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.

Related Link: Stifel Sees Near-Term Concerns At Glaukos Overshadowing Long-Term Bullishness

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 percent yields a present value of $175 million for the product GKOS has in development. That alone is ~33 percent 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.