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Alcon (ALC) Signs EYSUVIS-Buyout Deal With Kala Pharmaceuticals

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Alcon Inc. (ALC - Free Report) recently inked a deal to acquire EYSUVIS (loteprednol etabonate suspension) 0.25% pharmaceutical eye drops from Kala Pharmaceuticals, Inc. The acquisition adds to Alcon’s Systane family of eye drops. It complements the newly-launched Systane Preservative-Free formulations by expanding treatment options for dry eye.

Alcon will also acquire INVELTYS (loteprednol etabonate suspension) 1%, the only corticosteroid for twice-a-day treatment of post-operative inflammation and pain following ocular surgery, as part of the agreement.

The EYSUVIS will provide Eye Care Professionals (ECPs) with a short-term treatment alternative to help alleviate dry eye disease. According to Alcon’s research, 20-25% of dry eye patients have acute dry eye episodes twice a year, on average. During these periods of acute dry eye, ECPs may prescribe EYSUVIS, which is a corticosteroid.

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The latest acquisition is likely to fortify Alcon’s growing ophthalmic eye drop portfolio.

Few Words on EYSUVIS

The EYSUVIS was authorized by the FDA in January 2021 as the first and only corticosteroid indicated for the treatment of the signs and symptoms of dry eye disease for up to two weeks. The prescription therapy uses AMPPLIFY, a proprietary drug delivery technology, to improve penetration of loteprednol etabonate into targeted tissue on the ocular surface, thus helping prevent flares related to dry eye disease.

Per management, the EYSUVIS is a natural fit for its newly-formed ophthalmic eye drop sales force in the United States. The company is well-positioned to grow the acute dry eye treatment market, leveraging its strong expertise in market access and commercial execution.

Financial Terms of the Agreement

The terms of the agreement require Alcon to pay $60 million in upfront consideration to Kala Pharmaceuticals, Inc. Alcon may also be needed to make additional contingent payments if certain commercial milestones are met. The transaction is expected to close in the third quarter of 2022, subject to fulfillment of customary closing conditions, including regulatory approval.

As a result of the agreement, Alcon’s full-year guidance for 2022 remains unchanged.

Industry Prospects

Per a report published in Mordor Intelligence, the dry eye disease market is expected to see a CAGR of nearly 5.12% during 2022-2027. Factors such as aging, decrease in supportive hormones, systemic inflammatory diseases, ocular surface diseases or surgeries that affect the cholinergic nerves can be attributable to the prevalence of dry eye-related diseases.

Given the substantial market prospects, Alcon’s acquisition of EYSUVIS for dry eye relief seems well-timed.

Notable Developments

In March 2022, Alcon launched its Clareon family of intraocular lenses (IOLs) in the United States. Based on Alcon’s advanced IOL material, Clareon claims to deliver better visual outcomes with long-lasting clarity. With the latest launch, ClareonMonofocal, ClareonPanOptix, ClareonPanOptix Toric, Clareon Vivity and Clareon Vivity Toric IOLs are now available in the United States.

In January 2022, Alcon noted the addition to its advanced portfolio of dry eye products with the European launch of Systane Complete Preservative-Free Lubricant Eye Drops, available in an easy-to-use, multi-dose bottle. The Systane Complete Preservative-Free expands Alcon’s multi-dose, preservative-free portfolio to include an all-in-one solution for patients with dry eye symptoms.

In the same month, the company launched the DAILIES TOTAL1 for Astigmatism-- the first and only Water Gradient contact lens for astigmatism patients. This launch expands Alcon’s premium, daily disposable lenses, including the DAILIES TOTAL1 (sphere) and DAILIES TOTAL1 Multifocal. The DAILIES TOTAL1 for Astigmatism contact lenses will be offered in the United States beginning in March.

Share Price Performance

The stock has outperformed its industry in the past year. It has gained 5.6% versus the industry’s 16.8% fall.

Zacks Rank and Key Picks

Currently, Alcon carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Medpace Holdings, Inc. (MEDP - Free Report) and UnitedHealth Group Incorporated (UNH - Free Report) .

AMN Healthcare has a long-term earnings growth rate of 1.1%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 15.6%, on average. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AMN Healthcare has outperformed its industry in the past year. AMN has declined 1.8% versus the industry’s 63% fall.

Medpace has a historical growth rate of 27.3%. Medpace’s earnings surpassed estimates in the trailing four quarters, the average surprise being 17.1%. It currently has a Zacks Rank #2 (Buy).

Medpace has outperformed its industry in the past year. MEDP has declined 20.3% against the industry’s 63% fall.

UnitedHealth has an estimated long-term growth rate of 14.8%. UnitedHealth’s earnings surpassed estimates in the trailing four quarters, the average surprise being 3.7%. It currently carries a Zacks Rank #2.

UnitedHealth has outperformed the industry over the past year. UNH has gained 18.2% compared with 16.2% industry growth in the said period.