Adds Novel Bio-Activated Pharmaceuticals to
Glaukos’ New Corneal Health Franchise
Potential Revenue Synergies from Complementary
Product Portfolios that Leverage Glaukos’ Commercial Scale,
Market-Building Experience and Shared Reimbursement Expertise and
Customer Relationships
Expanded Pharmaceutical and Device Research,
Development and Clinical Capabilities that Enhance Ability to
Provide Innovative Hybrid Ophthalmic Therapies to Patients
Acquisition Expected to Accelerate Glaukos’
Revenue Growth Rate in 2020 and be Accretive to Operating Results
and Cash Flows by 2021
Executives to Discuss Transaction on Glaukos’
Second Quarter Financial Results Conference Call at 1:30 p.m. PDT
Today, August 7, 2019
Glaukos Corporation (NYSE: GKOS), an ophthalmic medical
technology and pharmaceutical company focused on novel therapies
for the treatment of glaucoma, corneal disorders and retinal
diseases, and Avedro, Inc. (Nasdaq: AVDR), a leading hybrid
ophthalmic pharmaceutical and medical technology company focused on
treating corneal disease and disorders, today announced that the
companies have entered into a definitive merger agreement under
which Glaukos will acquire Avedro in an all-stock transaction. The
transaction, which is subject to Avedro stockholder approval along
with other customary closing conditions and regulatory approvals,
has been approved by the board of directors of both companies and
is expected to be completed in the fourth quarter of 2019.
The acquisition combines two complementary, hybrid ophthalmic
pharmaceutical and device organizations and establishes the
cornerstone for Glaukos’ new corneal health franchise, providing
synergistic avenues for potential long-term growth in large,
underserved markets. Glaukos plans to leverage its proven
market-building expertise, global commercial scale and extensive
clinical and regulatory infrastructure to maximize Avedro’s
disruptive bio-activated pharmaceuticals and pipeline. The
transaction also expands Glaukos’ R&D capabilities and is
expected to strengthen multiple corneal health and vision
correction development initiatives now underway across both
organizations.
“Avedro is an ideal fit for Glaukos’ core strengths in creating
and disrupting ophthalmic markets with novel therapies that address
important unmet clinical needs of practitioners and patients,” said
Thomas Burns, Glaukos president and chief executive officer.
“Avedro has in place many of the same strategic attributes Glaukos
used to pioneer MIGS, including proprietary paradigm-changing
solutions, extensive clinical validation, broad reimbursement and
first-to-market status. Our combined organizations can possess the
essential expertise, scale and reach to maximize these
opportunities, drive further commercialization of Avedro’s
bio-activated pharmaceuticals and establish another synergistic and
durable Glaukos franchise to fuel potential near- and long-term
growth and shareholder value.”
Avedro’s platform uses its proprietary, bio-activated,
single-use Photrexa® drug formulations to strengthen corneal tissue
and halt progression of keratoconus, a degenerative corneal ectatic
disease that affects approximately 1.1 million eyes in the United
States. Typically diagnosed in a patient’s teenage years,
keratoconus is characterized by progressive thinning and weakening
of the cornea, resulting in vision loss. Approximately 90% of cases
are bilateral and as many as 20% of patients ultimately require a
corneal transplant. Conventional treatments address symptoms but
the Avedro platform is the first and only FDA-approved therapy that
can stop disease progression. Avedro estimates the total U.S.
opportunity for its keratoconus therapy to be approximately $3
billion.
Avedro has also developed a pipeline of novel single application
bio-activated topical ophthalmic pharmaceuticals for common
refractive conditions, including presbyopia, low myopia and
post-cataract refractive error, which are estimated to have a
combined U.S. addressable opportunity of approximately $23
billion.
“Avedro is extremely pleased with the potential to become part
of Glaukos, a highly-respected ophthalmic organization with a
successful track record forging new markets with disruptive
technologies like our keratoconus pharmaceutical therapies,” said
Reza Zadno, Avedro president and chief executive officer. “Glaukos
already has deep customer relationships with the majority of our
target accounts, and a large, seasoned field organization that can
unite with our team to accelerate awareness, adoption and
utilization of our novel platform. In addition, Glaukos will bring
its extensive clinical and regulatory resources to bear to help
advance our promising pipeline therapies. I believe this
transaction can benefit customers, employees and patients, while
creating value for shareholders through ownership in a combined
company with the expertise, scale and resources to drive meaningful
future growth."
Key strategic and financial benefits of the transaction
include:
- Avedro fits perfectly with Glaukos’ commercial
organization: Roughly 700 of Avedro target accounts are
comprehensive ophthalmic practices where Glaukos maintains deep
relationships. In addition, the Avedro platform can benefit from a
5-fold increase in the size of its current 17-person U.S. field
sales organization.
- Avedro can accelerate Glaukos’ growth trajectory: Avedro
generated 66% year-over-year revenue growth in the first half of
2019. Once combined, the addition of Avedro’s fast-growing product
portfolio is expected to generate revenue growth acceleration for
Glaukos beginning in 2020 and potential revenue synergies beginning
in 2021.
- Furthers Glaukos’ hybrid strategy: Avedro and Glaukos
have similar and complementary hybrid pharmaceutical and device
profiles that can combine to create a unique set of R&D,
clinical, regulatory and commercial capabilities with the potential
to enhance organizational success.
- Enhances organic pipeline initiatives and R&D teams:
The combined R&D and clinical organization can provide Glaukos
with scale and a unique blend of integrated expertise across
ophthalmic pharmaceuticals, drug delivery, micro-scale engineering,
and hardware and software development. In addition, an expanded
pipeline can provide new opportunities to extend leadership
positions in high-growth ophthalmic markets.
- Provides attractive financial benefits and potential
shareholder value creation: In addition to the potential for
accelerated revenue growth, Glaukos anticipates achieving
annualized cost savings in excess of $15 million by 2021, primarily
through reduced public company and administrative costs. As such,
the company expects the transaction to be accretive to operating
results and cash flow by 2021.
Transaction Terms and Approvals
Under the terms of the merger agreement, for each share of
Avedro common stock they own, Avedro shareholders will receive an
exchange ratio equivalent of 0.365 shares of Glaukos stock.
Based on the parties’ volume weighted average prices (“VWAPs”)
for the last 60 trading days prior to August 6, 2019, the
transaction represents a 42% premium for Avedro shareholders. Upon
closing, Glaukos shareholders are expected to own approximately 85%
of the combined company, with Avedro shareholders expected to own
the remaining 15%.
The transaction is subject to customary closing conditions and
regulatory approvals, including approval of the merger by
stockholders of Avedro. Certain shareholders of Avedro, including
OrbiMed, HealthQuest and LAV Agile, which collectively own
approximately 41% of the outstanding shares of Avedro common stock,
have entered into voting agreements to vote in favor of the
transaction.
Advisors
Perella Weinberg Partners LP is serving as financial advisor to
Glaukos, and O’Melveny & Myers LLP is serving as its legal
advisor. Guggenheim Securities is serving as financial advisor to
Avedro and Cooley LLP is serving as its legal advisor.
Conference Call, Webcast and Presentation
Glaukos will hold its regular quarterly earnings conference call
and webcast for investors and analysts today at 1:30 p.m. PDT (4:30
p.m. EDT) where its management will also discuss the transaction
and the company’s long-term growth strategy. The earnings
conference call and webcast will be held jointly with Avedro, in
lieu of Avedro’s previously scheduled call for Thursday, August 8.
An investor presentation will be available for download. Links to
the webcast and presentation are available on Glaukos’ website at
http://investors.glaukos.com and on Avedro’s website at
http://investors.avedro.com. To participate in the conference call,
please dial 833-231-8262 (U.S.) or 647-689-4107 (international) and
enter Conference ID 3119047. A replay of the webcast will be
archived on Glaukos’ and Avedro’s websites following completion of
the call.
Glaukos and Avedro Second Quarter 2019 Earnings
Results
In separate news releases issued today, Glaukos and Avedro each
announced financial results for the second quarter ended June 30,
2019. Glaukos and Avedro management will address questions
regarding quarterly financial performance as part of the joint
conference call and webcast referenced above. Avedro’s quarterly
conference call, previously scheduled for tomorrow, Thursday,
August 8, has been cancelled.
About Glaukos
Glaukos (www.glaukos.com) is an ophthalmic medical technology
and pharmaceutical company focused on novel therapies for the
treatment of glaucoma, corneal disorders and retinal diseases. The
company pioneered Micro-Invasive Glaucoma Surgery, or MIGS, to
revolutionize the traditional glaucoma treatment and management
paradigm. Glaukos launched the iStent®, its first MIGS device, in
the United States in July 2012 and launched its next-generation
iStent inject® device in the United States in September 2018.
Glaukos is leveraging its platform technology to build a
comprehensive and proprietary portfolio of micro-scale surgical and
pharmaceutical therapies in glaucoma, corneal health and retinal
disease.
About Avedro
Avedro is a leading hybrid ophthalmic pharmaceutical and medical
technology company focused on treating corneal disease and
disorders and improving vision to reduce dependency on eyeglasses
or contact lens. Avedro’s proprietary bio-activated pharmaceuticals
strengthen, stabilize, and reshape the cornea to treat corneal
ectatic disorders and correct refractive conditions. Avedro’s suite
of single-use drug formulations are applied to the cornea and
bio-activated to induce a reaction called corneal collagen
cross-linking.
Use of Forward-Looking Statements
This communication contains “forward-looking statements” within
the meaning of federal securities laws. Forward-looking statements
may contain words such as “believes”, “anticipates”, “estimates”,
“expects”, “intends”, “aims”, “potential”, “will”, “would”,
“could”, “considered”, “likely” and words and terms of similar
substance used in connection with any discussion of future plans,
actions or events identify forward-looking statements. All
statements, other than historical facts, including statements
regarding the expected timing of the closing of the proposed
transaction and the expected benefits of the proposed transaction,
are forward-looking statements. These statements are based on
management’s current expectations, assumptions, estimates and
beliefs. While Glaukos and Avedro believe these expectations,
assumptions, estimates and beliefs are reasonable, such
forward-looking statements are only predictions, and are subject to
a number of risks and uncertainties that could cause actual results
to differ materially from those described in the forward-looking
statements.
The following factors, among others, could cause actual results
to differ materially from those described in the forward-looking
statements: (i) failure of Avedro to obtain stockholder approval as
required for the proposed transaction; (ii) failure to obtain
governmental and regulatory approvals required for the closing of
the proposed transaction; (iii) failure to satisfy the conditions
to the closing of the proposed transaction; (iv) unexpected costs,
liabilities or delays in connection with or with respect to the
proposed transaction; (v) the effect of the announcement of the
proposed transaction on the ability of Avedro or Glaukos to retain
and hire key personnel and maintain business relationships with
customers, suppliers and others with whom Avedro or Glaukos does
business, or on Avedro’s or Glaukos’ operating results, market
price of common stock, and business generally; (vi) potential legal
proceedings relating to the proposed transaction and the outcome of
any such legal proceeding; (vii) the inherent risks, costs and
uncertainties associated with integrating the businesses
successfully and risks of not achieving all or any of the
anticipated benefits of the proposed transaction, or the risk that
the anticipated benefits of the proposed transaction may not be
fully realized or take longer to realize than expected; (viii)
competitive pressures in the markets in which Avedro and Glaukos
operate; (ix) the occurrence of any event, change or other
circumstances that could give rise to the termination of the merger
agreement; and (x) other risks to the consummation of the proposed
transaction, including the risk that the proposed transaction will
not be consummated within the expected time period or at all.
Additional factors that may affect the future results of Avedro and
Glaukos are set forth in their respective filings with the SEC,
including each of Avedro’s and Glaukos’ most recently filed Annual
Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K and other filings with the SEC, which
are available on the SEC’s website at www.sec.gov. The risks and
uncertainties described above and in Avedro’s most recent Quarterly
Report on Form 10-Q and Glaukos’ most recent Quarterly Report on
Form 10-Q are not exclusive and further information concerning
Avedro and Glaukos and their respective businesses, including
factors that potentially could materially affect their respective
businesses, financial condition or operating results, may emerge
from time to time. Readers are urged to consider these factors
carefully in evaluating these forward-looking statements, and not
to place undue reliance on any forward-looking statements. Readers
should also carefully review the risk factors described in other
documents that Avedro and Glaukos file from time to time with the
SEC. The forward-looking statements in these materials speak only
as of the date of these materials. Except as required by law,
Avedro and Glaukos assume no obligation to update or revise these
forward-looking statements for any reason, even if new information
becomes available in the future.
Additional Information and Where to Find It
In connection with the proposed transaction between Avedro and
Glaukos, Glaukos will file with the SEC a registration statement on
Form S-4 that will include a document constituting a prospectus of
Glaukos and will also contain a proxy statement of Avedro. Avedro
and Glaukos also plan to file other relevant documents with the SEC
regarding the proposed transaction. After the registration
statement on Form S-4 is declared effective by the SEC, a
definitive proxy statement/prospectus will be mailed to the
stockholders of Avedro. INVESTORS AND SECURITY HOLDERS ARE URGED TO
READ THE PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS
FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors and security holders will be able to obtain free copies
of the registration statement on Form S-4 and the proxy
statement/prospectus (when available) and other relevant documents
filed or that will be filed by Avedro or Glaukos with the SEC
through the website maintained by the SEC at http://www.sec.gov.
Copies of the documents filed with the SEC by Glaukos will be
available free of charge within the Investor Relations section of
Glaukos’ internet website at https://investors.glaukos.com or by
contacting Glaukos Investor Relations by email at
investors@glaukos.com or by phone at 949-481-0510. Copies of the
documents filed with the SEC by Avedro will be available free of
charge within the Investor Relations section of Avedro’s internet
website at https://investors.avedro.com or by contacting Avedro
Investor Relations by email at investors@avedro.com or by phone at
646-924-1769.
Participants in the Solicitation
Each of Avedro and Glaukos and their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies from Avedro stockholders in connection with
the proposed transaction. Information about Avedro’s directors and
executive officers is included in Avedro’s Annual Report on Form
10-K for the year ended December 31, 2018, which was filed with the
SEC on March 21, 2019, and is also included in Avedro’s Form S-1
Registration Statement filed with the SEC on January 18, 2019, as
amended by Amendment No. 1 to Avedro’s Form S-1 Registration
Statement filed with the SEC on February 4, 2019. Information about
Glaukos’ directors and executive officers is included in its
definitive proxy statement for its 2019 annual meeting of
stockholders, which was filed with the SEC on April 17, 2019. Other
information regarding the participants in the solicitation of
proxies in connection with the proposed transaction and a
description of their direct and indirect interests, by security
holdings or otherwise, will be contained in the proxy
statement/prospectus and other relevant materials to be filed with
the SEC regarding the proposed transaction when they become
available. Investors may obtain free copies of these documents from
Avedro or Glaukos as indicated above.
No Offer or Solicitation
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities nor a solicitation
of any vote or approval with respect to the proposed transaction or
otherwise. No offering of securities shall be made except by means
of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended, and otherwise in accordance
with applicable law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190807005773/en/
Glaukos Investor Contact: Chris Lewis, Director, Investor
Relations, Corporate Development & Strategy 949-481-0510
clewis@glaukos.com
Glaukos Media Contact: Cassandra Dump 619-971-1887
cassy@pascalecommunications.com
Avedro Investor Contact: Brian Johnston or Lynn Lewis
631-807-1986 investors@avedro.com
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