Alcon (NYSE:ALC) and RxSight (Nasdaq:RXST) announced that they entered into a non-exclusive intraocular lens (IOL) collaboration.
The companies intend to jointly develop adjustable presbyopia-correcting IOLs (PCIOLs). Under the collaboration, the companies intend to innovate on their respective platforms. RxSight’s focus centers around post-operative light-adjustable technology. Meanwhile, Alcon will continue its work on PCIOL optical designs.
With these developments, the companies plan to combine technologies to create a co-developed offering. They hope to enable surgeons to fine-tune visual outcomes for cataract patients who choose a PCIOL.
As part of the agreement, RxSight will receive a $60 million upfront payment to begin development. It could receive up to an additional $140 million in payments, contingent on development and regulatory milestones.
Under the deal, Alcon takes the lead on global commercialization efforts. RxSight’s responsibilities include development and manufacturing, with royalties awarded based on net sales.
The partnership comes as a major boost for Alcon, which had to terminate an agreement to acquire Lensar earlier this year due to government scrutiny.
Commentary from Alcon and RxSight officials
David J. Endicott, Alcon CEO, said:
“Our leading PCIOLs have helped millions of patients reduce or eliminate the need for glasses after cataract surgery. Together with RxSight’s technology, we have the opportunity to develop tunable PCIOLs, giving surgeons even greater confidence to refine outcomes after surgery.”
Ron Kurtz, president and CEO of RxSight, said:
“We are excited to work with Alcon to provide patients greater access to outcomes customized to their needs after surgery. This collaboration underscores our belief in the importance of adjustability and will help accelerate its expansion across a wider base of patients.”
The analysts’ take
BTIG analysts Ryan Zimmerman and Iseult McMahon maintain a “Buy” rating for Alcon and a “Neutral” rating for RxSight after the announcement.
The analysts called the collaboration a “post-op pivot,” saying the deal “accomplishes a few things for both companies.”
Zimmerman and McMahon say Alcon has struggled to bring an adjustable, accommodative IOL technology to market. They point to delays with PowerVision, which the company acquired for $285 million in 2019. With this in mind, the analysts say the collaboration “sets [Alcon] on a new course.”
“Investors had largely written off the PowerVision investment and [Alcon] has the cash from failed acquisitions to invest in other development opportunities,” the analysts wrote. “This may be the easiest path for [Alcon] that does not involve an acquisition.”
The analysts also point to new entrants to the IOL market, including Johnson & Johnson. They said RxSight, meanwhile, has “struggled to turn things around commercially,” meaning the agreement could take pressure away from commercial execution on its end.
“If successful, the agreement, could make adjustable IOL technology more mainstream given [Alcon’s] scale and commercial reach while also improving [RxSight] shares,” the analysts concluded.
