Eurovision Bio to Acquire Eight Ophthalmic Products from Alcon in Exchange for 16.7% Equity Stake Valued at HK$12.8 Billion

On August 12, Ocumension Therapeutics (“Ocumension”) announced that it had entered into an agreement with Alcon Inc. (“Alcon,” collectively referred to herein with Ocumension as the “Parties”), under which Ocumension will acquire the rights in China for a portfolio of eight dry eye disease treatment and surgical eye drop products from Alcon. The portfolio includes seven marketed mature products and one product in clinical development. The scope of the agreement also covers research and development, manufacturing, and commercialization in China.

In connection with the transfer of these rights, Ocumension will issue 139,159,664 shares to Alcon, representing 16.71% of its total share capital (post-issuance). Consequently, Alcon will become one of Ocumension’s largest shareholders. Under the terms of this arrangement, both parties have granted each other right of first negotiation for future products.

Under the terms of the agreement, Ocumension will acquire full product rights to New Tears Naturale®, Tears Naturale®, Bion Tears®, Alcaine®, Lacrisert®, and Systane® in the Chinese market, as well as commercialization rights for Soothe® and AR-15512 (a novel topical drug candidate for dry eye disease) in China. Pursuant to the terms of this agreement, Ocumension will be permitted to domestically manufacture these products with full rights after a transition period. Ocumension will also be authorized to develop, manufacture, and commercialize AR-15512 in China.

As part of the equity consideration, Ocumension plans to issue 139 million shares to Alcon, representing 16.71% of its total share capital (post-issuance). Based on Ocumension’s closing price of HK$6 per share on August 14, the transaction consideration amounts to HK$834 million.

According to the assessment by the intermediary agency, the value of the relevant rights and interests associated with these eight products is HK$1.28 billion, representing a premium of over 30% compared to the transaction consideration.

Notably, the structure of this transaction is highly innovative. First, instead of using cash, the consideration was paid through the issuance of shares to Alcon. Against the backdrop of the current capital winter, this cash-conserving approach helps maximize benefits while strengthening the strategic tie between Ocumension and Alcon. This is expected to prompt a market revaluation of Ocumension’s worth, thereby creating long-term value for shareholders.

Secondly, the addition of seven mature products and AR-15512 is expected to further strengthen Ocumension’s leadership position in China’s ophthalmology market. Through the acquisition of these products, Ocumension anticipates being able to offer more comprehensive and advanced treatment solutions, thereby better meeting patient needs and expanding its market share.

Moreover, given that Alcon will become one of Ocumension’s largest shareholders, this transaction brings not only products but also international commercialization resources to Ocumension.

As a global leader in ophthalmology, Alcon has cultivated the Chinese market for over 30 years and provides a broad portfolio of products to patients in more than 140 countries. Its commercialization team boasts market insights and execution capabilities that are unparalleled by other pharmaceutical companies. Following the collaboration, Alcon is expected to bring valuable commercialization experience and resources to Ocumension, particularly by driving the expansion of its out-of-hospital channels and further enhancing product monetization capabilities.

Furthermore, as the collaboration stipulates that both parties shall grant each other the right of first negotiation for future products, Ocumension will have the priority to introduce Alcon’s products when Alcon seeks to enter the Chinese market. In terms of global expansion, Alcon will also serve as a key partner for Ocumension in exploring overseas markets, providing international empowerment.

Through this collaboration, Alcon and Ocumension will leverage their complementary strengths, share R&D resources, optimize R&D processes, and enhance R&D efficiency, jointly exploring new technologies and approaches in ophthalmic treatment.

Ocumension also stated in the press release that both parties expect to further promote technological advancements and innovation in the field of ophthalmology through this strategic collaboration, bringing safer, more effective, and cutting-edge treatment options to ophthalmic patients worldwide and meeting their growing medical needs.

Ocumension is a Chinese ophthalmic pharmaceutical platform company dedicated to integrating comprehensive capabilities across the entire lifecycle of ophthalmic drug development, from R&D to commercialization. As one of the most competitive enterprises in China’s ophthalmology sector, Ocumension boasts a pipeline of 25 products, comprehensively covering major indications for both anterior and posterior segment eye diseases.

An analysis of Ocumension’s product pipeline reveals a distinct hierarchical structure. According to the company’s semi-annual report, 8 out of its 25 pipeline products have already been commercialized in China, 3 are in Phase III clinical trials, and 3 are at the stage of filing for marketing approval. This implies that the company can achieve cash conversion in a structured manner, thereby navigating industry cycles effectively.

Ocumension also boasts an efficient clinical team and mature commercialization capabilities, enabling the rapid transition of its product pipeline from clinical development to market launch. This collaboration further underscores the recognition of Ocumension by overseas pharmaceutical companies.

Through this collaboration, Ocumension is poised to expand its product portfolio in the dry eye disease sector, further driving pipeline diversity and differentiation.

Dry Eye Disease (DED) is a form of ocular surface damage caused by multiple factors, with a complex pathogenesis. The treatment of DED is often an iterative process requiring combination therapies to maximize therapeutic efficacy. However, currently marketed DED medications can only alleviate symptoms such as dry eyes, visual fatigue, and blurred vision, making it difficult to achieve a cure. Consequently, there remains a lack of effective treatment options for DED.

According to statistical data, the number of dry eye disease patients in China has reached 360 million. Given the unmet clinical needs, the market potential for dry eye disease medications is substantial.

Prior to this transaction, Ocumension’s existing pipeline already included two dry eye disease products: Ouqin (sodium hyaluronate eye drops), which has already been commercialized, and OT-202 (a tyrosine kinase inhibitor), which is in clinical development. OT-202 is a dual-target inhibitor with first-in-class potential and represents one of the few innovative ophthalmic drugs in China targeting novel mechanisms. It simultaneously inhibits spleen tyrosine kinase (Syk) and vascular endothelial growth factor (VEGF). Through a unique synergistic mechanism, it effectively suppresses ocular inflammatory responses. The drug has met the primary endpoints of its Phase II clinical trials, demonstrating positive results in both safety and efficacy, and is expected to enter Phase III clinical trials in the second half of the year. If the Phase III trials proceed smoothly, OT-202 has strong potential to become a blockbuster drug in the field of dry eye disease.

Through this transaction, four of the eight drugs introduced by Ocumension—Systane Ultra, Systane, Blink Tears, and the candidate AR-15512—are indicated for the treatment of dry eye disease; Systane Complete is indicated for the relief of eye dryness. Among these, AR-15512 is a novel topical candidate drug for the treatment of dry eye disease with first-in-class potential. It met its primary endpoint in pivotal efficacy and safety studies conducted in the United States, demonstrating a statistically significant improvement in tear secretion (p < 0.0001) without serious adverse reactions. In Phase III trials involving more than 930 subjects in the United States, AR-15512 demonstrated rapid onset and sustained efficacy, addressing a critical gap in the treatment of dry eye disease. An FDA application is expected to be submitted in 2024.

In addition to the two products previously launched, Ocumension currently has up to six products in the dry eye disease field that are either in clinical stages or commercialized. These products cover different targets and have the potential to be best-in-class, positioning the company for a significant advantage in future market competition.

In addition to dry eye disease, another highly anticipated candidate in Ocumension’s R&D pipeline is OT-101, a low-concentration atropine eye drop designed to control myopia progression, which has currently entered Phase III clinical trials. Given that the global number of adolescents with myopia reached 571 million in 2022 and is projected to reach 642 million by 2027, the drug holds substantial market potential upon its commercial launch.

With the completion of this transaction, Ocumension’s portfolio of ophthalmic drug assets will total 33 candidates, making it the company with the largest ophthalmic drug pipeline in China.

Currently, Ocumension has expanded its product portfolio in the dry eye disease sector. As its pipeline products for myopia control and macular degeneration are gradually commercialized, the company will establish a comprehensive innovative therapeutic regimen for ophthalmic drugs. Moving forward, through effective integration of resources, Ocumension may further solidify its position as an industry leader, creating a virtuous cycle.

References:

The Full Story of a Chinese Pharma Company’s “Marriage” to the Global Ophthalmology Leader — TradeWind

Why Is He the New King of Ophthalmology? — Archimedes Biotech