NicOx Kicks Off Specialty Ophthalmics Transformation With Altacor Buy
This article was originally published in The Pink Sheet Daily
Executive Summary
France's NicOx, aiming to transform into a specialty ophthalmology company after several late-stage disappointments, announced plans to acquire VC-backed U.K startup Altacor.
French nitric oxide R&D specialist Nicox SA has taken an exclusive option to acquire the small U.K. ophthalmology company Altacor Ltd. for approximately £11 million ($17.4 million) upfront, as the first step in a new business strategy: transitioning into an international late-stage development and commercialization ophthalmology company.
NicOx, which possesses a cash pile of €93 million but has suffered a series of late-stage product disappointments, announced plans to acquire the company March 21 in a phased transaction. NicOx will immediately buy an 11.8% stake in Altacor for £2 million in cash. At the same time, it will enter into an exclusive option agreement to acquire the remaining shares of Altacor for £9 million, either in NicOx shares, cash or a combination of both, which must be exercised by May 31, 2012. Altacor shareholders also could receive an additional £8.5 million in milestones, largely tied to regulatory goals for pipeline products.
Altacor, located in Cambridge, U.K., was established in 2007 by angel investors, CEO Fran Crawford and Bridgehead International Ltd. Other investors include , The Aspire Fund, and NVM Private Equity.
The company, which employs just 12 people, already markets one product, Clinitas hyaluronic acid eye drops for dry eye, available in both a prescription and over-the-counter version in the U.K. and Ireland. The company’s late-stage pipeline includes a potential surgical antiseptic for ophthalmic use, ALT-005. A Phase III clinical trial testing the product recently was initiated and a second Phase III trial is planned. The company’s pipeline also includes SOLO, a device for the insertion of advanced materials IntraOcular Lenses (IOLs). Commercial rights to SOLO are owned by Staar Surgical Co., a U.S.-based company specializing in lenses for ophthalmic surgery.
From Pain To Niche Ophthalmology Specialist
NicOx’s transformation has been underway since its lead compound, the non-steroidal anti-inflammatory naproxcinod, was turned down by U.S. regulators in mid-2010 (Also see "Naproxcinod Must Show More Data On Both Safety And Therapeutic Benefit After "Complete Response" Letter" - Pink Sheet, 22 Jul, 2010.). The news was a blow to the company, which closed its U.S. office and markedly reduced its headcount. In April 2011, NicOx withdrew it marketing authorization application for naproxcinod in the EU. The company appealed the FDA decision in July 2011, but has not provided an update on the status of the appeal. Following the restructuring, the company’s cash burn declined from €47.9 million in 2010 to €14.9 million in 2011.
Ophthalmology seems like an unusual choice on the surface for NicOx, which had been focused on pain and inflammation, but the company actually is quite experienced in the field. The company had developed its own nitric oxide-donating glaucoma therapy, which it licensed to Pfizer, Inc. NicOx eventually re-acquired rights to that product in 2009 after Pfizer concluded from Phase II testing that it provided only marginal improvement over its Xalatan (latanoprost), which is now available as a generic.
But NicOx was able to turn around and license the drug out again to Bausch & Lomb Inc. within six months (Also see "NicOx finds new partner Bausch & Lomb for Phase II Glaucoma Candidate" - Pink Sheet, 3 Mar, 2010.). The drug is now called BOL-303259-X (formerly NCX 116). Phase III trials recently were initiated.
NicOx retains U.S. co-promotion rights for BOL-303259-X, which could offer the French company an opportunity to expand its U.S. commercial presence if the drug is approved.
Ophthalmology has been attracting a lot of interest recently, including from big pharma companies like Novartis AG, which completed the acquisition of Alcon Inc. last year (Also see "Consolidated Alcon Eye Division Has Key Role In Maintaining Novartis’ Growth" - Pink Sheet, 19 Sep, 2011.). In 2009, Sanofi took steps to build up its ophthalmology business by acquiring Fovea Pharmaceuticals SA (Also see "Sanofi Creates Ophtho Division through Earn-Out Acquisition of Fovea" - Pink Sheet, 1 Oct, 2009.).
But in an interview, NicOx CEO Michele Garufi said ophthalmology remains less competitive than other therapeutic areas like oncology. If drug companies avoid back-of-the-eye retinal conditions, where big pharmas like Novartis and Bayer AG currently are battling over indications in age-related macular degeneration, there are significant opportunities, Garufi said.
There are only a few pan-European ophthalmology companies, and in the U.S., there are only a few small- to mid-sized ones, like Eyetech Inc., interested in niche eye products. As a result, Garufi sees an opportunity to become a European marketing partner for U.S. companies playing in the space.
NicOx is planning to build up its portfolio of ophthalmic products, devices and diagnostics through the acquisition of a series of small companies or late-stage products. At the same time, it will divest NicOx's research and pipeline products in areas that don’t fit into the new strategy.