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Glaukos Corp  (NYSE:GKOS)
Q4 2018 Earnings Conference Call
Feb. 27, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Welcome to Glaukos Corporation's Fourth Quarter and Full Year 2018 Financial Results Conference Call. A copy of the Company's press release issued after the market close today is available at www.glaukos.com. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions). As a reminder, this call is being recorded and an archived replay will be available on the Investor Relation section at www.glaukos.com.

I will now turn the call over to Chris Lewis, Director of Investor Relations and Corporate Strategy and Development. Please go ahead.

Chris Lewis -- Director, Investor Relations, Corporate Strategy and Development

Thank you and good afternoon. Joining me today are Glaukos' President and CEO, Tom Burns; CFO, Joe Gilliam and COO, Chris Calcaterra. Following our prepared remarks, we'll open the call to questions. To ensure ample time and opportunity to address everyone's questions, we request that you limit yourself to one question and one follow-up.

If you still have additional questions, you may get back into the queue. Please note that all statements other than statements of historical facts made on this call that address activities, events or developments, we expect, believe, or anticipate will or may occur in the future are forward-looking statements. These include statements about our plans, objectives, strategies and prospects regarding among other things, our sales, our products, our pipeline technologies, our US and international commercialization efforts, the efficacy of our current and future products in our competitive market position, financial condition and results of operations.

These statements are based on current expectations about future events affecting us and are subject to risks, uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, therefore they may cause our actual results to differ materially from those expressed or implied by forward-looking statements. Review today's press release and our recent SEC filings for more information about these risk factors. You can find these documents in the Investor section of our website at www.glaukos.com.

With that, I will turn the call over to our President and CEO, Tom Burns.

Thomas William Burns -- Chief Executive Officer, President and Director

Thanks, Chris. Good afternoon, and thank you for joining us today. Glaukos finished the year strong, capping an excellent 2018 that saw it succeed our financial outlook each quarter, bolster our US market leadership position with the iStent inject launch, drive increased international penetration and make significant clinical and regulatory progress to advance our transformative pipeline.

While we're pleased with the strong performance in 2018 and focused on 2019 execution, we continue to believe we're still in the early stages of unlocking the Company's long-term value potential.

Today, Glaukos reported fourth quarter net sales of $54.1 million, up 30% versus the year ago quarter and 23% sequentially. For the full year 2018, net sales rose 14% to $181.3 million from $159.3 million in 2017. We are also issuing 2019 net sales guidance of $220 million to $230 million. Joe will discuss our financial results and outlook in more detail later in the call.

Our mission at Glaukos has been aspirational from the outset, to truly transform glaucoma therapy for the much-needed benefit of patients worldwide. And today we remain ambitious as we seek to transform Glaukos into a global ophthalmic pharma and device leader by pioneering powerful platforms and sustain pharmaceutical systems, micro scale Surgical Devices and Diagnostics capable of providing drop-less approaches for effectively managing glaucoma and possibly other ocular diseases.

These platforms combine to create a robust portfolio of micro scale injectable therapies potentially capable of providing an optimized treatment solution at each stage of glaucoma disease stage severity, from the earliest manifestations to the most severe and in both combocataract and stand-alone procedures. They are also providing an increasingly promising early stage development efforts in other ocular diseases.

We believe these pipeline platforms, if approved could significantly expand our market opportunity at a solid cadence and ideally position Glaukos for growth and leadership well into the next decade.

To put this in context, using our treatment algorithms and combination therapy expectations, we estimate our US addressable market opportunity could potentially expand seven-fold from roughly 600,000 procedures today to approval of over 11 million diagnosed and treated eyes, of which we believe over 4 million can be treated annually.

In 2018, we made significant progress to advance our mission with the following key accomplishments. Number one, we received FDA approval and commenced the US commercial launch of iStent inject months ahead of our original timing expectations.

Number two, we began patient enrollment of key US pivotal clinical studies for iDose Travoprost and iStent infinite. Three, we continued to deliver strong international growth. Four, we expanded our pharmaceutical capabilities through continued investment and new pharmaceutical development agreement with D. Western Therapeutics Institute.

Five, we added to our patent portfolio of over 200 method and Apparatus patents designed to protect the viable technologies that we've created. And six, we grew our body of clinical evidence, which now includes 104 separate peer-reviewed articles.

A key driver of our success in the fourth quarter was the tactical US commercial launch of the iStent inject, our next generation Trabecular Micro-Bypass device. We continue to deliver on our expectations since the September launch. Now in full swing, our methodical launch strategy is designed to achieve optimal procedural proficiency and patient safety through superlative sales rep training and skills transfer to the surgeon.

Our seasoned US commercial team is meeting its internal conversion targets with more than half of our installed base either fully trained or in the training process by the end of 2018.

We've also seeing early indications that the iStent inject has the potential to be a market expanding product in the US overtime, similar to our international experience. Thus far we have opportunistically trained numerous first time MIGS surgeons on iStent inject despite our primary focus on existing customer conversions.

Over the first half of 2019, we will remain primarily focused on converting existing iStent implanters with a gradual shift of our reps back to training new surgeons who have yet to adopt MIGS, along with increasing utilization within existing accounts.

Overall, we are very pleased with the initial response to iStent inject by the ophthalmic community, surgeon feedback and emerging real world results here mirror our experience in international markets and continue to provide us with high confidence in the product's prospects and what it means for Glaukos going forward.

US surgeons consistently highlight the elegant and straightforward nature of the iStent inject implant procedure providing them with confidence and predictability of stent placement. They know greater than expected IOP reductions with promising initial outcomes given the two patent bypass openings through the Trabecular meshwork designed to create multi directional flow through Schlemm's canal.

Finally, feedback and results reinforce the product's superlative safety profile in its minimal invasive tissue sparing (ph) procedure.

In 2018, we grew our robust body of clinical literature that is unrivaled within the MIGS category. Our clinical library now consists of 104 peer reviewed studies supporting the performance of our technologies, including a total of 38 studies on iStent inject or multiple iStent therapy and 18 clinical publications, specifically on iStent inject.

These datasets continue to confirm the product's ability to achieve sustained IOP reductions that are equivalent or better than the US pivotal trial results.

By now, many of you have seen the results from Dr. Hengerer of Germany published in Ophthalmology and Therapy. In a case, serious study of 81 eyes implanted with iStent inject in combination with cataract surgery, his data showed a Mean IOP reduction of 37% to 14.3 millimeters of mercury and a 68% reduction in medication burden of three years post implantation.

A recent presentation of the Asia Pacific glaucoma Congress by Dr. Clement, showed 165 subjects implanted with iStent inject in combination with cataract surgery achieved a mean IOP reduction of 23% to 14.2 millimetres of mercury along with a 72% reduction in medication use of one year.

Another recent publication in Ophthalmology and therapy, by Dr. Guadiz (ph) compared the use of iStent inject in combination with cataract surgery versus the first generation iStent. In his study of 73 subjects with 6 months post implantation, the iStent inject cohort achieved a mean IOP of 12.7 millimetres of mercury versus the iStent cohort mean IOP of 13.9 millimetres of mercury.

In addition, 100% of subjects in the iStent inject cohort achieved an IOP, less than 18 millimetres of mercury and researchers observed a mean medication burden reduction of 83%. Dr. Guadiz's publication represents an important milestone for Glaukos marking the 100th-peer reviewed publication on our technologies.

iStent inject represents the first in a potential cascade of new product and platform introductions over the next five years. In 2018, we achieved several critical pipeline milestones, most notably commencing two key pivotal clinical programs for iDose Travoprost and iStent infinite. The iDose Travoprost Phase 3 IND clinical program consist of two concurrent prospective randomized double-blind pivotal trials that will enroll approximately 1,100 ocular hypertensive or open-angle glaucoma subjects across roughly 100 investigator sites, primarily in the United States.

The studies have a primary efficacy endpoint of non-inferiority to topical Timolol with 12 weeks and a primary safety endpoint of one year. Similar to our Phase 2 iDose study, we will follow the Phase 3 subjects for three years post implantation in order to evaluate sustained longer-term efficacy duration along with safety.

Patient enrollment for the iDose Travoprost studies is proceeding in line with our expectations to support our FDA approval target of late 2021 to 2022. Based on our interactions with the ophthalmic community and feedback from clinical investigators participated in the iDose Phase III studies, we believe there is substantial appetite for viable continuous glaucoma drug delivery treatment option that combat (ph) the ubiquitous problem of patient non-adherence to topical medication.

This comes as no surprise given several large scale published studies that have demonstrated that roughly 40% to 60% of patients do not adhere to their prescribed medication regimen. Further as measured by pharmacy data of more than 10,000 subjects in the glaucoma adherence and persistent study or gaps only 10% of patients who are prescribed glaucoma drops were persistent with therapy without any gaps and refilling the prescription over the following year.

In the same study, 27% of the patients who discontinued their medication cited hyperemia as their main reason. Hyperemia is a frequent and a disturbing side effect because topical glaucoma drugs require a relatively high loading dose to get through the precorneal tear film. However, because iDose is secured and anchored into the square behind the cornea, it is designed to create therapeutic index capable of providing IOP reductions over sustained period of time and a micro illusion rate.

In short, since iDose delivers the drug from inside the eye rather than on its surface, we believe it has the potential to significantly reduce hyperemia and other side effects often associated with topical drops while ensuring 24/7 compliance.

This was a valid -- this was validated in our Phase II, 12 month interim data analysis in which no adverse events of hyperemia were reported in either iDose cohort. In addition, we believe iDose has the potential to significantly expand our future addressable markets by 3 million eyes annually in the US alone.

Given this potential for broad label and recurring treatment algorithm, we envision an opportunity for iDose to pave the way for a new treatment algorithm where surgeons could use it alone or in combination with other therapies, including our portfolio of surgical flow devices to more effectively manage patient's IOP.

Further, we believe the powerful iDose Travoprost data available thus far underscores the potential of our novel drug delivery platform to produce future generations of sustained therapies for glaucoma and potentially other ocular diseases. We are pursuing these opportunities through internal R&D programs along with pharmaceutical development agreement we entered into 2018 with D. Western Technology Institute.

This agreement facilitates joint research efforts using compounds from the proprietary Rho-kinase or ROCK inhibitor compound library. While our collaborative efforts remain in the early stages, we are encouraged with the initial discovery progress being made for potential new ROCK compounds capable of being used on the iDose platform that could have a highly synergistic mechanism of action to a prostaglandin.

While we actively recruit our iDose pivotal trials, patient enrollment continues for the 510 (k) pivotal trial for iStent infinite, our 3-stent stand-alone product for advanced and refractory glaucoma patients. As a reminder, this is a prospective multi-center single-arm clinical trial that will enroll roughly 65 refractory subjects. We continue to target FDA approval for iStent infinite in the late 2020 to 2021 time period.

Finally, the pivotal trial data set analysis and initial preparation for FDA discussions for iStent Supra, our Suprachoroidal stent is expected to be completed over the coming months.

We look forward to examining the full dataset with the FDA and determine the most appropriate regulatory and potential commercial path forward for this product. Our notable clinical and regulatory progress in 2018 leaves us well positioned to further advance our transformational pipeline in 2019 and beyond.

We believe the powerful platforms we're building combine to represent the most comprehensive portfolio in the global glaucoma landscape, a portfolio capable of meeting the needs of the entire disease state continuum from Ocular Hypertension to refractory glaucoma, both in combocataract and stand-alone procedures and through a variety of mechanism of action treatment approaches.

Throughout 2018, we also made meaningful progress to expand and strengthen our international business. Not only did revenues grow 61% in 2018 over 2017, while we continue to successfully optimize reimbursement in key markets to support future growth and to resolve several reimbursement challenges that often remain a fundamental issue in pioneering new international markets.

In Australia, the permanent reimbursement code covering the implantation of iStent and iStent inject in combination with cataract surgery became effective on November 1st, 2018. In France, we were delighted to learn that after more than five year process, the French Health Authority designated iStent inject to be registered under (inaudible) or add-on list, which provides hospitals with reimbursement coverage to use the new technology.

We are now working with the French Ministry of Health pricing committee and hope to finalize pricing sometime in the first half of this year. Our international commercial strategy in 2019 will be more of the same. We plan to continue to support and grow our quality experience, surgical sales teams are working to optimize the reimbursement coverage and payment landscapes, train surgeons and leverage our compelling clinical data to grow MIGS adoption and drive deeper penetration.

In addition to the 16 international countries where we've had a direct market presence today and continue to add resources, we continue to evaluate and make initial investments in potential future direct international markets for us where favorable market opportunities and reimbursement pathways exist.

While we remain bullish about our long-term OUS growth opportunities, it is important to remember, it takes time to pioneer a completely new market in each of these international countries and potential unforeseen setbacks may arise through these early market building product phases.

To that point, in the UK, the NHS has recently proposed reductions in reimbursement for a broad range of medical devices, including glaucoma devices set to become effective in April 2019.

As always, we will work with the NHS and medical community in an effort to secure fair reimbursement for our customers. Finally, our 2019 focus will be on continued commercial execution in the US and abroad, to accelerate our clinical and regulatory efforts, expanding our core research programs and implementing improved enterprise systems and facilities infrastructure to support our future cadence of global growth.

So to the last point, as we discussed on our third quarter call, 2019 will be an important investment year for us. Late last year we were excited to announce our plans to shift our corporate headquarters to Aliso Viejo where our new campus will be designed to provide Glaukos with customized state-of-the-art facilities to support the pharmaceutical and medical device innovation that is necessary to achieve our long-term growth objectives.

Combined, we believe the investments we're making today will help strengthen Glaukos' opthalmic pharma and device leadership position, fuel our continued growth and solidify the foundation from which our franchise can significantly expand over time.

So with that, I'll turn the call over to Joe for a summary of the fourth quarter and full-year financial results. Joe?

Joseph E. Gilliam -- Chief Financial Officer, Senior Vice President, Corporate Development

Thanks, Tom. As noted earlier, net sales for the fourth quarter of 2018 were $54.1 million, a year-over-year increase of 30%. The US represented 84% of our sales in the quarter and international 16%.

In the US, fourth quarter 2018 sales were $45.3 million, up 25% in the same period a year ago. US sales in the quarter primarily benefited from the launch of iStent inject and the competitive market development late in the third quarter.

Outside the US, fourth quarter sales were $8.7 million, an increase of 63% from the same period a year ago. Our international business continue to outperform expectations driven by broad-based growth. Our gross margin in the fourth quarter was 86.8% versus 88.9% in the same quarter in 2017. The latter of which included an one-time benefit related to an inventory valuation adjustment. We continue to expect our gross margins to remain in the mid 80% range going forward as our product MIGS shifts increasingly to iStent inject in the US.

SG&A expenses in the fourth quarter rose 24% to $32.1 million versus $26 million in the year ago quarter. This rise reflects higher personnel and other costs related to the ongoing expansion of our domestic and global infrastructure primarily in our commercial and international operations and investments associated with the iStent inject launch.

R&D expenses rose 23% in the fourth quarter to $13 million versus $10.5 million in the same year-ago period. This rise reflects primarily the cost of additional personnel as we expand our pharmaceutical R&D capabilities and within clinical research where in particular the direct cost associated with the iDose trial enrollment continues to increase.

We finished the fourth quarter with net income of $1.8 million or $0.04 per diluted share compared to net income of $1 million or $0.03 per diluted share in the fourth quarter of 2017. As of December 31st, 2018, we had cash, cash equivalents, short-term investments, and restricted cash of $149.3 million compared to $137.8 million at the end of the third quarter of 2018 and $119 million at the end of 2017.

While we are pleased by the profitability and cash flow generation of the business, it is important to remind you that as we move into 2019, our primary focus remains on long-term growth as we prudently invest to build a MIGS market, drive increased penetration of our iStent and iStent inject platforms globally, drive our robust pipeline initiatives through necessary clinical studies and programs, advance new opportunities into clinical studies and build our global infrastructure.

As we said before, and consistent with Tom's remarks, we do expect CapEx to increase substantially in 2019, as a result of the investments we are making across the business, notably, with the build out of our new headquarters facilities and upgrades in our global systems capabilities, including the implementation of improved enterprise systems to broaden our technology capabilities to support future growth.

Now, I'll briefly recap our full year 2018 results. Total net sales were $181.3 million, a year-over-year increase of 14%. US net sales were $151.7 million, a year-over-year increase of 8%. International net sales were $29.6 million a year-over-year increase of 61% and approximately 16% of total 2018 net sales versus roughly 12% in 2017. Our 2018, gross margin was 86% versus 87% in 2017.

SG&A expenses for the full year rose 24% to $119.5 million versus $96.3 million in 2017. R&D expenses rose 28% for the full year to $49.7 million versus $38.9 million in 2017 excluding the onetime in-process R&D charge of $5.3 million.

Our 2018 net loss was $13 million or $0.37 on a diluted per share basis, compared to a net loss of 100,000 or $0.00 per diluted share in 2017. As Tom indicated earlier, we are introducing 2019 net sales guidance of $220 million to $230 million. This guidance takes into account our expectations for organic growth, the updated MIGS market landscape and competitive dynamics.

The new doctor training dynamics associated with our inject launch and the expansion of our international sales, which we now expect to be in the range of $36 million to $38 million for the full year, based on current foreign exchange currency exchange rates.

Finally, as we think about our operating expenses in 2019, we expect to modestly expand our SG&A spending from Q4 levels to support the inject launch international efforts and increased our R&D spending as clinical costs increased to support our pivotal trial activities.

With that, I'll now turn the call back to Tom.

Thomas William Burns -- Chief Executive Officer, President and Director

Okay. Thanks, Joe. So to recap, Glaukos is pursuing an aspirational mission to transform glaucoma therapy. We made significant strides to advance this mission in 2018 with the US approval and commercial launch of iStent inject along with the commencement of the key pivotal clinical studies for iDose Travoprost and iStent infinite.

While the progress we've made to-date is important, we believe our future opportunities remain robust. The powerful platforms we are building in sustained pharmaceuticals, micro-scale surgical devices and diagnostics should help us evolve into a hybrid ophthalmic pharma device global leader capable of providing optimized drop-less treatment approaches for effectively managing glaucoma and potentially other ocular diseases.

I believe we'll remain in the early stages of the unlocking the Company's long-term value potential and I'm excited for the opportunities that lie ahead. So with that, I'll open the call to questions. Operator?

Questions and Answers:

Operator

(Operator Instructions). And your first question comes from Brian Weinstein with William Blair. Your line is open.

Brian Weinstein -- William Blair -- Analyst

Hey guys, thanks for taking my question. Just thought we'd just start on the guidance, the $220 million to $230 million, obviously, you guys had a very strong fourth quarter and just sort of annualizing that would just elongate it within the range there. So you know just -- can you just remind us about how we should be thinking about seasonality coming in here, and -- thinking through the other parts of the guidance in particular, anything that you can provide on pricing that you guys are thinking on inject and any other dynamics that we should be considering?

Joseph E. Gilliam -- Chief Financial Officer, Senior Vice President, Corporate Development

Hey, Brian, it's Joe. So maybe I'll start off and I'll start somewhat of a high level and then if we want to dive into any of the other subjects, you can sort of raise there, we can do that. I think, as we think about guidance for the year as you know pretty consistent with past practice, we run and look at a lot of different scenarios and we think about that in the context of the standard bell curve distribution of potential pass (ph) for the year and we take a look at that and decide where we're going to land. In the context of 2019, there is a handful of things, none of which will surprise you that are driving our views on the year.

Core market growth remains healthy, but we have to analyze that and think about various scenarios there in particular as we think about the dynamics around new doctor training. CyPass share recapture, it continues to be in line with the expectations in our prior communications. So we expect that over the course of 2019 as well.

The inject conversion process right, we've talked about that I think in the prepared remarks, we discussed that we remain on track there as well and we expect that to continue to phase in over the course of the first half of 2019. Competition, obviously we continue to assume trialing associated with full scale launch there. (inaudible) to date they really haven't formally commenced the full launch, but we have to back that into the views of 2019 guidance.

Now in the international front, we continue to have broad progress, but we have to factor in the inevitable setbacks with a small Company and we're building brand new markets, as Tom alluded to in 16 distinct countries. So we continue to take a cautious view of that progress as we look forward.

Brian Weinstein -- William Blair -- Analyst

Got it, thanks. And then as far as some of the investments that were made there, you're thinking about making rather -- you talked about some of the CapEx investments and other things, but can you give us an update on where the sales force is right now and the investments that you're specifically making both domestically and internationally to just to expand that sales force?

Chris M. Calcaterra -- Chief Operating Officer

Hey Brian, it's Chris. We continue to look at these things opportunistically and where we see an opportunity, we do add people is an example of that, we added some people, some sales reps in France, at the US level, we are still in the high -- mid to high 50s with sales reps and 90 overall in terms of sales professionals and those numbers are pretty much near the international markets as well.

So we'll continue to look at it and where we see opportunity we'll add people as needed.

Brian Weinstein -- William Blair -- Analyst

Thanks Chris.

Operator

Your next question comes from the line of Robbie Marcus with JP Morgan. Your line is open.

Robert Marcus -- J.P. Morgan -- Analyst

Yeah. Thanks a lot and congrats on the good quarter. Joe, may be I can follow-up on that last question and ask it a different way. So I know you don't give quarterly numbers, but maybe help us understand what the Company did in the US, maybe what market growth was in 2018, if you could help us out, maybe on a one-time look at volumes and pricing for the year, true us up at your end and help us understand what you're assuming for market growth in 2019 and those the volume price dynamic as well, as there's a lot of moving parts, and I think it would help us understand the guidance a little better.

Joseph E. Gilliam -- Chief Financial Officer, Senior Vice President, Corporate Development

Yeah, absolutely, Robbie, happy to do that. Maybe I'll first address the market related questions, then I can circle back to this kind of the quarterly cadence component what you and Brian were asking.

So first from a market standpoint, I think the year ended up shaping up almost exactly as we had predicted at the outset. So I would say that for the year, we saw market growth in the neighborhood of 20%, to get there, as you can imagine that meant the fourth quarter was somewhere in the mid-teens from market growth perspective, again, as we sort of predict and expect at the beginning of the year and entirely driven by our new doctor training efforts in the slowing of that associated with the iStent inject conversion.

As we think about that, turning the corner in 2019, we have to take into consideration that you know, both the lag effect of the lag of new doctor training in the second half of '18 as well as new doctor training being slowed with a continuation of that being slowed in the first half of 2019.

When we think about all those pieces and we look at the opportunity in 2019, we see mid teens market growth for the 2019 time period.

That's on the market side, we can talk about individual drivers later in the call. On the quarterly cadence component, you're right, there are a fair number of puts and takes that we can -- we can discuss. I think the -- the net of that, and while we don't give quarterly guidance is that we would expect that the 2019 year in the US will actually somewhat mirror the traditional cataract seasonality.

It was a reminder because we've had a couple of years here, where this has been a little bit of a different pattern, the typical cataract seasonality happens about 22% of cataract volumes happened in the first quarter with 25% happening in the second and third quarter and 28% in the fourth quarter.

So I would think that's probably the best indicator you can have, as we think about the rollout of 2019.

Robert Marcus -- J.P. Morgan -- Analyst

Great. And maybe just the one other component for '18 that I think would be helpful is, what do you think the de-stocking number was?

Joseph E. Gilliam -- Chief Financial Officer, Senior Vice President, Corporate Development

Yeah, so it's interesting and obviously we've talked about this in the past, it's hard to pinpoint the exact number. We can look at it in a fairly macro sense and I will say this, and we talked about there being some destocking at the tail end of the second quarter that continued into the third.

It's our belief that in the fourth quarter based on the analysis we've done here that, that actually had reversed itself a bit, particularly in the second half of the fourth quarter, where we start to see a little bit of restocking, and I'll say that restocking is probably measured in the tune of $1 million plus of revenue that was coming back end as some of our larger customers they converted over to iStent inject.

Robert Marcus -- J.P. Morgan -- Analyst

That's really helpful. And then maybe if I could just squeeze in one last one for Tom or Chris, if you guys could just give us your thoughts from the field (ph) and what doctors are telling you in the uptake of inject, how they like it and just maybe comment on what you're seeing from competitive launches out there. Thanks a lot.

Chris M. Calcaterra -- Chief Operating Officer

Okay, hey Robbie, it's Chris. We couldn't be more pleased with the execution and the roll out strategies of the iStent inject launch. Things are going well and it's really validating what's been seen in the clinical literature and what we've seen internationally with iStent inject, doctors are getting good results, they are pleased with the IOP reductions, the safety profile and the ease of use of the product.

So in short, it's going not exactly, but very much in line with what we expected.

Operator

Your next question comes from the line of Larry Biegelsen with Wells Fargo. Your line is open.

Lawrence Biegelsen -- Wells Fargo Securities -- Analyst

Hey, guys. Thanks for taking the question and congrats on the good quarter. Hey, Joe, just a follow-up one on the guidance for Q1, I mean it looks like you got about based on what you've said about $188 million at the midpoint for the US in 2019, 22%, it's about $41 million. You just did $45 million in Q4, but the growth rate slowed, so that $41 million if I'm doing the math right, is about 23% versus the 25% you did in Q4, but it would seem Joe, that you could actually do better and given the stocking issues in the second half of the year, so why would on a year-over-year basis, growth slow a little bit in Q1 and I had a follow-up.

Joseph E. Gilliam -- Chief Financial Officer, Senior Vice President, Corporate Development

Sure. Larry, I mean obviously it's difficult to follow all the calculation you just did there but conceptually, I think what we're looking at first and foremost as you alluded to, it's always a little bit difficult if we go from our seasonal high quarter Q4 into our seasonal low Q -- quarter in Q1 and in particular in Q1, just the dynamics behind the scenes are that we see a lot of the volume actually happen in the month of March in particular.

So that informs a little bit about where the guidance as we sit here today and think about this, but in general the business remains healthy, obviously we are expecting to experience an uptick in some of the competitive trying and trialing activities that would come from competition, and sometimes the international business can be a bit more speculative about the outset of the year as well.

Lawrence Biegelsen -- Wells Fargo Securities -- Analyst

All right, thanks for that. Sorry for the math question there. So on international, how big is the UK, how big is the reduction in the reimbursement, and just lastly, Tom, you could probably have anticipated this question, but what's the next steps in the Ivantis litigation and I guess given the strength of the patents, at least we thought the strength of your patents, we were surprised that you haven't requested a preliminary injunction. Is there anything you can share with us? Thanks for taking the questions.

Thomas William Burns -- Chief Executive Officer, President and Director

Yeah, why don't I go first and attack that head on? So just to give everyone kind of a refresher on where we are, we really are kind of in the relatively early phases of litigation with Ivantis as you know, we filed our preliminary claims against Ivantis in April. The trial date has been set for February of 2020 and over the course of this year, you can expect that there'll be discovery from both sides, depositions and claims construction prior to the trial.

You also know that we filed a summary judgment to get a finding of non-infringement on the patents that Ivantis had started against us in litigation and the court did grant Ivantis some additional time for discovery, but we expect that the judge will hear that motion again probably sometime in March of this year.

We are on track with where we are in the litigation, I will tell you that as you know, we've been consistent in our position that we're not going to -- we're not going to publicly talk about our IP strategy, but I will tell you that we've also been very consistent in that strategy, and we remain very, very confident in our position.

Joseph E. Gilliam -- Chief Financial Officer, Senior Vice President, Corporate Development

Okay. It's Joe. Okay, I'll start off with the UK question and Chris can add some color as well. We've obviously never broken out specifically individual country's revenue contribution, but what you have heard from us, especially over the last year plus, is that the UK has been an important driver of the overall growth of our international business, in particular since we launched iStent inject there at the latter part of 2017, so it's an important market for us, but we've not quantified that publicly.

Chris M. Calcaterra -- Chief Operating Officer

And to add some color to that, NHS has proposed a cut to all glaucoma devices, including us and this is now under review and there's a commentary period to be specific, it would affect the facility fee right now being reimbursed at $2,000 and would go down to $1,200 and this is something we're obviously working with the Congresses and individual physicians, and as I mentioned, we're in the commentary period and it is a proposal. So we'll see what happens over the next couple of months.

Lawrence Biegelsen -- Wells Fargo Securities -- Analyst

Thank you.

Operator

Your next question comes from the line of Matthew O'Brien with Piper Jaffray. Your line is open.

Drew -- Piper Jaffray -- Analyst

Hi guys, this is Drew on for Matt. Thank you for taking the questions. I know in the past you've been hesitant to disclose CyPass capture specifically, but now that you've had another quarter here, how should we frame expectations in the 2019 and should this really be an accelerating piece going forward?

Joseph E. Gilliam -- Chief Financial Officer, Senior Vice President, Corporate Development

Hi, Drew, it's Joe. I'll start off with that and if others want to add in, they can, I think with respect to CyPass, and the share recapture, it's really gone as expected and sort of as we communicated even from the early days post the recall announcement. So nothing new there in terms of what we experienced in the quarter.

We are -- we are capturing the majority, the vast majority of those procedures, but it's not a one-to-one, and for those procedures that are not being captured often they're being lost at later stage, you know, in therapy devices and we would expect, and there is no reason not to expect that would continue in 2019, as well.

Drew -- Piper Jaffray -- Analyst

Okay, and then...

Thomas William Burns -- Chief Executive Officer, President and Director

I would just -- this is Tom, I would just add to that, because in the real world, we're seeing perceptions that the real world results through the -- by (ph) iStent and inject are really significantly better than what we've see -- saw on the iStent pivotal trial or for that matter for iStent real world data. I think that makes iStent inject a more compelling opportunity for patients that are previously more relegated to CyPass for more moderately advanced patients.

I think that just puts us in better position to capture the majority of these patients.

Drew -- Piper Jaffray -- Analyst

Okay, great. And then on infinite, I believe that that device could be on the market in the next two years or so and is targeting more severe patients initially, but I believe there are also some mild to moderate patients that don't quite achieved IOP reductions as necessary with inject, could a 3-stent system like Inject be helpful to these patients, and if that was the case, would a separate approval be necessary to target them? Thank you.

Thomas William Burns -- Chief Executive Officer, President and Director

Yeah, OK. So what I would tell you again is that the iStent infinite is undergoing a 510 (k) review for refractory patients as you're all aware and as we move forward, we will seek approval for that indication and as you know, surgeons once this product when and if it is approved will have the discretion to use it in patients that they see better or where they think they can achieve desirable intraocular target pressures.

I think what we need to be cognizant of is to make sure that we have the appropriate coverage where payers will pay for that device in ranges that are outside the approved claim obviously we cannot and will not promote for any indications outside our approved claim, but we suspect that with a 3-stent alternative there will be some surgeons that will see a desirable need to use an iStent infinite for patients where they are seeking a little bit additional reductions in pressure to reach lower intraocular target pressures.

Drew -- Piper Jaffray -- Analyst

Okay. Thank you.

Operator

Your next question comes from the line of Jon Block with Stifel. Your line is open.

Jonathan Block -- Stifel Nicolaus -- Analyst

Great. Thanks, guys. Good afternoon, maybe 2 or 2.5, the first is price Joe, I believe, you usually give us some color on price historically, I don't know if I missed it, but how is 4Q '18 US ASP versus a year ago, and then in '19, I'm guessing you're going to have mix shift in your favor within Inject, will there also be any increase in price on the underlying Stent themselves and then I've got a follow up.

Joseph E. Gilliam -- Chief Financial Officer, Senior Vice President, Corporate Development

Sure. Thanks, John. Hi. So, I think for the fourth quarter of 2019, the reason why you din't hear that in our prepared remarks, it was a very modest benefit in the fourth quarter on a year-over-year basis, coming from the combination of the mix shift and just generally pricing with the inject device. And as you alluded to in the context of 2019, you obviously do get a bit of benefit from the mix shift as we have been pretty consistent in saying that the iStent Inject is a premium product and that we would expect to get a modest price premium for that device.

It's not -- it will phase in of course -- course of 2019 as we continue to convert doctors in accounts over types of inject and we'll see the full benefit of that obviously in 2020 once we got the vast majority of our surgeons convert.

Jonathan Block -- Stifel Nicolaus -- Analyst

Okay. Great, helpful, thank you. And then just to shift gears, can you talk a little bit about the competitive landscape, I mean any update on Ivantis what you are or are not seeing there, what's reflected in your guidance, I think to build on -- I think it was Brian's question earlier, if you sort of take that 4Q number in the US annualize it, add in your international, you sort of scrap that 220-ish type of numbers, if then maybe if you could also talk to -- what's the swing factors Joe, between the low end and the high end of your '19 guide? Thanks guys.

Chris M. Calcaterra -- Chief Operating Officer

Hey, Jon. It's Chris. In terms Ivantis, we've still -- they've still been limited in their activity, but we do expect them to ramp up and scale up through the course of the year. They've been very prominent at some of the major meetings in the first quarter, but at this point in time, they still seem to be doing a limited launch, a controlled launch to the best of our knowledge, they have between 10 and 12 representatives.

Joseph E. Gilliam -- Chief Financial Officer, Senior Vice President, Corporate Development

And then, John, the second part of your question, as you think about 2019 and what sort of frames the low versus the high, I'll reiterate sort of where we started this call with -- it's a little bit of everything, right.

So we talked about mid-teens growth and some these are inter-related, right, the pace in which we get the doctors converted over to inject, right, and those last sort of a handful of docs that are out there as we get toward the middle part of the year. What that does or does it mean in terms of our ability to get back and training new doctors and focusing on same-store sales growth, will have a pretty big impact both on the core market growth, as well as the pricing question that you asked previously.

On CyPass, to Tom's point, right, we run scenarios around what we're seeing today and how that may change as we look forward with inject being in the hands of more surgeons and our ability to capture a little bit more.

On competition, you were sort of just hearing it from Chris. I mean, it's still early days, but we have to obviously factor in scenarios that involve increased trying and trialing over the course of the years, as they -- we would expect that they would more formally commence the full launch.

And then internationally, as we talked about, there's things there, whether it's the UK example or those that are smaller that we don't call out or those that are unforeseen right now, to date, we've done a great job, I think in the Company in these markets are working our way through those resolving them with minimal disruption to the business, but, and as we think about 2019, we have to factor that in, as well as we think about the -- how to (inaudible).

Jonathan Block -- Stifel Nicolaus -- Analyst

Okay, very helpful. Thanks guys.

Operator

Your next question comes from the line of Chris Cooley with Stephens. Your line is open.

Chris Cooley -- Stephens, Inc. -- Analyst

Hey, good evening, and congratulations on a great fourth quarter. I'll keep it literally to two. Could you help us define significant when you think about the step up in CapEx this year in 2019, and then maybe I'll do the same thing everyone else has in regards to trying to parse guidance. You know, when you look at the OUS component, you just put up 63% in the fourth quarter and while, the UK may represent a fairly material headwind, you're expanding into new markets and you have now continued just overall adoption the guide only implies 20% to 26%.

So maybe you could help us think about what is and isn't factored in to that OUS component of your top line guidance for '19? Thanks, so much.

Joseph E. Gilliam -- Chief Financial Officer, Senior Vice President, Corporate Development

Sure. So, maybe I'll start with the latter part of that question, we'll focus on that. So from an international standpoint, obviously the couple of things going on there, one, we've talked about now at link the various things we have to factor in.

If you look back historically on the international business, you've seen a business that grew 135% in 2016, 95% in 2017, 60% roughly in 2018. One of the challenges in 2019 from a growth rate perspective, when you're looking at it that way, is just that from a comparability standpoint, 2018 was the first year in which all of our international markets were really running at full speed for the entire year.

You'll recall that the vast majority of the 16 international markets, we actually entered into over the course of 2017. So we had a little bit of favorable comparability as we looked at 2018 -- as we went through 2018, that won't be there for 2019.

But beyond that, we do factor in things, we said earlier about whether it's the UK or other potential setbacks in these markets as we look to grow them. Oh, and then sorry, you also asked Chris about the CapEx. So for us, we did about $10 million of capital expenditures in 2018 that was broad based as you'll see in our 10-K when it's filed.

For 2019, our best estimate right now is that may approach them when they were over the $20 million of capital expenditures, but I want to caution this in that -- there's a lot of variability in that, that has to do with the timing of the build out of the Aliso Viejo headquarters and the receipt of some of the associated TI allowances which are pretty substantial there.

So there could be some variability there and I would expect that to be fairly back-end loaded in the year.

Chris Cooley -- Stephens, Inc. -- Analyst

Thank you. Appreciate it.

Operator

Your next question comes from the line of Joanne Wuensch with BMO Capital Markets. Your line is open.

Matthew Henriksson -- BMO Capital Markets -- Analyst

Yes, hi. This is Matthew Henriksson in for Joanne. First question with regards to your commentary on opportunistically training new physicians, that sounded new from previous commentary. So what's the strategy about going into 2019, are you going to expand these opportunistic training, and then is this factored into your 2019 guidance?

Joseph E. Gilliam -- Chief Financial Officer, Senior Vice President, Corporate Development

Hi, Matt, it's Joe. So, first and foremost, of course it's all of our doctor training expectations by quarter have factored into the 2019 guidance. Well, maybe the first time you heard that in Tom's prepared remarks, we've often just said that one of our strategies would be to opportunistically hire or train new doctors alongside, the bar is high as you can imagine because the primary focus first and foremost, from the beginning and through today is on converting our existing surgeons, but there are exceptions to that, we've been very pleased with the reception that we've received in the community and the desire to be trained on injecting from those service (inaudible) in the past.

So we've taken advantage of that in cases, and so we were to simply pointing that out as a part of what's happened in the fourth quarter.

Matthew Henriksson -- BMO Capital Markets -- Analyst

That's helpful. And then just back to pricing, are you seeing the MACs be more willing to cover the add-on-code for the second stent for iStent inject? Thank you, very much.

Chris M. Calcaterra -- Chief Operating Officer

Hey, this is Chris. And at this point in time, there is just one MAC that is consistently covering the add-on-code, 0376T, the other MACs have been variable in terms of their coverage both from a rate perspective and whether or not they're covering it.

It's something that we're going to continue to pursue, something that we're hopeful of, but we do feel that the 0191T coverage of the iStent Inject are from professional fee standpoint is healthy enough for these doctors who want to use the best MIGS (ph) procedure out there.

So it's something that we're not counting on, but it's something that we're pursuing.

Thomas William Burns -- Chief Executive Officer, President and Director

And the 0376T code is not something that we factor into our guidance in the context of -- it would be upside as it continues to make progress.

Operator

Your next question comes from the line of Ravi Misra with Berenberg Capital Markets. Your line is open.

Ravi Misra -- Berenberg Capital Markets -- Analyst

Hi. Thank you for taking the questions. So I guess I have one -- just not to beat a dead horse on the guidance again, and then another on operating expenses. So just I think a lot of us are trying to understand here just whether there is a realisticness or conservatism based into guidance and based on some of the questions, can you just help us calibrate how we should be thinking about in our models like is the way to kind of think about this that you have this mix shift driving ASPs slightly higher offset by flattish surgeon training with kind of volume growth in existing accounts above levels exiting last year or kind of a good way to get to the midpoint of your number?

Joseph E. Gilliam -- Chief Financial Officer, Senior Vice President, Corporate Development

So. Hey, Ravi, it's Joe. I would say, we think about the sort of the year, I'm not sure I would necessarily say it's as much price-driven, maybe, it sounds like the way you set that up. I think it's fairly broad in terms of the drivers that are taking our business forward in '19 and as I mentioned earlier, as a combination of the -- of the core market grows, the CyPass share recapture, the pace in which we convert the remaining physicians over to inject and start focusing back again on same-store sales and in new doctor training, the competitive landscape and how that will evolve over the course of the year and then obviously the international business there.

Also, to reiterate again what we've always said -- with respect to setting guidance, we look at a lot of scenarios we look at what that means from the sort of distribution of the bell curve, if you will, and we try to be -- we have our guidance range be a bit left to center as you might expect, but we really do take a thoughtful approach in looking at all the various paths forward for the year before we set the number and give it to you guys.

Ravi Misra -- Berenberg Capital Markets -- Analyst

Great thanks, and then just my follow-up, you showed some really nice leverage on the SG&A line there in the quarter. Just wondering if that's kind of a one-time thing, or would you guys delivering this profitability in net income, help us think about maybe where the leverage can go in the model, if you go to that -- to the top end or the bottom end of your range. Thank you.

Joseph E. Gilliam -- Chief Financial Officer, Senior Vice President, Corporate Development

Sure. Well, I think one thing, let's take a step back on the fourth quarter from an operating perspective is obviously was a fairly material change in the marketplace competitive landscape heading into the fourth quarter. It's always hard to change your investments you're making in the business as fast as obviously what changed in the commercial marketplace.

Having said that, you heard from Tom, you heard form me, we're going to continue investing heavily in 2019, both from an infrastructure perspective, in the commercial infrastructure, in the increased spending around the clinical trials, iDose, infinite, et cetera.

So we're going to continue to make those investments over the course of the year. Growth there and operating spending will probably look something fairly similar to what you saw percentage wise in 2018. But as you think about longer-term in the operating leverage, that's there. We're clearly still building the pieces associated with our international business, our infrastructure that -- we're still in the middle of that.

But having said that, with our gross margin profile and just the dynamics of our business, we see a lot of operating leverage in the years ahead. In particular, as we get on the other side of the iDose launching some of the larger investments that we've got associated with that.

Ravi Misra -- Berenberg Capital Markets -- Analyst

All right. Great, thanks a lot.

Operator

There are no further questions at this time, I'll turn the call back to the presenters.

Thomas William Burns -- Chief Executive Officer, President and Director

Okay. So, this is Tom. I want to thank you all for your time and attention today and always, for your continued interest in Glaukos. Thanks, and goodbye.

Operator

This concludes today's conference call. You may now disconnect.

Duration: 55 minutes

Call participants:

Chris Lewis -- Director, Investor Relations, Corporate Strategy and Development

Thomas William Burns -- Chief Executive Officer, President and Director

Joseph E. Gilliam -- Chief Financial Officer, Senior Vice President, Corporate Development

Brian Weinstein -- William Blair -- Analyst

Chris M. Calcaterra -- Chief Operating Officer

Robert Marcus -- J.P. Morgan -- Analyst

Lawrence Biegelsen -- Wells Fargo Securities -- Analyst

Drew -- Piper Jaffray -- Analyst

Jonathan Block -- Stifel Nicolaus -- Analyst

Chris Cooley -- Stephens, Inc. -- Analyst

Matthew Henriksson -- BMO Capital Markets -- Analyst

Ravi Misra -- Berenberg Capital Markets -- Analyst

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