Blindness: The underrated investment case

Sector Background

As the scope and possibilities of science and technology continue to grow at exponential rates, many healthcare sector stocks have the potential to robustly outperform the market over the next decade, especially in light of COVID-19, maturity in Big Tech, slower economic growth and the low-yield environment.

Within this trend, there are particular hotspots of investor potential. Edison has identified macular degeneration, a condition causing degrees of blindness, as having untapped investment potential. It has also received less media coverage and analyst recognition than almost any other.

Investment Logic

Age-related macular degeneration (AMD) is the leading cause of blindness in older adults across western countries. It damages the retina but its exact causes are not fully understood.

The treatment market for neovascular AMD (often referred to as ’wet AMD‘) is already valued at more than US$5.7bn and is still expanding. Two treatments – ranibizumab and aflibercept – achieved combined sales growth of c 9% of in 2019.

These treatments are targeted at c 2.8 million people across the US and Europe, most of whom would otherwise become legally blind. Another c 18–22 million people in these regions have earlyto-intermediate forms of ’dry AMD‘.

Dry AMD can progress to geographic atrophy (GA), which we estimate affects a further c 2.7 million. There is no widely accepted and approved treatment for either condition and GA often also leads to legal blindness and loss of independence.

Effective dry AMD and GA treatments could be ‘blockbusters’, adding billions of dollars to the market. There is also a signficant opportunity for investors as companies compete to improve the effectiveness of existing wet AMD treatments, make them more convenient and/or reduce the need for invasive procedures.

Source: Refinitiv price at 09 October 2020

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