We have previously emphasized early development of the target product profile, with examples of financing with non-dilutive capital through strategic partnerships. In this installment, we will review another innovative project from a physician-entrepreneur. We will explore the progression of a product’s development, starting with the initial germination of the idea based on clinical observations; the journey of developing prototypes; initial clinical testing; attempts to secure funding; and current strategy for funding further development to value inflection.

The Premise
Donald Schwartz, MD, (Long Beach Eye Care Associates, a clinical professor at the Keck School of Medicine, University of Southern California) had been a practicing ophthalmologist for nearly 25 years and had been part of the evolution of cataract surgery from surgical lens removal techniques to phacoemulsification. Dr. Schwartz was intrigued by the idea that as the use of phacoemulsification became more widespread, ophthalmologists would routinely observe that glaucoma in glaucoma patients undergoing cataract surgery would improve as a result of the surgery. He hypothesized that the ultrasound was having an impact on the fluid buildup classically associated with glaucoma, and in July 2006, he decided he would explore the possibility of using ultrasound to help treat glaucoma.

We know that a large number of patients with glaucoma or ocular hypertension are under multiple drug therapies, up to two or three times a day, and are dealing with side effects such as eye redness and irritation. This makes compliance difficult for glaucoma patients, who are often elderly. Dr. Schwartz knew that many of his patients, experiencing only the side effects and inconvenience of the eye drops and no detectable impact of glaucoma, would only administer drops for the few days before their visit with him. These patients risked losing their vision over time, but there was little Dr. Schwartz or other ophthalmologists could do to help them. Dr. Schwartz was driven by the promise of a simple, non-invasive, office-based ultrasound procedure that would lessen or ideally eliminate the need for daily drug dosing for these patients.

Dr. Schwartz began spending a lot of time in the library and on the Internet researching the rationale for the observation that the ultrasound-based procedure for cataract surgery was having a positive impact on his glaucoma patients. He had no understanding of the specifics of ultrasound and only a nascent understanding of how this could interface with the physiology of glaucoma. He discovered that, in the 1980s, there had been a commercialized device that used high-intensity focused ultrasound to ablate the ciliary body—reducing secretion of fluid into the eye. However, that particular approach suffered from the lack of predictable impact on the ciliary body and ultimately failed at that time. Dr. Schwartz considered an alternative explanation—that the vibrations caused by low-frequency ultrasound could be clearing blockages in the trabecular meshwork, the natural fluid drainage system of the eye. He decided to investigate how this hypothesis could lead to a different approach of administering the ultrasound energy for a more consistent outcome.

First Steps
He spoke with a Swedish clinician who had researched the use of non-focused ultrasound on glaucoma patients. Based on these discussions and further research, Dr. Schwartz calculated the frequency of ultrasound that would be required to transmit energy to the eye below the level that would damage the ocular tissue. Using personal funds, he contracted for the manufacture of an ultrasound device that could deliver ultrasound waves at a frequency of 1 million Hz. He received the devices, but they were more complicated than he had anticipated. When he turned them on, he could not detect any output that would provide him with feedback during their use. He called the manufacturer, who assured him that the devices were functioning and he should simply test the devices using an oscilloscope. As a clinician, Dr. Schwartz had no access to oscilloscopes and gave up on this initial batch of devices.

False Starts
Dr. Schwartz went back to calculating specifications for a new set of devices and contracted with a new manufacturer, who agreed to make the devices for free in exchange for a royalty on sales. The new devices worked better; however, they still needed some minor adjustments. The manufacturer met with Dr. Schwartz and took the two prototypes, promising to make these adjustments. However, the next time Dr. Schwartz heard from the manufacturer, he learned that the manufacturer had decided that the glaucoma device was a long way from market, and so had disassembled the prototypes and sold them for parts.

Undeterred, Dr. Schwartz contracted with yet another manufacturer, using what he had learned from using the second set of devices, and soon he had new prototypes in hand. Continuing to use his own funds, Dr. Schwartz conducted experiments with the new prototypes, first on cow and pig eyes, and then on live pigs and rabbits. These experiments revealed promising impact on intraocular pressure with few or no side effects evident via histopathological analysis. Armed with this data, Dr. Schwartz applied to an institutional review board for a non-significant risk determination to conduct a human trial. Using his own funds, he tested the device in a series of clinical trials.

The first trial demonstrated that the device was safe and well-tolerated. The next two trials demonstrated that the device could lower intraocular pressure for a sustained period of time in combination with or in the absence of pharmacotherapy. Dr. Schwartz is currently conducting a fourth trial, with the device having been used on more 80 patients, with follow-up of several years. These clinical case follow-ups were very important in establishing initial proof of concept, prior to setting the stage for larger, controlled and randomized trials that would require external funding.

Within the span of a few years, Dr. Schwartz had taken an idea, developed a working prototype, demonstrated proof of concept in human clinical trials, and filed patents. During this time Dr. Schwartz also tried to secure funding for the company he had founded, EyeSonix. He was surprised to find that despite the human testing, venture capitalists were not interested in funding the device, citing it as “too risky” and “too early” for funding. This is a common refrain heard from life-science entrepreneurs, especially regarding first-time entrepreneurs with no track record of success, nor operational or development experience.

Dr. Schwartz pursued angel financing as well, travelling across the country and even to Australia to find a funding source. After many meetings with a prominent angel network, EyeSonix had a prospect to secure financing. Ultimately, the group opted for a social media, tech startup that promised a quick return with no regulatory or clinical risks. This is another common challenge faced by life-science entrepreneurs: competing for funds with IT investments that have easy-to-understand value propositions and quicker timelines. Although sophisticated investors recognize that life-science investments provide a risk-adjusted return that is competitive with alternative investments, many angels—themselves entrepreneurs—naturally gravitate to invest in businesses they can understand.

To address the objection some had raised about the lack of experienced management, Dr. Schwartz hired a CEO and a chief technology officer, again bankrolling them with his own money. Ultimately, they parted ways.

Dr. Schwartz pursued non-mainstream avenues for funding, as well. Through a website that connects entrepreneurs with funding sources, Dr. Schwartz found another lead. A mysterious man named “Stefan” called Dr. Schwartz and advised him to bring many sources of identification and cash for a meeting with a high-net-worth individual in Lebanon. After researching the potential funder online, Dr. Schwartz discovered that the funder had political connections to controversial groups, and declined the meeting.

In 2015, Dr. Schwartz approached Ora, a contract research organization and product development firm. The interaction between EyeSonix and Ora was instantly positive and quickly moved into a funding discussion. Ora recognized the potential product opportunity, and the further validation that a controlled, masked, randomized, clinical trial would provide both for fundraising and securing a commercialization partner for the product. Within a few months, Ora and EyeSonix agreed to terms for funding a proof-of-concept clinical trial at an independent clinical site. Dr. Schwartz believes that this funding will propel EyeSonix into launching a very valuable product, validating his years of hard work.

Reflecting back, Dr. Schwartz feels that EyeSonix has been a worthy endeavor, but one that took a lot more money and time than he had anticipated. He says perseverance and flexibility are what got him through. Going through multiple manufacturers, endless fundraising meetings and discussions with potential strategic partners was not what he had anticipated. His secret—a journal, in which he writes every few days. It has grown to more than 250 pages over the course of the development of EyeSonix. After every setback, Dr. Schwartz returns to the journal. Invariably he finds a reminder of a lead or a task that he had forgotten about, which generates renewed energy and a new path to pursue for the product.

“This has been the most exhilarating part of my career, one where I can make a major impact on eye disease,” he notes. The desire to make a change and to make a difference is what drives Dr. Schwartz, and it’s a common trait seen in entrepreneurs. Today, as Dr. Schwartz embarks on the next stage of his endeavor, he remains as passionate as ever, looking forward to the date that his product launches and fundamentally changes the way glaucoma is managed.

Mr. Chapin is senior vice president of the Corporate Development Group at Ora Inc. Dr. Biswas is a managing director of OraVision Ventures. Ora provides a comprehensive range of product development, clinical-regulatory and product consulting for developers, investors and buyers; preclinical and clinical trial services, regulatory submissions; integrated with asset, business partnering, and financing support in ophthalmology. They welcome comments or questions related to this or other development topics. Please send correspondence to mchapin@oraclinical.com.