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Blindness: The under-rated investment case

By Pooya Hemami, Healthcare Analyst at Edison Group – Blindess is perhaps not the most obvious opportunity for investors to spot. Even in a world where other pharma investments are being rehabilitated by Covid-19, sight loss remains a relatively small and expert-only corner of the market.

By Pooya Hemami, Healthcare Analyst at Edison Group – Blindess is perhaps not the most obvious opportunity for investors to spot. Even in a world where other pharma investments are being rehabilitated by Covid-19, sight loss remains a relatively small and expert-only corner of the market.

But that is about to change. There is a promising pipeline of opportunities for investors in the coming year with pharmaceutical giant Roche among a number of stocks with promising late – stage candidates. And the next five to ten years could be potentially transformational in a segment that, until now, has had little to offer patients

The main focus is companies operating in the age-related macular degeneration (AMD) market – which collectively are sitting on an untapped equity opportunity set to generate billions in new potential sales. Businesses racing to find the first effective dry-AMD treatments, and improve the effectiveness of treatments for wet-AMD. As a result, capital is likely to flow strongly into the sector over the next few years. Age-related macular degeneration (AMD) remains the leading cause of blindness in older adults in western countries and is characterised by damage to the retina (see diagram), leading to central vision loss. The exact causes of AMD are not fully understood. We can now, differentiate between two forms of AMD: “dry” and “wet”:

Dry form of AMD accounts for about 85–90% of cases. As dry-AMD advances, it can lead to an associated condition called geographic atrophy (GA). Currently, Dry-AMD has no proven broadly approved treatment. There is also the wet form of AMD (also known as neovascular AMD, or NVAMD) can be controlled in most cases with regular injections into the eyeball of what are called anti-VEGF drugs. However, there remains a need to improve NVAMD treatments, as recurring injections are burdensome, and about a third of patients will become resistant to anti-VEGF treatment over time.

A growing market opportunity

We estimate that across the US and Europe in 2020 there are between 18 and 22 million cases of early-to-intermediate stage dry-AMD, and about 5.5 million cases of late-stage AMD. (NB: as all AMD cases start as dry-AMD, “late stage AMD” is defined as those with either geographic atrophy or NVAMD).

The NVAMD market is already worth in excess of $5.75bn worldwide. We do not foresee significant reimbursement challenges for new treatments for NVAMD, as the greatest hurdle, in our view, is obtaining regulatory approval.

The NVAMD pipeline

Companies are looking at ways to extend NVAMD treatment durability to reduce the frequency of injections into the eyeball and so improve compliance. Roche has two late-stage candidates (faricimab, PDS-ranibizumab) seeking to do this. Meanwhile, Kodiak’s pivotal-stage KSI-301 may reduce dosing frequency to every six months.

In our view, the late-stage approaches we profile in the report generally carry relatively lower regulatory risk (thus a higher chance of obtaining approval) than some of the next generation therapies we outline.

Next-generation NVAMD therapies

There are many new candidates on the horizon (such as OPT-302, ICON-4 or AKST4290), which may in the next half-decade or so provide new treatment options for NVAMD patients resistant to current treatment.

Other next-generation NVAMD products in the pipeline (such as GB-102) hold the promise of even more durable treatment effects, particularly those that may employ gene therapy (namely RGX-314 and ADVM-022).

Non-invasive NVAMD drug candidates may also allow for patient-administered therapy (namely AKST4290 or PAN-90806), greatly improving treatment compliance and overall safety by reducing the need for injections. However, we believe longer studies will be needed to confirm the durability of these non-invasive drug treatments.

Dry-AMD continues to represent an untapped frontier

Given the prevalence of dry-AMD, it is foreseeable that this market could easily eclipse the >$5.75bn size of the NVAMD market if treatments can be shown to have definitive efficacy and obtain approval in the largest markets (such as the US).

Several mid- to late-stage drugs are targeting inflammation and/or oxidative stress, and promising data has been released in the past 18 months for pegcetacoplan, Zimura and risuteganib. Zimura has already shown positive 18-month GA data in a Phase II/III study and a second Phase III is underway. There are also oral drugs (Oracea and ALK-001) in Phase III trials.

Proprietary light-based therapy (2RT and Valeda) may also potentially decelerate dry-AMD progression of early-to-intermediate stage patients, although further clinical studies will be needed to confirm earlier data and drive adoption.

Altogether, we continue to expect the next five to 10 years to be potentially revolutionary in a segment that until now has had little to offer to patients beyond dietary supplements and lifestyle modifications.   

Visual rehabilitation for late-stage GA patients

Unfortunately, many patients with GA or NVAMD will progress into severe central vision loss. None of the treatments discussed in the report can benefit patients who have already developed such profound loss (as their intent is more to preserve vision, since there is no known proven way to regenerate damaged retinal photoreceptors or downstream ganglion cells).

However, Pixium Vision (ALPIX, Euronext Growth; a research client of Edison Investment Research) is advancing a photovoltaic retinal implant-based platform that aims to provide a new form of vision to restore functioning to those with profound vision loss attributable to retinal diseases such as GA. We expect a registration-enabling study to start in H121, which could lead to EU commercialisation in H223.

Given the pipeline, the outlook for prospective patients and the industry for both dry-AMD and NVAMD appears very promising, with blockbuster-size revenue opportunities for products that can improve outcomes in the space, or in the case of NVAMD, at least deliver improved convenience or treatment durability.

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