By Brady Huggett
Staff Writer
Cellegy Pharmaceuticals Inc. has always wanted its own marketing force, so it hooked up with Ventiv Integrated Solutions in a deal structured to eventually provide it with one, as well as lend Cellegy $10 million in launch funding for its product, Anogesic.
Its an extremely interesting deal in that we believe it provides the best of both worlds, said Michael Forrest, CEO and chairman of Cellegy. [Ventiv] was willing to work with Cellegy in a flexible fashion and to assume some of the risk with an assumed higher percentage pay off.
Eran Broshy, CEO of Ventiv Health Inc., the parent of Ventiv Integrated Solutions (VIS), said, We have gotten to know each other pretty well over the last six months or so, so we expect that it will go very smoothly.
The agreement stipulates that Ventiv will provide among other things marketing and sales solutions, prelaunch medical education and analytical support. Ventiv, of New York, will recruit and train 75 representatives to launch Anogesic, and will cover prelaunch and early launch expenses, up to $10 million, through a loan to South San Francisco-based Cellegy.
The loan will be for the first 18 to 24 months of the six-year agreement, and will be paid back through Anogesic revenues as they materialize. The revenue split is uneven, however, with a large portion going to Ventiv early on, but with Cellegy taking the lions share over time. VIS will receive undisclosed royalties throughout the life of the six-year deal
Once all that settles, the total profit split works out to be 80 percent Cellegy, 20 percent Ventiv, and the arrangement has both sides happy.
In the early years, it is skewed very much in our favor, then shifts the other way around over the life of the deal, Broshy said. Its better than they would have gotten with a larger pharmaceutical partner, and its a richer deal for us than a straight sales and service type of arrangement.
In June, Cellegy filed a new drug application with the FDA for Anogesic, the product in the center of the deal, to treat pain associated with chronic anal fissures. The FDA may be reviewing that filing now, or it may not, Forrest said.
The intention was to complete a Phase III trial that now has been enrolled and is being finished and file that as an addendum by the end of the year, he told BioWorld Today. Our expectation is that the FDA began the review process when we submitted and the clock would be running. In that case, we would expect approval by the middle of next year. If the FDA has not begun the review and is waiting for the additional data, Forrest said, approval could come by the end of 2002.
Anogesic, a topical nitroglycerin ointment that works by relaxing the internal anal sphincter muscle, also is in Phase II trials for hemorrhoids. Forrest said the plan is to have some efficacy data in the first quarter of next year. Following that, Cellegy would look to begin a Phase III trial, perhaps in the first half of 2002. Forrest estimated the anal fissure treatment market for the United States to be in the area of $100 million. For a product that could effectively treat both hemorrhoids and anal fissures, he said the estimates are around $1 billion in the United States.
The marketing deal covers both indications for Anogesic, but there is the possibility of adding other products to the deal, namely Cellegys Tostrex, for the treatment of male hypogonadism. Tostrex is currently in Phase III trials in the United States.
We want to keep our powder dry, but that is a possibility, Forrest said. We have had such discussions with Ventiv but we havent come to a conclusion at this point.
However, the real prize for Cellegy is the eventual assumption of the sales force. After four years, the 75-person force is taken over by Cellegy.
The utilization of Ventiv is important to Cellegy because we retain the main portion of the profits associated with our lead product and gain the expertise of the sales force and maintain that sales force for other products over a long time, Forrest said.
While it appears both sides will benefit through the agreement, Richard Juelis, vice president, finance and chief financial officer at Cellegy, said this deal is exactly what Cellegy wanted.
Clearly, this is a Cellegy deal, he said. We had a choice among sales associations and we decided to go with Ventiv. This is key for us.
Cellegys stock (NASDAQ:CLGY) dipped 30 cents Friday to close at $5.60. Ventivs stock (NASDAQ:VTIV) rose $1.73, or about 17 percent, to close at $11.72.