When hundreds of periodontists and dentists told officials at CollaGenex Pharmaceuticals Inc. that their approved drug Periostat not only improved gum disease, but also seemed to help patients' skin conditions, the company embarked on a new clinical program testing it for acne and rosacea.

On Tuesday, the company announced that Phase III data confirmed their suspicions. A low, 20-mg dose of doxycycline hyclate tablets appeared to significantly reduce inflammatory lesions in rosacea patients, complementing positive Phase II data from a year ago in acne patients.

"We're very pleased that the results came out as they did," said Dave Pfeiffer, senior vice president of sales and marketing at Newtown, Pa.-based CollaGenex. "This will further CollaGenex moving from just being a dental specialty company to a specialty company that has a growing presence in dermatology."

The study enrolled 134 patients and is the largest ever conducted to evaluate a systemic therapy for rosacea. Preliminary analysis suggests that patients treated with Periostat showed continuous improvement during 16 weeks, compared to patients on placebo. Periostat had a significantly greater reduction in the number of papules and pustules, showing a "p" value of 0.009.

The study also showed that overall clinical disease severity based on the Clinician's Global Severity Assessment Scale declined significantly in Periostat-treated patients. Also, erythema - persistent redness of the skin - in Periostat-treated patients showed a trend toward greater improvement.

A principal investigator in the study will present more detailed results at the Skin Disease Education Foundation's Phoenix Dermatology Open Seminar in March.

Mark Taylor, a specialty pharmaceutical analyst with Roth Capital Partners Inc., of Newport Beach, Calif., said he had not seen the clinical data, but that the dermatology indications are very significant for CollaGenex's future growth.

"The clinical data I'm assuming is very good, and being the only pill-based therapy with a better side effect profile and without resistance, I think this would be a $100 million product in its third year," Taylor told BioWorld Today.

Periostat was approved in 1998 as an adjunct to scaling and root planing to treat adult periodontitis. CollaGenex has a 115-person sales force that markets the drug, which inhibits the enzymes that destroy periodontal support tissues and enhances bone protein synthesis. It brings in about $44 million in sales per year, Taylor said, who estimates the drug could be launched for rosacea in 2006.

Research has shown that certain properties of the tetracyclines discovered during the development of Periostat might be beneficial in treating other inflammatory diseases, including acne and rosacea.

In April, CollaGenex published findings in the Archives of Dermatology describing Phase II data of Periostat in treating moderate facial acne. The well-tolerated drug significantly reduced the number of inflammatory and non-inflammatory lesions. It also showed no detectable antimicrobial effect on the skin flora and did not result in an increase in resistant organisms or overgrowth of opportunistic pathogens, which are observed with the chronic use of higher doses of tetracycline antibiotics.

High-dose antibiotics, 100 mg or more, are the only available therapies for rosacea and acne. Most are topical. An oral drug, Periostat offers significant benefits at a lower dose, 20 mg, displaying fewer side effects and eliminating antibiotic resistance.

"There have not been any head-to-head studies," Pfeiffer told BioWorld Today, "but our advisers tell us the results are comparable."

CollaGenex officials next will meet with the FDA to map out a regulatory path. Pfeiffer declined to say when the company might file a supplemental new drug application or how much the new indication would boost sales.

"The market is large and if it was approved we would expect that we would put a large sales and marketing push behind it," he said, "and it would be a large contributor of revenue."

In the meantime, more and more dermatologists are using the drug off label, Taylor said.

Rosacea, which affects 14 million people in the U.S., is characterized by erythema and inflammatory lesions seen on the nose, cheeks and forehead. It can cause itching and pain. CollaGenex said the market for prescription drugs in the indication is estimated to be about $500 million in sales annually.

Taylor said his growth expectations for the company are based more on its focus in dermatology than in dental indications. He believes Periostat is a significant product not only for CollaGenex, but also for rosacea and acne patients in general.

"I think it would be a very important dermatology drug, perhaps one of the most important dermatology drugs in development today," he said.

If approved for rosacea, Periostat would compete with various antibiotics, including Irvine, Calif.-based Allergan Inc.'s Finacea, which was approved in December 2002.

CollaGenex's stock (NASDAQ:CGPI) moved up 44 cents Tuesday to close at $11.05.