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REGN - Does anyone have any thoughts?
Its PDUFA date is Nov 18th. It hit a high in the mid 70s, but has recently been beaten down to low 50s. Analyst continue to upgrade the stock.
CRIS: Thoughts on Metastatic BCC market size.
Basal Cell Skin Cancer
A. Subtypes
a. Multifocal superficial
b. Nodular
c. Pigmented
d. Basosquamous
e. Morpheaform (sclerotic)
f. Cystic
B. Epidemiology
a. Approximately 1.5 million cases of basal cell skin cancer in the US
b. Most common locations are photoexposed surfaces (nose, lips, ears, facs, scalp). Less common on dorsal hands and upper extremities.
c. Incidence increases with cumulative sun exposure and decreasing Fitzpatrick skin phototypes (Types I-III most prevelent).
C. Treatment
a. Superficial multifocal BCC:
i. Electrodessication and curettage
ii. Aldara (Imiquimod): Topical gel that induces TNF alpha production.
b. Nodular:
i. Excision
ii. Mohs micrographic surgery: Gold standard for non-melanoma skin cancer treatment. 99% visualization of the excision borders with cure rates of 99% for primary and 93-97% for recurrent BCCs.
iii. Radiation
c. Cystic and Morpheaform
i. Mohs surgery is gold standard
ii. Radiation
d. Metastatic
i. Chemotherapy
Metastatic BCC is exceptionally rare with an incidence as low as 0.003% to 0.55%. The variability is due to lack of accurate data on BCC incidence. The most widely accepted incidence of metastatic BCC is < 0.01%. Since I have been practicing dermatology and Mohs micrographic surgery, I have not seen one case of metastatic BCC. Metastatic BCC is extremely rare because it is a very slow growing tumor that rarely invades lymph nodes. I have seen very large BCCs that have been left untreated for years that are cosmetically disfiguring but have not invaded lymph nodes.
Perineural invasion is not metastasis; however it can be difficult to treat and does qualify as locally aggressive. Squamous cell carcinoma is more likely to have perineural invasion than BCCS. Oral-paharyngeal cancers are typicall squamous cell carcinomas. Smoking, tobacco chewing, alcohol, and burns are associated to squamous cell carcinomas.
I think that the Hedge Hog signal transduction pathway is important. I would just like to point out that if Vismodegib is limited to adult BCCs that are metastatic or locally aggressive, we are talking about a very small market share. Mohs surgery is considered the gold standard for locally aggressive BCCS and metastatic BCCs are extremely rare.
Please note that I am not saying the stock price will not appreciate, double, or triple. Depending on the catalysts and investor interest CRIS may be an excellent trade. I just wanted to add some insight as to the market size for Vismodegib.
Sheff, what are your thoughts about Neop?
Neop recently filed their NDA for Lymphoseek and the FDA just finished their 60 day review period. Neop is expecting a response any day now. I realize that NDA acceptance is usually a nonevent; however given that the shorts were able to bring down the share price from the mid 5s with arguments that lymphoseek was compared against the wrong comparator, do you think this could be a good trade.
I have looked at both the long and short case and feel the long argument has more merit. However, if i have learned anything recently its that what I think and what the FDA thinks are two entirely different things.
Your sage advice is appreciated as usual.
A Tale of Two Companies…
I apologize to all the message board members who work diligently to provide due diligence as I will be providing none of that. The time for scholarly exchange of facts is over – an immature and untimely death brought about by an irrational and obtuse management. What I will provide is nothing more than the meandering thoughts of a severely disappointed shareholder- one who rarely gives sway to whimsical retort; but desperate times call for drastic measures.
To fully appreciate the depth of my angst and utter bewilderment at Fibrocell’s share price after FDA approval one must look outside the confines of all things Fibrocell. My tale does not start today, or the day of FDA approval for that matter, rather it starts on April 18th, 2011 with a little fish oil company called Amarin. At approximately 1:00 am for reasons unknown, I could not sleep so instead of counting sheep, I decided to peruse my stocks when my eyes fell upon a press release on Amarin Corp., my largest holding. What happened next, and the ensuing events are just conjecture on my part as I am certain that that much euphoria has affected my memory. What I do remember is that Amarin ANCHOR results indicated that AMR-101 significantly decrease triglycerides without raising LDL in patients with dyslipidemia who are already on statins with a baseline triglyceride level of 200-499. There is much more to the study, which I won’t bore you with, but suffice it to say that the results were so amazing that I started doing the moonwalk to Weird Al Yankovich’s - Eat It. Seriously, thoughts of dancing sugarplums were in my head. I awoke the next morning to find that Amarin share price had more than doubled!! Life was good, very good…
…Fast-forward to June 22, 2011 and our beloved Fibrocell Corp. I am home lounging on the sofa perusing my stocks when, lo and behold, I see a press release that Fibrocell has received FDA approval for LaViv, the first autologous cell transplant technology for aesthetic facial rejuvination. I am beside myself. Amarin was amazing; however, AMR101 was a purified fish oil competing in a market with other fish oil products – albeit AMR101 was more pure. LaViv is the First Autologous Cell Transplant technology that is FDA-approved for the aesthetics market!!
Deep breath…
A Tale of Two Companies Part II
Now back to our tale. After reading that the FDA approved LaViv, I fully expected Fibrocell’s share price to increase 50 -100%. Can you honestly blame me? LaViv was the first autologous cell transplant technology for aesthetic facial rejuvenation with further indications down the road (acne scarring, full face, periodontal etc.). If this cannot raise the share price then what can? A simile would be good ol’ Jed Clampett shootin at some food when up through the ground came a bubblin crude – oil that is, black gold, Texas tea- only to find that now, his property has decreased in value!!!
I was in a daze. I could not believe my own eyes. Surely this was someone’s idea of a sardonic joke. But who would be that deranged? Trying to make sense of these events was maddening. No matter how much I agonized over the data and the resulting share price, this was shaping up to be a Greek tragedy. I don’t mind a Shakespearian tragedy. God knows I have character flaws that have, and will, shape my destiny; but to have the company’s share price plummet despite the long arduous work that led to these amazing results is just exacerbating! I felt that I was in some bezaro universe where the fabric of reality was torn and I was drifting without the benefit of natural laws to guide me. As I lie bemused, a thought suddenly emerged in my mind – out of nowhere, with a big bang – and guided me back to reality.
I suddenly realized that this is a Shakespearian tragedy and that gave me some hope. All tragedies are regrettable, however I am sure you would agree that one that is due to one’s own actions is infinitely more preferable than one that is outside of one’s control. After all, one can work on one’s character. But whose character is to blame? And what characteristics have to be modified? After much contemplation, the answer to these questions became obvious. The culprits are the management and the shareholders. Yes, that means me. It’s true the management runs the company and the trials, but I have an share in the success of the company and thus must shoulder some of the responsibilities.
Management failed – big time in my opinion – to adequately capitalize on FDA approval. They or their marketing department were somehow able to grab defeat out of the jaws of victory. To say that this was a marketing failure is akin to saying that the Hindenburg disaster was an engineering glitch! Management should have been out front with the news – on CNN, CNBC, FOX Business Chanel, Wall Street Journal, and Bloomberg etc.… Basically, they should have been in the face of anyone and everyone who has eyes and ears. Amarin did just that. Fibrocell did not.
Now to the shareholders. The bile regurgitating, gut-wrenching fact is that we, the shareholders are also culpable. Message boards are inhabited by all sorts of creatures – some intelligent while others not so, some hoping to capitalize on a company’s share price appreciation, while others hoping to capitalize on a company’s share price depreciation. It is the responsibility of intelligent, well-informed shareholders to post well thought-out messages – not to do so creates a vacuum that becomes filled with nonsensical drivel intended to misinform the potential investor and drive the share price down. To this end, I would like to thank Atownwater, Laltrader, Biolover, Eyebuystox, Kipperdo, Rickkkk, and others (I apologize if I missed someone, this list is not all inclusive) who tirelessly search and provide information that we all can use.
As shareholders we also have a responsibility to evaluate our investment strategy to see if modification is necessary. When objectively evaluating my investment in Fibrocell I have come to the following conclusion: 1- My assessment of Fibercell’s autologous cell transplant technology was accurate. 2- My assessment of the likelihood of FDA approval was correct given the Advisory Committee report. 3- The potential for LaViv in the aesthetic market is significant (my opinion only, not fact). I base this upon discussions with other dermatologist as well as interest from my own patients. 4- My assessment of management’s credentials, experience, and potential was woefully wrong. Without really knowing the management, I retained my investment (Actually 30%. I sold 30% pre-PDUFA and 40% the day of PDUFA) in Fibrocell post-FDA approval. My mistake was that I fell in love with the technology and I exacerbated that mistake by allowing it to cloud my judgment. Great technology gets you FDA approval – great management gets you a company with a successful product while rewarding investors for their trust.
After this painful catharsis I realized that this tale might not be so much a tale of two companies, but rather, a tale of mice and men. Men know what they own, why they own it, and forge their destiny. Mice, although they may be blessed with good fortune, have their destiny determined by forces they see outside of their control.
OT - but not really.
SGEN, one of my stocks received FDA approval today. Surprise, surprise, the company put out a PR and put it on their website. Equally amazing, management is having a conference call pre market on Monday. Boy, the must be novices compared to the seasoned people at FCSC. I mean really, what are they thinking? Don't they know that these actions could cause an appreciation in the share price and reward their investors? Oh well, I guess you just can't figure some people.
Update on a good management's effect on a bad outcome
REGN share price barely down and in fact increased $2 from yesterday's sfter hour trading. This is what today's conference call did for the share price and its investors. FCSC management could take a page out of REGN's management's playbook!
Fibrocell management vs. Regeneron management
As indicated in My Stock section, I am invested in Regeneron (REGN). REGN is a biotech company that is making a drug for wet age-related macular degeneration. The company recently had an Advisory committee that ruled 12-0 in favor of efficacy and safety of REGN’s product. REGN was awaiting a PDUFA date of August 19, 2011 (this Friday) and was expected to pass by flying colors. Today, the FDA a torpedoed them (in my opinion) and said that there will be a 3 month delay (November) before it can be reviewed because the FDA ruled the answers by REGN to some of their questions as major amendments.
Now, my purpose for writing this post is not to dissect the appropriateness of the FDA’s response, but rather to point out the difference between the response of REGN’s management and that of FCSC. For all practical purposes, this is devastating news (at least in the short-term). So, how did management respond? They released an immediate press release and scheduled a conference call tomorrow before the market opens. REGN gets devastating news and faces its investors. Now flash back to FCSC immediately post PDUFA. LaViv gets FDA-approved and we hear about it from thestreet.com and the management goes mute for almost two months!
Ah, a tale of two companies.
Does FCSC’s death mean Allergan’s Success and Vice Versa?
I think it is interesting how Allergan and FCSC are pit against each other in a David vs. Goliath scenario. I think this is a falsehood that has been created due to animosity between posters who are invested in Allergan and those who are invested in FCSC. In the defense of FCSC investors/posters, this is a FCSC board that presumably was created where FCSC investors could discuss their investment. This is not to say that objective contrary views are not welcome; however, it becomes fairly easy to distinguish between individuals who provide genuine unbiased critiques and those that have an emotionally biased point-of-view based on their vested interests.
As this is a FCSC investment board, it is reasonable that investors would be offended that individuals with a disdain for FCSC’s success would constantly post on this message board. However, by going down this path and engaging individuals rather than providing unbiased information, we will end up diminishing the quality of this board and become mired in senseless arguments.
So here are the facts as I see it:
1. There are individuals on this board that relish in the demise of FCSC and have a vested interest in its failure.
2. No amount of discussion between FCSC investors will change fact #1 above.
3. Regardless of personal attacks, emotional tirades, or biased forecasts as to the demise of FCSC, investors are here to stay.
4. There are individuals that post unbiased contrary points of view without any emotional attachment and that is helpful as no one has a lock on knowledge.
5. LaViv does not compete with Botox.
6. If FCSC will fail tomorrow and will never be heard from again, Allergan will not benefit whatsoever. FCSC is too young to be of any threat to Allergan.
7. Allergan’s chief competition is Medicis and potentially Galderma.
8. LaViv will command a share of the market – how large a share still remains to be seen and will solely be determined by patients.
FCSC has great potential and management will need time to grow the company. Patients will ultimately determine the success. To have individuals who are not dermatologists or plastic surgeons pontificate that LaViv will fail is irrelevant. At this point no one could objectively know if LaViv will be a success until they start introducing it into their practice. Not all dermatologist and plastic surgeons are convinced that LaViv will be a commercial success; however, what separates them from naysayers on this board is that while taking an objective stance that time will tell, they do not have an emotional attachment to LaViv’s failure.
Eyebuystocks, I see your point; however I would like to provide a counterview. I preface this by saying this is only my opinion and I may be completely wrong.
Here is the way I am looking at this:
1. FCSC has a FDA-approved product
2. LaViv will compete as a dermal filler, volume enhancer with Juvederm (Allergan), and Restylane (Medicis). In my view if sales of LaViv increase, there should be some decrease in the facial fillers, although this is not a zero sum game.
3. FCSC has roughly 22 million dollars.
As a purchasing company, and for just my example let’s assume it is Allergan, I want to justify spending scarce cash on FCSC. FCSC does not have an unrealized potential to add to my sales, rather FCSC has an FDA-approved product that will cut into my sales if successful. So, why would I buyout FCSC? If I don’t buyout FCSC, FCSC will have to market LaViv by itself. This will be a painstakingly slow process fraught with many ups and downs. FCSC does not have an established sales force and will need to hit the ground running. FCSC does not have sufficient cash to hire, train, and market LaViv on a large scale. Also, if I purchase FCSC and market LaViv, I will be marketing it for the same FDA-approved indication as Juvederm.
I may be very wrong. I do not have the business experience that you and many other posters have on this board, but this is the way I see it. I base this on my experience of trying to negotiate a deal for a product I invented a few years back. I had invented a punch biopsy device that had interchangeable tips with a plunger mechanism to dispel the tissue and by pressing further, dispel the tip. The handle would be reusable. I contacted Miltex Corporation and sent them my prototypes. They were very interested and invited me for an interview. At the time I was very naive and thought they would be offering me millions of dollars. After sitting with them and reviewing my product, they were very excited. However, what the offered me was $0.07 per tip (each pack contains 25 tips). I felt insulted! The Vice President then took me for a tour of their facility and showed me their automated machinery. He than explained that although my product was superior, they would have to have a reason to invest in it. He said their machinery costs millions of dollars and they would have to change it to start producing my punch biopsy. So, any sales in my product would come at the cost of their product. It would not increase the market. Now, if my product increased the market then that would be a different story.
I know my story does not apply to everything, but I thought that at least I would share the reason for my opinion.
Is trading FCSC a viable option.
I agree that a buyout is not in the cards at this time. To be a buyout candidate you must show that you are cutting into the sales of the purchasing company and that is not going to happen anytime soon (3rd quarter 2012 we should have some sales figures). However, ROW Partnerships are possible along the way.
The question is, how can one make money with FCSC until the price appreciates:
1- Is there enough volatility to trade this while keeping a core position? If someone would have bought at $0.45 and sold at $0.60 that would amount to a 25% profit.
2- Do you average down? If there is good news in the future of FCSC, what is the likely impact on share price? Does good news take the share price to $0.75, $0.85, $1, $2 etc.
3- What are upcoming catalysts? Response from management would be an obvious catalyst.
If you believe in the product, technology platform, patents, and management, then you will maintain a core position; however, it would be interesting to see if a trading strategy would also be appropriate. I only ask because I know there are some experienced traders on this board.
Fibroblasts and neurons.
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2829121/
Thank you sheff, bfr, atownwater. I appreciate all your insights. I will wait until the water clears.
Does anyone have any thoughts on ONTY.
The share price has taken a beating recently after an article by Martin Shkreli (also posted against Neop) and DNDN collapse. They have a interesting immunotherapy for non-small cell lung cancer. they have a second look catalyst in 4th quarter/1st quarter 2012.
Thinking of taking a position and would appreciate any info.
Thank you.
Atownwater, I agree.
As an investor I certainly would like the share price to appreciate. However, what I really need is guidance from management to make an informed decision.
What I cant get over is why management did not halt after PDUFA acceptance and call a conference call. How would that have hurt their current position. If they were working on a deal, announcing to their shareholders that LaViv was accepted and stating verbally what they put in their July presentation would have helped significantly. If there was no partnership talks, at least level with investors and tell them what your vision is for the future.
Short of a bonanza statement (major partnership which is absolutely not likely), this has been a missed opportunity.
Tragedy of the Commons – FCSC and the message boards
When I was in college (further back than I care to remember), I received a one-year scholarship to further my studies in physics at the University of Cambridge in Cambridge, England. England’s weather at it’s best is gloomy and rainy and Cambridge was no different, so sitting in a classroom or a library wasn’t all that bad. While at Cambridge, I decided to take a class in ecology (I have no idea why, other than it fit my schedule and I needed the equivalent of an upper division biology course). During my ecology course the professor discussed a paper by Garrett Hardin first published in the journal Science in 1968 called “Tragedy of the Commons” a situation when multiple individuals acting in heir own self-interest will abuse a shared resource, even when it is apparent that it is not in everyone’s best interest for this to happen. Hardin was a renowned ecologist who based his theory on William Forster Lloyd’s observation that ranchers, to their own detriment, will increase the size of their herd on public (“common”) land and slowly, but surly, deplete the land’s resources due to overgrazing resulting in thinner cattle (worth Googling. Not related to stocks, but very interesting).
As I was reading yahoo message boards for various stocks, I realized that a twenty-first century example of Hardin’s “tragedy of The Commons” is in fact the various stock message boards and the individuals who inhabit them. These message boards should serve as a common, public area that could foster genuine scholarly debate and the free exchange of ideas (long, short, etc.…), which would benefit all. Instead, they have descended to the equivalent of a public lake that is being abused by immoral dumpers (individuals that promote or degrade a stock for mere self-interest at the detriment of the public good) protected by the anonymity that is afforded by the Internet.
I would like to gauge the interest of board members for creating a site on Ihub for genuine debate of ideas and fostering better investment strategies. I do not take issue with any individual that has a contrary viewpoint to my own; however, I would like the information provided to be substantiated. Merely stating that a buyout is around the corner or that this product will never be profitable (when management has not released information regarding costs, gross margins, etc.) is devoid of value. The site would have to be moderated to insure that the posts contribute to the overall knowledge of the group and that there is no bias towards the long or the short position and all posts are welcome as long as they are substantiated by facts.
As I have stated in my previous posts, I believe that FCSC has great potential; however, and this a big “however,” it depends on management’s vision and execution. With the share price of FCSC decreasing significantly, almost daily, I think a scholarly environment would be beneficial to exchange trading ideas. Do you sell and cut your losses? Do you buy more shares hoping to play the bounce? If you want to play the bounce, do you buy as the share price is falling so you don’t miss the floor or do you wait for an increase in price to avoid losing more? How should LaViv be priced to be profitable? Should physicians purchase LaViv and mark up the product or should they charge for office visits, biopsies, and injections?
Clearly there are many unanswered questions and management’s silence has not helped.
Personally, my outlook is long-term; however, I would be disingenuous to say that I am not disappointed by management. I do not blame management for issuing shares to raise funds nor do I blame them for being quite if they are working on a deal. However, if they are not working on a deal then their silence is unacceptable. Why did management not raise funds when the stock was in the $1.40s prior to PDUFA? Why did investors have to find out that LaViv was approved from thestreet.com.? Why did it take management almost the entire day to update their website to indicate that LaViv was approved? Why has the website not been redesigned to reflect a company with a FDA-approved product? Why not have patient photos on the site (Medicis does)? Until answered, these and many other questions pose significant concern regarding management’s ability to steer FCSC toward success.
FCSC past, present, and future
Prior to today's announcement there were four possibilities for the company going forward:
1. Buyout. 2. Partnership. 3. Dilution. 4. Bankruptcy. I would like to examine these possibilities and the likelihood of them occurring going forward.
1. Buyout: Low possibility in the near term. FCSC would be a buyout candidate if it can show that it has cut into the sales/revenue of the purchasing company; otherwise, why should a company spend cash on a company that is not a threat. A simile would be potential energy versus kinetic energy. potentially cutting into a company's sales revenue is not enough for a buyout. A company must prove it can cut into the sales of the purchasing company and this only will occur after the launch. In my opinion, at least 3rd quarter of 2012 before we have a better handle of FCSC sales. But, yes, if FCSC meets or exceeds its sales projection, than it will be a takeover target.
2. Partnership: I believe going forward that partnership possibilities have increased after today's capital raise. I base this on the following assumption: No company will want to partner with a cash strapped company regardless of its product or potential. A simile would be that no girl would like to be friends with a needy guy regardless of whet he looks like or his potential. By shoring up its financial balance sheet, FCSC has better positioned itself for a partnership. By partnership, I don't mean a US partnership to begin with. I think the most likely partnership will be outside the US. Perhaps a partnership where the partnering company will assume the marketing responsibilities while FCSC will assume the manufacturing responsibilities. FCSC will be a more attractive, stronger partner if the partnering company does not have to spend cash marketing LaViv as well as providing cash to FCSC.
3. Dilution: Just occurred today. In my opinion this was the most likely option, perhaps combined with a ROW partnership. I do not see FCSC needing to raise capital anytime soon, especially if they stay true to their plan of slowly generating sales starting from the clinical trial sites. If, and this is a big if, they are able to stick with their plan and LaViv gains acceptance by patients, then US partnership or buyout becomes a possibility, but probably not before 2013-2014. Just my opinion.
4. Bankruptcy is not a probability with this recent capital raise. I think that if they keep to their marketing strategy and generate sales slowly while gaining patient confidence, they will grow the company and gain market share.
I think as investors it is natural to look at the share price on a daily, weekly, monthly basis and judge the success of a company and it's management. Why not? it's our money. Management however, must keep a singular focus on strategically growing the company and making it a success. Regardless of what individual investors, traders, or short sellers may feel, this capital raise will propel FCSC forward toward becoming a successful company.
Clarification of my post about Dr. Klein and artefill
I apologize for any misunderstanding I have created. The first half of my post was my explanation of Artecholl, Artefill, and LaViv. The second half of my post included a link to the Huffington Post that represented the views of Dr. Klein, an eminent Dermatologist and academician. I reposted his article in it's entirety in the second half of my post for those not wishing to cut and paste the link. It was Dr. Klein who went to great lengths to expose the dangers of Artecholl and Botox.
I also would like to point out that this article was cut and pasted in it's entirety from the Huffington Post article without alteration. I did not include the date of the article as I had provided the link to the article in Huffington Post which clearly shows the date.
The date of the article is Febuary 3, 2010
Title: Botox Chapter 2: Is it safe?
Link: http://www.huffingtonpost.com/arnold-william-klein/botox-chapter-2-is-it-saf_b_448583.html
Artecoll, Artefill, Dr. Klein, & LaViv oh my!
Parts 1 and 2
Recently there has been some discussion about Medicis possibly partnering with Suneva Medical Inc., the producers of the permanent filler Artefill. This possible partnership has fueled discussion on the similarities or lack-there-of between Artefill and LaViv. It has been suggested that Artefill has not penetrated the market well because it is a permanent filler and therefore this portends the same fate for LaViv. I would like to examine this thesis; but, to do so, I think we must look at the history of Artefill.
Artefill was not created in a vacuum. It is the third generation of a permanent filler based on polymethylmethacrylate (PMMA) – a hard plastic polymer that is non-biodegradable. The predecessor of Artefill was Artecholl, a PMMA polymer that was used for facial aesthetics, both as a dermal filler and as a volume enhancer. Artecholl had significant complications associated with it leading to low market penetration and significant backlash from the cosmetic dermatological community, none more vocal then Dr. Arnold Klein, an eminent cosmetic dermatologist, academician, and scientist often considered the “father of cosmetic dermatology”. But, before I delve into Dr. Klein’s concerns, or crusade against Artecholl, I would like to discuss the numerous complications. Soon after Artecholl hit the market, reports of significant complications arose from the aesthetic community. Complications included granuloma formation, distant migration of the PMMA spheres, induction of an intense immune response, exacerbating or potentially inducing Lupus and other collagen vascular disorders, and a host of other less significant complications such as chronic pruritis of the overlying skin. The question is why? To understand this, we must understand the mechanism of action of Artecholl. Artecholl is composed of 20% PMMA spheres by volume and 80% Bovine Collagen by volume. The PMMA spheres were of varying sizes and ranged from less than 20 micrometers in diameter to greater than 80 micrometers in diameter. The spheres themselves were rough and non-uniform. It was later discovered that the complications of Artecholl were due to the variability of the size of the spheres – especially sphere sizes < 20 micrometers, and the general roughness of the spheres. The PMMA spheres induce a fibrotic response- induce the fibroblasts to produce collagen and encapsulate the PMMA spheres. The Bovine collagen acts as a scaffolding to prevent dispersion and migration of the spheres. PMMA spheres <20 micrometers would disperse despite the Bovine collagen. Artefill, the 3rd generation PMMA filler, has PMMA spheres that are > 20 micrometers (40-50 micrometers) and are smooth in contour, thus eliminating the complications associated with Artecholl. Artefill still has shortcomings: It still uses bovine collagen instead of human collagen, thus requiring skin testing. Artefill is extremely technique dependent and requires placement in the dermal-subdermal cutaneous fat layer. Artefill also requires a large gauge needle bore 26G-23G(the smaller the number, the larger the needle bore). Also, unlike injection of hyaluronic acid products, Artefill must be injected through a syringe that is in constant motion and not static – this makes it more difficult.
Given the complications associated with Artecholl and the fact that it was a foreign substance that induced a fibroblasts to produce collagen significant concern developed about the potential of collagen vascular disease. The medical community does not in general feel comfortable with foreign material being injected that has the ability to induce cells to produce a product. Given this concern and the complications, Dr. Arnold Klein led a crusade to ban Artecholl – and he was justified! It is important to note that, as Dr. Klein stated a physician’s first responsibility is to do no harm, and Artecholl was in conflict with this tenant. Artefill however, is not Artecholl and lacks it’s complications. It is important to note that Dr. Klein’s comments were restricted to Artecholl.
LaViv is neither Artecholl nor is it Artefill. LaViv is autologous fibroblasts. There is no need to induce cells to produce anything. With LaViv you are cutting out the middleman – you are actually injecting the fibroblasts themselves without the need for a foreign substance to cause induction. FCSC will succeed or fail by patient acceptance of LaViv. To pronounce LaViv dead prior to it’s launch is well…. A bit too premature!
Finally, I would like to point out that I, as well as the aesthetic community of physicians have the outmost respect for Dr. Klein’s achievements, patient advocacy, and his insight. It is worth noting that Dr. Klein has voiced concern for another cosmetic product – Botox. It is worth looking at the provided link from the Huffington Post. I have attached it at the bottom for everyone.
http://www.huffingtonpost.com/arnold-william-klein/botox-chapter-2-is-it-saf_b_448583.html
Part4
In 2005, four hundred thirty six "serious adverse event" reports related to Botox had been reported to Allergan, the manufacturer of Botox. Two hundred one of these cases were possibly or probably due to remote spread of the toxin, including 42 cases reported after wrinkle injections. Also in 2005, Allergan had reported to the FDA that they had identified 38 patients -- 20 children, most of them with cerebral palsy, and 18 adults -- who had suffered seizures after Botox injections.
During May 2007, European regulators requested that Allergan and two other toxin competitors add information to their product labels and to warn doctors that the toxin could spread, causing botulism like symptoms (dry mouth, difficulty swallowing, blurred or double vision, drooping eyelids, slurred speech and progressive muscle weakness). In July of that same year a confidential report made to Allergan by a consulting firm showed 207 patients had developed medical problems associated with the spread of toxin, including several deaths. A third of the cases reported occurred in people treated for wrinkles. The rest were treated for muscle spasms, muscle spasticity and eye problems. Proportionately more problems were reported amongst children who had received Botox.
Given those statistics, however, it must be stated that Botox and Botox Cosmetic are extraordinarily safe drugs when used correctly by a qualified physician. Issues occur when medical literature is, at times, totally incorrect and when you have a manufacturer who is unwilling to admit the true number of adverse reactions. The accurate and safe usage of this toxin becomes problematic when a physician's or injector's expertise and knowledge become questionable. Therefore, one must choose their physician carefully.
Recently, the Quality Standards Subcommittee of the American Academy of Neurology and the Practice Committee of the Child Neurology Society stated:
"Botulinum toxin type A was found to be generally safe in children with cerebral palsy. However, the Food and Drug Administration is presently investigating isolated cases of generalized weakness resulting in poor outcomes."
I think that rather than use words like "poor outcomes"; it would be more accurate to use the word "deaths." Indeed, in Orange County, California, there is a trial currently underway concerning the death of a seven-year-old girl after she was treated with Botox--not for cosmetic purposes, but for cerebral palsy. While it is widely known that Botox will reduce the spasticity of the leg and arm muscles in individuals with cerebral palsy, the question that must be answered is "Is it safe?"
How does Allergan educate physicians for the use of this product for cerebral palsy when it is not approved for this indication? Allergan, through its extensive chain of paid consultants, has created a vast array of courses they sponsor through assorted CME (Continuing Medical Education) programs. This is not widely known outside of a select medical community. The FDA has seemingly turned a blind eye toward Allergan's off-label promotion of this drug for a myriad of purposes.
In the deposition for this trial, the treating physician (Dr X) stated that he went to two Allergan-sponsored symposiums to learn how to treat cerebral palsy with Botox. Indeed, Allergan has been known to pay the travel expenses of physicians to attend such meetings. While the physician named in this suit is not a neurologist, he was trained to use Botox in cerebral palsy by a pediatric neurologist. Would you not think training of this type be best left to training other pediatric neurologists? He was taught to use a dose of Botox in treating children which in reality is twice the maximum dose. What makes no sense is that even though sales representatives of Allergan visited the physician's office over 50 times; maximum dosing was never discussed nor was why the patient was hospitalized 10 times for difficulties breathing while undergoing Botox therapy. This is a well known side-effect which occurs with spread of a botulism based toxin. Why was the treating physician unaware of this sign that the toxin had spread? Was he unaware that death can happen as a complication if you have severe problems with swallowing or breathing after treatment?
What is even stranger is that, according to Mitchell Brin, Vice-President of Allergan for Botox/Neurology, the company has never shared its maximum dosage information with physicians due to a federal ban on marketing for non-approved uses. What is meant by maximum dose is even confusing. Some individuals consider the maximum dose in cerebral palsy to be 400 units per visit. However, the child's weight, muscle mass and acute nature of the illness will modify this dose. So the idea of a maximum dose for a specific condition is indeed variable and physicians should be aware that there are no specific rules, but rather the physician must understand the toxin, the disease and various factors that determine the treating dose to be used in a given patient.
So, apparently, Allergan can teach physicians how to treat cerebral palsy with Botox, but not how to treat it safely? Furthermore, there is literature that supports the use of low-dose rather than high-dose toxin in treating cerebral palsy. Was Dr X aware of this or the fact that low volume with precise injections produces the best results? Maybe he believed volume does not matter in that it has been printed in a journal?
Why have there recently been so many more reports of severe adverse reactions and deaths associated with botulinum toxins, which never seem to find their way into public awareness? Certainly, it could be the greater number of physicians using the toxin. But there is a much more serious issue; the current medical literature on Botox should be approached with caution, in that many of the articles are far from accurate. Also, they have not recognized or have even ignored the dangers that accompany the use of this product, even in cosmetic settings.
The following illustrates how physicians and pharmaceutical companies can attempt to compromise the medical literature, the cornerstone of medicine:
Part 5
A few years ago, the lead consultant for Allergan (who was a foreign doctor and not even licensed to practice in the US) attempted to publish a manuscript that supported the concept that dilution of the agent did not matter, even though it has long been known that large dilutions of the vial of toxin could result in the toxin migrating and reaching unintended muscle areas. Additionally, FDA studies had found that problems with dilution were the greatest cause of adverse reactions with Botox. A review of the submitted paper uncovered serious problems and contradictory data, including graphs which suggested a worsening of wrinkle severity from baseline after the Botox wore off. Additionally, small sample size and adverse events in the larger dilution groups were noted. In light of these concerns, the article was rejected for publication. The authors then resubmitted this article, choosing to alter the data and remove the results which suggested wrinkles worsened after the toxin wore off. I spoke to the editor of the journal and, once aware, he promised to address the problem with the authors. Two years later, in a special issue of the journal, Dermatologic Surgery, an issue sponsored by Allergan, this article was published with the altered data and the conclusion that "dilution used when administering Botox was unimportant." When I brought this to the attention of David Pyott, Allergan's chief executive, he stated that while they financially supported the issue and this foreign physician who authored the piece (their chief consultant and their aesthetic Czar), they could do nothing about the altered data. In another article in the same issue of Dermatologic Surgery, this very same foreign physician attempted to include my name on an article regarding the supposed safety of an injectable type B toxin. I demanded that my name be removed. I was then offered $10,000 by Soltace, who manufactured this toxin (Myobloc), to include my name on this paper. This is supposedly the same sum they paid the lead author.
I voiced my concern that this article was incomplete and did not reflect the true toxicity of this agent as had been indicated in other studies, including Japanese studies which have shown this toxin to be much more toxic than originally believed. In clinical use, this toxin had been known to cause distant side effects such as dysphagia (inability to swallow) when it was used in normal doses. My name was removed from the article but the manufacturer refused to include this important safety data. The article concluded that this toxin was both safe and effective. The field of aesthetics has been badly damaged by these acts.
My voicing of serious concerns and having raised questions about the alteration of data published in peer-reviewed journals did not go unnoticed. As a result of trying to inform the medical community of these issues, I was terminated from two manufacturer's advisory boards and from the editorial board of three peer-reviewed publications (Dermatologic Surgery, Journal of the American Society of Dermatology and the Archives of Dermatology). Interestingly enough, William Coleman, who was editor during the entire altered-literature episode, remains at the helm of Dermatologic Surgery today. Furthermore, due to the power of Allergan and other companies, I am no longer invited to speak at any Dermatologic or Plastic Surgery meetings. Recently, Allergen used a patient of mine in an advertising program. My long-standing patient was told that I could no longer be his treating physician. Is this not illegal? I have been disinvited from CME meetings, as well as being prevented from using an educational grant they had provided me to teach courses. Finally, Robert Grant, the president of Allergan Medical, called me and stated that even though I was the best injector in the world, my services would no longer be needed.
Having read of the problems in Europe and Canada and being aware of Allergan's tendency not to reveal severe adverse reactions to Botox, the black box warning they received in 2009 from the FDA vindicated me and the allegations I had made against Allergan, according to BNET/money.com. While consultants to Allergan, as well as the company itself, have publicly denied any problems with the cosmetic use of Botox, the previous data indicate fatalities can occur. Through all the above and despite multiple letters to the FDA, I never have met once or heard from the FDA regarding the information I had provided regarding botulinum.toxin. In that the chief aesthetic czar to Allergan, Alastair Carruthers, is a foreign national not licensed to practice in the US, I would have expected at least a response in that he injected and demonstrated Botox injections throughout the USA without a license in any state.
I also expected to get a response to the information I provided in regard to dilution of toxin wherein the authors suggested it did not matter. Even though I proved the authors had altered their data to reach this conclusion, again I heard nothing. So while the FDA has seemed disinterested in forged literature and unlicensed physicians injecting Botox, the FDA has changed and there is now new leadership. There may still be hope. The following is something I hope never comes to be: Allergan recently filed a lawsuit stating that the ban on off-label marketing of Botox violates its First Amendment rights to free speech. In that a significant portion of their product's $1.3 billion in annual sales comes from off-label prescriptions, to treat everything from migraine headaches to juvenile cerebral palsy, they feel they have the right to sell it for these purposes. Just remember that people have died from wrinkle treatment with this toxin. Do we want to see more children dying when it is used in cerebral palsy? We do not want abuse of this drug, we should want proper use. How can this happen when the studies surrounding approved applications include data that has been forged?
Hi Laltrader - question
The post from Medicis indicates "privately held company". FCSC is not a private company. Am I misunderstand or overly analyzing it?
What FCSC has in common with the Mavericks vs. the Bulls on Nov. 1, 2012.
I can with certitude predict the score of the impending game between the Dallas Mavericks and the Chicago Bulls on November 1, 2012 before they start. The score will be 0 to 0!
The point that I would like to make is that it does not take great insight to say that a company has no revenues and is straddled with debt when the company has not even launched their product. Of course the share price will be down. The simple truth is that many things have to occur before a company is a success and the easiest part is the time prior to FDA approval. After FDA approval the hard part starts – growing a company. When I graduated from residency, many of my friends (recently graduated dermatologists) were actively seeking jobs instead of opening their own practices. When I asked them if they really wanted to have a boss, their answer was always the same. No, but I don’t want the hassles and headaches associated with starting my own business. They said that they don’t want to worry if they have patients or not, they don’t want to get loans and write business plans, they just want to do their jobs and know that at the end of the month, come hell or high water, they will get their checks. I do not blame them. Getting a job is the safest bet. It is well known that most businesses go bankrupt in the first three years. The point I am trying to make is that it is not particularly insightful to bet against the potential success of an upstart company – you are merely playing the odds. Yes, 90% of the time one can predict that a company will fail and be correct. The company has to raise capital, purchase equipment, market the product, manage employees, answer to shareholders, comply with SEC regulations, and plan for the future. This is no easy task! Along the way there will be many road bumps where the management will have to change directions, all awhile not losing sight of the goal – growing the company into profitability.
I can understand frustration, but lets not forget that management has yet to even launch the product. FCSC’s success will not be measured by an arbitrary share price - its success will be measured by the growth of the company.
If you wish to be correct 90% of the time bet against any company after FDA approval that does not get an immediate buyout offer. Short of a buyout offer, even with great partnership news, FCSC’s share price will in the short-term decrease or hover in this range. Why? There are significantly higher numbers of traders that have ended up on the wrong side of the trade than investors. Even with great news the share price will not immediately increase because all the traders will be trying to get out with the skin on their teeth and I sympathize with them. This wall of sellers, will keep the share price from increasing – initially. Short sellers will point to this obvious fact and state, “ see, even with great news this stock can’t appreciate in price. I warned you all”. However, when the dust settles, the share price will increase for investors based on the successful launch of LaViv and its future indications. Success for FCSC is measured in years (1-3), not months.
Upcoming meetings and FCSC
American Academy of Dermatology Summer Meeting
August 3-7 NY, NY AAD.org
63rd Annual Meeting of the Pacific Dermatologic Association
Aug 10-14 Coeur D’alene, ID
pda@hp-assoc.com
www.pacificderm.org.
ASDS Art & Science of Fillers and Injectables
Sept 10-11, Chicago, IL
kweber@asds.net
www.asds.net
2011 CalDerm Meeting (California Society of Dermatology and Dermatologic Surgery)
Sept 16-18, San Diego, CA
www.calderm.org
ASDS Art & Science of Fillers and Injectables
Oct 15-16, NY, NY
kweber@asds.net
www.asds.net
ASDS Annual Meeting
Nov 3-6, Washington DC, DC
ksantaniello@asds.net
www.asds.net
Cosmetic Surgery Forum
Dec 1-4, Las Vegas, NV
Pam@LovelySkin.com
Cosmetic SurgeryForum.com
Florida Society of Dermatology and Dermatologic Surgery
Feb 16-20, Miami Beach, FL
ecorrales@southbeachsymposium.org
www.southbeachsymposium.org
70th Annual Academy of Dermatology Meeting
March 16-20, San Diego, CA
AAD.org
List of Clinical Training sites for Isologen/FCSC
Please refer to this study by its ClinicalTrials.gov identifier: NCT00649428
Locations
United States, Alabama
Total Skin & Beauty Dermatology Center, PC
Birmingham, Alabama, United States
United States, California
Silverburg Surgical & Medical Group
Newport Beach, California, United States, 92660
United States, Florida
Dermatology Research Institute, LLC
Coral Gables, Florida, United States
United States, Illinois
River North Dermatology and Dermatologic Surgery
Naperville, Illinois, United States
United States, North Carolina
Aesthetic Solutions
Chapel Hill, North Carolina, United States
United States, North Carolina
Dermatology, Laser & Vein Specialists of the Carolinas
United States, Texas
Center for Skin Research
Houston, Texas, United States
United States, Maryland
Maryland Laser, Skin and Vein Institute
Hunt Valley, Maryland, United States, 21030
United States, California
Therapeutics Clinical Research
San Diego, CA
From my conversations, I believe that the earliest that FCSC can make a presence is at the Florida Society of Dermatology and Dermatologic Surgery or The 70th Annual Academy of Dermatology Meeting. LaViv is not yet available and none of the physicians have it on hand. I believe that a presentation /poster session will be beneficial; however, we would be talking about early 2012 at the above two meetings. The most likely
Situation will be presentation of the PIII data and the PII acne scarring data by the principal investigators.
As a side note, I did contact two dermatologists who used LaViv in Orange County prior to it being withdrawn. They both indicated that they would be very interested in offering it to their patients, as it was very successful for them in the past. This does not guarantee success for LaViv, but it is interesting to note that there was interest.
Hello Null.
True, they do not have a presence at the exhibition hall. This is based on the last update from June 30th. However, I will contact the AAD summer session tomorrow to determine if there were any late additions that were after the June 30th update. The more important question has to do with presenters. I would be more interested to see if there will be any discussion of LaViv by any presenter or will there be discussion of LaViv in the Live filler course. I have tracked down the dermatologists involved in the PIII LaViv clinical trials to see if any of them will be presenting. I will contact them tomorrow and report back.
I read the studies that you provided. Gary Lask is the guru of the cosmetic laser world. I think there are many possible indications for LaViv once we first cement its use in nasolabial fold correction.
Completely hypothetical: One idea I had was to use Botox and LaViv together for correction of the horizontal forehead lines. Currently the only treatment is Botox or a forehead lift. My idea is to inject Botox and paralyze the dynamic action of the frontalis muscle. The effects of Botox generally take a few days to a week to occur. At the Botox injection visit a semipermanent surgical marker would be utilized to mark the forehead wrinkles with maximum contraction of the frontalis muscle (raising of the eyebrows). The patient would then return a few days later when the Botox has taken effect. small subcutaneous tunnels would be created at the location of the permanent marker markings followed by injection of LaViv. The patient would then undergo 2 more injections at 5 week intervals. In theory, the injected fibroblast will be under homeostatic control and produce the correct amount of collagen and hyaluronic acid to correct the lines without requiring further Botox. This would not be achieved with any current filler as dynamic wrinkles cannot be filled effectively.
Just a thought.
Greetings Nul,
I am a member of ASDS and the AAD although I only occasionally attend the meetings. These meetings are more social than anything else, but for FCSC I definitely would go. I called and emailed FCSC to see if they would have a presence at these meetings but have not heard back. The AAD summer meeting is just around the quarter in August. From the exhibitor section, I did not see FCSC's name published. ALso, when reading the Filler course synopsis I did not recognize a faculty member that was involved in the clinical trials. My guess is they will not make a presence. I tried to contact Dr. Weiss's office regarding the cosmetic bootcamp in Colorado, but he was out of the office the past few days. I wanted to attend this meeting which is going on right now because Dr. Weiss will be a presenting faculty member. As you may recall, Dr. Weiss was a clinical trial physician for FCSC.
This Monday I will be off. I will contact the dermatologists for the filler courses personally and ask them about LaViv and report back. I will attend these meetings if LaViv will be discussed and will report back.
If you have any specific questions you wish asked please let me know and I will do my best to get them answered.
The Task at Hand
So where do we go from here? With management tight-lipped and message boards a buzz with theories spanning the spectrum from why FCSC will be the greatest failure since the pet rock to why LaViv will revolutionize medicine as we know it today, I thought it would be nice to see what is the task at hand. On this msg board we have views from investors, traders, and short sellers; however, what is missing is management’s point of view – les we forget it is their view and work that will ultimately determine our fate.
So, what is the task at hand? Successfully launching and marketing of LaViv for nasolabial folds! I know that many will argue – what about acne scarring? Full-face aesthetics? Burn patients? Surely I must be insane to speak of LaViv without mentioning these other potential indications? While I agree that there is a wide market available for LaViv, none of this will matter if management takes its eye off the ball, with the ball being that LaViv is FDA approved for correction of nasolabial folds. If LaViv becomes a commercial failure for the only indication that it has FDA approval for, does it matter if there are other potential indications for its use? Concentrating on other potential uses of LaViv before commercial success of LaViv would have dire consequences for FCSC and its shareholders. First, lets not forget, Isologen failed in England because management took its eye off the task at hand. Instead of concentrating on achieving outstanding patient results by concentrating on a small core group of highly trained physicians for correction of nasolabial folds, they chose to let anyone, and everyone inject LaViv regardless of training and for whatever indications. Does anyone remember the advertisement in the London newspaper that a physician placed “facelift in a syringe”? Second, concentrating on other indications without first cementing LaViv a share of the nasolabial fold correction market would give one of two impressions: 1) LaViv cannot compete effectively with other well-established dermal fillers and thus we want to ignore this. 2) The nasolabial fold indication is too small of a market in general so we are going to concentrate on other markets. This begs the question why FCSC would go after the nasolabial fold indication in the first place. Impression is everything!
Assuming management sees it as I do, then the task at hand is the successful commercialization of LaViv for nasolabial fold correction. Ok, but now what? Management has said it is low on cash and will thus use the initial clinical trials sites to conserve cash and resources. This is an excellent idea and simple enough. But, what about the next stage? Management has said that it would slowly introduce the technique to other dermatologists and plastic surgeons, who must first be sufficiently trained in the injection technique. It appears that management does not want a repeat of the mistakes that occurred with Isologen. But, this does present some dilemmas. By what criteria will some be trained and others not trained? How will they be trained? Will the physicians have to fly to the clinical trial sites? If so, will their expenses be covered? Will it be on a weekend or will the physicians have to cancel their clinic and lose revenue? Will the training facility be compensated? Will the training doctor travel to individual dermatologist /plastic surgeon offices to minimize the cost to the physician to be trained? Will an injection specialist be utilized who will initially be trained at one of the clinical trial sites and then travel teaching the technique to free up the involvement of the clinical trial physicians? As you can see this is a logistic nightmare if management is not 100% committed to the task at hand.
The Task at Hand part2
Let us assume that the logistics are worked out. What about pricing? Management will be announcing pricing shortly; but this too is only superficially simple. Management has said pricing may be in the $2000 - $3000 as they estimate that is what patients currently pay per year for dermal fillers. To help understand the basis of this assumption, I reviewed the data from my office. To give you some context for the prices that I will quote, my practice is in Orange county CA. Although I do cosmetic procedures, my practice is dominated by Mohs surgery (skin cancer surgery with margin control) so I am not a high volume cosmetic practice:
An order of Juvederm costs approximately $500 and comes in a package of two 0.8cc syringes. My typical markup is 100% witch therefore costs each patient $500 per syringe. A typical patient will have Juvederm injected twice per year. 75% of my patients will purchase one syringe each time, while the remaining 25% will purchase two syringes each time. It all depends on the degree of correction needed and the patient’s budget. If my arithmetic is correct, the typical patient in my practice will spend $1000 per year on Dermal fillers, with some spending as high as $2000.
Given this scenario, a number of questions come to mind? The patient cost maybe $1000 -$2000, but the company is generating $500-$1000 (discounting the 100% markup from the physician’s cost). What will be the cost of LaViv to the physician? One scenario would entail the patient purchasing LaViv as a kit with the physician only charging an injection fee, skin biopsy fee, and office visit. In this scenario, the physician would make more money than the 100% markup and the company would make significantly more money as it would not have to take a 100% haircut by selling first to the physician. Other scenarios exist, but as you can see pricing is neither simple nor straightforward.
Botox Cosmetic is purchased in 100 unit dry powder vials that must be reconstituted with normal sterile saline. When Botox was new to the market, dermatologists in my area were charging $14-$17 a unit, with the typical patient requiring 25 units per area injected. Now the price at my office is $11 per unit with some medispas run by physician assistants charging $9 per unit. In my practice 75% of patients have 2 areas injected with the remaining 25% having one area injected. The typical Botox patient returns 3 times per year. Thus, 75% of my Botox patients pay $1650 per year, while 25% pay $825. The profit margin on Botox is as follows: A 100 unit vial costs roughly $450-$500. At $11 per unit the revenue generated is $1100. $1100 - $500 = $600.
The next question deals with marketing and getting the biggest bang for the buck. Do you make a presence at dermatology and plastic surgery meetings? Do you sponsor events for physicians? Do you hire a sales team to call on physicians (not likely without partnership)? Do you have a physician loyalty program such as Allergan? Allergan will provide discounts based on the number of vials of Botox purchased? This means that not all physicians pay the same price for Botox – risky marketing strategy that has not worked out well for Allergan.
In summary, in retrospect I not only understand the silence of management, I also sympathize with them. They are faced with a monumental task. I respect the fact that they do not wish to speak until all the details are worked out. To borrow a line from the movie Rush Hour and paraphrase liberally… “Being able to speak does not mean one has something intelligent to say”. The corollary is also true: Not speaking does not mean that one does not have something intelligent to say.
LaViv and hair loss
Is LaViv a cure for baldness? The short answer is no. Baldness, otherwise known as alopecia is divided into two broad categories: Scarring alopecia and non-scarring alopecia. Scarring alopecia occurs usually from an infectious etiology ie… bacterial or fungal or an inflammatory dermatosis. Tinea Capitis is fungal infection of the scalp. In infants it is often referred to as cradle cap. The fungus itself does not cause destruction of the hair follicle (hair bulb to be exact); however, it elicits an intense immune reaction that destroys the hair bulb and causes scarring. Various inflammatory diseases such as Lichen planopilaris can cause non-infectious scarring alopecia. Non-scarring alopecia includes diseases such as androgenic alopecia (male-pattern baldness), Telogen effluvium (a condition where most of sthe hair follicle remain in the telogen, or resting stage of growth and then suddenly go into the catagen, or falling out stage). There are many more subcategories of non-scarring alopecia, however I used these just for examples.
Fibroblasts should not have any bearing on any type of alopecia. There is no mechanism that I can foresee that would reverse any of the subcategories of alopecia. The only possible use of fibroblasts would be based on the research at UCLA where they induce fibroblasts to transform into pluripotent adult stem cells. It may be possible to induce follicular differentiation; but this is only hypothetical, as I have not read any studies to this effect.
Investors, traders, and short sellers…
I have been reading the Yahoo MSG Boards as well as our ihub board here and have noticed what appears to be a perfect storm of pessimism. Rarely have investors, traders, and short sellers come together so cohesively with a singular viewpoint. I understand that there are certain individuals that have broken from the herd; however I would like to concentrate on the “heard”, or “heard mentality” for this analysis. To understand the heard mentality, I would like to view FCSC from the viewpoint of an investor, trader, and finally a short seller to see if such pessimism is warranted. Before I start my analysis, I think we should agree on some nomenclature to objectively reach a conclusion.
For the sake of this analysis, I would like to define an investor as an individual that maintains a core position in the company for a number of years, usually greater than 3 years. A trader is an individual that moves in and out of the company based on short-term catalysts. A trader may actively trade the company for years; however, he/she will be moving in and out based on catalysts without maintaining a core position and thus, his/her success is not wed to the ultimate success of the company. A short seller is an individual that will financially benefit from the depreciation of the company’s stock price. Generally, a short seller looks for short-term stock volatility and catalysts to drive the share price down and profit. Short sellers rarely base their position on the long-term demise of a company’s share price, as this is very difficult to forecast with any degree of certainty. Also, short sellers must pay an interest on shares shorted; thus, the longer the shares short are outstanding, the greater the difficulty in covering for a profit. Shorting shares over a long period of time also runs the risk of an unforeseen catalyst causing the stock price to appreciate. With this basic nomenclature, it is apparent that traders and short sellers are different sides of the same coin. Both profit from the short-term volatility in the share price and neither is wed to the long-term success or failure of the company.
Now, I will examine FCSC from the viewpoint of each of these individuals (investors, traders, and short sellers) to try to understand the underlying reason for pessimism and if it is warranted. To analyze the disappointment with FCSC and its management, I must first define what constitutes a success or a failure for the company and how, if at all, has the company failed to meet expectations.
Short sellers: Benefit from catalyst driven share price depreciation. In the case of FCSC, there have been a number of recent catalysts that have benefited short sellers. 1) Pre-PDUFA price appreciation of FCSC share price to the $1.40s in anticipation of PDUFA and the expectation of a post-PDUFA share price in the $3-$5 range. 2) PDUFA date in 6-22-2011 – a near-term catalyst. 3) Post PDUFA sell the news (a nearly universal rule among Short sellers and traders). 4) Concern with regard to Warrant and Preferred stock conversion. This concern resulted in a greater proportion of traders compared to investors and thus favored a massive selloff after PDUFA with the beneficiary being short sellers. 5) The company’s lack of funds. Microcap biotechs are usually cash-strapped and this creates anxiety and doubt in the minds of investors about the ultimate success of the company – “too many pieces of the puzzle must fit before the company can capitalize on its scientific success”. Ironically, this lingering doubt fosters the reliance and preoccupation of investors on a partnership and/or buyout. This has two negative consequence which further benefit’s short sellers: 1- It cements the idea that the company can not make it alone and must look for a “knight in shiny armor” and 2 – It creates another catalyst (partnership/buyout) which until it occurs, will drive the share price further down. 6) Information vacuum. FCSC management’s lack of communication has been extremely beneficial for shorting the stock. Lack of information creates anxiety (fear of the unknown) and this anxiety can be channeled and manipulated to the advantage of a short seller. A crude analogy would be a parachute jumper who has leaped from a plane. It is said that the parachute jumper feels more anxiety before he pulls the ripcord than if the ripcord fails. Fear of the unknown is more anxiety provoking than certain outcome. 7) Unrealistic and overly exuberant belief by investors that the share price would asymptotically increase post PDUFA leaving an opportunity for exploitation by short sellers when such expectations are not met. It becomes easy for short sellers to discount any and all further positive factual information as mere hyperbolae.
I think that FCSC has provided a perfect storm for short sellers. This would have been a very successful strategy as there was minimal risk given the share price pre-PDUFA of $1.40s and immediate post-PDUFA of $1.70s. So, it is easy to understand the pessimism of short sellers with respect to FCSC. Short sellers hope that their pessimism will result in a self-fulfilling prophecy that will enhance their profit.
The question is whether shorting FCSC is still a viable strategy and if not, what has changed to account for a change of strategy. 1- The share price has been trading in the $0.60s – $0.70s giving a market cap significantly lower than pre-PDUFA (50% lower). 2- Warrant and preferred stocks have converted. 3- LaViv is FDA approved. 4- Media exposure of LaViv (Vogue magazine, websites, etc…). 5- FCSC has started a joint venture in China. 6) FCSC has a clear path forward to rollout LaViv utilizing the clinical trial sites in the US, thus significantly decreasing the marketing burden. I do not see short selling FCSC as a viable financial instrument given that the unknown catalysts now lean toward positive news.
Investors, traders, and short sellers Part 2
Traders: Based on the above nomenclature, traders actively move in and out of the stock based on short-term catalysts and are not financially invested in the long-term success of the company. Traders, for the same reasons listed above for short sellers, did extremely well trading FCSC pre-PDUFA. However, traders who did not liquidate their position immediately post-PDUFA had their position significantly decrease in value. Traders have every right to be pessimistic about FCSC as they are not concerned about the long-term prospects of the company and only look toward short-term catalysts. In this scenario, it is difficult to imagine anything other than an announcement of a partnership/buyout (Knight in shiny armor) reversing their position. Unfortunately, given the low cash position of FCSC any partnership in the US will be highly disadvantageous to the long-term success of the company and its management and investors. The company would have to sacrifice the future for a short-term gain in stock price and this would only benefit traders; so, I do not see this as happening. The most likely scenario will be an announcement of a partnership outside the US that will increase the company’s cash position to fund the marketing of LaViv and its further development for acne scar and burn indications. With increased cash, revenue generation (sales data for 3 quarters), and a progressing pipeline (indications), FCSC will attract significant US partnership and buyout opportunities; but this will not be in a matter of months and therefore no use to traders.
Investors: Out of the three groups discussed above, investors are the only group that measures their success with the success of the company. The success of investors directly correlates with the company’s long-term success and not to the short-term or medium-term fluctuations in stock price. The question is why are investors pessimistic about FCSC? Or are they? Usually what fuels investor pessimism is failure of management to deliver on promises – poor quarterly sales figures, reverse splitting a stock, or lack of partnerships/buyout etc… So, here is the 800-pound gorilla in the room – did FCSC management fail to deliver on a promise? Management was forthright about the conversion of warrants and preferred. Management did not dangle the prospects of an eminent buyout or that they were engaged in partnership discussions. Management stated in press releases that they will initially market LaViv alone, and to conserve cash and ensure great outcomes they will make LaViv available only to a select group of dermatologists and plastic surgeons that were involved in the clinical trials. Management’s sales projections for LaViv do not seem overtly optimistic – 1000 patients by the end of 2011 and 6000 patients by the end of 2012. The company has not diluted the stock (although some dilution will be necessary) or performed a reverse split that would cripple investors. It seems that the majority of angst against the management is due to their lack of communication and the resulting information void that has been used quite effectively by short sellers. I would be remised if I did not point out that this view is fallacious as short sellers only affect the short-term stock price and thus, only adversely affect traders, not investors. Some would argue that management should be at every hilltop shouting the merits of LaViv at the top of their lungs. I believe this also to be a wrong course of action. To borrow a simile, management is like a drum – the hollower they are, the louder they sound. Management can walk and speak quietly as long as they carry a big stick, and that stick is the FDA approved LaViv – the first and only approved autologous cell transfer product for aesthetic indications.
In summary, out of the three groups, only traders seem to have a legitimate reason for pessimism, as I do not see any short-term solution that will elevate the stock price sufficiently to that of pre-PDUFA. Short sellers and investors should not be pessimistic. Short sellers should have profited well based on the decline in share price post-PDUFA. And, investors should be happy that LaViv has been approved and that management will be slowly, but methodically rolling out LaViv for aesthetic enhancement as well as pursuing other indications such as acne scars and burns. I think that the majority of pessimism by investors is actually due to the pessimism of traders that have been caught on the wrong side of the trade and thus, have become reluctant investors – or at least longer-term traders.
Acne scars, burn scars, and scars in general
Part 1
There is much discussion recently about LaViv as a model treatment for acne scars and burn victims – much of it fueled by the dramatic pictures in the company’s investor presentation. For those interested I would like to give an overall synopsis on scarring and then lead into acne scarring and treatment.
Scarring: Is a dermal process in response to inflammation or trauma. The initial goal of scarring is to heal the injured site as soon as possible. This may seem obvious, but it has important ramifications – especially with respect to LaViv. First, it must be noted that there is more than one type of collagen. Post-injury, the fibroblasts initially produce collagen type III (fetal collagen). Fetal collagen is initially produced because it can be produced much more rapidly than adult collagen (type I). The disadvantage of Fetal collagen is that it has poor tensile strength and thus the wound can reopen. Approximately two weeks status-post injury, fetal collagen Type III is degraded by type III specific collagenase and replaced with the stronger adult type I collagen. It is during this 2-3 week process that a wound is at its weakest point and why subcutaneous sutures are placed during surgery. Scarring results in the deposition of vertically oriented collagen fibers (non-scarred tissue has horizontally oriented collagen fibers) which can readily be seen on microscopic examination. Scars ultimately undergo contraction, a process that is more evident when the scar forms in an area of tension.
Acne scars: Acne leads to many signs that are visible even beyond the lifecycle of the acne lesion itself. The process of acne scarring is a process of inflammation induced scarring. Visible signs of previous acne include erythema (red marks), hypertrophic scars (raised or protruding scars), atrophic scars (indented or depressed scars), Icepick scars (tethered extremely depressed scars associated with cystic acne), hyperpigmentation (dark spots), and hypopigmentation (areas of decreased pigmentation).
Acne scarring Part 2
Current treatment modalities for acne scarring focus on the cause. Rarely is a treatment modality sufficient as multiple types of acne scars are usually present simultaneously,
Erythematous scars: Laser treatment with a pulse-dye laser. A pulse dye laser, is not a brand, rather it is a type of laser that emits a monochromatic wavelength in the 570 nanometer range. This wavelength matches the absorption spectrum of red scars, thus decreasing the erythema. This process is selective photothermolysis – only the target is destroyed. No collateral damage to surrounding, uninvolved tissue.
Hypertrophic scars: Are best treated with ablative lasers. Unlike non-ablative lasers, ablative lasers indiscriminately destroy tissue. These lasers are used to thermally ablate layers of epidermis and dermal tissue (usually the papillary dermis). The classic and most efficient ablative laser is the CO2 laser; however, it is associated with significant pain (anesthetic blocks and anesthesia are usually required), potential for further scarring, hypopigmentation (which may be permanent), prolonged erythema (3 months), and intensive wound healing post treatment. Erbium CO2 lasers were developed to address the shortcomings of traditional CO2 lasers. Erbium CO2 requires less sedation, decreased wound care, and decreased risk of complications. However, the results were significantly inferior and complication (in practice) were only slightly decreased. Currently fractional CO2 lasers are used. Fractionated Co2 (Fraxel laser) has microscopic zones where there is no ablation (skip areas). These healthy areas serve to facilitate wound healing and decrease complications.
Hyperpigmented scars: These are best treated with either trichloroacetic acid peels +/- Jesner’s reagent or lasers that target the epidermal/dermal pigmentation. Q-switched Yag as well as many other lasers have been used. Intense photo light (IPL) has also been used but 6-7 treatments are usually necessary (6-7 months).
Finally Icepick scars: This is one of the most difficult scars to treat. Icepick scars occur when the vertically oriented collagen fibers contract vertically and pull the overlying skin inferiorly similar to an inverted cone (icepick). Current treatment includes punch grafting – a 2-3 mm punch biopsy is performed and a suture is placed thereby removing the icepick scar. But as can be expected, this leads to further scarring. The dermatologist/plastic surgeon may incise the scar and perform subscision (cutting the tethered vertical collagen fibers) and then inject a dermal filler. This has worked well; however, it has to be repeated frequently and is costly – especially if very little filler is needed.
LaViv: A completely different approach to acne scar treatment. Let’s take the example of the icepick scar – the most difficult acne scar to treat, and one where no good treatment currently exists. If the surgeon incises the scar and severs the vertically oriented collagen fibers a hollow tunnel is created. Now, if you inject LaViv (fibroblasts not subject to inflammatory modulation) the fiberblasts will start to produce normal adult type I collagen, hyaluronic acid, elastin extracellular matrix proteins. What you now have is a paradigm shift in acne treatment.
How can FCSC monetize FDA approval of LaViv?
There has been much discussion, both here, and on the Yahoo MSG Board about the effectiveness and shortcomings of LaViv. I myself also engaged in this debate with members regarding fat transfer (I believe someone reproduced my post here). This debate is healthy and necessary regardless of one’s outlook (short or long) on FCSC; however, what is interesting is this debate is still occurring post FDA approval of LaViv. I do not wish to discourage debate; but this is akin to closing the barn door once the rider and the horse have left. Where the horse ends up after it has left the barn is entirely up to the rider. Albeit a crude analogy, the barn door is the FDA approval of LaViv, the horse being LaViv, and the rider being FCSC management. The only relevant question that remains for investors, or short sellers for that matter, is how well management is able to market and monetize Laviv les you will end up on the wrong side of the trade/investment.
To understand where FCSC can take LaViv, we must examine where LaViv has been. As is pointed out by many who express reservation about Laviv’s success in the marketplace Isologen went bankrupt marketing the non-FDA approved LaViv and ended up with many dissatisfied physicians, patients, and investors. This seems to be a good of a place as any to start our critical examination of LaViv and autologous cell therapy.
The ultimate determinant of FCSC’s and shareholder’s success will be patient satisfaction; but one must realize to achieve this success well trained physicians versed in the proper injection technique of LaViv are required. Dermatologists and Plastic surgeons will be acting as surrogate marketing reps – if they perform the procedure well and manage patient expectations than LaViv will be a success. Although I understand that many would like the share price to appreciate immediately, one must realize that it will take time to train physicians properly and for patients to have the desired outcome. If it takes 90 days from the time a patient has the biopsies to when the final injection occurs, it will take at least one year before enough patients can undergo the procedure for the company to capitalize on its success. In the meantime share price will be catalyst driven.
Investor presentation - Personalized skin care cosmeceuticals
This has not received much attention, but this could be very significant. The cosmeceutical business is expanding significantly, specially at dermatology and plastic surgery offices. The big cosmeceutical brands - Obagi, skin ceuticals, Topix, Physician's Formula, Prevage (Allergan) etc... will now have significant competition. None of the cosmeceuticals are FDA approved.
Cosmeceuticals are a 5.8 billion dollar annual business in the US and are projected to increase by 7% in 2012.
Imagine if a patient signs up for LaViv and as an add on benefit also gets a personalized collagen cream, hyaluronic acid cream, or elastin cream made from their own cells. This would be a great marketing angle.
I had emailed the company twice and have not heard from them. Dr. Weiss will be performing live patient demonstrations at the Cosmetic bootcamp and I wanted to know if LaViv will be demonstrated. Also emailed them regarding the AAD (American Academy of Dermatology) summer session and wether they will be exhibiting. Unfortunately no response to either questions.
Hello Silliwog.
You pose an interesting question. I will give you my opinion with the obvious caveat that this is just my opinion based on my experience at my office.
I think that FCSC is not a threat to Allergan. Its mode of action would complement, not compete with Botox. LaViv would however, would compete with Juvederm and other dermal fillers. FCSC would not be a takeover candidate by Allergan unless it can prove that it can cut into Allergan's sales and this would not be anytime soon.
The importance of FCSC and LaViv in terms of acquisition or partnership will stem from the intense competition between Allergan, Medicis, and Galderma. All three produce neurotoxins (Botox, Dysport, and Azzalure) and hyaluronic acid fillers (Juvederm, Restylane, and Emervel). The market monopoly of Allergan is threatened, not by FCSC, but by Medicis and Galderma. At the same time, Galderma and Medicis are striving to take market share away from Allergan and each other. Its the competition between these giants that will elevate the importance of FCSC and LaViv. If for no other reason than it will distinguish the acquiring company from the other two. I see FCSC as either a defensive chip in the hands of Allergan or an offensive chip in the hands of Galderma or Medicis. Time will tell!
Partnership, Buyout, or Going it Alone:
I posted this on the yahoo msg board a while back, but I think it may be more appropriate here.
There has been much talk since LaViv was approved about how best the company will be going forward. Much of the debate is due to the precarious silence of management, which in turn has led to a void filled with much speculation. As a dermatologist, I would like to through my hat in the ring with some thoughts. Due to the length, I will post my thoughts in parts.
Part 1
1. GSK: Buyout or partnership. The only theory supporting GSK partnering or purchasing FCSC is that the CEO was an ex-GSK senior vice president.
a. Negatives: GSK does not have a strong presence in dermatology. The main three products of GSK are listed below. GSK does own Stiefel Pharmaceuticals, which does have a strong presence in dermatology though not in the cosmetic arena. Steifel Pharmaceuticals mainly produces foam vehicle products (corticosteroids such as Olux, Olux-E, Luxiq, Verdeso, and acne products such as Duac). GSK directly markets the following:
i. Altabax (topical antibiotic) competes with Bactroban and its generic form – mupiracin. Recently, GSK received a FDA warning for attempting to misrepresent Altabax as superior to bactroban. Altabax sales have not been robust as bactroban and its generic still command a lion’s share of the market
ii. Cutivate: A topical steroid. The topical steroid market is vast and cultivate is not prescribed very often.
iii. Valtrex and Zovirax: used for Herpes family of infections – Herpes Zoster (shingles), Herpes Simplex I, and Herpes Simplex II. Although Valtrex is the most frequently prescribed drug for herpes by dermatologist, it competes with Famvir and generic Acyclovir. Zovirax is a nonprescription Acyclovir.
2. Allergan: Buyout or partnership: It is important to note that although everyone discusses
a. Negatives:
i. Although everyone discusses Allergan and Botox in one breath, Allergan is first and foremost a ophthalmology company. Botox was initially developed for ophthalmology. Dr. Gene Carruthers a pioneer in Botox is an ophthalmologist. Her husband, Dr. Alastair Carruthers is a dermatologist who pioneered the introduction of Botox into the dermatology world.
ii. Allergan does not have very many sales reps, if at all. When I want Botox, I just call the company and they ship it next day. My area of southern California has not seen a rep over the past 4-5 years.
b. Positives:
i. Allergan, although does not have sales reps, still has a strong presence in dermatology and plastic surgery.
ii. Allergan has Juvederm, a hyaluronic acid dermal filler for nasolabial folds which LaViv would threaten.
iii. Botox will be going off patent and already has competition from Dysport.
iv. Allergan has the funds and the history of acquisitions.