Allergan to buy dry eye device startup Oculeve for $125M+

The implant is designed to stimulate natural tear production.--Courtesy of Stanford University

Allergan ($AGN) will acquire clinical-stage dry eye device startup Oculeve for $125 million plus undisclosed commercial milestone payments tied to lead program, OD-O1. The somewhat stealthy startup came out of the Stanford Biodesign program and counts Kleiner Perkins Caufield & Byers, New Enterprise Associates and Versant Ventures among its investors.

Oculeve hasn't taken much time or money to reach this exit--about four years and a total of around $26 million, according to SEC filings. 

And, unlike many medical device acquisition targets, Oculeve isn't past regulators. Allergan expects to run two additional pivotal trials for the startup's OD-01 prior to FDA submission, which is expected next year with a potential commercial launch in 2017. The device has already been studied in more than 200 patients, Allergan noted.

"The OD-01 program has been shown to provide a strong safety and efficacy profile, and if approved, would provide an exciting new treatment option for patients that is complementary to our existing product offerings in this important treatment area," said Allergan EVP of Global Brands Research and Development David Nicholson in a statement.

Dry eye products are a priority for the Allergan; here's what its president and CEO Brent Saunders had to say about the segment on the company's most recent quarterly conference call in May.

"We have roughly four programs in dry eye. We think we have some really interesting ones and ones that maybe perhaps will fall out. We'll go through that over the course of the next month or so," Saunders said. "But dry eye is something that we're also very committed to, and we're looking at a variety of external innovations as well as our internal programs. And you'll see us very committed to this space for the long term."

OD-01 is a non-invasive nasal neurostimulation device that increases tear production in patients with dry eye disease. It includes a tiny device that is inserted into the mucous membrane of the nasal cavity and another inserted under the skin below the eyebrow. Rates of tear delivery can then be adjusted manually via a wireless controller. Allergan also will gain an earlier-stage, undisclosed dry eye device that's in development.

Current treatments for dry eye include lubricating eye drops, which are inconvenient since they can require refrigeration, and cyclosporine, which patients often discontinue after a few months of use.

Oculeve started out in 2011 when former Boston Scientific ($BSX) biomedical engineer Michael Ackerman and his team raised $32,000 in startup competitions to fund a prototype of OD-1. Then the company caught the attention of Brook Byers at Kleiner Perkins and the firm backed Oculeve with $100,000 in seed funding to test safety and efficacy in animals.

Then in October 2012, Kleiner Perkins, Versant and NEA backed a $7.6 million round to hire employees and launch clinical trials in Australia, New Zealand and Mexico. That was followed by the most recent disclosed financing of $16.6 million in March 2014.

- here is the release

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