Connetics Corp.'s president and CEO Thomas Wiggans called it a "transforming event." Known for Olux and Luxiq, the marketed duo of foams to treat scalp disorders, his company this month entered an agreement to buy exclusive U.S. rights to F. Hoffmann-La Roche Ltd.'s marketed oral psoriasis drug, Soriatane, for $123 million.
"We never had a vision we would stay in topicals or foams," Wiggans said. Soriatane is a retinoic acid analogue approved by the FDA in 1997 for severe psoriasis. The drug sold $41 million last year.
But just as Connetics moves from the topical to the oral systemic area, a potential competitor is doing the same: Allergan Inc. in November submitted its new drug application to the FDA for the oral retinoid tazarotene. Allergan already markets a topical form of the drug, called Tazorac.
"From a portfolio perspective, what [Connetics] did was smart," said Sylvia Marecki, analyst with Decision Resources, adding that "it will be interesting to see" if the timing was appropriate.
"The Holy Grail is developing a safe and effective therapy for mild patients," she told BioWorld Financial Watch. "Right now, Soriatane is used for more severe cases, based on surface-area involvement." She said the drug "may get moved back" with labeling for milder cases, but toxicity could be an issue.
"Everyone's vying for the moderate to severe segment," Marecki said, pointing to a "huge amount of potential" in the mild to moderate population, which has "no good oral therapy. Occasionally, they may get oral corticosteroids, but that's when they have moderate disease."
Psoriasis afflicts more than 4.5 million people in the U.S., and Decision Resources estimated the total market for psoriasis drugs could reach $3.9 billion by 2011 in the U.S., France, Germany, Italy, Spain, the UK and Japan.
A serious drawback of Soriatane is that it's contraindicated for pregnant women, and those who plan to be mothers must be off the drug for three years before they get pregnant, Marecki said.
"That's sort of a carryover from the etretinate," which was worse, she said. With Soriatane, "the metabolites aren't around for as long." Etretinate, once sold as Tegison by Roche, was taken off the market with the advent of Soriatane. Tazarotene is cleared from the body in a month or so and seems to have fewer effects on blood lipids than Soriatane, Marecki noted.
Zeroing-In On Dermatology: Goodbye Relaxin, Ridaura
Wiggans acknowledged that pregnant women or those planning to become pregnant soon can't use Soriatane, but plenty of other people can.
"The way we see it is that the market for oral products with good efficacy can expand significantly," he told BioWorld Financial Watch. "The biologics are fine products, but they obviously have significant cost and administration issues. Soriatane is a once-daily capsule with very good efficacy, and when we talk to dermatologists they're confident about managing the side effects."
Those effects include "chapped lips, dry skin, muscle aches and pains, which frankly we believe are class effects of the retinoids," Wiggans said.
Investors must have liked Connetics' acquisition of Soriatane rather a lot, since later in the week the firm disclosed it had entered definitive agreements for a private placement of 3 million shares at $20.25 each, yielding gross proceeds of about $60.8 million. Cash from the transaction will be used to pay for Soriatane, as well as for general corporate purposes.
Connetics had said it would use, if necessary, a $30 million bank note to buy Soriatane, but - thanks to the placement, which was upped from the $30 million to $40 million range because of high demand - the note won't be required to make the deal happen.
Connetics markets Olux (clobetasol propionate) and Luxiq (betamethasone valerate) foams. Olux is for short-term treatment of the inflammatory and pruritic manifestations of moderate to severe corticosteroid-responsive dermatoses of the scalp, as well as for short-term treatment of mild to moderate plaque-type psoriasis of non-scalp regions, excluding the face and intertriginous areas (where skin touches and might rub together). Luxiq is for inflammatory and pruritic manifestations of corticosteroid-responsive scalp dermatoses.
Luxiq was approved by the FDA in 1999 and Olux gained marketing clearance the following year. Both use the foam delivery technology licensed from Australia's Soltec Research Pty. Ltd., the division of F.H. Faulding & Co. Ltd. that Connetics agreed in March 2001 to buy for about $16.9 million in cash.
Connetics has been tightening its dermatology focus for some time. In July the company sold its rights to recombinant human relaxin, which it had acquired from Genentech Inc., to privately held BAS Medical Inc. After a Phase III study with the drug against sclerodoma, Connetics backed off developing it and in May 2001 quit entirely, reducing its work force from 182 people to 155 people. Relaxin is believed to have activity in vasodilation, angiogenesis and inhibition of fibrosis.
Also in May 2001, Connetics got out of the rheumatology research field, selling the rights to Ridaura for $9 million plus a royalty on annual sales in excess of $4 million for the following five years. A gold salt used to treat rheumatoid arthritis, Ridaura was licensed from SmithKline Beecham plc, now GlaxoSmithKline plc, in 1996.
Soriatane, Tazarotene, Others In Rotation Therapy?
Connetics' development pipeline includes Extina, a foam formulation of the antifungal drug ketoconazole; Actiza, a foam formulation of clindamycin for treating acne; and Velac Gel, a combination of clindamycin and tretinoin, also for acne. But the acquisition of the oral retinoid Soriatane put Connetics in a new league.
The psoriasis market is plenty crowded. Late last year, Genentech's Raptiva (efalizumab) was approved by the FDA, just ahead of news from Biogen Inc. that uptake by physicians of its psoriasis treatment Amevive (alefacept, approved earlier in the year) had been less robust than expected. (See BioWorld Financial Watch, Nov. 3, 2003.)
Raptiva and Amevive are fighting it out in a market that includes two time-tested anti-tumor necrosis factor therapies: Amgen Inc.'s leader Enbrel (etanercept), approved for rheumatoid arthritis and psoriatic arthritis but used off-label for psoriasis, and Centocor Inc.'s Remicade (infliximab), approved for Crohn's disease and RA.
Also in line is Humira (adalimumab), from Abbott Laboratories, another TNF-blocker approved for RA that could get a psoriasis label in 2005 or 2006. Isotechnika Inc., of Edmonton, Alberta, in March reported data from a successful Phase II trial with its lead drug against psoriasis, known as ISA247 - an immunosuppressant that apparently is more potent and less toxic compared to other immunosuppressants in its class, such as cyclosporin A.
Where does Soriatane fit in? The drug has been on the market for years and lost patent protection in 1999, but no known generic competitors are working on formulations.
"I don't think Connetics bringing it to market vs. Roche is going to do anything," Marecki said. "Clearly [Connetics] doesn't have the marketing power, but this is a well known product among the psoriasis population."
Also, in the U.S., sticking with one therapy is rare, she said. "Physicians tend to put patients on something a few months at a time and rotate them onto something else."
Oral systemic drugs are much preferred by patients, Marecki said. Compliance with topicals is "abysmal," and biologics "have a lot more zeros" on their price tags.
Lincoln Krochmal, vice president of research and development for Connetics, noted Soriatane offers psoriasis relief "for the first time without some of the previous side effect issues" noted when patients are given cyclosporin and methotrexate.
Last year, Soriatane's label - which previously was for only plaque, erythrodermic and pustular type of psoriasis - was changed to add guttate and palmoplantar, making it the only product approved for all five varieties. The new label also includes updated instructions for using phototherapy with Soriatane, as many physicians prefer to do. "Significantly lower doses of phototherapy are required" with the drug, according to the label, since Soriatane makes the skin more sensitive to light. Krochmal echoed Marecki, pointing out Soriatane has been on the market for years, providing solid proof of efficacy and a physician comfort level.
The psoriasis area is heating up as the months go by, Marecki said, not only with oral tazarotene pitted against Soriatane - which is a situation that cries out for head-to-head trials - but with the biologics crowding the space.
"It's the rheumatoid arthritis market happening all over again with psoriasis," she said. "A lot of upheaval and mind change."