CEO Wolfgang Tolle joined VisionCare last year to move the company into the commercial stage. Now with long-term data and reimbursement in place, the firm is making a strong commercial push.
Tom Salemi: Hello, OIS Podcast listeners, this is Tom Salemi, your host. Thanks for joining us today on the Podcast. We’re going to talk a little medtech today. Had a chance to speak with Wolfgang Tolle. He is the relatively new CEO of VisionCare Ophthalmic Technologies. Wolfgang joined the company just under a year ago, but he of course is no stranger to ophthalmology, having spent time CEO of WaveLight, and then when it was acquired by Alcon, spending time at Alcon. So he brings a lot of commercial understanding to VisionCare at just the right time. VisionCare, of course, has been rolling out its IMT. It’s an implantable miniature telescope, IMT, that can help restore vision for patients with age related macular degeneration. So it’s really entering a market in need of a therapy like this one. It’s giving options not only to patients, but to cataract surgeons. And Wolfgang and VisionCare have had success with reimbursement, had success on the regulatory front. A couple of years ago, the FDA expanded its use for patients over 65. Previously it had been just patients over 75. So things seem to be really aligning for VisionCare, and Wolfgang can tell this story much better than I can. So I hope you enjoy this conversation with Wolfgang Tolle of VisionCare.
TS: Wolfgang Tolle, welcome to the Podcast.
Wolfgang Tolle: Thank you for having me.
TS: Pleasure to have you here. VisionCare is one of those medtech companies that I’ve enjoyed covering for a time. And it’s great to see a device that can really help people with late stage macular degeneration. I mean there’s so few options for them. You just joined the company last year. We’re going to get into that transition in a few minutes, but why don’t you just start off by bringing everyone up to date on the technology and sort of where you are in its commercial launch?
WT: Yeah. Thank you for giving me the opportunity. VisionCare has as its main product a so-called implantable miniature telescope, or IMT. It’s a surgically implanted device to address end-stage AMD in really its both dry and wet form of the disease. On the wet side, it has to be stable, so no injections for 6 months. But the device itself is FDA approved. It’s Medicare reimbursed, and really addresses end-stage AMD. As you know, when you have end-stage AMD, you lose your central vision. And what this device does, it’s a monovision concept. You implant the device into one eye. And it magnifies the image, in our case at 2.7 magnification, and displays the image then on the healthy part, on the remaining healthy part of the retina. Because you know, the central vision loss, you know, scars or something like that. And then you have a magnification. So in this one eye the patient sees much closer and these large scars essentially become very small, which means the patients can see again. And you do this on one eye and one eye only because you lose some peripheral vision, and then the other eye acts pretty much for the periphery. So it’s kind of a monovision concept not too dissimilar from monovision let’s say with Lasik or anything else. And the brain then has to adjust to the new vision afterward.
TS: What does the image look like? What does the vision look like? Is it a complete picture, full color, the whole bit?
WT: Yes, absolutely, the full picture. You have – the macula is kind of – it has a problem: you don’t have any central vision. And so you really have to imagine this whole image now being displayed on the remaining healthy part. And let’s say if you look at something and you lose your sense of vision, you see maybe the periphery. Let’s say you’re looking at someone’s face or a group of people. You don’t see anything in the middle. You see something on the periphery, and now this device is implanted in one eye, and now you see it much closer, and now you can see the faces again. You can see labels again. And so that really makes a huge difference in the patient base. In our study, which was a full PMA study, the vision gain was on average 4 lines of vision, which is of course significant. But probably more importantly, the quality of life improved significantly in these patients. These patients, as you know, typically have to live with a loved one or a caregiver. They really stay home. They’re often depressed. And after this implant, most of them really can see again in such a way that they can cook, they can see labels, they can read newspapers, yes with glasses, and they can have a complete change of life. And that’s really the big difference. And our label actually does include both the vision gain and the improvement in quality of life.
TS: It’s obviously difficult to put a price on such freedom, but we have to put a price on everything these days in healthcare. What’s the status of reimbursement? What are you being paid for?
WT: Yeah, and in many ways this is really an important question because in many with commercialization of this technology only starts now. The company has been around for a while. It took a long time to get the FDA approval. We also have to do two year follow up. We actually now have 5 year follow up data, which is excellent. But only since last year did we have what I would call appropriate reimbursement in place in both hospital and ASC settings. Before 2015, we did not really have access to ASCs. And ASCs are so critical in this industry, as you know. Eighty or 90% of cataract surgeries are performed in ASCs. So the average for 2016 now, and this is average across the country, is about $18,000 reimbursement for this device, and the device only. And then on top of that, you have an average reimbursement for the surgeon fee of about $1600. Of course in urban areas it’s much higher. So the way to look at this – I believe this is actually the second largest reimbursement in the industry, so it’s pretty expensive, but it’s fully reimbursed. And for the surgeon, it’s about two and a half to three times as much as a cataract surgery.
TS: Fascinating. And this is all Medicare? Private pay doesn’t come into this because the population is over 65?
WT: Yeah. The label is right now it’s over 65. It used to be 75 and older. Now it’s 65 years and older. And there’s a certain visual acuity and a couple of other critical elements in the label. But it’s very well aligned with the Medicare population. But Medicare Advantage and others tend to also pay it. It depends on the payer, but across Medicare we really now have tremendous experience with 2015 that the Medicare reimbursement functions very well across the entire country.
TS: And that was the 65 and older as opposed to 75 and older. That approval came by only a couple years ago. How big of a change was that to the company’s – the market size and the potential for the company?
WT: Yeah, that’s also a great question. It does of course increase the market size for us very nicely overall. But I think much more critical is actually to have the access to the ASCs with appropriate reimbursement, because before 2015 it was really just not profitable for any ASC to take on this procedure. And now it’s very, very appropriate for both ASCs and hospitals. In fact, we’re in the unusual position that the reimbursement is almost the same in hospitals as well as ASCs. We have a permanent NNJ code for our device. I should also say, by the way, that this is in a way a global market. This is not just a US market. We are focusing on the US market because we have all the things in place now, you know, the approval, the reimbursement, the sales structure, and so on and so on. But we also have CE Mark, Canadian approval and others, and we are commercializing OUS as well. We actually just very recently received our first reimbursement in the UK, so that’s new for us as well. The market, the way we look at this, is since it’s both dry and wet – of course on the wet side a stable form of it – is just about – it’s a large market. The population we estimate that could benefit from this device in the United States alone is about 200,000 people. And our market grows by 10% per year. So it’s very significant. In Europe, it’s roughly the same. In Asia, because of the population, simply, it’s in China, India and others, is much, much larger. But we don’t have any activities there yet. That’s something for the future. So the market size is quite, quite large overall. It’s a matter of capturing and finding the patients overall.
TS: And you mentioned you had long term data of up to 5 years. That’s terrific. What is that data showing?
WT: Yeah, that was published I think about 6 months ago. Dr. Boyer and several others. It was a peer-reviewed article. And the five-year data essentially shows that before implant – this comes directly from our study – before implant, the average visual acuity was 20 over 312. The label, by the way, in the US, is 20 over 160 to 20 over 800. In Europe it’s much broader. It’s 20 over 80 and also 55 years and older. But baseline visual acuity was 20 over 312 across a little more than 200 patients overall. After one year, the visual acuity was 20 over 141. So that’s essentially a four-line vision gain. After 24 months, it’s 20 over 149, and after 60 months 20 over 169. So what it shows is that visual acuity is essentially retained over the lifetime, so far 5 years, of the device in the eyes of these patients, which is a fantastic result overall.
TS: Going to take a quick break from this conversation with Wolfgang Tolle to remind you to go to OIS.net to register for the upcoming OIS@ASCRS. It’s going to be May 5 in New Orleans. Now back to this conversation.
TS: Who are your target surgeons is the question. Is this something that every cataract surgeon is able to do, or are you focusing your efforts on really perhaps some lead KOLs in larger metropolitan areas?
WT: Well, this is something that we still have to work on. But in essence, you have to envision this surgery and not a totally complex surgery, but it’s certainly a little bit more complex than a cataract alone. The procedure for a new surgeon, never done it before, takes about an hour. For someone that’s done say, three devices, takes an average of about 45 minutes. There’s also cases of 30 minutes, and that includes, by the way, performing cataract surgery during the time of surgery. Since the device – this is its special sauce; it’s a telescope, it’s a completely enclosed system and has two Galilean lenses and air space in between that actually provides the secret sauce on how the magnification works. It’s essentially the size of an IOL but it’s a little thicker than an IOL. So the procedure itself is a little bit more complicated than a cataract surgery. So our prime target for now, let’s say cornea trained cataract surgeons. There are plenty in the United States. I should say though that Medicare reimbursement language has changed as of January 1 and also now includes the removal of an IOL, and not only the removal of the natural lens. It does not mean – I need to emphasize this very strongly – this is FDA approved. It is not. However, in context, we are now pursuing this with a phakic trial probably at the end of Q2 will start that. And that means, and this is why I’m mentioning this, is that retina surgeons will most likely also be interested in performing this surgery in the future. So it’s really cornea trained cataract surgeons today, but also in the future then possibly retina surgeons also.
TS: That’s terrific. What will be required to get that approval?
WT: Well, we’re targeting a study of maybe 100, maybe 250 patients over 2 years. And it’s really in many ways a surgical technique because the device is exactly the same with no change to the device. So we don’t know yet. We still have to approach the FDA. We’re writing the protocol as we speak. But we believe it’s really about the correct surgical technique for an IOL to an IMT exchange.
TS: What has the appetite been for devices like these? We’re seeing so many great new medtech technologies coming into ophthalmology lately. Really vision restoring kind of stuff like SecondSight’s Argus etc., and of course the IOLs and such. Is there a real hunger for these sort of tools? What sort of responses are you getting from surgeons and from patients as well?
WT: You know, uptake has been very good in 2015. As I said, I think it was more of a commercial barrier because of inappropriate Medicare reimbursement. The technology worked. I think if you reach out to surgeons, the technology really works, it really helps the patients. We have a number of commercial implants now; as I said, we’re really starting commercialization in many ways only now. But the technology really works commercially. So the barrier mostly was really on the financial side overall. So the possibilities are really, really great overall for the uptake, and that’s what we’re working on. We do need more knowledge about the technology. We need more constant audience. You have very good KOLs attached already, but we need to get the word out much more in terms of actually helping these patients that can benefit so tremendously from this technology. I should say that we are the only FDA approved device. There’s nothing out there, especially on the dry AMD side. We don’t know of any competition in the US. We don’t know anyone filing. I guess you could make an argument that gene therapies and others might be a so-called competition in the future. But we don’t see anything in the very short term or even medium term in terms of potential competition. On the wet side, and I find this also very interesting, you know, as long as the disease is stable for no injections for 6 months, this device can be implanted. But it’s absolutely not competitive to the anti-VEGFs because once it’s implanted and the AMD may possibly get active again, you can actually inject behind it. So it’s really continued disease state management on the wet side of this disease as well. But it applies to both dry as well as wet, and on the wet side it continues disease state management.
TS: What’s going on inside the company? You took over a year ago as CEO, took over for Allen Hill. Have you made changes inside as the company sort of evolves into much more of a commercial operation? Or is the company remaining the same inside, and you’re merely building out a commercial side of it?
WT: Yeah, I mean I was specifically hired to now drive the commercialization. My background is I was the CEO of WaveLight, so I know the industry quite well. Then Alcon took over and ran WaveLight for a while. Ran Alcon’s business in a certain market for a long time. So I know the industry quite well. This was an orderly transition from the former CEO who had been here almost 12 years, was getting to the retirement stage. So it’s a very orderly transition. And I’ve been here now about ten months. In Q4 of 2014 I decided to complete a restructure of the sale, having my arms around what we need to do. So I hired an industry veteran as a new VP of Sales, and a new structure of territories, and we have a different way of approaching and targeting commercializing now. So we’re ready now in 2016. We’re going to take it up from here.
TS: What is your view of above, with all the changes going on at the larger ophthalmic companies? Do you see this as an opportunity for a company like yours to really grow and fill any sort of vacuum that might be created by those companies as they find their way with their new leadership? Or are you just really just sticking to your knitting and keeping your eye on the road up ahead of you?
WT: Well, that’s a super question. I mean there’s obviously a lot of change in the industry. We know that. Having said that, we are addressing a complete unmet medical need. There’s nothing out there like it in the US for sure, and global market opportunity. So our pathway, and we’re actually in the middle of raising one more round of funding that will likely be the last one, gets us through profitability and cash flow positive. So we’re going to build this company, the commercial side, and get the traction and build up the revenue overall. Pathways are really the usual ones: you know, possibly going public. That’s a timing related question, you know, if the revenue is the right size for a large strategic, I think this actually is a very unique product because it is an unmet medical need, no one has anything like it. And in many ways, it’s a plug and play. We have all the checkmarks in place. We have the global regulatory approval, we have CE Mark, we have FDA, we have Canadian and others. We have the reimbursement checkmark. It’s all in place. We have a large global market opportunity which really only depends on getting the reimbursement in various countries. It’s a very profitable business model. And so overall, this is a kind of plug and play for a strategic in the future, which should be very, very much of interest to them, depending on either the strategic view and how a product fits into a company, but also where they are overall.
TS: Have you had conversations with larger companies? And have any of them invested in VisionCare in the past?
WT: No. The company has been traditionally funded by venture capitalists. We also have a recently new owner. So overall, there’s to my knowledge, there have been discussions in the past at times with strategics. This is something that I want to drive forward and have those discussions in the future in a more managed way. So I would certainly be interested to entertain those discussions in the future. But as I said, traditionally so far, the investments either came from venture debt or venture capitalists, but no investments so far from strategics.
TS: And last question. What’s the syndicate look like for this new round that you’re putting together? Will it be more just traditional VCs? Or will we see potentially some interesting players in there?
WT: Well, we’re kind of in the middle of that. We just recently started the process after JP Morgan. So we’re reaching out in a formalized way, actually with advisors. So we’re reaching out and telling the story of where we are today and where we’re going. So the syndicate is not in place. If there’s anyone interested, I would love to know.
TS: Overall, are you seeing ophthalmology holding a lot of interest in investors? We’ve obviously seen some nice exits on the glaucoma space from medtech companies.
WT: Yeah. I mean this is a difficult question. On the pharma side, generally that tends to be the focus simply because of the potential there. I think the medtech, even though some companies obviously are undergoing some change right now, will always be a very interesting area to invest in. If you look at a company like VisionCare where there’s no competition at all and it address unmet medical need, I think that’s a given that companies will need to do that.
TS: Well, I look forward to reporting on that financing when it’s finally closed. Make sure you give us a call.
WT: Will do.
TS: Excellent. Thanks for your time today.
WT: No, thank you very much for having me. I really appreciate it. Bye.
TS: Wolfgang Tolle, thank you for joining us on the OIS Podcast. Really enjoyed hearing VisionCare’s story. I love a good medtech story. And what could be better than an implantable miniature telescope? Really it’s a great advance for age-related macular degeneration patients, and happy to see that things are going well at VisionCare. Hope to hear of more of the story at OIS@ASCRS. Wolfgang will be there. You should be there as well. So go to OIS.net to register for the May 5 conference, OIS@ASCRS. And we’ll see you in New Orleans.