“The Long and Winding Road”

“The Long and Winding Road”
The March 14th meeting of the FDA’s Ophthalmic Devices Panel Advisory Committee, which was convened by the FDA to consider the pre-market application (PMA) for STAAR Survival’s toric implantable collamer lens (TICL) brought to my mind the Beatles song “The Long and Winding Road” from their 1970 album “Let it Be.”

The reason? It has taken STAAR a seemingly eternity to reach this point. To wit, this trial, which enrolled just 108 patients, was originally designed in 2002 and patient enrollment was completed in 2005. The TICL is approved in virtually every market around the world except the USA, which accounts for approximately 30% of STAAR’s annual worldwide revenue. It was first approved outside of the US in 2001.

The company had originally sought FDA’s marketing approval for the lens, which is also known as the Visian Toric ICL, in April 2006, but was stalled for many years as the FDA raised concerns about the integrity of the submitted data. The agency later placed on hold the company’s application for a two-year period starting 2007. In 2009 the FDA removed the hold, but added questions related to the patient data.

While there is no guarantee that the FDA will abide by the independent Ophthalmic Advisory Panel’s recommendation, industry pundits believe that the FDA will adhere to their decision and approve the product. Though final approval might take another few months, STAAR will soon be able to market and sell this in the US. In the rest of the world, the company estimates that about 40% of its total Visian units (toric and standard) and 50% of its total dollar sales are generated by the toric version.

So, “The Long and Winding Road” to FDA approval appears to be coming to a happy conclusion.

Another company, not so fortunate with the FDA’s approval process is privately owned, venture capital backed, Avedro, which was eagerly anticipating positive news from the FDA last month for its corneal cross-linking procedure.

In a press release dated March 18, 2014, Avedro announced that it had received a “Complete Response Letter” from the FDA regarding its New Drug Application (NDA) for their combination riboflavin ophthalmic solution and KXL System for corneal cross-linking. It stated that “the agency identified a number of areas in the application which require additional information.”

In other words, Avedro had received a diplomatic “no” to its application.

CEO, David Muller, added that “we plan on working closely with the FDA to resolve these issues as quickly as possible to make this important treatment available to patients in the US. While we do not yet have an estimate on how long it will take to resolve the issues, we are confident that we can adequately answer their questions.”

In an interview recently, Muller told me that he was “fully expecting an approval and was totally shocked” by the FDA’s decision.

Corneal cross-linking was first performed in Europe and received the CE Mark, without the need for a clinical trial, in 1998. It was broadly approved for all indications, whereas in the US the FDA has required Avedro to go through a rigorous multi-center trial that treated 400 eyes. In September 2013, the company submitted it and fully expected an approval in mid-March.

Corneal cross-linking addresses two underserved ophthalmic conditions—keratoconus and corneal ectasia—and patients outside the US can avoid these sight-threatening conditions by availing themselves of cross-linking technology. The company has indicated that it has performed over 75,000 procedures in the past two years, including patients in the US that are being treated as part of the company’s three Phase lll trials at over 100 sites in the US.

Avedro distributes its products in 62 countries throughout the world and the US is essentially the only major market where patients do not have access to this important technology.

An important negative consequence of this setback is that Avedro’s contemplated plan to do an initial public offering (IPO), will almost certainly have to be put on hold until the FDA approval is attained. The company appears to be in solid shape financially, having raised $43 million in its Series D preferred round just over a year ago. I estimate that since it was founded over eight years ago, Avedro has raised a total of about $83 million.

Speaking of IPOs, I was frankly taken aback when I saw that Presbia had recently filed an S-1 (securities registration statement), indicating that it is hoping to complete a public offering in the near term. It hopes to raise $90 million in this offering.

For those not familiar with the company, it has developed and is currently marketing a proprietary optical lens implant for treating presbyopia.

The reason for my utter surprise is that Presbia is a company that is still very early in its development phase. To wit, just 70 patients have been implanted so far, all have taken place in Italy and Greece in 2012. Interestingly, the company admits that “We did not commission these studies or design, review or oversee the implementation of their protocols,” and . . . has limited information with respect to these studies.”

In December 2013 Presbia received FDA permission to commence a staged pivotal clinical trial and will enroll a total of 75 subjects at up to six investigational sites in the United States. The company has a very long road ahead to attain final FDA approval, which it predicts in its IPO filing, will not occur until the first quarter of 2019.

I believe that may be a “best case” scenario, as virtually all medical device companies experience much lengthier recruitment times than they expect. In addition, the FDA approval road always seems to be bumpier than expected (just ask STAAR Surgical and Avedro about that!). My gut tells me that it will take at least a year or longer than Presbia is now forecasting.

So, why is this fledgling company going public so early in its corporate life? There may be several plausible explanations, but in my opinion the most likely reason is that the company has failed in its attempt to raise venture capital funds. Over the past few years, the number of venture capital firms financing early stage medical device companies has shrunk considerably. In addition, those that are still actively investing are shunning the early stage deals that have a long and expensive regulatory path ahead of them.

So, how will the company fare in its attempt to do an IPO? Hard to say for sure but I predict that they will not succeed in raising the $90 million they are targeting. That’s an awful lot of money to be raised for a company that has: (1) essentially an unproven product; (2) a management team whose CEO and executive chairman have no ophthalmic industry experience; (3) not demonstrated any notable success to date.

Editor’s Note: Larry Haimovitch is President of Haimovitch Medical Technology Consultants, a Mill Valley, California based consulting firm (www.haimovitchmedtech.com). He has followed the ophthalmology industry for over 30 years and closely focuses on the business aspects of the industry.

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