Neurostim dry eye startup backed by Kleiner Perkins, NEA readies for CE mark

The implant is designed to stimulate natural tear production.--Courtesy of Stanford University

Dry eye implant maker Oculeve is working toward a CE mark with its venture round from last spring. It's also in the process of recruiting for an initial U.S. clinical trial; the trial started in December and is expected to collect final data this month.

The startup expects to achieve European and Canadian approvals with the $16.6 million it raised in the spring of 2014. But additional financing seems likely to support additional U.S. testing and a regulatory submission to the FDA.

Oculeve certainly has sufficiently deep-pocketed and high-profile investors, including Kleiner Perkins Caufield & Byers, New Enterprise Associates and Versant Ventures, to get a sizable financing done.

The company's tiny, implantable neurostimulator to treat dry eye originally came out of the Stanford Biodesign program from participant Michael Ackerman, a biomedical engineer who had previously been at Boston Scientific ($BSX) working on chronic pain and movement disorder neuromodulation devices.

Ackerman and his team originally came up with the idea for neurostimulation to treat dry eye, along with several other initial concepts, after observing an ophthalmology practice for two months.

"Every third person visiting the clinic seemed to be suffering from dry eye, which ranged from something that was a nuisance to a genuine, sight-threatening disease," Ackerman said in a statement. "It was a huge medical need with no optimal treatments."

The two most common treatments for dry eye, a condition that causes patient discomfort and can lead to a scratched cornea, are lubricating eye drops and a topical emulsion of cyclosporine. However, the eye drops are inconvenient since they require refrigeration and patients often discontinue cyclosporine after a few months of use.

Given his background in neuromodulation, Ackerman hoped to stimulate the nerves in the lacrimal gland to generate tears. But an early vision of a large implanted device with a wire inside the neck, similar to a pacemaker, was scrapped.

The current iteration is much smaller. It includes a tiny device that is inserted into the mucous membrane of the nasal cavity and another inserted under the skin below the eyebrow. Rates of tear delivery can then be adjusted manually via a wireless controller.

The U.S. trial that is currently enrolling is a single-center, randomized controlled pilot study of the device with 40 patients.

In 2011, Ackerman and his team raised $32,000 in startup competitions to fund a prototype. Then the company caught the attention of Brook Byers at Kleiner Perkins and the firm backed Oculeve with $100,000 in seed funding to test safety and efficacy in animals.

Then in October 2012, Kleiner Perkins, Versant and NEA backed a $7.6 million round to hire employees and launch clinical trials in Australia, New Zealand and Mexico. That was followed by the most recent financing last March.

"Oculeve was going after a large market with weak competition," Byers said in a statement, justifying his firm's initial interest in the startup. "They had a clever new invention, a good economic model and a strong starting team."

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