Allergan’s Oculeve Acquisition Bolsters Dry Eye, Medtech

The dry eye space has taken a few hits lately with disappointing clinical news on the biopharmaceutical front.

But investors and entrepreneurs developing new treatments have to be bolstered by Allergan’s agreeing to purchase early-stage company Oculeve.

According to a press release on the deal, Allergan would pay $125 million up front for Oculeve, which is still developing a neurostimulation treatment for the chronic eye condition.

But the deal includes what no doubt will be sizable (but undisclosed) earn outs if Oculeve’s OD-01, a non-invasive nasal neurostimulation device that “tells” the lacrimal gland to increase tear flow.

Oculeve has kept a low profile. It hasn’t even appeared at OIS yet. But this account by Stanford Medicine gives some details of the origins of the technology and the company.

However, in today’s OIS Podcast, Michael Ackermann, CEO and President, says the article doesn’t highlight the lead product that drew new Allergan CEO Brent Saunders to make an aggressive move on the company.

Published in January, the article reports that Oculeve has only raised $24 million from venture investors including seed investor Kleiner Perkins Caufield & Byers and first-round backers Versant Ventures and New Enterprise Associates.

(Successful Serial Entrepreneur Mark Blumenkranz sits on Oculeve’s board.)

With that degree of firepower behind it, Oculeve certainly was fueled for the long haul. Ackermann wouldn’t provide details, but clearly Allergan’s offer was significant.

In an email, OIS-chair and Versant Ventures Partner Bill Link says, “it has been very rewarding to witness the Oculeve team developing this novel, non-invasive neuro-stimulation device which activates the naso-lacrimal pathway to increase tear production.”

“In multiple studies, the early clinical findings were very encouraging,” Link continued. “I am pleased that Allergan, the leader in the dry eye market, saw the promise of this technology and stepped up with an early proposal to purchase the company. My expectation is that this technology will make a meaningful impact and provide relief to potentially millions of people suffering from dry eye.”

According to the press release about the acquisition, Oculeve has completed four clinical studies of OD-01 to date in more than 200 patients, showing positive safety and efficacy of the device.

Allergan plans to conduct two additional pivotal trials prior to FDA submission, which is expected in 2016 with potential commercial launch in 2017.

The deal is expected to close by the third quarter of this year.

Allergan’s Restasis (topical cyclosporine 0.05%) is the only pharmaceutical approved for the treatment of Dry Eye, a market estimated to be worth more than $2.4 billion and affecting up to 100 million people worldwide.

But, as we reported earlier, Restasis has limitations that others are trying to exploit. If OD-01 pans out, Allergan’s bold move to lock down Oculeve shores up the company’s position in Dry Eye.

In recent public talks, Allergan CEO Saunders indicated the company might be ready to move into Medtech, particularly at the intersection of drugs and devices. The Oculeve purchase shows Allergan, under Saunders, isn’t just talking the talk when it comes to becoming a player in ophthalmic Medtech devices.