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OccuLogix narrows focus as it regroups from financing troubles
OccuLogix officials decided to focus on the small company OcuSense and its tear film testing station.
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In the midst of what appears to be a volatile market for small biotechnology companies, OccuLogix is streamlining its focus to one segment of its portfolio but has no plans to shut its doors.
“The next stage is primarily focusing on the whole concept of point-of-care diagnostics from tears,” Elias Vamvakas, chairman and CEO of OccuLogix, told Ocular Surgery News in a telephone interview.
 Elias Vamvakas |
Initially, company officials identified three major points of interest for OccuLogix as a company: age-related macular degeneration, glaucoma and dry eye. The company endeavored to get a foothold in all three therapeutic areas. It already had a stake in AMD with the rheopheresis treatment protocol, and in 2006, OccuLogix purchased Solx, which manufactures a glaucoma shunt that is not yet available in the United States.
Lastly, in April, OccuLogix announced that it had signed an agreement to acquire the remaining 49% stake in OcuSense that it did not previously own. OcuSense produces TearLab, a biomarker measuring system.
OccuLogix was in the process of raising funds to back all three projects when the subprime market crashed last year, sending a ripple effect through the investment world.
“Not only did it hurt our financing, but it also hurt one of our major institutional shareholders who went out of business and had to sell its stock,” Mr. Vamvakas said.
The economic downturn has had industry-wide ramifications.
“A lot of the smaller, publicly traded biotech companies are having a tough time these days because investors at the moment aren’t really interested in taking a lot of risks, and smaller-cap biotech companies are almost as risky as you can get,” Les Funtleyder, a health care industry analyst with Miller Tabak, told OSN.
Meanwhile, OccuLogix received a letter from the NASDAQ stock market in September notifying the company that its stock had dipped below the minimum bid price of $1 per share. The company had 180 days to bring up the price or it would be delisted, the company reported.
That is when OccuLogix began re-evaluating its priorities.
Rheo trial shuttered
The Rheo-AMD clinical trial was a 24-month study evaluating the safety and efficacy of the rheopheresis treatment for patients with dry AMD. During this process, patients’ blood is filtered through a system that removes macro-proteins and other fatty compounds thought to be involved in AMD progression.
In the study, participants at 25 sites throughout the United States were to receive eight Rheo treatments or eight sham treatments over a 10-week period.
“We all felt and frankly believed very strongly in the Rheo business,” Mr. Vamvakas said.
“There are people who have been on the Rheo treatments for 8 or 9 years and would attribute their vision to having the treatment,” he said.
In analyzing the results of an earlier trial, Mr. Vamvakas and others found the treatment to be generally effective in halting the progression of dry AMD. However, they noted that the RHEO-AMD trial would not be able to reach solid conclusions for more than 2 years.
“We couldn’t find anybody out there who was willing to take that chance in this marketplace, so we had no other choice but really to shut the trial down,” Mr. Vamvakas said.
In November, the company announced that the trial was suspended indefinitely.
Solx sold
Next, OccuLogix looked to shed some or all of its financial responsibility for Solx, a glaucoma device company that offered great potential but no guaranteed results.
“The good news with Solx was that there was a good management team in place who were very excited about the business and wanted to continue running it,” Mr. Vamvakas said.
Doug Adams, Solx CEO and founder, put an investor group together, and the sale was announced in December. The deal involved a small financial transaction up-front, with OccuLogix to receive an ongoing royalty from sales of the Solx 790 Laser and Solx Gold Shunt, according to an OccuLogix press release.
“We took that obligation off the balance sheet so we could focus on what we felt was really the best near-term opportunity in the organization,” Mr. Vamvakas said. The opportunity he refers to is a small company called OcuSense.
Moving forward with OcuSense
OcuSense is entirely focused on TearLab, a tear film testing station designed to measure a variety of biomarkers. The system has the potential to simplify and expand use of tear testing by bringing it out of a laboratory setting and into the clinician’s office.
OcuSense and TearLab carried comparatively lower risk for OccuLogix from an investment standpoint because the regulatory approval process would most likely go more smoothly, Mr. Vamvakas said. Additionally, officials feel that the product has the potential to reach a broad market.
“A point-of-care dry eye test – a lab on a chip – that would be done at a doctor’s office had tremendous potential because there’s such a huge focus or concern over dry eye as people are getting older,” Mr. Vamvakas said. “There are over 20 dry eye medications that are going through the FDA process, and there is no point-of-care, simple test that provides accurate, detailed information on the osmolarity level of a person’s tears, which is really the main indicator of dry eye.”
“I think there are all kinds of opportunities in being able to identify specific markers in tears as well as being able to analyze other kinds of proteins,” he said.
TearLab and osmolarity
TearLab requires just nanoliter volumes of tear film, according to company literature. The clinician obtains a tear sample using a disposable test card inserted into a tear collection pen. The pen is then attached to a reader that displays results.
“Tears can’t be shipped to reference labs practically,” Eric Donsky, chairman and CEO of OcuSense, told OSN. “They evaporate too quickly, and any evaporative loss will affect the measurement of these biomarkers in the tear film.”
Officials are introducing the product with an indication for testing heightened osmolarity levels, which can indicate the presence of dry eye, according to the 2007 report of the International Dry Eye Workshop.
“The idea of understanding disease physiologically is the strategic assumption behind TearLab,” Mr. Donsky said. If osmolarity is an indicator of dry eye, a machine capable of instantly testing tears for osmolarity would allow clinicians to diagnose patients with the disease and prescribe treatments more appropriately.
Company officials expect to launch TearLab in Europe later this year and in the United States in 2009.
Looking ahead
Moving forward, OccuLogix will concentrate on supporting OcuSense and TearLab. Over the past few months, the company has secured approximately $8 million in financing for the manufacturing, approval and launch of TearLab.
Next on the agenda for OccuLogix is to win approval from shareholders. A shareholder vote on the acquisition of all of OcuSense and the use of raised funds is expected to take place this summer.
OccuLogix is also in the midst of getting its stock profile back on track. “One of the things that we’re going to do once we get the shareholder approval is we will do what is known as a reverse split and increase our stock price from where it’s at to probably somewhere in the $2 to $3 range,” Mr. Vamvakas said. The stock price closed at $0.17 on May 30.
Company officials have met with NASDAQ representatives to explain their financial plans. Mr. Vamvakas said that he feels that the company can meet the listing requirements and, therefore, does not think the company will be delisted.
Capital markets
The OccuLogix story may not be uncommon among small U.S. biotech companies, which may continue to encounter challenges in raising funds until the economy turns around and capital markets are richer.
“The market today is harder than I’ve ever seen it, from a raising money perspective,” Mr. Vamvakas said. He called the present market climate terrible for smaller companies specifically.
“I think biotech generally has been hit very hard,” he said.
While he said he has not seen such a prolonged dry spell in finances before, he remained optimistic for the future.
“There’s no question in my mind that it will ultimately get better,” he said.
Mr. Funtleyder agreed. “These things tend to be cyclical, so it could very well be that in some short amount of time that it changes,” he said.
For more information:
- Eric Donsky can be reached at OcuSense, 12707 High Bluff Drive, Suite 200, San Diego, CA 92130; 858-794-1422; fax: 858-794-1493; e-mail: edonsky@ocusense.com; Web site: www.ocusense.com.
- Les Funtleyder can be reached at Miller Tabak + Co., 331 Madison Ave., New York, NY 10017.
- Elias Vamvakas can be reached at OccuLogix, 2600 Skymark Ave., Building 9, Suite 201, Mississauga, ON Canada L4W 5B2; 866-622-8564; fax: 905-602-7623; e-mail: elias.vamvakas@greybrook.com; Web site: www.occulogix.com.
- Jessica Loughery is an OSN Staff Writer who covers all aspects of ophthalmology.