at press time

B&L Buys Stake in Chinese Company
CTF is China's Leader in Ophthalmic Pharmaceuticals.

Bausch & Lomb has entered into a definitive agreement to acquire a 55% controlling interest in the Shandong Chia Tai Freda Pharmaceutical Group (CTF), the leading ophthalmic pharmaceutical company in China, from Sino Biopharmaceutical Ltd. The purchase price of $200 million in cash represents the equivalent of 18.6 times CTF's 2004 net earnings. The acquisition will accelerate Bausch & Lomb's expansion into the rapidly growing ophthalmic pharmaceuticals market in China.

In addition, Bausch & Lomb has agreed in principle to a future acquisition of an additional 15% interest in CTF held by two other entities for $54.5 million, an amount equivalent on a per-share basis to the price being paid to Sino Biopharmaceutical Ltd.

Theodore Huber, eyecare stocks analyst for Wachovia Securities, called the deal "financially and strategically sound. It takes B&L from nowhere to number one in Chinese pharma."

The leader in the China ophthalmic pharmaceuticals market, CTF primarily develops, manufactures and markets medications used to treat ocular inflammation and infection, glaucoma and dry eye including the Moisten and Mioclear lines of eye drops. In 2004, CTF recorded sales of US$62 million. Since 2001, CTF has recorded compound annual growth of more than 20% compared to the overall Chinese ophthalmic pharmaceuticals market growth of about 15% during the same period.

Headquartered in the city of Jinan in Shandong Province, CTF has roughly 1,300 employees, with about half of them in sales and marketing. CTF has an extensive national network of sales representatives and distributors that reach the country's hospitals and pharmacies.

"The acquisition of this well-known and respected local pharmaceutical company, combined with Bausch & Lomb's strong brand and longtime leadership in vision care products in China, will significantly enhance our presence in China's ophthalmic pharma market," said Bausch & Lomb Chairman and CEO Ronald L. Zarrella. "CTF will provide Bausch & Lomb access to a national network of pharmaceutical sales representatives and distributors, strong domestic brands, a GMP-certified manufacturing facility, and expertise in regulatory affairs and product development, all of which we view as a springboard for further growth in this strategically important market."

The acquisition is expected to close in the third quarter, subject to certain conditions including formal, final approval by the shareholders of Sino Biopharmaceutical, at which time asset valuation and purchase price allocations will be finalized. Based on preliminary estimates, the transaction is projected to be essentially neutral to 2005 earnings per share, five-to-10-cents-per-share accretive in 2006, and 10-to-15-cents-per-share accretive in 2007. These projections exclude transaction-related costs and customary purchase-accounting adjustments.

Ophthalmic ASCs Win Victory
CMS Drops Plan to Eliminate Procedures.

CMS has restored to the ambulatory surgery center (ASC) procedures list 95 of the 100 services - and all of ophthalmic surgical codes — that were proposed for deletion late last year. This reversal in CMS policy is consistent with the recommendations of the Outpatient Ophthalmic Surgery Society (OOSS), the American Academy of Ophthalmology (AAO) and the American Society of Cataract and Refractive Surgery (ASCRS). The views of these organizations were presented to CMS in formal comments to — and meetings with — the agency.

In November, 2004, CMS proposed to "update" the ASC procedures list by adding 25 additional ASC procedures, but deleting 100 service codes from, the current list. Had the proposal been finalized as proposed, Medicare-certified ASCs would no longer receive facility payments for 16 ophthalmic surgical procedures, including: 68340 (repair of symblepharon); 11444, 11446, and 11644 (lesion excisions); 13131, 13132, and 13152 (repairs of wound or lesion); 14000, 14060, and 14061 (skin tissue rearrangements); 65800 and 65805 (paracentesis of anterior chamber of eye); 67141 (prophylaxis of retinal detachment), and 68810 (nasolacrimal duct probe). Comments submitted to CMS jointly by OOSS and ASCRS urged that all of these procedures be restored to the ASC procedures list. In the interim-final regulation published recently, CMS adopted the position advocated by the ophthalmology organizations.

CMS also adopted OOSS' recommendation that several ophthalmic surgical services that have recently received CPT codes, including 66711 (ciliary endoscopic ablation), be added to the procedures list.

Though enthusiastic regarding CMS' acceptance of many of its recommendations, OOSS attorney Michael Romansky said the organization remains unhappy that the agency continues to refuse to add to the ASC procedures list a number of ophthalmic surgical services which OOSS says can be safely and effectively furnished to Medicare beneficiaries in the ASC environment. These include: 65855 (trabeculoplasty); 67105 (retina repair, photocoagulation); 67145 (prophylaxis of retinal detachment, photocoagulation); 67210 (destruction of retinal lesions, photocoagulation); 67221 (destruction of retinal lesions, photodynamic therapy), and 67228 (destruction of extensive or progressive retinopathy, photocoagulation).

IN THE NEWS

Bascom Palmer tops survey. The University of Miami's Bascom Palmer Eye Institute has been ranked as the nation's top hospital for ophthalmology in U.S. News & World Report's annual nationwide survey. Bascom Palmer earned top honors in 2005 for the second consecutive year and has been ranked number one four times since 1994.

The Wilmer Eye Institute of Johns Hopkins University ranked second, while Wills Eye Hospital in Philadelphia was rated third.

The magazine's America's Best Hospitals guide ranks the top hospitals in 17 medical specialties. The results of the eye hospital ranking is based on a survey of 200 randomly selected, board-certified ophthalmologists nationwide who were asked to identify the five best eye hospitals for the treatment of difficult cases regardless of location or cost. The annual guide, which is also accessible online at www.usnews.com, is a resource for consumers who seek optimal care in the diagnosis, treatment and management of difficult medical problems.

More data on Lucentis trials. In a presentation to the American Society of Retina Specialists, Genentech announced detailed results from its Phase III MARINA trial, encompassing 716 patients with wet AMD. The new data indicates that at 12 months, the average Lucentis-treated patient gained 7 letters on the ETDRS eye chart, while those in the control group given a sham injection lost an average of 10.5 letters. In May, Genentech had said that 95% of the Lucentis-treated patients had maintained or improved vision at 12 months, defined as a loss of less than 15 letters in visual acuity.

Genentech also released new data for its Phase I/II FOCUS trial showing that patients treated with Lucentis and PDT gained an average of 5 letters after
12 months, while those treated with PDT alone lost an average of 8 letters.

Study: CTRs Prove Highly Effective
Stabilization, Centration Achieved in About 98% of Patients.

For years, cataract surgeons in the United States were anxiously awaiting FDA approval of capsular tension rings (CTRs), primarily used to provide capsular support during and/or after cataract surgery in cases involving weakened or partially broken zonules. The CTR approval process was delayed because Morcher, the first company to file with the FDA, was based in Germany and unfamiliar with FDA requirements. The Morcher CTR was finally approved in late 2003, soon followed by the approval of the StabilEyes CTR, developed by Ophtec USA and marketed by Advanced Medical Optics (AMO).

The study that led to the approval of the StabilEyes was conducted by a team of ophthalmologists led by Francis W. Price, Jr., M.D., of Price Vision Group in Indianapolis, Ind. Twelve-month results of the ongoing study were recently made public in an issue of Ophthalmology. The 12-month data indicate that use of the StabilEyes CTR helped to achieve stabilization the capsular bag and IOL centration in 97.7% of patients.

CTRs were implanted in 224 patients who were found to have a weakened or partially broken ciliary zonule comprising less than 34% of the circumference of the lens capsule. Patients were examined preoperatively, intraoperatively and postoperatively at day 1 and months 1, 3, 6 and 12.

Results indicated that 98.8% of IOLs were centered immediately after surgery, 98.3% were centered 3 months following surgery, and 97.7% centration was observed at 12 months after surgery. The primary complication was posterior capsular opacification, which the researchers concluded was probably not the result of CTR insertion. The researchers also noted that eyes remained stable after YAG laser capsulotomy, which was performed in 12.8% of the study eyes after 12 months.

Researchers concluded that "Intraocular lens decentration is a common complication in eyes with a compromised zonule. When there is a local area of weakness or missing zonular fibers, as the capsule contracts in the healing process the IOL/capsule complex can migrate away from the area of weakened traction. The CTR distributes the tension of the healing and contracting capsule over 360 degrees, minimizing the forces and resisting displacement of the weak area."

Drug Alleviates Sjogren's Symptoms
Immunomedics Says its Study Results are "Encouraging."

Immunomedics, Inc., a biopharmaceutical company focused on developing monoclonal antibodies, has reported encouraging results from its Phase I/II trial with its compound, epratuzumab, for the treatment of Sjogren's syndrome, an autoimmune disease that currently affects between 2 to 4 million Americans.

"Current therapies for Sjogren's syndrome do not adequately treat the signs and symptoms, which is why these results are so encouraging," commented Ivan D. Horak, M.D., chief scientific officer of Immunomedics. "Our first set of epratuzumab data demonstrates clinical improvement in this difficult-to-treat population of patients with Sjogren's syndrome. We intend to meet with the FDA shortly to discuss further development of epratuzumab in this indication."

Dr. Horak said evidence suggests that B-cells may play a key role in the inflammatory cascade of Sjogren's syndrome or lupus. Consistent with the company's past clinical experience with epratuzumab, the investigators also found a reduction of 50% to 60% in circulating B-cells in the patients enrolled in the trial. These data suggest that B-cell modulation may be the primary mechanism of action of epratuzumab, and that complete depletion of B-cells is not necessary to provide a clinical benefit.

Over an 18-week period, most patients reported improvements in their clinical signs and symptoms, including dry eyes, dry mouth, fatigue, tender joints, tender points, tear and salivary flow.