2RT: A Groundbreaking Treatment for Age Related Macular Degeneration (AMD) With a Major Partnership Deal Imminent
I figured it would be a good idea to start a thread solely related to 2RT, given the fact the market is clearly not valuing the potential of this device at all into the current valuation of the company, a device which has the potential to be a breakthrough treatment for the currently untreatable early-intermediate AMD (which affects around 15% of people). iTrack Advance might be doing fantastically well in terms of generating strong sales growth, but we can't forget that we have this (potentially much bigger) product in the background. In fact, 2RT was actually what led me to initially invest in this company many years ago as I saw it (and still do see it) as an incredibly exciting product which definitely has the potential to be one of the biggest breakthroughs in ophthalmology since the invention of anti-VEGF drugs. iTrack Advance took center stage, but I think the time is ripe for 2RT to move back into the spotlight. I am guessing that the partnership announcement is due quite soon (in an announcement titled 2RT Pivotal Study and Regulatory Pathway (May 2022),the company hinted the intention to have the deal done by late calendar year 2023 or early 2024), so I am sure this thread will get plenty of use as we get more news related to this device. Let's hope the company is busy in final discussions this month whilst they are in the US for the next few weeks!
AMD - What is It? AMD is the leading cause of blindness in the developed world and is an incredibly debilitating condition. Not only is it so detrimental for the quality of life of so many people, but it is one of the costliest diseases in economic terms as well. Whilst the vast majority of cases (around 70%) are early to intermediate (which is currently untreatable), the small percentage of (treatable) advanced cases paints a clear picture as to just how lucrative the opportunity is. For advance AMD there are treatments known as anti-VEGF injections, however these are some of the costliest treatments for governments around the world, costing Australian taxpayers well over $600 million in 2020 (the costliest drug for the Australian government). Not only are these costly, but they negatively impact quality of life by requiring monthly injections in the eye. Putting aside how uncomfortable this would be for patients, it is also important to remember that these patients lack normal mobility, so many people often miss appointments. Advanced AMD is so severe that one missed injection can cause permanent irreversible damage to the patient's vision.
As a result, it is critical to intervene earlier in order to prevent people from ever reaching this stage, where the disease is so advanced that even one missed treatment can destroy an individual's vision. Whilst there have been many attempts at treating this condition in the earlier stages, none have been successful. Part of the issue as well is the need to come up with a minimally invasive option (like a laser) for earlier stages, as patients with few or insignificant symptoms will not be willing to have regular injections or invasive surgery in their eye which cause significant discomfort and inconvenience. Nonetheless, big pharma remains incredibly keen on finding new treatments, indicative by the very active M&A market for these treatments (remaining quite active even as sentiment has deteriorated in financial markets).
As seen in the figure above, the market for AMD treatments is incredibly lucrative. Wet AMD injections (accounting for only 15% of the total AMD patient population) is the highest revenue generating ocular drug in the USA, and within the top 5 drugs by revenue out of all drugs for all types of conditions. Companies that manufacture these drugs generating tens of billions of dollars per year, and fetch valuations even higher than that. Considering this, the early-intermediate market presents and incredibly lucrative opportunity, which could potentially see 2RT valued in the 10s of billions of dollars (based on comparables).
2RT Overview 2RT is a completely novel approach to treating ophthalmic conditions using a laser. Unlike traditional lasers which burn and therefore damage cells, 2RT has no heat profile and works by stimulating the rejuvenation of cells in the retinal to initiate a would healing response that targets the underlying causes of AMD (as opposed to simply burning everything, as is the case with traditional lasers), therefore, reverting the eye's function to what it was when the patient was in their teens. This is done via patented technology invented by Professor John Marshall, and addresses the deficiencies of traditional lasers in treating AMD, in that traditional lasers caused far too much damage to justify their advantages in treating AMD (as well as many other eye conditions). Until now, there has been little advancements in treating AMD before it progresses to the vision-threatening late stage of the disease. This is why 2RT represents such an important breakthrough. An extensvie multi-center clinical trial has shown that 2RT achieves a four fold reduction in the progression to late stage AMD in 76% of patients, representing the closest thing to a cure for AMD. Unfortunately at the time technology was not sufficiently advanced to identify and remove patients with reticular pseudrodrusen (a sign of more advanced disease) from the trial, and so these patients negatively impacted the final result. Noq with improved diagnostic technology, the company is in a position to engage in the final clinical trials without these patients.
2RT has been through all the preclinical work (which has been incredibly positive) and is now preparing for the final, pivotal FDA clinical trial. This is a large clinical study examining the use of 2RT on around 1000 patients. The pivotal trial has been approved by the FDA and all 28 invited retinal research institutions and leading retinal specialists have confirmed that they are keen to participate in the study. Initial work has begun on commencing the trial (with a smaller scale study already underway), though things should really ramp up when the partnership announcement is made.
In terms of financials, an individuals 2RT unit costs doctors about $100k (typical cost of a laser). Considering this is the cost of only 5 wet AMD injections, it is more than affordable (and will present significant cost savings for government and patients globally). Nova Eye will take a 20% cut from every treatment, so given that laser surgery tends to be priced in the thousands of dollars, there is clearly a very lucrative recurring revenue opportunity here for the company. Whilst patients will not need monthly follow ups (as opposed to injections), this is offset by the fact that the market is 10x the size of the wet AMD market.
But I say we let the man behind it, Professor John Marshall, explain why this is such a groundbreaking device:
The LEAD Trial
292 participants across 6 sites followed for 3 years, half received SNL with the 2RT laser every 6 months, half received sham treatment
Overall, progression to late AMD was NOT significantly slowed with SNL compared to sham treatment
However, a post hoc analysis found that there was strong evidence of a significant treatment effect modified by the presence, at baseline, of a particular deposit in the retina called RPD. RPD are thought to signify sicker eyes with more advanced stage disease.
There was a 4-fold reduced progression rate for the 76% participants without RPD at baseline with SNL treatment (aHR 0.24, 95% CI 0.09-0.59)There was a 2.5-fold increased progression rate for the 24% participants with RPD and SNL treatment (aHR 2.56, 95% CI 0.8-8.18)
This shows that patients with RPD were potentially offsetting the highly beneficial effect of 2RT on patients without RPD
As a result, there is good evidence to engage in a second validation study to confirm slowing progression from iAMD and therefore gain FDA approval.
The company has recently completed an Investigational Device Exemption (IDE) application with the US Food & Drug Administration in early July 2021 to commence a pivotal clinical study for 2RT. The FDA wants data to confirm the post-hoc analysis before they approve the IDE, so the current clinical trials are structured to commence in Europe and Asia etc. with 1 year data being used to gain an IDE and therefore complete the trials in the USA. Through this structure, the clinical trials will already have 1 years' worth of data prior to gaining an IDE which will hopefully speed up the approval process.
Aim to have approval in the USA by 2026, however commercialisation outside of the US will likely commence well before that.
The Man Behind It
Another very compelling part of 2RT is the inventor himself. If anyone is going to invent the first treatment for AMD in its earlier stages, its Professor John Marshall. This man is arguably the father of the use of lasers in ophthalmology, and was responsible (amongst many other things), the invention of the revolutionary excimer laser which has transformed the practice of ophthalmology. This man has a proven track record and a list of achievements few others could ever dream of accomplishing in their lifetimes.
John Marshall is a British medical scientist and inventor. Currently, he is the Frost Professor of Ophthalmology at the Institute of Ophthalmology UCL and Emeritus Professor King’s College London. He is a pioneer of laser eye surgery. In 1965 he graduated from Sir John Cass College and then began his 50-year career in eye research starting at the Institute of Ophthalmology. In 1968 he was awarded a PhD (medicine anatomy) from the University of London for a thesis titled: "Laser Induced Damage to the Retina" In 1983 he become Sembal Professor of Experimental Ophthalmology at the Institute of Ophthalmology. In 1991 he moved to St Thomas' Hospital, UMDS, to become the Frost Professor of Ophthalmology, honorary consultant and Head of Department of Ophthalmology.
He has published extensively in the field of ophthalmology (483 publications); on a broad range of ocular problems including age related, diabetic and inherited retinal disease; lens and intraocular lens design, development of lasers for diagnosis and surgery, light and ageing, refractive surgery and problems of the vitreous and glaucoma.
He has sat on and chaired many national and international committees including:
World Health Organisation (WHO)
Non-ionizing Radiation Committee of the International Radiological Protection Association
International Electro-Technical Commission (IEC)
British Standards Institution (BSI)European Community (EC)
International Committee of the Red Cross (ICRC)
National Radiological Protection Board(NRPB)
All Party Parliamentary Group on Refractive Surgery
These positions have all been concerned with protecting against the possible damaging effects of lasers and artificial light sources and played a leading role with the ICRC. He addressed the UN to successfully obtain a Geneva Convention banning the use of anti-personnel laser weapons. He is a frequent lecturer at international and national ophthalmology meetings and has successfully supervised 60 candidates for higher doctorate degrees.
Marshall is also a past master and on the Court of the Worshipful Company of Spectacle Makers, Trustee of the Frost Foundation, Trustee of Retina UK, Ambassador for Fight For Sight and Vice President of the National Eye Research Centre
Prior Inventions
He was the inventor of excimer laser technology for refractive surgery which formed the basis of the patent portfolio for "Summit Technology" which was acquired by Alcon in 2000 for almost US$1 billion. In excess of 50m procedures have been performed worldwide.
He created the world's first Diode laser for treating eye problems of diabetes, glaucoma and ageing. He was also a member of the industrial design group that progressed the device through to commercialisation
Co-foudner of Diomed, a UK company that was the world's largest supplier of diode laser devices for medical use. Board member and Chaiman of Medical Advisory Board until 1999
Co-inventor and founding member of Odyssey Optical Systems, a company formed to commercially exploit devices to image the interior of the eye
Co-inventor of hardware and optic disc recognition software used in a security based biometric analysis for Retinal Technologies Inc. Founding member of the company
Co-inventor of a diagnostic method and apparatus for predicting potential preserved visual acuity
Co-inventor of Eye Therapy - the use of cross-linking agents on the cornea
Recognition, Honours and Awards
1980 Nettleship Medal of the Ophthalmological Society of the United Kingdom
1985 Mackenzie Medal (Tennant Institute of Ophthalmology, Glasgow)
1988 Rayner Medal (UKISCRS)
1989 Life Fellow of the Royal Society of Arts
1990 Ridley Medal ESCRS
1991 Fellow of the Royal Society of Medicine
1993 Pecs Retinal Award
1993 Ashton Medal (Royal College of Ophthalmologists)
1993 Parker Heath Award, American Academy of Ophthalmology
1997 Elected Honorary Fellow of College of Optometrists
1998 Honorary Fellow of the Portuguese Ophthalmological Society
1998 Owen Aves Memorial Medal (Bradford, Yorkshire)
1999 Wilkening Award, Laser Society of America
2000 Distinguished Service Medal, Swedish Medical Society
2000 Ida Mann Medal (Oxford)
2001 Lord Crook Gold Medal, Worshipful Company of Spectacle Makers
2001 Doyne Medal (Oxford Congress)
2001 Barraquer Medal, International Society of Refractive Surgeons
2003 Elected Fellow of the Laser Institute of America (LIA)
2003 EURETINA Award, European Society of Retinal Surgeons (Hamburg)
2003 Buckingham Palace Reception, October 2003, for pioneers
2004 Charles D Kelman Innovator's Award and medal, ASCRS (San Diego)
2004 Lim Medal of the Singapore National Eye Centre (Singapore)
2004 Elected Fellow of the European Academy of Ophthalmology
2005 Elected Honorary Fellow of Royal College of Ophthalmologists
2005 Elected Honorary Fellow of Cardiff University
2005 Senior Achievement Award (American Academy of Ophthalmology)
2007 Fellow of the Royal College of Pathologists (by publications)2009 Fellow of the Association for Research in Vision and Ophthalmology
2009 Elected Fellow of the Academy of Medical Sciences
2009 Fellow of the Royal Society of Biology
2009 Lifetime Achievement Award, ISCRS & the American Academy of Ophthalmologists
2012 Junius-Kuhnt-Award for AMD Research (Düsseldorf)
2013 MBE for services to Ophthalmology
2013 D.Sc. (Hon) Glasgow Caledonian University
2014 International Congress of German Ophthalmic Surgeons (DOC) Bronze medal.
2014 Bowman Medal, Royal College of Ophthalmologists
2014 Zivojnovic Award, European VitreoRetinal Society
2014 Lifetime Achievement Award, UKISCRS2015 D.Sc. (Hon) London Metropolitan University
The Partnership As alluded to above, the magic of 2RT can only be unlocked through a massive partnership deal. This is perhaps the reason as to why the market has failed to price in the potential of 2RT into the valuation of this company. This announcement was always going to be a long wait, and in fact, early in 2022 the company was anticipating that the deal would be secured by late 2023 to early 2024 so they are still ahead of schedule. They obviously stopped providing updates to the timeline (anyone who has been involved in deals will tell you that even information as basic as a timeline to investors can be used against the company during the negotiation process), but I do feel they will deliver us a deal sometime between the end of this year, as planned. The company naturally was tied up with the launch of iTrack Advance for the first half of this year, but since then have likely had significantly more time to allocate to the partnership discussions. The company is currently in the USA for the next few weeks for an iTrack Advance roadshow, but I wouldn't be surprised if this is doubling as a trip to finalise the deal and announce a partnership. The timing of a deal in November makes sense as they usually aim to wrap things up like this before the holiday period, and of course the company will want something to show off at the AGM (besides the stunning iTrack Advance revenue growth). Moreover, the LIANA trial (the small scale trial for 2RT) commenced November 2022, meaning they should be getting 12 month data around about now. I also like how the company has continued to reiterate its view that partnership discussions are progressing well. This might seem like a minor detail, but the company is very consistent in only discussing things which it views as certain (hence why they never attempted to speculate on the LCD etc.). Of course, the announcement released last year mentioned that it could come as late as early 2024 as well, so my (highly speculative) target of this month or early next month is of course my opinion only, and we may very well still need to wait a few more months for the partnership announcement. However, I do see many signs pointing towards the deal coming soon.
The "when" is very difficult to predict of course, however the impact of the partnership on the share price is much easier to predict. Things like a deal are impossible for the market to ignore as it usually provides a clear new valuation for the company. There will almost certainly be a very large rerate, especially considering the total value of the deal will likely be very large relative to the currently very small market cap (given the existing clinical data related to 2RT and the massive TAM). As a recent example of the type of rerate we could expect, just look at DXB. That company rallied 200% after receiving a deal, and the price has held up very well since. I am guessing the deal that 2RT will score will be many multiples bigger for the reasons I listed above, and so I have no doubt that when the partnership arrives the price won't remain below 50 cents (as an absolute minimum). For all you traders out there, there will be a gap of nightmares, but I predict it will be a classic runaway gap.
Closing Remarks Very interesting to see the share price so low. I took a trip down memory lane whilst putting this together, having a read of past posts made in the discussion thread was quite interesting. Makes you realise that everything has so far gone as planned (and even better than planned) for the company, and management have continued to deliver strongly on their promises (nothing we were saying last year and this year contradicts with what actually ended up happening). The LCD situation for iTrack Advance is obviously a pain, but it is one that was completely out of the control of the company (and something I am sure will be resolved soon enough!). In the meantime, I look forward to seeing this company continue to charge ahead, both in relation to iTrack Advance but especially 2RT. I am sure that in good time the share price will catch up. This is a high growth, soon to be profitable company generating close to $20m in purely organic revenue at very high gross margins. Large cash pile, no debt, newly released best in class device as well as an incredibly exciting R&D pipeline -- and this is all valued at only a $30m market cap (around a $22m EV). I continue to buy, there are so many things going for this company besides iTrack Advance which I don't think the market is yet pricing in, but will eventually!
EYE Price at posting:
17.0¢ Sentiment: Buy Disclosure: Held
(20min delay)
