LENSAR files for bankruptcy with PDL BioPharma support

LENSAR Inc. announced its filing of a Chapter 11 bankruptcy petition on Dec. 19 to reduce its debt, strengthen its balance sheet, and strengthen its platform for future growth, according to a press release from the company.

The Orlando-based company is a leader in femtosecond laser technology for refractive cataract surgery and features a laser system with three-dimensional reconstruction of the anterior segment. 

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PDL BioPharma Inc. (PDL), LENSAR’s senior secured lender, supports the filing and is expected to support a plan to reduce LENSAR’s debt, convert a portion of PDL’s outstanding debt into equity, and facilitate financial resources to LENSAR through the process, the press release said. LENSAR is also expected to continue normal operations throughout the restructuring and reorganization process.

With the financial support of PDL, LENSAR intends to continue to pay all employee wages, healthcare, and other benefits without interruption, according to the company.

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“Given the growing aging population globally, with more than 22 million cataracts treated annually, I am very optimistic about the future of refractive cataract surgery and the opportunity to work with PDL,” said Nicholas Curtis, LENSAR chief executive officer, in a prepared statement. “We expect to continue changing the paradigm for how surgeons treat cataract patients and improve visual outcomes, seamlessly incorporating the preoperative diagnostics into the laser treatment to manage pre-existing and surgically induced astigmatism affecting nearly all cataract patients.”

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The Chapter 11 case is expected to conclude in the second quarter of 2017. From there, according to the press release, PDL will continue to provide support to the “reorganized, de-leveraged LENSAR.”

“The hard work and dedication of our employees has enabled us to create a leading femtosecond laser technology platform for refractive cataract surgery and we are truly grateful for their commitment and support,” Curtis said in the prepared statement. “Together, we look forward to working cooperatively with our vendors, suppliers, and partners as we move quickly through this process.”

While there is commonly a negative connotation associated with bankruptcy, Curtis said this is a positive event for LENSAR.

In the making for several months

The plan to convert the debt to equity has been in the making for several months and is expected to provide LENSAR additional opportunities to expand in the existing femtosecond laser space, according to Curtis.

Outside of healthcare, Curtis likens the company’s bankruptcy filing to the automobile manufacturing and airline industries, which came back even stronger after they filed for bankruptcy. However, there is a significant difference, according to Curtis. “In many cases, they did it to avoid their current liabilities,” he said, explaining that LENSAR will continue to pay all of its vendors throughout the bankruptcy.

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The company will continue doing business as usual, Curtis said, adding that the bankruptcy filing will not cause any disruption to employees, suppliers, customers, or customers’ patients.

There will be no downsizing or loss of employee jobs, he added.

“PDL is a very solid partner,” he said. “They believe in our technology.”

PDL, which has been partners with LENSAR since October 2013, has experience in the pharmaceutical industry and understands that pathways to FDA approvals are long and require significant investment, Curtis said. In 2013, LENSAR closed $27 million in private equity financing and up to $60 million in debt financing with PDL, according to a LENSAR press release.

LENSAR, which was a venture capital company, will benefit from the bankruptcy filing in that PDL is a strong, public, commercial company, Curtis said. In addition, over the past year, LENSAR has reduced its operating expenses and increased its sales, according to Curtis.

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The LENSAR laser system is a femtosecond laser specifically designed for refractive cataract surgery. An upgraded software to the LENSAR Laser System (Streamline) allows wireless transmission of preoperative topography data and infrared images of the undialated eye directly to the laser. The laser received FDA approval in 2013.

PDL is a bio-technology company which invests in patents and royalty-based biotechnology in order to optimize investment returns for shareholders. More than $1 billion has been made in its overall investments to date, according to the company. The company was known as Protein Design Labs prior to 2006 and is now headquartered in Incline Village, NV.

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