Small firm development offers big promise to retinal medicine

The posterior segment of the eye has long been a space poorly visualized and underappreciated.

The past two decades, however, have seen a transformation in the way retinal medicine is practiced. In large part, this change has been driven by innovation and new technologies that have improved diagnostic acumen and provided solutions for previously untreatable conditions.

The first landmark in retinal innovation was the introduction of optical coherence tomography in the early 1990s, which allowed an improved visualization medium for both clinical and research purposes. OCT has allowed researchers to study retinal architecture and disease states at a near cellular level and clinicians to treat conditions such as age-related macular degeneration and diabetic macular edema with greater confidence.

As more information has been gained from ever-improving diagnostics, new drug targets and therapeutic approaches have been identified. Although physicians knew there were many unmet needs in retinal medicine, they did not have the wherewithal to understand just how underserved patients were.

As the needs of patients with retinal disease have been better understood, so too has the prospect for financial reward for those companies that successfully navigate the research, development and regulatory pipeline. In its brief history, OCT has gone from an unknown device with great potential to an indispensable tool for managing patients. Likewise, anti-VEGF therapy exploded onto the scene, transforming retina management from a largely surgical undertaking to a pharmacological one.

Eugene de Juan Jr., MD, said that investment from venture capital in ophthalmology is perceived as some of the most successful venture opportunities that exist in medicine. Image courtesy of de Juan E

The demand for innovation that would allow retina specialists to better serve patient needs and the potential for tremendous profit have piqued the interest of industry. However, retinal research has taken shape in a way that is quite dissimilar from traditional research and development.

While Big Pharma is actively engaged in retinal research, the introduction of novel funding sources — biotech companies, venture capital, private firm startups — is as much a story as the products they are developing. These smaller-size companies, equipped with flexibility and risk tolerance that perhaps confer a competitive advantage over big corporations in some settings, are already making an impact. And, experts note, the collective pipeline of projects ongoing at these kinds of companies has the potential to dramatically change how retinal medicine is practiced.

“Unprecedented would be a mild term. It’s just stunning, really, not only what has happened today, but also what will happen in the future. We really have the potential for preventing, delaying or treating some of the major causes of blindness in the world,” Eugene de Juan Jr., MD, OSN Retina/Vitreous Board Member, said.

Venture funding

As the founder and vice chairman of the ophthalmic incubator ForSight Labs, Dr. de Juan knows firsthand that the field of ophthalmology is receptive to ideas generated from nontraditional research and development tracts. In the brief 5-year period since he started the project, he has already helped launch five companies.

“What we do is identify need, and then we try to create the best possible solution for that need and populate it with the best possible people, the managers and developers, to make that therapy successful,” Dr. de Juan said.

Each of the five companies started life as ideas from inventors both within universities and outside of universities and later launched as a private for-profit entity. The lion’s share of funding for these startups has come from venture capital firms, which represent a novel funding source for retina technology.

There is no question that venture capital has entered retina because there is money to be made. But regardless of the reasoning behind venture involvement in ophthalmology, several products now being developed by small firms and biotech companies may result in products that can preserve or even restore vision.

William J. Link

“[Venture capital firms’] first goal is to have profit, so that is why they are [investing in retinal technologies]. For medicine, though, it is an amazing positive,” Dr. de Juan said. “Investment from venture capital in ophthalmology is perceived as some of the most successful venture opportunities that exist in medicine.”

One of the more active venture investors in ophthalmology has been Versant Ventures. However, explained William J. Link, PhD, a managing director of Versant, his firm no longer enjoys a unique place in ophthalmic research and development, as several other venture firms have followed Versant into this area.

“One of the observations that I’ve made is that in the 1990s, there were probably one or two venture-backed companies. Since 1999, there have been 47 companies that are now venture backed in ophthalmology,” Dr. Link said.

Dr. Link, who has been active in ophthalmic investment since the late 1990s, described venture investment as “outsourced R&D,” sponsoring projects with great potential but little existing proof that the product will work. Overall, it speaks to greater risk tolerance because of the potential for substantial profit, which means capital engagement at an earlier phase in development than typically exercised by large corporations.

“Large corporations can’t fund all the big projects, and so it’s a rich opportunity for venture capital,” Dr. Link said. “It’s now understood by the leading companies that there is a pipeline that they can monitor and benefit from: tens and hundreds of millions of dollars invested by venture capital, as well as their own R&D.”

Dr. Link has been involved in several so-called exits to the ophthalmic marketplace, or companies that started small and sold big. He helped start IntraLase and sell it to Advanced Medical Optics (now Abbot Medical Optics). He then worked with many of the same people to launch LenSx, which was sold to Alcon. Earlier in his career, Dr. Link spent 10 years developing eyeonics, whose accommodating lens technology was eventually sold to Bausch + Lomb.

“There are certainly nice examples that if we open a market and address it with novel technology in a high-quality way, the leading companies are ready to acquire,” Dr. Link said.

Retinal implants

One of the most recent examples of innovative technologies entering the retinal market after small firm development is the Argus II retinal prosthesis by Second Sight Medical Products Inc. The device consists of a paired microchip implanted on the retinal surface and a camera worn on a pair of glasses. Together, these components provide mobility and orientation to patients blinded from photoreceptor loss or outer retinal degeneration (eg, retinitis pigmentosa and other inherited conditions). It may eventually prove useful for patients with end-stage macular degeneration.

“The way it works, basically, is it takes images from a camera, converts it to controlled electrical pulses, which then stimulate the remaining nerve cells on the retina and sends the information to the brain. By doing so, it allows the otherwise blind person to see through the camera,” Mark S. Humayun, MD, PhD, the co-inventor of the device, said.

Mark S. Humayun

In March, Argus II was granted a CE mark in Europe, and there are already medical centers in Europe using the device outside the context of clinical trials. The nidus of the enterprise was an idea Dr. Humayun and Dr. de Juan generated more than 25 years ago: Although some blinding conditions result from photoreceptor cell death or severe disorganization at the neurological level of sight, there may be a remaining neural network capable of transmitting sight preserved within the visual system. Much like cochlear implants do in the ear, the Argus II provides just enough information for the brain to complete the picture.

“What makes this really work is that the brain is able to fill in the missing information,” Dr. Humayun said. “It speaks to the incredible plasticity of the human brain to take information from a relatively limited number of neurons and make sense of it.”

Although the Argus II has reached a point of success, it also faces several challenges. Because of the long development process, one of the original patents of the product has expired, but another 70 patents are active. It faces potential competition in the near future, as other projects, such as the Learning Retinal Implant System from IMI Intelligent Medical Implants AG and a subretinal implant technology from Retina Implant AG, are currently in development. Most projections are that the Argus II will cost roughly $100,000 to implant; at such a high price, it is likely to face scrutiny from third-party payers and other insurers.

While these challenges might typically dissuade further development on a product facing a long uphill battle to achieve profitability, research is already ongoing on the next generation of implants. The first Argus had just 16 electrodes. The Argus II features 60 electrodes and, as a result, provides greater restoration of sight. The next device will feature hundreds, if not thousands, of electrodes.

“If the results continue to be as positive as they have been, there is every reason to believe that we should be able to get patients up to a 20/80 level and certainly to recognize faces,” Dr. Humayun said.

All of this development has occurred outside the framework of traditional research and development. Although ample funding has provided a means to move the innovation forward, none of it has come from Big Pharma. It is these sorts of novel approaches to unmet needs that have become the special purview of venture and private investment. If Dr. Humayun is correct and the product eventually finds utility for treatment of end-stage AMD, its market potential will expand.

Big Pharma has historically been averse to the kinds of long-term commitments that novel products such as Argus represent. Absent private firm interest and development, the Argus II and other retinal prosthetic implants might never have made it to actualization.

“I really think that this sort of technology will make a difference and has made a difference. It’s not something that people usually think of. We usually think of drugs and surgery, and not bioelectronics,” Dr. Humayun said.

Delivering drugs to the back of the eye

The spate of research on drug delivery devices for the retinal space provides another example of the impact that startup and private firm development has had on the practice of retinal medicine.

The first drug delivery implant introduced to the U.S. market was Vitrasert (ganciclovir intravitreal implant 4.5 mg, Bausch + Lomb), which is intended for treatment of cytomegalovirus infection secondary to AIDS. Before the release of the implant, patients who developed the opportunistic infection required daily intravenous infusions or weekly intravitreal injections of antiviral agents. Aside from the complications inherent to intravenous drug delivery for eye disease, the treatment protocol was not altogether successful.

Baruch D. Kuppermann

According to Baruch D. Kuppermann, MD, PhD, one of the clinical investigators and early adopters of the ganciclovir drug delivery implant in the 1990s, Vitrasert dramatically changed the landscape.

“Our ability to control this disease improved dramatically with the ganciclovir implant,” he said.

Over the course of the next decade, no new drug delivery devices made it through the development process all the way to market. Then, in 2005, the U.S. Food and Drug Administration approved Retisert (fluocinolone acetonide intravitreal implant 0.59 mg Bausch + Lomb) for the treatment of noninfectious posterior segment uveitis. Ozurdex (dexamethasone intravitreal implant 0.7 mg, Allergan) was then approved in 2010 for treatment of macular edema secondary to retinal vein occlusion or for treatment of noninfectious posterior segment uveitis. Additionally, the device is in clinical trials for other indications, such as diabetic macular edema and wet AMD.

Although Vitrasert and Retisert are marketed and sold by Bausch + Lomb, their initial development was undertaken by a small firm called pSivida. According to Dr. Kuppermann, the company engineered the essential technology and produced the cutting-edge science for these novel drug delivery systems and then sold to Bausch + Lomb.

pSivida has also developed a drug delivery system called Iluvien (sustained release fluocinolone acetonide), which is being developed with strategic partner Alimera. The device, small enough to be injected through a 25-gauge needle so as to create a self-sealing wound but designed to release drug for up to 3 years, has completed phase 3 testing for treatment of diabetic macular edema and the company has applied to the FDA for marketing approval.

Another approach to sustained drug delivery, Encapsulated Cell Technology, is being investigated by Neurotech. With Encapsulated Cell Technology, genetically modified retinal pigment epithelial cells are housed in a 6-mm semi-hollow permeable membrane and implanted in the eye. When implanted, the cells begin to generate the desired biologic compound in situ, thereby delivering freshly made drug directly to its site of activity and obviating the blood-retinal barrier as well as any issues regarding stability and degradation of complex molecules stored in a “traditional” drug delivery implant.

Market forces, it seems, will continue to push the science forward. Namely, as the population ages, the need for sustained, controlled treatment of chronic conditions will increase. One example is the market demand for sustained-delivery anti-VEGF therapy that will reduce the burden of treatment.

Earlier this year, Eyetech announced plans to develop an extended-release formulation of Macugen (pegaptanib sodium), and Genentech unveiled that it is working with SurModics on a similar concept for Lucentis (ranibizumab). The market is calling for less invasive treatment, the aging population indicates a viable market, and the history of AMD treatment with anti-VEGF therapy demonstrates the tremendous profit potential.

“Intravitreal injections have a long history of being extremely effective as a means to treat posterior segment diseases. That being said, we would love to make our effective treatments more convenient for our patients,” Dr. Kuppermann said. “We are all anticipating that the era will come when we will get away from doing frequent injections. We have good treatments currently, but they are labor intensive for physicians, patients and families.”

Roadblocks to innovation

Small firm innovation offers great development potential but also faces unique roadblocks. On a macro level, the entire enterprise of medical research has come under criticism for the very reason that these small firms are involved. Namely, some have argued that allowing market incentive to drive research, rather than clinical need, has slowed or halted development of needed therapeutics because of bottom-line considerations.

Those within industry contend that industry money fuels innovation. Absent capital interest, interesting research at the academic and institutional level would never translate to products and markets that benefit patients.

“The translation of research through the regulatory and approval process and into the market is essential for innovation. That’s done by industry, both in the private sector using venture capital as well as at the large corporations. From a reimbursement standpoint, there has to be adequate reimbursement to reward and attract innovation,” Dr. Link said.

Whether the market will continue to bear fruit for small firm involvement is another question. Although there has been ample incentive for development in the U.S. to this point, Dr. Link sees the potential for the process to become too arduous and too risky for risk-tolerant small venture capital firms.

“The innovation engine in America is still amazing. It’s in our DNA, both in the academic setting as well as in industry. The dilemma we face, and I think it will get better, is that we are forced to take our innovation outside the U.S. in order to move it ahead,” Dr. Link said.

Already, companies are looking to conduct the bulk of their development in non-U.S. markets that have more favorable regulatory climates, Dr. Link said. In many cases, these products, which may have been conceived in American academic settings, will not reach FDA consideration until research and development expenditures are recouped.

“There is no question that innovation is being stifled. We are getting some signals from Washington and from the FDA itself that there will be some improvements, and we would be delighted to see that,” Dr. Link said. – by Bryan Bechtel

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• Eugene de Juan Jr., MD, can be reached at the University of California, San Francisco, Box 0730, 10 Koret Way, Room K321, San Francisco, CA 94143-0730; 415-514-3398; fax: 415-476-0336; email: dejuane@vision.ucsf.edu.
• Mark S. Humayun, MD, PhD, can be reached at Doheny Eye Institute, 1355 San Pablo St., DVRC 119, Los Angeles, CA 90033; 323-442-6523; fax: 323-442-6755; email: humayun@usc.edu.
• Baruch D. Kuppermann, MD, PhD, can be reached at University of California, Irvine, The Gavin Herbert Eye Institute, University of California, Irvine, 125 Medical Surge 1, Mail Code: 4375, Irvine, CA 92697; 949-824-6256; fax: 949-824-4015; email: bdkupper@uci.edu.
• William J. Link, PhD, can be reached at Versant Ventures, 3000 Sand Hill Road, Building 4, Suite 210, Menlo Park, CA 94025; 650-233-7877; fax: 650-854-9513; email: bill@versantventures.com.
• Disclosures: Dr. de Juan is the owner/consultant for Transcend, Second Sight, Nexis Vision, Forsight Vision 4 and Forsight Vision 5. Dr. Humayun has a financial interest in Second Sight Medical Products Inc. Dr. Kuppermann is a clinical investigator and consultant to Alimera, Allergan and Bausch + Lomb. Dr. Link discloses that Versant is an investor in Neurotech and Second Sight. Versant has invested in each of the five companies launched by ForSight. Versant was an investor in eyeonics, IntraLase and LenSx.