Bausch + Lomb (NYSE:BLCO) will purchase a dry-eye drug from Swiss pharma company Novartis (NYSE:NVS) for $1.75 billion, the companies said on Friday, as the contact lens maker seeks to capitalize on a growing market for the disease’s treatment.
Acquisition of the drug, Xiidra, will mark the first big deal by CEO Brent Saunders since he returned to the company in March.
Sales of the anti-inflammation eye drop Xiidra, mainly from the U.S. market, were $487 million last year, up 4%. It faces competition from AbbVie’s Restasis and cheaper copycat versions.
The deal will also include potential milestone payments worth up to $750 million.
Per the terms, in addition to Xiidra, the Canadian eye health company will also acquire investigational products, libvatre, and AcuStream technology from Novartis in a deal expected to close by the end of 2023.
Xiidra, which brought $487M in sales for Novartis in 2022, competes against Restasis from Allergan, where Saunders previously served as CEO before AbbVie (NYSE: ABBV) acquired it for $63B in 2020.
Dry eye disease is estimated to affect about 16 million people in the U.S., and its prevalence is rising partly due to the aging population.
Saunders previously led Bausch + Lomb from 2010 to 2013 before its sale to Valeant Pharmaceuticals International, which later carved out the larger health care firm Bausch Health (NYSE: BHC) Bausch + Lomb is also being spun out of Bausch Health.
Shares in BLCO screamed higher $1.83, or 9.5%, to $20.92, while those for Novartis hiked 92 cents to $100.28.
