The Turning Tide: Positioning for the Next Wave of Vision Innovation
ExSight’s Year-in-Review - Year-Ahead Letter
Photo by Tim Marshall on Unsplash
As 2025 kicked off, we struck a cautiously optimistic note. While our optimism ran into policy headwinds—most notably in the form of tariff-driven market volatility—the year eventually turned positive for the healthcare and life sciences innovation ecosystem. Ophthalmic innovation also demonstrated meaningful signs of renewed momentum. After years of retreat by large pharmaceutical companies, 2025 brought more new entrants and strategic activity that bodes well for a reinvigorated sector.
Several developments underscored this shift. Merck’s 2024 EyeBio acquisition signaled renewed conviction in ophthalmic therapeutics. Eli Lilly, the pharma sector’s first trillion-dollar company, continued this momentum in 2025 as they licensed MeiraGTx’s ophthalmology gene therapy rights and acquired Adverum Biotechnologies, marking a major commitment to next-generation retinal therapeutics. ExSight’s own portfolio companies maintained momentum through 2025. Two significant highlights included Re-Vana Therapeutics’ partnership with Boehringer Ingelheim, a collaboration valued at up to $1 billion, and Horizon Surgical Systems’ revolutionary first-in-human robotic cataract surgery—a breakthrough that positions the company at the forefront of surgical automation.
While the backdrop provides reasons for optimism and strong tailwinds, the brutal market of the last few years leaves lingering impacts. Without exits, many funds have been forced to wind down. Those that remain tend to be the largest venture capital firms, resulting in significant capital concentration among incumbent players. Large funds must deploy large check sizes, which only exacerbates the funding gap for early-stage life sciences companies. Consequently, ExSight’s reason to exist—as a dedicated source of capital for capital-efficient, early-stage ophthalmic innovation—has only become more pronounced.
The Macro Environment: A Strengthening Backdrop
The broader macro environment continued to trend in directions favorable to the life science innovation ecosystem, which saw continuous improvements over the course of 2025. Interest rates came down, risk capital began flowing back into biotech, and investor sentiment shifted from cautious to constructive. These conditions are creating a more favorable operating environment for life sciences companies across the development spectrum.
M&A activity picked up meaningfully. After several years of subdued dealmaking, strategic acquirers returned to the table with renewed urgency. As Medtronic’s leadership noted, the industry has “earned the right” to pursue acquisitions after years of operational improvement. This sentiment is echoed across the large-cap pharma and medtech landscape, where depleting pipelines and patent cliffs are driving an imperative to acquire innovation externally.
Financing activity accelerated. The global ophthalmology drug market reached $38 billion in 2024 and is projected to reach $62 billion by 2030. In the second quarter of 2025 alone, 13 ophthalmic transactions attracted $620 million in investment, and the ophthalmic clinical trials market is expected to reach $2.5 billion by 2030. These data points reflect a sector that is not only recovering but actively attracting new capital, as demonstrated by Lily’s transactions.
Ophthalmology in 2025: Strategic Shifts & Implications
The Rise of Vertically Integrated Platforms
Two landmark acquisitions, McKesson and Cencora, demonstrated the value of large, vertically integrated platforms in ophthalmology. These transactions highlighted the profitability of an increasingly therapeutics-driven model, where companies that control distribution, practice management, and clinical delivery are commanding premium valuations. Both McKesson and Cencora’s interests are indicative of a broader recognition and maturation of retinal therapeutics as a significant value driver. This trend will not relent any time soon and favors continued investment in improved retinal therapeutics, creating downstream demand for innovative products.
Reimbursement Pressures & the Opportunity for Premium Services
Conversely, CMS reimbursement continues to erode, placing smaller independent clinicians in a difficult position. This dynamic is driving demand for services and therapies that are either cash-pay or carry premium reimbursement profiles. The pressure to find increased revenue streams can be seen in Alcon’s acquisition of LumiThera and it’s photo biomodulation device for the treatment of dry age-related macular degeneration.
This environment directly informed our DefEYE investment. DefEYE operates in a segment with favorable reimbursement and delivers a substantial clinical benefit, which is driving rapid adoption. As a revenue-stage company, DefEYE represents the kind of capital-efficient opportunity with near-term commercial traction that aligns with our investment thesis.
Longer-Duration Therapies: The Strategic Imperative
Longer-duration anti-VEGF therapies for wet AMD remain the key acquisition target for strategic buyers. A proven and growing market is likely a major factor behind Eli Lilly’s acquisition of Adverum and Merck’s interest in the ophthalmic space. The industry is actively seeking therapies that reduce treatment burden for patients while maintaining or improving efficacy—a paradigm that creates substantial commercial value.
This thesis underpinned our investment in Revopsis and continues to bode well for existing portfolio companies, including Re-Vana Therapeutics and Valitor. Re-Vana’s sustained-release drug delivery platform, now validated by its Boehringer Ingelheim partnership, is positioned squarely at the intersection of this demand. The growing interest from large vertically integrated platforms like McKesson and Cencora further reinforces the commercial potential for improved retinal therapeutics.
Long-Term Structural Trends: Automation & AI
Several long-term structural trends remain firmly intact and continue to shape our investment strategy. Clinician and labor shortages will persist and worsen across ophthalmology in the coming years, and the transformative potential of artificial intelligence is increasingly evident. These forces will continue to inform new investments and provide tailwinds for existing portfolio companies.
Horizon Surgical Systems achieved a landmark milestone in 2025 with the first-in-human robotic cataract surgery. This is a generational achievement for which the Horizon team cannot be praised enough. Cataract surgery represents one of the highest-volume surgical procedures globally, with approximately 20 million procedures performed annually. Horizon’s robotic platform addresses the dual challenges of clinician shortages and the demand for greater surgical precision and consistency. The total addressable market for robotic cataract surgery is massive, and Horizon is positioned as a first mover in this space.
Envision Diagnostics continues to advance AI-driven diagnostic capabilities that address the growing gap between patient volume and available clinicians and technicians. As patient populations grow and the eye care workforce remains constrained, AI-powered diagnostic tools will become increasingly essential to the delivery of care.
AI continues to be a transformative theme that will help address labor shortages in the face of growing patient populations. Horizon and Envision are companies that exemplify this paradigm, and we continue to actively seek additional investments in this space.
Capital Concentration: A Growing Challenge & Our Opportunity
One of the defining dynamics in venture capital over the past few years has been the increasing concentration of capital among the largest firms. As smaller and mid-sized funds have been forced to wind down—often due to the lack of exits and distributions—the remaining capital has consolidated into the hands of large incumbents. These firms, by necessity, write large checks, focusing on capital-intensive or later-stage opportunities that match their fund economics.
The consequence is a widening funding gap at the early stage. Capital-efficient, early-stage life sciences companies—the very companies that drive the foundational innovations which later-stage investors and strategic acquirers depend upon—are finding it increasingly difficult to secure funding. This structural dislocation represents both a challenge for the ecosystem and a significant opportunity for specialized investors like ExSight Ventures.
Looking Ahead: ExSight Ventures New Fund
With fewer early-stage investors competing for deals, our deep domain expertise in ophthalmology, and an established track record of identifying transformative companies at the earliest stages, we believe the current environment presents a compelling opportunity to deploy capital into the next generation of ophthalmic innovation.
2025 Ophthalmic Industry Highlights
The year was defined by notable innovation across the ophthalmic landscape. Key developments included:
FDA Approvals & Drug Launches. Susvimo (ranibizumab implant) became the first FDA-approved continuous-delivery treatment for diabetic macular edema and diabetic retinopathy, despite the technology's shortcomings and limited adoption. Alcon’s Tryptyr was approved as the first TRPM8 receptor agonist for dry eye disease, representing the significant unmet needs for patients living with dry eye disease. LENZ Therapeutics’ Vizz was approved for presbyopia, and Regeneron’s Eylea HD received approval for extended dosing in retinal vein occlusion. The entry of Celltrion’s EYDENZELT, an aflibercept biosimilar, intensified competition in the anti-VEGF space.
Myopia Management. The FDA authorized Essilor’s Stellest eyeglass lenses to slow myopia progression in children, reflecting growing commercial interest in the pediatric vision care market. However, Sydnexis received a complete response letter from the FDA. The FDA noted that the endpoint was met but stated that the data did not support effectiveness.
M&A Activity. The year also saw significant deal activity. While Lily’s deal activity is a bright spot, there was some difficulty on the M&A front. The attempted Alcon-STAAR Surgical merger, valued at approximately $1.5 billion, was ultimately terminated in early January 2026 after failing to secure the necessary stockholder votes—a reminder that even in an active M&A environment, deal execution carries risk.
Emerging Themes. The year was broadly defined by innovation in longer-lasting therapies, less invasive procedures, AI-driven diagnostics (the nascent oculomics space), and sustained-release drug delivery systems—all aimed at reducing treatment burden for patients. These trends are just getting underway and have much more upside to run and align directly with ExSight’s investment thesis and portfolio positioning.
Summary & Outlook
As we look to 2026 and beyond, we see a healthcare innovation ecosystem that is regaining its footing after several challenging years. Though tail risks remain, including policy and geopolitical instability, we remain cautiously optimistic that the environment will bode well for life sciences innovation. Interest rates are declining, strategic acquirers are active, and financing is returning to the life sciences sector. Within ophthalmology, the convergence of longer-duration therapeutics, AI-driven diagnostics, surgical automation, and evolving reimbursement models is creating a rich opportunity set for investors with deep domain expertise.
ExSight’s portfolio is well-positioned to benefit from these trends. Re-Vana’s Boehringer Ingelheim partnership validates the commercial potential of sustained-release delivery. Horizon’s first-in-human robotic cataract surgery establishes a new paradigm in surgical care. Envision’s AI diagnostics platform addresses a structural workforce shortage. DefEYE’s favorable reimbursement profile is driving commercial traction. And Revopsis and Valitor are positioned to benefit from the industry’s appetite for longer-duration wet-AMD therapies.
The structural concentration of venture capital among the largest firms has created a dislocation that favors specialized, early-stage investors. ExSight Ventures is uniquely positioned to capture this opportunity, and we are excited to grow our capabilities and activity in the space.