IPO Report: Glaukos (GKOS)

Francis Gaskins |

Glaukos.jpg

Glaukos (GKOS) is an ophthalmic medical technology company focused on the development and commercialization of breakthrough products and procedures designed to transform the treatment of glaucoma, one of the world's leading causes of blindness. It is based in Laguna Hills, CA.

Twelve other companies are scheduled for the week of June 22. The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: J.P. Morgan, BofA Merrill Lynch, Goldman Sachs
Co-managers: William Blair, Cantor Fitzgerald

End of lockup (180 days): Tuesday, December 22, 2015
End of 25-day quiet period: Monday, July 20, 2015

GKOS scheduled a $75 million IPO with a market capitalization of $415 million at a price range midpoint of $14 for Thursday, June 25, 2015 on NYSE.

Summary

GKOS is an ophthalmic medical technology company focused on the development and commercialization of breakthrough products and procedures designed to transform the treatment of glaucoma, one of the world's leading causes of blindness.

GKOS has pioneered Micro-Invasive Glaucoma Surgery, or MIGS, to revolutionize the traditional glaucoma treatment and management paradigm.

Valuation

Glossary

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Glaukos (GKOS)

$420

7.1

-70.0

8.8

11.9

18%

             

Conclusion

Positive

Q1 rev +78% to $15mm, after 118% growth '14 vs '13

81% gross profit

P/E of -70% indicating low cash burn rate relative to market cap

Price to sales of 7

Price to book of 8.8

Business

GKOS is an ophthalmic medical technology company focused on the development and commercialization of breakthrough products and procedures designed to transform the treatment of glaucoma, one of the world's leading causes of blindness.

GKOS has pioneered Micro-Invasive Glaucoma Surgery, or MIGS, to revolutionize the traditional glaucoma treatment and management paradigm.

iStentapproved by FDA

GKOS launched the iStent, its first MIGS device, in the United States in July 2012 and GKOS is leveraging the platform technology to build a comprehensive and proprietary portfolio of micro-scale injectable therapies designed to address the complete range of glaucoma disease states and progression. GKOS believes the iStent is the smallest medical device ever approved by the Food and Drug Administration, or FDA, measuring 1.0 mm long and 0.33 mm wide.

Glaucoma

Glaucoma is a group of eye diseases characterized by progressive, irreversible and largely asymptomatic vision loss caused by optic nerve damage, which is most commonly associated with elevated levels of pressure within the eye, or intraocular pressure.

Elevated intraocular pressure often occurs when aqueous humor, the thin watery fluid that fills the front part of the eye, is not circulating normally and draining properly.

According to Market Scope, more than 78 million people worldwide have glaucoma, a number it expects to grow to more than 88 million by 2019. This estimate includes approximately 4.2 million people with glaucoma in the United States, growing to 4.7 million by 2019. Glaucoma is a chronic condition that progresses slowly over long periods of time and can have a devastating impact on a patient's vision and quality of life.

Reducing Intraocular Pressure

Reducing intraocular pressure is the only proven treatment for glaucoma.

Glaucoma has traditionally been treated through a range of approaches that often require patients to use multiple types of prescription eye drops for the rest of their lives, and sometimes undergo complex and invasive eye surgery.

Prescription eye drops, which are estimated to account for approximately $4.6 billion in global sales in 2014, according to Market Scope, are often used to control intraocular pressure throughout glaucoma progression.

Unfortunately, these medications can be ineffective over time due to patient noncompliance and other factors. Complex and invasive glaucoma surgical options are typically reserved for more advanced disease and have remained largely unchanged since the 1970's.

Intellectual Property

As of April 3, 2015, GKOS owned or exclusively licensed in certain fields of use 114 issued patents, of which GKOS owned 51 that were issued in the United States and 51 that were issued outside of the United States, and 66 pending patent applications, of which GKOS owned 20 that were filed in the United States and 19 that were filed outside of the United States.

GKOS also granted to DOSE Medical certain exclusive rights and licenses outside licensed fields of use under certain of our owned patents and patent applications.

Issued patents that protect commercial products and current product pipeline will expire between 2020 and 2029. While GKOS has pursued and continue to pursue patent protection for technologies, GKOS may, from time to time, abandon certain patents and patent applications for business reasons.

Competition

Companies with competing products include Alcon, Inc., Abbott Medical Optics Inc., STAAR Surgical Company, Lumenis Ltd., NeoMedix,Inc. and Ellex Medical Lasers Limited.

Alcon, Inc. and Abbott Medical Optics Inc. are the leading manufacturers of aqueous shunts, and Alcon, Inc. also markets the EX-PRESS Glaucoma Filtration Device. Lumenis Ltd. is a leading manufacturer of SLT equipment. Neomedix, Inc. markets an electrosurgical device and Ellex Medical Lasers Limited markets a canaloplasty device that some physicians employ to lower intraocular pressure in glaucoma.

In addition to these current competitors, GKOS may also in the future compete with manufacturers of alternative technologies to treat glaucoma. GKOS is aware of several companies, including Transcend Medical, Inc., AqueSys, Inc., InnFocus Inc. and Ivantis Inc. that are conducting IDE-approved clinical trials of MIGS devices.

5% Shareholders Pre-IPO

Entities affiliated with Domain Associates          12.2%

Entities affiliated with Versant Ventures 12.6%

Entities affiliated with Frazier Healthcare             10.4%

Entities affiliated with InterWest Partners            10.5%

Entities affiliated with Montreux 13.2%

Entities affiliated with OrbiMed               11.7%

Entities affiliated with Meritech Capital Partners 12.2%

Thomas W. Burns          10.7%  

William J. Link, Ph.D.    12.6%

Gilbert H. Kliman, M.D.  10.5%

Paul S. Madera  12.2%

Dividends

No dividends are planned.

Use of Proceeds


GKOS expects to receive $67 million from its IPO and use it for the following:

$20.0 million to hire additional sales, marketing and customer service personnel and expand marketing programs both in the United States and outside the United States;

$15.0 million to fund clinical studies evaluating its pipeline of products under development and regulatory approvals for such products;

$15.0 million for the purchase of the glaucoma-related intellectual property and other assets from is affiliate DOSE Medical Corporation, or DOSE, pursuant to an asset purchase agreement dated as of July 10, 2014; and

the remainder for working capital and other general corporate purposes.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
GKOS Glaukos Corporation 32.04 1.43 4.67 444,122

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