AMO's shopping spree

Advanced Medical Optics (AMO) has acquired two companies in a spending spree that has cost it approximately $828 million. The purchase of IntraLase Corp represents a collaboration of, two of the strongest performers in the refractive surgery market and the acquisition of WaveFront Sciences boosts AMO's quest for the "custom all-laser LASIK".

The perfect blend?

AMO believes that the integration of AMO's Advanced CustomVue laser vision correction procedure with IntraLase's femtosecond laser for creating the flap will transform the refractive industry's standard of care and it is also thought that the mechanical microkeratome will become a thing of the past, although AMO says that it will continue to offer support to its Amadeus microkeratome until the acquisition closes. AMO executives hope that the purchase of IntraLase will help it to offer "the complete refractive solution" for eyecare professionals, when sold alongside its suite of corneal and lens-based products.

Joining the companies creates cross-selling opportunities in the US, where the LASIK market has been somewhat flat, and abroad, where the market is perceived to be growing. According to the FTN Midwest Securities Corp., the laser vision correction market has been in a 3% year-over-year decline in the US, although it has begun to show signs of improvement. AMO is said to be in favour of an "aggressive marketing campaign" to educate patients and to help take away fear of the blade, which many patients claim prevents them from pursuing laser vision correction.

Although some surgeons initially expressed doubt about the IntraLase method, more are being converted to it. IntraLase claims that, when practices have both an IntraLase and a mechanical microkeratome, 88% of all surgeries are performed using the IntraLase.

AMO purchased IntraLase for an estimated $808 million. Under the terms of the agreement, it will pay $25 in cash per share of IntraLase stock and the individually determined cash value per share of outstanding stock options. The transaction is expected to complete early in the second quarter of 2007.

Making waves

The deal with WaveFront Sciences gives AMO proprietary technologies that it hopes will accelerate next-generation diagnostics for refractive surgery. AMO agreed to pay $14 million cash at closing and pledged a further $6 million after meeting certain milestones over the next three years.

Privately held WaveFront, develops and manufactures a high-resolution Shack-Hartmann-based aberrometer for precisely measuring the total refractive error and aberrations prior to laser vision correction. AMO believes that the purchase will enable it to make dramatic and innovative improvements to future versions of its WaveScan Wavefront system.

WaveFront Sciences has 54 employees, most of whom are based in Albuquerque, New Mexico, with a smaller office in New Jersey. The company, which celebrated its 10th anniversary in September of last year, by doubling its office space to 24,000 square feet, also lends its technology for lasers, optics, optometry and semiconductor metrology. Its Complete Ophthalmic Analysis System (COAS) is used by Carl Zeiss Meditec as part of its MEL series of excimer lasers and by Scwind eye-tech-solutions for its ORK-CAM Wavefront Analyser. These relationships will be continued under AMO's ownership. It is thought that WaveFront has a yearly turnover of approximately $7 million.

What does the future hold?

These two acquisitions by AMO represent a joining of three of the best advances in laser vision correction, excimer, femtosecond and aberrometer and is set to make AMO an even more powerful player in the ophthalmic market. AMO believes that the company will now be in a unique position to offer a coherent market message that surgeons can identify with and that a more focused approach will help drive margins and expand the market.