By Randall Osborne

West Coast Editor

With Phase III studies ongoing for its Anogesic anal fissure ointment and Tostrex testosterone replacement gel, Cellegy Pharmaceuticals Inc. raised about $15.4 million through a private placement of 2.7 million shares.

The South San Francisco-based firm intends to file a new drug application for Anogesic, which also is being studied for treatment of hemorrhoids, by the end of this year. Anogesic¿s active ingredient is nitroglycerin.

¿When it¿s applied to smooth muscle, in this case the sphincter, it causes relaxation, and we believe, in the case of hemorrhoids, the sphincter muscle is involuntarily contracted,¿ said Michael Forrest, Cellegy¿s chairman, president and CEO. A more serious condition arises when the tissue rips, and the resulting fissure fails to heal, which may require surgery that can mean incontinence for patients, he said.

¿We expect to have data [from the Phase III study of Anogesic against fissures] late in the third quarter, or maybe October,¿ Forrest said.

The condition is ¿not pleasant to talk about, but we think the market is pretty large,¿ Forrest told BioWorld Today. ¿We estimate 235,000 to 1 million people suffer from fissures each year ¿ we tend to use the lower numbers for economic purposes ¿ and the cost of the surgical procedure can range from $1,000 to $2,500, without counting ancillary medications. That leaves quite a bit of room to price the product, and leave money on the table for the health care provider.¿

Cellegy¿s first Phase III study of Anogesic failed to meet its primary endpoint, complete healing of fissures, and so the company started another, with pain relief (which had been the secondary endpoint in the first trial) as the primary endpoint. (See BioWorld Today, Nov. 24, 1999; Dec. 17, 1999; and March 30, 2000.)

¿We also have two Phase II studies in hemorrhoids, with 120 patients each, and we expect data in the first quarter of next year,¿ Forrest said. About 9 million people in the U.S. are afflicted with hemorrhoids.

Tostrex is one of two transdermal testosterone gel products, and is intended as a treatment for hypogonadism, which leads to low energy and libido in men. Cellegy expects data from that trial in the first quarter of next year, and a new drug application filing in the middle of the year.

The other testosterone product, Tostrelle, is for treating sexual dysfunction in post-menopausal patients. A Phase I/II study in the United Kingdom with those rendered menopausal because of surgery is about to finish, with data expected in the third quarter. Cellegy already has favorable data for a similar study in normally post-menopausal women, and the new numbers ¿will allow us to design protocol for discussions with the FDA,¿ Forrest said.

¿Our plate is really full right now,¿ he added. Cellegy has retained worldwide rights to all of its products. Cash from the placement will be used to advance them, and allows the company to consider in-licensing options, the company said.

Participants in the most recent financing included current investors Baker/Tisch Investments, of New York, and GMT Capital Corp., of Norcross, Ga., as well as new investors OrbiMed Advisors, of New York; SAFECO Asset Management, of Seattle; First Manhattan Co., of New York; JALAA Equities, of Greenwich, Conn.; and Knott Partners, of New York.

Cellegy¿s stock (NASDAQ:CLGY) closed Friday at $6.56, down 51 cents.

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