Glaukos IPO Lockup Expiration Warrants Your Immediate Attention

Glaukos Corporation (NYSE:GKOS) - Sell or Short Recommendation - PT $21.75

December 22, 2015 concludes the 180-day lockup period on Glaukos Corporation.

We previewed this event for GKOS on our IPO Insights platform.

When the lockup period ends for GKOS, its pre-IPO shareholders, directors and executives will have the chance to sell their ~24 million shares. The potential for a sudden increase in stock available in the open market may cause a significant decrease in GKOS shares.

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The event offers short sellers a new opportunity.

Business Summary: Ophthalmic Medical Technology Company Focused on Treatment of Glaucoma

Glaukos Corporation is an ophthalmic medical technology company that develops and commercializes products and procedures that treat glaucoma, which affects nearly 78 million people worldwide and is the second leading cause of blindness. Glaukos established Micro-Invasive Glaucoma Surgery (MIGS) and other leading devices and procedures.

The company's portfolio includes a comprehensive and proprietary array of products such as the iStent, a micro-bypass stent used with cataract surgery; the iStent Inject Trabecular Micro-Bypass Stent for reducing intraocular pressure; the iStent Suprachoroidal Micro-Bypass Stent to reduce intraocular pressure through the suprachoroidal space of the eye; and iDose, an injectable drug delivery implant.

The company notes that the iStent is the smallest medical device ever approved by the FDA, and it was the first commercially available MIGS treatment solution. The iStent procedure that is used in conjunction with cataract surgery is reimbursable by Medicare and most commercial insurance companies. Glaukos has sold over 70,000 iStent devices through December 31, 2014.

Traditional treatments for glaucoma consist of using multiple types of prescription eye drops and in severe cases invasive eye surgery.

Glaukos markets its products directly in the United States and Germany through its sales team of approximately 55 professionals, and through distribution partners in Canada, Asia Pacific, and Europe.

Net sales increased from $20.9 million in 2013 to $45.6 million in 2014, although net losses were consistent at $14.2 million and $14.1 million for the years ended December 31, 2013 and 2014, respectively.

A Solid Start to Early Trading

Glaukos priced its IPO at $18 per share, considerably higher than its expected price range of $13 to $15. The stock opened on the first day of trading at $29.11 and closed at $31.22, for an increase of 82 percent. Since then the stock reached a high of $32.91 on August 18, and then declined to a low of $18.76 on November 10. Currently, the stock trades at $23.41 (12.11.2015).

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Competition From STAAR Surgical Company, Abbott Medical Optics, Lumenis and Others

Glaukos products are used in conjunction with traditional prescription treatments or as a replacement for such therapies. Other companies that are developing alternatives to conventional eye drops include Lumenis (NASDAQ:LMNS), NeoMedix, Ellex Medical Lasers, STAAR Surgical Company (NASDAQ:STAA), Alcon and Abbott Medical Optics (NYSE:ABT).

Management Team Highlights

Thomas Burns has served as President, CEO and Director since March 2002. Mr. Burns has over two decades of ophthalmic management experience. Prior to joining Glaukos, Mr. Burns held positions at Eyetech Pharmaceuticals, Chiron Vision Corporation, and Bausch and Lomb. Mr. Burns holds a B.A. from Yale University. His career has included general management experience across ophthalmic medical devices, ophthalmic pharmaceuticals, drug delivery technologies, surgical products, and over-the counter products.

Chief Commercial Officer Chris Calcaterra joined Glaukos in April 2008. He brings over 25 years of experience in the ophthalmic medical technology industry. His previous experience includes positions at Advanced Medical Optics and Allergan. Mr. Calcaterra has a B.S. from Miami University and an M.B.A. from Xavier University, and he was previously a board member of WaveTec Vision Systems, Inc., (acquired by Novartis).

Conclusion: Short GKOS Ahead of Its IPO Lockup Expiration

Again, December 22nd marks the expiration of GKOS' lockup expiration. On this date, a whopping thirteen individuals and seven firms will have a first chance to sell their restricted shares.

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We suggest selling ahead of the event for full gains as our team has found abnormal negative returns of ~4% in the period of days (-11, 9) surrounding the event day (0).