Core Insights - Brown Capital Management's Small Company Fund underperformed in Q4 2025, with a decline of 1.50% compared to the Russell 2000® Growth index's gain of 1.22% [1] - The Fund's performance for the entire year 2025 was down 11.46%, significantly lagging behind the Index's return of 13.01% [1] - The Fund's investment strategy is based on company fundamentals, which showed strong revenue and earnings growth in 2025 [1] Company Highlights - Glaukos Corporation (NYSE:GKOS) is a key holding in the Fund, focusing on glaucoma treatment through its medical devices [2][3] - The stock of Glaukos Corporation experienced a one-month return of -3.22% and a 52-week decline of 3.20%, with a market capitalization of $6.908 billion as of February 20, 2026 [2] - Glaukos offers innovative products such as iStent, Infinite, and iDose, with iDose being a recent FDA-approved implant that allows continuous drug delivery for glaucoma treatment, marking a significant advancement in the field [3]

Core Viewpoint - Glaukos (GKOS) has received FDA approval for its repeat dosing label for iDose, aligning with Wells Fargo's expectations, which is seen as supportive of the long-term iDose annuity model [1] Group 1 - The FDA approval for iDose includes some corneal-safety limits, indicating a broad label [1] - Wells Fargo maintains an Overweight rating on Glaukos shares with a price target set at $122 [1]

Core Insights - Alger Weatherbie Specialized Fund focuses on investing in a portfolio of 50 small and mid-cap companies with promising growth potential [1] - The US equity market ended Q4 2025 positively, with the S&P increasing by 2.7%, driven by better-than-expected corporate earnings and a supportive macroeconomic environment [1] - The fund's Class A shares underperformed the Russell 2500 Growth Index in Q4 2025, with Real Estate and Consumer Staples contributing positively while Information Technology and Health Care sectors detracted from performance [1] Company Highlights - Glaukos Corporation (NYSE:GKOS) is highlighted as a key stock, focusing on novel therapies for glaucoma and other eye disorders [2][3] - Glaukos experienced a one-month return of -7.131% but a 52-week gain of 22.99%, with a market capitalization of $7.131 billion as of January 21, 2026 [2] - The company reported a revenue growth of approximately 37% year-over-year, driven by its flagship glaucoma product, iDose, and received FDA approval for its next-generation corneal health product, Epioxa, which is expected to drive further growth [3]

Core Insights - Innovation is central to the company's strategy, driving its leadership in the ophthalmology market [1] - The company has pioneered the global MIGS (Minimally Invasive Glaucoma Surgery) marketplace and continues to lead in this area [1] - The introduction of iDose is aimed at creating a new market for procedural pharmaceuticals [1] - The company is expanding into the rare disease market and developing new procedures for corneal cross-linking to treat keratoconus [1] - There is an initiative to explore transdermal creams with active pharmaceutical ingredients (APIs) for anterior segment disease treatment, marking a novel approach in the industry [1]

Summary of Glaukos Conference Call Company Overview - **Company**: Glaukos - **Industry**: Medical Supplies and Devices, specifically in ophthalmology - **Core Focus**: Innovation in ophthalmic treatments, particularly in minimally invasive glaucoma surgery (MIGS) and procedural pharmaceuticals [4][5] Key Points and Arguments Innovation and Market Leadership - Glaukos has pioneered the global MIGS marketplace and is creating new markets in procedural pharmaceuticals with products like iDose [4][5] - The company has invested approximately $800 million in R&D since 2018, resulting in 12 commercially available products and 13 in various development phases [7] Market Growth and Financial Performance - Achieved over 30% market growth in the past year, with a sustained CAGR of over 20% for the last decade [7] - Reported a record quarter with revenues of $507 million for 2025, projecting a 20% CAGR over the next 10 years [36] Product Development and Pipeline - Focus on changing treatment paradigms for glaucoma and keratoconus, with significant advancements in products like iDose TR and Epioxa [8][28] - iDose TR shows promising results, with 81% of patients off all medications after one year and 70% well-controlled after three years [12][13] - Epioxa is a new treatment for keratoconus, targeting a younger patient demographic and aiming to increase patient access [30][31] Market Dynamics and Challenges - The current treatment paradigm for glaucoma is inefficient, with 90% of patients non-adherent to medication regimens [10] - Glaukos aims to shift clinicians towards interventional approaches that provide continuous treatment [10][11] - The company faces challenges in reimbursement processes for Epioxa, which differ significantly from those for iDose due to the complexity of commercial payers [46][48] Future Vision and Strategy - Glaukos envisions a future where interventional glaucoma procedures could match the volume of cataract surgeries, projecting significant growth in this area by 2035 [27] - Plans to create a new cadre of interventional glaucoma surgeons who will integrate iDose and iStent Infinite into their practices [26][27] - Commitment to building a comprehensive product portfolio that addresses all stages of glaucoma treatment [28] Additional Important Insights - The company is expanding its manufacturing capabilities with new facilities in San Clemente and Huntsville, Alabama [37] - Glaukos is diversifying its operations internationally, now present in 17 countries with over 300 employees [36] - The management emphasizes the importance of educating physicians and patients about the benefits of new therapies to drive adoption [55][56] Conclusion Glaukos is positioned as a leader in ophthalmic innovation, with a strong focus on developing new treatment paradigms for glaucoma and keratoconus. The company is navigating challenges in market access and reimbursement while maintaining a robust growth trajectory and a commitment to expanding its product offerings.

Group 1 - The firm Stephens raised the price target on Glaukos (GKOS) to $145 from $115 and maintains an Overweight rating on the shares [1] - The outlook for non-iDose U.S. glaucoma revenue was slightly moderated, while iDose revenue expectations were modestly increased [1] - Glaukos is viewed as "one of the best multi-year medtech growth stories" entering 2026, driven by expanding reimbursement, deeper utilization, a growing surgeon base, and a long runway of untreated and uncontrolled glaucoma patients [1]

Financial Data and Key Metrics Changes - The company has transitioned from a cash-burning phase to a cash flow break-even profile, with the convertible debt retired and a focus on capital-light operations [31][32] - Revenue growth is expected to continue, with operating margins projected in the 30% to 35% range as the company progresses towards profitability [76][77] Business Line Data and Key Metrics Changes - The core MIGS market has seen double-digit growth over the past year but is projected to decline in the mid-single digits next year, with the stent business expected to stabilize [13][16] - iDose is becoming a significant driver of revenue, with a shift towards pharmaceutical revenue potentially surpassing device revenue [9][10] Market Data and Key Metrics Changes - The reimbursement landscape for concomitant MIGS is facing low double-digit decreases, impacting professional fees while facility economics remain stable [20] - The company is currently working with four of the seven MACs that are reimbursing for professional fees, representing about 70% of Medicare lives [44] Company Strategy and Development Direction - The company aims to establish itself in the interventional glaucoma market, focusing on innovative product solutions and expanding its pipeline to include rare disease treatments like Epioxa [9][62] - The strategy includes enhancing education and awareness for rare diseases, which requires a different approach compared to more prevalent conditions like glaucoma [60][62] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting the importance of clinical outcomes and physician enthusiasm for iDose, which is expected to drive growth [28][30] - The company is focused on executing its strategies and addressing reimbursement challenges to facilitate broader adoption of its products [84][85] Other Important Information - The next-generation iDose TREX is in development, designed to carry a larger drug payload and potentially allow for longer durations of effect [55][56] - The company is also exploring in-office procedures for iDose, which could expand its market reach [57] Q&A Session Summary Question: What are the expectations for the iDose launch? - Management noted that while there were initial challenges with reimbursement, the clinical performance of iDose has exceeded expectations, leading to increased physician interest [26][28] Question: How is the company approaching profitability? - The focus remains on achieving cash flow breakeven in the short term while balancing revenue growth with necessary investments in product launches and R&D [75] Question: What is the outlook for the reimbursement landscape? - Management indicated that continued education and clinical demand are essential for expanding reimbursement coverage, with a goal of reducing the focus on reimbursement issues over time [49][50]

Financial Data and Key Metrics Changes - The company has transitioned from a cash-burning phase to a cash flow break-even profile, with the convertible debt retired and a return to normal capital spending [31][32] - Operating expenses are growing, but the company is showing leverage in its financial model as revenues increase [32][33] Business Line Data and Key Metrics Changes - The core MIGS market has seen double-digit growth over the past year but is projected to decline in the mid-single digits next year [13][16] - The introduction of iDose is cannibalizing some of the stent business, but it is also expanding the overall market opportunity [15][19] Market Data and Key Metrics Changes - The reimbursement landscape for concomitant MIGS is expected to decline in low double digits for 2026, impacting professional fees [20] - Four out of seven MACs are now reimbursing for the professional fee associated with iDose, covering about 70% of Medicare lives [44] Company Strategy and Development Direction - The company is focused on creating differentiated product solutions in large market opportunities, with a shift towards pharmaceutical revenues [9][10] - The strategy includes a strong emphasis on education and awareness for rare diseases, particularly with the launch of Epioxa [62] Management's Comments on Operating Environment and Future Outlook - Management is optimistic about the future, citing strong physician enthusiasm and positive clinical outcomes for iDose [28][30] - The company aims to shift discussions from reimbursement issues to clinical adoption and standard of care improvements in the coming year [84] Other Important Information - The next-generation iDose TREX is in development, designed to carry a larger drug payload and potentially allow for longer duration effects [55][56] - The company recognizes the challenges in treating rare diseases and is committed to transforming its approach to market access and patient education [60][62] Q&A Session Summary Question: What are the expectations for the MIGS market? - The MIGS market has grown but is expected to stabilize next year, with iDose impacting the stent business [15][16] Question: How is the reimbursement landscape evolving? - Four of the seven MACs are now reimbursing for iDose, with ongoing efforts to educate and drive demand for the remaining MACs [44][45] Question: What is the company's path to profitability? - The focus remains on achieving cash flow breakeven in the short term while aiming for operating margins of 30%-35% in the medium to long term [75][76] Question: What are the key challenges in launching Epioxa? - The company is aware of the need for education and awareness in the rare disease space, which requires significant investment and effort [60][62] Question: What will the company be discussing next year? - Management hopes to focus on clinical adoption and the opportunities associated with iDose and Epioxa, moving past reimbursement-related discussions [84]

Financial Data and Key Metrics Changes - The company is transitioning towards generating more pharmaceutical revenue than device revenue, indicating a significant shift in its business model [10] - The convertible debt has been retired, and the company is returning to a normal capital spend, aiming for a cash flow break-even profile [30][31] - The company is experiencing leverage in its model, with revenues increasing while operating expenses grow, indicating improved financial health [31] Business Line Data and Key Metrics Changes - The core MIGS market has seen double-digit growth in the past year but is projected to decline in the coming year, with expectations of mid-single-digit growth [12][15] - The iDose product is cannibalizing some of the stent business, as physicians prefer it due to its clinical profile and outcomes [16][17] - The company is seeing more standalone MIGS procedures, benefiting from the expansion of procedure volumes across various technologies [20][21] Market Data and Key Metrics Changes - Reimbursement for concomitant MIGS is expected to decline in low double digits for 2026, impacting the professional fee side of the business [19] - The company has secured reimbursement from four of the seven MACs, covering about 70% of Medicare lives, with ongoing efforts to educate and push for reimbursement from the remaining MACs [42][43] Company Strategy and Development Direction - The company is focused on building a foundation for rare disease drugs, with Epioxa being the first product aimed at treating keratoconus, a rare disease [61][70] - The strategy includes expanding the iDose product line and developing next-generation products like iDose TREX, which aims to provide longer duration effects [53][54] - The company is committed to changing the standard of care in glaucoma treatment and is optimistic about future growth opportunities in the U.S. glaucoma market driven by iDose [28][80] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting the importance of clinical adoption and the potential for significant growth in the interventional glaucoma market [83][84] - The company aims to shift focus from reimbursement-related issues to clinical adoption and the opportunities associated with its products [83] - Management acknowledged the challenges in establishing proper access and coverage for new treatment modalities but remains committed to navigating these complexities [47][48] Other Important Information - The company is working on a next-generation iDose product that could allow for secondary procedures and potentially in-office procedures, enhancing its treatment offerings [55] - The company is investing in education and awareness for keratoconus to improve patient detection and treatment access [60][61] Q&A Session Summary Question: What has surprised you about the iDose launch in 2025? - Management was surprised by the ongoing challenges with MACs and professional fee schedules but remains optimistic about the product's clinical performance and physician enthusiasm [25][27] Question: How do you think about profitability and reaching it? - The focus remains on achieving cash flow breakeven in the short term while aiming for profitability in the medium to long term, leveraging high gross margins [72][74] Question: What do you think investors are missing? - Management believes investors should focus on the long-term growth potential and the breadth of the company's portfolio rather than short-term fluctuations [80]

Summary of Glaukos Conference Call Company Overview - **Company**: Glaukos Corporation - **Industry**: Medical Technology, specifically focused on glaucoma treatment and corneal health Key Financial Highlights - **Q3 Revenue**: $133.5 million, a record quarter for Glaukos - **US Glaucoma Revenue**: $81 million, representing a 57% year-over-year growth [4][5] - **International Glaucoma Revenue**: $29 million, a 20% growth rate (17% on a constant currency basis) [4] - **Corneal Health Revenue**: $23 million, a 13% year-over-year growth [4] - **Gross Margin**: Reached almost 84%, driven by the high-margin product iDose [5][57] - **Cash Balance**: $277.5 million, slightly down from the previous quarter [6] Product Performance - **iDose**: - Contributed significantly to revenue growth, with 80% of volumes coming from three MACs (Noridian, Novitas, First Coast) [7][8] - Anticipated growth as more MACs establish pro fees, with NGS added recently [8][9] - Expected to drive utilization growth as operationalization takes time [9][10] - **Epiox**: - Announced pricing at $78,500 per eye, with expected net ASP between $65,000-$70,000 after discounts [31][33] - Targeting a mix of buy-and-bill and specialty pharmacy distribution models [34][35] - Anticipated to launch in early next year, with a focus on establishing a site of care network [36][37] Market Dynamics - **Commercial Coverage**: Approximately 50% of commercial plans currently cover iDose, with a significant portion of silent coverage [18][19] - **Patient Demographics**: The patient mix for iDose trials was approximately 50% Medicare-aged and 50% commercial-aged, indicating a potential shift in commercial usage over time [19] - **Utilization Trends**: Currently focused on glaucoma patients, with potential for treating ocular hypertension patients in the future [23] Strategic Insights - **Surgeon Training**: Surgeons are being trained at a healthy pace, with no significant barriers to adoption noted [16][17] - **Market Growth**: Anticipated recovery in the core MIGS market as LCD headwinds are overcome, with a focus on iDose as a primary growth driver [50][51] - **Cannibalization Concerns**: Some cannibalization of iStent by iDose is expected, but both products are seen as complementary [53] Future Outlook - **2026 Revenue Guidance**: Preliminary guidance of $600 million-$620 million, driven by multiple revenue streams including iDose and Epiox [55][56] - **Margin Expectations**: Continued improvement in gross margins expected as iDose and Epiox become a larger part of the business [57][58] - **Investment in R&D**: Plans to maintain a robust R&D pipeline while balancing operating expenses to achieve cash flow breakeven in the near term [59] Additional Considerations - **Educational Efforts**: Ongoing education for MACs and physicians regarding the clinical evidence supporting iDose is crucial for broader adoption [24][28] - **Patient Access**: Strategies in place to ensure patient access to Epiox, including trade-in programs for existing equipment [41][44] This summary encapsulates the key points discussed during the Glaukos conference call, highlighting financial performance, product insights, market dynamics, and future strategies.