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Allergan to grab AqueSys for $300M+ to add minimally invasive glaucoma microshunt

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XEN45 being inserted into the eye--Courtesy of Oculeve

Allergan ($AGN) will buy another ophthalmic device startup, just after its deal for dry-eye player Oculeve closed last month. This time around, it said it would purchase glaucoma microstent company AqueSys for $300 million upfront plus undisclosed approval and sales milestones.

AqueSys investors look to have nabbed a roughly 3x return on the upfront alone--since less than $100 million in venture capital has gone into the startup. The company got its latest, disclosed venture round, a $43.6 million Series D financing, in January 2014 on top of the $51 million is had already scored in prior rounds since 2006. Its investors include Accuitive Medical Ventures, The Carlyle Group, Longitude Capital, Rho Ventures and SV Life Sciences.

"Our eye care team has a strong track record of introducing novel treatments for patients with glaucoma," said Allergan President and CEO Brent Saunders in a statement. "The acquisition of the XEN45 device demonstrates our commitment to alternative next-generation glaucoma treatments which are appealing to both patients and physicians and extend beyond conventional medication eye drops."

The startup has the XEN45 Gel Stent, which is a soft shunt made of collagen-derived gelatin. It is only 6mm long--about the width of a human hair--and is injected by an ophthalmologist via a small corneal incision via a pre-loaded injector.

Upon implantation it enables the outflow of aqueous from the anterior chamber into the non-dissected tissue of the subconjunctival space. It is intended to reduce intraocular pressure in patients with primary open angle glaucoma where previous medical treatments have failed.

The stent has a CE mark in the European Union for use as part of cataract surgery or as a standalone procedure. It is also approved for use in Turkey, Canada and Switzerland. The device is in a pivotal U.S. clinical trial that was fully enrolled last quarter. An FDA clearance for XEN45 is expected by late 2016 or early 2017.

XEN45 is designed to protect against creating intraocular pressure (IOP) that's too low--a risk of current sub-conjunctival procedures. Typical management for glaucoma starts with medications and is followed by a laser trabeculoplasty. Up next as the disease progresses, is likely a trabeculectomy or a glaucoma drainage device--these have a one-year complication rate of up to 50%, the company notes, that includes IOP that is too high or too low.

"The XEN45 platform is a minimally invasive reinvention of the sub-conjunctival outflow approach to the treatment of glaucoma, one used for many years by surgeons," summed up Dr. Robert Weinreb, Professor of Ophthalmology and Director of the Shiley Eye Institute at the University of California, San Diego. "XEN45 provides the advantage of a simpler and less invasive way of conducting a well-established procedure to treat our glaucoma patients, and if approved in the U.S., would provide an exciting new option for ophthalmologists."

The startup has competitors--including the recent IPO company Glaukos, which has an approved product for moderate to severe glaucoma while the AqueSys device is for mild to moderate patients, observed specialty pharma analyst Umer Raffat from EverCore ISI in a recent note. The Glaukos device is already approved and the company already has an almost $1 billion market cap since its June IPO successfully raised more than $124 million. Transcend Medical and Ivantis also have competitive devices, he noted.

Allergan expects that XEN45 could reach peak annual sales in the hundreds of millions of dollars, Raffat added.

- here is the announcement

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