Medical Device Daily Contributing Writer

LAS VEGAS — There were several analyst meetings held at the annual meeting of the American Academy of Ophthalmology (AAO; San Francisco), which was held here this week.

CEO Barry Caldwell of ophthalmic and dermatology laser manufacturer Iridex (Mountain View, California) discussed the company’s three-pronged strategy to grow both the revenue line and improve profitability.

The first priority is to grow the company’s core business, which from 2000 to 2005 had been stagnant. Since joining the company as CEO in July 2005, Caldwell has implemented several changes, which have had a positive impact on revenue.

The two key tactics have been to increase the ophthalmic laser sales force from six reps to 10 reps and the second major initiative has been to revamp the company’s sales compensation to reward reps for growing the disposable business.

Both moves apparently are working as domestic direct ophthalmic sales of the lucrative disposable probe grew 38% during the second quarter ended June 30 and 32% for the first half compared with the first six months of 2005. Iridex has not yet reported its third quarter financial results due to some minor accounting issues, which management expects should be resolved shortly.

Caldwell explained that the company’s second major growth program was to introduce new products. At the AAO, Iridex announced three new product initiatives, including an innovative solid state 577 nm “true yellow” ophthalmic laser.

Caldwell described this new laser as “kinder, gentler” than the current 532 nm green lasers, which are widely used to treat a variety of retinal conditions. Yellow light lasers were sold several years ago in an expensive tunable dye format, which was relatively unreliable and expensive to maintain. A true-yellow 577 nm laser has never been available before in a small, affordable, reliable, solid-state technology platform for ophthalmology.

Vice president of marketing Don Todd explained that this product will allow Iridex to access an installed base of about 2,000 tunable dye yellow or multi-wave length lasers, a market segment in which Iridex currently does not compete.

At a presentation at the Iridex booth, Martin Mainster, MD, professor of ophthalmology at the University of Kansas Medical Center (Kansas City, Kansas), described this new product as “back to the future.” He further stated that there would be less patient pain and more clinical benefit than the existing technology of red or green lasers.

Moreover, compared to the tunable dye lasers, which are “costly, complex and difficult to maintain,” he said the new yellow laser will be a big step forward for retinal physicians.

The company anticipates that this product, premium-priced at around $50,000 to $55,000, will be available for shipment in the 2Q07. It will require FDA 510(k) clearance prior to its debut.

At the AAO, Iridex also launched two other additions to its product line, a high power 532 nm solid-state green laser with a new wireless, power adjustable footswitch and six new disposable laser endo-ocular probes.

“We are now a customer-driven company, and we believe that these new products will be well-received in the marketplace,” Caldwell said.

Iridex reported revenue for calendar 2005 of $37 million and is forecasted by Wall Street analysts to grow to about $41 million in 2006. The company’s avowed goal is to significantly accelerate its growth rate and reach $100 million in global sales by 2010.

Acquisitions, the third leg of the strategy, are a key element of that goal. Caldwell said that in order to grow to $100 million in sales by 2010 Iridex would require about $25-$30 million from acquisitions, $15-$20 million from new products and the remainder from growth in its existing portfolio.

The company has been diligently evaluating opportunities for many months, and although no deals have been consummated, Caldwell said, “we will be disappointed if we do not make a deal before the end of this year.”

Privately held, venture capital-backed Eyeonics (Aliso Viejo, California) held a breakfast meeting to introduce its new Crystalens Five-O accommodative intraocular lens (IOL). The company holds one of three FDA approvals for presbyopic IOL technology, competing against two ophthalmic industry behemoths, Alcon (Fort Worth, Texas) and Advanced Medical Optics (AVO; Santa Ana, California).

Both Alcon’s ReSTOR and AVO’s ReZoom have enjoyed strong growth since their launch in 2005, although in the past few months growth has slowed and been somewhat disappointing relative to the expectations of company management and Wall Street analysts. This appears to be due to mediocre results in some patients whose expectations have been very high.

According to Michael Colvard of the Colvard Eye Center (Encino, California), “our greatest challenge as ophthalmic surgeons is to meet patients’ expectations.” He went on to say that these expectations are especially high in younger patients with active lifestyles and who are paying a significant amount of money out-of-pocket when they opt for a non-Medicare-reimbursed IOL implant.

According to the company’s CEO, Andy Corley, the new Five-O lens will sell at the same price of $895 as the company’s original product, the AT-45 lens model. He predicted that most ophthalmic surgeons currently implanting the older lens would rapidly adopt the new product. Jim Davies, MD, of the Surgical Eye Care Center (Carlsbad, California), said that “this new lens is an effort to improve accommodation while securing it more firmly in the capsular bag.” The original lens, with a reduced footprint, is a bit too small for some patient’s eyes and does not give optimal results.

Davies said that in a small trial of 18 patients with the new lens, the results were improved over the AT-45 and that he planned to switch to the new lens once it is widely available.

Jay Pepose, MD, medical director of the Pepose Vision Institute (Chesterfield/St. Peters, Missouri) and professor of clinical ophthalmology at Washington University School of Medicine (St. Louis), has conducted a clinical evaluation, supported by a grant from Eyeonics, of the three FDA-approved lenses.

His study showed that both the multi-focal lenses from AVO and Alcon had a noteworthy drawback, the loss of contrast sensitivity. This shortcoming is particularly an issue in low light and nighttime driving conditions, when the patient desires crisp vision.

He also cited two surveys examining the subjective responses of patients to these three lenses, which showed that the Crystalens provided patients with better quality vision than the two larger competitors.

Pepose told the audience that although he was initially very skeptical about the Eyeonics lens, he is now convinced that “the quality of vision of the Crystalens is superior to the other available lenses.”