Shares Up on FDA's OK of CollaGenex Skin Drug
Posted on: Friday, 2 June 2006, 09:00 CDT
By Linda Loyd, The Philadelphia Inquirer
May 31--Shares of CollaGenex Pharmaceuticals Inc. rose as much as 18 percent yesterday shortly after the Newtown company said the Food and Drug Administration approved its drug to treat the inflammatory skin lesions of rosacea.
The company's Oracea capsule is the first FDA-approved oral treatment for the skin condition, which is associated with facial redness and affects about 14 million U.S. adults.
The stock closed up 7 percent, or 82 cents, at $12.50 on the Nasdaq, after touching $13.84 earlier in the day.
"Oracea is the first of a series of dermatology products we have in development," said Colin Stewart, president and chief executive officer. "And we are very pleased that our new-drug application was approved by the FDA within 10 months of submission."
Oracea is a formulation of doxycycline, the same active ingredient in CollaGenex's gum-disease treatment Periostat. The company began developing Oracea after getting reports from dermatologists that patients taking Periostat for gum disease also found it improved their skin, Stewart said.
Analyst Ken Trbovich of RBC Capital Markets gave a 2006 sales forecast for Oracea of $7 million, with projected sales of $60 million next year, and "peak sales" of about $100 million in 2008-09.
Based on an RBC Capital Markets survey of dermatologists, Trbovich said, "we remain quite optimistic about the prospects for Oracea." He raised his 12-month price target for CollaGenex shares from $16 to $19.
CollaGenex, a maker of specialty dental and dermatology drugs, estimates the U.S. market size for rosacea treatments to be about $500 million.
The company said it would begin selling the 40-milligram pill in July.
In May 2005, CollaGenex announced it would lay off nearly half its workforce -- 63 employees -- after regulators approved three generic versions of its primary drug, Periostat. The company has refocused its business, with a strategy of developing dermatology products.
In December, CollaGenex bought a West Conshohocken start-up, SansRosa Pharmaceutical Development Inc., for its technology and patents and to expand its research pipeline for rosacea and other skin disorders.
The Bucks County company now has 135 employees, including an 80-person dermatology sales force to market Oracea.
Last year, CollaGenex lost $24.2 million, or $1.67 a share, on revenue of $26.4 million.
Contact staff writer Linda Loyd at 215-854-2831 or lloyd@phillynews.com.
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Source: The Philadelphia Inquirer
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