Special Report: Industry Consolidation, OTC Development Expected to Continue
Industry leaders address recent trends and offer insight on potential developments.
By Paul Winnington, Editorial Director
In the months ahead some of the best-known brands in dermatology will be in the hands of new marketers, thanks in large part to Valeant's substantial acquisition push earlier this year and Medicis' recently announced agreement to acquire Graceway's product portfolio. Meanwhile, several new products have come to the market or are expected to be available soon. Companies that have not been significant players in dermatology continue to focus their attention on the specialty. In follow-up to previous articles assessing the shifting landscape of the dermatology pharmaceutical industry, we spoke with several industry representatives for their insights on the market now and in the months ahead.
An Industrial Evolution
Probably the name most associated with changes in the dermatology drug marketplace is Valeant Pharmaceuticals International, Inc. This summer saw the company, which had previously acquired Coria Laboratories and Dow Pharmaceutical Sciences, enter into agreements to purchase Dermik, a dermatology unit of Sanofi-Aventis, for approximately $425 million and Ortho Dermatologics division of Janssen Pharmaceuticals, Inc. for $345 million. Valeant acquired the US rights to market Elidel (pimecrolimus) from Meda and entered a collaborative agreement with Promius Pharma in which the latter will now market Cloderm cream (clocortolone pivalate 0.1%) in the US.
Rajiv De Silva, President, Valeant Pharmaceuticals International, Inc. and Chief Operating Officer, Specialty Pharmaceuticals, suggests that Valeant is not looking to model “Big Pharma,” but rather that it wants to evolve a business model that emphasizes a smaller, more nimble scale that is highly diversified with a lower risk profile. The goal is not to storm the market with high-risk blockbuster drugs. Rather, Mr. De Silva says, the strategy is to “buy products and companies with established brand loyalty. Then you can be successful with a portfolio of relatively small products.”
Valeant is focused on acquiring innovation through acquisition, but also through proprietary formulation science, which Mr. De Silva says combines the medical and consumer aspects of dermatology therapeutics. The staggering costs of bringing a new chemical entity (NCE) to the market make new drug development a costly and risky proposition, he says, while reformulation is a less expensive approach that addresses unmet therapeutic needs. According to Mr. De Silva, there is ample opportunity to improve the delivery of already-approved drugs, especially as patients adopt a more consumer attitude toward prescription therapies, which they increasingly expect to be tolerable and cosmetically elegant.
Yet despite the technical and financial challenges of NCE development, several companies continue to pursue this route. Genentech recently received FDA approval for Zelboraf (vemurafenib) for the treatment of BRAFV600E Mutation Positive Metastatic Melanoma and has submitted vismodegib to the FDA for the treatment of advanced basal cell carcinoma. Leo Pharma has submitted marketing authorization applications for ingenol mebutate gel, a novel botanicalbased therapy for the treatment of actinic keratoses on the face, scalp or the body, in Australia, Brazil, and EU and is expected to request FDA approval. Pfizer continues to support its program for tofacitinib, a Janus kinase 3 (JAK3) inhibitor for the treatment of psoriasis. Galderma has a topical anti-erythema drug in development.
NCE development remains part of the growth strategy at Stiefel, a GSK company, says William “Bill” Humphries, President, Dermatology for Stiefel. Mr. Humphries notes that of 44 NCEs with potential dermatology applications identified within the existing GSK portfolio, three are currently in proof of concept testing. Like other companies, Stiefel also recognizes benefit in novel formulations. On the heels of approval of calcipotriene foam (Sorilux foam), the company is developing a foam formulation of tazarotene and has other items in the pipeline.
For Onset Dermatologics, a wholly-owned subsidiary of PreCision Dermatology, the high cost of NCE development has the company, “Pursuing innovation as much as we can within the 510(k) device clearance,” according to Jeffrey M. Nugent, founding President and CEO of PreCision. Onset, which has seen changes in its name and strategic leadership this year, seeks to diversify out of pure prescription development, “without understating the importance of prescription therapies,” Mr. Nugent explains.
To meet this goal, the company says it is seeking to meet the needs of both patients and clinicians in the current healthcare environment. “In the face of declining reimbursement and managed care restrictions, we want to add real benefits for consumers,” Mr. Nugent says. “This has led to exploration of opportunities for physicians to dispense.”
Proof that the physician-dispensed model is a viable one comes from SkinMedica, which divested its prescription drugs to focus on non-prescription therapies. “Dermatology seemed to have a big gap in terms of NCEs,” says Mary Fisher, who also notes the high costs of NCE development. “Being new to dermatology, I was told the math doesn't work because even vehicle innovation is very costly. But history clearly shows that Dermatology values innovation.”
Addressing SkinMedica's decision to focus primarily on physician dispensing, Ms. Fisher says, “We're refocused on cosmetic dermatology not because we are leaving medical dermatology but because it is our heritage, and we can offer substantial innovation here.”
Up to two-thirds of dermatologists are dispensing in their practices, Ms. Fisher says. “Our philosophy is ‘We're not asking you to sell skincare to your patients. We're asking you to care for your patients',” she says. She credits significant advancement in the understanding of skin biology with fueling development of effective non-prescription formulations that improve the appearance of the skin and support prescription therapies. “Our goal is to motivate patients to seek results from health care professionals where they will get the best outcome,” she adds.
“Patient results are everything,” Ms. Fisher maintains; They reinforce the credibility of the physician, the specialty, and the company—and are good for the patient. That's a thought Mr. Nugent echoes. Onset's goal in product development is to look at the needs of patients and clinicians and “Provide efficacy, a delightful experience, an affordable solution.”
Non-prescription and physician dispensed products figure in the growth strategies of other companies, too. Galderma has continued to augment its wellknown Cetaphil line, recently launching the RestoraDerm system for atopic dermatitis. In addition to its prescription drug business, Stiefel has expanded both its OTC offerings—including the MaxClarity foam acne system and extensions of the PanOxyl line—as well as aesthetic offerings. In the past few months, two new extensions of the physician-dispensed RevaleSkin line have been released. Valeant seeks to build on its popular CeraVe line and is acquiring Sculptra in the aesthetic arena through its acquisition of Dermik. However, Mr. De Silva acknowledges that “we are still at a starting point with Aesthetics.”
Innovation. According to Jeff Wayne, Senior Vice President and General Manager of Onset Dermatologics and a veteran of the dermatology drug industry, dermatology drug companies, “Big or small, must meet needs of physicians and their patients…Clearly, there has to be more innovation and more creation.” However, he suspects that in the coming years, emphasis on bringing devices and equipment to the market will grow.
As the healthcare environment continues to evolve and new regulations take effect over the next few years, interest in out-of-pocket products will only increase, most observers agree. These products are attractive to industry because they are not subject to variability in reimbursement. “True innovation doesn't have to be an NCE, but it has to bring some added value,” Mr. Wayne says.
Consolidation and Cooperation. Consolidation is likely to continue as companies restructure, reorganize, merge, and/or grow. “Consolidation can be good for the industry,” Ms. Fisher asserts. “My hope would be that the bigger companies will also bring greater support to the specialty.” Mr. De Silva acknowledges that Valeant “has a responsibility in the near term to figure out how we shape our face to be a dermatology specialty,” including determining which programs and organizations to partner with.
Companies increasingly look to support the specialty via related public health/charity initiatives. Stiefel supports the Children's Skin Disease Foundation's “Camp Wonder” and kicked off the initiative “Hats On for Skin Health,” to provide protective sun gear in Tanzania, where there are significant rates of albinism.
Industry also needs to partner with physicians to confront issues such as decreased reimbursement from payors and perceived negative trends in healthcare, Mr. Wayne asserts.
Competition.Faced with competition from within the industry as well as the challenges of declining reimbursements, companies face, “a challenge to be economically sustainable to grow business,” Mr. De Silva says. “Co-pay cards in their current form are not sustainable for the long-term.” Alternative marketing tactics and other strategies to attract patients and increase prescriptions may replace the coupons that have become popular in recent years.
Research Updates and News
ASDS Poster Update: Focus on Injectables
Results from a multi-center, randomized, placebo controlled trial conducted by Fibrocell Science and presented at the ASDS Annual Meeting last month suggest that azficel-T (LaViv) provides cosmetic benefits in the treatment of moderate-to-severe depressed acne scars. Overall, data show that active treatment provided a 2-point or greater improvement on a 5-point Subject Live Acne Scarring assessment scale and a 1-point or greater reduction in cheek acne severity on a physicianassessed, validated 5-point Evaluator Live Acne Scar assessment scale.
Studies from the mid 2000s that show that about 95 percent of people with inflammatory and nodular acne will have some type of scarring, notes study author Girish Munavalli, MD. Given that acne is the “bread and butter” of many practices, “we are certain to have patients afflicted by acne scarring who want to discuss treatment options,” he adds.
Currently available procedures like full ablative resurfacing and dermabrasion involve significant downtime, and procedures like fractional resurfacing involve moderate downtime. There are risks of additional scarring and changes in pigment. “Patients with acne scarring know this and may be hesitant to initiate discussion on treatment options, if those are the only options available or the only ones they are aware of,” Dr. Munavalli suggests. “Less invasive procedures that involve minimal downtime like LaViv can fill an unmet need for these patients.”
“LaViv has been shown to provide a natural, noticeable correction for depressed acne scarring, without causing any permanent adverse events that could be associated with other fillers such as granuloma formation, persistent inflammation, overcorrection, or necrosis,” Dr. Munavalli says. “In my site, patients usually saw improvement after the third or fourth month of treatment with LaViv. The protocol called for a series of three treatments, spaced three to four weeks apart, so this makes sense. The data also implied that the patients receiving LaViv continued to see improvements beyond four months whereas those receiving placebo typically plateaued…Anecdotally, improvements with LaViv appear to last for well beyond the study period, although additional studies are needed to determine the duration of the effect.”
Dr. Munavalli suggests that any patient with moderate to severe depressed, distensible acne scarring would be good candidates for treatment with LaViv, while those with a majority of icepick, or boxcar acne scars probably would not be good candidates. “These types of scars are particularly challenging to correct as they typically do not distend when stretched. They also do not respond to volumetric correction with conventional dermal fillers like hyaluronic acid or calcium hydroxylapatite or to autologous cell transplantation like LaViv,” he observes.
One ASDS poster that garnered attention was a comparison of onabotulinumtoxinA (Botox, Allergan) and incobotulinumtoxinA (Xeomin, Merz) (Poster 1, Moers-Carpi, et al.). Despite the suggestion of some modest long-term differences in sustained efficacy of the products, the clinical relevance of the study is unclear, according to Vivian Bucay, MD, who notes that the study compared the toxins at dosages that are potentially disproportionate. Attention to the study may highlight the fact that US clinicians are eager to understand how the two neurotoxins compare clinically and where the newest formulation on the market may fit into patient care.
In the US, incobotulinumtioxinA is indicated for treatment of the glabella at a total dose of 20 units. OnabotulinumtoxinA is also indicated in the US at a 20-unit dose to treat the glabella. Most clinicians in aesthetic medicine and other specialties, such as neurology, tend to consider incobotulinumtoxinA and onabotulinumtoxinA to have approximately 1:1 dosing. Strictly speaking, it is not accurate to describe the agents as having equal potency, Dr. Bucay notes: Each neurotoxin uses a proprietary assay to measure its potency, making it difficult to compare agents. Furthermore, as Dr. Bucay points out, in the clinical setting, the injector has to determine the dose of any given toxin based on the characteristics of the specific patient and his/her treatment goals; the notion of a “standard dose” is not a clinical reality. For example, men typically require more toxin than women.
“For the purposes of a study, I understand that you need to establish a standard dose,” Dr. Bucay asserts. “It is unclear, however, why the differing doses were used and, therefore, what the subsequent findings may mean.” The study compared the agents at a ratio of 1:1.5 (20 units of onabotulinumtoxinA to 30 units of incobotulinumtoxin A) using incobotulinum toxin at the upper doses allowed by its European indication. At 28 days, there was statistical equivalence in the number of responders in each group and the proportion of subjects in each group rated by the physician as none or mild on the Facial Wrinkle Scale. At days 84, 98, and 112, the researchers say, there was a trend in efficacy scores in favor of onabotulinumtoxin A, but there was not statistically significant superiority.
Dr. Bucay says she would have liked to see a trial of similar doses of the two toxins to provide a more “real world” comparison. Ideally, she suggests, a three-arm study could be conducted with 20 units onabotulimuntoxinA in one arm, 20 units incobotulinumA in a second arm, and 30 units incobotulinumA in the third arm.
Overall, she says, the non-statistically significant trends seen at the later time points will have to be explored in a larger, controlled trial in order to provide meaningful clues for physicians. In the meantime, Dr. Bucay says, clinicians will develop personal experiences with all the approved neurotoxins.
HylatopicPlus Now Available in 450g Jar
Onset Dermatologics recently launched HylatopicPlus Cream in a convenient 450g jar with pump dispenser. HylatopicPlus Cream is indicated to manage and relieve the burning, itching, and pain experienced with various skin conditions, including atopic dermatitis, allergic contact dermatitis, and radiation dermatitis. The company notes that the jar is particularly well-suited for patients who are affected by eczema symptoms over a large surface area of their skin.
Practice Management Symposium Launching
The Medical Entrepreneur Symposium, a three-day, CME-accredited intense educational conference created to teach and prepare physicians at any point in their career for the business world will be held at the Delray Beach Marriott in Delray Beach, FL, from March 29 through April 1, 2012. The cost is $799. Topics include entrepreneurship, practice management and other business skills. The Medical Entrepreneur was founded by Dr. Steven Hacker, author of the business book, The Medical Entrepreneur. For information on the book or conference, visit TheMedicalEntrepreneur.com.
Long-term Data Highlight the Importance of Sun Protection
A new long-term study has found that optimal use of routine sunscreen or other sun protection methods were most strongly associated with decreased melanoma risk (Cancer Epidemiology, Biomarkers & Prevention, Nov. 15). In a population-based case–control study, participants reported for each decade year of age, outdoor activity-related sunscreen use, sunscreen patterns (SPF15+, amount, skin coverage, reapplication, routine use), and use of other sun protection methods (like hats, long-sleeved shirts, staying in the shade). Mean scores for sunscreen, sunscreen patterns or other sun protection methods were low, but higher among controls than cases for SPF15+ sunscreen and other sun protection methods. Moreover, optimal use of other sun protection methods was inversely associated with melanoma.
FDA Approvals Announced
FDA has approved Belotero Balance (Merz Aesthetics) for the correction of moderate-to-severe facial wrinkles and folds. Belotero Balance is a hyaluronic acid-based cohesive gel dermal filler designed to deliver naturallooking results with little recovery time. It is currently approved for aesthetic use in the United Kingdom, Germany, Italy, Russia, Austria and Switzerland. Belotero Balance Dermal Filler is the newest addition to the Merz Aesthetics expanding portfolio of products and the second Merz Aesthetics FDA approval in 2011.
In November FDA approved the melanoma detection device MelaFind (MELA Sciences). The device makes detailed, digital images of skin growths and uses a computer to analyze them for signs of cancer, offering a sort of second opinion to doctors. The device is approved only for dermatologists and only for use on growths that don't have obvious signs of cancer but still have one or two worrisome traits. For more information, visit www.melasciences.com.
Medicis Wins Bankruptcy Auction For Graceway
Medicis Pharmaceutical Corp. won a bankruptcy auction for Graceway Pharmaceuticals LLC, with a $455 million bid. Graceway listed debt of as much as $1 billion and assets of as much as $500 million. Medicis beat Galderma, which started the auction as the lead bidder with an offer of $275 million.
Provectus Melanoma Agent Nears Phase III
Provectus Pharmaceuticals, Inc. is closer to defining the applicable patient population and primary endpoint for its planned pivotal Phase III randomized controlled trial of PV-10 for metastatic melanoma. The company has requested a fourth end-of-Phase II meeting with FDA to finalize the design with the newly organized Division of Oncology Products 2 (DOP2). Provectus is seeking consensus on design of the study that qualifies for Special Protocol Assessment (SPA) and supports approval of PV-10 for its melanoma indication.
Tofacitinib Clears Regulatory Hurdle in Europe
The European Medicines Agency (EMA) accepted Pfizer's Market Authorisation Application for tofacitinib, a novel, oral JAK inhibitor being studied for the treatment of moderate-to-severe active rheumatoid arthritis. Pfizer studied tofacitinib for moderate-tosevere active RA in the Phase III ORAL (Oral Rheumatoid Arthritis Phase III TriaLs) program. In addition, tofacitinib is being investigated in two ongoing long-term open-label extension studies and is being investigated for psoraisis.