In So Many Words is a timely chat with an ophthalmic industry thought leader.

Seph Jensen has his eyes fixed on the future. He was named CEO of TearLab Corp at the start of 2016, as the company was undergoing major restructuring to reverse several quarters of financial loss. Since then, TearLab has significantly reduced its operating expenses, while keeping even with or slightly surpassing its quarterly revenues compared with Q2 2015 to Q1 2016, and burning through much less cash in 2016 as compared to 2015. TearLab’s net revenue for Q2 2017 was $7 million, with a reduction in operating loss of 16.7% compared to Q2 2016. Now, TearLab is looking to 2018 and the launch of its new TearLab Discovery.

Ophthalmology Management: TearLab has turned its financials around considerably, compared to last year. How did the restructuring help with that?

Seph Jensen: First, it can be very expensive on your sales force to be a single-product company. What we found was 40% of our customers were driving 80% of our revenues. Conversely, that remaining 60% of customers only accounted for 20% of sales. We were trying to cover everyone equally, and our sales force was just spread too thin.

We had been moving to a different model since our restructuring, and this April we officially got our internal sales group up and running. Our outside sales force can remain focused on our larger accounts, but now we can more efficiently service our smaller-scale customers with the internal group.

If you look at the year-over- year improvements, we grew our revenue 11% and gross profit by 25%, yet cut operating expenses by 30% and improved profit and cash flow by almost 50%.

Growth will come from settling into and fully executing this strategy, which is only one year old now. I’m excited about where we’re going.

OM: How do you anticipate the effect that DEWS II and its new definitition of dry eye will impact the DED market?

SJ: Today, more people are aware of DED’s consequences and its impact on the patient. When the first DEWS report came out, not many in the ophthalmic industry followed its dry eye guidelines. I think DEWS II will be more influential, and for us it’s an important validation of osmolarity.

OM: It would seem that Shire’s Xiidra (lifitegrast 5% solution) would have a symbiotic relationship with TearLab’s system. Have you seen, or expect to see, demand to increase with Xiidra on the market?

SJ: I’ve heard positive feedback on Xiidra and I think a symbiotic relationship between the products is possible.

But there are many effective DED therapies on the market, including from Allergan and TearScience. That increased interest in DED should benefit all of our businesses.

OM: The TearLab system measures osmolarity but cannot determine cause: aqueous deficiency or evaporation? Are there plans to discern cause in the future?

SJ: The first thing to understand is that the majority of DED patients have a mix of the two — only a small percentage are caused by just one. In any case, you’ll still have elevated osmolarity. The purpose of our test is to help doctors tell if something is happening with the ocular surface — does the patient have dry eye, or is it another problem?

As for plans to determine dry eye cause, we plan to introduce two additional inflammation markers with our new platform, TearLab Discovery.

The markers on our first test will be MMP-9, which has already been used in a test called InflammaDry (Quidel), and one called IL-1RA, which less well known but research highly correlates it with DED.

We believe these two markers will give doctors the best chance to know if their patients have active inflammation. The TearLab Discovery can still do an osmolarity-only test as well.

TearLab Discovery recently received its full CE mark, but we won’t immediately do a full commercial launch. We will execute a controlled release for key specialists interested in partnering with us for research.

We are targeting a late fall filing of our 510k with the FDA, with an FDA approval and global launch in Q2 2018.

OM: What about the clinical trials for the TearLab Discovery?

SJ: At this point, we have several sites up and running and testing patients, and we plan to complete study enrollment during the third quarter.

These trials will help demonstrate how IL-1RA responds to various therapies, so when TearLab Discovery launches, doctors will have a better understanding of these markers.

OM: Are there any medical fields TearLab Corporation could expand into?

SJ: The tear film carries much of the same information as blood, so our technology affords us opportunities well beyond dry eye; our initial focus will simply be broader in the area of ocular surface disease, such as helping diagnose allergies or infection.

Ultimately, this platform could diagnose nonocular diseases in fields where we can improve unmet needs such as level of invasiveness, sample volume required or testing time.

OM: What have you learned over the past year, balancing the financial restructuring of TearLab while developing the company’s unique platforms?

SJ: First, there’s more scrutiny than if TearLab were private. The company is aligned from a financial, R&D and commercial standpoint; but when you’re investing in a new platform and your public company is not yet profitable, shareholders want to know where every dollar is going. That takes extra effort to make sure we provide clarity of strategy, feasibility and likelihood of success. We never wavered from the long-term plan — investing in TearLab Discovery and bringing it to light in the best environment possible. OM