Charlottesville startup TearSolutions secures funding to complete clinical trial

Drug for dry eye would address a cause of the condition, company says

TearSolutions, a Charlottesville startup that spun out of the University of Virginia, recently reached another milestone in its quest to develop a new treatment for a dry eye.

TearSolutions announced earlier this month that it had closed a $8.5 million Series B financing round. Middleland Capital’s Virginia Tech Carilion Innovation Fund and Pharmstandard International, a Russian pharmaceutical firm, were the lead investors.

The company’s latest fundraising will enable it to complete an ongoing Phase 1/2 clinical trial for its dry eye drug candidate, Lacripep, in 2018.

Dry eye occurs when a person can’t produce the steady flow of tears needed to lubricate and nourish the eye. It affects nearly 30 million people in the United States, with a higher prevalence among the elderly and post-menopausal women.

“It’s a huge market, and it’s not being adequately addressed,” said Mark Logan, co-founder and executive chairman of TearSolutions.

Logan is the former chairman, CEO and president of VISX Inc., which introduced the laser technology for the vision correction procedure known as LASIK. He also was senior vice president, COO and a member of the board of directors of Bausch & Lomb.

Logan noted that undergoing LASIK surgery and using contact lenses — Bausch & Lomb’s signature product — can cause dry eye. “I know a lot about dry eye because I caused a lot of it,” he joked.

Restasis, marketed by Allergan, was the first prescription medication for dry eye to reach the U.S. market. Approved by the FDA in 2003, the drug generated $1.4 billion in sales last year.

Tom Gadek, TearSolutions’ CEO since December 2016, previously oversaw the development of the second dry eye medication approved by the FDA. Gadek’s startup, SARcode, created the drug Lifitegrast and sold the rights to Shire, which began marketing it last year as Xiidra.

“We are building on the combination of Xiidra and Restasis’ success to get Lacripep approved,” Gadek said.

While Restasis and Xiidra can reduce the inflammation caused by dry eye, Gadek said that neither drug targets an underlying cause of the condition.

Gordon Laurie, a professor of cell biology at UVa and chief scientific officer at TearSolutions, co-founded the company with Logan to commercialize findings from years of research on proteins that regulate tearing.

In 1992, Laurie began to conduct biochemical screens for proteins that regulate tearing with grant funding from the National Eye Institute at the National Institutes of Health.

“Looking for those proteins was like trying to find a needle in a haystack,” Laurie said.

In 2001, Laurie led a team of scientists that discovered lacritin, a protein found in tears that promotes further tear secretion and improves corneal health. Later studies indicated that people with dry eye had lower-than-normal concentration of lacritin in their tears.

Laurie hypothesized that dry eye could be managed with a “replacement therapy” for lacritin — similar to how insulin injections can help people manage diabetes.

Laurie said the complete lacritin protein is costly to produce. To create a viable drug, he had to identify the portion of the protein that induces tearing and develop a way to reproduce it artificially. The synthetic peptide, called Lacripep, is the active ingredient in TearSolutions’ dry eye drug candidate.

As the patent holder for Lacripep, UVa would benefit from royalties on future sales of the drug. TearSolutions worked with the UVa Licensing and Ventures Group to obtain exclusive license to use the patents on Laurie’s inventions.

The university also participated in TearSolutions’ latest funding round with an investment by the UVa Seed Fund.

“We are very pleased to be an investor in TearSolutions,” said Bob Creeden, managing director of the UVa Seed Fund and New Ventures for the Licensing and Ventures Group. “I think everyone on the [TearSolutions] team is an expert in their field, and has a great sense of how to move this technology forward.”

TearSolutions currently is running a Phase 1/2 trial of Lacripep eye drops to treat dry eye from primary Sjogren’s syndrome, an autoimmune disorder that causes dryness of the eyes and mouth, among other symptoms.

Sjogren’s syndrome patients include tennis star Venus Williams, who was diagnosed as having the disorder in 2011 after battling unexplained fatigue for several years.

“In a way, Sjogren’s is a ‘torture test’ for us; it’s the toughest form of dry eye to treat,” Logan said. “If Lacripep will work on Sjogren’s, we believe strongly that it will be effective in treating other forms of dry eye.”

Earlier studies using mice that were genetically modified to simulate Sjogren’s syndrome found that Lacripep increased tearing and restored corneal health.

Logan said that focusing on Sjogren’s syndrome makes Lacripep eligible for the FDA’s Orphan Drug Designation program, which incentivizes the development of drugs for rare diseases. Orphan drugs are granted seven years of exclusive approval by the FDA to treat those diseases.

TearSolutions has no salaried employees. Of its seven-person team, two receive fee-for-service and all are compensated with company equity.  

“TearSolutions is unusual in how our team is so closely aligned with our investors,” Logan said. “We are anxious to get [Lacripep] into the market — it’s the only way we get a payoff.”

Before its latest round of investment, TearSolutions raised $3 million in its 2015 Series A financing, led by Santen Pharmaceuticals, Medarva Innovations LLC, the Center for Innovative Technology and Launch Capital.