Since being spun off into a separate company in April 2019, Alcon Inc. (ALC, Financial) shares have thrived while the stock of its former parent, Novartis AG (NVS, Financial), has languished.
Shares of the Geneva-based eye-care leader have climbed about 50% to around $84 since the divorce. In the meantime, shareholders of Swiss pharma giant Novartis are right about where they started when the separation took place at $83 a share.
Alcon’s prospects appear even better after the company announced its plans for a major acquisition aimed at strengthening its global glaucoma franchise. The company plans to buy Ivantis, a developer of technologies to treat eye diseases, for an initial consideration of $475 million upfront.
The deal will add the Hydrus Microstent, a minimally invasive glaucoma surgery device manufactured by Ivantis, to Alcon’s ophthalmology portfolio. Hydrus Microstent is about the size of an eyelash and helps to reduce eye pressure by restoring flow through a canal that is the natural outflow pathway of the eye, according to an article in Medical Device & Diagnostics Industry.
The device was approved by the Food and Drug Administration for use in conjunction with cataract surgery. It is also indicated for primary open-angle glaucoma with cataract surgery or as a standalone procedure in the U.K., Germany, Canada, Australia and Singapore.
Alcon stated that the acquisition of Ivantis strengthens its portfolio for retina, cataract, refractive and glaucoma treatments.
A five-year trial showed that 65% of patients treated with the Hydrus Microstent remained medication-free up to five years after the implant. Alcon CEO David Endicott said, “Glaucoma is the second-largest cause of blindness after cataracts, impacting more than 75 million people globally, with significant unmet patient need.”
This is Alcon’s second bite at the MIGS market apple. The company, when it was a part of Novartis, was marketing the Cypass Micro-Stent, but voluntarily pulled all versions due to safety concerns. If the Ivantis deal is completed, it would give Alcon a product to compete with the MIGS market leader Glaukos Corp. (GKOS, Financial) of San Clemente, California.
Days after announcing the deal, Alcon reported outstanding sales for the third quarter, with worldwide revenue climbing 15% on a reported basis to $2.1 billion.
Analysts don’t see any major moves in the company’s share price over the next 12 months. Although they rate the stock a buy, Wall Street forecasts a high price of $95 and a low of $69 with an average near $86.
