Leo Sets Up For A David & Goliath Showdown In Atopic Dermatitis
Executive Summary
Scrip talked to Leo Pharma's new CEO Catherine Mazzacco about going up against big biopharma players in dermatology and plans to file tralokinumab in 2020.
Danish dermatology specialist Leo Pharma AS thinks it can leverage tralokinumab to become a global leader in atopic dermatitis, a big ambition given the competition in the space. The interleukin-13 blocker is a pillar of the company's expansion outside of topical psoriasis treatments, where it has a strong position.
The company is poised to file tralokinumab with the US Food and Drug Administration and the European Medicines Agency in 2020, though it has not given a specific timeline. The small dermatology company will be going up against two big biopharma rivals, Regeneron Pharmaceuticals Inc. and Sanofi, which market the blockbuster atopic dermatitis treatment Dupixent (dupilumab), and other big pharmas are coming behind.
"We are very excited about this opportunity and the potential for us to bring to the market in the atopic dermatitis space the second available treatment," CEO Catherine Mazzacco said in an interview. Scrip talked to Mazzacco about the potential launch and Leo's growth strategy at the J.P. Morgan Healthcare conference on 14 January.
Leo CEO Catherine Mazzacco
A Years Long Growth Strategy Takes Shape
Mazzacco joined Leo in August from outside the company to lead the expansion into medical dermatology. She has experience launching immunology biologics, having worked at Abbott Laboratories Inc. during the launch of Humira (adalimumab), before it was spun out into the company that is now AbbVie Inc.. She was most recently head of global commercial operations for GE Healthcare's biopharma division. The timing of the leadership transition, with Gitte Aabo stepping down, comes as Leo, in 2018, initiated a new 2025 business strategy, with the goal of launching several new drugs during the timeline. (Also see "Executive Interview: Gitte Aabo On Leo Pharma's Innovation Strategy" - Scrip, 9 Jan, 2018.)
"It's a very exciting moment to join Leo," Mazzacco said. "We are clearly signaling that we are transforming our company to expand from a heritage of experience in dermatology to more of this traditional pharma portfolio, towards finding and bringing in innovation."
The company gained rights to tralokinumab in skin diseases from AstraZeneca PLC in 2016 for a reasonable upfront of $115m. The deal includes up to $1bn in commercial milestones, however, and mid-teen tiered royalties on product sales. (Also see "AstraZeneca Hands LEO Dermatology Potential" - Scrip, 3 Jul, 2016.) Eli Lilly & Co., meanwhile, just agreed to pay $1.1bn in cash to acquire Dermira Inc. to gain a rival IL-13 blocker, lebrikizumab, in Phase III. (Also see "Lilly’s Paying $1.1bn For Itch Advantage With Dermira’s Lebrikizumab" - Scrip, 10 Jan, 2020.)
AstraZeneca offloaded tralokinumab for dermatology as part of a strategy to focus on its core therapeutic areas: respiratory, oncology and cardiometabolic disease. The company had been developing tralokinumab for asthma, but it failed in Phase III trials. (Also see "End Of The Line For AstraZeneca’s Tralokinumab In Asthma" - Scrip, 1 Nov, 2017.)
Leo also gained European commercial rights to the IL-17 inhibitor brodalumab from AstraZeneca at the same time. Leo markets brodalumab as Kyntheum in Europe, and in 2019, the company gained rights to the drug in select other ex-US countries from Bausch Health Companies Inc., which holds the US rights to the drug. Brodalumab's commercial uptake has been limited versus some other IL-17 inhibitors because of a safety warning on suicidal thinking.
Tralokinumab, if approved by the FDA, would have a healthy head start in the market over lebrikizumab, but it would launch into what is expected to be a competitive market for atopic dermatitis drugs that is currently led by Dupixent. Several other new drugs are advancing through late-stage development for atopic dermatitis, including oral JAK inhibitors. (Also see "Atopic Dermatitis: Ruxolitinib And Baricitinib Spearheading New Therapies" - Scrip, 30 Jan, 2020.)
Dupixent, meanwhile, is getting enhanced attention under Sanofi's new CEO Paul Hudson, who set an ambitious €10bn revenue target for the drug as part of his turnaround plan for the company. (Also see "Sanofi's €10bn Dupixent Plan: 'We're Going To Put The JAKs Properly In Their Place'" - Scrip, 12 Dec, 2019.)
A Different Product Profile
Tralokinumab and dupilumab work differently, however, and while Regeneron and Sanofi have already secured approval of Dupixent in three indications and have plans for its development to treat many more allergic diseases, Leo is focused solely on skin diseases. Dupixent blocks IL-4 and IL-13, while tralokinumab only blocks IL-13.
Sanofi and Regeneron believe IL-4/IL-13 are the master regulator for Type 2 inflammatory disease, which encompasses many diseases. Leo believes IL-13 is the key cytokine associated with atopic dermatitis and that the specificity will provide an advantage when it comes to treating a skin disease that effects a heterogeneous population, exec VP-R&D Kim Kjoeller said.
"What is the most important is the quality of the product that we will be providing to the market," Mazzacco said. "When we discuss with the key opinion leaders who have been involved in our several clinical trials, there is the same feedback from all of them – that there is a need for this treatment in the treatment paradigm."
Leo presented top-line data from three Phase III trials testing tralokinumab in December. Two of the studies, ECZTRA 1 and ECZTRA 2 were randomized, double-blind, placebo-controlled trials that evaluated tralokinumab as monotherapy in adults with moderate-to-severe atopic dermatitis. ECZTRA 3 measured the safety and efficacy of tralokinumab in combination with topical corticosteroids. The company said all three studies met their primary endpoint: Investigator Global Assessment (IGA) score of clear or almost clear skin at week 16 and at least a 75% or greater change from baseline in their Eczema Area and Severity Index (EASI) score at week 16. The company said it will present the full data in 2020.
Mazzacco said Leo has been building out a commercial team in the US to support the launch of tralokinumab. "We have been investing significantly these past years and it was in preparation of this upcoming potential launch," she said. "We have been building the last two years progressively a team in the US with the right competencies and the right skills that we believe will be able to provide this product successfully to the marketplace."
A Unique Business Model
Leo Pharma doesn't answer to public or private investors. The company is funded by the Leo Foundation, which was established in Denmark in 1984, with the aim of supporting skin disease research and establishing Denmark as a global leader for dermatology research. The Leo Foundation owns financial assets of around DKK18bn ($2.66bn), provides financial support to Leo Pharma and funds philanthropic grants, according to the foundation's 2018 annual report. The Leo Foundation is the sole shareholder of Leo Pharma.
Leo Pharma generated DKK10.4bn ($1.54bn) in 2018, roughly flat with 2017 revenues. Operating profit was DKK1.61bn ($237m), a substantial increase from DKK852m ($126m) in 2017 driven by the divestment of Leo Pharma's non-strategic dermatology portfolio to Karo Pharma AB, resulting in a net gain.
Leo may be small, but Mazzacco said the company is one industry should pay attention to because behind tralokinumab, the company is developing other systemic drugs for dermatology indications, with a focus mainly on atopic dermatitis but a desire to expand to rare diseases.
"Our vision is super clear and simple: We want to build upon our legacy and reputation in dermatology to really find and bring innovative treatments to a larger number of patients in dermatology," she said. The company has a strong commercial presence in topical treatments for mild-to-moderate psoriasis but is making a substantial push into atopic dermatitis.
Leo's pipeline of drugs for atopic dermatitis includes: delgocitinib, a pan-JAK inhibitor in development as a topical treatment; AGRX-112, an anti-inflammatory monoclonal antibody; and an H4R antagonist as a potential oral treatment.
"Then, there is clearly a willingness to go beyond eczema and psoriasis, and we have been making a clear first step in rare diseases," she said. In November 2018, Leo signed a partnership with PellePharm Inc. to develop patedegib, a topical gel for the prevention of Gorlin syndrome, a severe rare skin disease for which there are no approved therapies, committing $70m up front. The deal included back-end milestones and an option to buy the company outright.