GENDERM TO FILE IND FOR Rx N-1103 TOPICAL SYNTHETIC CAPSAINOID IN 1992

GENDERM TO FILE IND FOR Rx N-1103 TOPICAL SYNTHETIC CAPSAINOID IN 1992 for relief of arthritis pain and neuralgias, according to a Feb. 24 prospectus for an initial public offering. Lincolnshire, Ill.-based GenDerm already markets two OTC natural capsaicin products, Zostrix and Zostrix HP, for arthritis and neuralgia pain relief. "If topical N-1103 were to be approved by FDA, the company believes that much of its sales of Zostrix and Zostrix-HP would be converted to sales of topical N-1103," the prospectus states. "The company believes that the prescription status of topical N-1103 would permit greater penetration of the topical analgesic market." Capsaicin is a Category I counter-irritant ingredient under the proposed monograph for external analgesics. The company holds three patents on topical capsaicin, the prospectus states, and has been the only marketer of it since March, 1991, when it acquired Galen Pharma. Galen Pharma marketed Axsain capsaicin cream, which GenDerm renamed Zostrix-HP. Zostrix is copromoted in the U.S. by Knoll under a June 1991 agreement, the prospectus says. The 10-year deal calls for Knoll to "allocate at least 25% of its U.S. sales activity to Zostrix and Zostrix-HP," according to the prospectus. GenDerm noted that Knoll has a 300-person U.S. sales force. The deal calls for the two companies to split costs and revenues equally. North American sales for Zostrix were $11.9 mil. in 1991, the company said, more than half of total corporate sales of $19.8 mil. The potential advantage of a prescription capsaicin-like product is highlighted by the regulatory difficulties encountered by GenDerm in promoting the OTC product to professionals. "The company has received several regulatory letters from FDA between 1988 and 1991 raising issues concerning the labeling of certain of the company's products, including Zostrix," the prospectus notes. "The company has responded promptly to each of these inquiries" and believes "it has adequately addressed the issues raised." Moreover, GenDerm maintains that "the specific uses questioned by FDA are not material to the successful marketing of these products by the company." A second new capsaicin product, Nasocap, is slated to enter the clinic this year, GenDerm said. A nasal capsaicin formulation, Nasocap will be studied under separate INDs for migraine/cluster headaches and vasomotor rhinitis, with both filings expected in 1992, according to the prospectus. Genderm forecasts a 1994 NDA filing date for migraine use. Nasocap and N-1103 will join six other GenDerm products in clinical trials. The company also has two NDAs pending. An application for Xepin (doxepin) for itching associated with eczema was submitted in October 1990 and "approval could be received as early as 1993." The second NDA is for the anti-acne gel Papulex (nicotinamide). GenDerm also has an ANDA pending for eczema treatment Occlucort (betamethasone dipropionate sustained release) and has submitted data seeking a psoriasis indication in the professional labeling of Zostrix. GenDerm is seeking $19.9 mil. from the offering of 2.6 mil. shares at a proposed price of $12-$14 per share. The company is selling 1.7 mil. of the shares and the rest are being offered by shareholders including Chairman and CEO Joel Bernstein, MD, who is offering 237,500 shares. GenDerm estimates that proceeds will fund operations at least through 1993. Prudential, Hambrecht & Quist and William Blair are underwriting. GenDerm employs 92 people, including 41 engaged in sales and marketing and 21 in R&D. The firm has subsidiaries in Montreal and the U.K. and has a Pacific Rim division. Bernstein, a dermatologist, founded the company in 1983. Company president Frank Pollard had marketing experience at Abbott; Exec VP-Sales Frank Brisben worked in sales for Bristol-Myers Squibb. Former Lyphomed CEO Gary Nei sits on GenDerm's board.