Dr Boreham’s Crucible: Nova Eye’s US vision sharpens as profits come into view

With the bulk of its revenue now derived from the US, Adelaide-based glaucoma device maker Nova Eye Medical (ASX:EYE) would seem to be a bull’s eye target for the Trump administration’s punitive tariffs.

In reality, Nova Eye is a poster child for the Make America Great Again (MAGA) manufacturing push, as it makes all its products at its facility at Fremont in San Francisco.

What’s more, the company exports material from the US to Germany and China – its two other key markets.

How MAGA is that?

What Nova Eye does fear are reciprocal ‘revenge’ tariffs imposed against the US by China or the European Union.

Fortunately, Beijing looks to have settled on 10% – a far more manageable impost than the envisaged 125% or more.

As for Germany, the European Union is reluctant to impose any tariff on US goods, despite Trump threatening a 15% impost on most Continental goods.

“There is a bit of uncertainty, but we will cope,” says Nova Eye CEO Tom Spurling.

“Our message is that 80% of our revenue is in America to Americans and that’s rock solid.”

Nova Eye’s rebirth

Nova Eye’s Itrack Advance device surfs the growth of minimally invasive glaucoma surgery (MIGS), which is becoming the standard of care in the US.

Glaucoma is the second leading cause of blindness in the world, behind wet aged-related macular degeneration in developed countries and untreated cataracts in developing nations.

Nova Eye evolved from Ellex Medical Lasers, which in 2020 sold off most of its business (lasers and ultrasounds) to French multinational and laser specialist Lumibird.

The divested operations accounted for about 80% of Ellex’s business. Still, the $100 million sale price exceeded the entire company’s market capitalisation at the time.

The bonsaied Ellex changed its name to Nova Eye and the company focused on its Itrack glaucoma tool.

Commercialised in 2008, Itrack pioneered canaloplasty, a non-penetrating eye canal procedure to reduce the intraocular eye pressure that causes glaucoma.

FDA approved the improved Itrack Advance in April 2023.

Spurling joined (or effectively re-joined) the company in April 2021 as an executive, having previously headed Ellex between 2011 and 2019.

He became CEO in August 2021.

Nova Eye retains its headquarters and research and development function in Adelaide.

The company sells mainly in the US and Germany (directly) and China (via a distributor).

Glaucoma explained

A failure of the eye’s “plumbing”, glaucoma is caused by the blockage of drainage canals, which results in a build-up of pressure within the organ.

The ocular irrigation system at the front of the eye circulates nutrients, but with time and age – typically 40 years and over – blockages occur.

The optic nerve is crushed, the pressure builds and eventually patients lose their sight.

To date, glaucoma patients have been prescribed eye drops that reduce the production of a liquid-rich protein – and thus the pressure.

Spurling says about half of patients stop taking the drops, because they are hard to administer and they hurt.

“Patients give up, until they are told off by their doctor,” he says.

Given glaucoma is degenerative, minimally invasive surgery is not a cure.

But it might give patients several years’ respite from taking the drops – or they might die before they can go blind.

“Some patients have gone out to six years without needing any more intervention,” Spurling says.

‘Clearing the eye’s gutters’

Spurling describes the Itrack procedure as “like clearing the leaves from your gutter and then flushing with a hose”.

Itrack performs a 360-degree clean-out of Schlemm’s canal, the eye’s natural ocular drainage system.

Looking somewhat like a portable reading light, Itracks are a catheter consisting of a light, a pipe and a wire.

The pencil-like handpiece enables surgeons to use their fingers to move the catheter through the canal.

This optical waterway is then flushed out with bio-compatible fluid.

The original Itrack required the use of forceps, which was cumbersome.

Itrack Advances incorporate a handpiece, enabling surgeons to guide the catheter with a thumb or forefinger.

Sizing the US prize …

Nova Eye does have the market to itself, competing with four main rival products.

For the record, they are Glaukos’ Istent, Alcon’s Hydrus, Sight Sciences Omni and New World Medical’s KDB.

Nova Eye claims Itrack is superior, partly because it cleanses 360 degrees of the canal, while rival products only cover 180 degrees.

The catheter has a light, which gives the doctor a better understanding of where the catheter is in the canal.

Based on interviews with 35 US ophthalmologists, financial services advisory Needham & Company puts Istent’s market share at 39% – well ahead of the pack.

The firm says Itrack has been the fastest growing device with a 2.4% share, forecast to grow to 3.4% by the end of the 2025-’26 financial year.

This increment does seem small, but the 2.4% equated to revenue of US$14.1 million last year.

On our sums, a 3.4 per cent share equates to US$20 million – a material increase.

… but taking it slowly

In the US, Nova Eye sells through its own sales team, consisting of 13 representatives.

The company discloses the current per-representative revenue of US$1.5 million, compared with rival companies’ productivity of less than US$1 million.

So why doesn’t Nova Eye go hammer and tongs to hire more and supercharge revenue?

The answer is that hiring sales reps is a sizeable upfront expense, which would work against Nova Eye’s commitment to achieving profitability in the short term.

“We have a commitment to improve our bottom line as well as good sales growth, which we interpret as 25 to 30% annually,” Spurling says.

“We could grow a lot faster on the top line, but it would cause damage to the bottom line.”

He adds that as the company’s “foot soldiers”, the sales reps have a dual role of parlaying sales and spreading the message about Itrack’s superior efficacy.

Eyeing China

In late September, China’s National Medical Products Administration approved Itrack advance. The original device already had been approved and “well accepted by Chinese surgeons”.

The company said it would initiate pre-launch activities with its Chinese partners “immediately”, with revenue evident from the current financial year.

Spurling believes the Chinese glaucoma treatment market is about a decade behind the West’s – and this relates closely to the “concurrent glaucoma” market.

To explain, about one in five patients who present for cataract surgery have concurrent glaucoma.

If the five-minute cataract procedure is lengthened by a few minutes, the glaucoma can be dealt with as well.

Spurling says doctors love to tell patients they can be eyedrop-free – at least for a period – but concurrent glaucoma procedures are not common in the Middle Kingdom.

“It’s a compelling story not told in China. but ultimately that market will be very large.”

In the US, about six million cataract procedures (patients) are done annually.

The Chinese market would be at least three times bigger.

Other programs

Nova Eye has an asset in development called Alpha RET, the world’s first laser therapy for aged-related macular degeneration.

In essence it’s been parked, for want of a partner to take the running on it.

“We are like an oil explorer discovering a massive reserve, but without the resources to develop the field,” he says.

Sticking with that analogy, Nova Eye is waiting for the eyecare equivalent of Woodside Energy – Australia’s biggest hydrocarbon producer – to come along.

Nova Eye also chalks up modest sales of a drainage device called Molteno3, which is accounted for as glaucoma revenue.

Invented by late New Zealand ophthalmologist Prof Anthony Molteno in the 1970s, Molteno3 is used to create an artificial ocular drain for complex glaucoma patients.

A 0.4-millimetre-wide plate, Molteno3 slides between the tissue planes and adjacent extraocular muscles.

While the device has been copied over the years, in 2020 Nova Eye acquired the Molteno rights for $920,000.

Finance and performance

Nova Eye reported revenue for the year to June 30, 2025 of $29.3 million. US revenue gained 26% to US$14.3 million ($21.7 million) and accounts for three-quarters of the company’s turnover.

(While the company reports in Aussie dollars, its real lingua franca is the greenback).

German income oompah-ed up 17% to US$1.9 million and Chinese revenue rose 17% to US$1.16 million.

The net loss came in at $9.06 million, compared with a $8.8 million deficit previously. But most of the underlying loss was incurred in the first half, with a “material improvement” in the second.

Management has guided to revenue of $32 million to $37 million for the current year, with breakeven underlying earnings in the current half.

The company raised $6.6 million in February, at 12 cents a share (a 20% discount).

Over the last year Nova Eye shares have varied between 28 cents (mid-July 2024) and a record low of nine cents (early April this year).

In its post-divestment period, Nova Eye shares peaked at 45 cents in August 2021.

Nova Eye’s only substantial shareholder, Australian Ethical has an 18% stake.

Follow the money

A glaring omission from Nova Eye’s revenue is Australia, apart from some minor sales to public hospitals.

The Therapeutic Goods Administration approved Itrack a decade ago.

The trouble is, the company has not been able to convince regulators to subsidise the devices, even though it presented the same data that spurred US approval.

Nova Eye has no plans to be a good patriot and sell the device here at a loss.

“I’m not here to fly the flag,” Spurling says bluntly.

“Our concern is improving our share price and our bottom line, not selling in Australia just because we are from Australia.”

Not only are the US and German markets much bigger, they offer attractive reimbursement.

In the US, Itrack Advances sell for around US$1000.

Dr Boreham’s diagnosis

According to research house Marketscope, the global glaucoma treatment market currently is worth US$5.7 billion. The devices component is expected to rise from US$877 now, to US$1.56 billion in 2029.

“We have a tiny share in the US, we are taking share from other people and the market is growing,” Spurling says.

With Nova Eye’s share price halving over the last year, the company trades on a mingy revenue multiple of less than one times.

If the company can demonstrate consistent profitability, its circa $40 million market cap looks decidedly underdone.

No doubt some of Nova Eye’s larger rivals have done the sums.

Meanwhile, Spurling makes no apologies for Nova Eye’s short term profit focus, because that’s what investors clearly have demanded.

“We think this is a great business in the long term,” he says.

“But we need to show we can demonstrate profitable sales that ultimately will improve our share price.”

At a glance

ASX code: EYE

Share price: 14 cents

Shares on issue: 284,821,284

Market cap: $40 million

Chief executive officer: Tom Spurling

Board: Victor Previn (chair), Spurling, Daniel Webb, Rahmon Coupe, Mike Southard

Financials: (year to June 2025): revenue $29.3 million (up 25.5%), net loss $9.1 million ($8.8 million deficit previously), cash of $5.055 million (down 18%)

Identifiable major holders: Australian Ethical 18%, Sedico Pty Ltd (Victor Previn) 4%, Ruminator Pty Ltd 2%, Canala super fund (Giuseppe Canala) 1.6%

Disclosure: Dr Boreham is not a qualified medical practitioner and does not possess a doctorate of any sort. He also has a myopic focus – on meeting today’s deadlines.

This column first appeared in Biotech Daily.