“All eyes on 2021” might be an apt description to cap off the year, as 2020 and “business as unusual” was reviewed at the recent Ophthalmology Innovation Summit (OIS) event. And the future looks exciting — and optimistic — with current growth driven by new drugs, medtech and biotech innovations. OIS Chairman Dr. Bill Link kicked off the review, which had a stellar line-up of industry experts and key opinion leaders (KOLs) in their respective fields, and featured three presentations followed by panel discussions.
FDA approvals
This year, the U.S. FDA’s Center for Drug Evaluation and Research recorded 47 approvals for new molecular entities (NMEs) and new biologic drugs (BLAs) in 2020. This is in comparison with 48 approvals in 2019, according to Patrick Healy, co-founder of Trial Runners, a contract research organization.
Mr. Healy highlighted that 60% of the 2020 approvals had orphan designations. There was also a priority review designation for Horizon’s TEPEZZA® (teprotumumab-tbrw) for thyroid eye disease, which was approved in January 2020.
Besides TEPEZZA’s approval in January, other ophthalmology drugs approved this year were Kala Pharmaceuticals’ EYSUVIS for short-term dry eye treatment and Allergan’s DURYSTA, an IOP-lowering agent for glaucoma and the first intracameral biodegradable sustained-released implant.
Recordati Rare Diseases’ Cystadrops was approved in August. The cystine-depleting agent is indicated for the treatment of corneal cystine crystal deposits in adults and children with cystinosis.
This year also saw two ophthalmic device approvals, namely CooperVision, Inc’s MiSight 1 Day Soft Contact Lenses for Daily Wear and Alcon’s AcrySof IQ Vivity Extended Vision IOL. MiSight lenses are intended for slowing myopic progression in children aged 8-12. “The Acrysof IQ Vivity shows a decreased visual disturbance profile, which is a major upgrade in my opinion,” said Mr. Healy.
Overall, there were 64 ophthalmic 510k clearances received from October of 2019 to December 2020.
Private funding trends
Healthcare as a percentage of overall U.S. venture capital (VC) fundraising has increased significantly over the last three years, said Jonathan Norris, managing director (healthcare practice) at Silicon Valley Bank. Just to show the rate of growth, he said in 2019, healthcare venture capital fundraising reached a record of US$10.7 billion. However, it surpassed US$14 billion through Q3 of 2020. Equally significant are the figures in ophthalmology VC investments, with 2019’s showing USD$372 million in biopharma and US$308 million into ophthalmic devices. However, Q3 of 2020 saw US$291 million going into biopharma and quite a pullback in devices at US$111 million.
The top biopharma deals of 2019/2020 were Oyster Point’s project for dry eye at US$93 million and Graybug Vision’s US$80 million for wet AMD and macular edema. These two companies — and Tarsus, which has US$60 million invested for its demodex blepharitis treatment — have also gone public. Most of the top investments in ophthalmic devices were worth over US$30 million, on average.
Among the active early stage players in the series A deals and ophthalmology investment arena are Hatteras Venture Partners, Perceptive Advisors, Infocus and Visionary Ventures, along with a few Asia-focused investors. Mr. Norris also pointed to later stage players, companies like exSight Ventures, KKR, Falcon Vision, D1 Capital and Vivo Capital.
“You’re seeing a lot of activities out there, a lot of new players that I haven’t seen as much in the ophthalmology space. Overall, the healthcare venture sector is really active and ophthalmology is getting a good amount of the investment,” said Mr. Norris.
Public market highlights and M&A activity
Piper Sandler, executive director in healthcare investment banking Udit Patel, said at the time of reporting, that the public market was expected to end at an “all-time high,” showing major public indices like NASDAQ, S&P500 and Dow Jones closing high in late November, which demonstrates notable year-on-year growth, despite all that’s happened this year.
“The medtech and biotech sectors have outperformed the overall market, fueled by optimism and progress towards a vaccine for COVID-19, significant innovation and diagnostic tools,” Mr. Patel shared. Public ophthalmology-focused companies continue to outperform, with drug companies showing positive clinical trial results and biotech companies contributing significantly to the growth. Life sciences companies overall have raised over US$50 billion in capital thus far (at the time of review). The growth was not only in the greater number of deals, but also an increase in average deal size.
“There’s more to come. Over US$80 billion of M&A capital will be deployed over the next few months,” he said. Life Sciences IPOs have also significantly outpaced previous years. He showed the rolling average performance of biotech IPOs going at 110%. The class of 2020 IPOs currently represents US$111 billion in public market value. Crossovers and insider support were key success factors for this year’s biotech IPOs,” Mr. Patel pointed out. This translates to meaningfully higher valuation and after performance market for IPOs (that did crossover rounds). Ophthalmology saw six new public listings in the US [Graybug, Tarsus, Opthea, Lensar (spin-off) Gemini (SPAC reverse merger) and Ocuphire (reverse merger)]. What investors liked about the ophthalmology space is that “the companies tend to be at later stages with clinical data, markets are large and regulatory pathways are well-defined.”
Jump for joy: The OIS Year in Review showcased optimism in ophthalmology.
According to Mr. Patel, the criteria investors look for in IPO candidates included strong proof of concept via clinical data, competitive differentiation, and how that differentiation translated to commercial opportunity — while keeping in mind pricing and reimbursement perspectives. “The ophthalmology sector has caught the eye of public investors,” he said, citing the US$1.6 billion in capital raised by ophthalmology companies via follow-on offerings, mostly based on positive clinical readouts.
“We expect public investors to be interested in this space going forward,” he said as he pointed to medtech and biotech M&A activities seeing a slowdown. Mr. Patel also showed historical patterns over the last 100 years (based on Dow Jones) that demonstrated that a Democrat U.S. President usually showed 100% positive returns on the market. Overall, the 2021 outlook is positive — although that is dependent on issues like market volatility, U.S. Congress control, U.S. dollar weakness, and escalating COVID-19 cases.
Editor’s Note: OIS Year in Review, presented by Ophthalmology Innovation Summit (OIS), was held on 9 December 2020. Reporting for this story took place during the event.
