In October, we launched the OIS Index, a composite of ophthalmic growth stocks, to track the investment performance of our sector. Our goal is to highlight ophthalmology investment performance, in absolute terms and compared with broader biotech and medical device industries, as well as the stock market as a whole.
After a 17.2% decline in Q4 2016 and a modest decline of 0.9% in January, the OIS Index gained 7.4% between January 31 and March 1. Over this period, 22 of the 32 stocks in the index increased in value, compared with only half of stocks gaining value during January. The OIS Index was launched with an initial value of 1,000 on October 1; as of the market close on March 1, the OIS Index stood at 881.91.
OIS Index – Three Month Performance
December 1, 2016 – March 1, 2017
Over the past month, the OIS Index performed generally in-line with its industry benchmarks. While the OIS Index gained 7.4%, the NASDAQ Biotechnology Index (NBI) gained 8.2% and a composite of US medical device stocks gained 6.7%. All three of these medical technology indices outperformed the broader stock market over this period. The Russell 3000 Index, which represents the overall US stock market, gained 4.9%.
Drivers of Positive OIS Index Performance
The largest contributor to OIS Index performance in February was Carl Zeiss Meditec AG (+1.9% contribution to index performance, stock up 18.3%). The stock appreciated steadily after results from the company’s first fiscal quarter of 2016/2017 were reported on February 10.
The largest percentage gainer in February was EyeGate Pharmaceuticals (+0.2% contribution to index performance, stock up 79%). The stock rallied on news that the company had entered into an exclusive, worldwide licensing agreement with Valeant Pharmaceuticals involving the EyeGate II Delivery System and EGP-437 combination product candidate for the treatment of postoperative pain and inflammation in ocular surgery patients.
Other positive contributors to OIS Index performance in January were Omeros Corp. (+1.5% contribution to index performance, stock up 25.3%), Ocular Therapeutix (+1.1% contribution to index performance, stock up 33.2%), and Glaukos Corp. (+1.1% contribution to index performance, stock up 11.1%).
OIS Index Headwinds from AMD Pipelines
The largest negative impact on the OIS Index in February came from Ophthotech Corp. (–0.7% impact on index performance, stock down 21%), which on February 28 reported a wider than expected Q4 loss. In December of last year, Ophthotech’s announcement that Fovista had not met the primary endpoint in two pivotal Phase III trials in wet age-related macular degeneration (AMD) impacted index valuation by about 7%.
The largest percentage decliner in the OIS Index in February was Ohr Pharmaceutical (–0.4% impact on index performance, stock down 41%). On February 14, the company announced a temporary suspension of its Phase III trial for squalamine for wet AMD.