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INTERVIEW-Tiny Clinuvel spurns tanning for medical need

Fri, 2 Dec 2011 16:55 GMT

Source: reuters // Reuters

* To file for European approval for Scenesse in December

* CEO sees $100 mln annual sales for rare genetic disorder

* Drug being tested for much larger patient population

By Bill Berkrot

NEW YORK, Dec 2 (Reuters) - Tiny Australian company Clinuvel Pharmaceuticals Ltd is getting close to seeing its first commercial product, just not for the huge market many of its shareholders had envisioned.

The company this month will seek European approval for its drug Scenesse to treat an extremely rare genetic disorder that causes excruciating pain and scarring from exposure to sunlight. A U.S. application is expected next year.

Scenesse helps activate pigmentation that darkens the skin. Early on, its developers saw it as an alternative to tanning products in the vast cosmetic market.

Clinuvel Chief Executive Philippe Wolgen has been adamant that the company will only pursue medical uses for the drug. To his chagrin, media reports, some citing dermatologists, still play up its potential as a tanning agent.

"This industry wasn't founded to produce Botoxes. That is an abuse of the system that the FDA condoned and allowed that they should not have," Wolgen said in an interview this week, referring to Allergan Inc's multibillion-dollar wrinkle treatment.

"Injecting peptides in a human being is a very serious business," said Wolgen. "The cosmetic application for this company, for this management, is an absolute no no. We will never condone it and that's the end of it."

Scenesse's initial market comprises only about 10,000 patients, but it has the potential for treating millions more. The drug is in mid-stage testing for treating vitiligo, which causes some blacks and Hispanics to lose skin pigmentation and results in unsightly white skin blotches. The disease affects an estimated 40 million people in the developed world.

Wolgen, who is 48, acknowledges that the radical change in the company's focus under his watch in the past six years was "not to the liking of all shareholders because they had already invested in the company for a cosmetic market."

"We believed that the right and only strategy would be to develop this for conditions that actually needed the skin protection," added Wolgen. "There is enough value in medicinal use of drugs."

That stance is not out of character. Trained as a reconstructive surgeon, Wolgen spurned lucrative nose jobs and facelifts in favor of correcting serious head and neck disfigurements.

Clinuvel is listed and technically based in Australia, but Wolgen now runs it from Switzerland to be in a pharmaceutical environment and closer to clinical and regulatory talent. Switzerland is home to major drugmakers Roche Holding AG and Novartis.

LIFE CHANGING

The first use for Scenesse, known chemically as afamelanotide, is expected to be for erythropoietic protoporphyria, or EPP, that affects about 10,000 light skinned people worldwide. It is so severe that sufferers are affected even if exposed to reflected sunlight or through windows.

The drug, delivered as an implant about the size of a grain of rice, is placed under the skin three or four times a year. In clinical trials it significantly reduced the incidence and severity of phototoxic reactions with no major safety issues.

"It's life changing. You've got patients (aged) 60-plus who have been indoors their whole lives who are able to go outdoors in spring and summer," Wolgen said. "Now they can go climb a mountain or go to the beaches."

The drug is sold in Italy under special permission granted on a compassionate basis after patients and doctors involved in trials there successfully lobbied the government.

It had $1 million in sales over the past 11 months and Wolgen sees eventual annual sales of $100 million for EPP.

In a previous role as research analyst for a London-based hedge fund, Wolgen once put a "sell" rating on Clinuvel, now valued at only about $45 million. He has taken flak from shareholders for abandoning the cosmetic approach. Clinuvel shares are down more than 60 percent since mid-2009 and more than 80 percent since April of 2007.

"I didn't foresee that you could succeed in the entire program but devalue the company," Wolgen said, calling that his biggest frustration.

He insists U.S. regulators would never approve Scenesse for tanning rather than a medical condition. He noted that once a drug is approved for one use, it is easier to gain additional, potentially more lucrative, approvals, such as for vitiligo.

The drug may also have a future in helping prevent skin cancer in transplant patients taking immune system suppression drugs who are at high risk of developing melanoma.

The company currently has only enough cash to complete the EPP program and will have to raise money to advance its other clinical options, preferably through a partnership or licensing deal with a larger drugmaker, Wolgen said.

And so long as he is in charge, the French-born CEO insists he will never bow to pressure from investors to produce an artificial tanning formulation of the drug.

"The shareholders will not like it, but you will always find a few that will support it," he said. "I call them the smarter ones." (Editing by Michele Gershberg, Dave Zimmerman)