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Investments in Ophthalmology

What’s new, hot, and trending in 2019

Ophthalmology is an exciting field to invest in, especially with the unfolding of new developments and opportunities in 2019 and beyond. With the help of Michael Lachman, founder and president of EyeQ Research, we’ve rounded up some investment trends and opportunities to look out for this year. 

Gene therapy: What’s new?

Ophthalmic technology stocks have gotten off to a strong start in 2019, driven primarily by strategic developments for gene therapy companies. Most of the gains for the ophthalmology sector resulted from the announced acquisitions of Spark Therapeutics and Nightstar Therapeutics by Roche and Biogen, respectively. MeiraGTx’s shares also moved higher following an announced partnership with an investment from Janssen Pharmaceuticals (J&J). 

Of course, it’s hard to predict the next big acquisition or partnership in the ophthalmic gene therapy space. Companies that plan to announce early stage clinical trial results in ophthalmic gene therapy programs this year include AGTC, MeiraGTx and REGENXBIO.

Alcon strikes out on its own

A major ophthalmic investing event in April was the spin-out of Alcon from Novartis, enabling a pure-play investment in this ophthalmic market leader for the first time in nearly a decade. The Alcon investment thesis is based on revenue growth driven by multiple product lines, including premium IOLs, vitreoretinal systems, contact lenses and over-the-counter (OTC) dry eye products. 

This year, Alcon plans to submit to the Food and Drug Administration (FDA) for approval in the U.S. of three new intraocular lens (IOL) systems, including the PanOptix trifocal (Alcon, Geneva, Switzerland) IOL and a new extended depth of focus (EDOF) IOL. In addition to developing new products internally, Alcon has also been active in acquiring new technologies, including recent acquisitions of Tear Film Innovations, TrueVision Systems and PowerVision. 

The Alcon investment thesis is also driven by margin improvement through a favorable product mix, productivity and efficiency, and leverage of existing infrastructure. Of course, these positive investment characteristics come at a price, and Alcon already trades at a premium to its peers.

STAAR takes the limelight

Another ophthalmic device company with possible important milestones this year is STAAR Surgical. The company could benefit from U.S. approval of its EVO Visian ICL, which has performed well in Asian markets. STAAR plans to submit for CE mark approval of its EDOF IOL to address presbyopia by the middle of this year.

Aerie is making major moves

One of the highest profile ophthalmic product launches this year was the US launch of Aerie Pharmaceuticals’ Rocklatan for glaucoma and ocular hypertension. The stock peaked in July last year upon the announcement of early FDA acceptance of the company’s new drug application (NDA) submission. Aerie’s stock regained some lost ground in anticipation of FDA approval in earlier this year, but gave back those gains following approval. 

Investors hope that sales of this product will drive a rebound in the stock. Aerie continues to make progress toward regulatory approval in Japan of netarsudil ophthalmic solution (Rhopressa in the U.S.), having initiated a Phase 2 clinical trial in March. 

Aerie’s stock performance over the past year illustrates the fact that it is sometimes more rewarding to own stocks heading into events, such as product approval decisions and clinical data announcements, since they can sell off following achievement of such milestones. With that in mind, it is useful to keep an eye on anticipated upcoming FDA approval decision dates.

Kala Pharmaceuticals was expecting an FDA approval decision in August for its dry eye product candidate, KPI-121 0.25%, and expected to announce topline results from its STRIDE 3 trial in Q4. Clearside Biomedical anticipates an FDA approval decision in October for XIPERE for uveitis.

More to look out for

Additional news related to late-stage ophthalmic development programs could come from Molecular Partners, which, in collaboration with its development partner Allergan, has key milestones this year in its age-related macular degeneration (AMD) and diabetic macular edema (DME) programs involving Abicipar (DARPin therapy). 

Allergan plans a biologics license application (BLA) filing for neovascular AMD in H1-2019, and initiation of a Phase 3 trial in DME in H2-2019. Separately, in H2-2019, Aldeyra Therapeutics plans to announce Phase 3 results for Reproxalap for noninfectious anterior uveitis, and possible initiation of the first part of a Phase 3 trial involving ADX-2191 for proliferative vitreoretinopathy.

This year looks to be a year of many interesting developments and opportunities in ophthalmology, and investors can potentially make good gains from smart investments.

CAKE Magazine Issue 03: The ebook version (The 'Haute Couture' Issue, ESCRS 2019 Edition)

CAKE (Cataract – Anterior Segment – Kudos – Enlightenment) is The World’s Second Funky Ophthalmology Magazine, and Asia-Pacific’s Most Delicious Magazine on the Anterior Segment. CAKE Magazine is published by Media MICE Pte Ltd (Singapore).

Michael Lachmann

Michael Lachman

Michael Lachman is the founder and president of EyeQ Research, a consulting partner for strategic transactions in eye care. EyeQ Research provides consulting services to innovators and investors in eye care, including financial modeling and business valuation, proprietary market research, due diligence, and strategic advisory. Previously, Lachman was a managing director and equity research analyst with ThinkEquity Partners, healthcare analyst with SAC Capital Advisors, and a medical device analyst with Hambrecht & Quist, where he received a number one ranking in medical industry stock picking in the Wall Street Journal All-Star Analyst Survey. Lachman worked for five years in business development for Johnson & Johnson, and for seven years in marketing and R&D with Baxter. Email: michael@lachmanconsulting.com.