including cash generation in the quarter that we saw. And again, like we've said to investors in the past, given our company's gross margin profile, there's certainly a clear line of sight that we have today towards cloud proceeding profitability at some point in the future. And it's increasingly more and more towards the near term as we see the increased revenues from these two transformative drivers. But that said, we would remind investors that our management focus continues to be on prioritizing and prudently investing back into the commercial business to support these two transformative launches, as well as supporting the R&D pipeline and things that you saw in the quarter as we stepped up, especially in clinical, as we've grown our clinical trial programs that Tom was referencing in the prepared remarks. And that is just really, again, driven to maximize both our near-term and long-term top-line growth profile of the company.

Thank you. I'll just leave you at that.

Your next question from the line of security. Richard, your line is now open. Please go ahead.

Hi, thanks for taking the questions and congrats on the quarter. I guess I just want to ask very quick ones on IDOS and one on Epioxa. I guess on Eidos, this is such a substantial, sequential uplift. I get that the reimbursement environment is getting better. But was there any pull forward or just consideration from your customer base on everything going on in the backdrop of the LCD? I'm just wondering if you're starting to hear or see any of that.

And then on Epioxa,

I'm just curious if from a 340B standpoint, is there anything that we should be thinking about from an ASP standpoint or how that might impact pricing there? Thank you.

Thanks, Richard. First, on the IDOS front, there was no, that I'm aware of, LCD-related pull-forward dynamics in IDOS. Most of the surgeons you talk to, their schedules are pushed out well beyond even that timeframe from when this came on. So if you're going to see that, I think it would be something that was on the heels of actually a final rule, if it were ever to come out. So I don't think that was really the case. And what we really saw in the quarter was the first time where you had, obviously, we've had meaningful growth from the beginning. But in this quarter, we really saw both an acceleration across the various MACs, I would say, with the most recent additions of the professional fees and NGS and and Palmetto, you saw that contribution pick up. And then maybe even more importantly, or equally as important, we saw a nice uptick in activity around the commercial and Medicare Advantage patient populations, as well as more of our customers started to expand utilization of IDOS into those patient populations. So I would say it was a diversified performance in the quarter. You know, the strength of it does give us a little bit of pause, I'll call it, in terms of conservatism around how we think about that into the third quarter and through the remainder of the year. We're still early in that launch as well. So when you have quarters of this magnitude, you want to make sure you still stay somewhat cautious about how that will translate, certainly into a seasonal down quarter in terms of ophthalmology procedures in the third year. As it relates to Epioxa and 340B pricing, that's really factored in as a part of the prior question that I think Ryan asked. So when we think about the gross to net and what that kind of realized average ASP, and we've sort of consistently said around 60K is our starting point, that really factors in the impact of the 340B institution-related volume and the discounts associated with selling product into those institutions. Thank you.

Your next question from the line of Joanne Weensch with Citi. Joanne, your line is now open. Please go ahead.

Thank you so much and good evening. I want to sort of zero in on some of the expense management that we're looking at. In particular, gross margins have reached a new high by my math. Last quarter, you gave us 84% to 86% growth margins for the year. I don't know if that's still consistent. And similarly, it looks like you are starting to leverage OPEX. What your current thoughts are for that?

Hey, Joanne, it's Alex. Thanks for the question. And yeah, we were pleased absolutely to see the continued accretion in the gross margin during the quarter. And as you mentioned, it landed approximately 85%, which was up roughly, you know, call it you know 90 basis points from last quarter and you know that accretion was driven as you might expect from the growing contributions of Eidos and Epioxa and the overall revenue mix and you were asking about looking ahead you know we would continue to expect modest gross margin accretion over the remainder of the year and particularly in the fourth quarter as the Eidos and Epioxa sales you know continue to become a greater share of our revenue mix Now, that all said, you know, we'll continue to stick with our targeted guidance range for the year of a gross margin of 84 to 86%. We're holding that steady as we move forward at this point.

And on margins?

Yep, on operating expenses, yep. Nope, that's exactly right. We, you know, we were obviously, we're encouraged to see the operating leverage in the quarter. and our philosophy remains the same. We're going to continue to push our operating expenses such that we realize the leverage in the model while still investing in these priorities around commercial and R&D and that will be our philosophy growing forward. And again, you couple that with the cash and what we're trying to do there and we're just trying to manage the business toward a cash flow break-even stance and those all kind of fold together and triangulate.

Excellent. Thank you so much.

And I guess, Joanne, I'll just end, you know, just to get it out there on the record that for operating expenses for the year now, given the, you know, the outperformance on the top line, you can expect our operating expenses to land somewhere around $600 million for the year.

Thank you again. Your next question from the line of Mason Carrico with Stevens. Mason, your line is now open. Please go ahead.

Hey guys, appreciate the questions here. Going back to the guide, you called out IDOS revenue in the $275 to $285 million range this year. That seems to imply a pretty minimal sequential growth from the Q2 numbers. So just to confirm, is that largely just driven by your commentary around being conservative on commercial and Medicare Advantage volumes? Is there anything else in the back half we should be aware of?

Yeah, Mason, there's nothing I would call out in particular around it. I think I sort of answered that before by saying that whenever you have this level of outperformance in a quarter and it's really the first, you know, we certainly continue to see sequential growth and progress throughout our launch and strong growth on a year-over-year basis. But the second quarter was so strong, I think we'd like to see another quarter or two of that before we call it a trend. And so I think we just want to be cautious about how you translate that Q2 number into Q3 in particular. And just knowing that volumes seasonally tend to be down in the third quarter and given that outperformance in the second, I just Your next question from the line of David Saxon with Needham and Company. David, your line is now open. Please go ahead.

Great. Good afternoon. Thanks for taking my question and obviously a really strong quarter here. So I wanted to ask my question on EPIOXA and, you know, would love if you could talk about the cadence of prior off submissions you saw in the second quarter. Did you see any uptake in activity as the J code became effective here in July? And then how does the the backlog of eyes looking in the portal, you know, the cases that are kind of awaiting approvals and would love to see color on just the cadence of approvals as you move through the quarter and into July. Thanks so much.

Yeah, David, I think, so let me start with the second quarter and the cadence there. As you might expect, The majority or certainly a significant portion of the $11 million of revenue that we talked about was realized towards the latter part of the quarter. And that stands to reason with an FDA approval that was as we exited the first, it took time for some of those claims to make their way through the prior authorizations, the contracting around them, and ultimately to get those approved and shipped and those treatments to happen. So I think we're now thankfully through that part of that process. But having said that, you kind of get there in June, and then on July 1, a very important milestone, but one that does shift gears for us a bit, is the permanent J code being established. So you made that progress, you got those patients treated, and you did that in the miscellaneous code environment. and on July 1st, obviously you have, it's not a full reset if you will, but there's a partial reset there around making sure those patients are getting access in the contracts and both the prior authorization as well as the payment approvals are happening with that permanent J-code now in place. And so you got to start back over a little bit in that context and make it through. And that's why we called out here on this call the potential for volatility around the epioxin and corneal health results in the third quarter in particular as we reset that. But I'll finish this by addressing, I think, part of your question around the backlog. And that along with the things that you heard Tom mention earlier in terms of the payer network, the progress we've had there, the site of care network, and so on and so forth in terms of the foundations of our launch, we've been extremely encouraged by The sheer number of patients that are being put in to seek approval for epioxide makes us, I'll call it very bullish around what this product can mean for us. in the intermediate term. And the question becomes more about how quickly can you get from where we stand today to seeing these patients get approvals and access to treatment on a more rapid basis. Certainly, as we make our way into 2027, that'll be our focus here. But the leading indicators are strong in terms of the number of patients that our providers are seeking access to epiox as a therapy form.

Great. Thanks so much for that, Joe.

Your next question from the line of Stephen Lichtman with William Blair. Stephen, your line is now open. Please go ahead.

Thank you. Hi, guys, and congratulations. I'm wondering on your Epioxa customers, how they're viewing the specialty pharmacy option versus By and Bill. Are we seeing most go to specialty pharmacy initially? How quickly are they getting confidence so that they're shifting to By and Bill? Because obviously that's another driver over the medium term. Thanks.

Yeah, absolutely. So that answer that question has very much to do with which side of care you're talking about. So there are clearly those institutions and groups who have the experience and are much more comfortable out of the gate with the buy and build pathway. And you see them pretty much even in these early days bypassing the specialty pharmacy option. I think as you get more into the broader community-based practices, you can imagine that they lean a little bit more heavily, if not entirely, on the specialty pharmacy option. It's certainly, again, in these early days. That does not mean that we don't believe over time. They won't shift some of their thinking around that versus the buy and build pathway. But it's a little early, you know, again, thinking about we just got the permanent J code here less than a month ago. And so from that standpoint, I think for them to have that confidence, they've got to start seeing consistent and recurring approvals, even through the SP pathway with individual payers before they're going to start thinking about whether they should buy and build that. So I think that'll be a part of the journey here over the next several years, but one we're prepared to support.

Thanks, Joe.

Your next question from the line of Anthony Patron with Mizuho Group. Anthony, your line is now open. Please go ahead.

Thanks and congrats here on a solid quarter. I'll keep it to Epioxa. Maybe first just on the competitive landscape as it sits today and just how it's going to evolve over time. Do you think we're in a position to gain share, I guess, from scleral lenses which is an option here ahead of corneal cross-linking. Are you seeing those patients come in? And then there's some combination therapies under development, some private companies out there. So if you look ahead over the next couple of years, how do you think the cross-linking specific competitive landscape will shape out assuming we have a potential entrant again at some point next year or the year after? Thanks.

Well, I think first, It's important to remind ourselves that we're at the beginning of a pretty transformational product launch and maybe even more importantly a seismic shift in the standard of care. And when you think about what that means in terms of driving awareness and detection and access to treatment at a different level, that's obviously a large opportunity for Glaucos and for our customers and most importantly their patients. Whenever you build a market like that, you do so expecting competition. And you hope that that incremental competition comes in the form of responsible market participants who are going to invest and hopefully help accelerate that shift in overall market growth. I think when we look at it sitting here today, we should be many, many years away from market share dynamics outweighing expansion and market growth as the key consideration. The reality is that when you think about things like scleral lens, that's really not a competitive solution. These patients often will have scleral lens even after therapy. The point is you stabilize and arrest the progression of a sight-threatening disease. and so from that standpoint I think the fact that you've got a solution that doesn't require removing epithelium lowers the bar for patients or for providers to act more prophylactically in the treatment of the disease and put scleral lens where it should be which is you know post-operatively a part of continuing that vision as you move forward after a cross-linked procedure. So I think that Epioxa helps us in that broader initiative in terms of are solidifying cross-linking as the therapy of choice. And I think ultimately, we provide the investment to meaningfully change. We've talked before about the difference between doing 18,000 to 20,000 eyes, where we ultimately believe the market could be as high as 50,000 or 100,000 annual eyes at any given year that's potentially addressable. But we've got to go do the work to build that market the hard way and prove that to ourselves and to you all.

and I'll add on to what Joe's saying. This is Tom and we spend lots of time and effort building new marketplaces. So you can imagine we spend considerable time figuring out how to protect our market share and how to grow these marketplaces over time. And so it's important to point out not only how much progress we'll make with Epioxa in the near term, but we already have a second or we call it now a third generation customized topographically guided eyelid therapy that's going to begin clinical trials in 2027. And if that product performs as well as I think it will and can, we could have a product that has demonstrably greater reductions in Kmax than even what we're seeing with the current methodologies and a preferential treatment of the peaks to allow us to create the ultimate kind of sphere and refractive indices that may be able to throw off even better best corrective visual acuity. So you can imagine not only would any competitor have to deal with a really formidable commercial team that Joe has put together, but we'll have to then have to deal with a demonstrably, possibly far better approach that we will have just in the near term. So you can imagine in our contemplation If we spent the time and effort to build this marketplace, we will spend that time and effort to protect it as well.

Thank you.

Your next question from the line of Yi Chen with HC Wainwright. Yi Chen, your line is now open. Please go ahead.

Yi, are you there? Maybe I'm you.

Can you hear me?

Yeah.

Hi, this is Katie on for Yi. Just real quick on looking at re-administration and TREX. Is what you're seeing what you kind of expected from early re-implantation data? Are you seeing any cannibalization on the devices?

I'll start if Tom wants to add something he can. I think as it relates to re-administration, we're continuing to see successful procedures get done. Obviously, it's still somewhat limited because these are really for some of our earliest commercial patients that are just now getting the window where you see that, but where they're eligible, we're seeing them get done and get done successfully. I don't see anything there in the context of cannibalization. I see that as additive in terms of the physicians and those patients determining that they want to stay on the therapy as the initial I-dose wears off. And if you think about it in the context of I-dose T-Rex, you know, in the future and the approvals there, I think that's only additive in the context of that overall algorithm for getting those patients therapy both initially as well as during a re-administration procedure.

Perfect. Thank you. This concludes our question and answer session. I will now turn the call back to the company for closing remarks.

Okay, I want to thank all of you for your time and attention today, and thank you for your continued interest and support of Gold Coast. Goodbye.

This concludes today's call. Thank you for attending. You may now disconnect.