Glaukos: What Data Points Really Matter?

Piper Jaffray said it values Glaukos Corp (NYSE: GKOS)'s suprachoroidal stent in development at $175 million based on Alcon's announcement that it paid $352 million for Glaukos competitor, Transcend which also has a similar product.Analyst Matt O'Brien said Transcend's CyPass Stent is placed in the suprachoroidal space in the eye, while Glaukos also has a suprachoroidal stent in the pipeline that is expected in 2019."The disclosure that Alcon paid such a large price for Transcend, in our opinion, is just further evidence of the value GKOS is creating," the analyst wrote in a note.Glaukos, which specializes in Glaucoma treatment, has a product called iStent in Schlemm's canal for reducing introcular pressure (IOP). The company claims that iStent is the only FDA-approved device for the treatment of mild to moderate open-angle glaucoma.Meanwhile, Glaukos is also developing a device that goes in to the suprachoroidal to relieve IOP."Thus assuming a similar value to Transcend (one product currently) and discounting the purchase price three years by 25% yields a present value of $175M for the product GKOS has in development. That alone is ~33% of GKOS' current EV and doesn't even account for other products (in our view larger opportunities) Inject and iDose," O'Brien noted.The analyst reiterated his Overweight rating and increased the price target by $2 to $21. Shares of Glaukos rose 3 percent to $18.53.