January 22, 2007

:Top Story
CIBA Vision CL Recall Impacts Q4 Performance of Parent Novartis
The recent contact-lens recall by CIBA Vision, the eyecare unit of Novartis (NYSE: NVS), impacted fourth-quarter performance of the parent company’s consumer health division, which includes CIBA, Novartis said last week. From an accounting perspective, charges relating to the recall were taken in the fourth quarter because the issues were discovered during that quarter, in mid- to late December, a spokesman for Novartis here told VMail. The actual recall, affecting 12 million CLs, took place this month.
“The continuing operations of Consumer Health in Q4 performed well thanks to double-digit growth in Animal Health and OTC that offset a weak performance in CIBA Vision” related to the CL recall, a Novartis announcement said. But the division’s overall performance was negatively impacted by costs related to that CIBA recall, the company noted. The consumer health division’s net sales from continuing operations rose 6 percent in Q4, to $1.6 billion. Operating income for the period fell by 17 percent, however, to $143 million. For the full year 2006, “CIBA Vision had a weak performance due to product supply issues,” the announcement said. The consumer health division still had an 8 percent increase in sales of its continuing operations, to $6.5 billion, and a 12 percent gain in operating income, to $1.07 billion, the announcement said.
Earlier this month, CIBA Vision notified optical retailers and distributors and eyecare practitioners that it was recalling select lots of spherical O2Optix (lotrafilcon B) soft contact lenses in the U.S. and other countries in what the company described as a voluntary trade-level (not consumer) recall. A statement said CIBA Vision anticipates “significant O2Optix (lotrafilcon B) supply constraints and backorders into the second quarter, with increasing improvements through mid-year.”
The Novartis spokesman said the parent company has not yet determined whether it will need to take additional charges in this year’s first quarter relating to the January recall.

:COMPANY NEWS
Advanced Medical Optics (NYSE: EYE) acquired privately-held WaveFront Sciences, Inc., a leading provider of proprietary wavefront diagnostic systems for refractive surgery and medical research, for approximately $20 million. This includes a $14 million cash payment at closing and an agreement to make a total of $6 million in future cash payments contingent on achievement of certain milestones over the next three years. The acquisition expands AMO's portfolio of industry-leading laser technologies and strengthens its pipeline of new wavefront-guided diagnostic innovations. Last week, AMO and IntraLase (NASDAQ: ILSE) entered into a definitive agreement for AMO to acquire IntraLase for approximately $808 million in cash.

Bausch & Lomb (NYSE: BOL) made an equity investment in--and secured an exclusive option to purchase--AcuFocus, Inc., a privately-held company located in Irvine, Calif. that is developing corneal inlay technology for the treatment of presbyopia. Terms of the agreement were not disclosed. The AcuFocus ACI 7000 is designed to treat presbyopia, a condition which affects more than 50 million people in the U.S. Presbyopia, a part of the normal aging process, reduces the ability of the eye to focus on near objects. Traditionally, most people with presbyopia have had to use reading glasses to improve their near vision. The AcuFocus corneal inlay is designed to treat presbyopia in all patients, including those who have had cataract surgery, and reduce their dependence on reading glasses. Recent studies have demonstrated that the ACI 7000 improves near vision in patients who previously didn't require vision correction as well as those who have had LASIK surgery. Trials are being conducted to study the ACI 7000 in patients with intraocular lenses. AcuFocus officials said with Bausch & Lomb's investment, it can accelerate and broaden efforts to bring this technology to refractive surgeons and patients.

IRIDEX (NASDAQ: IRIX) completed the acquisition of the aesthetics business of Laserscope, pursuant to the terms of the definitive agreement IRIDEX entered into with Laserscope and American Medical Systems Holdings, Inc. on Nov. 30, 2006. Under the agreement, IRIDEX has acquired certain assets and liabilities of Laserscope including four patents, a license to an additional nine Laserscope patents, and a license under Palomar hair removal patents, for $26 million in cash and approximately 214,000 unregistered shares of IRIDEX Common Stock. IRIDEX has also acquired between $7.3 million and $9.5 million in net assets in this transaction, including accounts receivable from Laserscope.