PowerVision is the second acquisition Alcon has announced since Novartis revealed last year that it wants to split from the Alcon division. The spinoff is expected to happen during the first half of 2019.
It's shaping up to be an interesting year for Alcon, which is expected to split from Novartis to become a standalone Switzerland-based company during the first half of 2019.
Alcon just paid $285 million to acquire PowerVision and agreed to additional milestone-based payments starting in 2023. Fort Worth, TX-based PowerVision has been working to create fluid-based intraocular lens implants, but the new IOL technology won't be commercially available until after "significant additional development and clinical trials," Alcon noted.
The new lens could prove to be well worth the wait, however, as it is designed to use the eye's natural accommodating response to transport fluid in the intraocular lens which is implanted in the eye's capsular bag. While most presbyopia-correcting intraocular lenses use a multifocal design that distributes light between different focal points, PowerVision's fluid-based design creates a continuously variable monofocal lens, using the natural contraction of the eye's muscles. This technology allows the patient to actively focus on objects, just as the natural crystalline lens does in a youthful eye, providing patients with a natural, continuous range of vision.
"As the industry leader in cataract surgery, we're eager to accelerate development of this potentially breakthrough accommodating lens technology," said Michael Onuscheck, president of global business and innovation for the Alcon division. "By treating cataracts and restoring natural, continuous range of vision, this intraocular lens may be the preferred IOL for cataract surgery patients who desire spectacle independence."
While basic, monofocal IOLs are most commonly used for cataract surgery, Alcon noted that AT-IOLs (advanced technology IOLs), including those that correct presbyopia, are improving patient outcomes and fulfilling desire among patients for spectacle independence. Alcon said it leads the industry in global IOL share and estimates double-digit growth in AT-IOLs, largely driven by new innovations.
In a statement provided to MD+DI, Bryan Roberts, a partner at Venrock, said the deal represents Venrock's second successful medical device investment with Barry Cheskin, CEO and co-founder of PowerVision. The firm first worked with Cheskin in 2003 when he was CEO of NanoGram Devices and then reunited with him when Venrock led PowerVision's series C financing in 2010.
"We first worked with Barry in 2003 when he became CEO of NanoGram Devices Corporation and then reunited with him when Venrock led the series C round of PowerVision in 2010 - a difficult fundraising period for all companies but especially medical devices. We are drawn to unique solutions to large problems led by terrific entrepreneurs. Barry and PowerVision’s accommodating intraocular lens completely fit the bill.
Alcon CEO David Endicott actually namedropped PowerVision during the Alcon Capital Markets Day in November 2018 in response to an analyst's question about M&A opportunities. Endicott also noted during the investor and analyst meeting that Alcon typically prefers to acquire technologies that are still in the development stage, so it comes as no surprise that the company would go after PowerVision before the technology is fully baked.
"It is most interesting to us to find new technologies and see how they fit into this," Endicott said. "We've done a really good job, I think, in the last couple of years of buoying up our contact lens business and our IOL business ... we tend to want to bring 'em in and then develop them ourselves. We're particularly good at eye care development in the device [sector], so we see technology coming in as the core ideas. We still think a lot about dry eye and what we could do in that space. We think a lot about diagnostics and what's going on in that space. And there are a lot of other technologies that are a little bit on top of what we're doing already, but I think may be different spins on similar themes."
Endicott was not at all shy about touting Alcon's IOL tech that day. "We have the most exciting IOL pipeline of anybody in the business," he said.
PowerVision is the second acquisition Alcon has announced since Novartis revealed last year that it wants to split from the Alcon division. In December 2018, Alcon acquired Tear Film Innovations, which developed the iLux device used to treat Meibomian Gland Dysfunction, a leading cause of dry eye. The spinoff from Novartis is expected to happen during the first half of this year, assuming the company satisfies all the necessary regulatory requirements.
Novartis acquired Alcon in 2011 for $12.9 billion after first buying a 25% stake in the eye care company back in 2008 for about $11 billion.
So how has Alcon changed during its time as a division of Novartis and what should investors expect once it becomes a publically-owned company again?
"From a cultural standpoint, med device is very different from the pharmaceutical business. So I think we've made great progress on medical device culture, which is a very customer-centric culture and a very non-bureaucratic, agile, nimble culture ... it's all about taking out bureaucracy and roadblocks to efficiency and then, the magic is, you take the money that you spend on bureaucracy and focus it outward toward the customers," Endicott said. "So we're looking to get much more efficient internally. And then we can unlock and unleash the power of the employees getting that nimbleness agility throughout the organization."
Endicott said the management team plans to manage Alcon as an upside-down pyramid, with the bottom of the pyramid being the executive leadership team.
"So it's not that we're asking employees what they can do for us, we're asking employees what we can do for them," he said. "It's a very profound notion because what it focuses the company on is the frontline and the customers and the patients because at the end of the day that's what we're in business to do."