Alcon Makes Big Move in MIGS

With Transcend, Alcon Gains a Foothold in Glaucoma Device Market
Contributed by Larry Haimovitch and Richard Mark Kirkner

With its move to acquire Transcend Medical and its CyPass Micro-Stent platform for glaucoma, Novartis aims to kick start the lackluster growth of its Alcon unit by tapping into the high-growth micro-invasive glaucoma surgery (MIGS) device market with a technology that’s moving through the FDA approval pipeline.

This acquisition marks the second time in recent months that a larger, more mature and diversified pharma-biotech company acquired a MIGS platform. Late last year, Allergan acquired Aquesys for $300 million plus undisclosed earn-out payments. Novartis did not disclose a transaction price for Transcend.

Transcend, based in Menlo Park, CA, has been developing the CyPass Micro-Stent, a micro-invasive device that’s implanted into the anterior segment of the eye. It reduces intraocular pressure (IOP) in glaucoma by enabling outflow of aqueous fluid into the suprachoroidal space of the eye. Last fall, Transcend submitted to the FDA positive two-year results from the COMPASS pivotal clinical trial in the final module of its Premarket Approval Application for the CyPass Micro-Stent.

The final dataset from the COMPASS trial is expected to be released in May at the annual meeting of the American Society of Cataract and Refractive Surgeons, which takes place in New Orleans. The “buzz” in the MIGS space is that the data will demonstrate both excellent efficacy and safety, which would be a logical expectation given that Alcon would have scrutinized the preliminary results before making the acquisition.

Although a final date has not been set for Transcend to present its results at an FDA Ophthalmic Advisory Panel meeting, it could occur as early as late second quarter or third quarter this year. Final FDA approval should follow six to nine months later.

In October 2015, Transcend cleared another hurdle in bringing CyPass to market when it settled a patent lawsuit with Glaukos Corp., which launched the iStent MIGS device in the US in 2012. Transcend agreed not to challenge any Glaukos patent and to pay up to $6 million in future sales of CyPass into 2022. Glaukos has racked up cumulative worldwide sales of approximately $137 million since 2012.

Transcend’s board saw Alcon’s position in the cataract and refractive markets as a good fit for the CyPass Micro-Stent, which is designed to be implanted in the iris root. “Due to Alcon’s leadership position in refractive surgery, the Transcend board and management see Alcon as an ideal partner to commercialize the CyPass technology for the treatment of mild to moderate glaucoma in patients undergoing cataract surgery,” said Wende Hutton, general partner with Canaan Partners, a venture capital firm that invested in Transcend.

“We expect the MIGS technology to be a great addition to our device pipeline and to establish Alcon’s presence in this new surgical category to treat glaucoma,” Alcon CEO Mike Ball said in the release announcing the deal. “If approved, it will provide a less invasive means of lowering IOP than traditional invasive glaucoma surgery, with the goal of lowering the dependency of topical ocular medication. This acquisition also expands Alcon’s leadership in glaucoma and cataract treatment as part of our surgical business.”

With the acquisition, Alcon gains a further foothold in the high-growth global glaucoma devices market, which Dublin-based Research and Markets has forecast to post a compounded annual growth rate of 21% through 2018.

That Alcon needs to add products to its overall portfolio and grow markets was evident after its parent Novartis reported its full 2015 results in late January. Alcon had a disappointing 2015. Core operating income of $3.1 billion was 20% off from 2014, and revenues declined 9% for the full year and 13% for the fourth quarter of 2015. Revenues from both the surgical and pharmaceutical units were down 9% for the year as well.

Glaucoma specialists welcomed the news of the acquisition, seeing it as another significant sign of the specialty’s emergence. Kuldev Singh, MD, director of the glaucoma service at Stanford University School of Medicine, says the products developed by Glaukos, Aquesys, and Transcend will give specialists a wide range of product choices for targeting Schlemm’s Canal as well as the suprachoroidal and subconjunctival areas of the eye. Initially, these products will complement each other rather than compete.

“We really have to tailor a therapy to the individual patient, and each of these devices is associated with a risk-efficacy profile that is ideal for a certain type of patient, and probably not ideal for every single patient,” Singh told the OIS Podcast. “So I do think that people have choices, and … they should tailor their approach depending on the particular patient’s profile.”

“You’ll probably have multiple products in each of those categories down the road,” he predicted.

Existing investors and an undisclosed global pharmaceutical and medical device company participated in a $22 million Series C preferred equity investment in Transcend in April 2014. Besides Canaan Partners, the Transcend investor syndicate included Morgenthaler Ventures, Split Rock Partners, Investor Growth Capital, Technology Partners, HLM Venture Partners, Latterell Venture Partners, Kaiser Permanente Ventures, and Finistere Ventures. In all, Transcend raised a total of $89 million.