IRIX Stock Price Increases Over 20% Pre-Market: Why It Happened

By Amit Chowdhry ● Mar 3, 2021
  • The stock price of IRIDEX Corporation (NASDAQ: IRIX) is trading at over 20% pre-market. This is why it happened.

The stock price of IRIDEX Corporation (NASDAQ: IRIX) – a provider of innovative ophthalmic laser-based medical products for the treatment of glaucoma and retinal diseases – is trading at over 20% pre-market as of 7:37 AM ET. Investors appear to be responding to the company announcing yesterday afternoon that it has entered into a strategic collaboration with Topcon Corporation. Topcon is a Japanese-based manufacturer and distributor with about $1.3 billion in annual revenues, including $430 million from its eye care business. 

These are the highlights of the deal:

– The transaction nets $19.5 million of cash to Iridex, providing multiyear funding for strategic growth initiatives, particularly those designed to drive expanded market penetration of Iridex’s unique non-incisional glaucoma therapy products

– Topcon invests in Iridex by i) purchasing exclusive rights to distribute Iridex’s retina and glaucoma products in certain global markets, and ii) acquiring a common equity stake of approximately 10.4% in Iridex

– Iridex product portfolio to benefit from Topcon’s distribution strength in Asia Pacific and key EMEA markets, joining Topcon’s broad offering of diagnostic and treatment products for glaucoma and retina customers

– Iridex acquires Topcon’s PASCAL product line, combining Iridex’ MicroPulse technology with Topcon’s PASCAL laser platform, resulting in a leading market share for retinal scanning laser products, plus greater scale to generate design, manufacturing, and marketing efficiencies

The collaboration between Iridex and Topcon includes three main agreements: 1.) an Exclusive Distribution Agreement, 2.) an Asset Purchase Agreement and 3.) an Equity Funding Agreement. Under the terms of these agreements, Topcon will acquire exclusive distribution of Iridex laser systems, delivery devices, and disposable probes to be sold through its strong networks in the Asia Pacific and key EMEA regions. And concurrently, Iridex will add Topcon’s PASCAL systems to its U.S. direct sales and rest-of-world distribution network. Plus Iridex will acquire the design and manufacturing operation of Topcon’s PASCAL product line. Finally, Topcon is going to purchase $10 million of Iridex common shares at a price of $6.18 per share. The net cash proceeds to Iridex of these transactions are expected to be about $19.5 million before offering expenses.

KEY QUOTES:

“We feel energized entering into this important alliance with Topcon that advances the strategic positions of both companies on multiple fronts. Joining Topcon’s comprehensive distribution network throughout Asia Pacific and key EMEA regions will help Iridex to significantly expand the market penetration of our marquee non-incisional glaucoma therapy. Topcon can further capitalize on its already-strong distribution network by adding our leading retina product portfolio to enhance the breadth of its ophthalmic system offerings. This alliance will enable both companies to benefit from the enhanced scale achieved by consolidating the design, manufacturing and distribution of two leaders in scanning laser retinal treatment. Finally, with $19 million in additional capital, Iridex has the resources to drive its multiyear growth programs.”

“In line with our goal of ensuring the long-term adoption of our laser-based MicroPulse TLT procedure in the marketplace, we are gratified with the high-level commitment Topcon has made to our platform, and we look forward to a strong partnership that is beneficial for patients and eye care specialists around the world for years to come.”

— David Bruce, CEO of Iridex

“We sought this alliance with Iridex to achieve significant benefits to our operating and distribution efforts. As leaders and innovators in advancing the treatment options for eyesight-threatening diseases, we recognize a great opportunity to bring our strengths together. We are excited to bring Iridex’s retina and glaucoma therapy products to our expansive customer base throughout Asia Pacific and key Europe, Middle East and Africa markets. This alliance with Iridex is one of the major initiatives which Topcon will offer with our ‘Shared Care’ program. We are confident that combining our new product design and development efforts will enhance our existing and future products in both retina and glaucoma.”

— Fumio Ohue, Managing Executive Officer of Topcon’s Eye Care Business

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.