Charlottesville startup TearSolutions is moving ever closer to commercialization after hauling in a $6.4 million funding round.
The company, which launched in 2013 as a spinout of the University of Virginia, is developing a drug called Lacripep to combat dry eye. The condition – when you can’t produce the tears needed to lubricate the eye – is estimated to affect nearly 30 million people in the U.S.
Co-founder Mark Logan, who confirmed the Series B-2 round, said the drug works like a natural replacement therapy, akin to those with some forms of diabetes injecting insulin. TearSolutions is three-quarters of the way through a clinical trial involving 200 people with Sjogrin’s Syndrome, a more extreme dry-eye condition.
“This round of funding was needed to complete the clinical trial and extend our toxicology study, which will need to be further out before we get FDA approval,” Logan said.
The deal, a combination of stock and convertible notes, follows the 2017 close of an $8.5 million Series B financing round led by Middleland Capital’s Virginia Tech Carilion Innovation Fund and Pharmstandard International, a Russian pharmaceutical firm. The UVa Seed Fund also participated in that funding, which allowed the startup to complete a Phase 1/2 clinical trial for its dry eye drug candidate, Lacripep, in 2018.
Before that, TearSolutions raised $3 million in a 2015 Series A round led by Santen Pharmaceuticals, the Center for Innovative Technology, Launch Capital and Richmond-based Medarva Innovations.
Part of its attractiveness to venture capital groups is TearSolutions’ leadership team, which has a formidable resume in the industry.
Gordon Laurie, a cell biology professor at UVA and chief scientific officer at the startup, co-founded it with now-chairman Mark Logan to commercialize findings from research on proteins that regulate tearing. Logan is the former chairman and CEO of VISX, which introduced the laser technology for LASIK vision correction procedures. He also was senior vice president, COO and a member of the board of Bausch & Lomb.
Additionally, TearSolutions CEO Tom Gadek oversaw the development of the second dry eye medication approved by the FDA, then sold the rights to Shire, which began marketing it last year as Xiidra.
Restasis, made by Allergan, was the first prescription medication for dry eye in the U.S. market. It was approved by the FDA in 2003 and generated about $1.4 billion in sales last year.
TearSolutions is very much in the business of being acquired, or at least selling its patents, Logan said.
“None of our employees are salaried, they all have stock,” he said. “We are aligned with our investors, so we will not have anything until they get something, whether that’s an IPO – very unlikely – or an exit.”
