Novartis is passing off the dry eye disease drop Xiidra to eye health specialist Bausch + Lomb in a $2.5 billion deal, another step in the company's overhaul as it focuses on five core areas.
Bausch + Lomb will pay $1.75 billion upfront with potential milestone payments up to $750 million. It will also take over Novartis’ libvatrep, which is currently being studied in chronic ocular surface pain, and the rights to AceStream, an investigational device that could potentially facilitate precise dosing and delivery of some topical eye medications. Bausch also gets preclinical asset OJL332, a TRPV1 antagonist.
The news comes after Novartis in March was reported to be looking at selling off some of its ophthalmology assets, an area that is not one of the company’s five priorities in cardiovascular diseases, immunology, neuroscience, solid tumors and hematology. However, the company will continue efforts to address retinol diseases through platforms such as gene therapy and optogenetics, according to a recent release.
The deal marks the third time Xiidra has changed hands after Takeda’s $62 billion buyout of its original maker, Shire. The drug was then hauled off to Novartis in 2019 for $3.4 billion, along with over 400 of Takeda’s Xiidra-associated staffers. Bausch + Lomb will now take over Xiidra’s sales team.
At the time, Novartis boasted the drops’ “blockbuster potential,” which didn’t exactly play out with growth difficulties and a bust in Europe after the European Medicines Agency couldn’t shake concerns about Xiidra’s effectiveness. The drug pulled in $487 million in 2022 sales, a far cry from the $3 billion-plus Novartis spent on it.
As for Bausch, the acquisition goes hand in hand with its recently-FDA approved Miebo drops, which directly target tear evaporation while Xiidra focuses on dry eye inflammation. The two drugs work on “distinct elements” of the dry eye disease cycle, the company said in its release.
Bausch + Lomb CEO Brent Saunders called the deal “a prime example of our strategy in action,” making it “a leader in ocular surface disease,” according to the company’s statement.
“The deal is also expected to accelerate margin expansion through a larger mix of pharmaceutical products in our portfolio, provide strong and immediate earnings accretion and presents a clear path to deleverage, making it financially compelling,” Saunders added. The company’s ophthalmic pharmaceuticals sector made $677 million in 2022, a 4% decrease from 2021.
Novartis will continue supplying Xiidra to patients for “a limited period” after the deal closes, which is expected in the second half of this year.