Benzinga | Mar 2, 2021 04:12PM EST

Iridex Announces Strategic Collaboration with Topcon Corporation; Transaction Provides $19.5M Cash to Iridex

Iridex Corporation (NASDAQ:IRIX), a provider of innovative ophthalmic laser-based medical products for the treatment of glaucoma and retinal diseases, announced today that it has entered into a strategic collaboration with Topcon Corporation. Topcon is a Japanese-based manufacturer and distributor with approximately $1.3 billion in annual revenues, including $430 million from its eye care business.

Highlights of the new strategic relationship include:

* The transaction nets $19.5 million of cash to Iridex, providing multiyear funding for strategic growth initiatives, particularly those designed to drive expanded market penetration of Iridex's unique non-incisional glaucoma therapy products

* Topcon invests in Iridex by i) purchasing exclusive rights to distribute Iridex's retina and glaucoma products in certain global markets, and ii) acquiring a common equity stake of approximately 10.4% in Iridex

* Iridex product portfolio to benefit from Topcon's distribution strength in Asia Pacific and key EMEA markets, joining Topcon's broad offering of diagnostic and treatment products for glaucoma and retina customers

* Iridex acquires Topcon's PASCAL(r) product line, combining Iridex' MicroPulse(r) technology with Topcon's PASCAL(r) laser platform, resulting in a leading market share for retinal scanning laser products, plus greater scale to generate design, manufacturing and marketing efficiencies

Terms of the Agreements

The comprehensive collaboration between Iridex and Topcon includes three main agreements: an Exclusive Distribution Agreement, an Asset Purchase Agreement and an Equity Funding Agreement. Under the terms of these agreements, Topcon will acquire exclusive distribution of Iridex laser systems, delivery devices and disposable probes to be sold through its strong networks in Asia Pacific and key EMEA regions. Concurrently, Iridex will add Topcon's PASCAL(r) systems to its U.S. direct sales and rest-of-world distribution network. Further, Iridex will acquire the design and manufacturing operation of Topcon's PASCAL(r) product line. Finally, Topcon will purchase $10 million of Iridex common shares at a price of $6.18 per share. The net cash proceeds to Iridex of these transactions are expected to be approximately $19.5 million before offering expenses.

About the partnership, David Bruce, CEO of Iridex, said, "We feel energized entering into this important alliance with Topcon that advances the strategic positions of both companies on multiple fronts. Joining Topcon's comprehensive distribution network throughout Asia Pacific and key EMEA regions will help Iridex to significantly expand the market penetration of our marquee non-incisional glaucoma therapy. Topcon can further capitalize on its already-strong distribution network by adding our leading retina product portfolio to enhance the breadth of its ophthalmic system offerings. This alliance will enable both companies to benefit from the enhanced scale achieved by consolidating the design, manufacturing and distribution of two leaders in scanning laser retinal treatment. Finally, with $19 million in additional capital, Iridex has the resources to drive its multiyear growth programs."

"We sought this alliance with Iridex to achieve significant benefits to our operating and distribution efforts. As leaders and innovators in advancing the treatment options for eyesight threatening diseases, we recognize a great opportunity to bring our strengths together," said Fumio Ohue, Managing Executive Officer of Topcon's Eye Care Business. "We are excited to bring Iridex's retina and glaucoma therapy products to our expansive customer base throughout Asia Pacific and key Europe, Middle East and Africa markets. This alliance with Iridex is one of the major initiatives which Topcon will offer with our 'Shared Care' program. We are confident that combining our new product design and development efforts will enhance our existing and future products in both retina and glaucoma."

Mr. Bruce concluded, "In line with our goal of ensuring the long-term adoption of our laser-based MicroPulse TLT procedure in the marketplace, we are gratified with the high-level commitment Topcon has made to our platform, and we look forward to a strong partnership that is beneficial for patients and eye care specialists around the world for years to come."