SkinMedica Seeks Niche in Skin-Care Drugs, Products
By MARION WEBB
Rex Bright is following in the footsteps of his former employer, Irvine-based Allergan Inc.
His Carlsbad-based SkinMedica Inc. sells chemical peels, facial cleaners and toners and creams to dermatologists and plastic surgeons and licenses compounds that show promise in skin care.
Bright is chief executive and an investor in SkinMedica, along with David Hale and Cam Garner, two San Diego biotech veterans. San Diego dermatologist Dr. Richard E. Fitzpatrick started the company.
Allergan, which Fitzpatrick worked at while it was part of SmithKline Beecham PLC, is a favorite among plastic surgeons with Botox.
SkinMedica is looking to expand from dispensing drugs to dermatologists to licensing drugs that no longer offer big drug makers large enough profits. The company is looking for compounds that show promise in skin care, particularly acne, anti-aging and hyperpigmentation.
The next step is to test the products in patients to get data doctors like to see, and sell it under a new brand name, Bright said.
“The company, right now, is a “cosmeceutical” company focused on dispensing physicians, primarily dermatologists and plastic surgeons the real growth will come from prescription products,it’s a very big market and it’s growing rapidly,” Bright said.
The worldwide skin care market is about $19 billion, led by $14.1 billion in the U.S., according to a cosmeceutical consulting group. Of that amount, $8.1 billion is in consumer products, $4.2 billion is in prescription drugs, and $1.8 billion is in cosmeceutical products.
SkinMedica has no plans to compete against the likes of Lanc & #244;me and Estee Lauder, which sell directly to consumers. Bright instead wants to venture into prescription products. He said he wants to give the rising numbers of aging baby boomers what they want,a more youthful appearance. And he knows they’re willing to pay a high price to get it.
Bright recently licensed an anti-aging product from the Dublin, Ohio-based drugmaker Cardinal Health Inc., which he hopes to sell by the year’s end. He also hopes to add four acne products.
Bright said identifying patented formulations that are better than existing products is key.
He envisions an acne cream with sustained-release formulation that’s less harsh or is packaged in such small dosages they’ll conveniently fit into a person’s pocket.
Bright, who formerly was president at then SmithKline Beecham’s Allergan skin care unit, contends the time is ripe to invest in a skin-care focused specialty pharmaceutical firm.
“If you went back 10 years ago, dermatology was kind of a second-class citizen with a lot of lotions and potions,” he said. “New technologies didn’t go to skin care,they went to cardiology, oncology and central nervous system problems.”
But that’s changed.
Newer products on the market, including acne prescription drugs Retin-A and Accutane really work, he said.
Other technologies coming out of research done at biotechnology and drug companies have been shown to indirectly benefit dermatology.
SkinMedica’s flagship product called TNS Recovery Complex is a topical solution consisting of human growth factors derived originally from neonatal human foreskin at the San Diego biotech Advanced Tissue Sciences Inc.
Advanced Tissue sells its own wound care product, but together with Fitzpatrick developed and then tested TNS, using growth factors to see if it would improve aging skin.
SkinMedica is testing 200 patients to further evaluate its use, but the product is already being sold to dermatologists.
Showing dermatologists data is critical to the success of SkinMedica’s business, Bright said.
“You show them clinical data and let them try the product themselves and that’s how you generate interest,” he said.
Out of the 6,000 dermatologists in the United States, 3,300 are high-volume prescribers, he said. The average acne patient on a typical visit walks out with 2.3 prescriptions.
Bright said it only takes a small sales force to call on dermatologists compared to a fleet of representatives to call on family-care practitioners
SkinMedica has five salespeople now.
Bright wants to hire 15 more by year-end and expand the total sales team to 35 by 2003.
SkinMedica had more than $1 million in revenues in 2001 from product sales, Bright said. Sales will get a 200 percent boost this year, he predicted.
Fitzpatrick started SkinMedica with $1.5 million in seed funding.
Bright raised $1 million in Series A financing last year led by San Diego-based venture firm Windamere Venture Partners LLC.
By the end of the year, Bright hopes to raise between $5 million and $7 million in financing.
“We don’t compete with other specialty pharmaceutical businesses except in the investment community,” Bright said.
“Investors like specialty pharmaceutical firms because they grow faster and because growth comes from acquisitions rather than long-term development. We see an exit for investors in three to five years out rather than eight to nine years.”
Competitors on the prescription side include some big drug companies,L’Or & #233;al SA’s Galderma unit and skin care divisions at Johnson & Johnson and Aventis, he said.
Bright said the units are small and focus on developing products to treat disease.
By contrast, SkinMedica wants to sell products that help people look better.
The big drugmakers don’t even look at products unless they generate more than $500 million in sales, he said.
“They want a product that’s $1 billion or more,they want a Lipitor,” he said.
That opens a $25 million and $50 million niche market that specialty pharmaceutical companies gladly fill, he said.
Still, the small market doesn’t necessarily correlate to smaller prices for consumers.
Bright admits SkinMedica’s prices are on the “high-end.” Their top product TNS runs $125 for a one-month supply, with other products averaging about $35.
TNS’ price tag hasn’t deterred patients, said Heidi Lindner, a physician assistant for Dr. Milind Ambe, a plastic and reconstructive surgeon in Newport Beach, who used SkinMedica’s growth factor product for five months and treated hundreds of patients.
“It’s flying off our shelves,” Lindner said about the TNS product.
That’s because patients who have used the product twice a day for three months and continued using it once a day have seen dramatic results,from reduced wrinkles to faded age spots.
The office serves mostly affluent clients, but finds the cost of treatment is still much lower than more aggressive treatments or laser surgery.
Webb is a staff writer with the San Diego Business Journal.
