Bench to Bedside: Lifitegrast, pt.1 – The SARcode Story: How to build a biotech company – Tom Gadek


Hi, I’m Tom Gadek and I’m going to tell you a story today about the company, SARcode, and SARcode’s efforts to develop a novel pharmaceutical called Lifitegrast toward the treatment of ocular inflammation, a disease called dry eye. I’m going to give this talk in several parts, the first part here is going to give an overview of the company itself, how do you come up with an idea of a company, how do you start to think about developing a drug, so that the whole picture fits together. I’m going to take you a little bit behind the curtain and show you and discuss with you a lot of the things that we were thinking of along the way when we made various decisions that ultimately took us to where we are today on the verge of approval from the FDA for this drug called Lifitegrast. The story goes back to about 2006, which is when we formed the company. We actually formed it a little earlier than that, but in 2006 we raised funding to take the company forward. I’m going to give you some ideas on the strategies we were thinking of and the actual execution of the program once we got down to it. Again, this is an attempt to tell the complete story start to finish, not to be so technical as to be informative on how a company is formed and how it gets to where it needs to go. I should say that this takes me back in time to about 1988, when I had the opportunity to talk to Bob Swanson at Genentech. I was interviewing for a job as a chemist at the time and they were being very innovative in the day, knowing that the fruits of molecular biology could be brought forward to enable the discovery of small molecule pharmaceuticals. He was very positive about what he had been doing at Genentech, at one point I asked him if he would change anything along the way, knowing all the road bumps he had hit and landmines he’d even stepped on. And he said he would change absolutely nothing along the way. I took that as very encouraging and started thinking about maybe someday I’ll start a company of my own. So to get back to how to form a company, you need a pretty good idea. And that idea should come down to an actual target, a biological target that’s addressable. And then you have to find that target in a number of disease states or at least one disease state where you can build a product around it. So the idea where you can inject something, an antibody, into your arm so that you can treat some inflammatory disease and then move forward into that concept of how you’re going to administer it, how long you’re going to administer it, what it’s going to do, and how you’ll measure that effect in patients in the clinic. That’s sort of your product concept. In order to execute all of this, you need a company. The company needs to have some rigor and form to it, so that you can provide a platform for the execution of the scientific studies. In order to then execute the whole program, you need an investment. You need money. So that’s where that comes from, you have to attract investors. And then ultimately before you go into a clinical trial to get to the market, you have to show that the drug is likely to work in people. So that’s the preclinical work, and then you have to show that the drug, in fact, does work in people; that’s the clinical success. And that should ultimately lead to commercial success. This is a whole slew of things that have to happen along the way, and overall, they all have to come together at the end. You have to execute these. You can start at multiple points if you want to do that, but you have to be able to have all of these time together at the end of the day in an application to the FDA for commercial sale of the drug. Along the way you have to have a vision, you have to be able to see the end goal line, and move toward that through the whole thing. You may not have clarity along the way of how you’re going to get to the 50 yard line, but you do want to keep the goal end zone in sight. And you can then maneuver through the various problems that you have along the way. And along the way, you should seek advice from people who have actually done this before. So let’s focus on a target. You really do need a good target. The target has to be linked to a disease. I would advise that you find a great target. In my case, I worked at Genentech for about 15 years some time ago, and I had the opportunity to watch a scientist there, Paula Jardieu, work on an anti-LFA antibody, which at the time was when antibodies were just emerging as pharmaceuticals. And I saw extremely interesting data that linked LFA1 and T-cells to multiple disease states, and I paid attention at the time. So you need a target, the target has to be linked to a human disease. The human disease might be something like inflammation in the eye. Like how my eye’s feeling funny today, not sure what’s wrong with it — patients are thinking that. What should I do? Ultimately, they go to the doctor and get a diagnosis. The doctor looks at their eye and says it’s inflamed and there’s signs of a disease called dry eye. If you look in the literature then, there are links between dry eye and T-cell mediated inflammation. So that takes you to T-cells as the target, potentially. And then ultimately, if you look at targets on LFA or on T-cells, you see that you come to LFA-1 as a potential target. So this is how we thought about it. We’re talking about now taking something that’s outside the eye, it’s on the eye surface, it’s a T-cell on the eye surface, and that T-cell has LFA-1 on it. And we’re going to drip something into there. Right onto there, that’s accessible. So this thought process gets down to higher and higher resolution. The ultimate precision of the target is then ultimately a receptor on T-cells called LFA-1 for lymphocyte function associated antigen 1. So the target LFA-1, it’s a great target, I’ve seen it before. I saw it when I was at Genentech, particularly with Paula working on it. And then the question we’re asking or starting to think about right now is if we’re going to try to bring something forward to the clinic and ultimately to the market, is can we translate that antibody story to a small molecule? Maybe. That’d be an interesting thing to try, it might keep you busy for a decade or two. So right now, we’re thinking in our thought process at the time that an eye drop would be accessible to tears. So you take a drop, drip it in your eye, first thing it hits is tear, and that’s on the front of the eye, and LFA-1 is on the outside surface of T-cells right at that surface of your eye, right in the cornea. So that seems to be addressable by this compound if we were to get it into an eyedrop. If you look at a higher resolution, let’s say in a microscope, you can then see T-cells and you can see that they have LFA-1 on them. You can stain them with various antibodies that are tagged with dyes. And you can then think about developing a compound which we’re calling SAR 1118, short for SARcode. And it’s not the 1118th molecule that we made, it has to do with the fact that LFA-1 has another name, CD11/CD18. We were amusing ourselves, perhaps at the time. In the industry you have to give your molecule a number. So we then developed a compound called 1118, we then showed that in in vitro or in test tubes or in this case, tissue culture, cell culture media, that it could affect T-cell binding to ICAM-1. And then that biology is all linked to a number of events that happen at the cell surface or at the ocular surface where the host T-cells will then move into tissue, produce cytokines, and enhance or exacerbate inflammation over periods of time. So we’re targeting LFA-1 on the exterior surface of T-cells at the ocular surface in patients with dry eye. That’s the whole idea here. As we’re thinking about the target, we thought of multiple targets where LFA-1 was linked to them. T-cells were linked to the inflammatory disease, we could’ve looked at psoriasis or a number of other indications, but we started to focus on dry eye because this idea of dripping a drop right on your eye seemed to be a good idea. Local administration, looking for local effect. So we then went through the literature and looked for precedent in the field. And we noticed that for dry eye, there was a compound that had just been developed at that time called Restasis from Allergan. Very, very interesting story in its own right. But within data that they came across, they did a study in humans and they took biopsy samples from those patients and they had been on Restasis for a while. And they were able to show that in fact, if you treated with Restasis, you could decrease the amount of LFA-1 expressed on the surface of T-cells in the biopsy samples taken from the conjunctiva of the eyes of patients with dry eye. Very, very interesting. They didn’t reach statistical significance, but it was certainly trending that a higher dose had a larger effect. We were caught by this, it seemed to link LFA-1 to the disease. Allergan tried to link T-cells to the disease, but didn’t take it down to the level of LFA-1. They never really thought about LFA-1 as a target. But we thought that we could bring that to bear. So we think we have a good target. We now need to think about as a product, how would we link the drug’s mechanism of action and get to the pharmacy shelf. So going from drug as a white powder to a drug as a liquid in solution where you can drip a drop on your eye. And then ultimately, take it to the pharmacy shelf. So this product concept fit this paradigm here, where you have an eye that has inflammation and it has signs and symptoms of inflammation here shown as red on this eyeball. You then get a dropper and put a drop on the eye, and after a period of time, you find that the eye is no longer red. It doesn’t feel so bad. So after thinking about your eye for a little bit that’s not feeling so good, put an eye drop in, wait a couple hours later, hey I’m feeling a lot better. So the idea is an eye drop administered locally, directly to the inflamed surface of the eye. So right onto the cornea. No different than adding it into a tissue culture dish. And we want to treat both the symptoms and the signs of dry eye. So the symptoms of dry eye are feeling like your eye is burning, it feels like every time you blink that there’s some sand or grit in there, and it’s very irritating. And the signs include clinical signs where you put a dye in called fluorescein and you look for imperfections in the eye surface, places where the dye accumulates over time. And by dropping this in locally, rather than taking a pill and have it circulate all over your body or injecting it in your arm and having it circulate all the way through your body to get to your eyeball, we’re trying to do local delivery and looking for a local effect. We think we can get the drug right there no different than adding it to a petri dish or a tissue culture dish in the laboratory. So that’s the product concept. If we can get it into the eyedropper, then we have to make it stable enough to put on the drug store shelf for 2 years at room temperature. And then we really have a product. But if we can meet these standards or these goals, we should be able to make your eye feel better and part of the thought process to getting to this point was us putting ourselves in the patient’s shoes. As to how a patient must feel after a period of time, I started to imagine that I had dry eye. I’m not sure. It is associated with staring at a computer screen for too long, where you don’t blink and then when you do blink, you have a very high friction event that causes irritation. And enough of those together over a period of time, and that’s inflammation, and then you definitely do have to have the disease. The next step is to form a company, we did this actually initially in California, sending in $100 to the Secretary of State of California and an application. You go online, find the Secretary’s website, and fill out some forms, send it in with $100, and at the time, we got Arnold Schwarzenegger’s autograph on our articles of incorporation. The company is there to provide infrastructure and support the plan we’re trying to execute. And it provides some box for us to have to stay in. I’m a scientist by training, I’m a research scientist, I’m not trained to essentially stay in the box, but the company does provide a place to hang my hat and support on how to do that. It provides a paycheck, which is a good thing. So I’m going to tell you the story of two companies, both named SARcode. But as you can see, the initial logo is one that I designed personally using a program called ChemDraw. It’s an attempt to look kind of like an eye, like a drop hitting water. And like a molecule that’s on target and another one that’s off-target. We were hoping to be on target. Giving this concept to a computer graphics person, they later at a much higher price, came in and gave us this very, very nice logo. In a transition from logo 1 to logo 2, I stepped aside as the CEO of the company, which I had been since its inception, and then became just a member of the board of directors and kind of a consultant to the company. The idea during that transition was to move the company more toward commercialization. So in order to get a company that’s of value and provides infrastructure, although I just told you that we incorporated in California, you do want to incorporate in Delaware, ultimately. This makes things easier in terms of the rules of corporations in Delaware, which are well understood both across states and the United States, but also internationally. It makes it easier to sign contracts and do other functions, legal functions within the corporate world. The company that we did create, SARcode, is a virtual company which was kind of sexy at the time. And this time frame is roughly 2006, so about 10 years ago. And a virtual structure to the company allowed us to have a small number of employees, in fact, only 7. And then to contract all of the work out to other contract research organizations that would actually execute the studies and do the work that we needed to have to bring the compound forward. The virtual structure did not require laboratories or anything like that. We did at one point in time, do one experiment in our offices, which were in the Financial District of San Francisco. And now we’re in about 2008, when the financial market tanked, we were able to find office space very easily and affordably right in downtown San Francisco. And one day we got a call from one of our contract research organizations that the drug wouldn’t dissolve. We had recently had the drug manufactured in Switzerland, the Swiss group had been giving us amorphous material for a period of time, and ultimately they got to a point where it finally crystallized. And its ability to dissolve behaved differently. On a Friday afternoon, we got a desperate phone call that they couldn’t dissolve the drug to make up the dosing solution for the weekend toxicology study. So I then said I’ll call you right back. Got a little scintillation vial, put some water in it, put the drug in it, didn’t dissolve like it had before. And then I got a match, warmed it up and it dissolved. And then I grabbed it, and being a chemist, I said well that’s about 60 degrees. So I called them back and said heat it up to 60 degrees and it should dissolve, and they never called us back, which meant it must’ve worked. So I think that by lighting the match to warm up that vial, I violated the lease on our office space in downtown San Francisco. That’s the only lab experiment we ever actually did personally. The company needs employees, there’s advantages to being an employee, but then you have to behave then under labor laws and provide all the things. We had to post instructions, labor laws in the lunchroom at the company. We didn’t even have a lunch room, we had a table we sat at and a microwave, that was about it. The company gets to have a bank account to move money back and forth, pay employees, pay contract research organizations, The company gets to then file patents in the company’s name, typically I’m an inventor on a number of these, I then assign them to the company. And at the end of the day, we are trying to bring this drug to proof of concept in the clinic and then ultimately sell it to a larger pharmaceutical company. We never intended to have sales. Being a company, you’re also allowed to issue stock, essentially sell small portions of the company at a particular price. Stock then gave me official ownership in the company as one of the founders and employee moving forward. I got initial founders shares, ultimately, I also got stock options which were granted to me. But the stock is what we actually sold to investors. So when we lined investors up, we gave them stock for their investment. And at the time, in 2006, you were actually legally required to have a fax machine. They were dying even back then, I don’t know if you can purchase one anymore. But for legal communications with our lawyers regarding contracts, but also with the FDA, we were required to have a fax machine. Okay, so next you have to present the company as a viable investment. And why do you need an investment? If the investor comes in and gives us money, we already founded the company, can’t we just take that money and run? Our intent is to use it to bring the company forward and to add value. So you’re starting to hear stuff on the radio about investor value lately as a very big topic. And you want that investor value or stock value to grow over time, the thing for me was that initially I was going through and paying all the bills for the company personally. And that got expensive. And so after a period of time, I was running out of money. My wife, I had to explain to her, she said she noticed that our stock account was getting a little lower. And I had to admit that I had put about $150,000 into the company by this point. And that was to get some things going, we got to the point of having the actual white powder drug crystals made. And we had to pay the people who were doing the experiments to make it. But, you bring in investors because it’s always better to pay the bills with somebody else’s money, and the bills were getting too big for I and my partner at this time, John Burnier, to pay. We opened our wallets long enough, we quit after a while and raised roughly $25 million dollars. So we raised $25m and the expectations of our investors was that that $25m would grow over the course of our efforts from $25m to let’s say $250m. That’s a 10-fold increase in a few years, so let’s say roughly 3 years is what we’re targeting there. At the time, the people to go to — you can’t go down to your local bank or the ATM, you have to go to a group called venture capitalists, who have money, they are technically savvy, and they are willing to invest in some high risk investments with the expectation that they can get a large payout at the end of the day, hopefully 10-fold or more. Another thing we needed to do to make the company an investment was come up with a budget, and the budget basically then linked expenses to things you were going to do. And then that then is the plan, and that plan had to be bulletproof. So again, investors like a return on their investment, and venture capitalists like big returns. So let’s talk about venture capitalists for a minute. I knew some venture capitalists, but I knew nothing of this process that Bob Swanson already talked about earlier. Started out as a venture capitalist. So if you have a room full of venture capitalists, let’s say roughly 50 is represented here, you then want to sort through them to identify venture capitalists with interests. They’re interested in your project or your company that you’re proposing or pitching to them. And then those venture capitalists, you have to sort through them again to find venture capitalists who have money. So called “adventurous venture capitalists,” who are willing to invest. The investment we’re talking about here was a preclinical asset so that the compounds we’re looking at had never been in the clinic before. And ultimately, that’s risky. If the compound has been in the clinic and was shown to be safe, it’s less risky. So that’s phase I. And if it’s been through Phase III and you’re looking for investors, that’s very low risk for the investors, but it tends to take larger amounts of money at that point in time. We’re looking for adventurous venture capitalists who will invest in a preclinical asset and help us get to proof of concept in the clinic. So we’re able to do that, very interestingly. We had conversations with probably 50 venture capital firms along the way, across about 8 months in early 2006, starting in January. And we identified a number of investors who were interested, and then we told them we needed $25m and on a Friday afternoon in October, my phone rang twice within an hour from two separate firms proposing investments to us. And that was nice, because if you have only one investor interested and they make you a proposal, you have a choice of one. If you have two you have some leverage and maneuver one against the other to get a better investment. At the end of the day, the founders agreed with the investors on the scope of the investment and the focus of the investment. And the room was full of love. This is probably December 2006, early December. And money moved from their bank account to our bank account. The fact that there were two people that called me within an hour after an 8 month process led me to believe that this wasn’t random. And in fact, there might be a conspiracy out there, in terms of how to execute this. And venture capitalists were clearly aware of each other. I think one heard from the other that there was an investment getting put together, second one panicked and put us in a good position. Now we’re going to move into the budget and bulletproof plan that your investors are looking for from you. The reason why they want a budget and a plan is they want to fund the corporation, and the corporation is then going to execute the research and development activities shown here in blue and red. The plan then has to be paid for by the investor. Shown here is that we tried to chop off almost all of the blue research section by going outside and licensing an LFA-1 antagonist program from a company called Sunesis. This then enabled us to be virtual, we didn’t have to have laboratories doing experiments every day trying to identify a compound. We could go to Sunesis, license their intellectual property and their patents, and then bring them in-house into our corporation, and then work forward toward the moving the compound into development. It cut years off potential timeline here for the whole program and the whole company. So in licensing the LFA-1 antagonists from Sunesis, this also in addition to accelerating the timeline, reduced the risk of failure. We were able to reduce that risk further by picking Lifitegrast as a single compound out of a group of about 3000 compounds that they had looked at and picked that as our clinical candidate, and then just moved that forward into the clinic into some final preclinical work. Safety studies for the FDA as your application is going into the clinic. The first task that we did after we picked the compound as the clinical candidate is that I went back, I actually found a lab, went into the lab, tried to make 10 grams of the compound, in fact, made 3g. But it allowed us to send it out for testing at a number of locations and validate and replicate the data that we had seen from Sunesis. So we knew it was real and that really reduces the risk of failure at that point. A lot of companies get set up and fail at that point because they typically are licensing a compound out of an academic lab and it only works under very exquisitely controlled conditions that are not able to be brought to the clinic. So it’s not helpful to move forward. Along the way here you also want to execute the plan that you have flawlessly. This was a comment that came from Sue Hellmann at a number of presentations that I witnessed at Genentech, that she would then require flawless execution of plans. And that came at a time in the company’s history where it was a golden age. And it was the golden age because the company was able to bring forward an emerging group of monoclonal antibodies into the clinic, and from the clinic into the market, without failure. In roughly 10 clinical phase III trials in a row, there was no failure. Plans were executed flawlessly. So the investment looks good, we’re going to take $25m and turn it into $250m, or something like that down the road. In order to get there we then want to execute the Gantt chart plan. We first need preclinical success. We had to look at the target we’re going after at a period of time in the blue zone of the Gantt chart. ICAM-1, scientifically, had been shown to be the native ligand for LFA-1. So it seemed to be a good place to start, there were no known antagonists of LFA-1 at that point in time. We went and said to ourselves, what if we just make something that looks like ICAM-1? Will it bind to LFA-1 and block LFA-1 binding to the T-cells or block LFA-1 on T-cells from binding to other cells? And block inflammation. Technically this had not been done before, to make a small molecule look as functionally equivalent to an antibody. But while I was at Genentech, we did see a lot of monoclonal antibody data for studies against LFA-1. We thought we would try to do this. So we started with ICAM-1, that’s the ligand, we then looked at studies that some colleagues had done that looked at ICAM-1 and the epitope of ICAM-1 and reduced it to about 7 residues on the main chain of ICAM-1. They were all close together in space, those 7 residues, but if you looked in sequence, they covered about 50 amino acids in the sequence of ICAM-1. It looked like the size of a small molecule, we did some studies and in a scientifically and chemically reasonable process, we’re able to convert that epitope of a large protein into a small molecule that had, in fact, higher affinity for LFA-1 than the initial protein ligand did. So that’s how we did our lead identification, we broke down a scientifically intractable or difficult problem, we reasoned how to do it, we got to a reasonable process, which was to break a difficult challenge into a number of doable events. Initially, rather than trying to make all 7 residues simultaneously, we did it sort of one by one. We did two residues at a time, then a different two, then we kind of made it homologous by grinding it all together at the end of the day. So the molecule we’re talking about is in fact shown here in a stick structure, that is Lifitegrast. At the bottom, there’s a footnote that points you toward the scientific publication that describes how we did it. We thought biologically and we acted chemically. We built a small molecule to mimic ICAM-1, the epitope of ICAM-1 that’s used to bind to LFA-1. And we were able to inhibit a large protein-protein interaction that was controversial in the day, as to whether a small molecule could do that. But clearly, it can. Lead optimization we then moved into preclinically, where you have an interesting molecule that binds to LFA-1 and blocks ICAM-1 binding and works in cells. Now we want to sort of hone it for that ability, but also simultaneously take it to something that could actually be a pharmaceutical. So we’re able to identify Lifitegrast as an ICAM-1 decoy that did bind to LFA-1 on T-cells and it did block inflammation in some animal models of inflammation, mostly in mice. We then enhanced the molecule’s affinity for LFA-1 to get to Lifitegrast, we went through roughly 3000 molecules, we got to about 10 that were really high affinity for LFA-1, sub-nanomolar KDs. We enhanced the water solubility of the compound, figuring we wanted to dissolve it in water and drip it on the eye surface for the treatment of dry eye. And we enhanced its stability, knowing that not only for it to work in the clinic, we couldn’t be making new molecules every day. We wanted to make it, put it in a large number of vials, package those vials individually, put them on a shelf in a pharmacy, and then have the patients come get them as they had a prescription for it. So that optimization process worked, and we also wanted to move beyond mice. So we used in a definitive preclinical study, we treated dogs. Dogs get a disease that looks an awful lot like human dry eye. It’s called keratoconjunctivitis. And so what we did was we started a study based out of the University of Wisconsin, they went and found dogs that had the disease, we treated them with our compound, and in fact, we saw very positive effects in that study, where the dogs responded. Their inflammation seemed to be reduced, and their signs of dry eye improved. So along the way, we weren’t being too adventurous. We used dogs because the people at Allergan who developed Restasis used dogs in their studies. We didn’t want to plow new pharmacological earth, so we were very pragmatic and kept the use of things that had worked. We thought that the data here that we’re now getting from the dogs translated our in vitro data showing that our compound was anti-inflammatory, would quiet down T-cells in a petri dish or a tissue culture dish. And then we took it in vivo, dripped drops in the eye of the dog and saw that that translated directly from what we had seen in vitro. And that then gave us what we expected to see in vivo, that the dogs symptoms of dry eye and their signs of dry eye greatly diminished. This is exactly what we wanted to do in the clinic. So now we’re at the point of let’s go to the clinic. So roughly in the United States, roughly 5-10% of people in the population has dry eye. It’s an increasing number of people as the population gets older. So in order to run a clinical trial, you have to take what’s the heterogeneous population in the general population identify the patients, shown in red, concentrate them, and pull them out of the general population and now get them in your clinical trial population as 50 red people, or at least half red people, mild, moderate, and severe disease — different progressions of the disease. And then take those people, and treat them for a while. And show that after treating for three months, it looks more like the general population. In that there are fewer bright red people. We observe symptoms and signs, and then we graph this and show that we reached a statistically significant improvement. Not only that, that we reached a statistically significant improvement in signs or in symptoms of dry eye. One of the interesting things down here is shown that, we
show a dose dependency. Higher concentrations of the drug are more effective, so lower bars. The longer you administer drug, the better it is. And these two events then link the pharmacokinetics of the drug, when you apply it and how much drug is there. And the pharmacodynamics of the drug, which pharmacodynamics looks at the symptoms and signs of the disease, pharmacokinetics looks at the amount of drug that’s present when you measure those symptoms and signs. So overall, we thought we’d come to clinical success. Where we’re able to treat people who were concentrated in our clinical trial and selected for to give us a population where almost everybody had the disease, in fact, we think everyone had that disease. And we’re able to return them toward what looks like a normal distribution of disease in an overall population of the United States. So along the way there’s another level of challenge in the clinic. So in the clinic there are symptoms and signs of the disease. For the approval we were shooting for, we wanted demonstration of both symptom and sign that would position us better in the market. But you have to ask the question of what symptom do you want to use. The FDA has a list of about 5 approvable symptom endpoints. And they’re open to discussion of any other symptoms you want to identify. Which sign? So their symptom was gonna be patient reported, where they’re going to say my eye feels better, my eye seems to be better, I have less grittiness, I can see better. Alternatively, the sign is clinically measured so that the optometrist or the ophthalmologist would put a dye on the surface of the dye and see where it stains. And it’s typically the surface of the eye it has a barrier, a functional barrier that would keep that dye from getting in, but if you look at it long enough and there are imperfections with the eye, the dye will get in and get retained in imperfect areas where the barrier function is disrupted. That’s a sign of inflammation. You then have to put that on a score of a scale of 0 to 4, but we can do all of this. So if you have 5 symptoms and 5 signs, you have to pick 1. One primary symptom and one primary sign, so if you just look at it as a matrix, you have to pick one possibility, one combination of symptom and sign out of 25 possibilities. And you have to specify that before you start your study, in order for that study to be valid and useful for registration with the FDA. You then want to link the drug target to the disease symptoms. That’s what we were trying to do preclinically. We think we have an idea of what to do and that there enables us to hone down the 5 symptoms and the 5 signs to one of each. That’s what we did to make that decision. We wanted to link the drug pharmacokinetics to its drug pharmacodynamics, so we wanted the effect in the clinic to be linked to the amount of drug that was present. That’s a good thing. And then we had to come up with a trial design. Not only do you have to identify the patients, you have to figure out how long the treatment and what you’re going to measure at the end of the day, what’s the scale of the thing you’re going to measure. These are all very, very subtle challenges that you need to do. It required a lot of strategy, and we tried to get strategic decisions down to a scientific decision. So again, we had to determine what the dose would be. We used some of our preclinical data to figure out what the dose would be. And then we went into the clinic and just showed that we could have an effect in a dose-dependent manner. And that the effect also continued to improve over time. So the duration of the treatment was also linked to the effect. So with clinical success, we then moved toward commercial success. So this is the backside of the investment proposition. We’re now trying to look at what’s the value of helping a patient in the clinic and balance that against the cost of getting the drug to the shelf in the pharmacy. If we can show that we can go from what is initially a commercial — a market size if you would, if one began the program with roughly $100m to an excess of $1b, now you’re talking. You’re going to get some people interested. If you can get 4 or 5 pharmaceutical companies interested, you should then be able to generate interest in the purchase of either the product or the company. So what we’re trying to do here in commercial success is balance patient benefit and have it translate into the company’s commercial success. And if you do that, that’s a $64,000 question that remains to be seen. I mentioned earlier that Shire came in and purchased SARcode after the compound had shown proof of concept in the clinic. And in fact, after it had gotten to phase III clinical trials. So the question is, can you do that. Can you then bring this to commercial success? That’s actually the challenge that Shire’s looking at right now. So the commercial success is to be determined. The drug is not yet approved for sale in the United States, but the FDA is reviewing it based on all clinical data that’s been gotten to date. And analysts like to speculate, but if you look at analyst reports, the stock analyst reports on the internet, you’ll see that analysts expect Shire’s sales of Lifitegrast to top $1b. I would expect that it’ll ultimately displace or largely impact the market for Restasis as well. So that the upside of the market could be significantly larger than $1b. FDA is currently evaluating the program and the compound. It’s approval is anticipated. If I was a betting man, I would bet that it’s going to be approved, but I have no say over that. But approval or decision by the FDA is expected by July 22. They’ve announced that. All this is on their website if you want to look at it. So that approval will be opined on by the FDA by July 22 of this year, 2016. And I expect that the drug, once it’s brought to market, will be a commercial success. With sales in excess of $1b. So I’ve taken you through the process of developing a company and a drug at the same time in a massively paralleled and seemingly chaotic process that comes together at the end of the day with an application to the FDA, that the FDA will rule on. I wanted to add a little discussion of lessons that I’ve learned along the way. I went out to friends and asked them, how do you start a company? What do you do? What do you have to be thinking about along the way? Their universal first response was get a good lawyer. Their second response was get a good team of people capable of executing the program. And I think we were able to do that. I took it to another level and I said, I really don’t need the aggravation. I didn’t used to have gray hair, I didn’t used to have a white beard. So I would’ve had no hair, and i would’ve — I don’t know what, but I would’ve had whiter than white hair if I did not work with people that I know and like, so employment at SARcode in the virtual world of 7 people was by invitation only. Back in the day. You should also have a well conceived and bulletproof plan, we talked about that. You should think over the horizon and ahead of the curve. When we began this, ocular and ophthalmic eye development was a sleepy field. This was before the approval of Lucentis, this was before the approval of a lot of things. It’s now a very hot and sexy field, it’s probably too late to start a company in the ophthalmic space. Unless you really understand the target at a much better level than the other people on the planet. Along the way you’re gonna have people question what the hell are you doing, and you can’t take any of that personally. You’re going to have people be mean to you. You’re going to have people be nice to you, too. Don’t take any of it personally. You do have to suffer the slings and arrows of outrageous things that go on along the way. There are people along the way who said “no f-ing way you can make a compound that blocks a large protein-protein interaction.” Well, we did. Along the way, this was advice given by Sue Hellmann, it’s that you have to execute the plan. In fact, you have to execute the plane flawlessly. So in this process, everything is linked. A lot of the events have to happen simultaneously. Everything was massively paralleled. It seemed chaotic. Our challenge was to focus and stay on time and stay on budget. As long as you’re meeting time and budget, your investors will be very happy. We did get to the end of the proof of concept study in the clinic with about $1.80 in our bank account, but we did it on time and we did it on budget. Along the way, do good science. And publish it. Prove to the world that you did good science. You owe it to yourself, you might need another job at the end of the day. And this is what goes along with you as part of your resume. Along the way, don’t believe in miracles. There should be no miracles on your Gantt chart, none whatsoever. And along the way, reduce everything that you have to do to sound scientific decisions. This was advice from Dennis Henner — I don’t remember the exact circumstances, but I had to go to a meeting and pick a clinical candidate for a program. And he said just make sure the science is sound underneath it. And then, you have to expect that the science and the program are still not worked out, and the investment that you need to execute the program will come to you if you have a vision and you can sell that vision to the investors and you can reduce that vision to a doable scientific experiment. I need to acknowledge a lot of people, I did not do this by myself. A lot of people gave me good advice. I’m going to focus on the advisors, a number a people Rod Ferguson, Ken clark, Geoff Duyk, Janine Smith, and Gary Foulks, gave me free advice when I had no money. I said I’m thinking about this, and they would say I don’t know, or they would help me refine the program. Janine Smith and Gary Foulks said it’s time to do a drug for inflammation in dry eye. They were very helpful in seeing that area of the program. A number of people helped along the way. The good lawyers we got. At the top here, very good people at Wilson Sonsini, particularly Ken clark. But they covered all functions, intellectual property, corporate, everything, contracts. The people within SARcode John Burnier and I, started this as a collaboration, we were the ones with our wallets open at the beginning. Chuck O’Neill came in pretty quickly and did the pharmacology. Mary Newman was the first employee we hired, she covered the regulatory aspects of this and kept the research scientists, who were a bit like feral cats, she kept us within the box and focused on the next task at hand. Valerie and Charlie ran the clinical trials, Charlie was instrumental in getting through what seemed to be an intractable requirement for both symptom and sign. Great, great kudos to all of them. Michael Bacigalupi kept the computers running within the company. And helped correlate all the data. Number of other people were involved along the way. Investors came from Clarus, and from Alta, and then ultimately came from Rho and Sofinnova investors. At the end of the day, Shire came in and purchased the company. So they too were an investor. And I’d like to thank everybody for paying attention here.

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