Regenera eyes merger with US firm, CEO resigns

Perth-based Regenera (ASX:RGA) has revealed plans to acquire US-based Advanced Ocular Systems (AOS) for US$31 million (AUD$40 million) in a plan to expand its portfolio of ophthalmic products and technologies.

The move has resulted in changes at the helm -- Dr William Ardrey has resigned as Regenera's CEO, making room for AOS's current CEO Dr Kenneth Taylor to become president, managing director and CEO of the merged company.

"We are pretty excited about it. This is a merger of Regenera -- an ocular pharmaceuticals company, with a focus on retinal diseases, with AOS -- a refractive medical device company with a focus on presbyopia," said newly appointed chief operating officer Mark Gummer. "There is a fairly natural fit -- we both have a focus on the eye, the likely commercial major industry players are similar and the skills required from management and advisors also overlap strongly."

The acquisition is subject to final due diligence and shareholder approval. If approved, AOS shareholders will own 45 per cent of Regenera. The merged company will carry the name Advanced Ocular Systems.

AOS is a Delaware-based company with a portfolio of technology and intellectual property in refractive products with products close to market launch.

"AOS' product Tetraflex, which is an accommodative two intraocular lens (IOL) for the treatment of presbyopia in patients with cateracts, or as a clear lens exchange, is the first product we expect to have available in the US," said Gummer. "It has European CE Mark approval and has been granted an Investigational Device Exemption (IDE) by the FDA for clinical trials which have just commenced."

AOS also has a second IOL product, for the treatment of patients with short- or long-sightedness, and a pipeline of inlay products including corneal inlays for presbyopia and myopia and photoablatable inlays for LASIK surgery.

Following the proposed merger, and at current share price levels, Regenera will have a market capitalisation of about AUD$92 million. The merged company will continue to have the ASX as its primary exchange and will seek to advance from a level 1 to a level 2 ADR program on Nasdaq to give US-based shareholders greater access to the stock.

The board of Regenera is currently obtaining an independent assessment of the merits of the AOS IP portfolio and expects to be in a position to formally recommend the merger to shareholders by mid-November. It anticipates completing the proposed transaction towards the end of 2005.

Management changes

Regenera said AOS CEO Taylor was widely recognised as one of the foremost advisors and international commentators on ophthalmic markets, new products and corporate activity in the US.

Following the proposed merger the board intends to appoint two US-based independent directors with strong financial and capital markets experience to assist executive chairman Tony Fitzgerald.

Gummer has been appointed to oversee the Australian operations, investigate acquisitions, manage collaborations and coordinate marketing. "I am here to support Tony Fitzgerald and keep the everyday workings of the company running. Tony was involved in founding Regenera and was a key force in the licensing deal with Alcon," he said.