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"This acquisition is a clear strategic fit. It complements our expertisein ophthalmology, and it supports our goal to expand our pipeline of ocularproducts," said Bob Butchofsky, President and Chief Executive Officer of QLT."We believe that our proprietary system for delivery of medications to the eyeusing punctal plugs will be an important therapeutic advance in the field ofophthalmology, and could become a key contributor to our future growth."
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Under the terms of the agreement, QLT will acquire all of the outstandingshares of ForSight Newco II for $42 million on closing along with futuremilestone payments and royalties on net sales of products. The milestonepayments consist of a one-time $5 million payment upon the initiation of aphase III clinical trial for the first product, $20 million on firstcommercialization of each of the first two products using ForSight Newco II'sproprietary technology and $15 million on first commercialization of eachsubsequent product. The acquisition is expected to close early in the fourthquarter of 2007 and is subject to customary closing conditions. On completionof the acquisition, ForSight Newco II will become a wholly-owned subsidiary ofQLT.
In order to facilitate the Company's focus on innovative ocular drugdelivery, QLT plans to continue its divestment of non-core assets, includingselling the vacant property adjacent to its headquarters in Vancouver, BritishColumbia. In addition, the Company plans to monetize the value built up in itsheadquarters by obtaining a mortgage or other financial structures.
"We are very excited to work with the experienced drug and devicedevelopment teams at QLT to advance this technology," said Eugene de Juan Jr.,M.D., Founder and Vice-Chairman of ForSight Labs. "We think this is a verysignificant technology that could ultimately lead to a sea of change in theway medications are delivered to the eye."
ForSight Newco II's proprietary punctal plugs are a non-invasive drugdelivery system capable of delivering a variety of drugs to the eye over timethrough controlled release to the tear film. Sustained release punctal plugscould potentially replace eye drops for glaucoma, dry eye, allergies andpostoperative care, which represent a $6 billion market. In addition, plugsmay provide a more effective, convenient and reliable treatment alternativethat could ultimately improve patient compliance with their medication andoutcomes for their disease.
Through this acquisition, QLT, through its wholly-owned subsidiary, willobtain worldwide rights to commercialize ForSight Newco II's proprietarypunctal plug technology combined with any active pharmaceutical ingredient,and will lead and fund future development efforts in this program. QLT plansto initiate a Phase I/II clinical trial with the first product using ForSightNewco II's proprietary technology for the treatment of glaucoma in the firsthalf of 2008. Glaucoma affects approximately 65 million people worldwide andis the second leading cause of blindness. Approximately 99% of glaucomapatients are treated with topical medications, 4-6% receive surgery and onaverage each diagnosed patient has multiple visits to ophthalmologist peryear. Compliance with topical eye drop medications in glaucoma patients ispoor, with approximately half of treated patients not refilling theirprescription after the first six months of therapy. In spite of this, theglaucoma market continues to grow and i
