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Ophthalmic Business Performance Strong and Stable despite COVID-19
Defensive growth Ophthalmic Business and convertible bonds
Performance Strong and Dr. Gil Kliman, a digital health Stable despite COVID-19 investor with Interwest Partners (Menlo Park, by Andrew Sweeney California, USA),, acted as moderator. He began sharing In case it escaped your notice, the last 12 months have been a little unusual. When the pandemic bagan webinar organized by Eyecelerator, was the ideal online event to take stock of ophthalmology’s performance over the that ophthalmology’s performance over the past 12 months has been better than expected and has outpaced expectations at the outset of to impact the West in March 2020, last 12 months and consider its future the pandemic. frontline ophthalmology clinics were hit progression. Through a partnership hard. Smaller practices were particularly between the American Academy of According to Dr. Kliman, Eyecelerator affected. Attention to budgets and Ophthalmology (AAO) and the American had plans for two live events with up finances became more important as Society of Cataract and Refractive to 1,200 attendees in 2020 but in many economies slowed, and to this day, Surgeons (ASCRS), Eyecelerator is a response to COVID-19, the events ophthalmic practices face difficulties platform to connect “entrepreneurs, were moved online. He used this as that would have been unimaginable in investors, companies and an example of how the pandemic 2019. ophthalmologists to advance ophthalmic silver linings — in this case, allowing innovation through conferences, live his organization to more than 5,000 Thus, Financing in the Time of COVID, a streams and networking.”
viewers via online programming. This focus on the “positives” is reflected in ophthalmology’s overall financial performance.
“Equity markets are up by over 20 percent. Ophthalmology is doing very well and this development is being driven by factors including defensive growth, interest rates and a strong appetite to put capital to work,” said Andrew Gitkin, managing director and co-head of Health Care Investment Banking at Raymond James (St. Petersburg, Florida, USA).
He described how these changes are leading to increased development in bio-pharma research and development, acting as another catalyst to propel ophthalmology’s growth and insulating it from the worst effects of COVID-19.
This strong performance is exemplified by Glaukos (San Clemente, California, USA), a medical technology and pharmaceutical company focused on ophthalmology. According to the company’s CFO and Vice President of Corporate Strategy and Development Joseph Gilliam, Glaukos responded to constricted cash flow at the outset of the crisis by considering new financing models including government programs, convertible bonds and receiving credit facilities.
According to Mr. Gilliam, Glaukos analyzed its options based on five key metrics: cost of capital, net proceeds, flexibility/risk, investor relations and execution risk. The company initially considered using a revolving credit facility or structured debt, before opting for a convertible bond offer worth $250 million. This increased Glaukos’s cash and other equivalents to $416 million by December 31, 2020, providing what Mr. Gilliam described as “a very bullish signal to our investors” and a good example of how businesses could explore new options for capital.
Ophthalmology is strong and stable
“We are probably in our best public relations heyday in five to 10 years, so we haven’t seen the impact on investment that we would have expected in Q2 last year. As long as we can understand how we progress into the clinic, we can have confidence in moving forward with ophthalmology,” said Wende Hutton, general partner at the venture capital firm Canaan Partners (Menlo Park, California, USA).
Ms. Hutton’s comment came during the second part of the webinar that focused on private financing and exemplified the buoyant attitude which characterized the participants’ views on ophthalmology’s financial health. According to William J. Link, PhD, the managing partner of Flying L Partners in Steamboat Springs, Colorado, USA, both public and private financing in ophthalmology is healthier than could have been expected one year ago. He characterized the market as “stable and solid,” and a good environment for investment going into 2022.
What is certain is that despite COVID-19, major innovation continues in ophthalmology. The webinar’s participants (audience and panel alike) were asked about which innovation sector would see the most interest from investors and strategics in 2021, with options ranging from dry eye to glaucoma. The clear winners were presbyopia, followed very closely by retina, which will come as no surprise to our readership. Other topics raised as good investment targets included myopia, thanks to its pervasiveness in East Asia. Dr. Nick Pliam, MD, PhD, a partner at Chinafocused investment firm Decheng Capital in Menlo Park, California, said that in meetings with his Chinese colleagues, he is often the only person present without eyeglasses. Technology associated with COVID-19, like telemedicine, was also noted as a good investment opportunity.
Vaccination programs are ongoing in many parts of the world and we can optimistically say that the worst of the crisis appears to be over. Ophthalmology is in better health than was predicted; the state of the industry was perhaps best exemplified by the Worldwide President of Surgical Vision at Johnson & Johnson Vision (Jacksonville, Florida, USA) Warren Foust.
“Business responded quickly to the pandemic than we expected. Speaking for Johnson & Johnson Vision, there are good underlying fundamentals to the industry and we have a high level of confidence. It is business as usual going forward,” he concluded.
Editor’s Note:
Eyecelerator’s Financing in the Time of COVID webinar was streamed live on March 3, 2021. Reporting for this story took place during the event.
