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Abbott Expands in Eye Market with Visiogen

Abbott Laboratories is finding Orange County to be fertile ground to grow its eye surgery products business.

Abbott, based in the Chicago area, made its latest foray into eye surgery devices when it said last week it was buying Visiogen Inc., a privately held Irvine startup that makes replacement eye lenses, for $400 million in cash.

Visiogen is Abbott’s second big OC deal this year. In February, Abbott spent $2.8 billion for Advanced Medical Optics Inc., a Santa Ana ma-ker of eye surgery devices, lasers and contact lens products.

That buy was Abbott’s way of getting into the $22 billion yearly eye products market.

The company now is known as Abbott Medical Optics Inc. and will oversee the Visiogen integration.

Visiogen makes an intraocular lens that is implanted in the eye to replace the natural lens.

Its lens, known as Synchrony, is used to treat a condition called presbyopia,where the eye loses its ability to focus close-up,in patients who have had their natural lenses removed because of cataracts.

Abbott, a diversified maker of drugs, consumer products and medical devices, is buying Visiogen because “we love” the intraocular lens category, said James Mazzo, an Abbott senior vice president and president of Abbott Medical. Abbott got the Tecnis and ReZoom intraocular lenses through the Advanced Medical deal.

The intraocular lens market should become a $600 million market within five years, Mazzo said.

Visiogen is “perfectly aligned with where we want to go,” Mazzo said.

Abbott is looking to expand within the lens market and compete with Bausch & Lomb Inc. of Rochester, N.Y. for the accommodating intraocular lens segment, which is made up of lenses that work with the eye’s natural muscles.

Bausch markets Crystalens, which now is the only Food and Drug Administration-approved lens that works with eye muscles.

Bausch got Crystalens when it bought Eyeonics Inc., the lens’ Aliso Viejo-based developer, in 2008. Bausch & Lomb’s surgical hub is in Aliso Viejo.

Abbott said it expects the Visiogen deal to close in the fourth quarter.

Both Abbott and Bausch paid roughly the same price to acquire the companies, ac-cording to Larry Biegelsen, an analyst with Wells Fargo Securities LLC. Biegelsen said the steep price paid for Visiogen could signal promising results in clinical trials.

Synchrony is under review at the FDA; it could be approved in the first half of 2010, according to Biegelsen.

He said buying Visiogen shows that Abbott is “serious about ophthalmology and (is putting) pressure” on rival Alcon Inc., which has a 785-worker plant in Irvine. Alcon also makes intraocular lenses as well as eye solutions.

“I had talked to Abbott management after the AMO purchase, and they were very clear: The space was interesting to them and they wanted to grow,” said Jan Wald, an analyst with Noble Financial Capital Markets in Boston. “They’re not the first in; they’re not the scouts. They’ve seen how much of a market opportunity” exists, Wald said.

Synchrony, which has been implanted in more than 1,200 eyes, has been sold in Europe since January.


History

Visiogen was founded in 2001 and moved to OC to attract more engineering talent. The company has 65 workers.

It has raised some $80 million in venture capital funding, including a $40 million round in April led by the Novartis Venture Funds, the venture capital arm of Swiss drug maker Novartis AG. Other large investors included New Leaf Venture Partners.

Wald said it was “a great time to buy” a company like Visiogen because medical device company valuations have been depressed and the initial public offering market still is weak.

Mazzo said no decisions have been made about how Abbott plans to integrate Visiogen, including the role of Reza Zad-no, the company’s founder and chief exe-cutive, because the deal hasn’t been closed yet.

Mazzo said that he’s a believer in Zadno and the Visiogen team, and he noted that he’s talked with Zadno for some years.

“They’re very sharp people, they’re extremely dedicated and they’ve done a great job in a very short amount of time,” Mazzo said.

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