Iridex Corporation (NASDAQ: IRIX) saw its shares’ price climbing 26.27% in after-hours trading on Tuesday following news of a strategic collaboration with a Japanese firm.
What happened?
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Mountain View, California-based IRIX has been providing laser treatments for ophthalmic conditions such as glaucoma and peripheral retinal diseases since 1989. A strategic partnership between the company and Topcon Corporation was announced today.
- In addition to its $430 million eye care business, Topcon has over $1.3 billion in annual revenues, primarily as a manufacturer and distributor in Japan.
- The transaction will provide IRIX not only with a net $19.5 million of cash but will also provide ongoing funding for a number of strategic development projects, in particular those designed to expand in glaucoma therapy markets with its unique non-incisional products.
- The investment by Topcon in Iridex consists of the following:
- Purchasing exclusive distribution rights in certain global markets for Iridex’s retina and glaucoma products; and
- Purchasing approximately 10.4% of Iridex’s equity.
- With Topcon’s strong distribution in the Asia Pacific and key EMEA markets, Iridex can provide a comprehensive diagnostic and treatment portfolio to glaucoma and retina market.
- To combine its MicroPulse laser platform with that of Topcon’s PASCAL, Iridex is acquiring Topcon’s PASCAL product line.
- This will help the companies to better focus on larger share of retinal scanning laser market, plus greater scale that will result in greater efficiency in the manufacturing, marketing and design sectors.
Iridex and Topcon are partnering on a comprehensive collaboration, which includes an Exclusive Distribution Agreement, an Asset Purchase Agreement and an Equity Funding Agreement. In these agreements, Topcon will acquire exclusive distribution of Iridex laser devices, accessories, and disposables in Asia Pacific and EMEA to be sold through its strong network in those regions.
In addition, Iridex will add Topcon’s PASCAL systems to its direct sales and distribution channels throughout the world. The company will also acquire Topcon’s PASCAL product line and its design and manufacturing operations. Iridex’s 10 million shares of common stock will be bought by Topcon for a price of $6.18 each. Before offering expenses, Iridex expects to receive approximately $19.5 million in net cash proceeds from these transactions.