BioWorld Today Contributing Writer

Launched in 2006 with a $37 million Series A financing by venture capital firms Alta Partners and Clarus Ventures, SARcode Corp. had been working quietly to bring to market a class of small-molecule lymphocyte function-associated antigen-1 (LFA-1) antagonists as a nonsteroidal anti-inflammatory topical agent to treat unmet medical needs in ophthalmology, dermatology and other inflammatory diseases.

In September, the Brisbane, Calif.-based biotech became a bigger blip on the radar screen when Quinton Oswald joined as CEO.

Oswald became the third member of SARcode's management team who had played a significant role in the commercial launch of Lucentis (ranibizumab) by South San Francisco-based Genentech Inc.

He joined Charles Semba, SARcode's chief medical officer, who was the clinical development team leader for Genentech's ophthalmology program, and Valerie Smith, SARcode's senior director of clinical operations, who was clinical program manager for Lucentis.

Reuniting the Lucentis team was certainly no accident.

SARcode co-founders Tom Gadek, who remains on the company's board of directors, and John Burnier also were Genentech scientists. In fact, Gadek and Burnier were members of the research team studying LFA inhibition at Genentech in the late 1990s, Oswald recalled during an interview with BioWorld Today.

"The program failed because it was an oral program, and they were trying to create small-molecule versions of a large molecule that Genentech had in its pipeline," Oswald said. "But the founders felt that these drugs, used topically and intravitreally, could potentially have some opportunity going forward."

In 2006, Gadek and Burnier purchased LFA-1 inhibitor technology from Sunesis Pharmaceuticals Inc., of South San Francisco, for $2.6 million to launch SARcode.

At the time, "the weakness of the drug became the strength" underpinning the company's platform – "a highly potent small molecule with local bioavailability that is cleared rapidly by the body's circulation," Oswald explained.

SARcode – a name that refers to the "structure-activity relationship," a term used by chemists to describe the relation between the chemical structure of a molecule and its biologic activity – is staking its future on the success of its lead product candidate, SAR 1118.

In May, the company reported results of a 230-patient Phase II proof-of-concept study evaluating topical SAR 1118 ophthalmic solution in the treatment of aqueous deficient dry eye (keratoconjunctivitis sicca).

The results demonstrated improvements in both signs and symptoms of dry eye at 12 weeks compared to placebo, according to the company.

SAR 1118 was well tolerated, and no serious ocular adverse events were reported.

SARcode's corporate philosophy has been to move SAR 1118 toward proof of principle and meaningful endpoints "in a relatively short timeline," Oswald said.

Dry eye requires a 12- to 24-week study period, "so this was thought to be the most efficient therapeutic area to study from a drug development perspective," he added.

The problem is that dry eye also is "notoriously complicated" to treat, according to Oswald, who was lured to SARcode by the company's small-molecule program, which "breaks the chronic cycle of ocular surface inflammation."

A major contributing factor in the development of dry eye is T-cell mediated inflammation and cytokine production in diseased ocular surface tissues that leads to disabling eye discomfort and reduced tear quality, he explained.

SAR 1118 inhibits the interaction of LFA-1 with its cognate ligand, intercellular adhesion molecule-1 (ICAM-1) – a protein that is normally expressed in low levels on the surface of epithelial and endothelial cells, but is highly expressed in inflamed tissue.

"The blockade of LFA-1 binding to ICAM-1 is the key" to treat not only dry eye but also diabetic macular degeneration, atopic dermatitis "and many other diseases," Oswald said. "We have a well-defined biologic pathway that could be effective for future unmet needs."

Although the symptoms of dry eye are addressed by "a whole raft of artificial tear products," Oswald said, Restasis (cyclosporin emulsion 0.05 percent) is the only therapy approved in the U.S. to treat the condition, which represents a $1.3 billion market in the U.S.

Clinical studies of Restasis suggested the onset of action is nearly twice as long – 24 weeks – as SAR 1118, according to Oswald. Unlike SAR 1118, Restasis also accounts for up to a 17 percent rate of ocular burning at the same dosage, he added.

A dermatologic formulation of SAR 1118 also is in development as a treatment for atopic dermatitis and psoriasis to provide a potentially safer alternative to long-term topical steroids or calcineurin inhibitors. The opportunity for SAR 1118 in diabetic macular edema – the leading cause of blindness in working-age adults in the U.S. – could be even larger, given the severity of the disease and the growing incidence of diabetes in the U.S. and abroad.

The new year could bring a new, catchier name for the company and, Oswald hopes, initiation of a Phase III study of SAR 1118 in dry eye, named OPUS-1. A successful outcome would pave the way for follow-on safety and efficacy studies and an anticipated new drug application filing for SAR 1118 ophthalmic solution in 2014. Down the road, the company has eight compounds in its large library of drugs that are potential candidates for commercialization, he added.

However, SARcode has no intention of changing its capital-efficient structure. With only six employees, the company outsources preclinical development and other functions "at the point of need," according to Oswald. And although Alta and Clarus remain active members of SARcode's board, "at the same time, we're thinking about how we continue to move toward our Phase III program with a potential Series B financing," which also could occur early in 2011, he said.