Allergan (NYSE:AGN), the Botox maker, said it has agreed to buy Oculeve, a maker of novel dry-eye disease treatments, for $125 million in cash.
In addition to the upfront cash payment, Allergan will also pay commercialization milestone payments.
South San Francisco, California-based Oculeve specializes in treatments for dry eye disease. Its lead device is OD-01, a non-invasive neurostimulation device that increases tear production.
Allergan said in a statement that it will conduct a pair of additional pivotal studies before submitting OD-01 for Food and Drug Administration approval in 2016. If approved, OD-01 will be on the market in 2017.
"Allergan is committed to developing a broad range of innovations that help patients address dry eye," said David Nicholson, Executive Vice President, Global Brands Research and Development at Allergan.
"The OD-01 program has been shown to provide a strong safety and efficacy profile, and if approved, would provide an exciting new treatment option for patients that is complementary to our existing product offerings in this important treatment area."
Chronic dry eye is a disease that can be caused by advanced age, contact lens wear, certain medications, eye diseases, other medical conditions or environmental factors. One type of chronic dry eye is caused by decreased tear production due to inflammation.
Without enough tears, the film protecting the eye can break down, creating dry spots on the cornea. Chronic dry eye is estimated to affect 25 million patients in the U.S.
Allergan expects to close the deal in the third quarter of the year.
Shares of Allergan retreated 0.8 percent to C$305.24 at 2:34 p.m. in New York, paring this year’s gain to 19 percent.