A Rundown of a Record-setting OIS
[creativ_pullleft colour=”light-gray” colour_custom=”” text=”Episode 066″]
The Ophthalmology Innovation Summit hit it big in Las Vegas prior to the industry’s American Academy of Ophthalmology Annual Meeting. With close to 1,000 registered attendees, OIS@AAO brought innovators together with both public and private investors as well as corpo-rate leaders of our dynamic sector. OIS Podcast walks through the agenda, hitting upon the highlights that include comments from OIS and industry leaders.
Tom Salemi: Hello everyone, and welcome back to the OIS Podcast. This is Tom Salemi, your host. We are one week removed from OIS@AAO in Las Vegas. It was a fantastic day. We recorded 974 registered attendees, which is a record by far, the biggest OIS we’ve enjoyed. Congratulations to co-chairs Emmett Cunningham, Bill Link and Gil Kliman for helping us to put on a show. Congratulations to the OIS staff that worked so hard to get it all together. The day started with some breakfast breakout sessions that we’ll be summarizing for you in an upcoming publication. Keep your eye out for that. And also, we’re going to start producing content from the day itself, including interviews that I conducted with some of our selected leaders in ophthalmology as well as the on goings on stage, including 36 company presentations, panels, interviews, plenaries. We have it all. So go to ois.net, keep an eye on the content flow there, or just sign up for the Eye on Innovation Newsletter. Again, go to OIS.net, give us your email, and you will be kept up to date on what is available. And we’re going to use this podcast a little differently this week. Instead of sitting down with one person, one leader in ophthalmology, we’re going to visit with them all, at least the ones who were on stage at OIS@AAO. We’ll give a rundown of the entire day, including Brent Saunders’ keynote address. Brent Saunders of Allergan gave a great discussion about innovation in the pharma industry. We’ll wrap up with the Masters of the Universe panel that traditionally ends OIS, and included senior executives from Alcon and Allergan and J&J and Santen and Valeant and Zeiss. So stay tuned for this entire wrap-up of the OIS agenda. But again, if you want to hear everything, go to OIS.net once that content becomes available. Emmett Cunningham of Clarus Ventures, who of course is the founder and co-chair of the OIS events gave his state of the ophthalmology industry. He’s done this before OIS@AAO for every year, and it’s always a nice summary of what’s transpired the year before. In this presentation, Emmett focused, as he should, a lot on clinical trial advances of companies like Ophthotech and AGTC and Biogen and Foresight Vision 4, a lot of advances there in companies both big and small. He hit upon the FDA approvals including AccuFocus’ receipt of approval for the Kamra Inlay, and AccuFocus later in the day had announced that it had performed 1000 procedures using Kamra, so it’s really making great progress. And I actually had a separate interview with Nick Tarantino of AccuFocus to discuss their success. Emmett hit upon the milestones that we’re seeing on the regulatory front. Revision filing a PMA, Transcend filing a PMA. And then of course he slipped into financing, which is always something that we need to keep an eye on. Venture investing in life sciences overall is up 30%, and as Emmett pointed out, ophthalmology is benefitting from that increase. Let’s listen to what he has to say.
Emmett Cunningham: If you look at ophthalmology generally, the financing has been pretty stable at about 400 to 500 million per year for a long time. That’s comparable to the NEI, comparable to a large company like Alcon’s annual budget. So you can see basically NEI, Venture and Alcon is a third, a third, a third. And then there are how many Alcon equivalents out there? The vast majority of funding for innovation, at least in our country, is non-governmental. It’s private funding. You do note the small circle here. There was only one device company in ophthalmology invested in device. Device companies are under a little bit of pressure, and investing in that subsector, if you will, has been down this year. We hope it will come back in subsequent years.
TS: We followed up Emmett’s talk with our company presentations. Again, overall, we had 36 companies presenting that day. Many of them were broken up into categories, including drug delivery, biopharma, medtech, and digital. Later on in the day we had a public company showcase for the first time, where we highlighted some of the more advanced startups in ophthalmology, companies like Aerie and Spark, which even though it was founded only 2 years ago, was able to go public this year and is doing quite well in the public markets and in the regulatory front as well. Following the company presentations which again will all be available on OIS.net, we had our OIS Ophthalmology Innovator’s Award Presentation. We presented the trophies to Dr. Dan Durrie and Tom Frinzi of WaveTec. Tom of course has been a frequent guest at OIS. Both men have, as a matter of fact. And they are honored for their ability to not only identify the WaveTec opportunity, but turn things around when things got a little difficult for WaveTec early on. Tom Frinzi, interviewed by Dick Lindstrom talks about when he first came on as CEO.
Tom Frinzi: We redesigned the technology because talking to our customers, we realized two things. We weren’t consistent with our measurements, and we weren’t very accurate with our measurements. So we went about challenging the R&D group, and they, under Craig Bender’s leadership, really rose to the occasion and got the technology right. At the same time, docs were telling us they didn’t like our business model, so we revamped the business model. We ultimately took that as an opportunity to rebrand the technology, brought in some new blood and some new energy. And lo and behold, within 15 months we reintroduced ourselves to the marketplace. And from that point forward, which was the AAO of 2011, we had quarter over quarter growth every quarter until the time we did the transaction with Jeff and Alcon. So it was a great turnaround story. But sometimes you’re just lucky to be in the right place at the right time, and I think I was.
TS: The deal with Jeff and Alcon of course refers to WaveTec’s acquisition by Alcon, which was announced last year at OIS@AAO. Alcon now is selling WaveTec’s ORA system, which is a guidance system for cataract surgeons implanting IOLs. Dan Durrie, who really founded the technology and the company and reached out to Bill Link to get the company together, explained how doctors, surgeons really came together to make sure that WaveTec’s system, called ORA now, called ORange then, found its way and righted itself so it could become a valuable piece, a valuable tool for cataract surgeons.
Dan Durrie: It was such a good group effort. And Tom had mentioned certainly we had the investors and we had the team internally, and Tom’s leadership that is coming in. But we really had a great group of clinical investigators. I mean they wanted to help on this. They were very critical. I remember Marie Scott, just to point somebody out who, if we could make Marie happy, the company was going to succeed. And she admitted it. And it was one of those things. The feedback that says this is going to work, but I don’t like this, and I don’t like this, and here’s how I want to make it better. And they showed up for all of the conference calls. And so it really was this team effort of ophthalmologists really trying to get better results for their patients. They saw it. But they really liked working together because it wasn’t just one person’s idea. It was really a group of very solid people that were coming up with the ideas that made it where it is today.
TS: We were very fortunate to have Brent Saunders, the President and CEO of Allergan give the plenary address. Saunders of course is helping make some headlines lately with Allergan’s discussions with Pfizer about a possible combination. And he opened his speech in a disappointing fashion, informing all that he couldn’t speak a word about Allergan’s talks with Pfizer, but he more than made up with that with a data drive speech outlining the state of innovation in pharma and medtech. By his measure, we’re entering a golden age of innovation in ophthalmology. And we’re due to see more success stories like WaveTec. Let him explain why.
Brent Saunders: The science is starting to explode. And we’re seeing great outcome and great understanding of biology. We’re also starting to see the crossover of drugs and device. You’re starting to see things that were big boxes like WaveTec, you know, being reduced to simpler things. Technology, IT, everything is starting to merge together to create incredible opportunities for us. And so when we look at just some of the representative sample of partners that we have looked at, Molecular Partners for the DARPin platform, for a whole suite of biologic products to work in retina disease. AqueSys to change the way glaucoma can be managed in patients. Oculeve I already mentioned. And then Mometagen, a new molecular entity for dry eye. And so again, it’s about tapping into this wonderful ecosystem of inventors with great ideas and working with customers to bring them to life. And so I’ll end with our commitment to this space. Allergan was founded as an eye care company. It’s an area of healthcare that I think is very special, even though I’ve only been involved with it for almost 5 and a half years. I don’t have the tenure of some of the folks that were mentioned in the last presentation. But I recognize how lucky I am to be a part of this wonderful ecosystem that really has a profound impact on people’s lives. And so it’s important for me to say that Allergan is absolutely committed to eye care. We are absolutely committed to our science and advancing our ideas, but also to all of you as innovators. And we want to be a vibrant part of this ecosystem, and we want to help shepherd through the next golden age of innovation as all of you work to bring great ideas to patients.
TS: The afternoon continued with presentations by Dr. David Park. He is of AAO, of course, and Dr. Paul Sieving of NEI. Both gave their regular reports on their organizations’ advances in ophthalmology, delivering more good news to attendees. And then we visited with Alcon, where both Laurent Attias and Franck Leveiller of Alcon gave an update of their workings with Google. The pair talked about the deal that they signed last year with Google, sort of early discussions focused on the Smart Lens for glucose monitoring, but they’re also working on IOLs and contacts that can accommodate for distance, for vision, long term and short. The glucoLens is in the clinic, and they’re looking at other opportunities to measure other substances that can be found in the tear film.
Franck Leveiller: Strategically, what we wanted to do is to understand how to better solve presbyopia. So obviously you know that Alcon has invested one of their area in all the light splitting. So whether it’s multi-focality, whether it’s extended depth of focus, or some of these small aperture lenses that we’ve seen out there, that’s a very strong area of really trying to provide solutions for the presbyopic patient. Secondly, obviously we’ve heard at this meeting a lot of interest on the accommodative side, and obviously there’s products that are already marketed and new products that we saw. That’s a second area. And then the third area which we wanted to therefore leverage some of the Google capabilities that Franck described is really the ability to now marry some of our learning in lenses that have been for many, many years, as well as some of the electronics. So this was the strategy of how to tackle presbyopia in these three pillars: the light splitting accommodation, and then electronics.
TS: That was Alcon’s Franck Leveiller giving a summation of the Alcon-Google relationship, which continues to be exciting to watch. Next up, we went back to early stage ventures. The panel, Protecting and Monetizing IP, a Primer for Early Stage Entrepreneurs reviewed many of the patent pitfalls facing inventors. OIS audience members got expert and first-hand advice from Casey McGlynn, of course a partner at Wilson Sonsini, John Shimmick, a patent attorney also from Wilson Sonsini sat on the board, along with Mark Blumenkranz and Reza Zadno and Dick Lindstrom, all three who are well known in ophthalmology circles all three who have contributed mightily to early stage operations and innovation. So it was a panel that really drilled down on the necessity of protecting your IP. Next we heard from John Norris of Silicon Valley Bank. John was his usual whirling Dervish self, presenting a complete overview of the private financing scene. In his report, John told attendees that VC commitments to tech and healthcare companies through three quarters are almost 2014 numbers.
John Norris: 2015 is really set up to be the biggest dollar invested into healthcare and technology companies in venture capital since 2000. And you can see on the bottom the percentage for biopharma sort of staying firm at 12%, even with bigger dollar amounts, device falling down a little bit. So people are saying, Is device investing going down? And really, the answer is no. It’s just dollars invested into the sectors, all other sectors are going up, so healthcare as a percentage is going down a little bit. And so if you really look at it on a yearly basis since 2009, you know, somewhere around 2.6 billion dollars is invested into the sector, into companies on a yearly basis. And through Q3 it’s sort of looking like it’s right on line.
TS: Joe Gilliam of JP Morgan followed up with a report on the public markets, saying that while many sectors have shown flat growth in recent years as far as stock prices are concerned, healthcare has been an outlier. It’s really shown some strength. And Gilliam was able to drill down into the ophthalmology space, giving some promising hope for companies, device companies, and pharma companies in ophthalmology that have their eyes on the public markets.
Joe Gilliam: So now I look at it within the ophthalmic community, right? I think this is really interesting. It says a lot about many of the folks in the room. Over the last 2 years, on a relative basis, S&P 500 up 17%, the diversified and ophthalmic companies, so the larger names in the space, are up almost 30%. But the pure play, or relatively pure play ophthalmic companies – they’re listed in small font down below – are actually up 53%. Where this matters, I think, is that when we got into the 2008, 9 and 10 time frame, and many of the larger names in this room and as a part of this industry were consolidated, part of larger companies, public investors got a bit stale on this market and what’s going on in ophthalmology, right? The success of the companies listed here and several others that aren’t that were driving that 53% have brought those investors back into looking at ophthalmology as an attractive asset class. Right. They’ve seen M&A exits, which we’ll talk about. They’ve seen this success. And we saw it. I mean a good example was the Glaukos transaction in June. The number of investors and the amount of excitement that were around the high quality story that was coming out of this community was robust, and we saw it in the outcome of that deal and the subsequent trading performance.
TS: Joe’s presentation led into our new public company showcase. We heard presentations from Aerie, Ophthotech, Spark, Second Sight, and Alimera. In fact, the presentation in all of OIS were part of a webcast for the first time, which was kind of exciting. All these presentations, when you want to see them, they’ll be up on OIS.net. So again, go on OIS.net and sign up for our Eye on Innovation Newsletter, and we’ll let you know when those presentations will be up. Emmett Cunningham followed up with a conversation with several analysts who were covering ophthalmology. The Wall Streeters gave some very practical advice during the presentation. There’s a whole list of dos and don’ts that each had contributed to. In fact, I tweeted them out @OIStweets. If you’re on Twitter, go check it out. The analysts told the OIS audience that Wall Street investors and the analysts themselves are really bringing deep technical skill, scientific understanding to evaluating companies. So this really is a help because innovation is being charged, recharged constantly by these investors and these observers and these analysts who are able to recognize valuable assets when they see it. Adnan Butt of RBC Capital Partners kind of picked up on a theme Emmett Cunningham had introduced earlier about why things are different this time, why we aren’t necessarily fated to see a decline in biotech stocks.
Adnan Butt: Science doesn’t stand still. We get to tell your stories, and all of your stories are different. So innovation leads that path which can break through, quote-unquote, windows being closed. The audience that you talk to, it’s becoming increasingly more sophisticated. The investors that you go to are scientists half the time, like yourselves. They’re MD PhDs. They will not paint every company with the same brush. So if you have something new, if you have something unique, it will break through. And last but not least, IPO is not the only exit. We look at all these big companies. They’re talking about their basically pipelines being empty. Two of them recently have said so. So buy side realizes that as well, so hope is not lost. I think it’s different this time.
TS: And the end of the day belonged to the Masters of the Universe. For those on Twitter, you might have seen Jim Mazzo’s handiwork. He had hung a huge sign behind the panel of ophthalmology’s leaders depicting each in a sort of heroic fashion. On the panel were Jeff George of Alcon, Ari Kellen of Valeant/Bausch+Lomb, Ashley McEvoy of Johnson & Johnson, Ludwin Monz of Zeiss, and Naveed Shams of Santen. Jim Mazzo led them through a discussion just about how larger companies incorporate innovation inside their own operations. Saunders took the question and spoke about the inclusion of Oculeve’s Michael Ackerman into Allergan’s much larger fold. Ludwin Monz of Zeiss explained why his company is opening up R&D centers in Asia, while Jeff George of Alcon revealed how big a role acquisitions have actually played in Alcon’s innovation strategy.
Jeff George: You know, we’re relatively agnostic as well. We don’t have all the best ideas, certainly not. I mean if I look, in some areas there’s been terrific innovation within Alcon and surgical equipment with Centurion and the cataract refractive suite. I think that there hasn’t been enough innovation on the ophthalmic pharmaceutical side from what I would like to see over the course of the past ten years. So we’re very open to whether it comes internally or externally it matters less. I think ideally I’d probably like to see a 70-30, 60-40 split, slated towards the internal development just because I believe that’s the core competency of Novartis. We’re a science-based innovation company. If I look at our products today on the Novartis pharma business, which is, I don’t know, 30, 32 billion, I believe well over half of that has originally been developed inside of our labs. And so we really do believe in the importance of applied research and translational research. And I think at the same time we’re very committed to doing deals. I look at Alcon since last summer: we just signed another one today. We’ve done 11 deals. We’ve only announced 2 because I’m not really interested in sharing with Brent and Ari and everyone else what we’re doing. But most of them hit 2018 to 2025. But I’m really excited about the innovation that we’ve done with a number of companies are doing with a number of companies in this room, even though we haven’t disclosed those publicly, although, Bill, we did the deal with WaveTec that got feted a little bit earlier to day. And the Google stuff as well. But those are the only 2 we’ve announced. So I think a mix really at the end of the day, Jim, is important. And if you have a philosophy you’re going to do everything else in house, you’re going to fail. If you have the philosophy that, you know, in house doesn’t matter at all, I don’t know that that’s a recipe for mid to long term innovation either.
TS: Well, that’s it. That’s the rundown of OIS. Again, you’ll be able to see and hear all of what was said at the event on OIS.net. If you’re not signed up for the Eye on Innovation Newsletter, sign up and we’ll let you know as the videos come out. This seems like a good time to thank our exclusive sponsors of OIS. They include Abbott Medical Optics, Aerie Pharmaceuticals, Alcon, Alphaeon, Bayer, Aura, Santen, and Shire. And our premiere sponsors include Avedro and Genentech and Ophthotech and Spark. So thank you everyone who has attended OIS. It was one of the most successful events I’ve actually ever been to. The size, nearly 1000 people, was astounding. But the ability to network and connect was not compromised. It was definitely a busy, happy place, and I know a lot of people left very glad that they came. Thank you for listening to the OIS Podcast. Tune in next week and we’ll resume our tales of innovation. I’ll be speaking with one of the presenters at OIS, as a matter of fact. So thank you for listening to the OIS Podcast, and we’ll talk to you next week.