Medical Device Daily Contributing Writer
ATLANTA – The annual meeting of the American Academy of Ophthalmology (AAO; San Francisco) is not only an opportunity for physicians to learn about the latest clinical developments in their field, but also provides ophthalmic companies with a chance to update the investment community and media about their most current information.
As previously reported (Medical Device Daily, Nov. 11, 2008), privately-held Bausch & Lomb (B&L; Rochester, New York) met with members of the press. In addition, both STAAR Surgical (Monrovia, California) and Alcon (Fort Worth, Texas) held informational meetings with the financial community during AAO.
Since its founding in the early 1980s, STAAR has been a company whose steady flow of new and outstanding products has not translated into profitable and consistent financial results. One result has been that the company has been forced several times to raise dilutive equity capital from its shareholders to sustain its operations.
Upon joining STAAR just over a year ago, CEO Barry Caldwell embarked on a program to wean STAAR from outside financing and achieve a solid financial footing. Five initiatives were established to achieve this goal:
1) Reduce the quarterly cash burn.
2) Improve gross margins.
3) Maintain continued strong international growth.
4) Successfully integrate the Canon business acquired in January, with annual revenue to reach or exceed $12 million.
5) Stimulate the growth of the U.S. refractive business.
In 2008 to date, the company is performing well relative to these targets, especially with its gross margins expanding impressively from 49.7% in 3Q07 to 57.7% in 3Q08. Combined with stringent expense controls, STAAR has been able to slash its operating loss from $3.6 million last year to $1.4 million this year, which in turn lowered the cash burn significantly.
Caldwell told meeting attendees that "we are pleased with our progress and our goal in 2009 is to be profitable." Wall Street analysts who follow STAAR think the company can become profitable and generate cash within the next few quarters.
A key driver to STAAR's recent financial progress and anticipated future growth success rests with the Visian ICL. This phakic, refractive intraocular lens (IOL), made from STAAR's proprietary collamer material, has shown tremendous growth, with global revenue for the first nine months of 2008 surging 52% over last year. Conversely, according to MarketScope (St. Louis), domestic LASIK procedures are forecasted to decline 26% in 2008.
This stellar performance has been fueled by excellent domestic media exposure, such as the Today show, a new direct sales and marketing team and an improved web site. To a lesser extent, demand has benefited from negative FDA-related publicity for LASIK that occurred in the spring.
Outside the U.S., approval in China, the world's second-largest refractive market with about 650,000 refractive procedures, has boosted the company's international revenue. The fastest-growing portion of Visian revenues is coming from the toric version of the ICL (T-ICL), which has grown 70% this year and now accounts for nearly half of all Visian international revenue.
STAAR does not have a domestic T-ICL approval as yet, having incurred FDA-related challenges in the past couple of years. Based upon a recent re-audit of the data, which appear to validate its accuracy and communication with FDA, it appears that an approval could come sometime in 2009. This approval would be a boon for STAAR's domestic Visian revenue.
Rob Rivera, MD, of the Barnet, Dulaney & Perkins Eye Center (Phoenix), has been implanting the Visian ICL since 1997, when he became a clinical investigator. He may now be the largest Visian implanter in the U.S. and he certainly is one of the most enthusiastic, based on comments at the analysts meeting.
"I believe that the Visian provides far superior visual outcomes for my patients than does LASIK," he said. Rivera also said that he is so confident in the safety of the Visian that he has no qualms about performing a bi-lateral procedure.
He also extolled the clarity of the vision his patients are receiving. "The Visian ICL gives my patients 'high definition' quality vision. The result is that the vast majority are extremely pleased with the outcome."
Caldwell noted that a recent survey of Visian patients revealed that 98% of them were either "extremely satisfied or very satisfied" with their outcome. This compares favorably to the 95% of LASIK patients who reported that they were "satisfied" with their results.
Rivera said he is eagerly anticipating the potential availability of the T-ICL in the next several months. It is common for high myopes to also have astigmatism that needs correction and Rivera said the T-ICL is "the best single procedure in terms of vision quality" for these patients.
Indicative of the need for this product, he told attendees that his practice has a backlog of 800 patients awaiting the approval of the T-ICL.
Whereas STAAR has struggled financially as a niche player in ophthalmic anterior segment surgery, broad-based Alcon has been hugely successful, growing rapidly and enjoying excellent profitability for many years.
At its traditional analyst meeting at the AAO, Alcon CEO Carey Rayment said the company has a long history of excellent execution and financial performance and that this should continue as "solid long term fundamentals underlie our markets and our business."
Rayment reiterated that Alcon's long-term business model projects 8% to 10% organic sales growth and positive margin evolution.
"These fundamentals remain intact," he said, although in its last investor conference call after 3Q08 results were announced and again at this meeting, the company guided 2009 revenue expectations considerably lower. Two key factors are the expected impact of generic competition to TobraDex, a widely used antibiotic/steroid combination which is coming off patent early next year, and the impact from the economy.
In addition, the company now expects unfavorable foreign currency fluctuations to reduce reported sales in 2009 by 5% to 6%, implying that reported top-line growth for 2009 will be a very modest 2% to 3%. By comparison, global revenue growth in 2007 was 14% higher than 2006 and expected 2008 revenue will be up about 12% to 13% over 2007.
Alcon has a deep pipeline of new products, some of which will be rolled out in the coming months. In particular, the company expects a significant contribution from the ReSTOR aspheric +3.0 multi-focal lens.
Kevin Buehler, chief marketing officer, said that in comparison to its current +4.0 Acrysof lens, this new product offers patient better reading and intermediate distance visual acuity.
"Our studies show that there is higher rate of patient satisfaction and spectacle independence," Buehler remarked.
Alcon filed a PMA for this lens in 2Q08, implying that approval could come in the next few months. Upon approval, it will be marketed against Bausch & Lomb's very successful Crystalens HD accommodating IOL (MDD, Nov. 11, 2008).
The company also is entering the phakic IOL market in Europe, having recently received a CE-mark designation. It will compete head-to-head against STAAR, but will not be able to offer a toric version.
In the U.S., the company is planning to meet with the FDA in early 2009, hoping to accelerate a PMA filing before the mandated three-year follow-up is complete. Final FDA approval appears possible in 2010.