Glaukos Corporation (NYSE: GKOS) (the “Company” or “Glaukos”),
an ophthalmic medical technology and pharmaceutical company focused
on novel therapies for the treatment of glaucoma, corneal disorders
and retinal diseases, announced today the pricing of its private
offering of $250 million aggregate principal amount of 2.75%
Convertible Senior Notes due 2027 (the “notes”). The offering size
was increased from the previously announced offering size of $200
million aggregate principal amount of notes. The notes were offered
only to qualified institutional buyers in accordance with Rule 144A
under the Securities Act of 1933, as amended (the “Securities
Act”). Glaukos has granted to the initial purchasers of the notes a
13-day option to purchase up to an additional $37.5 million
aggregate principal amount of notes. The offering of the notes is
expected to close on June 11, 2020, subject to customary closing
conditions.
The notes will be Glaukos’ senior unsecured obligations. The
notes will bear interest at a rate of 2.75% per year, payable
semiannually in arrears on June 15 and December 15 of each year,
beginning on December 15, 2020. The notes will mature on June 15,
2027, unless earlier converted, redeemed or repurchased. Glaukos
may not redeem the notes prior to June 20, 2024. On or after June
20, 2024 but before the 45th scheduled trading day immediately
preceding the maturity date, Glaukos may redeem for cash all or a
portion of the notes if the last reported sale price of Glaukos’
common stock has been at least 130% of the conversion price then in
effect on (i) each of at least 20 trading days (whether or not
consecutive) during the 30 consecutive trading day period ending
on, and including, the trading day immediately preceding the date
Glaukos provides notice of redemption and (ii) the trading day
immediately preceding the date Glaukos provides such notice. The
initial conversion rate for the notes is 17.8269 shares of Glaukos’
common stock per $1,000 principal amount of notes (equivalent to an
initial conversion price of approximately $56.10 per share of
Glaukos’ common stock), which represents an approximately 30.0%
conversion premium over the last reported sale price of $43.15 per
share of Glaukos’ common stock on The New York Stock Exchange on
June 8, 2020.
Prior to March 15, 2027, the notes will be convertible only upon
satisfaction of certain conditions and during certain periods, and
thereafter, at any time until the close of business on the second
scheduled trading day immediately preceding the maturity date.
Glaukos will satisfy any conversion election by paying or
delivering, as the case may be, cash, shares of common stock or a
combination of cash and shares of common stock, at its election.
Holders of the notes will have the right to require Glaukos to
repurchase all or a portion of their notes at 100% of their
principal amount, plus any accrued and unpaid interest, upon the
occurrence of certain events.
Glaukos estimates that the net proceeds from this offering will
be approximately $241.3 million (or $277.6 million if the initial
purchasers exercise in full their option to purchase additional
notes), after deducting fees and estimated offering expenses
payable by Glaukos. Glaukos intends to use the net proceeds from
the offering to pay the approximately $31.0 million cost of the
capped call transactions described below and the remainder for
working capital and general corporate purposes. If the initial
purchasers exercise their option to purchase additional notes,
Glaukos expects to use a portion of the related net proceeds to
enter into additional capped call transactions and any remainder
for working capital and general corporate purposes.
In connection with the pricing of the notes, Glaukos entered
into privately negotiated capped call transactions with one or more
of the initial purchasers and/or their affiliates and/or other
financial institutions (the “option counterparties”). The capped
call transactions cover, subject to customary adjustments, the
number of shares of common stock initially underlying the notes.
The capped call transactions are expected generally to reduce
potential dilution to Glaukos’ common stock upon any conversion of
notes or at Glaukos’ election (subject to certain conditions)
offset any cash payments Glaukos is required to make in excess of
the aggregate principal amount of converted notes, as the case may
be, with such reduction or offset subject to a cap. The cap price
of the capped call transactions will initially be $86.30, which
represents a premium of 100% over the last reported sale price of
Glaukos’ common stock of $43.15 per share on June 8, 2020, and is
subject to certain adjustments under the terms of the capped call
transactions. If the initial purchasers exercise their option to
purchase additional notes, Glaukos expects to enter into additional
capped call transactions with the option counterparties.
In connection with establishing their initial hedges of the
capped call transactions, the option counterparties or their
respective affiliates expect to purchase shares of Glaukos’ common
stock and/or enter into various derivative transactions with
respect to Glaukos’ common stock concurrently with or shortly after
the pricing of the notes. This activity could increase (or reduce
the size of any decrease in) the market price of Glaukos’ common
stock or the notes at that time. In addition, the option
counterparties or their respective affiliates may modify their
hedge positions by entering into or unwinding various derivatives
with respect to Glaukos’ common stock and/or purchasing or selling
Glaukos’ common stock or other securities issued by Glaukos in
secondary market transactions following the pricing of the notes
and prior to the maturity of the notes (and are likely to do so on
each exercise date of the capped call transactions, which are
expected to occur during the 40 trading day period beginning on the
41st scheduled trading day prior to the maturity date of the notes,
or following any termination of any portion of the capped call
transactions in connection with any repurchase, redemption or early
conversion of the notes). This activity could also cause or avoid
an increase or a decrease in the market price of Glaukos’ common
stock or the notes, which could affect a noteholder’s ability to
convert the notes and, to the extent the activity occurs during any
observation period related to a conversion of notes, it could
affect the number of shares and value of the consideration that a
noteholder will receive upon conversion of the notes.
In addition, if any such capped call transaction fails to become
effective, whether or not this offering of notes is completed, the
option counterparty party thereto may unwind its hedge positions
with respect to Glaukos’ common stock, which could adversely affect
the value of Glaukos’ common stock and, if the notes have been
issued, the value of the notes.
The notes and shares of Glaukos’ common stock issuable upon
conversion, if any, have not been registered under the Securities
Act, or under any U.S. state securities laws or other jurisdiction
and may not be offered or sold in the United States absent
registration or an applicable exemption from registration
requirements.
This press release is neither an offer to sell nor a
solicitation of an offer to buy any of these securities nor shall
there be any sale of these securities in any state or jurisdiction
in which such an offer, solicitation or sale would be unlawful
prior to the registration or qualification under the securities
laws of any such state or jurisdiction. The offering of the notes
is being made only to qualified institutional buyers by means of a
private offering memorandum in accordance with Rule 144A under the
Securities Act.
About Glaukos
Glaukos is an ophthalmic medical technology and pharmaceutical
company focused on novel therapies for the treatment of glaucoma,
corneal disorders and retinal diseases. The company pioneered
Micro-Invasive Glaucoma Surgery, or MIGS, to revolutionize the
traditional glaucoma treatment and management paradigm. Glaukos
launched the iStent®, its first MIGS device, in the United States
in July 2012 and launched its next-generation iStent inject® device
in the United States in September 2018. In corneal health, Glaukos’
proprietary suite of single-use, bio-activated pharmaceuticals are
designed to strengthen, stabilize and reshape the cornea through a
process called corneal collagen cross-linking to treat corneal
ectatic disorders and correct refractive conditions. Glaukos is
leveraging its platform technology to build a comprehensive and
proprietary portfolio of micro-scale surgical and pharmaceutical
therapies in glaucoma, corneal health and retinal disease.
Cautions Regarding Forward-Looking Statements
This communication contains “forward-looking statements” within
the meaning of federal securities laws including, but are not
limited to, statements concerning the completion of the proposed
offering and the anticipated use of the net proceeds from the
offering. All statements other than statements of historical facts
included in this press release that address activities, events or
developments that Glaukos expects, believes or anticipates will or
may occur in the future are forward-looking statements. These
statements are based on management’s current expectations,
assumptions, estimates and beliefs. Although Glaukos believes that
it has a reasonable basis for forward-looking statements contained
herein, it cautions you that they are based on current expectations
about future events affecting Glaukos and are subject to risks,
uncertainties and factors relating to its operations and business
environment. These and other known risks, uncertainties and factors
are described in detail under the caption “Risk Factors” and
elsewhere in Glaukos’ filings with the Securities and Exchange
Commission, including its Quarterly Report on Form 10-Q for the
quarter ended March 31, 2020, which was filed with the SEC on May
7, 2020. All forward-looking statements included in this press
release are expressly qualified in their entirety by the foregoing
cautionary statements. You are cautioned not to place undue
reliance on the forward-looking statements in this press release,
which speak only as of the date hereof. Glaukos does not undertake
any obligation to update, amend or clarify these forward-looking
statements whether as a result of new information, future events or
otherwise, except as may be required under applicable securities
law.
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version on businesswire.com: https://www.businesswire.com/news/home/20200608005798/en/
Chris Lewis Director, Investor Relations, Corporate Strategy
& Development (949) 481-0510 clewis@glaukos.com
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