Bausch + Lomb to Acquire Xiidra from Novartis

Bausch + Lomb announced it has entered into a definitive agreement with Novartis under which Bausch + Lomb will acquire dry eye drug Xiidra (lifitegrast ophthalmic solution) 5%. Xiidra is a non-steroid eye drop specifically approved to treat the signs and symptoms of dry eye disease (DED) focusing on inflammation associated with dry eye.

As part of the transaction, Bausch + Lomb will also acquire libvatrep (also known as SAF312), an investigational compound being studied for the treatment of chronic ocular surface pain; and AcuStream technology, an investigational device that may have the potential to facilitate precise dosing and accurate delivery of certain topical ophthalmic medications to the eye.^5,6 Libvatrep is currently in phase 2b development with study results expected in the third quarter of 2023.

Under the terms of the agreement, Bausch + Lomb has agreed to acquire Xiidra, libvatrep and AcuStream from Novartis for up to $2.5 billion, including an upfront payment of $1.75 billion in cash with potential milestone obligations up to $750 million based on sales thresholds and pipeline commercialization. Bausch + Lomb will also bring on the sales force supporting Xiidra. Bausch + Lomb said it has obtained fully committed financing from J.P. Morgan for the transaction and intends to finance the $1.75 billion upfront cash purchase price with new debt prior to closing.

The acquisition marks the first big move since Brent Saunders returned to Bausch + Lomb as CEO and Chair of the Board of Directors in February. 

“This acquisition is a prime example of our strategy in action, as it provides needed scale for the company and transforms our pharmaceuticals business by making us a leader in ocular surface diseases,” Mr. Saunders said in a company news release. “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.”

In 2019, Novartis acquired Xiidra from Takeda Pharmaceutical in a deal worth up to $5.3 billion. Under terms of the deal, Novartis agreed to pay $3.4 billion upfront, plus potential milestone payments of up to $1.9 billion. In 2016, Shire received FDA approval for Xiidra, making it just the second drug approved in the United States for dry eye disease, joining Allergan’s Restasis (cyclosporine ophthalmic emulsion) 0.05%, which was approved in 2003. Takeda acquired the rights to Xiidra following its $62 billion acquisition of Shire in January 2019. 

In a news release, Novartis said the deal is consistent with its strategy of divesting assets outside of its prioritized therapeutic areas, which includes "front-of-the-eye ophthalmology assets." 

“This transaction will enhance our focus on prioritized innovative medicines to alleviate society’s greatest disease burdens, achieve the greatest patient impact and drive our growth strategy,” said Ronny Gal, Chief Strategy & Growth Officer of Novartis. “Our ongoing portfolio refinement enables us to best deploy our scientific expertise and resources towards priority programs and therapeutic areas, while remaining open to opportunistic development for additional high impact conditions leveraging our advanced technology platforms. We believe that Bausch + Lomb has the capabilities, scale and commitment to continue the work of Novartis in delivering and developing much needed therapies for patients suffering from dry eye and related conditions.”

In January, Novartis completed its sale of five branded ophthalmic products—Ilevro, Nevanac, Vigamox, Maxidex, and Triesence—to Harrow in a deal worth up to $175 million. 

The strategic acquisition of Xiidra will add to Bausch + Lomb's dry eye portfolio, which includes eye and contact lens drops from the company’s consumer brand franchises and its pharmaceutical business that features Miebo (perfluorohexyloctane ophthalmic solution), which was recently approved by the FDA as the first and only approved eye drop for DED that directly targets tear evaporation. Xiidra and Miebo work differently to target distinct elements of the DED cycle.

“Dry eye disease is multi-factorial and can stem from varying root causes, which means differing treatment options are needed,” said Marguerite McDonald, MD, FACS, OCLI Vision, Oceanside, New York. “With the acquisition of Xiidra and recent approval of Miebo, Bausch + Lomb enhances its approach to different facets of dry eye and is well positioned to ensure both medicines reach as many patients as possible.”

Xiidra generated about $487 million in sales in 2022 and is patented through 2033.

The transaction was approved by the Board of Directors at each of the respective companies and is subject to receipt of regulatory approval and other customary closing conditions. The transaction is expected to close by the end of 2023 and will be immediately accretive.