Innovation in Retina

Role of venture capital


Venture Capital Is Catalyst That Spurs Major Advances

Edited by Emmett T. Cunningham, Jr, MD, PhD, MPH and Pravin U. Dugel, MD
Jerry Helzner, Senior Editor

If you want to understand just how important the availability of serious venture capital has been to the major strides made in ophthalmic drugs and (especially) devices over the past decade, the man to speak to is William J. Link, PhD, a founder and managing director of Versant Ventures (Menlo Park, CA). Over the past decade, Versant has almost certainly been the leading provider of capital to ophthalmic startups, having itself supplied $190 million of the total of approximately $700 million invested in the 15 startups in which Versant has participated.

“We've made investments in these ophthalmic startups since 1999,” Dr. Link mentioned in an interview. “This is the best environment we've ever experienced for ophthalmic innovation. To give you an idea, there have been 47 eyecare-related startups funded by venture capital since 1999. There were maybe two or three in the prior decade.”


Dr. Link says one of the key factors driving recent interest in ophthalmic innovation is an obvious one — demographics and the aging of the baby boom generation, the vanguard of which turns 65 this year.

“Most of the major eye diseases come with aging — cataract, glaucoma, macular degeneration — says Dr. Link. “The lack of innovation prior to this decade created many unmet needs in eyecare. Plus, retinal diseases especially are difficult diseases. It's taken a while to figure out solutions. We have only recently gotten to the point where we can provide capital to companies whose therapies have a real chance of succeeding commercially.”

In simple terms, the role of the venture capitalist is to provide promising young companies with the capital to fund the advancement of drugs and devices through the critical development phase, including, in many instances, years of costly clinical trials and the approval process. Before investing in any company, the venture capitalist must conduct a cost/benefit analysis as to the projected economic potential of the drug or device under consideration. Will this innovation create a benefit that will be adequately reimbursed, or will the innovation provide a benefit over and above reimbursement that patients will be willing to pay for out of their own pocket?

“Once an ophthalmic drug or device is approved and ready to be commercialized, we venture capitalists tend to sell it to a major eyecare company such as an Alcon, AMO or Bausch + Lomb,” says Dr. Link.

Though providing seed money to unproven startups entails a great deal of risk and requires superb judgment in evaluating the future commercial prospects for a product, Versant Ventures has a decade-long batting average that any major league slugger would be proud to have on his baseball card.


“Initially, we had a lot of activity in the anterior segment with concepts that applied to cataract and refractive surgery,” notes Dr. Link. “We were backers of eyeonics, the developer of the Crystalens, which was acquired by Bausch + Lomb. We also helped fund IntraLase, bought by AMO, and most recently LenSx, which has exciting prospects in the emerging area of femto-phaco. That company was just recently acquired by Alcon.”

Dr. Link says that one of the factors driving innovation in the area of cataract surgery and premium IOLs is the federal government's decision in 2005 to allow patients to pay out-of-pocket for premium services that patients want and that go beyond basic cataract surgery.

“Patient-shared billing provides the economic foundation for venture capitalists to invest in premium IOLs, femto-phaco and other technical advances that are not covered under traditional reimbursement,” says Dr. Link.

Staying in the anterior segment, Dr. Link is particularly proud of Versant's investment in WaveTec Vision (Aliso Viejo, CA), developer of the ORange device for providing intraoperative IOL calculations.

“WaveTec is a perfect example of the kind of company we like to help fund,” says Dr. Link. “Here is a device that is helping cataract surgeons make accurate decisions in real time. This is a significant advance in technology.”

Neurotech's encapsulated cell technology promises sustained-release delivery of posterior segment drugs.

Dr. Link is also happy with Versant's investment in Glaukos (Laguna Hills, CA), which has developed the iStent for safer, blebless glaucoma surgery. Although not yet FDA-approved, the iStent has already been commercialized in many countries internationally.

“Glaukos is another prime example in the area of surgical glaucoma,” he says. “We didn't have options like this before. The good news in this area is that there are now numerous credible projects for improved surgical solutions in glaucoma. There is never one ‘right' way to approach a problem. There are numerous ways to innovate.”

NeoVista uses radiation to maintain vision gains and extend the interval between intravitreal injections.


While Dr. Link gives full credit to Genentech for developing the anti-VEGF drug Lucentis as a transformative therapy for the treatment of wet AMD and other retinal diseases, he notes that the advent of Lucentis has opened up important opportunities to improve the value of anti-VEGF treatment.

The Glaukos iStent offers safe, blebless glaucoma surgery with entry directly into Schlemm's canal.

“Monthly intravitreal injections of Lucentis are the recommended standard now, and it's being done that way because the need is so strong,” he says. “However, the monthly injection schedule is going to prove unsustainable for patients and retina specialists alike. There are currently about 20 serious projects around the globe looking into sustained-release systems or other ways to improve delivery of anti-VEGF drugs.”

Versant Ventures has invested in two companies that are working toward this end. “NeoVista (Fremont, CA) uses small, targeted doses of radiation (epimacular brachytherapy) in combination with anti-VEGF to extend the interval between injections, while also maintaining vision improvement,” says Dr. Link. “This concept is currently in clinical trials. We are very pleased with the one-year results of our clinical studies, which indicate vision improvement plus a sharp reduction in the number of anti-VEGF injections required.”

Versant has also invested in Neurotech (Lincoln, RI), which employs encapsulated cell technology (ECT) in an implant the size of a grain of rice that can be programmed to deliver medication directly to the back of the eye in a sustained manner.

While successful innovation in a major area such as AMD can bring great financial rewards to venture capitalists, Versant has also helped fund Second Sight (Sylmar, CA), a company that has been using sophisticated miniature camera technology to successfully provide at least some sight to blind people who are afflicted with diseases such as retinitis pigmentosa.

“With Second Sight, we are addressing a smaller population of patients, but depending on reimbursement, this can also prove to be a sound economic investment.”


With the stellar record of success achieved in the ophthalmic area thus far by Versant Ventures, SV Life Sciences, Interwest Partners, Clarus Ventures and other companies that have been focusing on financing this sector of innovation, Dr. Link notes that other venture capital companies are now turning their attention to the ophthalmic space.

“A lot more financial resources are now being made available for innovation in ophthalmics,” says Dr. Link. “It's become a very fertile area for investment.” RP

Pravin U. Dugel, MD, is managing partner of Retinal Consultants of Arizona in Phoenix and founding member of Spectra Eye Institute in Sun City. Emmett T. Cunningham, Jr., MD, PhD, MPH, is a partner at Clarus Ventures (a sponsor of the Ophthalmology Innovation Summit), director of the uveitis service at California Pacific Medical Center and adjunct professor of ophthalmology at Stanford University. He also sees patients at West Coast Retina Medical Group in San Francisco. Dr. Dugel can be reached at