Some readers will be wondering what "Prednisporin" is. This substance, which contains low doses of the glucocorticoid, prednisolone acetate and the immunosuppressant cyclosporine A, is a topical ocular drug candidate whose license Zalicus (ZLCS) granted to Fovea Pharmaceuticals SA, a division of Sanofi (SNY).
On October 1, 2009, Fovea Pharmaceuticals announced that it had entered into a binding agreement to sell 100% of its share to Sanofi. Fovea had a portfolio of three clinical compounds, a unique technology platform and several discovery programs dedicated to back of the eye diseases. The deal was valued at €370MM, including an immediate upfront payment and subsequent milestone payments related to the progress of the clinical compounds.
Fovea is developing a proprietary co-formulation of Prednisporin and is seeking to develop Prednisporin to treat inflammatory ocular diseases such as allergic conjunctivitis. During 2009, Fovea investigated Prednisporin in a Phase IIa proof-of-concept clinical trial. Fovea has reported that on the primary endpoint of ocular itching, the Prednisporin combination with the higher dose of cyclosporine A is superior to placebo (p=0.048) and non-inferior to the higher dose of prednisolone acetate alone. The Prednisporin combinations were generally well tolerated and there were no serious adverse events reported.
The market size for ocular drugs and eye care products is estimated to reach more than $15 billion (U.S.) by 2013. There appears to be a chronic lack of innovation in the ocular drug development arena, despite the large market potential. The FDA website notes that only 21 ocular drugs were approved in the last 10 years; 30 new drugs if one looks back to 1995. No ocular drugs were approved in 1995 or 2003. Two manufacturers, Alcon and Allergan (AGN), garnered the most approvals during this timeframe.
For such a large market, there have been a limited number of traditional players (Alcon, Allergan, Bausch and Lomb). However, things may be changing. A top-line review of ClinicalTrials.gov reveals that a plethora of other players [ISTA "a company of Bausch and Lomb," Innovative Medical, Chakshu Research, Vistakon, Novartis (NVS), Pfizer (PFE), Inspire, Othera, Merck (MRK), Glaukos Corp, Danube Pharma, Santen Oy and Sirion] are finding the barriers low enough and the potential profit large enough to enter this arena.
In the following table, you can check the annual sales of some topical ocular drugs to treat inflammatory ocular diseases such as allergic conjunctivitis.
|$267MM (Q2 2012)||Novartis||Alcon|
|$346MM* (Q2 2012)||Allergan|
*Revenues of Lumigan Franchise and Restasis
The previous table shows that Sanofi is interested in completing the development of Prednisporin. The estimated annual sales of Prednisporin can be from $30 to $50MM during the first year and can climb to $150MM in the third year of marketing.
Zalicus received payments totaling $1.5MM for Prednisporin, and is eligible to receive up to $39MM in development and regulatory milestone payments. Zalicus is also qualified to receive royalties on net sales of Prednisporin by Sanofi.
Only Prednisporin could be valued at more than $50MM, if we add the announced approval of Exalgo 32 m.g. by the FDA and the $50MM of cash Zalicus reported it has in its last financial report. So we could be talking about a minimum valuation of $300MM for the capitalization of Zalicus, in other words, Zalicus should have a price per share of $2.5 minimum. Needless to say that Z160 and Z944 studies' evaluation is not included in the previous comments.
For further information, please read my previous article on this issue.
*Data sourced from Nasdaq.com as well as the web of the previously mentioned companies.