The market for treatment of complicated solar damages - actinic keratosis - has shrunk significantly for Danish Leo Pharma. Now, the company stops the development of the candidate drug ingesol disoxate that was planned to be marketed as a replacement for Picato in 2018.
This is according to Kim Kjøller EVP Global Research & Development in Leo Pharma.
"In short, you can say that the case for this area is not as good as it was five-six years ago, when we began," he says.
As a result, Leo Pharma recorded a write-down of DKK 170 million (USD 28.09 million) in December last year to cover the shutdown costs.
Disappointing phase III results
Actually, the sales of actinic keratosis products, led by Picato, increased by 4 percent in 2017 and all of the therapy area generates an income of DKK 369 million (USD 60.98 million). However, Picato sales decreased by 11 percent back in 2016.
"We still consider Picato an amazing treatment but it has not had the breakthrough we hoped for in the US. It has limited out business opportunities in that area significantly. But luckily, we have other assets in the pipeline with great potential in the US," says Kjøller.
Another consequence of Leo Pharma giving up on the ingenol disoxate project is the shutdown of the company's production facilities in Southport, Australia. The factory was meant for the production of Picato and ingenol disoxate and it was where the company harvested the plant euphorbia peplus, also known as petty spurge.
"The Australia factory was established with the aim of harvesting enormous amounts of the plant and afterwards extracting the active ingredient ingenol mebutate. Today, there are other and more effective methods," says Kjøller.
The shutdown of the factory means that the 27 employees lose their job.
No interest in competing with generics
By closing the Southport factory Leo Pharma also stops the production of Picato. However, due to the unsuccessful sales, the company has a large stock, sufficient for providing the drug until 2022.
Technically, Leo Pharma could move the production of Picato home to Denmark but currently, the company has no interest in doing so. Already in its annual report 2016, Leo Pharma announced a downscale of investments in the drug.
"As for any other drugs in the world, generic competition appear sooner or later. Within the near future, it will also be the case for Picato in Europe and the US. Thus, we are careful with investing more in Picato," says Kjøller.
Picato was approved in 2012 so many of the patents on the drug will expire before 2022. Leo Pharma anticipates that the generic manufacturers will take over the market before the company runs out of ingenol mebutate.
English Edit: Ida Løjmand
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