Dr. Gil Kliman and InterWest Partners

Following anterior-segment successes, retinal disease becomes a focus.

By Jerry Helzner, Senior Contributing Editor | Retinal Physician, March 2012

In the closely knit, California-centered realm of ophthalmic venture capitalism, the reputation of InterWest Partners is such that if InterWest makes the decision to back your concept with its considerable financial resources and brainpower, you will have an excellent chance of achieving a commercial success.

In the 15 years or so that InterWest has been investing in ophthalmic innovation, it has achieved two stunning successes — first, with the IntraLase femtosecond laser for refractive surgery and, more recently, with the LenSx femto-phaco system for laser-assisted cataract surgery. IntraLase, which came public in a highly successful IPO, was later sold for $808 million to AMO (now part of Abbott Medical Optics), while LenSx was sold to Alcon in 2010 in a deal that could eventually return $743 million to the LenSx shareholders.

In addition, InterWest has current investments in several fledgling ophthalmic businesses that have the potential to replicate the group’s past successes. Though InterWest’s past successes have largely been in the cataract and refractive areas, one of its more recent investments, On Demand Therapeutics, offers the promise of a highly innovative, advanced and novel implant for the sustained release of drugs to treat retinal diseases. This especially includes the wet form of AMD, where repeated intravitreal injections have been a burden to patients and retina specialists alike.

AN INITIAL SUCCESS

A key player in InterWest’s ophthalmic investments is managing partner Gilbert H. Kliman, MD, who joined InterWest in 1996, just at the dawn of venture capitalists’ discovery of the ophthalmic arena as a viable place to put their money. Dr. Kliman, who completed a fellowship in retina at the Massachusetts Eye and Ear Infirmary, was headed for a career in academic ophthalmology when he discovered a strong interest in innovation and the business side of medicine.

“I had done some research on photodynamic therapy during my fellowship and developed an interest in the role that lasers could play in eyecare,” recalls Dr. Kliman. “I sent out 30 resumés to companies that were investing in innovation and received 29 turndowns. However, one venture capital firm did respond positively and hired me.”

Figure 1.
Laser initiation of drug release from one reservoir of a multi-reservoir ODTx intravitreal implant.

At about that time, excimer lasers were making their debut in such new procedures as PRK and LASIK. “I got very interested in excimer lasers and was hired as a consultant by LCAVision to help them develop new laser centers in California,” says Dr. Kliman. From there, Dr. Kliman made the move to InterWest Partners, picking up a Stanford MBA along the way in a program that was tailored to entrepreneurial physicians. “My first projects at InterWest were in orthopedics and other nonophthalmic areas, but in early 2000 I got very excited about IntraLase,” he says. “I understood laser technology and could see the potential. IntraLase was InterWest’s first investment in the ophthalmic area.”

The decision-making process at InterWest is by consensus, with multiple reviews, “so making the investment in IntraLase was initially fairly controversial,” notes Dr. Kliman. “We had to take into account many factors. Would the patient pay extra for an IntraLase procedure? Would practices spend $500,000 for the equipment? Would there be a per-procedure fee? Would strong competition to IntraLase emerge?”

The decision to invest in IntraLase was made on the basic premise that a laser-cut flap offered a patient-friendly alternative to the microkeratome that was both safer and more accurate. The premise proved to be valid and eventually changed the paradigm for performing LASIK. More recently, IntraLase has also been used successfully in cutting tissue for corneal transplantation.

A COMMITMENT TO FEMTO-PHACO

In the case of LenSx, Dr. Kliman notes that the same proven management team that shepherded IntraLase also was involved in developing LenSx. InterWest backed the LenSx concept largely on the strength of its founders in addition to its advanced technology, plus research that showed that patients generally have a very positive view of laser-assisted ophthalmic procedures.

“We believe that having the right people is just as important as having the right technology,” asserts Dr. Kliman. “So we were confident that we had a winner in LenSx. Plus we had the same ‘first-to-market’ advantage that we had with IntraLase, which is critical in turning an innovative idea into a commercial success.”

With IntraLase and LenSx, Dr. Kliman strongly believes that both innovations wound up with the acquiring company that had the best chance to achieve significant commercial success with them. “AMO already had the Visx excimer lasers, so IntraLase was a perfect fit with the company’s position in refractive surgery. Alcon is dominant in cataract surgery, so LenSx is a highly complementary acquisition for them.”

INVESTMENTS WITH POTENTIAL

Currently, InterWest has an investment in Glaukos, which has a safe, blebless surgical procedure for mild-to-moderate glaucoma open-angle glaucoma. The Glaukos iStent procedure is already approved in Europe and Canada, with FDA approval expected in the near future.

“There is competition in blebless glaucoma procedures, but we believe Glaukos will have the first-to-market advantage,” says Dr. Kliman. “We feel the primary market for this procedure is going to be general ophthalmologists who are not comfortable performing trabeculectomies and putting in shunts. This is a safer procedure for them to perform without the risk of hypotony. It is a procedure we would like to see taught in residency and fellowship programs so that the next generation of ophthalmologists will be familiar with blebless glaucoma surgery.”

Another current InterWest investment is the previously mentioned On Demand Therapeutics, which has a highly innovative sustained-release drug-delivery system called ODTx that encapsulates many tiny, individual, drug-filled cells in a small implant. A single implant can contain one or more drugs, each in its own sealed reservoir. Individual cells can then be opened by a laser to release the appropriate drug into the eye when it is needed over the course of a year. It is currently being tested as a means of delivering drugs to treat wet AMD and thus avoid repeated intravitreal injections, but Dr. Kliman says it could be used with almost any eye drug.

The ODTx procedure begins with the injection of the device into the periphery of the vitreous in the region of the pars plana using a standard intravitreal injection technique. When the ophthalmologist decides to release the drug, he or she uses a slit lamp and mirrored lens to locate the ODTx implant and then focuses a laser beam on the selected reservoir. When the laser energy hits the selected reservoir, an opening is created that allows the drug contained in the reservoir to elute into the vitreous and diffuse to the retina. The unactivated reservoirs remain intact and enable the ophthalmologist to release drugs from the additional reservoirs via the same noninvasive process “as needed” during subsequent visits.

InterWest also has an interest in presbyopia and has invested in ReVision Optics, which has a corneal implant that can counter the effects of presbyopia. InterWest is also looking at newer types of presbyopia-correcting IOLs but has not yet made an investment in that area. “The IOL we are looking for should have benefits for both the patient and for the surgeon,” he says. “That means it should be easy to implant as well as provide great vision.”

ADVICE FOR INNOVATORS

Dr. Kliman says that ophthalmologists are known for having ideas for innovations. He advises any ophthalmologist who has developed an innovative idea to make sure it is original and not just a “me-too” concept. This can be accomplished through a patent search. He also advises that ophthalmologist-inventors should try to team up with an experienced business partner to help in shepherding the concept through what will prove to be a long and perhaps costly process. Finally, do everything you can to show proof that your principle will work in the real world, perhaps with rabbit studies. Finally, he says that if you truly believe in what you have, don’t give up.

“There will be setbacks along the way, but if your idea has merit and you stick with it, success is achievable,” he concludes. “Remember, I got turned down 29 times before I got my first job in venture capital.” ■