Bausch + Lomb Corp. announced June 30 that it will acquire XIIDRA, a treatment for dry eye disease (DED), from Novartis for up to $2.5 billion. 

The eye health company, which is headquartered in Ontario with corporate headquarters in Bridgewater, said the deal with Norvatis, which has its U.S. base in East Hanover, will complement its existing dry eye portfolio. 

Bausch + Lomb Chairman and CEO Brent Saunders said in a statement that the acquisition “provides needed scale for the company” and makes it “a leader in ocular surface diseases.” 

Saunders added, “The deal is also expected to accelerate margin expansion through a larger mix of pharmaceutical products in our portfolio, provide strong and immediate earnings accretion and presents a clear path to deleverage, making it financially compelling.” 

XIIDRA (lifitegrast ophthalmic solution) 5% is a non-steroid eye drop approved to treat the signs and symptoms of dry eye disease, an affliction that affects approximately 35 million people in the U.S. alone, according to an Eyes on Eyecare report cited by Fortune Business Insights. 

Bausch + Lomb also noted that the condition is becoming more prevalent because of the increased use of digital screens.  

“The prescription U.S. DED field is expected to grow at a double-digit compounded annual growth rate over the next five years,” the announcement stated, adding that XIIDRA generated approximately $487 million in sales in 2022 and is patented through 2033. 

In addition to eye and contact lens drops, Bausch + Lomb’s existing dry eye portfolio includes MIEBO (perfluorohexyloctane ophthalmic solution), which was cleared in May by the U.S Food and Drug Administration as the only approved eye drop for DED that directly targets tear evaporation.  

The company clarified that “XIIDRA and MIEBO work differently to target distinct elements of the DED cycle,” since XIIDRA focuses on inflammation. 

More details 

As part of the deal, Bausch + Lomb will also acquire two advancements under research: libvatrep (also known as SAF312), which is being studied for the treatment of chronic ocular surface pain; and AcuStream technology, a device that may help with dosing and delivery of topical ophthalmic eye medications. 

The $2.5 billion price tag includes an upfront payment of $1.75 billion in cash with potential milestone obligations up to $750 million based on sales and commercialization. The sales force supporting XIIDRA will also join Bausch + Lomb. 

Both companies’ boards have approved the deal, which is subject to regulatory approval and other customary closing conditions and expected to close by the end of 2023. 

J.P. Morgan served as financial advisor to Bausch + Lomb. Wachtell, Lipton, Rosen & Katz advised on legal matters relating to the transaction, and Davis Polk & Wardwell advised on legal matters relating to the financing, according to Bausch + Lomb. 

Bausch + Lomb launched as a publicly traded company in May 2022.