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OIS Index Follows the Stock Market Lower in December

OIS Index Follows the Stock Market Lower in December

The OIS Index declined 11% in December, marking the fourth month in a row in which ophthalmic stocks lost value. For the month, the overall US stock market as measured by the Russell 3000 Index declined 9.5% and the NASDAQ Biotechnology Index 11.3%. A composite of US medical device stocks slightly outperformed the other benchmarks, declining only 7.7%. Declining stocks in the OIS Index outnumbered advancing stocks, 29 to six.

Positive Contributors

The largest positive contributor to the OIS Index performance in December, and the largest percentage gainer as well, was UNITY Biotechnology (+1.3% contribution to index performance, stock up 26.4%). The stock continued an upward move that began in mid-October, which followed a steep drop in the weeks prior to that, finishing the year within 2% of its May 2018 IPO price.

The second largest positive contributor to OIS Index performance in December was Carl Zeiss Meditec (+1.1% contribution to index performance, stock up 12.1%). Zeiss was driven by a strong report of financial results for 2018.

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

  • GenSight Biologics (+25.2%, following a 59.3% gain in November), which announced positive results from its Phase III REVERSE clinical trial of GS010 for the treatment of Leber hereditary optic neuropathy.
  • Imprimis Pharmaceuticals (+20.3%), which changed its name to Harrow Health at the beginning of 2019.

Negative Contributors

The largest negative contributor to OIS Index performance in December was Bausch Health Companies (–2.8% contribution to index performance, stock down 24.2%). The stock moved lower following the December 12 announcement that Bausch Health was acquiring substantially all the assets of Synergy Pharmaceuticals out of bankruptcy. The deal is valued at about $200 million plus assumed liabilities and brings to the company gastrointestinal products that it says are synergistic with Bausch’s Salix Pharmaceuticals business.

Ocular Therapeutix (–0.9% contribution to index performance, stock down 40.2%) had been a top performer in November (+34.3%) in anticipation of the December 3 announcement of FDA approval for DEXTENZA (dexamethasone ophthalmic insert) for the treatment of ocular pain following ophthalmic surgery. However, these gains were erased in the two weeks following FDA approval.

The largest percentage decliner in December, but with a smaller impact due to lower weighting within the OIS Index, was Applied Genetic Technologies Corporation (–61.6%). The stock declined following the announcement of disappointing Phase I/II clinical trial results for its investigational gene therapy for X-linked retinoschisis (XLRS) due to mutations in the RS1 gene, and termination of the company’s collaboration agreement with Biogen.

Two additional stocks with large percentage declines in December have been removed from the OIS Index during the January 1 quarterly update of the index. The market capitalizations of both companies have fallen below $10 million. They are:

  • Presbia, which declined 57.5% in December and lost about 90% of its value over the course of 2018. In October, the FDA requested additional information regarding Presbia’s premarket approval (PMA) submission for its Microlens device. Presbia says it expects that will delay approval of the corneal inlay for presbyopia until at least Q4 2019, a full year later than previously projected.
  • Ohr Pharmaceutical, which declined 42.7% in December and lost about 95% of its value during 2018. Most of this decline came in January 2018 following disappointing results for squalamine for wet AMD. Last week, Ohr announced it would merge with NeuBase Therapeutics of Pittsburgh.

OIS Index Quarterly Update

With the January 1 quarterly rebalancing, Aerpio Pharmaceuticals has been added to the OIS Index. Aerpio is focused on advancing first-in-class biopharmaceutical treatments for ocular diseases. The company’s lead product candidate, which seeks to achieve vascular stabilization in diabetic eye disease by activation of the Tie2 pathway, is currently in a Phase IIb study for the treatment of non-proliferative diabetic retinopathy.

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 January 1, 2019, the OIS Index stood at 803.13.

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

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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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