Earlier this week, Alcon Inc. (ACL) signed a definitive agreement for the acquisition of Swiss biotech company ESBATech AG. Alcon will pay $150 million in cash at closing. Besides this, Alcon may pay up to $439 million on the achievement of future research and development milestones.

With this acquisition, Alcon will gain access to ESBATech’s proprietary antibody fragment technology, which is used for the development of compounds for the treatment of eye diseases like age-related macular degeneration, diabetic macular edema, glaucoma, dry eye and uveitis.

ESBATech has several stable and soluble single-chain antibody fragments in development.
ESBATech’s lead antibody fragment, ESBA105, is a recombinant humanized scFv antibody fragment directed against human tumor necrosis factor-alpha (TNFα). ESBA105 is being developed for a number of therapeutic indications and is currently in a phase IIa study for uveitis and a phase Ia/IIb study for cataract surgery.

We view this acquisition as a positive as it reinforces Alcon’s commitment towards building its pipeline through in-licensing deals and acquisitions. The transaction should allow Alcon to strengthen its ophthalmic product pipeline.

The ESBATech acquisition is the latest in a series of deals entered into by Alcon to build its pipeline. In July 2009, Alcon entered into a five-year collaborative research agreement with AstraZeneca (AZN) for the exclusive ophthalmic discovery and potential development rights to AstraZeneca’s compound library.

Alcon also entered into a research and licensing agreement with PhiloGene Inc. for rights to a vascular endothelial growth factor (VEGF) protein, which will be developed for the treatment of wet age related macular degeneration and diabetic macular edema.

Alcon’s primary competitor in the ophthalmology market is Allergan, Inc. (AGN).
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