, global and regional economies have experienced, in connection with ongoing macroeconomic conditions, inflation, supply shortages or delays, changes in supply and demand, foreign exchange rate fluctuations and other conditions that have led to disruptions in commerce and pricing stability.
For the year ended December 31, 2023 and December 31, 2022, we recorded a provision for income taxes of $0.9 million and $0.8 million, respectively. For the year ended December 31, 2023 our tax provision was primarily comprised of state and foreign income tax expense offset by release of uncertain tax positions for which the statute of limitations has expired.
For the years ended December 31, 2024 and December 31, 2023, our tax provision was primarily comprised of state and foreign income tax expense offset by release of uncertain tax positions for which the statute of limitations has expired.
Critical Accounting Policies and Significant Estimates Management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (GAAP).
Additionally, we paid $0.7 million in principal on our finance lease. We do not have any off-balance sheet arrangements. Critical Accounting Policies and Significant Estimates Management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (GAAP).
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.
The following table summarizes our cash and cash equivalents, short-term investments and selected working capital data as of December 31, 2024 and December 31, 2023 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2024 2023 Cash and cash equivalents ​ $ 169,626 ​ $ 93,467 Short-term investments ​ ​ 149,289 ​ ​ 201,964 Accounts receivable, net ​ ​ 60,744 ​ ​ 39,850 Inventory ​ ​ 57,678 ​ ​ 41,986 Accounts payable ​ ​ 13,026 ​ ​ 13,440 Accrued liabilities ​ ​ 62,099 ​ ​ 60,574 Working capital (1) ​ ​ 374,667 ​ ​ 321,447 (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 received from commercial operations as well as cash generated from employee stock option exercises. 46 Table of Contents We may seek to obtain additional financing in the future through other debt or equity financings.
Additionally, changes in operating assets and liabilities were $13.4 million, which resulted primarily from increases in accounts payable and accrued liabilities of $7.2 million, and decreases in other assets of $0.3 million, offset by increases in inventory of $15.5 million, increases in accounts receivable of $3.1 million and increases in prepaids and other current assets of $1.7 million.
Additionally, changes in operating assets and liabilities resulted in a net use 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.
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.
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. For the year ended December 31, 2022, we recorded approximately $3.1 million in cost of sales in connection with the product payment obligation.
Non-Operating Expense, Net Non-operating expense, net primarily consists of interest expense associated with our finance lease for our Aliso Facility and for our 2.75% convertible notes due 2027 (Convertible Notes), interest income derived from our short-term investments and unrealized gains and losses arising from exchange rate fluctuations on transactions denominated in a currency other than the U.S. dollar, primarily related to intercompany loans.
Non-Operating Expense, Net Non-operating expense, net primarily consists of charges associated with our Convertible Note exchange, interest expense associated with our finance lease for our Aliso Facility and for our Convertible Notes, interest income derived from our short-term investments and unrealized gains and losses arising from exchange rate fluctuations on transactions denominated in a currency other than the U.S. dollar, primarily related to intercompany loans. 43 Table of Contents 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.
Acquired In-process Research and Development IPR&D expenses for the year ended December 31, 2023 related to the issuance of $3.0 million of our common stock for the acquisition of intellectual property rights, as well as a $2.0 million upfront payment related to our Stuart License Agreement, both of which were previously discussed in Recent Developments above.
IPR&D expenses for the year ended December 31, 2023 related to the issuance of $3.0 million of our common stock for the acquisition of intellectual property rights, as well as a $2.0 million upfront payment related to our exclusive license agreement with Stuart Therapeutics, Inc. License Agreement.
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.
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 other disruptions. 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.
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%.
Research and Development Expenses R&D expenses for the years ended December 31, 2024 and December 31, 2023 were $136.4 million and $138.8 million, respectively, reflecting a decrease of $2.3 million or 2%.
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.
Our research programs vary significantly for each current and future product candidate and completion dates are difficult to predict.
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.
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. We currently operate in one operating and reportable segment and our primary business activity is the development and commercialization of therapies across several end markets within ophthalmology.
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.
The increase in international sales reflects continued broad-based growing volume in many key international markets for glaucoma procedures, primarily France, Japan, the United Kingdom and Australia, the dollar-based results of which were slightly affected by unfavorable foreign exchange rates over the course of the year, primarily related to the Japanese Yen, during the year ended December 31, 2024 as compared to the year ended December 31, 2023. 44 Table of Contents Net sales of corneal health products were $80.2 million and $77.7 million for the years ended December 31, 2024 and December 31, 2023, respectively, increasing by 3%.
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.
We sell the majority of our products through a direct sales organization in the United States. 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.
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.
We incurred net losses of $146.4 million, $134.7 million and $99.2 million for the years ended December 31, 2024, December 31, 2023, and December 31, 2022, respectively and as of December 31, 2024, we had an accumulated deficit of $745.4 million.
Net sales of glaucoma products in the United States were $151.5 million and $144.7 million for the years ended December 31, 2023 and December 31, 2022, respectively, increasing by approximately 5%. This increase is primarily due to higher volumes sold of our iStent family of products, including iStent infinite .
This increase is primarily due to the introduction of iDose TR as well as higher volumes sold of our iStent family of products due to higher demand, primarily iStent infinite . ​ International sales of glaucoma products for the years ended December 31, 2024 and December 31, 2023 were $103.7 million and $85.6 million, respectively, increasing by approximately 21%.
Of the total $30.9 million increase in SG&A expenses for the year ended December 31, 2023 as compared to the year ended December 31, 2022, $13.1 million related to increased compensation and related employee costs, with $1.8 million of the incremental amount related to an increase in stock-based compensation expense.
Of the total $37.1 million increase in SG&A expenses for the year ended December 31, 2024 as compared to the year ended December 31, 2023, $19.0 million related to increased compensation and related employee costs, with $3.0 million of the incremental amount related to an increase in stock-based compensation expense, the majority of which was associated with certain performance equity awards that were achieved during the year.
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 believe that cash from operating, financing and investing activities, together with our cash and investment balances, will be sufficient to meet ongoing operations, capital expenditures, commitments, working capital requirements and other known contractual and other obligations and satisfy our liquidity requirements for at least the next 12 months and the foreseeable future. 47 Table of Contents 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.
In addition, the 2024 Final Rule contained significant increases in the facility fee rates for ASCs and hospitals that perform iStent infinite procedures in a standalone setting under its temporary Category III CPT code.
The 2025 Final Rule did not materially modify the 2024 Medicare physician fee and facility fee payment rates with respect to physician fee and facility fee payment rates for procedures using our iStent family of products in conjunction with cataract surgery, which 2024 payment rates contained significant increases in the facility fee rates for ASCs and hospitals that perform iStent infinite procedures in a standalone setting under its temporary Category III CPT code.
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.
We regularly monitor our rebate programs to ensure the rebate allowance is fairly stated. Our rebate allowance is included in accrued liabilities in the consolidated balance sheets.
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.
We have determined the transaction price to be the invoice price, net of adjustments that reduce revenue, which includes estimates of volume-based rebates, rebates for government pricing programs, variable consideration for certain product returns and warranty replacements, and other discounts and incentives that reduce revenue.
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.
Investing Activities In the years ended December 31, 2024 and December 31, 2023, our investing activities provided cash of $47.8 million and $14.1 million, respectively. 48 Table of Contents In the year ended December 31, 2024, we used approximately $190.0 million for purchases of short-term investments and approximately $6.3 million for purchases of property and equipment, primarily related to our facilities in Aliso Viejo, California; and San Clemente, California.
International sales of glaucoma products for the years ended December 31, 2023 and December 31, 2022 were $85.6 million and $69.6 million, respectively, increasing by approximately 23%.
Net sales of glaucoma products in the United States were $199.6 million and $151.5 million for the years ended December 31, 2024 and December 31, 2023, respectively, increasing by approximately 32%.
We have made and expect to continue to make significant investments in our global sales force, marketing programs, market access, research and development activities, clinical studies and general and administrative infrastructure. FDA-approved IDE and IND studies and new product development programs in our industry are expensive.
In addition to investing in R&D and clinical activities, we expect to utilize cash for various capital expenditures. We have made and expect to continue to make significant investments in our global sales force, marketing programs, market access, research and development activities, clinical studies, facilities and general and administrative infrastructure.
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.
Of the approximately $2.5 million increase in net sales generated by our corneal health products, $2.3 million related to an increase in U.S. net sales of Photrexa using direct sales operations, which was positively impacted by higher realized average sales prices of Photrexa along with increases in sales to existing customers and new account starts, mostly offset by accrued rebates related to our participation in the Medicaid Drug Rebate Program (MDRP).
In October and November 2023, the five MACs released final LCDs, confirming reimbursement coverage of the standalone procedure utilizing the iStent infinite and non-coverage for certain procedures, including the ophthalmic canaloplasty procedure utilizing our iPRIME product. Further, the final LCDs indicated that surgical MIGS procedures should not be performed in combination with other MIGS or surgical glaucoma procedures.
In October and November 2023, five of the seven MACs released final local coverage determinations (LCDs) confirming reimbursement coverage of the standalone procedure utilizing the iStent infinite , which received FDA clearance in August 2022, and non-coverage for certain procedures, including the ophthalmic canaloplasty procedure utilizing our iPRIME product.
Long-term Liquidity Requirements Our long-term liquidity requirements primarily consist of interest and principal payments related to our Convertible Notes, capital expenditures for the continued development of our manufacturing facilities and office spaces, payments in connection with our Promissory Note with Radius, potential future payments related to our licensing agreements, and firm purchase commitments.
Long-term Liquidity Requirements Our long-term liquidity requirements primarily consist of capital expenditures for the continued development of our manufacturing facilities and office spaces, potential future payments related to our licensing agreements, and firm purchase commitments. As demand grows for our products, we will continue to expand global operations to meet demand through investments in our manufacturing capabilities.
In the latter part of 2023, these supply challenges generally stabilized; however, if these supply issues persist or worsen in the future, 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. 41 Table of Contents Additionally, the effects of foreign currency fluctuations were most notably experienced in our international glaucoma business.
While these supply challenges have generally stabilized over the course of 2024, if these supply issues persist or worsen in the future, 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.
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.
We expect levels of our capital expenditures to be higher in 2025 than in 2024 as we upgrade certain manufacturing facilities and continue investing in R&D equipment needed to advance our product pipeline. Financing Activities In the years ended December 31, 2024 and December 31, 2023, our financing activities provided $91.5 million and $15.0 million of net cash, respectively.
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 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, if earned by the customer, we provide a rebate (in the form of a credit memo) at the contract’s conclusion.
Business Outlook CMS physician fee payment rate decreases have disrupted traditional customer ordering patterns and have resulted in our customers’ trialing and utilization of competitive products, causing reduced U.S. Glaucoma sales volumes of our iStent family of products used in conjunction with cataract surgery in 2022 and, to a lesser extent, in 2023.
Business Outlook CMS physician fee payment rate decreases have disrupted traditional customer ordering patterns and may have resulted in certain of our customers’ utilization of competitive products, which may have reduced U.S.
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.
Components of Results of Operations Net Sales Our net sales are generated primarily from sales of our iStent family of products to customers, Photrexa and other associated drug formulations, our proprietary bioactivation systems and royalty income. We also began commercializing iDose TR in a controlled manner in February 2024.
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. We also offer commercially a proprietary bio-activated pharmaceutical therapy for the treatment of a rare corneal disorder, keratoconus, that was approved by the FDA in 2016. We received U.S.
We also offer commercially a proprietary bio-activated pharmaceutical therapy for the treatment of a rare corneal disorder, keratoconus, that was approved by the United States (U.S.) Food and Drug Administration (FDA) in 2016.
For the years ended December 31, 2022 and December 31, 2021, we recorded approximately $3.1 million and $4.2 million, respectively, in cost of sales in connection with the product payment obligation. Cost of sales has included amortization of the $252.2 million developed technology intangible assets recorded as a result of our acquisition of Avedro, Inc (Avedro).
Cost of sales has included amortization of the $252.2 million developed technology intangible assets recorded as a result of our acquisition of Avedro, Inc (Avedro) and our Celanese Agreement.
In December 2023, prior to their respective effective dates, the five MACs rescinded the final LCDs and determined there would be no change in the current status of coverage for MIGS. The other two MACs have taken preliminary steps to assess coverage of iStent infinite through temporary local coverage article (LCA) updates.
These LCDs also indicated that surgical MIGS procedures should not be performed in combination with other MIGS or surgical glaucoma procedures. In December 2023, prior to their respective effective dates, those five MACs rescinded the final LCDs and determined there would be no change in the current status of coverage for MIGS.
Our primary uses of cash have been for commercial activities, research and development programs, general and administrative expenses, and capital expenditures.
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. Our primary uses of cash have been for commercial activities, acquired in-process research and development, clinical and research and development programs, general and administrative expenses, and capital expenditures.
Our international corneal health sales decreased $0.5 million from net sales in countries outside the U.S. during the year ending December 31, 2023 as compared to the year ending December 31, 2022. 46 Table of Contents Cost of Sales Cost of sales for the years ended December 31, 2023 and December 31, 2022 were $75.6 million and $69.0 million, respectively, reflecting an increase of approximately $6.6 million or 10% that is proportionate to the increase in net sales for the corresponding period.
Our net sales of iLink devices in the U.S. increased $0.3 million for the year ended December 31, 2024 as compared to the year ended December 31, 2023. Our international corneal health sales decreased $0.1 million from net sales in countries outside the U.S. during the year ending December 31, 2024 as compared to the year ended December 31, 2023.
We continue to provide a full valuation allowance against our other net deferred tax assets.
Our net deferred tax liability of $6.9 million at December 31, 2024 primarily represents the excess of our indefinite-lived deferred tax liabilities over our indefinite-lived deferred tax assets. We continue to provide a full valuation allowance against our other net deferred tax assets.
Revenue is recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration to which we expect to be entitled in exchange for those products or services. We sell the majority of our products through a direct sales organization in the United States.
Revenue recognized reflects the consideration to which we expect to be entitled in exchange for those products or services.
Cash, Cash Equivalents, Short-term Investments and Restricted Cash As of December 31, 2023, our cash, cash equivalents and short-term investments totaled approximately $295.4 million and our restricted cash totaled approximately $5.9 million.
Cash, Cash Equivalents, Short-term Investments and Restricted Cash As of December 31, 2024, our cash, cash equivalents and short-term investments totaled approximately $318.9 million and our restricted cash totaled approximately $4.7 million. Cash Flow used in Operations For the twelve months ended December 31, 2024, our operating activities used $61.3 million in net cash.
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.
For the year ended December 31, 2024, our net cash used in operating activities reflected our net loss of $146.4 million, adjusted for non-cash items of $120.1 million, primarily consisting of stock-based compensation expense of $50.2 million, depreciation of $10.9 million, inducement expense related to Convertible Notes Exchange of $17.4 million, amortization of intangible assets of $24.7 million, non-cash lease expense of $4.3 million, amortization of debt issuance costs of $0.7 million, amortization of premium of $4.0 million, a write-down charge of $4.4 million associated with product line optimizations that was recorded against inventory and prepaid assets and other assets, and IPR&D acquired through issuance of common stock of $5.0 million.
Glaucoma sales volumes during 2022 and certain portions of 2023. Our corneal health sales have experienced sporadic headwinds in recent years due to U.S. commercial payer volatility. We believe investments in our market access organization were successful in reducing volatility in 2023, however these investments continue to remain early.
Glaucoma sales volumes of our iStent family of products used in conjunction with cataract surgery in each of the three years ended December 31, 2024, December 31, 2023 and December 31, 2022. Our corneal health sales have experienced sporadic headwinds in recent years due to U.S. commercial payer volatility .
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.
Revenue is recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration to which we expect to be entitled in exchange for those products or services, which includes estimates of reductions to revenue for commercial and governmental rebates owed, variable consideration for product returns and warranty replacements and other discounts and incentives. 41 Table of Contents 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.
Our corneal health sales have experienced sporadic headwinds in recent years due to U.S. commercial payer volatility . We believe investments in our market access organization were successful in reducing volatility in 2023, however we are in 42 Table of Contents the early stages of these investments and cannot predict whether such success will continue.
We believe investments in our market access organization were successful in reducing volatility during the years ended December 31, 2024 and December 31, 2023, although we cannot predict whether such success will continue. In addition to the foregoing, we commercialized certain of our products for several years in the U.S. with few or no direct competitors.
We accounted for the transaction as an asset acquisition as the set of acquired assets did not constitute a business. We may have ongoing milestone payments based on achieving certain clinical and regulatory milestones depending on the success of the development and approval of the proprietary technologies.
We may have ongoing milestone and royalty payment obligations depending on the success, development regulatory approval and commercialization of the proprietary technologies we have acquired.
FDA approval for the 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 therapeutic levels of a proprietary formulation of travoprost inside the eye for extended periods of time.
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. In 2024, we commenced commercial launch activities for iDose TR , an intracameral procedural pharmaceutical implant designed to continuously deliver therapeutic levels of a proprietary formulation of travoprost inside the eye for extended periods of time.
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.
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, 2024, 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 $ 177,608 $ 9,453 $ 19,420 $ 20,233 $ 128,502 ​ Firm purchase commitments ​ 48,742 ​ 47,268 ​ 1,474 ​ - ​ - ​ Total ​ $ 226,350 ​ $ 56,721 ​ $ 20,894 ​ $ 20,233 ​ $ 128,502 ​ ​ 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.
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.
The residual increase primarily relates to enhancements of various customer and patient support functions, our business intelligence function, and growth in our commercial infrastructure in glaucoma and corneal health, along with increased travel, meetings and accompanying costs as business activities have expanded.
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.
The remaining increase of $18.1 million primarily relates to discretionary expenses supporting the above personnel growth as well as our ongoing administrative operations, inclusive of information technology, facilities and allocated expenses.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeForeign Currency Exchange Risk We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. dollar. Increases or decreases in our foreign-denominated revenue from movements in foreign exchange rates are often partially offset by the corresponding increases or decreases in our foreign-denominated operating expenses.
Biggest changeIncreases or decreases in our foreign-denominated revenue from movements in foreign exchange rates are often partially offset by the corresponding increases or decreases in our foreign-denominated operating expenses. To the extent that our international operations grow, our risks associated with fluctuation in currency rates will become greater, and we will continue to assess our approach to managing this risk.
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
A hypothetical 10% increase or decrease in the value of foreign exchange rates relative to the U.S. dollar as of December 31, 2024 would have had an immaterial impact on our net loss. ​ 51 Table of Contents
While 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.
While 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.
To the extent that our international operations grow, our risks associated with fluctuation in currency rates will become greater, and we will continue to assess our approach to managing this risk. In addition, currency fluctuations or a weakening U.S. dollar can increase the costs of our international operations.
In addition, currency fluctuations or a weakening U.S. dollar can increase the costs of our international operations. To date, we have not entered into any foreign currency hedging contracts although we may do so in the future.
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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. Foreign Currency Exchange Risk We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. dollar.

Other GKOS 10-K year-over-year comparisons