When a drug company gets the green light to market its new product in the US, there’s usually a big sales push planned. Fibrocell Science
, which just got Food and Drug Administration approval
to sell its wrinkle treatment LaViv, has a much slower growth plan.
The reason for the slow pace is the company doesn’t have a whole lot of money or a deep-pocketed partner to help ramp up production and sales. Exton, Pennsylvania-based Fibrocell is held back by its own inability to make enough product. And it needs to raise some more money.
“It’s a trot -- not a sprint in the first year,” says CEO David Pernock, a former GlaxoSmithKline
(GSK) executive who joined the company last year.
What the small-cap company has is an interesting science behind its first approved drug. Fibrocell will extract cells from patients to produce a personalized treatment that is injected into the area of the wrinkles. On Wednesday, Fibrocell won FDA approval to sell LaViv as a treatment for smile lines, technically known as nasolabial fold wrinkles. The company also is studying the drug to treat acne and burn scars.
Long term, the company could generate $500 million in sales from LaViv for smile lines and acne scars, Pernock predicts.
That goal, of course, is contingent on winning approval for acne treatment and it assumes LaViv will take off as a product. Fibrocell is going up against established players such as Botox maker Allergan
(AGN) and Medicis Pharmaceutical
(MRX), which sells Restylane injectable gels.
Pernock is counting on LaViv attracting people who want an alternative to the existing treatments and he calls his product a more natural way to treat wrinkles since the patient’s own skin cells are being used. But LaViv isn’t a quick trip to the doctor’s office for a one-time shot (like Botox). The LaViv treatment takes three months to complete. The payoff for LaViv patients, according to Pernock, is a more natural look.
“They’re looking like themselves,” he says. “We’re really going to offer a market expansion.”
Fibrocell plans to start taking skin samples of patients next month in selected markets, including Southern California, Miami, New York, and some other East Coast locations. Pernock expects to treat about 1,00 patients this year and hopes to ramp that number up to 15,000 by 2013. After that, he hopes to increase the number to as many as 40,000 a year but that will require an expansion of the company’s manufacturing capacity.
The company will need to spend $20 million to $25 million over the next 12 months just to launch and make enough product. With only about $3 million in cash now, that raises a question of how Fibrocell is going to raise the money. Pernock says he’s open to a marketing partner (a move that would be a positive catalyst for the stock) and there are some other possibilities being considered.
After more than doubling this year, Fibrocell’s stock declined a bit since the FDA approval this week, trading around $1 a share. It’s still up more than 90% this year.
A price for the treatment will be announced in coming weeks, Pernock says. He’s mindful of his competitors’ prices, which he estimates run $2,000 to $3,000 a year for repeat treatments. Fibrocell has been shown to treat wrinkles for six months, according to the company’s own studies.
Pernock, 56, was a senior vice president at Glaxo. In his last role at that company he oversaw pharmaceuticals, vaccines, oncology, acute care, and HIV. He says he left his high-level job at the big drug maker because he saw a lot of potential at Fibrocell -- a small, undervalued company with a novel product. Over the next couple of years, he’ll need to show investors he made the right move.
No positions in stocks mentioned.
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