Welcome to the conference call to discuss Glaukos Corporation’s acquisition of Avedro, Inc. and the Second Quarter 2019 Financial Results that each company have released this afternoon. A copy of the company’s press release can be found on the company's respective websites. 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] This call is being recorded and an archived replay will be available online in the Investor Relations section at www.glaukos.com. And www.avedro.com. I would now like to turn the call over to Chris Lewis, Glaukos Director of Investor Relations and Corporate Strategy and Development. Please go ahead.

Thank you and good afternoon. Joining me today from Glaukos are president and CEO Tom Burns. CFO, Joe Gilliam and COO Chris Calcaterra and from Avedro our president and CEO Reza Zadno and CFO Tom Griffin. Following our prepared remarks we will 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 U.S. and international commercialization efforts, the efficacy of our current and future products, our competitive market position, financial condition and results of operations in the proposed acquisition transaction with Avedro. These statements are based on current expectations about future events affecting us in our subject to risks, uncertainties and factors relating to our operations and business environment and the proposed transaction; 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 releases and our recent SEC filings for more information about these risk factors. You'll find these documents in the investor section of the company's respective websites. Comments we make today about the proposed acquisition transaction with a Avedro do not constitute an offer to sell or the solicitation of an offer to buy any securities nor the solicitation of any vote with…

Good afternoon and thank you for joining us. Today is truly an exciting day for Glaukos as we report record second quarter financial results and announced a definitive agreement whereby Glaukos will acquire Avedro in an all stock transaction. Based on our closing stock price today the deal values of Avedro at approximately $26.68 per share or a total transaction value of $500 million. This transaction appears too highly complementary hybrid pharma and device organizations combining Avedro disruptive bio activated pharmaceutical solutions and R&D capabilities with Glaukos's global commercial scale, proven market building and shared reimbursement expertise, robust pharmaceutical and medical device R&D capabilities and extensive clinical and regulatory infrastructure. By leveraging our core strengths we see tremendous opportunity to accelerate Avedro's growth potential and pipeline programs while also strengthening our own R&D expertise to propel organic development programs forward. Avedro is an ideal strategic fit for Glaukos as evidenced by the striking similarities between our two companies. We are both transforming of tonics treatment paradigm and pioneering an entirely new market, like Glaukos Avedro is first to market with novel solutions backed by a considerable body of compelling clinical data and like Glaukos Avedro has secured favorable reimbursement and developed a market expanding pipeline to extend its leadership well into the future. Importantly, a majority of Avedro's target accounts are already Glaukos customers which will enable us to use our reach and scale to accelerate utilization of Avedro's pharmaceutical solutions. By virtually every measure we believe Glaukos is uniquely qualified to fuel Avedro's momentum, creating a durable synergistic global health franchise that should serve as a powerful growth engine capable of delivering near and long-term shareholder value and helping to transform Glaukos into a global pharma and device ophthalmic leader. We will discuss the key factors that attracted us to Avedro as well as our future plans in more detail shortly but first I'll ask Reza to make a few remarks. Reza?

Thanks Tom. I too would like to express my excitement about Avedro becoming part of the Glaukos organization and the significant value we believe the transaction creates for all of our stakeholders. We are proud to be pioneering new treatment options for patients with corneal disease and those seeking to improve their eyesight using a single application of bio activated topical ophthalmic pharmaceuticals. Our initial commercial product offering the Photrexa bio-activated topical solution is the first and only FDA approved treatment for patients suffering from progressive keratoconus, a sight threatening corneal disease characterized by progressive thinning and weakening of the cornea ultimately resulting in vision loss if untreated. I have long admired Glaukos and the manner in which the organization forge a new path to establish MIGS. I believe their existing infrastructure, relevant customer relationships and their proven strength in pioneering viable new ophthalmic markets with disruptive technologies that address important unmet clinical needs of practitioner and patients make Glaukos the perfect partner to help execute on our current and future business opportunities. Our board carefully and thoroughly review the strategic and financial benefits of this opportunity and has agreed in its view that this transaction represents a compelling opportunity for shareholders, patients, providers and employees. I'm more certain than ever that Avedro's best days are ahead. With that I'll turn the call back over to Tom.

Thanks so much Reza and we certainly look forward to welcoming you and your team to Glaukos. We've been carefully evaluating our core capabilities and long-term growth strategies for some time. With the fundamental strength of our base business continued execution and the combination of the complete glaucoma pipeline we have created to address all stages of disease severity, I am confident that the time is right to implement this next major phase of our long term growth strategy. Consider our key accomplishments this quarter one, we delivered record 2nd quarter net sales of $58.6 million, up 36% versus the year ago quarter allowing us to increase our full-year 2019 revenue guidance to $226 million to $231 million. Two, we progressed on the U.S. commercial rollout of our next generation iStent inject Trabecular Micro-Bypass device. Thanks to our team’s solid execution we have made considerable progress on the initial conversion process and U.S. reps are beginning to shift focus back to driving utilization and training new surgeons who have yet to adopt MIGS, surgeon feedback and real-world results remain very positive and give us high confidence on iStent inject’s potential of fuel meaningful U.S. sales going forward. Three, we drove robust international growth of 53% year-over-year as we continue to see the benefits of the international investments we've made over the past several years. Four, we advanced our industry-leading proprietary glaucoma pipeline that now addresses the full range of disease states and progression. Five, we continue to expand and strengthen our pharmaceutical R&D capabilities to advance more than 10 internal preclinical initiatives across glaucoma, corneal health, and retina. And six, we executed financially, not only with continuing revenue growth than outperformance but also with strong gross margins, disciplined operating investments and positive net cash flow. With respect to our existing…

Thanks Tom. I will first walk through the transaction terms and financial benefits followed by a summary of our second quarter financial results. Under the term of this agreement Avedro will merge with the subsidiary of Glaukos in an all stock transaction. For every one shareholder or share Avedro stockholder holds they will receive an exchange ratio equivalent of 0.365 Glaukos shares which implies the per share value of $26.68 and a total transaction value of approximately $500 million based on Glaukos' closing share price on August 7, 2019. The transaction represent a premium of approximately 42% based on both companies 60 day volume weighted average price. Upon closing Glaukos shareholders are expected to own approximately 85% of the combined company with Avedro shareholders owning the remaining 15%. As Tom highlighted earlier we believe this transaction is financially compelling for us. Through the first half of 2019 the companies generated combined sales of $131.7 million, an increase of 39% compared to the same period in 2018. As we look forward and as Tom discussed we expect Avedro to increase our revenue growth rate in 2020 and we expect to realize revenue synergies that could further accelerate pro forma revenue growth beginning in 2021. The transaction is expected to generate annualized cost savings of at least $15 million through reducing public company and administrative cost and is expected to be accretive to operating results and cash flow by 2021. The transaction is expected to close in the fourth quarter of 2019 subject to the satisfaction of customary closing conditions including [indiscernible] clearance and approval of Avedro shareholders. Now we will discuss our second quarter financial results. As noted earlier net sales for the second quarter of 2019 were $58.6 million a year-over-year increase of 36%. The U.S. represented 82% of our…

Thanks Joe. For the second quarter of 2019 Avedro revenue grew 63% to $10.3 million compared to $6.3 million in the second quarter of 2018. Worldwide drug revenue accounted for approximately 88% of our total revenue for the second quarter of 2019 and revenue from the United States accounted for approximately 80% of the total revenue in the second quarter of 2019. A $4.2 million increase in U.S. revenue drove the growth primarily from a $4.3 million increase in drug revenue driven by expanding average revenue per unit and volume of drug formulations sold. The utilization rates strengthened in the second quarter of 2019 to 2.81 Photrexa treatments per account site per month compared to 2.1 in the second quarter of 2018. As of June 30, 2019 we have 332 active centers in the United States which we estimated a 30% penetration into our 1100 target centers. We now expect 2019 revenues to be in the range of $38 million to $41 million compared to our previous range of $37 million to $40 million. Our upwardly revised outlook implies anticipated annual growth of 43% at the midpoint of the range. I'll now turn things back to Tom for a few closing remarks.

Okay. Thanks Tom. So I'll wrap up by reminding you that our goal of Glaukos is to build durable disruptive franchises and large and growing markets where we can leverage our core competencies in microscale surgical, sustained pharmaceutical and hybrid platforms across glaucoma, corneal health and retinal disease. The acquisition of Avedro combined with our promising organic initiatives and other strategic expansion plans create a hybrid pharma and device ophthalmic leader which we believe is ideally positioned to deliver sustainable long-term growth and create meaningful shareholder value for years to come. I could not be more enthusiastic about the future of Glaukos as we embark on our aspirational mission to transform ophthalmology. By turning the call over for questions I want to express my deep appreciation to Avedro's talented and dedicated employees. We look forward to working closely with them to plan integration and ensure a seamless combination. So with that I'll open the call to questions. Operator?

[Operator Instructions] Your first question comes from Robbie Marcus with JPMorgan. Your line is open.

Hi, this is actually Alan on for Robbie. I guess one question is kind of on that 15 million part of the rationale for the deal really is the cross selling opportunity. So I guess that's when it comes to generating that [indiscernible] where is it going to come from?

Hi Alan it's Joe. Thanks for the question. So with respect to the 15 million you're absolutely right in the way you ask the question I mean this is ultimately about our ability to achieve the channel synergies and drive revenue growth especially as we get towards 2021. On the cost savings in particular it really comes primarily from company -- public company costs as well as what you'd expect on this sort of administrative side and given the current size of Avedro there's a lot of things that they continue to do that rely on third-party consultants and expenses associate with that that we believe ultimately we can do in-house here with our existing infrastructure at Glaukos.

Got it. And then I guess when just moving on to guidance, so it looks like you guys raised it a little bit but given you already raised guidance a little bit conservatively on the first quarter call, I know you said that UK was a little bit stronger this quarter but looking into the back half like what's kind of like keeping you guys a little bit I guess a little less, little more conservative on the guidance front [indiscernible] concerns there?

Yes. Sure Alan. It's Joe again. I'll break that down between the United States and international markets. Internationally, it quite frankly is sort of what we said on the first quarter call. While in the second quarter the UK actually performed quite well. The cuts did happen in April and we do know that over time that's going to be a headwind to that market in particular even though it wasn't as much of a headwind in the second quarter as we anticipated. So I think as we continue to play our way through the UK situation we want to make sure that we're appropriately capturing that and are thinking about international guidance. In the U.S. we usually talk about a series of topics in the dynamics around the trends especially with our U.S. business and what I'll say sort of simply is all the trends that were we saw on the first quarter really continued in the second quarter with very little change if you will but having said that in the context of competitive trying and trialing we continue to expect to see it and it's and we continue to expect to see some growth in it. I think as we think about the set up for the second half we want to continue to be cautious about what that could mean for our U.S. business even though to your point thus far in the first half we've been delighted with the results we've seen.

Got it. And then sorry just one more when it comes to Avedro, you think it can help with a kind of a halo effect of injecting iDose? Does that give you like a better presence in the office as you have such a differentiated asset, starting in fourth quarter? Thanks.

Well, I'll answer that. This is Tom and I think it does have an appreciable effect. I mean we will be entering with a paradigm changing new pharmaceutical ingredient into the offices where really as we think about it of the current 1100 targeted accounts that Avedro is approaching we are already actively addressing 700 of them. So we have intimate relationships with really the vast majority of the targeted accounts and with something that is such a paradigm changing solution that can help such an underserved market place. Of course I think it's going to add value with our representatives entering into these practices.

Your next question comes from Lawrence Biegelsen with Wells Fargo. Your line is open.

Thanks for taking the question. Congrats on the deal. Tom one on Avedro, Joe one on the guidance. So Tom why is this the right time for this deal given your strong pipeline, I'm sure you've known Avedro for a long time. So why is this the right time?

Yes. Thanks Larry. Great question. So we believe that the opportunity and the timing of this transaction are a deal at this time to fortify our long-term growth potential. So both companies have just come off record second quarter revenues and we're both really strongly positioned in our respective marketplaces and Glaukos really has just completed its treatment algorithm in glaucoma which is designed to really give a sustained commercial growth and sustained competitive advantage well into the mid 2020s and beyond so with the capstone agreement with Santen we've now capped off a full portfolio of products that treat glaucoma from its most incipient stages to late stage treatment. So it's incumbent upon me to look for a long-term growth potential and we believe we have the opportunity to build powerful commercial franchises within this corneal commercial class just like we've done in glaucoma. The characteristics of the class are vastly underserved market are very very similar to what we did with MIGS and Avedro is an ideal partner and if you think about it, Avedro has a paradigm changing technology. It's already has very, very strong foundational clinical data. It's established its J code and a solid reimbursement foundation. It's the first to market in this vastly underserved embryonic marketplace and it's be able to address with really a palpable, a new product to address these unmet clinical needs. And I would say that the transaction really plays to our strengths in two major ways. One, we believe we're very good at disrupting and creating new marketplaces. So I would argue that just what we've done in glaucoma by setting up this template in this portfolio that gives us such a sustained quality competitive advantage, it's a challenge and opportunity for us to do this with cornea as well and we have every intention to do so. And then secondly Larry, if you think about the commercial fit that within the organization it is enviable. We'll have 700 to 1100 accounts that are currently targeted we already call on. So we'll have kind of a very, very modest change in bandwidth for our commercial organization and if you think about it what Avedro has been able to accomplish with 17 representatives now with the new math will have nearly five times the mass and muscle and commercial sales representatives hitting the marketplace and so for all these reasons it is the right opportunity. It is the right time and that’s why we're striking now.

Perfect and just one follow-up for Joe. Just a cadence of growth in Q3 and Q4 for standalone Glaukos given that the comps get tougher in Q4 and Joe the midpoint of the second if guidance implies growth of about 18%, is there any read through there? How should we think about maybe puts and takes for 2020 as we kind of update our models here? Thanks for taking the question.

Thanks Larry. Well, let's think about this for 2019 obviously as we think about the remainder of the year, you have to remember first the seasonality that we tend to experience and as we've said in the past, the first quarter can be 22% -- 23% of our overall business. The Q2, Q3 tends to be about 25% of the year each and Q4 tends to be somewhere in the 27% to 28% zip code. I think that's the most important determine when you think about the set up for the overall year. Obviously, we've had a variety of puts and takes but as we look at it I think it actually should land us back in a place that looks somewhat like that typical seasonality. When you think about the implied growth in the second half obviously you've got comparability to the second half of 2018 and I think everyone on this call knows the recall associated with CyPass happened really as we went into September. So detail into the third quarter of last year and the fourth quarter really had a full run rate of that CyPass recapture in it and that that will temper the year-over-year growth percentage as we think about this fourth quarter.

Maybe that's helpful Joe. Just color on puts and takes for 2020 given that 18% implied second half growth and I'll drop. Thank you.

Yes. No. I mean I think when we think about 2020 and will obviously get to that when we get to our fourth quarter call and the guidance there but I think it continues to be all about execution about the addition of new surgeons as our sales force gets back to bringing in new doctors more so than converting the existing physician base and utilizing a benefit of that. I think it's about the expansion of same store sales as we've talked about that we believe comes with the conversion diced injected getting a full-year benefit of that. And then of course as Tom mentioned depending upon the timing of the Santen product hitting we could potentially have some benefit from Santen in 2020 as well but we'll obviously dial that in as we know the timing or more on the timing associate with that product.

Your next question comes from Brian Weinstein with William Blair. Your line is open.

Hey guys, thanks for taking the question. Going back to the revenue synergy discussion it seems pretty obvious that there's a good strategic fit here. You talk about revenue synergy in 2021 and beyond. Why would you not be able to see anything sooner than that? It would seem that maybe the plug-and-play isn't quite there word to use here but pretty close to that. Thanks.

Yes. Thanks Brian. It's Joe and Tom or Chris can add on here. I think the way to think about it is it takes a little bit of time to actually organizationally make all this stuff happen. So while we will be putting our full salesforce behind this day one, we know from deals like this sometimes there can be disruption that happens during that time as well and so, I think we want to make sure that we've got as we're setting expectations that we think about 2020 is potentially having some put and takes as we navigate that and that you were confident by the time you turn the corner to 2021 you should start to see the benefit of this combination in the context of the ability to grow above what the expectations would be on a standalone basis.

And I would just add and say Avedro has done a wonderful job getting the J code and putting into place commercial payer coverage. You see how well-defined they are and how much commercial payer coverage they have but there's always a hangover with doctors who express some skepticism that coverage and payment is available. So that take some a little bit of a Missouri show-me-state what's going on and Reza can add to this as he deals fit within the commercial organization takes a little while to overcome and I can't imagine a better combined companies than us and Avedro to be able to [talk] that and to make payment a routine part of the use of drugs in the marketplace. But it'll take some time.

Yes, I'm going to add. I agree with what Tom is saying. We definitely have now more than 95% coverage and Photrexa there is a J code for that. All nationals are covering it. All most regional insurance are covering. There are few regionals left, so those are still we need to work with them. Again that's why we're still as Tom mentioned still need some support for accounts to, for those regional insurance to pay this consistently.

Okay and then not sure if Reza or Tom you guys want to do which one of you want to just kind of educate [indiscernible] how do you guys that two organizations together can actually help accelerate R&D in commercial, well we talked about commercialization but just I guess how you guys can jointly accelerate the R&D on both sides of the house. Thank you.

Well thanks Brian. I guess I'll ask Reza who's been so prominent in bringing this pipeline into reality to address the first part of the question and then I'll try to address how is a combined business we can accelerate and move that forward. So Reza.

Yes. So the first product that receive FDA approval was the Photrexa that's the only FDA approved for the treatment of progressive keratoconus. We just as Tom mentioned completed the enrollment of a clinical study for the next-generation treatment with a new drug epi-on the enrollment of that is complete and we are in the one-year followup on that and then separately that phase 2A is different. For every application we have a system activation system and its own corresponding drug. So these are the two studies currently in the clinical.

And as far as a combined business if you think about it already the Avedro has shown really strong prowess in creating using both optical and scanning boxes in order to bio activate these pharmaceutical compounds and transform them on the surface of the eye. It's really quite an amazing accomplishment what they've done but I think when we put them and combine them with now the greater than 30 scientists, engineers, biochemists that we've been able to recruit from Allergan and other major companies I can't help but think we're going to add substantial intellectual capability to what we'll be able to create as a combined company and in the clinical side you can imagine as a small company typically you have a Spartan clinical group as you look the [indiscernible] resources and get the highest returns and I think when we combine Avedro's clinical group with our substantial clinical and regulatory infrastructure, I'm very-very encouraged to see how quickly we can attack both clinical recruitment and maybe bring these products to fruition into approval in a more expedited fashion.

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

Afternoon. Thanks for taking the question. Just one quick housekeeping one Joe what kind of color do you have on this transaction?

This transaction actually does not have a color attached to it.

Okay and then Tom forgive me for being blunt here and with this question but I think people are going to look at that what's going on today with in process R&D charge, you're talking more about iDose extended-release now which is a newer thing for you. You're doing Avedro as well on top of that which has a lot of products in the pipeline. So I think what people are going to assume here is that something's wrong in the pipeline with additional iDose you have presented it or with infinite or something else along those lines. So what can you offer up to make us all confident that there's not some other issue with the pipeline that's causing you to do this Avedro deal or something with the core business that's causing you to do this Avedro deal as you're lapping tough comps in the next year, etc.

Well, I guess what I would say if we're accused of anything we'd be accused of great ambition. Okay. And if you look at my career this is not anything new. In all the roles that I've had within several companies I will certainly test and challenge organizations to move forward in expedited fashion to create growth in as many areas as I can conceive and I think that will benefit shareholders and so I want to address something that I can't approve or disprove that kind of perception but what I can tell you is that if you think about the logic behind a company now that has really rung the bell within glaucoma has a fulsome dedicated pipeline that treats all stages from incipient glaucoma to late stage glaucoma carries us through with commercial value into the 2020s and beyond. I think it's time for us to be able to look beyond into another growth are, we may be able to recreate this opportunity and recreate really prominent shareholder value. And so that's how I'd answer the question.

Okay. Fair enough. And then maybe something that's a little bit softer. Just the Santen deal you guys haven't put a lot of air bars around what that's going to look like from a contribution perspective in ‘20 or beyond. Can you talk a little bit about that and then also on the international side was really strong again this quarter. Just any color there would be helpful. Thanks.

Thanks Matt. But thanks for saving the softer question for me. So on the Santen side we really have to work with our partner before we can share much more. So what we've said there quite frankly is let us get through them having submitted and where we can talk more about potential timelines and coordinate with them around what we will and won't say publicly around the economics that transaction. All I can say sitting here now is what -- they've said which is they expect a filing in 2019 and approval and commercialization in 2020 and we're preparing accordingly alongside them. In regarding international, international performance there we really couldn't be more pleased. We continue to see another quarter of broad-based growth reported at 53% constant currency of 64%. It was across the globe. Our usual stalwart markets contributed meaningfully newer markets like Japan and France contributed meaningfully and perhaps the surprise for us relative to the set up going in as I mentioned in the prepared remarks was that the UK held in there much more robustly than we anticipated coming into the quarter. So that's really kind of where we sit today from an international perspective.

And one more thing I'll add Matt is to think about we talked about the strength of our portfolio, I think you heard in the prepared remarks that we now have with late-breaking readout we have this view of the phase 2B data now out to two years. This is new. This is the first time I'm reporting it publicly and the data shows durable, durable reductions in inter ocular pressure and reductions in medication burden. This is exciting and this is something that should give investors even more confidence in the path and the route that we're choosing and then supplemental to that is the fact that we've figured out how to have a form factor that can look and feel very close to initial iDose that holds nearly two times the level of medication within its tiny vessel. And so if anything, I think people's confidence and strength and conviction should be buttress by this call and by the pipeline that I'm asserting.

Very helpful. Thanks so much.

Thanks Matt.

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

Good afternoon and thank you for taking the questions. And let me just start by congratulating Tom and Reza both. It's potentially powerful combination you guys are putting together and looking forward to seeing what you do here. Maybe first for me to if you wouldn't mind just give us some additional color as you evaluated the Avedro transaction, things that you were considering whether it's either the extension of exclusivity now potentially out to the 2027 period, competition outside the United States that has an beyond epi-on offering as it stands today and of course the pipeline, I'm assuming most focused there on both low myopia and presbyopia but just help us walk us through how you kind of wait those kind of three key tenants in evaluating the transaction and I've got one quick follow-up. Thank you.

Okay, I'd be happy to weigh-in and what I found attractive about the organization as I grew to know it and please correct me if you want me to redress the three [tenants] you talked about but first I looked at really the paradigm changing technology that is resonant and the fact that this is such a vastly [indiscernible] embryonic marketplace, I mean if you think about it keratoconus is dramatically under diagnosed and there have been no treatment options. So this is the first of its kind and it happens to replicate what we faced with MIGS entering with the first eye stent. The pipeline is fulsome and extraordinary. It offers the ability to really make this a value proposition if you think about it of using a single application of a pharmaceutical to arrest a site threatening disease and you think about that in context, I get terribly excited as in [indiscernible] it's a potential patient if I had keratoconus to know that I could come in and with a topical application of a pharmaceutical that's activated by UV light and transform them the surface of the eye that I could arrest the progression of a site threatening disease and perhaps be able to ameliorate a condition of having to have a corneal transplant later in life. These are things that are powerful, palpable and high valuation propositions for patients When I look at the strong clinical data they have I think the numbers are something like a 130 peer review studies. These are studies that Avedro has been part of and it's studies that have been done the appetite for this area is extremely strong because a lot of these have been done with non-granted physician sponsored studies and, so I know that the appetite is there…

I appreciate all the detail there. Maybe I will keep in line with everyone else and I'll give Joe the softball and so much going on right now and you just talked about $15 million in incremental cost savings as we go into 2020. The reduction more so in the corporate costs that seems with the added infrastructure with other various R&D projects here. I mean you have a pipeline pretty formal. So how should we think about additional spend that may be required to run the business going forward, the incredibly talented team for a business of any scale but what type of incremental investment should we be thinking about for Glaukos now moving out since you're obviously going to be folding in the later organization as well? Thank you.

Yes. Thanks Chris. It's Joe. So first I just want to make sure one quick correction on that so that our expectation of the $15 million plus run rate is -- as we make our way towards 2021 they'll be a great time [indiscernible] but yes I mean as we think about the overall operating expenses and investment we're making the business the way I would answer it is this I think the history in some ways the best predictor of the future. You have a pretty good sense of the way we've run the organization here to date in that we've largely lived within our means, so right since the time of the IPO. We've made substantial investments in the pipeline as it exists today organically over the last several years while still generating cash quite frankly within a day and again largely living within our means. So while there may be periods here as we see opportunity to push forward investment and to reiterate what Tom said long-term growth is our objective. I think that our historical track record speaks for itself in the context of being able to deploy and invest in a prudent way.

Your next question comes from Joanne Wuensch with BMO Capital Markets, your line is open.

Hi this is Steve on for Joanne. Can you guys just discuss some of the market dynamics in the U.S. in the quarter? Are you still expecting mid-teens volume growth for the year? And then just as a follow-up to that can you add any more color on the same store new store sales in the quarter with the inject launch? What was the sales forces’ ability to go on the offense and convert new physicians in the quarter, thanks.

Thanks. So I guess a couple of things on that first and a broader market dynamics. As I start off earlier in the call it largely unchanged from what we saw in the first quarter. I think the market growth continues to kind of be in line with our expectation and we continue to attract towards what we believe based on the information we have is mid-teens growth for the year. I think the CyPass dynamics are unchanged in terms of the share recapture there. The competitive landscape is largely unchanged in the context that we continue to see trying and trialing and it continues to be an important component of what we're seeing in the marketplace but that so far it continues to track a little bit below of what our internal expectations had been. So I think from market perspective we're not really seeing much different in Q2 than what we saw in Q1. I know Chris if you want to come comment on what you're seeing within the salesforce.

Sure Steve this is Chris. I would say that the only difference from the first quarter or excuse me from the first quarter and the second quarter is towards the end of that second quarter we're now beginning to gradually move towards adding new docs, more than we did since the launch of iStent inject. We have primarily been focused on converting our iStent users to iStent inject. Now we began to focus on increasing utilization or same-store sales growth as you asked within our existing accounts and adding more new docs as we head into the second half of the year.

Okay. Thanks for taking the question.

Our next question comes from the line of Ravi Misra.

Hi, thank you for taking the question. Just a couple of [indiscernible] and then just a couple on the pipeline that's the kind of existing pipeline. So you mentioned the 700 of 1,100 Avedro accounts. I am just wondering, are you willing to provide any color around the 700 and kind of what percentage of your accounts that represents, so we can get a handle of how Avedro can go after your market and is there any breakup fee on that and I guess I'll wait post the response to ask the pipeline question. Thank you.

Hey Ravi it's Chris. I am going to address the first part and then I'll turn it over to Joe about the break-up fee. In terms of those 700 accounts these are all accounts that we're calling on in terms of what the percentage is where we have business. We're not in position to discuss that but as you look at that the vast majority of these accounts which are comprehensive ophthalmologists are accounts where we're already in and that is very exciting to me. It's quite synergistic for our people to be able to not only talk to them about glaucoma therapy but corneal health as well. So I look at this is a great opportunity to leverage the two businesses. I think there's a lot of synergies here and I think this will be proven out moving forward.

And Ravi on the break-up fee front there's a customary breakup fee for a transaction of this nature.

Okay and then if I could ask around iDose you spoke somewhat about the follow up data of two years. Can you maybe help quantify that compared to what you presented back in early January around the phase two data and 12 months data that you were seeing. Then just one last one on my end, just where are we on the kind of conversion from iStent inject, is that kind of complete or are we still kind of still in the late innings there? Thank you.

Thanks Ravi. I'll take the first question and while I have said that we have the full cohort in at the phase 2B, I've purposely kept it at a very top line draw of talking about durable, appreciable decreases in inter ocular pressure and medication burden but if you think about that what I've said from the very beginning is that we needed to have six months of delivery to have a commercial product. The ideal would be a year and I've said that now constantly I think since our IPO and what I'm telling you today is that we have data that suggests that the product is delivering intra ocular pressure reductions and meaningful decreases in medication burden at two years. So I haven't gotten and won't get more granular than that. Phase 3 will be the ultimate determinant of the iDose's success and certainly I want to be able to husband data away from potential competitors absolutely they don't know the true capabilities of this product but I will tell you that I am more enthusiastic and become increasingly convinced that iDose can become a very meaningful part of the glaucoma treatment paradigm. Chris?

As far as the second part, are we complete in terms of converting our iStent customers to iStent inject, we're largely through that process and I do want to remind everybody that that's not going to be 100% conversion to iStent inject. What we've seen in other markets in Germany, Australia, Canada is roughly 90%, not to say that that's what it will be in the U.S. but that gives you an idea of what's happened in other geographies.

[Operator Instructions] Our next question comes from the line of Ryan Zimmerman with BTIG.

Great. Thanks for taking the questions. I'll follow up on Ravi's question a little bit maybe asking a little different way. I mean understand that there's 1,100 counts that Avedro is targeting and you're in 700 of those today but from the accounts that Avedro hasn't identified Tom or Reza maybe you can characterized of the cataract and refractive surgeons that are out there today how many have interest in corneal health or how would you characterize those that maybe have a corneal focused ophthalmologist or corneal ophthalmologist who can do this who maybe is not identified in those 700 or excuse me 1100 accounts and what that looks like over time and their ability to get those revenue synergies they are talking about 2021 and I have a follow-up question.

Hey Ryan this is Chris and I'm going to address that one. Those additional accounts are refractive only or corneal only accounts where they're specifically focused on that and wouldn't have any cross over into glaucoma. So we'll address that in a different manner than just with our glaucoma team.

Okay understood. And then I think Tom you made some commentary around a secondary group of sales reps eventually. So appreciating you are going to combine or to leverage your existing sales force into Avedro's sales channel but maybe you could just talk about kind of the timing or when you think you could have maybe a more specialized sales force secondary to your existing sales force today.

Yes. I'd be happy to. So what I said before is that Ryan we had 75 representatives that are currently on the street in the United States and that the total amount with Avedro are 17. Avedro has a very capable highly qualified sales force and so what we want to be able to do is to see if we can transform that sales force into a specialized sales force of what we'll call corneal health and the deliveries will be a little bit different. They will be really supplementing the activities of the main sales force. They'll be working strongly on utilization within practices showing practices how to find these patients, how to identify them, how to sell them from the beginning opportunity and to alert them to this new pharmaceutical single-use preparation. We also are quite skilled in looking at OD referral networks and trying to put ODs and optometrists in concert with ophthalmology practices. We do this all the time in glaucoma and this corneal health sales force will be dedicated to priming and utilizing those OD referral networks to be able to drive both identification, capture, adoption and utilization of the Photrexa formula. So I am highly encouraged. There are great people on the ground both at Avedro and Glaukos. We are going to spend some time really reviewing how we can put both these sales forces together so that the synergies are powerful.

And just Tom if I could squeeze in one last one. What do you see as the ideal number given that they gave have 17 today, is that -- how undersized in your view is that sales force and where do you see yourself taking that guys overtime potentially?

Well, I think I wouldn't comment on kind of the upper scale but what I will tell you is if you think about it what Avedro is accomplishing with 17 people is now going to be multiplied by again by the new math by 5 or 6 actually total of over 90 combined people that are going to be able to go after the adoption and utilization of Photrexa. So I think if I had to say today I think that's going to be more than ample to be able to achieve the desired adoption rates that we want to see within the marketplace. But like all things Ryan we will assess as we go. If we need more representatives we will do so.

Okay. Thank you for taking the questions. Congrats on the acquisition.

Thank you.

Okay. So with that first I would like to thank Reza and Tom for their diligence in this process and really welcome their team into Glaukos. And I would like to thank all of you for joining us today for your time and attention and for your continued interest in Glaukos and now n this combined entity. Thank you very much.

Thank you for your presentation and this concludes today's conference call. You may now disconnect.