82.1 F
San Fernando
Thursday, Mar 28, 2024

Skin Drug Scarcity

Arcutis, an immuno-dermatology drug development company which has functioned as a virtual company since 2016, set up its first brick-and-mortar location in Westlake Village two months ago. The Arcutis team is led by Frank Watanabe, who has 25-plus years of experience in biotech and pharmaceuticals and held various leadership positions at Kythera Biopharmaceuticals Inc., Amgen Inc. and Eli Lilly & Co. The company’s other executives with experience in drug development hail from major players such as Pfizer Inc. and Dow Pharmaceuticals. Watanabe put the team together to focus on research and development in the dermatology field, a market that he felt was severely lacking. “There’s just this dearth of development work in dermatology for new drugs,” said Watanabe. “Over the last decade or so, Allergan and Valeant essentially bought all of the drug development companies. Allergan doesn’t do much R&D and Valeant doesn’t do R&D – that’s part of their strategy.” Allergan has since shut down its medical dermatology operation, Watanabe said, noting that “we actually hired their last dermatologist.” Pipeline So far, the company has focused on psoriasis and dermatitis. Its lead drug – ARQ-151 – is a topical solution that will treat both diseases. The company expects Phase 2 clinical trials to be complete in the third fiscal quarter of this year, and start Phase 3 in the early part of 2020. Arcutis will file for approvals in 2021 and launch the product for market in 2022. ARQ-151 will be prescription only. Injectable biologics to treat psoriasis are the latest drugs to hit the market, such as Amgen’s Embrel. Biologics cost upwards of $40,000 and are not offered to most patients because of cost, Watanabe said. Topical creams for psoriasis, on the other hand, have not been updated for more than 30 years. “Our chief medical officer has been in practice for 30 some odd years, and he was trained on these drugs when he was a resident – the same drugs,” said Watanabe. “Patients need more effective, safer medication to treat their psoriasis. The biologics don’t help the majority of patients because the insurance companies won’t let them have them. So that’s the major unmet need in psoriasis that we’re addressing.” On the dermatitis front, the company targets “atopic” dermatitis, meaning the allergic reaction occurs even though the skin and allergen are not in contact. The disease mainly affects children age 5 and younger. For treatment, dermatologists have old topicals, just like psoriasis, injectables with steroids, or calcineurin inhibitors, which have been linked to a risk of cancer. Investors see the unmet needs as well, with big names from San Francisco, Boston and New York supporting Arcutis. Frazier Healthcare Partners, Bain Capital Life Sciences, OrbiMed, Hillhouse Capital Group, Rainbow Group Capital Management and RA Capital Management are the major funders. Watanabe cites the company’s unconventional strategy and first-rate talent as a selling point for investors. Arcutis is focusing on targets that are already biologically validated, meaning the company’s chances of success are much higher than other startups. “Investing in small biotechs is very risky business. Arcutis, because we focus on novel targets and also because of the experience of our team, our chances of success are much, much higher than 10 percent,” Watanabe said. He believes the company’s products have a high likelihood for approval by the Food and Drug Administration. “We already know our drug works; we already know our drug is safe. It’s one of the things that investors have found particularly attractive – this very unusual risk profile in the company,” he added. Virtual legacy Two-thirds of Arcutis’ staff work from headquarters at 2945 Townsgate Road, with the rest working remotely across the nation. “We have people in Colorado, Missouri, Florida, New Jersey, and then we have people in San Francisco and San Diego. We look for the best people regardless of where they live,” Watanabe explained. Many members of the Arcutis team come from big companies, and have chosen to go smaller to have a greater impact with people they trust. “If you worked at Amgen for 20 years and you’re suddenly going from this big, secure company with stable cash flow and guaranteed benefits, and you’re going to jump to a small company, you’d like to jump to a smaller company that you think is going to make it,” said Watanabe. “We certainly offer our employees a more secure landing place than a lot of other opportunities.” Selling the company is not something on the radar right now, but if a buyer with the right price came along, the board would consider it, Watanabe said. The company’s board consists of investors, with the exception of one industry expert who is an independent director. “You’re looking for different expertise as the company matures. It could be financing expertise, manufacturing, scientific, commercial,” said John Smither, chief financial officer for Arcutis. “As people look for board opportunities, we look for similar pattern recognition. It really goes around quality of the company and quality of the people.”

Previous article
Next article

Featured Articles

Related Articles