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Executive Summary

TELOR OPHTHALMIC XARANO IOP SPIKE TREATMENT ENTERING PHASE III clinical trials "in the first half of 1993" for the treatment of intraocular pressure spike following cataract surgery, according to a preliminary prospectus for the start-up firm's proposed initial public offering. The clinical trial of Xarano (ethacrynic acid) will involve cataract surgery patients with ocular hypertension or glaucoma at approximately 17 study sites in the U.S., Canada, Europe and Israel. Woburn, Mass.-based Telor Ophthalmic Pharmaceuticals completed a Phase I/II trial of Xarano in November 1992. That double-blind, placebo-controlled study demonstrated that Xarano is "safe at the doses tested," the prospectus states, and "patients receiving Xarano had overall lower post-surgery intraocular pressure than patients receiving placebo." Telor is the exclusive licensee for a patent held by the Massachusetts Eye and Ear Infirmary for the use of ethacrynic acid to decrease elevated ocular pressure. Telor believes that approximately 35% to 50% of patients undergoing cataract surgery experience IOP spike despite "widespread off-label use" of glaucoma medications for the condition. Of cataract surgery patients who also have glaucoma or ocular hypertension, 80% have post-surgical IOP spike, Telor said. There are currently no approved pharmaceuticals for treatment of IOP spike. Allergan has initiated Phase III trials of its alpha([2] agonist brimonidine in IOP spike and glaucoma ("The Pink Sheet" Jan. 25, 1993, T&G-3). Telor is seeking to raise approximately $40 mil. through the proposed offering of 2.9 mil. shares at a proposed maximum price of $14 per share. About $14 mil. of the capital will be used to fund clinical research on the company's two lead compounds -- Xarano and another formulation of ethacrynic acid, Tekron -- and $7 mil. will be spent on other preclinical and clinical development programs. In February, Telor began a Phase I trial of Tekron for general treatment of intraocular pressure in patients with glaucoma or ocular hypertension. The prospectus states that ethacrynic acid works by "directly increasing fluid outflow" from the eye, while currently approved therapies work by suppressing fluid inflow. Therefore, Telor asserted, ethacrynic acid addresses "the underlying cause" of elevated intraocular pressure. Allergan has said that its prostaglandin prodrugs, which are in Phase II clinical trials, reduce ocular pressure by increasing the outflow of ocular fluid. Telor also believes Tekron could have the advantage of a once- daily dosing schedule and that it "may cause fewer side effects" than current therapies. Ethacrynic acid was approved for use as an oral and intravenous treatment for hypertension and kidney failure "more than 20 years ago," Telor said. Telor is headed by CEO Stephen Riggi, PhD, a former president of Pennwalt's pharmaceutical division with experience at Lederle. The firm's chief scientific officer is Arthur Neufeld, PhD, who helped found the company in 1988. Neufeld was formerly senior director of research at Eye Research Institute of Retina Foundation. He also has affiliations with Harvard Medical School. Telor is conducting preclinical research on pharmaceutical treatments for presbyopia, the far-sightedness that accompanies aging. Telor has compounds in research that it believes would "strengthen the contraction of the ciliary muscles" which have weakened over time and caused a decrease in the ability of the lens to focus on near objects. Other areas of research include treatments for uveitis and post-refractive surgery tissue response and second-generation outflow agents for glaucoma and ocular hypertension. Following a successful offering, Telor would expect the venture capital firms Hambro Entities and Asset Management Associates to be Telor's largest stockholders, with each firm holding about 12.5% of Telor shares. Other large stockholders will include Venrock Associates (10.8%) and Prince Venture Partners III (9%). The four venture capital firms have supplied Telor with the bulk of its $14.5 mil. in private funding. Combined, the four firms own about 70% of Telor private shares.

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