Bausch + Lomb Corporation (NYSE:BLCO) has agreed to acquire 'front of eye' ophthalmology assets for $1.75 billion in upfront cash, plus additional milestone payments from Novartis AG (NYSE:NVS), marking the first significant move by CEO Brent Saunders since his return to Bausch + Lomb in March of this year.

The deal includes Xiidra (an eye drop for dry eye symptoms), investigational medicine SAF312 (libvatrep) for chronic ocular surface pain, the rights for the use of the AcuStream delivery device in dry eye indications, and OJL332, a second-generation TRPV1 antagonist in pre-clinical development.

Novartis will receive milestone payments of up to $750 million linked to anticipated future sales for Xiidra, SAF312, and OJL332. 

The acquisition of Xiidra is expected to bolster Bausch's stake in the profitable and expanding dry-eye market, which affects approximately 16 million people in the U.S.

WSJ was the first to report the potential acquisition. The global dry-eye market is projected to exceed $10 billion in 2030, up from $5.5 billion the previous year, WSJ reported citing Grand View Research.

Saunders led Bausch + Lomb between 2010-2013 before its $8.7 billion sale to Valeant Pharmaceuticals International.

He then spearheaded several deals at Forest Laboratories, including the $66 billion purchase of Botox maker Allergan in 2015, making it one of the industry's largest companies.

Saunders served as Allergan's CEO until its $63 billion acquisition by AbbVie Inc (NYSE: ABBV) in 2020.

Xiidra generated $487 million in sales in FY22 and is expected to help boost Bausch's revenue. The company forecasts total FY23 sales of $3.9-$3.95 billion.

Related: Inflationary Factors And Slow Product Uptake Could Be Headwinds For Bausch + Lomb, Analyst Says.

Xiidra will compete against Restasis, a dry-eye drug Saunders oversaw at Allergan, which had $666 million in sales for AbbVie last year, along with its generic versions.

Bausch plans to sell Xiidra alongside a new prescription dry-eye treatment called Miebo, approved in May, which operates differently and targets a different aspect of the disease.

The goal at Bausch is to stimulate growth; the company's revenue of $3.8 billion last year remained largely unchanged from the previous year.

Price Action: BLCO shares are up 5.01% at $20.14 during the premarket session on the last check Friday.