MORRISVILLE, N.C. – What’s next for TearScience?
The Morrisville-based firm develops and sells innovative methods to diagnose and treat the most common form of dry eyes. Dry eye syndrome impacts 300 million people worldwide and more than 70 percent suffer from evaporative dry eye.
Treatments for dry eye represent a global market of more than $10 billion in the U.S. alone.
TearScience has raised $113 million from venture investors (Essex Woodlands Health Ventures, Investor Growth Capital and Catalyst, DeNovo Ventures, Spray Ventures and Quaker Bio Ventures).
To IPO or not?
Most recently, Healthcare Royalty Partners invested $70 million to fund its global sales and marketing efforts. The 100-person company is still hiring sales people in the U.S. and entering Asian markets, including Japan, Korea and China.
The company has achieved regulatory approval in Europe, but it sees Asia – where dry eyes are even more of a problem than in the U.S., as a primary market.
“The market opportunity is untapped there,” said TearScience CEO Tim Willis. “We were amazed at how large the Chinese market is.”
There are 179 million Chinese who suffer from dry eyes, added Willis, and more than 40 million of them can pay the cost for the TearScience treatment. Willis noted that the company has learned to find and work with partners in those markets who have had previous success with medical devices.
“These partners have skin in the game,” he explained. “I tell them, we can’t be a success unless you are.”
While $70 million certainly sounds like a pre-IPO mezzanine round, Willis said it’s not necessarily the next step.
“We’re venture-funded, so one day down the road we’ll have an exit for our investors and employees, whether through an acquisition or going public if that’s appropriate,” he explained. “That seems like more of an option today than a year ago.”
Willis noted that although biotech IPOs have done well the last three years, it’s still not that great for medical devices. “But, he said, “the window is opening and at the right moment and valuation, everything is on the table; anytime anyone is willing to give me money at the right price, I’m willing to take it.”
A 12-minute office treatment
TearScience sells two devices in its LipiFlow system.
The LipiView device captures images of the tear film, processing more than a billion data points in less than five minutes to diagnose the problem. The Lipiflow device provides a 12-minute in-office heat treatment. Currently, the average U.S. charge for the treatment is $1,650.The two devices together sell for about $80,000.
The treatment, successful 79 percent of the time, is effective for about nine months. Other treatments, such as eye drops, tend to focus on the symptoms rather than the cause.
If you’ve ever suffered from this form of dry eyes, usually caused by a malfunctioning gland (Meibomian Gland Dysfunction) that secretes an oily layer to protect the eye’s lubrication, you would understand why people are willing to pay a significant amount of money for a treatment that works.
“If you have ever had a lash caught in the eye that is what moderate dry eye feels like 24/7,” Willis said. “Severe dry eye feels like sand in your eye 24/7.”
Addressing the cause, not the symptom
The company’s product will compete against such products as Allergan Inc’s Restasis, eye drops that increase tear production. It currently costs $173 to $181 for a 30-day supply, but insurance may cut that to a co-pay amount. The TearScience treatment is not currently covered by health insurance companies.
A number of firms have attempted to create other treatments for dry eyes, include Triangle-based Inspire Pharmaceuticals, which partnered with Allergan to develop Prolacria, which failed to meet its goals in a Phase III trial.
Willis said TearScience spent $70 million of its venture money “figuring out the core reason for dry eyes, how to measure it, identify it, and treat it – it was full effort and something that had never been done before.”
It’s possible the TearScience treatment will become somewhat less expensive and it may eventually be covered by health insurance, but that, Willis pointed out, is a long process taking at least four or five years.
The company has additional new technology in the works. It has been awarded 35 patents with more than 50 others in process. “There will be additional things coming out in the next several months,” Willis closed.