Market Rebounds in November; OIS Index Does Not

Market Rebounds in November; OIS Index Does Not

The OIS Index of ophthalmic stocks declined by 2.3% in November on the heels of a 17.7% decline in October, failing to participate in the market rebound that lifted most stocks following the October sell-off. During November, the overall US stock market as measured by the Russell 3000 Index gained 1.8% following its 7.5% decline in October. The NASDAQ Biotechnology Index gained 4.7%, and a composite of US medical device stocks gained 5.5%. Declining stocks in the OIS Index outnumbered advancing stocks, 20 to 15.

Positive Contributors

The largest positive contributor to OIS Index performance in November was Nightstar Therapeutics (+1.3% contribution to index performance, stock up 48.6%), following an October during which Nightstar declined by 50.6% and was the largest negative contributor to index performance. On November 12, Nightstar announced plans to initiate a Phase II/III expansion study of the XIRIUS clinical trial for gene therapy to treat X-linked retinitis pigmentosa.

The second largest positive contributor to OIS Index performance in November was Glaukos (+1.0% contribution to index performance, stock up 13.7%). During the month, the company reported positive Q3 results and raised revenue guidance for 2018.

Also contributing to OIS Index performance last month was KalVista Pharmaceuticals (+0.8% contribution to index performance, stock up 27.3%). Over the past four months, the stock has increased in value from about $9 to $24 per share. On November 12, KalVista announced an acceleration of the development plan for its oral candidate for a non-ophthalmic disorder, hereditary angioedema.

Other positive gainers in November, but with a smaller impact due to lower weighting within the OIS Index, were:

  • EyeGate Pharmaceuticals (+63.1%), which announced top-line clinical data and Food and Drug Administration approval for two Investigational Device Exemption submissions for its Ocular Bandage Gel (OBG) for punctate epitheliopathies.
  • GenSight Biologics (+59.3%), which announced at the end of October the initiation of a Phase I/II study of a combination gene therapy/visual stimulation treatment for retinitis pigmentosa.
  • Ocular Therapeutix (+34.3%), which moved higher in anticipation of the FDA’s approval for Dextenza (dexamethasone ophthalmic insert) for the treatment of ocular pain following ophthalmic surgery. The FDA issued its approval on Monday.

Negative Contributors

The largest negative contributor to OIS Index performance in November was Aerie Pharmaceuticals (–2.1% contribution to index performance, stock down 25%). On November 6, the company reported Q3 sales of Rhopressa (netarsudil ophthalmic solution) that were sufficient to support existing 2018 revenue guidance, but a higher than expected loss per share due to costs related to the product launch.

The second largest negative contributor to OIS Index performance in November was Carl Zeiss Meditec (–1.7% contribution to index performance, stock down 15.8%). There is no obvious driver for the recent decline that has taken the stock back to levels seen in June of this year. The stock is still up 23% over the past 12 months.

Clearside Biomedical (–1.1% contribution to index performance, stock down 72.9%) declined following the announcement that the primary visual acuity endpoint was not achieved in its Phase III SAPPHIRE clinical trial investigating XIPERE (suprachoroidal triamcinolone) used in combination with the intravitreal anti-VEGF agent EYLEA (aflibercept), compared with Eylea monotherapy, for the treatment of retinal vein occlusion (RVO). Clearside plans to discontinue development of combination therapy for RVO.

The OIS Index is a composite of ophthalmic growth stocks and tracks 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 overall stock market. The OIS Index was launched with an initial value of 1,000 on October 1, 2016; as of December 1, 2018, the OIS Index stood at 902.65.

Michael Lachman can be reached at Michael@EyeQResearch.com.

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