Innocoll: Don't Say No

| About: Innocoll (INNL)


Innocoll is a pharmaceutical company with 3 end stage products.

Cogenzia may be the first topical drug to help with diabetic foot ulcers approved by the FDA.

Cogent is has already achieved the QIDP designation.

The Company:

Innocoll Holdings plc (NASDAQ:INNL) is a specialized pharmaceutical company which currently has 3 end stage products ready for late stage trials. The products are designed for topical application or can be implanted on surgical patients. The medications are delivered directly to the wound which can enhance the medicine's effectiveness as well as eliminate other problems associated with typical or atypical side effects. The company recently moved its headquarters to Athlone, Ireland because of beneficial corporate laws and greater flexibility in financing transactions. Its management team has a wealth of experience in the pharmaceutical world and includes the expertise of leaders who have specialized in the research, discovery, and commercialization of some of the top health care brands in the world. The management team gives credit to the drugs and there promise for the future success of the company.

My Drug of Choice:

Out of the 3 drugs Innocoll is developing, Cogenzia, the drug which is intended to help with diabetic foot ulcers seems to have great potential. If successful it would become the first topical drug approved by the FDA under these requirements. Diabetic foot ulcers affect approximately 7% of diabetic patients each year with 58% of these wounds becoming infected. Currently Diabetic foot infections (DFI) which are caused by a compromise of the blood supply from the disease can be as simple as cellulitus which can be treated with antibiotics, to as complicated as chronic osteomyelitis which could result in amputation. The current treatments which mainly use systemic antibiotics have a 30-50% failure rate. Cogenzia has the potential to be the first topical antibiotic used in conjunction with other antibiotics that could significantly increase and improve the current success rate of the other drugs. The difference between Cogenzia and alternative treatments is that the treatment provides a high dosage of the topical treatment directly to the site. These concentrations are normally not possible because of side effects from the systemic drugs. In the Phase 2 study, 100% of Cogenzia treated subjects compared with 70% in the control group experienced a clinical cure. The phase 3 Study will take two identical placebo controlled studies to determine the safety of Cogenzia administered along with the other antibiotic drugs. This study should be completed in 2016. Dr. James Tursi, former Chief Medical Officer at Innocoll stated " With no FDA approved topical therapy options for DFIs , this first person dosed in COACT-1 signifies an important step in addressing this serious health concern. We believe that Cogenzia, if successful in clinical trials, could lead to the first FDA- approved, topical adjuvant treatment option for DFIs." In June of 2015, Cogenzia received the Qualified Infectiois Disease Product(QIDP) designation. The QIDP was established as a part of the Generating Antibiotic Incentives Now (NASDAQ:GAIN) Act passed by the US Congress to increase incentives for drug companies to continue to develop drugs to combat hard to treat infections. Receiving the QIDP means that Cogenzia is now eligible for more government FDA incentives which can not only expedite the approval and marketing design but can also lead to a five-year extension of marketing exclusivity.

The Incentives:

While there is significant financial potential in a QIDP and the GAIN Act, there are also negatives associated with the government programs. There is no doubt that the necessity to "fix" hard to cure infections is something that needs to be addressed. The historical problem with pharmaceutical companies and these less lucrative drugs is that they simply aren't cost effective. It costs billions of dollars and more than a decade of development to develop a drug and achieve the FDA approval to market it and realize returns. Only 2 new antibiotics were approved by the FDA between 2008 and 2012. QIDP and the GAIN Act incentives will help with this "forgotten" area of the pharmaceutical industry, but the problem is that the market may be inundated with a multitude of drugs that essentially accomplish the same thing, but are called a different name just to get the newly established government incentives. Cogenzia doesn't seem to fall into this category since it will be the first, and at least for the first five years, only topical solution for that medical problem. As a result, with the governmental incentives and the current positive clinical trials, the drug appears to at the late stage development look like a winner for Innocoll and its investors.

Investing in Innocoll:

Innocoll has revenue of $1,772,000, Net Income of -$6,608,000, assets of $5,175,000, and liabilities of $102,881,000. Its stocks have ranged from a 52-week low of $6.30 to a high of $16.46. Though these numbers do not seem to encourage investing, 2016 promises to be a ground breaking year for the drug maker and its pipeline of products. With Phase 2 and Phase 3 trials showing positive results on Cogenzia, and with the governmental programs adding financial incentive on the front side helping with the development and research of the drug and on the back end giving it a five year exclusivity, the company is heading in the right direction. With the current stock price of $8.31, I think this stock has a lot of potential for the future.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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