If It’s Eye Care Technology, This Must Be Orange County
THAT Orange County, Calif., has become a center of small companies developing devices for eye care is no coincidence.
Some of the companies were nurtured by a six-year-old private organization of more than two dozen top executives of corporations in the county. The organization, called Orange County Technology Network, or Octane, has so far created 27 companies, most in electronics and software technology, and biomedical devices, especially for eye care.
“It’s innovation development, a variation on economic development,” said Gary Augusta, executive director of Octane.
Other small eye device companies can trace their origins to William J. Link, who earned an engineering doctorate from Purdue University and came to Orange County in 1977 to work for a hospital supply company. He went on to found two eye device companies, sell them, and with the proceeds join venture capital investors who finance health care companies. He has helped to finance 20 companies, half of them in Orange County.
“When companies get bought out, some of the people in them who owned shares find they have money,” Mr. Link said. “And if they are entrepreneurial, they get the confidence to start their own companies. So the industry multiplies over and over again.”
In all, there are 310 biomedical firms in Orange County, according to Octane, including several dozen developing implanted lenses, known as intraocular lenses, for use in cataract surgery, laser surgery for vision correction and instruments to alleviate glaucoma and other eye diseases.
“This area has the highest concentration of ophthalmic industry in the world,” said Dr. Roger F. Steinert, professor of clinical ophthalmology at the University of California, Irvine, which is closely involved in the Octane community effort. Every Thursday, Luis Vasquez of Octane goes to the Eye Institute at the university and listens as medical researchers tell him of ideas they have for businesses. Then he refers the ideas to the venture capital investors and entrepreneurial businesspeople who serve on Octane’s 27-member board.
“There is a remarkable community here,” said Dr. Steinert, who is helping to raise funds for a $50 million Eye Institute building at the university. The building will be named for Gavin S. Herbert, founder and former chairman of Allergan, the large pharmaceutical products company that first developed antiallergy eye drops 60 years ago in Los Angeles. Allergan moved its headquarters to Irvine in 1971.
The industry grew over some three decades in an organic process of small companies being taken over by large ones, which spurred entrepreneurs to form and lead new companies. Mr. Link, for example, started in the business 31 years ago when he heard about a need for intraocular lenses to replace lenses clouded with cataracts. “So I contacted an ophthalmologist friend of mine and we founded American Medical Optics to make such lenses,” Mr. Link said in a recent interview.
Mr. Link sold that company to Allergan in 1986 and then founded Chiron Vision, as an Orange County eye care subsidiary of the Chiron Corporation, the biotechnology firm based in Emeryville in Northern California.
Chiron Vision succeeded with lenses and research into advanced eye care, and Mr. Link sold it to Bausch & Lomb of Rochester for $300 million in 1997. Mr. Link then became a venture capitalist at Brentwood Venture Partners and its successor firm, Versant Ventures.
Eyeonics of Aliso Viejo, Calif., is a company founded by J. Andy Corley and Dr. J. Stuart Cumming in 1988. Mr. Corley worked with Mr. Link at American Medical Optics and at Chiron Vision. At Eyeonics, he changed the industry by persuading Medicare to let patients pay surgeons extra and directly for specialized lenses.
“Cataract surgery is the most common operation performed, three million a year in the United States,” Mr. Corley said in an interview. “But Medicare in recent years started cutting remuneration for the procedure and private insurers did the same.” So Eyeonics has developed what Mr. Corley called a premium lens that not only replaced the cataract but reduced the need to wear eyeglasses afterward for reading.
“Baby boomers don’t want to wear glasses,” Mr. Corley said. “They want to preserve the youthful lifestyle, and they’re willing to pay for it.” Eyeonics made $34 million in revenue for its premium lenses last year, he said. Cataract surgery costs up to $2,000 an eye while surgery that installs the premium lenses can cost $5,000 an eye, according to data supplied by Eyeonics and physicians.
Mr. Corley sold Eyeonics last February to Bausch & Lomb for an undisclosed sum that he said exceeded $80 million. Impressed with the entrepreneurial environment in Orange County, Bausch & Lomb is transferring some research functions to the Eyeonics location, which Mr. Corley will manage.
Thomas J. Berryman, who founded WaveTec Vision Systems in Aliso Viejo, Calif., in 2005 with $5 million in venture capital from Mr. Link’s Versant Ventures, noted in an interview that the demands of eye care change as technology advances.
“Many young people have Lasik surgery these days, and that changes the calculations on their lenses when they come to need cataract surgery,” Mr. Berryman said. “This presents problems for surgeons who guarantee a certain level of vision perfection as a result of their operations.”
WaveTec Vision has responded by developing an instrument that attaches to the surgical microscope, allowing the doctor to have a more precise measurement of a patient’s corrected vision. The company has run trials of the device on 300 patients, has raised $18 million in venture capital and hopes to achieve commercial operation next year, Mr. Berryman said.
Another eye device company is the Glaukos Corporation, headed by Thomas W. Burns, who worked with Mr. Link at Chiron Vision and was recruited by him in 2002 to be president and chief executive. Mr. Link serves as chairman of Glaukos, which is in Laguna Hills, Calif. Inspiration for the company came from a financier in Orange County, Olav Bergheim, whose son suffered from glaucoma and required high-risk surgeries. “We founded this company,” Mr. Burns said, “to develop a safer microinvasive procedure to treat glaucoma.”
Glaukos, with help from Dr. Richard Little, an ophthalmologist at the University of California, Irvine, developed an infinitesimal titanium stent that can be implanted in the eye to drain fluid and thus reduce the pressure that leads to glaucoma. The company, backed by $55 million in venture capital, has completed its clinical trials and hopes to secure approval for the device by mid-2009, Mr. Burns said.
Noting the intense levels of activity among the hundreds of biomedical companies in Orange County, Mr. Augusta summed up one of Octane’s tasks this way: “We have 400 jobs open and must attract the people.”