Market

Acne market overview

Disease description and affected population

Acne, a chronic inflammatory skin disease, is characterized by comedones (blackheads and whiteheads), pimples, and deeper lumps (cysts or nodules) that occur on the face, neck, chest, back, shoulders and upper arms. It is one of the most common reasons for visiting a dermatologist. Globally, it is estimated by Hay et al that acne affected 650 million people in 2010. According to the American Academy of Dermatology, 40 to 50 million people within the United States are affected annually, with 85% of all those aged between 12 and 24 getting acne. In 2007 acne represented approximately 25% of the patient volume of dermatologists in the United States, and over 23 million acne prescriptions were written in 2014 in the United States, according to Management’s analysis of data from IMS Health, IMS SMART MVP Solutions. See Figure 1 below.

Treatment mechanics

Acne is believed to result from an interaction of multiple pathogenic or contributing factors ultimately leading to the skin condition. These factors include an overexpression of androgens, an excessive sebum production, a keratinocyte hyperactivity, a follicle occlusion with subsequent infection with the bacterium Propionibacterium.acnes and the resulting inflammation. Typically, androgens stimulate the sebaceous glands to produce more sebum than normal; sebum and keratin debris clog the follicle, which is colonized by bacteria. The resulting inflammation leads to the formation of acne. See "Product candidate and research program pipeline – Winlevi™".

Prescriptions vary according to the degree of acne severity established (American Academy of Dermatology):

  • Mild: topical therapy is the standard care for the treatment of mild acne
  • Moderate: oral antibiotics are prescribed for moderate and severe acne, and acne that is resistant to topical therapy or that covers a large body surface area
    • Combination therapies using oral antibiotics and topical retinoids have been found to be effective
  • Severe: oral isotretinoin is the only medication approved for severe cystic acne, the most serious form of this skin disease

Dermatologists generally prescribe multiple products with complementary mechanisms of action at the same time as the cause of acne is multifactorial:

  • Seborrhea (excessive sebum production): an anti-androgen, corticosteroid or estrogen is prescribed to inhibit increased sebum production within the sebaceous gland;
  • Obstruction (clogging of follicles with sebum and keratin): a retinoid is typically used to reduce keratinization within the follicle and the resultant obstruction of the pilosebaceous duct; and
  • Infection with P. acnes and inflammation: antibiotics are prescribed to address the infection and reduce inflammation.
  • A product to clean the skin may also be prescribed.

Market fundamentals and competition

There are currently no topical anti-androgens available on the market targeting androgen to control the complex cascade of events that causes acne. Innovation in the acne market over the last twenty years has been limited, with no NCEs in the United States since the launch of Differin (Galderma) in 1995 and Tazorac (Allergan) in 1997. Based on Management's analysis of data from IMS Health, IMS SMART MVP Solutions (see Figure 1 for full details) other key products currently in the market include:

  • Solodyn (Medicis) launched in 2006 – peak U.S. Retail sales of $954 million and 1.3 million prescriptions were achieved in the twelve months to December 2011. Solodyn is an oral antibiotic.
  • Epiduo (Galderma) launched in 2008 in Europe and in 2009 in the United States – peak U.S. Retail sales of $392 million and 1.2 million prescriptions were achieved in the twelve months to April 2015. Epiduo is a combination of a topical retinoid and a topical antibiotic.
  • Aczone (Allergan) launched in 2008 – peak U.S. Retail sales of $345 million and 0.9 million prescriptions were achieved in the twelve months to April 2015. Aczone is a topical anti-infective.
  • Benzaclin (Sanofi) launched in 2000 – peak U.S. Retail sales of $222 million and 2.0 million prescriptions were achieved in 2006. Benzaclin is a topical antibiotic.
  • Acticlate (Aqua Pharmaceuticals, an Almirall company) launched in August 2014 – a new version of Monodox, an oral antibiotic. Acticlate achieved U.S. Retail sales of $28 million and 35 thousand prescriptions in the month of April 2015.

According to Management’s analysis of data from IMS Health, IMS SMART MVP Solutions, acne accounted for approximately $5.1 billion of Retail sales and 23.4 million prescriptions in the U.S. in 2014, representing a 10.5% CAGR from $4.2 billion and a 1.2% CAGR from 22.9 million prescriptions in 2012, respectively.

Figure 1: U.S. Acne Market Overview

Source: Management analysis of data from IMS Health, IMS SMART MVP Solutions. TRx and Retail sales comprised of:
(i) USC3 Classification 37100 Acne Therapy, Prescription Only, in all specialties.
(ii) Selected anti-acne products Doryx, Monodox, Solodyn and Tazorac, in all specialties.
(iii) TRx and Retail sales within the Dermatology specialty only for Doxycycline HYC DR; Doxycycline Hyclat; Doxycycline Monohyd; Minocycline HCl; Minocycline HCl ER; and Spironolactone.

Reimbursement

In the U.S. market, many prescription medications for the treatment of acne are eligible for reimbursement from the patient’s health care insurer. However, as the symptoms of acne are visible, patients can be particularly motivated and willing to pay out of pocket for treatments and higher co-pay associated with Tier 2 and Tier 3 insurance coverage.

Retail prescriptions written by physicians are not always dispensed, as they may be either rejected by payers or abandoned by the patient. According to the IMS Institute for Healthcare Informatics, , patients on average abandon approximately 3% of prescriptions and insurers reject approximately 7% of claims. See Figure 2 below. Relative to other classes, acne products have below-average rates of prescription abandonment and payer rejection. We believe that these lower rates further reduce potential future reimbursement risk.

Figure 2: Percent of retail prescriptions abandoned and rejected in 2013

Source: IMS Institute for Healthcare Informatics.

According to the Association of American Medical Colleges, in 2010 the U.S. acne market was served by 10,800 practicing dermatologists, a relatively small addressable channel when compared to the approximately 215,600 internal and general practice physicians in the United States in 2010.

Androgenic alopecia

Disease description and affected population

AGA, is the most common cause of hair loss, affecting up to 70% of men and 40% of women at some point in their lives according to Medscape. According to the American Hair Loss Association, by the age of thirty-five two-thirds of American men will experience some degree of appreciable hair loss and by the age of fifty approximately 85% of men have significantly thinning hair. In 2012, 35 million men and 21 million women in the United States experienced hair loss, according to the International Society of Hair Restoration Surgery.

Hair loss is an emotionally distressing disease, as was recently highlighted in a study by the International Society of Hair Restoration Surgery:

  • 47% of those surveyed said they would spend their life savings to regain a full head of hair
  • 60% of those surveyed said they would rather have more hair than more money and friends
  • 30% of those surveyed said they would give up sex if it meant they could get their hair back

The study also supports the notion that hair loss sufferers are highly motivated to seek treatment.

Treatment mechanics

Early stages of hair loss can be slowed or reduced with medication. In spite of the very high incidence of AGA, there are currently only two drugs for its treatment: minoxidil (Rogaine) and finasteride (Propecia) both of which are generically available. Minoxidil is a vasodialtor that stimulates already-damaged hair follicles to continuing producing normal hair. Finasteride is an oral medication that works by reducing the level of dihydrotestosterone (DHT) produced by enzymes in the body by 85-90%. Because this DHT is the main causal factor responsible for AGA in men, this reduction protects the hair follicles by limiting the impact of the excessive DHT.

Market fundamentals and competition

According to a survey by the International Society of Hair Restoration Surgery in 2014, the worldwide spend on hair restoration surgery in 2012 was $1.9 billion, an increase of 48% since 2008. Globally, according to EvaluatePharma, $600 million was spent on all drugs indicated for AGA in 2013. The only approved drugs within the United States and EU are Propecia (finasteride) and Rogaine (minoxidil), however according to the International Society of Hair Restoration Surgery both have low levels of efficacy. The current size of the drug market is of limited relevance, given both Propecia and Rogaine are off-patent. See Figure 3 below.

Figure 3: U.S. Propecia Case Study

Source: IMS, IMS SMART MVP Solutions. Global sales from EvaluatePharma.

As outlined in Figure 4, other forms of current non-surgical patient prescriptions include nizoral and other shampoos to thicken hair, generically available minoxidil, biotin (to address biotin deficiency) and others. Propecia, currently the only available anti-androgen for AGA, is contra indicated for women, which leaves the female market largely untreated.

Figure 4: Non-surgical patient prescription usage

Propecia:28%, Rogaine:15%, Nizoral and other shampoos:15%, Minoxidil:13%, Biotin:5% and Others:24%

Source: International Society of Hair Restoration Surgery.
(1) Other shampoos include Nioxin, other special shampoos and Head & Shoulders
(2) Other treatments include Proscar, Compounded minoxidil with additives, home and clinical low level laser therapy, herbs & vitamins and Avodart.

Genital warts

Disease description and affected population

Genital warts, also known as condylomata acuminata, venereal warts, anal warts and anogenital warts, are symptoms of a highly contagious sexually transmitted disease caused by some types of human papillomavirus, or HPV. It is spread through direct skin-to-skin contact, usually during oral, genital, or anal sex with an infected partner. 90% of those who contract HPV will not develop genital warts; however those infected can still transmit the virus. Although estimates of incidence vary between studies, HPV is so common that nearly all sexually active people will contract it at some point in their lives.

According to the Centers for Disease Control and Prevention, in 2013 more than 79 million people were infected with HPV in the U.S. and around 14 million people become newly infected each year. Around 360,000 people develop ano-genital warts annually.

Treatment mechanics

According to the Merck Manual of Diagnosis and Therapy, available online, as at the date of this Offering Memorandum, no treatment of anogenital warts is completely satisfactory and relapses are frequent and require retreatment. Genital warts can be left untreated; however, they could take a long time to clear up. There are two main types of treatment for genital warts:

  • Prescribed topical treatments including, antimitotics (e.g., podophyllotoxin, podophyllin, 5-fluorouracil), caustics (e.g., trichloroacetic acid), interferon inducers (e.g., imiquimod) and sinecatechins (a newer botanical product with an unknown mechanism)
  • Prescribed physical ablation by destroying the tissue of the warts through cryotherapy, electrocautery, excision or laser treatment

Current topical treatments are widely used, however usually require multiple applications typically over a period of four months. Treatment can be ineffective and recurrence is frequent. Furthermore, a number of topical treatments such as Imiquimod are deemed unsafe for use during pregnancy.

Market fundamentals and competition

Gardasil, the main drug in the market is only indicated for the prevention of genital warts. The most common approved drugs for the treatment of genital warts are Imiquimod (a generic), Zyclara, Veregen and Condylox.

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