The real asset for Transdel Pharmaceuticals Inc (OTC: TDLP.OB) is their proprietary transdermal cream drug delivery platform. Pharmaceutical companies have taken notice of the technology and the company may be on the verge of big news.
Utilizing this cream based technology (called Transdel™), they’ve developed their lead product called Ketotransdel®, a potentially first in class, topical anti-inflammatory cream for the treatment of acute pain. Company officials feel this technology has other pharmaceutical and cosmiceutical product applications that can be developed in the future.
Ketotransdel®, the Company's lead late stage pain product, utilizes the Transdel™ technology to deliver the active drug, ketoprofen, a non-steroidal anti-inflammatory drug (“NSAID”), through the skin directly into the underlying tissues where the drug exerts its well-known anti-inflammatory and analgesic effects. This Ketotransdel®, product, has actually been taken through a Phase 3 trial, so it’s a late stage product.
In their first Phase 3 trial, they had statically significant efficacy results and the safety profile was really strong.
The company's transdermal cream drug delivery platform consists of a cream that enables transdermal penetration of drugs avoiding first pass metabolism by the liver and minimizing systemic exposure.
Transdel Pharmaceuticals is also investigating other drug candidates and products in pain management and other therapeutic areas.
Anti-inflammatory drug delivered through skin set to net $10 million upfront deal
John Lomoro, acting CEO and CFO of Transdel has over 15 years of finance and accounting experience with private and publicly traded organizations. Most recently, Mr. Lomoro was the director of North American accounting for Carl Zeiss Vision, Inc. Earlier in his career Mr. Lomoro was the manager of financial reporting and planning for dj Orthopedics, Inc. Also, Mr. Lomoro worked as an audit manager with Ernst & Young LLP and is a Certified Public Accountant.
“One thing we like to highlight is that this is a cream based formulation,” explained Lomoro. “It has some advantages over some of the other delivery systems out there such as a patch or gel delivery system. The cream based formulation is a very cosmetically appealing type of formulation that we have found to dissolve quickly and not leave too much ‘residue’, if you will, when someone applies it. The ease of application we feel is a real benefit of our technology."
“It’s compatible with any number of drugs and sizes of those drugs so not only are we looking to utilize it for drugs that are approved and established in the market, delivering them through a transdermal, but also if a company as a novel chemical entity, if they’re looking for a transdermal delivery technology, we feel that ours, potentially is something that could be licensed to them to develop their product as well.
“Basically our technology utilizes a combination of penetrator enhancers to take the drug through the skin barrier and delivering it to the affected tissues."
The company has been actively looking to partner Ketotransdel® up with a strong pharmaceutical company which has an established sales and marketing infrastructure to sell it once it is approved by the FDA.
“We still need to conduct a second Phase 3 trial for approval,” explains Lomoro. “We also need to complete a couple of routine “safety” trials, if you will, in regards to analgenicity.”
On the cosmeceutical side of the pipeline they have an anti-cellulite product that shows great efficacy and has great market potential as well, but what makes the company so interesting to investors right now are the rumors that Transdel is very close to a deal with one or two companies that could mean a $10 million upfront cash deal as well as the expenses for the trial being paid for by those partners. In addition, there are indications that the company could receive a royalty payment in excess of 25%.
You can read official comments to our questions about those rumors in the Q&A section below.
If true, we believe a deal announcement is only a couple of weeks away. In fact, one industry source tells us that term sheets have already been exchanged.
“Pain is one of the largest markets out there,” explained Lomoro, “and the value of this is that the market itself has become very dynamic because the agency has become quite concerned about the safety and efficacy of NSAIDs and Cox-2 inhibitors. As you know, Merck lost billions of dollars in sales and put together a rescue program for patients who had trouble with Vioxx. Pfizer lost Bextra which had to go away. They also fought to keep Celebrex, and even though they didn’t withdraw it from the market, it has lost sales dramatically. The important point here is that safety is the driver with the agency regarding these topically applied NSAIDs and orally applied NSAIDs. The safety profile we’ve seen to date is remarkable. The incidents of adverse events is actually lower with our active drug than with the placebo, so we’re real comfortable that we have a drug that is aesthetically attractive to the patients and yet doesn’t produce any type of significant adverse effects that might limit its acceptance and use in the space.
“The opportunity that we’ve spelled out. The Cox-2 NSAIDS that I talked about is an $8 billion marketplace that is out there waiting for us. By the time we believe that we will launch this product, the US transdermal market is going to be somewhere in the range of 4 to 5 billion dollars.”
Given the problem that Johnson & Johnson is having with Tylenol and a lot of negative press flowing out about risks associated with over-the-counter painkillers, there appears to be a real opportunity for physicians and patients to seek alternative options for an effective, safe pain medication, and that’s precisely what Transdel may be to able to bring to consumers. If Ketotransdel® is approved by the FDA, it would become the first topically applied NSAID cream product for acute pain.
The Flector patch has done quite well, projected to do over $180 million this year and could pass $200 million. In ’08 it was the market leader, but in February of ’09 the Voltaren gel was launched in the US by Endo Pharmaceuticals, and by the end of ’09 they had tripled their market share and are now clearly the market leaders. That’s the space Ketotransdel® is looking to compete in. There are lots of dollars out there to be captured and that is one reason why these partnership rumors sound very credible to us.
BioMedReports: Do you believe your Ketotransdel® product is superior to Voltaren?
John Lomoro, acting CEO and CFO of Transdel: I’d like to say that I know it’s superior, but we’ll wait for the second study to definitively say that. What we do know is that patients prefer it over the Voltaren gel just simply from the aesthetics of the application of the product. If you put both products side by side, you’ll see a dramatic difference between the Voltaren gel and Ketotransdel® both in appearance and odor. Whenever we do the comparison for potential partners, they are always amazed at how superior the formulation is for Ketotransdel®, especially when they have pain.
For example, we had a couple of guys in a few weeks ago and one of them had a pain on his neck and the other had an arthritic finger (the company is not studying this product for osteo-arthritis), we had some samples on the table and they both used the drug. The guy with the pain on his neck within minutes of application remarked about the pain relief and they all like the cosmetic application. And I speak to that because that’s the limitation that our competitors have. When you have a patch, obviously there are real problems with a patch – does it stick? Does it not stick? Are they allergic to the adhesive? It collects dirt, it collects lint, all of these kinds of things. When you have an alcohol-based gel like Voltaren gel, you have to stand there and let it evaporate and dry before you do anything. When you put this cream on, the drug penetrates the skin and you’re good to go. And you get what the medical community considers to be the best NSAID for topical delivery, which is Ketoprofen.
BioMedReports: All this sounds very exciting. What keeping you from doing the next phase 3 trial?
John Lomoro, acting CEO and CFO of Transdel: Money.
BioMedReports:: The next question, there has been talk about partnering. Is that with this product?
John Lomoro, acting CEO and CFO of Transdel: Yes, we will partner this product. When I signed on with the company I was given a mandate by the board that we wanted to be a fully integrated specialty pharma company and to accomplish that goal we need to partner out the Ketoprofen program, either on a global basis or on regional deals, and we have pursued those aggressively.
We are in late stage discussions with potential regional partners and with a global partner. The idea being that we would set it up where we would sit back a clip coupons and have a joint development committee where they would participate in the development and exercise of the Phase 3 studies and registration process, meaning they would pay for it.
On the marketing side, the partner(s) would be fully responsible for the marketing, commercialization and distribution of the product. We would collect a double digit percentage of net sales royalties, the typical licensing deal from that standpoint.
BioMedReports: So you talking about doing something similar to what Intellipharmaceutics is doing- where you’re reformulating maybe the generic versions of drugs or big billion dollar drugs into this type of application?
John Lomoro, acting CEO and CFO of Transdel: That’s correct. We have a delivery platform that allows us to create a proprietary formulation using a drug that FDA is very familiar with, and we’re going to be able to demonstrate a safety profile that the agency desires to have for a topically applied NSAID. The strategy then, is taking Ketoprofen, putting it in a proprietary formulation package and entering a market that is enormous.
An analyst at Roth Capital was asked to do a forecast tied to the product profile (because they had done the forecasting for the Flector patch and they had called it almost to the penny). The analyst had also done an analysis for the Voltaren gel. This product and their model calls for the product to do somewhere around $70 to $80 million the first year only in the US. It’s a very conservative model where the company is speculating that they’ll capture about 1 to 2% of the market at peak penetration. And the market is less than 50% of the currently identified musculo-skeletal pain where a soft tissue product like this would be used. So it’s extremely conservative. $70 million the first year and by the third year where we would peak out at about 1.5% penetration, we believe they have a product doing in excess of $200 million in the United States alone.
If a model like this has been presented to potential pharma partners that would like to be in the pain space, they would sit up and take notice because this is a low risk drug development program and a low risk marketing launch program to create significant revenue.
You’re talking about $30 million a year in revenue for a company that has 12 million shares. And that’s on the low end. Is it any wonder why we think Transdel Pharmaceuticals Inc (OTC: TDLP) and Ketotransdel® looks so attractive at these price levels?
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