The old adage - seldom spoken in our more enlightened, animal-sensitive times - about there being "more than one way to skin a cat" might have come to mind last week when CollaGenex Pharmaceuticals Inc. disclosed its plan to get around a generic threat to Periostat for gum disease.

Skin plays into the strategy. Specifically, CollaGenex said it has filed a new drug application for the psoriasis treatment Oracea. The drug is a once-daily dose in pill form of doxycycline, the same active ingredient in Periostat, which is taken twice per day.

Periostat's trouble has loomed for a long time, and CollaGenex has been getting ready with its new drug. In May, as a result of approval for the generic competitor developed by IVAX Pharmaceuticals Inc. and CorePharma LLC, CollaGenex said it would restructure if court action failed, reducing its head count by 63, including the whole dental sales force.

The court action failed.

But a year earlier, CollaGenex had started experimenting with doxycycline for Oracea, as a way around the Periostat trouble. Psoriasis is an estimated $500 million market. If Oracea could win marketing clearance and pull down even 10 percent of that, the drug would make more for CollaGenex than all of the Periostat sales.

"You have to tinker with the drug to make something once a day," noted Reni Benjamin, analyst with Rodman & Renshaw, adding that the approach is "not a tactic they came up with on their own. It's how a lot of companies, when they're dealing with patent expirations, extend their patents."

Until last week, patents represented another potential problem.

Even if Oracea gains FDA approval - and Benjamin estimated the drug has a "better than average" chance of that - a fear lingered that CollaGenex might not be out of the woods. The company still lacked a patent, though an application has been filed, for the Oracea version of doxycycline.

"If for some reason the trademark office says no - that's it," Benjamin told BioWorld Financial Watch early in the week, meaning that the stock likely would plummet. Investor anxiety over the patent issue is most likely why shares ticked up only 7 cents to close at $7.87 the day the NDA news hit.

Later in the week, though, CollaGenex reported that the patent office allowed U.S. Patent Application Serial No. 10/117,709, which covers the use of sub-antimicrobial tetracyclines for the treatment of acne and acne rosacea, including Oracea, thus lifting "a major overhang" for the company's stock.

As for the bid for marketing clearance, regulators have plenty of strong data. Results from two Phase III trials of Oracea were offered at the meeting late last month of the American Academy of Dermatology in Chicago. Both of the double-blinded, placebo-controlled studies achieved their primary endpoint by demonstrating a greater mean reduction in inflammatory lesion count from baseline for the Oracea-treated patients (61 percent and 46 percent) compared to the placebo controls (20 percent and 20.8 percent).

Benjamin predicted CollaGenex is on its way to creating a "lean, mean dermatology machine." Oracea would be the first systemic therapy for rosacea, and the National Rosacea Society estimates that, of about 14 million people in the U.S. afflicted with the skin condition, only about 1.4 million currently seek treatment.

The market seems to beg for expansion. According to a Gallup survey, 78 percent of Americans have no knowledge of rosacea, including how to recognize it and what to do about it, Benjamin said.

"Because of its red-faced, acne-like effects on personal appearance, rosacea can cause significant psychological, social and occupational problems if left untreated," he wrote. "In a recent survey by NRS, nearly 70 percent of rosacea patients said this condition had lowered their self-confidence and self-esteem, and 41 percent reported it had caused them to avoid public contact or cancel social engagements. Among rosacea patients with severe symptoms, nearly 70 percent said the disorder had adversely affected their professional lives."

Oracea just might be a rescue. But what about using the generic Periostat pill against that condition, too? Benjamin said that is possible, though unlikely.

"Twice per day is not approved for rosacea, so [as a physician] you are opening yourself up to potential litigation," he said. And, as a patient, "because it's rosacea, and it's on your face, the patients want to get better. They will opt for the easier treatment, once a day."

What's more, he said, "we're not talking about oncology drugs" and the problems with reimbursement for some of them. "We're talking about a potentially $2 or $3 per pill."

Benjamin has a "market outperform/speculative risk" rating on CollaGenex's stock, with a target price of $10. CollaGenex is expected to have a European partner for Oracea next year, and the company has more drugs in the works, including products using its platform called Inhibitors of Multiple Proteases And Cytokines (IMPACS), on which Periostat is based.

A Phase II trial is under way with a product called COL-3 for rosacea, and a 300-patient dose-ranging study with the compound in acne is expected in the fourth quarter. Second generation IMPACS molecules are at the preclinical stage.

Also last week, Benjamin upped his 18-month price target for CollaGenex's shares, from $10 to $13, because of "decreased clinical and patent risk." With about $35.7 million in cash and cash equivalents, the company has enough to last "into 2007," Benjamin said, and the way appears clear for Oracea.

"It's their biggest near-term hope," he said.

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