EX-99.2 3 d276613dex992.htm 2012 GUIDANCE AND PIPELINE UPDATE PRESENTATION - JANUARY 2012. 2012 Guidance and Pipeline Update Presentation - January 2012.
2012
Guidance
and
Pipeline
Update
January
4,
2012
Exhibit 99.2


ISTA PHARMACEUTICALS
2
ISTA’s Track Record of Success
2011: Solid Commercial and Pipeline Progress
Attractive portfolio of highly valuable assets
ISTA’s Financial Strategy and Outlook
2012 Guidance
Delivering Value -
Looking to 2015 and Beyond
ISTA Exploring Strategic Options
Q&A
Agenda
Agenda


ISTA PHARMACEUTICALS
3
Safe Harbor Statement
Safe Harbor Statement
Certain statements contained herein are “forward-looking”
statements (as such term is defined in the Private Securities
Litigation Reform Act of 1995).  Because such statements include
risks and uncertainties, actual results may differ materially from
those expressed or implied by such forward-looking statements. 
Factors that could cause actual results to differ materially from those
expressed or implied by such forward-looking statements include,
but are not limited to, failure to initiate clinical studies, failure to
achieve positive results in clinical trials, failure to receive market
clearance from regulatory agencies, and those risks and
uncertainties discussed in filings made by ISTA Pharmaceuticals,
Inc.,
with the Securities and Exchange Commission.
NON-GAAP FINANCIAL MEASURES-
ISTA believes the metric "adjusted cash net income (loss) and adjusted cash EPS excluding non-cash interest expense, stock
option expense and non-cash warrant valuation adjustments," are useful financial measures for investors in evaluating the Company's performance for the
periods presented. ISTA’s management believes the presentation of these non-GAAP financial measures provides useful information to the Company and to
investors regarding ISTA’s results of operations as these non-GAAP financial measures allow better evaluation of ongoing business performance. These metrics,
however, are not a measure of financial performance under accounting principles generally accepted in the United States (GAAP) and should not be considered a
substitute for net  income (loss) or EPS in accordance with GAAP and may not be comparable to similarly titled measures reported by other companies. The
company historically has included a full reconciliation of net income (loss) to adjusted cash net income (loss) in its press releases reporting quarterly financial
results, and intends to include such reconciliation for the current period in its press release reporting the full financial results for 2011 after market close on
February 23, 2012.


ISTA PHARMACEUTICALS
ISTA’s Track Record of
Success and Strategic Vision
ISTA’s Track Record of
Success and Strategic Vision
4


ISTA PHARMACEUTICALS
5
ISTA’s Track Record
of Success
ISTA’s Track Record
of Success
Third largest branded Rx eye care company in U.S.
Thriving core Rx eye business, emerging Rx allergy franchise
5 Rx eye and allergy product approvals obtained in 6 years
ISTALOL®, VITRASE®, XIBROM™, BEPREVE®, BROMDAY™
Products
are
#1
or
#2
in
their
markets,
with
market
share
growth
potential
Deep R&D pipeline of new product candidates
Anticipate 5 new products < 5 years
Solid IP position and strategy to enhance protection of core franchises
Experienced management team and formidable specialty sales force: ~ 340
employees –
over 60% are field based
Achieved profitability in 2010 *
* On an adjusted cash net income basis                                 
Rx = Prescription


ISTA PHARMACEUTICALS
2011 –
Solid Commercial and
Pipeline Progress
2011 –
Solid Commercial and
Pipeline Progress
Preliminary unaudited revenues >$160 million, profitable*
Highly successful switch from XIBROM to BROMDAY
BEPREVE revenue and market share increased significantly
Strong clinical pipeline progress, significant de-risking of
programs
PROLENSA™
Phase 3 successful
BEPOMAX™
Phase 2 successful; BEPOSONE™
entering Phase 2
OTC tear product formulated and successfully tested
T-PRED™
path forward clarified
Paper published on bromfenac adjunct therapy for AMD
6
*On an adjusted cash net income basis


ISTA PHARMACEUTICALS
7
Current Commercial Products                            
$300 Million Near-Term Potential Revenue
Current Commercial Products                            
$300 Million Near-Term Potential Revenue
BEPREVE®
Fast growing, twice-daily
prescription eye drop for
ocular itching associated
with allergic conjunctivitis
ISTALOL®
Leading once-daily beta-
blocker eye drop for the
treatment of glaucoma
VITRASE®
Leading spreading agent
used to enhance absorption    
and dispersion of other
injected drugs
BROMDAY™
Only once-daily
prescription eye drop for
postoperative inflammation
and reduction of ocular
pain in patients who have
undergone cataract
extraction


ISTA PHARMACEUTICALS
Delivering Compelling  Value
BROMDAY
(Ocular pain & inflammation post cataract surgery,
Hatch-Waxman protection to Oct 2013)
ONLY approved once-daily NSAID
Launched Twin Pack
Achieved #1 position in TRx dollars
Est. 2011 NSAID market size $367mm
PROLENSA
(New
formulation
for
ocular
pain
&
inflammation
post cataract surgery, patent recently allowed)
Superior safety profile of PROLENSA  Phase
3 studies
Plan for 1H 2012 NDA filing, launch 2013
2015 market potential $500mm
Achieved proof-of-concept
Has robust potential in blockbuster AMD
market
2015 market potential $400mm
BROMFENAC Adjunct
(Candidate as adjunctive treatment for AMD, patent
pending)
One of a few ophthalmology drugs to
achieve >$100mm in revenues
Highly regarded in
the ophthalmology
community
Portfolio of Assets
Unique Eye Care Franchise
Proprietary Bromfenac Franchise
High Strategic and Financial Value
XIBROM (discontinued Feb 2011)
(Ocular pain & inflammation post cataract surgery)
Years of safety &
efficacy data
Successful clinical
trials
8


ISTA PHARMACEUTICALS
9
BROMDAY October 2011 prescriptions equal
to highest level achieved by XIBROM
Major new managed care account wins to
drive increased share
Introduction of Twin Pack
Has added about $4 to the net average sales
price (ASP)
As of week of December 23, 5% of total
prescriptions (TRx) are Twin Pack
No generic to BROMDAY until October 2013
Planning  synchronized switch to
PROLENSA™
in 2013
Three-year Hatch-Waxman exclusivity
Patent through 2024 recently allowed.
Anticipated to issue 1H 2012
BROMDAY
TM
Convenient Once-Daily Dosing
BROMDAY
TM
Convenient Once-Daily Dosing
The ONLY
approved once-daily
Rx non-steroidal        
anti-inflammatory (NSAID) eye drop for pain and
inflammation post-cataract surgery
Estimated NSAID 2011 Market Size TRx $: $367mm


ISTA PHARMACEUTICALS
BROMDAY
Outlook Strong
Prescription Dollars Reflect Increasing Average Price
BROMDAY
Outlook Strong
Prescription Dollars Reflect Increasing Average Price
10
Source –
IMS Health Monthly NPA –
All MDs
#1 in Total
Prescription
Dollars (TRx$)
Achieved 33%
TRx$ share in
only 13
months


ISTA
PHARMACEUTICALS
11
PROLENSA
New Formula with Allowed and Patents Pending                   
Through 2024
PROLENSA
New Formula with Allowed and Patents Pending                   
Through 2024
Bromfenac-based NSAID for ocular pain and inflammation                   
associated with cataract extraction –
projected to replace BROMDAY
Positive Phase 3 Study Results Reported Oct. 2011 –
Clinical work done
Lowest number of adverse events (of greater than 2%) vs. prior bromfenac trials
Optimized,
lower
concentration
formula
enhances
penetration
into
ocular
tissues
Plan to file NDA with FDA 1H 2012
Launch by early 2013
Will implement switch strategy similar to XIBROM to BROMDAY
Complete switch before BROMDAY Hatch-Waxman exclusivity expires in Oct. 2013
2015 market potential: $500+ million
Three-year Hatch-Waxman exclusivity through 2016
Patent
through
2024
recently
allowed.
Anticipated
to
issue
1H
2012;
Other
pending
patents
will
extend
protection
further
Key bromfenac extension for cataract-based indication


ISTA PHARMACEUTICALS
Uncertainty Around Bromfenac
Franchise Resolved
Uncertainty Around Bromfenac
Franchise Resolved
Can ISTA successfully convert XIBROM users to
BROMDAY?
Will BROMDAY adoption be completed before
the launch of a generic?
Is PROLENSA able to pass rigorous FDA clinical
trial testing?
Will PROLENSA be approved before a generic
is launched?
Will ISTA be able to successfully convert
existing BROMDAY users to PROLENSA?
Will bromfenac receive patents to extend
PROLENSA’s life past Hatch-Waxman expiry?
12
ISTA’s recent success with the BROMDAY conversion and with positive Phase 3 results for
PROLENSA highlight the significant potential of the bromfenac franchise
Answers
Questions
Yes, ISTA successfully completed the transition in
2011
Yes, ISTA quickly introduced BROMDAY, preventing a
generic competitor from capturing the market
Yes, ISTA successfully completed Phase 3 clinical
trials in October 2011
Yes, ISTA expects to file the PROLENSA NDA in early
2012, almost eighteen months in advance of a generic
Yes, previous experience successfully converting
XIBROM to BROMDAY has prepared ISTA for the
PROLENSA launch
Yes, one of the patents for PROLENSA should issue
1H 2012


ISTA
PHARMACEUTICALS
13
Bromfenac Adjunct for AMD
Lower-Risk "Back of the Eye" Approach
Bromfenac Adjunct for AMD
Lower-Risk "Back of the Eye" Approach
Higher-concentration, new formulation of bromfenac
For adjunctive treatment of age-related macular degeneration (AMD)
Paper published in Sept 2011 Issue of RETINA suggests bromfenac 0.09% (XIBROM),
administered twice daily may have an additive effect when used with intravitreal
ranibizumab (LUCENTIS®)
in reducing retinal thickness in neovascular AMD
Retrospective studies have shown the efficacy and safety of topical bromfenac along with intravitreal
injections
Determining path forward with FDA as adjunctive therapy with intravitreal injections
2015 market potential: $400+ million
Patent through 2024 recently allowed. Other pending patent through 2028
Continued expansion of successful bromfenac franchise
* Improvement in visual acuity not demonstrated in this study  
LUCENTIS®
is a registered trademark of Genentech, a member of the Roche Group


ISTA
PHARMACEUTICALS
Delivering  Near-
and Long-term
Revenue Streams 
BEPREVE
Continues to take share in the
ophthalmic allergy market
Major managed care formulary wins
Leverages sales force for BROMDAY
BEPOMAX
Positive Phase 2 data reported
2015 market potential $400mm
Estimated launch 2015
Potential  blockbuster drug. Nasal spray
market potential $2+ billion
Seeking commercial partnership to
accelerate growth & provide access to
primary care MDs
BEPOSONE
Potentially long
patent protection.
Option to license
oral therapy
A Growing Prescription           
Allergy  Portfolio
Proprietary Bepotastine Franchise
Proven Allergy Product with Robust Opportunities
Life cycle plan with
multiple product
opportunities
Lead product
strategically
positioned
14
(Fast-acting
eye
drops
for
ocular
itching
associated
with
allergic
conjunctivitis,
patent
issued)
(Single-agent antihistamine nasal spray for seasonal
allergic rhinitis, patents pending)
(Combination antihistamine & steroid nasal spray
seasonal allergic rhinitis, patents pending)


ISTA
PHARMACEUTICALS
15
BEPREVE
®
Near-term tactical drivers in place
BEPREVE
®
Near-term tactical drivers in place
Twice-daily antihistamine eye drop to treat
itching associated with allergic conjunctivitis
2011 revenues grew significantly
Major new managed care formulary wins to
drive market share in 2012
Currently #2 branded in NRx$ behind
Patanol/Pataday
Sales force calls on only ½
the market; potential
for partnering
Rx of BEPREVE generates 35-60% more
revenues than competitors due to larger
package size
Patents to 2017 with extension expected to
2019
Additional patents pending through 2023
Patanol, Pataday and Lastacaft are trademarks of their respective owners
Opportunity for BEPREVE to Gain Additional Market Share
Estimated
2011
Allergy
Market
Size
TRx
$:
$780
MM


ISTA PHARMACEUTICALS
16
BEPOMAX
Major
Extension of Allergy Franchise
BEPOMAX
Major
Extension of Allergy Franchise
Single agent antihistamine nasal spray
Active ingredient, bepotastine, already approved in Rx eye drop BEPREVE
For treatment of seasonal allergic rhinitis
Positive Phase 2 Study results reported April 2011
Safety similar to placebo and other antihistamine nasal sprays
Patented through 2017
Pending patent through 2023
Additional patent filed through 2031
Large Market Opportunity Exists
2015 Potential:  $400+ million


ISTA PHARMACEUTICALS
17
BEPOSONE ™
"Holy-Grail" Rx Nasal Allergy Product
BEPOSONE ™
"Holy-Grail" Rx Nasal Allergy Product
Combination patented antihistamine / steroid
Antihistamine, bepotastine, already approved in Rx eye drop BEPREVE
For treatment of seasonal allergic rhinitis (SAR)
Filed Investigational New Drug (IND) Q4 2011
4-armed Phase 2 Mountain Cedar Pollen study initiated January 2012
To accelerate growth, seek marketing partner for access to primary care MDs
Launch expected 2015
Patented through 2017
Pending patent through 2023
Additional patents to be filed
Blockbuster Market Opportunity Exists
2015 Potential: $2+ Billion


ISTA PHARMACEUTICALS
BEPOSONE
Unique Combination and Approach
BEPOSONE
Unique Combination and Approach
Combination of proven antihistamine and approved corticosteroid is highly
desired by seasonal allergy  patients and physicians alike
The market has limited expected competition from other allergic rhinitis
formulations
The only late stage product currently in development is Dymista from Meda (Phase 3)
Other products still in Phase 2 testing or earlier
ISTA has the opportunity to obtain 2 drug approvals out of the BEPOSONE
registration clinical trials (BEPOMAX and BEPOSONE)
Phase 2 Mountain Cedar pollen clinical trial is powered to prove
all efficacy
requirements from the drug combination rule
All active drug treatments have to be better than placebo
BEPOSONE has to be better than the BEPOMAX and steroid agents
18


ISTA PHARMACEUTICALS
Partner Potential to Unlock
Additional Upside
Partner Potential to Unlock
Additional Upside
19


ISTA PHARMACEUTICALS
ISTALOL and VITRASE
Other Market-Leading products
ISTALOL and VITRASE
Other Market-Leading products
ISTALOL
Market-leading, once-daily beta-blocker eye drop for glaucoma
Growth through share gain and pricing
2010 market size: ~$180 million
Patent protection to 2018
VITRASE
Injectable biologic spreading agent, hyaluronidase, used to enhance
absorption and dispersion of other injected drugs
Untapped future potential as a spreading agent in dermatology and for
hyperdermoclysis
100% market share while competitors continue to deal with
manufacturing issues (likely through 2012)
2010 market size:  ~$13 million
20
ISTALOL & VITRASE:
2011 Revenues Expected to Approach $40 Million


ISTA PHARMACEUTICALS
OTC Eye Products
Expansion of Rx Business into High-
Operating Margin Consumer Cash Business
OTC Eye Products
Expansion of Rx Business into High-
Operating Margin Consumer Cash Business
Over-the-Counter eye drops for treatment of dry eye and other
ocular conditions
OTC product developed and tested in 2011 during prescription
dry eye Phase 3 studies
Statistically significant improvements from patient baselines
Complete stability testing -
1H 2012
2015 market potential:  $300
million
Looking to acquire OTC business to jump-start launch
21
Existing sales force to drive practitioner-recommended sales


ISTA PHARMACEUTICALS
ISTA’s OTC Tear Formula
Results from Dry Eye Phase 3 Study
ISTA’s OTC Tear Formula
Results from Dry Eye Phase 3 Study
Successfully
treated
severe
dry
eye
disease
(DED)
subjects;
a
first for OTC tear formulations
Reduced both sign and symptoms by approximately 30%
within 7 days of treatment
(twice daily)
Over
50%
of
patients
responded
to
our
OTC
tear
(compared
to
15%
of
subjects
on
Restasis
after
6
months
of
treatment)
22


ISTA PHARMACEUTICALS
23
T-Pred
Promising Anti-Infective/Steroid
T-Pred
Promising Anti-Infective/Steroid
Fixed combination prednisolone & tobramycin prescription eye
drop
Prednisolone by far the steroid of choice for the ophthalmic community
For steroid-responsive inflammatory ocular conditions for which
a corticosteroid is indicated and where superficial bacterial
ocular infection or risk of infection exists
Initiate Phase 3 trials 2H 2012
2015 market potential:  $150
million 
Potential primary care market opportunity
Pending patent through 2025
Ideal supplemental product to leverage sales infrastructure


ISTA PHARMACEUTICALS
T-PRED
Upon Approval, New Entry to Market Long
Dominated by  Tobramycin /Dexamethasone
T-PRED
Upon Approval, New Entry to Market Long
Dominated by  Tobramycin /Dexamethasone
Uveitis
study
showing that the prednisolone acetate in
combination is as effective as the reference product
Allergic Conjunctivitis study
showing that the prednisolone
acetate in combination is as effective as the reference
product
In-Vitro Antibiotic Kill Rate study
showing that the
combination formula does not affect the tobramycin kill rate
when tested against a panel of microorganisms
24
Path forward determined in recent FDA meeting


ISTA PHARMACEUTICALS
25
ISTA's Robust Near-Term Pipeline
Launches Drive Revenues to $500 by 2015*
ISTA's Robust Near-Term Pipeline
Launches Drive Revenues to $500 by 2015*
Candidates
Formulation
Phase 1
Phase 2
Phase 3
2015 Est.
Market Size
OTC eye products
$300 million
PROLENSA                            
Low-concentration bromfenac
$500+ million
T-PRED
Antibiotic/steroid
$150 million
BEPOMAX                     
Bepotastine nasal spray
$400 million
BEPOSONE
Bepotastine/steroid                         
combo nasal spray
$2+ billion
Bromfenac Adjunct
for Age-related Macular
Degeneration
$400+ million
Allergic Rhinitis
Ocular Inflammation / Infection
* Includes BEPOMAX/BEPOSONE partnership  
Ocular Inflammation & Pain
Dry eye
AMD
Allergic Rhinitis
Total Market Opportunity  >$3.5 billion


ISTA PHARMACEUTICALS
26
ISTA's 2012 Pipeline Milestones            
to Drive Shareholder Value
ISTA's 2012 Pipeline Milestones            
to Drive Shareholder Value
Product / Candidates
Milestone
Timing
OTC tear products for dry eye
Complete stability
Launch
1H
2H
PROLENSA™
Patent Issuance
File NDA
Approval
1H
1H
1H 2013
T-PRED™
Initiate Phase 3 studies
2H
BEPOSONE™
Complete Phase 2 Cedar
Pollen Study
1H


ISTA PHARMACEUTICALS
27
ISTA’s Track Record of Success
2011: Solid Commercial and Pipeline Progress
Attractive portfolio of highly valuable assets
ISTA’s Financial Strategy and Outlook
2012 Guidance
Delivering Value -
Looking to 2015 and Beyond
ISTA Exploring Strategic Options
Q&A
Agenda
Agenda


ISTA PHARMACEUTICALS
ISTA’s Overarching                 
Financial Strategy
ISTA’s Overarching                 
Financial Strategy
Target above industry average
revenue growth
Fund
growth
from
internally
generated
cash
flow
no
financings
anticipated excluding acquisitions
Utilize
disciplined
investment
in
R&D
at
~20%
of
net
revenue
Leverage
SG&A
down
as
net
revenues
grow
Increase profitability & EBITDA
Excluding any acquisitions, be free of debt facility by end of 2013
Areas of upside
Expansion from pharmaceutical into over the counter products
Potential for geographic expansion outside of U.S.
Partner for primary care access
Acquisitions or in-licenses
28


ISTA PHARMACEUTICALS
Business Development
External Value Creation
Business Development
External Value Creation
Disciplined approach to evaluation of opportunities
Rx Eye and Rx Allergy for growth and commercial synergy
Acquire marketed or soon-to-be marketed products
License late-stage products
Partner for access to primary care physicians and consumer branding
OTC Eye and Allergy for  growth without heavy R&D investment
Acquire OTC business platform
License and/or develop new OTC products
Artificial tears
Ocular vitamins
Other
29
Goal –
To Become $1 Billion Specialty Pharmaceutical Firm


ISTA PHARMACEUTICALS
30
ISTA’s 2012 Financial Guidance
ISTA’s 2012 Financial Guidance
*
%
of
Net
Revenues
** Adjusted Cash Net Income and EPS excludes non-cash warrant expense, non-cash interest expense and non-cash stock-based compensation expense
*** After debt payments of $21.5m and including reserves for XIBROM/BROMDAY royalties and bank line
2012 Net Revenues
$180 -
$195 million
Gross Margin*
75% -
77% 
R&D*
19% -
22% 
SG&A*
45% -
49%
Adjusted Cash Net Income** 
$15 -
$19 million 
Adjusted EBIDTA
$25 -
$29 million
Adjusted Cash EPS** (53 mm shares)
$0.28 –
$0.36 per share
Cash at 12/31/12***
> $100  million


ISTA PHARMACEUTICALS
2013 Targets
BROMDAY/PROLENSA
$135 –
$155 million
BEPREVE
$100 –
$120 million
ISTALOL & VITRASE
$  40 –
$  50 million
TOTAL NET REVENUES
$275 –
$325 million
Adjusted Cash EPS*
> $1.00
Mid-Term Financial Outlook
Revenues Driven by Market Share Gains
Mid-Term Financial Outlook
Revenues Driven by Market Share Gains
31
* Excludes non-cash warrant expense, non-cash interest expense and non-cash stock-based compensation expense


ISTA PHARMACEUTICALS
"5 in 5"
5 new product launches in next 5 years
Rx Eye, Rx Allergy, Over-the-Counter
Significantly de-risked pipeline with candidates approved previously in other indications
$500 million in revenues by 2015
Forecasted compounded 4-year (2011 –
2015) revenue growth rate ~35%
Organic growth from current products drives majority of revenue growth
Revenues include partnering for primary care access –
BEPOMAX/BEPOSONE
Accelerate revenue growth through:
Establishment of OTC business de-risks future sales
Licensing of late-stage assets
Acquisition of marketed drugs
32
Delivering Value
Looking to 2015 and Beyond
Delivering Value
Looking to 2015 and Beyond


ISTA PHARMACEUTICALS
33
ISTA’s Track Record of Success
2011: Solid Commercial and Pipeline Progress
Attractive portfolio of highly valuable assets
ISTA’s Financial Strategy and Outlook
2012 Guidance
Delivering Value -
Looking to 2015 and Beyond
ISTA Exploring Strategic Options
Q&A
Agenda
Agenda


ISTA PHARMACEUTICALS
ISTA Exploring Strategic
Options
ISTA Exploring Strategic
Options
ISTA’s Board of Directors decided in December 2011 to
explore strategic options for the company, including but not
limited to:
Acquisition by or merger with another company
Acquisition of Rx or OTC business by ISTA
Partnering to reach larger audiences
Engaged Greenhill & Co. to explore options
34


ISTA PHARMACEUTICALS
35
ISTA's Recent Achievements Position the
Company for Long-Term Success
ISTA's Recent Achievements Position the
Company for Long-Term Success
De-risking of pipeline via positive PROLENSA Phase 3 and BEPOMAX Phase 2 trials
A more defined plan to transition the bromfenac franchise
OTC tear product formulated and successfully tested
T-PRED path forward clarified with FDA
Positive preliminary studies on Bromfenac with Lucentis®
over Lucentis®
alone as a
treatment for AMD
Greater clarity into BEPOMAX / BEPOSONE development
Significant growth in market size and share for BEPREVE
Progress on a number of patents for the bromfenac franchise and BEPREVE
LUCENTIS®
is a registered trademark of Genentech, a member of the Roche Group
Over the past year, ISTA has gone through a number of critical changes that have reduced
financial and operating risk while maintaining and enhancing growth prospects


ISTA PHARMACEUTICALS
36
Valeant Approach Timeline
Valeant Approach Timeline
September
October
November
December
Valeant first expresses
interest in acquiring ISTA in
a CEO to CEO conversation
as well as a Board member
to Board member
conversation
Nov.
23   :
Valeant
sends
letter
outlining non-binding proposal to
buy ISTA for $6.50 per share in cash;
ISTA commences review and analysis
with financial & legal advisors
Non-structured discussions
continue; no formal indication
of value, but 100% premium
suggested when ISTA’s price
was at ~$4.00 per share
Dec.
2    :
ISTA
advises
Valeant that it is
reviewing non-binding
proposal with advisors;
commits to formal
response by mid-
December
Dec.12   :
Valeant
reiterates interest,
asks for formal
response by
December
16
Dec.
14   :
ISTA
Board rejects
proposal as
grossly inadequate
Dec.16   :
Valeant
makes its proposal
public with a
deadline of Jan
31   ;
ISTA
reaffirms
rejection publicly
rd
th
th
st
th
nd
th


ISTA PHARMACEUTICALS
ISTA Response
ISTA Response
Upon
receipt
of
Valeant's
proposal
on
November
23  ,
ISTA
with
the
help
of its advisors, concluded that the proposal was grossly inadequate
ISTA
responded
to
Valeant
privately
on
December
14 
reiterating
that
the
offer failed to appreciate the intrinsic value of the Company
Two
days
later
Valeant
made
its
proposal
public
and
ISTA's
Board
confirmed its rejection of the proposal
Board focused on its fiduciary obligations to maximize shareholder value
37
rd
th


ISTA PHARMACEUTICALS
3.83x
3.86x
2.10x
1.79x
0.00x
1.00x
2.00x
3.00x
4.00x
5.00x
EV / LTM Revenue
EV / 2012E Revenue
Specialty Pharmaceutical Index Median
Implied ISTA Multiples at Valeant Proposal
Valeant’s Proposal Undervalues
ISTA
Valeant’s Proposal Undervalues
ISTA
38
Valeant’s proposal of $6.50 per share implies a multiple of 2.10x LTM revenue and 1.79x
2012E revenue
Valeant’s proposal fails to adequately compensate ISTA shareholders
It does not reflect current multiples of ISTA's peer group
It does not include a premium for a rare ophthalmic asset
It does not recognize the meaningful synergy value that exists with Valeant, as well as
many other possible partners
Valeant’s proposal fails to adequately compensate ISTA’s shareholders
Discount: 45.2%
Discount: 53.6%
Source: IBES estimates
Note: Specialty Pharmaceutical Index includes Allergan, Auxilium, Endo, Jazz, QLT, Regeneron, Salix, Shire, Valeant, ViroPharma,Warner Chilcott and Watson
EV / Revenue


ISTA PHARMACEUTICALS
39
Valeant’s Bid is at a Significant Discount to
Relevant Precedent Transactions
Valeant’s Bid is at a Significant Discount to
Relevant Precedent Transactions
Valeant’s proposal of $6.50 per share implies a multiple of 2.10x LTM revenue
This reflects a discount of 34% and 61% to the median precedent specialty pharma and
ophthalmic pharma transaction multiples, respectively
Merck’s recent acquisition of Inspire Pharmaceuticals is the closest comparable precedent
transaction
Valeant’s proposal represents a 34% discount
to the multiple Merck paid for Inspire
Valeant’s acquisition of Aton Pharma, which owns a number of generic ophthalmic
pharmaceutical products, provides another relevant precedent
Valeant’s proposal for ISTA represents a 61% discount to the Aton Pharma multiple of 5.4x LTM
revenue
Source: Capital IQ, Company filings
1)
Includes
announced
and
closed
transactions
between
$100
million
and
$1
billion
with
U.S.
specialty
pharmaceutical
targets and
selected
ophthalmology
targets
inthe
lastthree
years
2)
Multiple assumes transaction value is net of cash. At transaction value of $430 million reported by Merck on 4/05/2011 multiple
is 4.1x LTM revenue
3)
Selected ophthalmology transactions within the last three years
Discount: 61.1%
Discount: 61.1%
Discount: 34.4%
Discount: 34.4%
EV / LTM Revenue
(2)
(1)
(3)


ISTA PHARMACEUTICALS
ISTA is a More Attractive Company
than Inspire
ISTA is a More Attractive Company
than Inspire
40
Valeant’s offer fails to provide a fair value for ISTA
($ in millions)
ISTA
Inspire
Marketed
Products
Bromfenac franchise -
exclusivity until 2013
BEPREVE -
patented until 2017
ISTALOL -
patented until 2018
VITRASE -
off-patent
2011E
Revenue
>$90
>$27
>$28
>$15
AzaSite®
-
patented until 2019
Elestat®
-
off-patent
Restasis®
royalty -
patented until 2014
Diquas™
royalty -
patented until 2016
LTM 3/31/11
Revenue
$45
$16
$43
$1
Total
>$160
Total
$105
Pipeline
Products
Four late stage new formulations and product line
extensions
PROLENSA -
BROMDAY extension (NDA preparation)
T-PRED –
New formulation (Phase 3)
BEPOMAX -
New formulation (Phase 2)
BEPOSONE –
New formulation (Phase 2)
Other pipeline projects
OTC Eye Drops for dry eye, bromfenac adjunct for
AMD, strong steroid, ecabet sodium and iganidipine
Three early stage products with significant clinical risk
AzaSite -
blepharitis (Phase 2)
INS115644 -
glaucoma (Phase 1)
INS117548 -
glaucoma (Phase 1)
Sales Force
166 sales representatives
Product revenue per sales representative ~$1 million
90 sales representatives
Product
revenue
per
sales
representative
~$678,000
(1)
Source: ISTA management projections, Inspire public filings including 2010 Form 10K and the first quarter 2011 Form 10Q
Note: Revenue data for Inspire reflects latest available public information
(1)       Does not include revenue from Restasis  and Diquas royalties.                            Restasis  and Elestat are registered trademarks of Allergan, Inc: Diquas  is a  trademark of Santen Pharmaceutical Co., Ltd.  AzaSite is a registered trademark of Insite Vision Incorporated.


ISTA PHARMACEUTICALS
Wall Street Views on ISTA's
Valuation
Wall Street Views on ISTA's
Valuation
41
LONG TERM VALUE
UNDERAPPRECIATED
BY INVESTORS
Our $12.00 price target is driven by a sum-of-the-parts DCF analysis; BROMDAY at
$5.00 per share; BEPREVE at $4.00 per share; ISTALOL and VITRASE at $1.00 per
share; Bepotastine / pipeline at $2.00 per share with potential upside coming from
new patent issuances for BROMDAY and / or BEPREVE formulations and positive
Phase 3 results from the pipeline
RBC–
December  16th
SIGNIFICANT
DISCOUNT TO FAIR
VALUE
Our neutral rating on the company is based on a lack of near term fundamental
catalysts, but we believe the long-term value of ISTAs franchise is underappreciated
by investors, especially the Bepotastine nasal / combo product in Phase 2 trails
SunTrust–
December  16th
ATTRACTIVE UPSIDE
POTENTIAL
We value ISTA’s marketed products at $10.00 per share and Bepotastine for allergic
rhinitis at $2.00 per share. Under our upside scenario, current products could be
worth $16.00 based on life-cycle extensions and patent grants. We see potential for
upside from new patent issuances for BROMDAY, and/or BEPREVE formulations,
positive clinical data from the pipeline and/or a partnership for Bepotastine for
allergic rhinitis
RBC–
December  18th


ISTA PHARMACEUTICALS
42
Wall Street Views Valeant’s
Proposal as Low
Wall Street Views Valeant’s
Proposal as Low
Given the value of its marketed franchise (Bromday, Istalol and Bepreve), we are not
surprised by ISTA's proposal rejection and decision to explore strategic options. ISTA
believes that Valeant’s proposal is unjustifiably below comparable historical
acquisition multiples and that Valeant does not assign meaningful value to its
pipeline,
which
includes
Prolensa
(low
dose
bromfenac,
potential
entry
2013)
and
bepotastine
/
steroid
combo
(nasal
allergy,
Mar/April
Phase
2
readout).
Stifel Nicolaus –
December 16th
With
over
$160mn
in
2011E
revenues,
supported
by
a
strong
market
share
position
o
f the BROMDAY franchise and solid performance of ISTALOL and BEPREVE, ISTA
represents a significant ophthalmology entry opportunity.
Stifel
Nicolaus
December
16th
PLATFORM FOR
EXPANSION
SIGNIFICANT
DISCOUNT TO
HISTORICAL
ACQUISTION
MULTPLES
We believe the $6.50 offer from Valeant Pharmaceuticals is inadequate for ISTA. On
the qualitative front, ISTA is the number three player in the eye prescription business
behind giants Alcon and Allergan. The business is solidly positioned for profitability in
2012.
Auriga –
December 16th
INADEQUATE OFFER
We expect a strategic review to occur, including ISTA’s management soliciting other
potential offers. If there is
not an offer greater than $11.00 per share, we expect
ISTA to remain independent.
SunTrust –
December 16th


ISTA PHARMACEUTICALS
$25
($20)
$8
$17
$16
$29
($24)
($18)
($12)
($6)
$0
$6
$12
$18
$24
$30
$36
2008A
2009A
2010A
2011E
2012E
$180
$83
$111
$157
$195
$0
$25
$50
$75
$100
$125
$150
$175
$200
$225
$250
2008A
2009A
2010A
2011E
2012E
ISTA’s Revenue is Expected to
Grow to $180+ million in 2012
ISTA’s Revenue is Expected to
Grow to $180+ million in 2012
43
Revenue and Growth
Adjusted EBITDA and Growth
ISTA’S revenue has grown from $83 million in 2008 to an estimated $180 –
$195 million in 2012, a four year CAGR of 21.3% to 23.8%
As ISTA’s profitability grows, its adjusted EBITDA is expected to reach $25
$29 million in 2012
4 Year CAGR: 21.3% / 23.8%
($ in millions)
($ in millions)
> $160
Note: 2012E revenue and EBITDA represent management guidance
3 Year CAGR: 45.0% / 52.3%


ISTA PHARMACEUTICALS
ISTA's Pipeline is Full of Lower Risk, New
Formulations of Previously Approved Drugs
ISTA's Pipeline is Full of Lower Risk, New
Formulations of Previously Approved Drugs
44
Valeant’s offer attributes little to no value to the Company’s promising pipeline
Product / Candidates
Potential Launch
Estimated Market
Potential
OTC Tear Product line for dry eye
2012
$300 million
PROLENSA™
2013
$500 million
T-PRED™
2014
$150 million
BEPOMAX™
2015
$400 million
BEPOSONE™
2015
$2+ billion
Bromfenac for AMD
2016+
$400+ million
Ecabet sodium
2016+
$1.5 billion
Iganidipine
2016+
$2 billion


ISTA PHARMACEUTICALS
Growing Strategic Interest in
Eye Care
Growing Strategic Interest in
Eye Care
45
ISTA represents the last remaining pure play ophthalmic pharmaceutical company with scale
2007
2011
2008
2009
2010
May 2011:
Merck
acquires
Inspire for
$430 million
(3.2x EV / LTM
Revenue)
(1)
Jan. 2010:
Novartis
completes its
acquisition of
Alcon for $49
billion (7.4x
EV / LTM
Revenue)
May 2010:
Valeant
acquires Aton
Pharma for
$345 million
(5.4x EV / LTM
Revenue)
Sept. 2011:
Santen acquires
Novagali Pharma
for $126 million
(LTM Revenue
Multiple: NM)
Sept. 2009:
Abbott acquires
Visogen Inc. for
$400 million
(LTM Revenue
Multiple: NA)
Jan. 2009: Abbot
acquires
Advanced
Medical Optics
for $2.9 billion
(2.4x EV / LTM
Revenue)
May 2007:
Warburg Pincus
acquires Bausch Lomb acquires
and Lomb for
$4.0 billion
(1.7x EV / LTM
Revenue)
Sept. 2009:
Alcon
acquires
ESBATech for
$589 million
(LTM Revenue
Multiple: NA)
Dec. 2009:
Alcon acquires
Optonol for
$180 million
(LTM Revenue
Multiple: NA)
1)
Multiple assumes transaction value is net of cash. At transaction value of $430 million reported by Merck on 4/05/2011 multiple is 4.1x LTM revenue
Aug. 2007: Bausch
and Lomb acquires
Soothe XP OTC
product line from
Alimera Sciences
(LTM Revenue
Multiple: NA)
Jan. 2008: 
Bausch and
eyeonics, inc.
(LTM Revenue
Multiple: NA)
Sept. 2010:
Bausch and
Lomb acquires
Miochol-E
from Novartis
(LTM Revenue
Multiple: NA)
Oct. 2009:
Sanofi
acquires
Fovea for
$538 million
(LTM Revenue
Multiple: NA)


ISTA PHARMACEUTICALS
Conclusion
Conclusion
Valeant’s proposal to acquire ISTA at $6.50 per share is grossly inadequate
Significantly lower than ISTA’s intrinsic value
Out of line with comparable precedent transactions and peer trading multiples
Opportunistic in approach and ignores ISTA’s future prospects
Ignores benefit of synergies to Valeant
Proposal fails to appreciate areas of upside, including:
OTC market potential
Expansion into non-US markets
Partner for primary care markets
ISTA’s Board is focused on its fiduciary duty
Exploring strategic options over the following months to maximize shareholder value
46


ISTA PHARMACEUTICALS
Q&A Session
Q&A Session
Vince Anido
President and CEO
Lauren Silvernail
CFO and Vice President,                                        
Corporate Development
47



ISTA PHARMACEUTICALS
49
Supplemental Information
Supplemental Information


ISTA PHARMACEUTICALS
50
Company Timeline
Company Timeline
1992
2000
2002
2004
2005
2009
2010
Founded as Advanced
Corneal Systems
Acquired ISTALOL & XIBROM
Name change to                                
ISTA Pharmaceuticals, Inc.
IPO on NASDAQ
ISTALOL®
VITRASE®
XIBROM™
BEPREVE®
Revenue
>$100 million
BROMDAY™
ISTA
Profitable*
* On an adjusted cash net income basis


ISTA PHARMACEUTICALS
Bromfenac
A Strong Track Record in Meeting NSAID
1
Goals of
Cataract Surgeons
2
Bromfenac
A Strong Track Record in Meeting NSAID
1
Goals of
Cataract Surgeons
2
Effective anti-inflammatory
activity
Rapid pain resolution
Proven safety profile
Comfortable, well-
tolerated formulation
Simple dosing regimen
Photo: Uday Devgan, MD, FACS, FRCS
1.
NSAID = nonsteroidal anti-inflammatory drug
2.
Donnenfeld  ED, Donnenfeld A. Int Ophthalmol Clin. 2006;46:21-40
51


ISTA PHARMACEUTICALS
Unique Molecular Structure
Differentiates Bromfenac
Unique Molecular Structure
Differentiates Bromfenac
•Competitive molecules are not
halogenated –
lack bromine
•Addition of bromine imparts three
important characteristics to the
bromfenac molecule:
Enhances lipophilicity and
facilitates penetration into ocular
tissues
1,2
Increases the duration of analgesic
and anti-inflammatory activity
2,3
Strongly inhibits COX-2, the primary
mediator for ocular inflammation
4
52
1.
Sancilio
LF,
et
al.
Arzneimittelforschung.
1987;37:513–519.
2.
Walsh
DA,
et
al.
J
Med
Chem.
1984;27:1379–1388.
3.
Brown
HB,
et
al.
Muscarinic
receptor
agonists
and
antagonists.
Goodman
and
Gilman’s
The
Pharmacological
Basis
of
Therapeutics.
9th
ed.New
York:
McGraw-Hill;
1996.
p.
141–160.
4.
Cho,
et
al.
Clin
Oph.
2009;3:199-210.
bromfenac chemical
structure


ISTA PHARMACEUTICALS
PROLENSA
Successful Development Complete
PROLENSA
Successful Development Complete
Safe and efficacious track of XIBROM and BROMDAY led to
development of a lower concentration once-daily dosing of
bromfenac
Formulation was modified from BROMDAY to allow more
penetration of drug into ocular tissues
Concentration is decreased while efficacy is maintained
PROLENSA’s recently completed clinical studies showed a
record difference in proportion of subjects achieving a SOIS of
0 by Day 15 on bromfenac vs. placebo compared to previous
bromfenac studies
Studies also showed the favorable safety profile of PROLENSA
53


ISTA PHARMACEUTICALS
Launched in Japan by Tanabe Seiyaku Co, Ltd as TALION™.
Systemic indication for allergic rhinitis, urticaria, pruritus
associated with skin diseases (eczema/dermatitis, prurigo,
pruritus cutaneous).
Bepotastine Besilate
Marketed Compound with Significant History of Safe Use
Bepotastine Besilate
Marketed Compound with Significant History of Safe Use
1.
Talion Package Insert, Tanabe Seiyaku Co, Ltd, 2000.
2.
Data on file.Senju Ltd. PSUR
More than 850 million patient uses since 2000
54


ISTA PHARMACEUTICALS
Bepotastine Besilate
Multiple Mechanisms of Action
Bepotastine Besilate
Multiple Mechanisms of Action
Specific H
1
receptor antagonist
Lacks significant activity for other
receptors associated with
potentially undesirable side effects
Stabilizes mast cells
Inhibits eosinophil terminal
differentiation by suppressing
IL-5 production
IL-5 is a key factor in promoting
eosinophil activation and
eosinophil-mediated inflammation
Inhibits LTB-4 induced itch
1.
Williams, et al. CRMO 26(10), 2010: 2329-38
H1
H3
alpha 1
alpha 2
beta
D2L
5-TH2
M
Bzd
55


ISTA PHARMACEUTICALS
ISTA's Key Constituency
20,000+ US-Based Physicians
ISTA's Key Constituency
20,000+ US-Based Physicians
Ophthalmologists
Optometrists
Allergists
Physicians write prescriptions for ISTA products that are filled
by patients at drug stores, pharmacies, clinics, hospitals,
government agencies, etc.
56


ISTA PHARMACEUTICALS
Sales and Marketing
Capabilities
Sales and Marketing
Capabilities
ISTA has a strong, direct sales force of ~165 people calling on 20,000+ US
ophthalmologists, optometrists and allergists
For the last twelve months the sales force has generated >$160 million in
revenue or ~$1 million in revenue per sales territory manager
In addition, the Company has ~45 employees dedicated to various other
sales and marketing functions, bringing the total number of sales and
marketing employees to ~210 or roughly 62% of the Company’s 340 total
employees
57


ISTA PHARMACEUTICALS
ISTA’s Key Patents and
Applications
ISTA’s Key Patents and
Applications
58
PRODUCT(S)
PATENT(S) AND EXPIRATION
KEY CLAIM(S)
BEPREVE
BEPOMAX
BEPOSONE
ISSUED
Exp: Dec 2017 , filed for extension to Sept
2019
Bepotastine API and methods of
mfg.  (composition of matter for
Bepotastine besilate)
APPLICATION
Estimated Exp:  July 2023
Aqueous formulation
BEPOMAX
APPLICATION
Estimated Exp: October 2031
Formulation and use
BEPOSONE
APPLICATION
Estimated Exp: January 2032
Formulation and use
PROLENSA
APPLICATION  (recently allowed)
Estimated Exp:  Jan 2024
Formulation
APPLICATION
Estimated Exp: Jan 2024
Formulation and method of use
Bromfenac adjunctive
therapy
APPLICATION
Estimated Exp:  Feb 2029
Method of use in AMD and ocular
vascular/retinal disorders (also
covered by PROLENSA patent apps)
ISTALOL
ISSUED
Exp: Nov 2018
Method of use in eye drops
T-PRED
APPLICATION
Estimated Exp:  April 2025
Formulation and method of use