In July 2010, Alcon, Inc. (Huenenberg, Switzerland) announced an agreement to acquire LenSx Lasers, Inc. (Aliso Viejo, California), for up to $744 million USD. The acquisition brings to the global eye care company a new technology to complement cataract surgery: The LenSx femtosecond laser has received 510(k) clearance from the US Food and Drug Administration (FDA) for performance of anterior capsulotomy and lens fragmentation.
Cataract & Refractive Surgery Today Europe spoke to Steve Speares, Alcon's Vice President of Global Surgical Marketing, about the reasons behind the company's acquisition of LenSx and the prospects for its femtosecond laser technology.
CRST Europe: Why did Alcon make this acquisition? What made LenSx an attractive company?
Stephen Speares: The answer to that is in two parts. First, Alcon is the leader in eye care technology, and it is important that physicians look to us to be their source for new technology. Although this technology was developed outside of Alcon, it is a technology that we believe will assist physicians to improve key steps of the cataract procedure and therefore made it attractive to augment our cataract instrumentation portfolio.
The second aspect that made LenSx attractive is that the senior management and founders of the company—Ronald Kurtz, the President and Chief Executive Officer; Tibor Juhasz, the Chief Technology Officer; and Eric Weinberg, the Chief Commercial Officer—are the same people who brought IntraLase (now Abbott Medical Optics Inc., Santa Ana, California) to the refractive market. They clearly have broad perspective and experience with the challenges associated with a new technology, specifically a new femtosecond laser technology. These three principals have a great track record behind them, and that made the company attractive from the perspective of commercial viability.
CRST Europe: Because LenSx was a start-up and not yet generating revenue, what factors were considered when deciding an appropriate value for the acquisition?
Speares: There is always some degree of speculation when acquiring a technology that has not yet been commercialized. A number of factors went into our valuation process. LenSx had the first FDA 510(k) clearances for performing anterior capsulotomy and lens fragmentation with a femtosecond laser, and therefore it has the likelihood of getting to market first. It also had a nice complement of intellectual property.
Obviously, the investments that the company incurred getting the technology to where it is had to be factored into the value equation. Nobody who is developing a new technology is going to sell it to you for less than what it cost to develop. The most important factor was our own research regarding what the acceptance of the technology will be. Those were the basics of what went into the evaluation. It is difficult to say, “OK, this company is worth X million.” There is always going to be some level of speculation involved in an acquisition like this.
CRST Europe: Will the deal affect the business operations of LenSx?
Speares: LenSx had not yet established a commercial infrastructure. It did, of course, have a robust technology infrastructure. This deal will enhance and support that initial investment and make sure that the work that LenSx had been doing will continue. We expect as part of this acquisition that LenSx, the facility and the people, will remain in place, and they will continue to innovate and bring this product to market.
LenSx was well on its way to commercializing this technology, so our approach will be to not get in the way or slow that momentum. Our approach will be to nurture and support this technology in a way that gives it the best opportunity for broad acceptance in the marketplace.
The fact that the LenSx commercial infrastructure was yet to be built was also factored into our decision-making process. If there is one asset that Alcon brings to this relationship, it is our commercial footprint; our sales and marketing infrastructure around the world, through all of our affiliates, will make this new technology readily available to all surgeons. Additionally, we will provide extensive training, education, and in-market technical service to the customer, no matter where they operate. This product has yet to be registered in many countries around the world, so this is a top priority as we begin planning the launch.
CRST Europe: There are other companies developing technologies in the field of femtosecond laser-assisted cataract surgery, such as LensAR (Winter Park, Florida) and OptiMedica Corporation (Santa Clara, California). Did Alcon look at those companies in planning this acquisition?
Speares: We evaluated all technologies that are out there right now. Clearly LensAR and OptiMedica have done some very good work. All three companies were impressive in terms of what each has accomplished in the short time that they have been working on this technology.
But the decision came down to two key factors, where LenSx was in its development process and the history and success that the management team had with IntraLase. IntraLase changed the paradigm for LASIK surgery. Those individuals were instrumental in that process. So when we looked at all of the companies in this space, it was difficult to dismiss the success this team exhibited with the launch of IntraLase.
CRST Europe: When would Alcon like to see this technology in the offices of physicians?
Speares: The LenSx plan, and our intention as well, is to sell the first units in the fourth quarter of 2010, followed by a broader global launch in 2011. The FDA clearances for capsulotomy and lens fragmentation are already in hand. LenSx has a couple other indications pending FDA clearance.
The other factor that will determine our pace is setting up to manufacture for the first time. The LenSx cultural approach to quality, to innovation, and to customer education is closely aligned with Alcon's cultural approach. When we introduce a new technology such as this, these things enter into the equation. The fact that we are philosophically aligned with LenSx means that the burden is reduced as we go through the challenges of getting the technology out in the marketplace.
CRST Europe: Has the price per unit been determined?
Speares: That has not yet been established.
CRST Europe: Alcon has about a 70% market share in phacoemulsification. Some physicians believe this new technology will reduce the need for phaco and maybe eventually eliminate it. Is this acquisition in a way a hedge against that possibility?
Speares: That's a logical question and one that people who are learning about this technology are trying to understand. I have seen the LenSx laser used in surgery, and I have seen quite a bit of information about the OptiMedica and LensAR lasers. Based on everything I have seen, I do not believe that this technology is going to eliminate phacoemulsification. A femtosecond laser can only complement the procedure, not complete the procedure.
I believe any of the investigators will tell you the same thing: Right now, this technology is clearly complementary; it will not displace phaco. Now, if the question is: Can it enhance phacoemulsification? Can it improve the phacoemulsification procedure? Absolutely. It is going to assist surgeons in some of the most difficult and challenging steps of the procedure.
Steve Speares is the Vice President of Global Surgical Marketing, Alcon Laboratories, Inc. He may be reached at e-mail: Stephen.Speares@AlconLabs.com.
