Sun Pharma is set to acquire US-based eye-care company InSite Vision Inc, becoming the third Indian drugmaker to execute a major transaction in the US in less than two months.
The all-cash transaction at $0.35 per share is pegged at about $48 million in aggregate equity value, on a fully diluted basis including related debt and other transaction costs.
InSite, which develops specialty ophthalmic products, has three late stage programmes in its product pipeline. The deal is expected to bolster Sun’s ongoing efforts to build a branded ophthalmic business in the US.
Over the past two months, Lupin and Cipla have executed two big-ticket transactions in the US.
InSite said it has terminated its previously announced merger agreement with QLT Inc. InSite’s board of directors found the Sun offer to be better, it said. InSite was required to pay a $2,667,000 termination fee to QLT, which Sun’s subsidiary has paid on its behalf, it added.
Sun said its offer was at a 30 per cent premium to the implied price per share under the terminated agreement between InSite Vision and QLT for InSite’s common stock based on the stock price of the competing bidder as of September 11, 2015.
For the six-month period ended June 30, 2015, InSite recorded revenues of $3.8 million, an EBITDA loss of $6.4 million and a net loss of $7.5 million. Sun expects to close the deal by the fourth quarter of 2015.
Product pipelineThe latest acquisition fits well with Sun’s ophthalmic business plan. In June, the company had in-licensed Xelpros (latanoprost BAK-free eye drops) from its research company.
InSite has developed the DuraSite and DuraSite2 drug delivery platforms that are capable of extending the duration of drug retention, thus resulting in lower dosing frequency, and potentially enhanced efficacy, said Sun.
Based on this technology, InSite has developed a pipeline of late-stage clinical candidates, and recently filed a new drug application (NDA) with the US FDA for BromSite for the treatment of inflammation and prevention of pain associated with cataract surgery.
It plans to file another NDA in 2017 for DexaSite for the treatment of non-bacterial blepharitis, a common ocular condition for which there is no approved product currently available.
The company’s AzaSite Plus is currently in phase-III clinical development for the treatment of eye infections, and ISV-101 is in phase I-II clinical development for dry-eye disease and inflammation.
InSite Vision also has two commercialised products based on its DuraSite platform approved for the treatment of bacterial eye infections — AzaSite (azithromycin ophthalmic solution) and Besivance (besifloxacin ophthalmic suspension).
Sun’s North American business head Kal Sundaram said the acquisition is part of its transitioning to a specialty drugs company. Besides dermatology, the company has identified ophthalmics as one of the key segments for a branded presence in the US.
The transaction has been approved by the board of directors of the Sun Pharma subsidiary. InSite Vision’s board of directors has also approved the transaction and unanimously recommended that its stockholders tender their shares pursuant to the tender offer, Sun said.