Nobel Laureate Joins Alcon and Bausch + Lomb in the 'Golden Eye' Race with RxSight's Breakthrough Light-Adjustable Lens

In 1997, Daniel M. Schwartz, a professor at the University of California, San Francisco, identified a clinical need for postoperative vision correction in cataract patients during his daily work. With prior successful entrepreneurial experience, he promptly took action to bring this idea to fruition. To this end, he recruited two chemistry professors from the California Institute of Technology, rapidly assembled a team of scientists, and formally commenced research on postoperative vision correction for cataract patients.

“If you believe this project is valuable and truly needed by patients and physicians, then persist in pursuing it, even if you face endless challenges.” Daniel M. Schwartz’s perseverance bore fruit after 20 years.

2017In [year], the RxSight system, co-developed by three professors, received FDA approval, becoming the first and only medical device system capable of making minor adjustments to intraocular lens power after cataract surgery. In 2021, RxSight successfully listed on the NASDAQ.

According to a survey by the U.S.-based firm “Bastille,” the failure rate of startups founded by U.S. university professors is as high as 97%. In the face of such a high failure rate, how did RxSight mitigate risks, translate an innovative idea into a market-ready product, and successfully go public? More than a year after its IPO, how has RxSight performed in the market? VCBeat provides an analysis to offer insights for the industry.

RxSightis an ophthalmic medical technology company dedicated to improving vision in patients after cataract surgery, founded by three professors from top-tier universities worldwide.

The original innovative idea came from Daniel M. Schwartz, M.D., Professor of Ophthalmology and Director of Retina Services at the University of California, San Francisco.

Daniel M.SchwartzAfter earning a Bachelor of Science in Mathematics from Duke University, he completed medical school and ophthalmology residency training at Virginia Commonwealth University in Richmond, Virginia. In 1990, Dr. Schwartz joined the University of California, San Francisco, serving as Chief of the Retina Service at the San Francisco Veterans Affairs Medical Center, with a focus on developing new therapies and diagnostic methods for eye diseases.

He co-invented the OCT angiography system with Dr. Scott Fraser and Dr. Jeff Fingler at the University of Southern California. This system enables rapid, non-invasive retinal imaging, thereby streamlining the screening process for diabetic retinopathy. Currently, OCT angiography is playing an increasingly important role in the diagnosis and management of age-related macular degeneration, diabetic retinopathy, and other common retinal vascular diseases.

SchwartzThe Ph.D. candidate believes that one of the most fascinating innovations in clinical medicine is the application of machine vision to image analysis. “In the 1990s, during his retinal medical research with clinician Donald Gass, he used machine vision to observe numerous previously unimaginable clinical features of the retina. I believe that the application of computer vision in the medical field is becoming increasingly profound, and it will greatly enhance physicians’ ability to diagnose and predict clinical outcomes.”

All human decisions are subject to historical path dependence. This R&D experience inspired Dr. Schwartz to later found RxSight.

During his daily work, one of Dr. Schwartz’s colleagues became frustrated by a cataract patient who exhibited significant refractive error after surgery. He recalled that lasers had previously been used to treat diabetic retinopathy, venous occlusion, and choroidal neovascularization. Perhaps lasers could also be employed to adjust the refractive power of intraocular lenses?

SchwartzThe doctor immediately began to consider the possibility of light-adjustable intraocular lenses. To this end, he also established three clinical requirements that must be met:Lens adjustment must be capable of correcting errors of 2.00 D or less; the adjustment process must be performed rapidly and safely.

To further develop this idea, he needed the support of more professionals. After unsuccessful attempts to seek help from the chemistry departments at the University of California, Berkeley, and Stanford University, he turned to the California Institute of Technology (Caltech), where he met Dr. Robert Grubbs, a polymer chemist and 2005 Nobel Laureate in Chemistry, and Dr. Julia Kornfield, a Professor of Chemical Engineering at Caltech. The three instantly clicked and embarked on the journey of developing light-adjustable lenses.

Looking back at RxSight’s growth journey, we can see that its success hinges on three key actions:

First, establish a team that integrates clinical needs with technical R&D.SchwartzDr. Bo believes that clinicians are the driving force behind innovation in ophthalmology, as they are best positioned to identify the most genuine unmet medical needs and initiate corresponding innovative efforts. However, to translate these ideas into practical applications, they require the support of a high-caliber team of scientific researchers.

Initially, they hired two postdoctoral fellows from the California Institute of Technology (Caltech) to jointly develop this technology and conducted in-depth research at Caltech and the University of Utah. During this process, they also secured seed funding from the University of California, San Francisco. After demonstrating the feasibility of preclinical models, the scientific innovation team established RxSight through a technology transfer pathway to further develop light-adjustable lenses for clinical use.

Second, the addition of a professional commercialization team.In its early stages, RxSight recognized that scientific innovation alone does not encompass all aspects of technological and product innovation. To better and more concretely bring innovative research outcomes to market, the company needed to introduce professional expertise and talent with industrial and commercial perspectives. Consequently, RxSight sought partners capable of facilitating the industrialization of its technology. Currently, Dr. Ron Kurtz serves as President and CEO of RxSight.

Prior to joining RxSight, Kurtz co-founded IntraLase (femtosecond laser) and LenSx Lasers (a surgical laser manufacturer acquired by Alcon), and served on the faculty at the University of California, Irvine, and the University of Michigan. RxSight’s R&D and management team comprises world-class experts and business leaders in biology, medical devices, mechanical engineering, and ophthalmic care, bringing extensive experience and expertise in the research, development, and commercialization of medical devices.

Currently, Dr. Schwartz is not involved in the operational management of RxSight; instead, he is developing new therapies for age-related macular degeneration and myopic macular degeneration.

Third, Financial Support. As a premier ophthalmic medical company with over two decades of development, RxSight has successively secured investments from HIG BioVentures–Calhoun, Longitude Venture Partners II, RA Capital Healthcare Fund, and BP Calhoun Associates. Throughout its more than twenty-year history, the company has undergone multiple rounds of financing, from Series A to Series H, raising substantial capital.

2021On July 30, RxSight listed on the Nasdaq with an initial public offering price of $16 per share, raising approximately $120 million. As of the market close on January 5, 2023, the company’s stock price was $12.85, with a market capitalization of $356 million.

2017In November 2023, RxSight’s Light Adjustable Lens (LAL) system received approval from the U.S. Food and Drug Administration (FDA). It is the first and only medical device system capable of making minor adjustments to the power of an intraocular lens after cataract surgery, thereby reducing residual astigmatism and improving uncorrected visual acuity in cataract patients postoperatively. The RxSight system has also been approved in Mexico for the correction of postoperative residual refractive errors.

Cataracts are a common eye condition in which the natural lens becomes cloudy, impairing vision. Following cataract surgery, the clouded natural lens is replaced with an artificial intraocular lens (IOL). Improper focusing of the IOL can cause refractive errors, resulting in blurred vision and necessitating the use of eyeglasses or contact lenses.

Cataract surgery involves replacing the patient’s natural lens with an intraocular lens (IOL); therefore, the quality of the IOL is critical to surgical outcomes. Currently, IOLs available on the market primarily fall into two categories: conventional IOLs and premium IOLs. Conventional IOLs refer to monofocal IOLs, while premium IOLs include presbyopia-correcting IOLs and toric IOLs for astigmatism correction. Each type of lens offers unique advantages but also entails trade-offs.

Addressing the shortcomings of traditional intraocular lenses,The company designed the RxSight Light Adjustable Lens system. This systemComposed of two key components—the RxSight Light-Adjustable Lens (LAL) and the RxSight Light Delivery Device (LDD)—along with other intraoperative and postoperative accessories.

Rx SightIts core technology utilizes photochemical processes to apply photosensitive materials onto the LAL, which are then reshaped through exposure to ultraviolet light.

LALComposed of silicone and several specialized materials, the system utilizes polymerization to form silicone polymers from silicone monomers, arranging them into a three-dimensional structure. The LAL surface retains characteristics of partial polymerization and partial unpolymerization after low-temperature heating, thereby maintaining the mobility of photosensitive molecules. Silicone-based movement leads to predictable lens deformation. In conjunction with the use of the LDD, irradiation of the peripheral or central regions of the lens can alter its shape, thereby meeting the therapeutic needs of patients with ocular conditions.

LDDIt is a proprietary light delivery device that delivers ultraviolet light in precisely programmed patterns to induce predictable changes in the shape and refractive properties of the LAL, enabling surgeons to precisely adjust postoperative vision in cataract patients for optimal visual outcomes. The LDD consists of a biomicroscope, a computer controller for administering light therapy, and a patient interface with biometric design features.

Depending on the required adjustment, patients receive up to three light treatment sessions over a period of 1 to 2 weeks, with each session lasting approximately 40–150 seconds. From the time of cataract surgery until the completion of light therapy, patients must wear special UV-protective eyewear to shield the new intraocular lens from ultraviolet exposure.

FDAThe approval was based on the results of a randomized, pivotal study conducted in the United States, which compared the performance of light-adjustable lenses with existing monofocal lenses in 600 patients with astigmatism across 17 study sites.

According to RxSight’s prospectus, the efficacy rate of LAL reached 70.1% in clinical studies.Meanwhile, the RxSight system reduces the likelihood of secondary surgeries by using LDD to correct postoperative refractive errors, whereas other premium intraocular lenses often require separate LASIK procedures to address residual visual errors after cataract surgery.

Furthermore,RxSightThe system is also very user-friendly for physicians.In traditional surgery, surgeons need to spend a significant amount of time on intraoperative measurements to better estimate the most suitable lens power. With the RxSight system, surgeons no longer rely on intraoperative devices for measurement. Instead, they can focus on the surgical procedure itself, as residual refractive errors can be corrected postoperatively through Light Delivery Device (LDD) adjustments.

As of September 30, 2022, surgeons useRxSightThe system has performed over 32,000 surgeries.

2022On November 7, RxSight announced its financial results for the third quarter of 2022. For the first three quarters of fiscal year 2022, RxSight reported revenue of $32.917 million, compared with $14.167 million in the same period of 2021, representing a year-over-year increase of 132.45%. However, its net loss widened by 55.2% year over year to $51.146 million.

The Company’s revenue is derived from LAL and LDD in the U.S. and European markets, as well as from the sale of services and accessories, with its customer base consisting ofOphthalmology clinics (primarily LDD) and ambulatory surgery centers (primarily LAL).

RxSightThe gross margin for LDD is very low, with material costs accounting for more than 60% of total manufacturing costs. Therefore, RxSight will not significantly increase the unit price of LDD, but instead drive growth by increasing the number of LDD installations.RxSightthe adoption of the system, thereby achieving LAL sales.2022In the first three quarters of the fiscal year, RxSight sold a total of 138 LDDs and 16,161 LALs.

In addition to the number of LDDs installed and the number of LALs implanted, the number of physicians performing surgeries using RxSight products is also a measure ofThe number of cataract surgeons is also a key indicator of RxSight’s revenue-generating capacity. Therefore, RxSight places significant emphasis on physicians’ user experience.

RxSightThe market is being further expanded by increasing the sales force and clinical training staff. As of September 30, 2022, RxSight had established a comprehensive post-sales service team comprising 20 LDD sales representatives, 17 LAL sales representatives, and 88 clinicians, all of whom possess marketing experience in the cataract and refractive surgery industries.

RxSightRxSight also maintains a team of field service engineers responsible for the installation, preventive maintenance, and immediate repair of the Light Delivery Device (LDD). This team conducts on-site assessments within 4–5 hours to ensure a smooth installation process. Furthermore, RxSight has an internal Customer Experience Department that provides direct support to customers, clinical training specialists, and the field service team. To minimize users’ unfamiliarity with RxSight products, the company organizes multiple rounds of training sessions. Through methods such as dedicated on-site guidance and departmental training, RxSight strives to help users quickly become proficient in product functions and operations, thereby ensuring medical efficiency and quality during surgical procedures.

According to RxSight’s estimates, conventional cataract surgery will account for 88% of global cataract procedures and 80% of those in the United States in 2022. Among these, revenue from the premium intraocular lens (IOL) market represents approximately 42% of the global IOL market and is expected to grow significantly. In 2022, global revenue from the conventional IOL market was approximately $2.9 billion, projected to reach $4.2 billion by 2027, at a compound annual growth rate (CAGR) of 7.3%.In 2023,RxSightIt will also selectively expand its commercial presence in other regions with high-quality intraocular lens market opportunities, such as Asia, Europe, and Australia.

So, why is RxSight incurring losses?

In fact, since its inception, RxSight has incurred substantial operating losses and negative cash flows. The company began commercializing its products in the U.S. market in the second quarter of 2019 and in the European market in the third quarter of 2019, resulting in a limited commercialization history. As of September 30, 2022, RxSight reported an operating loss of $48.3 million and an accumulated deficit of $530.4 million. The company estimates that it will continue to incur significant sales, research and development, and other expenses as it expands its marketing team, conducts clinical trials, and develops new products and features. Consequently, RxSight expects to continue operating at a loss for the next several years.

Meanwhile, RxSight also faces intense industry competition. From a commercial perspective, RxSight’s main competitors in the cataract intraocular lens market includeAlcon, Johnson & Johnson, HOYA, Bausch + Lomb, and ZEISS. According to Market Scope data, the global cataract intraocular lens market is highly concentrated, with the top five players accounting for approximately 70% of total market revenue.

According toRxSightFinancial report data, currently Alcon andAcrysofAlcon’s and Johnson & Johnson’s Tecnis are currently very popular intraocular lenses (IOLs), with market shares of 32.8% and 21.4%, respectively, in the premium IOL segment in 2020. The Alcon IOL portfolio includes monofocal Toric, multifocal Toric, and EDOF Toric models. These Toric lenses accounted for approximately 28% of all premium multifocal IOLs sold in 2020. The remaining market is shared by Bausch + Lomb, Carl Zeiss, Hoya, and others, each holding less than 10%.

Obviously, in the face of giants with substantial capital and a comprehensive product matrix,RxSightits scale and product portfolio remain very thin. In response, RxSightIn the future, competitiveness can be enhanced by acquiring or investing in other businesses, products, or technologies to strengthen technical capabilities and expand the product pipeline.

Turning our attention back to China, domestic companies are facing a similar predicament of being suppressed by industry giants, just like RxSight.

According to VCBeat, the competitive landscape for intraocular lenses (IOLs) in China is relatively fragmented, with a low level of domestic production. The results of the centralized procurement of IOL medical consumables conducted by the Beijing-Tianjin-Hebei “3+N” Alliance, which commenced in early January 2022, showed that a total of 23 brands participated, among which only five were domestic brands, indicating a relatively dispersed market share. Even industry giants with highly concentrated international market shares have not established an absolute advantage. Furthermore, according to the prospectus disclosed by Aier Medical, the overall domestication rate of IOLs in 2019 was merely 19%–20%, remaining at a low level.

From a product perspective, more than dozens of domestically produced intraocular lens (IOL) products have been registered and launched in China, with the majority being mid- to low-end offerings. In terms of materials, some domestic products still utilize rigid PMMA (polymethyl methacrylate); regarding optical design, some domestic products continue to employ spherical designs, which are less effective at correcting aberrations.

However, China attaches great importance to the development of its domestic intraocular lens (IOL) industry. Since 2015, a series of policies have been introduced to encourage the growth of this sector, guide social resources toward it, and create a favorable policy environment for the development of the domestic IOL industry.

2022On January 4, the National Health Commission issued the “14th Five-Year Plan for National Eye Health (2021–2025),” outlining key priorities for ophthalmic medical services over the next five years. The plan specifically highlights achieving a national Cataract Surgical Rate (CSR) of more than 3,500 per million population and continuously improving the effective Cataract Surgical Coverage (eCSC). Supported by various policies and further expansion of the patient population driven by population aging, the intraocular lens market is poised for rapid growth.

VCBeat believes that the future growth driver of the intraocular lens (IOL) industry lies in domestic substitution. During the industry’s rapid growth phase, Chinese brands such as Aierbo Nuode (Aibotech) and Haohai Biological Technology can rapidly replace imported products by leveraging their price and channel advantages. In the mature phase, after domestic substitution is largely complete, leading Chinese enterprises can achieve a second wave of growth by capitalizing on their technological advantages and channel expansion capabilities, while maintaining high profitability.