Ista Looks to Fund Research With Product Sales
By VITA REED
Irvine-based Ista Pharmaceuticals Inc., a development-stage eye drug maker, plans to start selling other products in a bid to bankroll more work on its own compounds.
Ista said late last month that it plans to acquire and commercialize drugs while still working on its own potential products for treating eye disorders. As part of the shift, Ista brought in a new chief executive, Vicente Anido Jr., a former Allergan Inc. executive and venture capitalist.
Anido, who replaced former Ista chief executive Edward Danse, most recently was a general partner at San Diego-based venture capital firm Windamere Venture Partners LLC. During the mid-1990s, he spent three years as president of the Americas region at Irvine-based Allergan.
Ista has a sales and marketing pact with Allergan, which also makes eye drugs. Vitrase, Ista’s lead drug, is undergoing trials and is on schedule for a mid-2003 launch.
“We want to accelerate from a pure development house to one that makes money,” Anido said. “In pharmaceutical language, that’s not too far away.”
For the quarter ended Sept. 30, Ista counted no revenue and a loss of $5.2 million, primarily from research activities. The company had $11.8 million in cash and investments as of Sept. 30, down from $16.4 million in June and $21.6 million in March.
“The principal risk relates to the company’s need to raise capital, as existing cash of $12 million will only carry the company through two additional quarters of losses,” wrote Dr. Steven Gerber, an analyst with CIBC World Markets in Los Angeles, in a research note.
Anido’s appointment “sends a strong signal regarding an acceleration of the company’s efforts to become more commercially oriented,” Gerber wrote. “We expect Anido will quickly move to acquire additional marketed ophthalmology products to round out the company’s portfolio.”
Ista’s drugs are based on an enzyme called hyalurodinase and are intended to save and improve eyesight. The company hopes to go after conditions such as vitreous hemorrhage, diabetic retinopathy, corneal opacification and keratoconus, or corneal thinning.
Last month, Ista signed a pact with Otsuka Pharmaceutical Co. for exclusive development and commercialization rights for Vitrase in Japan. Ista will make Vitrase, while Otsuka is set to handle Japanese clinical development, regulatory issues and sales and marketing.
The pact also brought a $4 million investment in Ista by Otsuka and an undisclosed licensing fee, “which at least partially addresses Ista’s pressing cash needs,” analyst Gerber said.
Ista recently has seen a jump in its shares, which have tripled since October. Last week, Ista’s stock was near 7 with a market value of about $100 million.
Last week, the company adopted a shareholder rights plan as “protection in the event of an unsolicited takeover attempt.” Ista officials said they aren’t aware of any pending buyout plan.
Anido said he’s getting ready to hit the road to try and sell investors on the company. This week, he said he’s set to attend the JPMorgan Hambrecht & Quist healthcare conference in San Francisco. Investors have “an appetite” for companies such as Ista, he contended.
The annual global market for vitreous hemorrhage, or bleeding inside the eye, is pegged at $200 million to $300 million, according to Anido. Ista also believes its products could be used to treat diabetic retinopathy, a condition that leads to blindness and counts an estimated $1.2 billion annual global market, he said.
Vitrase could reach $200 million in global sales within five years of launch, according to analyst Gerber. Ista is set to release results from its third-phase clinical trials for Vitrase at month’s end, according to Anido.
“None of us know what’s in there. We’re hopeful that (the results) are very positive,” he said.
Ista is planning to submit its final data to the Food and Drug Administration later in the year, Anido said. Regulators have granted Vitrase a “fast-track” designation, meaning that approval could come by the end of next year.
As for Allergan, Chief Executive David Pyott has said that his company’s agreement with Ista could help Allergan boost its presence in retinal disease drugs, an area in which he said Allergan was relatively weak. Ista and Allergan entered their agreement in 2000.
As for competitors, Anido said he wasn’t aware of any companies doing exactly what Ista is doing in terms of drugs to treat vitreous hemorrhaging. Big names such as Alcon Laboratories Inc., Novartis AG and Allergan dominate the eye drug market.
