Dive Brief:

• Glaukos has struck a deal to buy retinal drug delivery company Dose Medical for $2.5 million upfront.

• Dose Medical spun out of Glaukos in 2010 but the companies retained ties and are now set to reunite.

• The takeover will give Glaukos ownership of micro-invasive, sustained-released, bioerodible drug delivery platforms to support a new retinal R&D program.

Dive Insight:

Glaukos has spent the nine years since it spun off Dose Medical reacquiring assets from its former wholly owned subsidiary. In 2015, Glaukos acquired the iDose product line from Dose Medical. Two years later, Glaukos paid Dose Medical $5.5 million upfront for an intraocular pressure sensor system.

Now, Glaukos has returned for the rest of Dose Medical. The takeover will see Glaukos acquire devices for use in the delivery of drugs to treat diseases including age-related macular degeneration and diabetic macular edema, retinal conditions that affect more than 10 million people in the U.S. Protective barriers built into the eye make it hard to deliver drugs to diseased areas.

Glaukos says Dose Medical’s technologies can overcome those delivery challenges and plans to put them at the heart of a new retinal R&D program that will run alongside its existing glaucoma franchise.

To acquire the delivery technologies, Glaukos will pay $2.5 million in cash upfront and potentially far more in milestones and royalties. If Dose Medical products win FDA approval in the 10 years after the deal closes, Glaukos will make milestone payments of up to $22.5 million. The size of the milestone, which could be as low as $5 million, will depend on the product approved. A set of smaller milestone payments are tied to regulatory approvals in Europe.

Shareholders in Dose Medical are also in line to receive 5% royalties on net sales of FDA-approved products featuring the acquired technologies. If net sales pass certain thresholds, Glaukos will make additional payments of up to $20 million.

Glaukos has the option to avoid paying royalties and milestones on net sales of certain products by making upfront payments after they win FDA approval. If Glaukos takes that option, it will pay as much as $55 million upfront but then keep all the profits from that product for itself.