OIS Index Delivers Steadier Performance in January

In October, we launched the OIS Index, a composite of ophthalmic growth stocks, to track 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 stock market as a whole.

After a rough final quarter of 2016, during which the OIS Index declined in value by 17.2%, the index turned in a modest decline of –0.9% in January. During the month, half of the 32 stocks in the index increased in value, compared with only 20% of stocks gaining value during Q4 2016.

OIS Index – Three Month Performance

November 1, 2016 – January 31, 2017

For complete information about the OIS Index click here

Despite the steadier performance in January, the OIS Index still underperformed its comparative benchmarks. During January, the NASDAQ Biotechnology Index (NBI) gained 5.0%, a composite of US medical device stocks gained 6.8%, and the Russell 3000 Index, which represents the overall US stock market, gained 1.8%.

Drivers of Positive OIS Index Performance

The largest contributor to OIS Index performance in January was Spark Therapeutics (+2.1% contribution to index performance, stock up 26.4%). The stock rebounded in January to a level previously reached in August, September, and November of last year. On January 9, the company announced new four-year Phase I clinical data showing durability of effect of one-time administration of investigational voretigene neparvovec, and that the FDA had granted a request to amend the orphan drug designation for this compound to encompass all inherited retinal disease (IRD) caused by biallelic RPE65 mutations, which is aligned with the proposed indication.

The largest percentage gainer in January was ThromboGenics (+0.5% contribution to index performance, stock up 29.8%). The stock rallied on news that the company had enrolled the first patients in a Phase II, single-masked, multicenter exploratory study evaluating the safety and efficacy of two dose levels of THR-317 (anti-PIGF) for the treatment of diabetic macular edema (DME).

Other positive contributors to OIS Index performance in January were Glaukos Corp. (+1.6% contribution to index performance, stock up 20.2%) and Aerie Pharmaceuticals (+1.3% contribution to index performance, stock up 16.0%). Additional stocks with large percentage gains in January were TearLab Corp. (+ 21.2%) and NovaBay Pharmaceuticals (stock up 19.7%).

Pipeline Setback Drives OIS Index January Decline

The largest negative impact on the OIS Index in January came on the first trading day of the year, when Inotek Pharmaceuticals announced that the first, pivotal Phase III trial of trabodenoson for glaucoma did not achieve its primary endpoint. The stock was down 73.8% in January, resulting in a –2.3% impact on index performance.

Other than Inotek, the largest percentage decliner in January was Second Sight Medical Products (–0.4% impact on index performance, stock down 27.4%). During the month, the company announced a rights offering to existing stockholders, with proceeds to be used for funding ongoing development programs and for other corporate purposes. Ocular Therapeutix (–0.9% impact on index performance, stock down 21.6%) declined following the pricing of a secondary stock offering that raised $25 million.

Additional declining stocks in the index included Molecular Partners (–1.0% impact on index performance, stock down 16.9%) and Applied Genetic Technologies Corp. (–0.7% impact on index performance, stock down 22.5%).

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About The Author

Michael Lachman

Michael Lachman is President of EyeQ Research, which provides market research, analytics, and strategic advisory to ophthalmic companies and investors. Previously, he was a healthcare investment research analyst with Hambrecht & Quist, ThinkEquity Partners, and SAC Capital, and worked in business development, marketing, and R&D for Johnson & Johnson and Baxter.

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