The OIS Index, a composite of ophthalmic growth stocks, was introduced at OIS@AAO. The purpose of the OIS Index is to provide a tool for tracking the investment performance of our industry, in absolute terms and in comparison with the broader biotech and medical device industries, and the stock market as a whole. My firm, EyeQ Research, has partnered with the Ophthalmology Innovation Summit to create and manage this stock index.
The components of the OIS Index are publicly traded small- and mid-cap growth companies in ophthalmology that derive at least half of their value from ophthalmic products and technology. The index was launched on October 1, with a base value of 1,000. The index is initially weighted about 70% biopharma and 30% ophthalmic device, based on both number of companies and company valuations. Company market caps range from $5 million to $3 billion, with a median of $170 million. Performance of the index will be updated on a regular basis on the OIS website and in OIS/Healthegy media, with the goal of providing additional context for reporting on industry news and developments.
The OIS Index is market-cap weighted, giving more weight to companies with higher market valuations. But like a lot of market indices, including the industry benchmark NASDAQ Biotechnology Index, the largest companies are capped to prevent them from dominating the index. In the OIS Index, the largest companies are capped at 10% of total index value. The OIS Index will be updated and re-balanced quarterly, adding new companies that have gone public, removing companies based on M&A transactions, and adjusting share counts based on stock issuances, buybacks, and splits.
The OIS Index showed strong performance over the six months between April 1 and October 1, based on the October 1 index composition and historical stock prices. Over this period, the OIS Index was up 22%, compared with a 19% gain for US medical device stocks, 11% for the NASDAQ Biotechnology Index, and a 6% gain for the overall US stock market. The largest positive contributors to index performance over this period were Aerie Pharmaceuticals, Glaukos, Spark Therapeutics, and Clearside BioMedical. Over a longer 12-month time horizon beginning in October 2015, performance of the OIS Index falls between the biotech and medical device indices, which might be expected for an index that contains a mix of biotech and device stocks.
Contributed By Michael Lachman
Michael Lachman is President of EyeQ Research, which provides market research, analytics, and strategic advisory to ophthalmic companies and investors.