QLT Inc. wanted to expand its pipeline of ocular products, and it did so in a major way, purchasing ForSight Newco II Inc. for $42 million due at the closing and millions more in future royalties and milestones.

For that the Vancouver, British Columbia-based company obtained the spinout of ForSight Labs LLC known for its punctal plugs used to prevent tears from draining from the eyes.

In addition to the $42 million at closing, QLT will pay a one-time $5 million milestone upon the initiation of a Phase III clinical trial meeting certain criteria; $20 million on first commercialization of each of the first two products using ForSight Newco II's technology; and $15 million on first commercialization of each subsequent product. The acquisition is expected to close early in the fourth quarter of 2007 and is subject to customary closing conditions. ForSight Newco II will become a wholly owned subsidiary of QLT.

To help finance the deal, QLT said it plans to sell vacant property adjacent to its headquarters, and obtain a mortgage or other financial structure on its headquarters.

ForSight Newco II's punctal plugs are a noninvasive drug delivery system capable of delivering a variety of drugs to the eye over time through controlled release to the tear film.

The company said sustained release punctal plugs potentially could replace eye drops for glaucoma, dry eye, allergies and postoperative care, which represent a $6 billion market.

QLT plans to initiate a Phase I/II clinical trial with the first product using ForSight Newco II's technology for the treatment of glaucoma in the first half of 2008.