OIS Index Declines Despite Positive Milestone Achievements

OIS Index

December was a month of positive milestones for key companies in the OIS Index. On December 18, more than two months before its February 28 Prescription Drug User Fee Act (PDUFA) date, Aerie Pharmaceuticals announced Food and Drug Administration approval of Rhopressa (netarsudil ophthalmic solution 0.02%) for glaucoma and ocular hypertension. On December 19, three weeks before its January 12 PDUFA date, Spark Therapeutics announced FDA approval of Luxturna (voretigene neparvovec-rzyl) gene therapy for inherited retinal disease. Also in December, Glaukos Corp. announced the Premarket Approval (PMA) submission for the iStent inject stent for use during cataract surgery, and the beginning of the US Investigational Device Exemption (IDE) trial for the iStent SA stand-alone procedure.

Despite these positive developments, all three of these stocks traded lower during December, as did the OIS Index overall. In December, the OIS Index declined by 3%, compared with gains of 1.5% for the NASDAQ Biotechnology Index and 0.9% for the overall US stock market as measured by the Russell 3000 Index, and a 2.4% decline for a composite of US medical device stocks.

Among the 31 stocks in the OIS Index, declining stocks outnumbered advancing stocks 21 to 10 during the month.

The largest positive contributor to OIS Index performance in December was Ohr Pharmaceutical (+0.9% contribution to index performance, stock up 119%), following a 39% gain in November. The stock surged after publication of a report on Seeking Alpha touting the high potential of Ohr’s Squalamine for wet age-related macular degeneration.

The second-largest positive contributor to the OIS Index in December was Second Sight Medical Products (+0.6% contribution to index performance, stock up 55%). Another top performer during December, but with a smaller impact on the OIS Index due to lower weighting within the index, was Presbia (+41%). The move in Presbia’s stock followed a December 14 announcement of operational and management changes, along with a financing event.

The largest negative contributor to OIS Index performance in December was Spark Therapeutics (–2.4% contribution to index performance, stock down 30%). Disappointing Phase I/II clinical data for the company’s gene therapy candidate for hemophilia A overshadowed the positive news regarding FDA approval of Spark’s Luxturna.

ThromboGenics (–0.8% contribution to index performance, stock down 26.4%) declined following discontinuation, due to slow recruitment, of the Phase II CIRCLE study of ocriplasmin for non-proliferative diabetic retinopathy.

2017 Performance Review

Despite a positive absolute return for the OIS Index during 2017 (+5.6%), the index underperformed the overall US stock market (+18.9%) and the biotech and medical device sectors (+21.1% and +30.3%, respectively).

The greatest drivers of OIS Index performance in 2017 were Omeros (+92%), Carl Zeiss Meditec (+47%), Aerie Pharmaceuticals (+58%), and STAAR Surgical (+37%).

The largest negative contributors during 2017 were Glaukos Corp. (–27%), AGTC (–63%), Ocular Therapeutix (–46%), and Iridex (–44%).

OIS Index Adds Two New Companies and Sheds a TEAR

With the January 1 quarterly rebalancing of the OIS Index, two companies that completed initial public offerings in Q4 were added, and one company was dropped, bringing the total number of companies to 32. Apellis Pharmaceuticals (NASDAQ: APLS), with a market cap of $1.09 billion, enters the OIS Index with the fourth highest valuation in the group. Apellis is developing novel therapeutic compounds to treat diseases of the retina, blood, and kidneys, through inhibition of the complement system.

Nightstar Therapeutics (NASDAQ: NITE), with a market cap of $379 million, enters the OIS Index with the 10th highest valuation among the 32 companies. Nightstar is developing novel one-time gene therapy treatments for rare inherited retinal diseases.

TearLab (OTCQB: TEAR; stock down 40% in December, down 93% in 2017), with a market cap of $3 million, has been removed from the OIS Index following delisting of the stock from NASDAQ.

The OIS Index is a composite of ophthalmic growth stocks which 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 January 1, 2018, the OIS Index stood at 874.31.

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