CEO: Elias Vamvakas.
No. of local employees: 15.
Net revenues: $639,000 (six months ending June 30, 2010).
Net loss: $3.6 million (six months ending June 30, 2010).
Company description: Develops lab-on-a-chip technologies that allow eye care practitioners to test for disease markers in tears.
When James Owen first cast eyes on San Diego-based TearLab Corp.’s lab-on-a-chip approach to testing for eye disorders, he knew one major category of patients would be seeing improved results in their vision.
The company, which has been marketing the product after getting through regulatory hurdles in Canada and 22 countries overseas, is seeing dollar signs as it moves closer to a reliable revenue stream.
Owen, a doctor of optometry at Encinitas Optometry, said patients who most benefit from the innovative assessment test are those suffering from dry eye disease, a condition which he said has caused many wasted visits in the past to his clinic because he didn’t have the right tools for a diagnoses.
The disease is a common condition affecting approximately 22 million people in the U.S., according to a study by Harvard Medical School and accounts for up to one-third of all visits to America’s eye doctors, said Owen. In its mild to moderate forms, it can reduce the quality of vision and the ability to go about daily activities, said Owen, whose clinic has been a site of clinical trials. In its more severe forms, DED can lead to permanent loss of vision.
As people age, their tear film becomes more porous and the concentration fluctuates significantly at each blink due to water loss through an unstable tear film, said Owen. He said the condition can make wearing contact lenses difficult for some people. It gives the makers of lenses an incentive to create better polymers that won’t disrupt the tear film.
Diagnosing the Disorder
The eye test focuses on osmolarity, which measures the salt content in a patient’s eye which is the standard of diagnosing DED.
“Assessment of tear osmolarity tells me how patients are responding to therapy, which formulations of artificial tears and other treatments work best for them, and how aggressive treatment needs to be,” said Owen, who also holds a masters in business administration from San Diego State University.
“Where this product is innovative is that it allows us to analyze a small amount of tears (to find what’s wrong),” said Owen, of the disposable product. Current testing devices from another company rely on a laboratory instrument requiring a 300 times greater fluid sample than what TearLab needs, said Owen.
“That’s a problem for people with dry eye because they don’t have that much volume to give,” he said.
Studies at sites such as Owen’s support the efficacy of the product, which has potential as a test for other medical ailments that show up in tears, said an official at the San Diego company, which was founded in 2003, has 15 employees and is publicly traded.
Company principals said TearLab is getting closer to finding a revenue stream and is elated at the boost by the American Medical Association which created a Current Procedural Terminology code for the product Oct. 19.
CPT codes are the most widely accepted form of medical nomenclature used to report medical procedures and services under public and private health insurance programs in the U.S. The purpose of the codes is to provide a uniform language that accurately describes medical, surgical and diagnostic services. Physicians, hospitals, and other health care providers use CPT codes to report medical services to private and public health insurance systems for purposes of reimbursement.
Elias Vamvakas, TearLab’s chief executive officer and who is based in Toronto, said, “We are very pleased that the AMA has created this CPT code that describes the osmolarity test. The establishment of this code demonstrates the uniqueness, utility and value of our patented lab-on-a-chip technology.”
The company received other good news this month.
On Oct. 8, the company said that the Committee for Medicare and Medicaid Services (CMS) published a proposed reimbursement rate for the company’s osmolarity test. Starting in January, the government will reimburse doctors for the test at $24.01 per eye.
Reimbursement by CMS will only be available for doctor’s offices that have a moderate/complex clinical laboratory improvement amendments certificate until TearLab receives a Clinical Laboratory Improvement Amendments (CLIA) waiver categorization from the U.S. Food and Drug Administration. This waiver is currently under review by the FDA.
“With FDA approval last year, reimbursement marks the achievement of the second of our three key milestones for U.S. commercialization,” said Vamvakas. “We look forward to receiving our CLIA waiver certificate, which will make it much simpler for individual doctors to provide the test for their patients.”
The company estimates the osmolarity test has a market potential of $175 million a year in the U.S.
But it will be several years before they start seeing any serious cash, said Owen, the Encinitas doctor of optometry. “It will take some time for most eye doctors to support this technology,” said Owen, of optometric and ophthalmologic practices. “About 5 (percent) to 10 percent will be early adopters, which could have a good impact on future sales,” he said.
TearLab shares trade on the Nasdaq as TEAR. The company’s 52-week range has been 90 cents to $5.14. Prior to May, TearLab went by the name OccuLogix. Top TearLab competitors in the tear assessment field include Abbott Laboratories, Beckman Coulter Inc. and Novadaq Technologies Inc.
Bob Walder, vice president of operations, said the company is aggressively setting the stage for a future rollout, such as exhibiting the product earlier this month at the American Academy of Ophthalmology Show in Chicago.
While eye doctor offices will be a logical point of call, Walder said the firm is also looking at large company chains where purchases are done at the corporate, not clinical, level.
Walder said $5 million in new financing is being used to pay salaries, office and lab space rent, fund research and development and marketing. In addition, Vamvakas has invested $2.5 million of his own money into TearLab. For the six months ending June 30, the company said it had cash and cash equivalents on hand of $4.8 million.