Ophthalmology Capital Markets
2
$-
$10
$20
$30
$40
$50
$60
2011 2012 2013 2014 2015 2016 2017
Ophthalmology to reach $48 Billion in 2017
 Key Market Dr...
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Total Transaction Size Transaction Distribution
Capital Raise
Although the number and total size of transactions decline...
4
Total Transaction Size Transaction Distribution
M&A Transactions
Total transaction value dropped to $872 Million in 2012...
5
Capital Flow Analysis
($ in millions except stock price)
Company Name
Stock
Price
52 Week
High/Low
LTM Total
Rev
Market
...
6
Most Recent Notable M&A Transaction
Financial Metrics
Bausch + Lomb Position
 Expected 2013 Bausch + Lomb financials
 ...
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Most Recent Notable M&A Transaction
Agreement Terms
Key Features
 Under the terms of the agreement, Abbott
will acquire...
8
Most Recent Notable M&A Transaction
Agreement Terms and Strategy
Synergy
 Shire:
 Upfront payment of $160 million.
 S...
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Ophthalmology Capital Markets

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The report data depicts an ongoing growth trend that began in 2011 with a $36 billion ophthalmology market that is projected to grow at a 5.12% CAGR to 2017, appearing to be funded by an investment model comprising more targeted ventures that would utilize larger individual investments made in fewer technology platforms.

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Ophthalmology Capital Markets

  1. 1. Ophthalmology Capital Markets
  2. 2. 2 $- $10 $20 $30 $40 $50 $60 2011 2012 2013 2014 2015 2016 2017 Ophthalmology to reach $48 Billion in 2017  Key Market Drivers:  Aging populations  Increased incidence of diabetes  Rising wealth in emerging markets  New product innovations.  5 Major Disease Conditions:  Glaucoma  Age related Macular Degeneration  Conjunctivitis  Dry Eye Conditions  Cataracts  Ophthalmology Drugs market is expected to grow at a slower pace compared with the devices market. This is due to the patent cliff and a less-than-robust pipeline of future products.  Advancements in technologies, high prevalence rates of refractive error, cataract, and glaucoma, increasing demand for the diagnostic procedures and low compliance with pharmaceuticals will propel the devices market. CAGR ~ 5.12% Source: BCC Research: Ophthalmic Devices, Diagnostics, and Surgical Equipment: Global Markets; MarketsandMarkets: Ophthalmology ; MedCity News: Global Ophthalmology Market; Valeant; Mckinsey Market Growth $ in Billions
  3. 3. 3 Total Transaction Size Transaction Distribution Capital Raise Although the number and total size of transactions declined, the number of transactions more than $50 million has increased when compared to the prior years. $597 $308 $271 $482 $347 33 20 23 22 19 0 10 20 30 40 50 60 70 80 $0 $100 $200 $300 $400 $500 $600 $700 2008 2009 2010 2011 2012 #ofTransactions Millions 12% 10% 22% 9% 5% 21% 30% 26% 18% 21% 12% 15% 13% 5% 11% 48% 40% 35% 59% 63% 6% 5% 4% 9% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2008 2009 2010 2011 2012 >$50MM $10-49MM $5-9MM $1-4MM <$1MM
  4. 4. 4 Total Transaction Size Transaction Distribution M&A Transactions Total transaction value dropped to $872 Million in 2012, from $12 billion in 2011. 63% 50% 50% 54% 50% 13% 10% 11% 15% 13% 10% 17% 23% 50% 6% 20% 6% 10% 11% 8%6% 6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2008 2009 2010 2011 2012 >$5B $1-5B $500-1B $100-500MM $50-100MM <$50MM $12,457 $4,409 $35,740 $12,808 $872 16 10 18 13 6 0 10 20 30 40 50 60 70 80 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 2008 2009 2010 2011 2012 #ofTransactions Millions
  5. 5. 5 Capital Flow Analysis ($ in millions except stock price) Company Name Stock Price 52 Week High/Low LTM Total Rev Market Cap TEV Total Debt / LTM EBITDA TEV/LTM Total Rev TEV/LTM EBITDA 3 Yr. Revenue Growth LTM Gross Margin LTM EBITDA Margin Johnson & Johnson $90.40 99% $69,992 $253,923 $248,147 0.7x 3.5x 11.1x 3.8% 68.2% 32.0% Pfizer $28.68 92% 57,601 203,434 209,042 1.6x 3.6x 8.3x 1.1% 81.0% 44.0% Novartis (Alcon) $73.43 94% 57,798 180,436 195,601 1.2x 3.4x 11.0x 6.8% 67.9% 29.7% Merck $48.23 96% 46,207 145,636 153,016 1.3x 3.3x 9.0x 11.4% 65.1% 35.4% Allergan $90.14 77% 5,918 27,723 27,664 1.2x 4.7x 14.8x 8.4% 86.9% 31.6% Regeneron $262.71 93% 1,586 25,557 25,712 0.7x 16.2x 41.0x 57.3% 51.6% NM Essilor $107.07 91% 6,578 22,598 23,263 0.8x 3.5x 15.6x 15.1% 55.8% 22.3% The Cooper Companies $125.07 97% 1,538 6,085 6,414 0.7x 4.2x 14.8x 11.2% 64.2% 28.2% Ginko $19.35 97% 134 1,750 1,729 0.5x 12.9x 36.3x 0.0% 63.1% 35.5% St. Shine Optical $29.07 98% 146 1,466 1,433 0.5x 9.8x 25.4x 19.7% 44.4% 38.5% STAAR Surgical $10.76 98% 66 395 383 1.5x 5.8x 91.1x 7.9% 69.4% 6.3% Mani $37.38 96% 91 419 348 0.0x 3.8x 9.6x -0.4% 60.7% 39.3% Median 0.8x 4.0x 14.8x 8% 65% 32% SV Life Sciences Advisers 30 Alcon 6 # of Companies 173 Versant Ventures 25 Allergan 5 # of Investors 579 Domain Associates 22 Bausch & Lomb 4 Investors / Company 3.3 Atlas Venture 15 Novartis 4 # of Rounds 361 De Novo Ventures 15 Opko Health 4 # of Rounds / Company 2 InterWest Partners 15 Abbott Medical Optics 3 Avg. Round Size ($M) $16 Clarus Ventures 13 Carl Zeiss Meditec 3 Total Invested $5,851 Polaris Partners 11 # of Exits 8 Aisling Capital 10 M&A Exits 4 Brentwood Venture Capital 10 Qianjiang Yongan Pharmaceutical 2/5/2010 $107 Public Offering Exits 4 HBM Partners 10 Jazz Pharmaceuticals Public Limited Company 3/8/2007 $108 # of Illiquid Companies 165 Alta Partners 9 Oldtech 9/12/2003 $137 Illiquid Capital ($M) $4,135 Kleiner, Perkins, Caufield & Byers 9 Alcon 2/22/2002 $2,302 Illiquid Capital (3 Yrs) ($M) $1,219 Novo A/S 9 Lexicon Pharmaceuticals 2/9/2000 $220 % of Illquid Capital (3 Yrs) 29% Omnes Capital 9 Ocular Sciences 5/19/1997 $119 Healthios, Inc -- Not for for distribution Initial Public Offerings / Date / TEV ($M) PUBLIC CAPITAL MARKETS Size Trading Multiples Operating Statistics PRIVATE INVESTMENT Most Active Venture Investors / Rounds Most Active Strategic Acquirors / Deals Liquidity
  6. 6. 6 Most Recent Notable M&A Transaction Financial Metrics Bausch + Lomb Position  Expected 2013 Bausch + Lomb financials  Revenue of ~$3.3 billion • Pharmaceuticals = ~$1.4B • Vision Care = ~$1.3B • Surgical = ~$0.6 B  Adjusted Gross Margins = ~62%  Adjusted EBITDA of ~$720 million  At least $800 million in synergies expected by the end of 2014  Expect to integrate into Valeant’s corporate structure  Immediately accretive  ~40% accretive to Valeant’s 2013 Cash EPS 1  Transaction value approximately $8.7 billion  Expected to close in the third quarter  ~4.6x Net Debt/ Pro Forma Adjusted EBITDA  Company expects leverage to be below 4.0x by the second half of 2014  Comprehensive product portfolio  Products presence across all key market segments: IOL, Anterior Phaco & VitRet, Visco, Instruments  Support cataract, refractive and therapeutic procedures from a single platform  Pipeline  Biotrue ONEday Multifocal Contact Lens  Next Generation SiHy(Silicone Hydrogel) Monthly Contact Lens  PeroxiClear  Mapracorat  Latanaprostene Bunod  Ocular Redness Therapy  Trulign Toric Premium IOL  enVista Toric IOL (US)  Technolas 317 Excimer Refractive Laser Platform Valeant acquires Bausch + Lomb for $8.7 billion. Source: Valent; McKinsey
  7. 7. 7 Most Recent Notable M&A Transaction Agreement Terms Key Features  Under the terms of the agreement, Abbott will acquire OptiMedica for $250 million, net of cash, plus additional payments totaling up to $150 million upon completion of certain development, regulatory or sales milestones Abbott acquires OptiMedica for $400 million. Source: Valent; McKinsey  Provides Abbott with an entry point into the rapidly developing laser cataract surgery market  Catalys™ Precision Laser System  FDA Approved & CE Mark  Includes 3D Optical Coherence Tomography technology.  Catalys™ laser system is indicated for use in patients undergoing cataract surgery for removal of the crystalline lens, with the following intended uses:  Anterior capsulotomy  Phacofragmentation  Creation of single and multi-plane arc incisions in the cornea.
  8. 8. 8 Most Recent Notable M&A Transaction Agreement Terms and Strategy Synergy  Shire:  Upfront payment of $160 million.  SARcode shareholders will be eligible to receive additional undisclosed payments upon achievement of certain clinical, regulatory, and/or commercial milestones.  Shire is acquiring the global rights to LIFITEGRAST(for treatment of dry eyes) and will evaluate an appropriate regulatory filing strategy for markets outside of the United States.  Shire anticipates launching LIFITEGRAST in the United States as early as 2016 pending a positive outcome of the phase 3 clinical development program and regulatory approvals.  Premacure:  HGT-ROP-001 for the prevention of retinopathy of prematurity  As a part of the transaction, Shire will purchase with upfront payment and certain contingent payments based on the achievement of pre-specified development and commercial milestones.  Looking to combine technology from recent acquisition of Premacure and Shire.  Introduction of a new late-stage phase 3 SPD606 (LIFITEGRAST) product and phase 2 HGT-Rop- 001 - clinical program to Shire’s research and development portfolio.  Three clinical trials – OPUS-1, OPUS-2 and SONATA – currently make up the phase 3 clinical development program for LIFITEGRAST. Shire acquires SARcode Bioscience for $160 million and acquires Premacure for a undisclosed amount. Source: Valent; McKinsey
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