The OIS Index returned to four-digit territory in May, surpassing 1,000 for the first time since the index was launched in October 2016. The OIS Index was initially set to 1,000 on October 1, 2016, and over the ensuing 20 months, US stocks have gained 30% in value and other developed markets have gained more than 20%. But several ophthalmic pipeline setbacks in late 2016 and early 2017 sent the OIS Index to a low of 800 four months after its inception, and it has taken the following 16 months for the index to dig out of this hole and return to its initial level. The index reached 1,009 on May 30, before dropping just below 1,000 on May 31.
The strong performance of the OIS Index in 2018 continued into May, with a gain of 7.9% on the heels of a 5.2% gain in April and a 4.4% gain in March. Ophthalmic stocks have far outperformed key market benchmarks over the past three months.
The NASDAQ Biotechnology Index gained 4.7% in May, while the overall US stock market, as measured by the Russell 3000 Index, gained 2.6%. A composite of US medical device stocks gained 5.1%.
For the three months ended May 31, the OIS Index gained 18.6%, whereas medical device stocks gained 7.7% and the biotechs and broader US market gained less than 1%. Among the 33 stocks in the OIS Index, there were 16 advancing stocks that increased by an average of 16% during the month, 16 declining stocks that fell by an average of 11%, and one stock that was unchanged.
The largest positive contributor to OIS Index performance in April was STAAR Surgical (+5.2% contribution to index performance, stock up 83.1%). The stock jumped 26% immediately following the company’s strong earnings report on May 2 and tacked on an additional 41% over the rest of the month. Revenue growth was driven by the EVO Visian ICL across key international geographies, and STAAR is now projecting revenue growth of close to 20% for 2018.
Omeros Corp. (+3.1% contribution to index performance, stock up 42.3%) was the second largest contributor to the index in May, following a 28.5% gain in April that was driven by extension of Medicare pass-through status for OMIDRIA (phenylephrine and ketorolac injection for use during cataract/IOL surgery). The stock’s surge in May was likely driven by progress in clinical development programs outside of ophthalmology.
The largest negative contributors to OIS Index performance in May were Apellis Pharmaceuticals (-1.1% contribution to index performance, stock down 15.4%) and Clearside Biomedical (-0.8% contribution to index performance, stock down 19.1%). Both stocks were top positive contributors as recently as March.
Clearside declined by 32% on the last day of the month following the announcement of “positive top-line results” from the Phase II TYBEE trial evaluating suprachoroidal CLS-TA used with intravitreal Eylea (aflibercept, Regeneron) in patients with diabetic macular edema over a six-month evaluation period.
Investors, however, did not interpret the results as positive, because the control arm of the study (Eylea alone) delivered similar efficacy as Clearside’s combination therapy, with a cleaner adverse event profile related to intraocular pressure and cataract formation.
The OIS Index is a composite of ophthalmic growth stocks that 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 June 1, 2018, the OIS Index stood at 996.66.
Michael Lachman can be reached at michael@EyeQResearch.com.