Staff Writer

Dermira Inc. popped onto the dermatology scene last week with a $42 million Series A financing and the acquisition of a handful of assets out of both industry and academia, including QLT Inc. spin-out Valocor Therapeutics Inc.

"There are a lot of opportunities in the dermatology market," Dermira CEO Tom Wiggans told BioWorld Today. "Investors are very interested."

Case in point: Just last month, Kythera Biopharmaceuticals Inc. raised $37.4 million to support its facial fat reduction program. A few months prior, Lotus Tissue Repair Inc. closed a $26 million Series A round for skin disorders. (See BioWorld Today, June 30, 2011, and Sept. 20, 2011.)

And if investments in derm have been hot, acquisitions have been on fire. Allergan Inc. recently bought Vicept Therapeutics Inc. in a $275 million deal, while Valeant Pharmaceuticals International Inc. acquired Sanofi SA's dermatology unit for $425 million and Johnson & Johnson's Ortho Dermatologics division for $345 million. (See BioWorld Today, July 20, 2011.)

Why so much interest in the space? Wiggans called out three factors. First, commercialization of dermatology products is fairly straightforward, since dermatologists are a relatively small and easy-to-access specialty group. Second, the field has proven to be less vulnerable to managed care issues than others. Third, dermatological indications have been "underserved by innovation," Wiggans said.

Add in large target markets and a cost-efficient clinical development path, and you've got a salve for many of the issues currently ailing other sectors of the drug industry.

Wiggans had first-hand experience in just how lucrative the derm field could be. He previously headed Peplin Inc., which garnered positive data in its first pivotal trial of actinic keratosis drug PEP005 and was promptly acquired by LEO Pharma A/S for $287.5 million. (See BioWorld Today, Sept. 4, 2009.)

So Wiggans teamed up with scientist Eugene Bauer, who'd had similar experiences. Bauer had cofounded Neosil Inc., which was acquired by Peplin, and Connetics Corp., which was sold to Stiefel Laboratories Inc. for $640 million. Stiefel was later sold to GlaxoSmithKline plc for $2.9 billion. (See BioWorld Today, Oct. 24, 2006, and April 22, 2009.)

Wiggans and Bauer cofounded Redwood City, Calif.-based Dermira last year with Bay City Capital, which provided seed funding. New Enterprise Associates also joined in during the seed stage, while both seed investors and new investor Canaan Partners participated in the Series A.

The $42 million Series A round is split into two relatively even tranches, the second of which will come next year but is not tied to a milestone. Wiggans noted the investors are "very excited about evaluating additional deals."

For now, Dermira's lead product is lemuteporfin, a topical photodynamic therapy for acne. QLT originally developed the drug for benign prostatic hyperplasia, but a failed Phase II trial prompted the shift in strategy. (See BioWorld Today, Feb. 17, 2006.)

Although BPH and acne may seem worlds apart, Wiggans explained that the promise of photodynamic therapy is its ability to "target a specific tissue that you want to destroy with minimal damage to nonspecific tissues." Lemuteporfin didn't destroy tumors, but when applied topically, it collects in the oil-secreting sebaceous glands, and exposure to red light then activates it to destroy them.

While the concept seems logical, QLT never got it far off the ground because its Visudyne (verteporfin) photodynamic therapy for wet age-related macular degeneration was pummeled by Genentech Inc.'s Lucentis (ranibizumab), prompting a series of restructurings. QLT eventually spun-out its dermatology assets to Valocor. (See BioWorld Today, Aug. 13, 2010.)

Dermira is looking to start a clinical proof-of-concept study with lemuteporfin later this year or early next year.

Another asset Dermira obtained in the Valocor acquisition is DRM01, an inhibitor of the enzyme acetyl coenzyme A carboxylase (ACC), which is involved in the biosynthesis of sebum, the oily substance secreted by sebaceous glands. There's also DRM02, which targets integrin-linked kinase (ILK) and may be applicable for atopic dermatitis and vitiligo. Both compounds are preclinical.

Wiggans said Valocor's pipeline includes other, as-yet-undisclosed assets, and that Dermira has picked up additional assets from other companies and from academia. "There's really good deal flow in dermatology right now," he said, adding that Dermira plans to continue building its pipeline.

In other financing news:

• PharmaGap Inc., of Ottawa, Ontario, said it closed a private offering of 2.2 million units for a net aggregate amount of $175,210. The company is developing peptide therapeutics for treating cancer, including GAP-107B8, which has shown to be highly toxic in numerous cancer types.

• Valeant Pharmaceuticals International Inc., of Mississauga, Ontario, completed its refinancing of the senior secured credit facilities of wholly owned subsidiary Valeant Pharmaceuticals International. The new $2 billion facilities were upsized from the previously announced $1.7 billion. The firm used a portion of the proceeds to repay $615 million in bridge loans and $200 million in revolving loans outstanding under its prior credit facilities and to pay related fees and expenses.