Two compounds move forward in cosmetic use
In October 2015, RXi announced the selection of two compounds for initial cosmetic product development, RXI-231 and RXI-185, which are both based on the company’s self-delivering RNAi (sd-rxRNA) platform and target the tyrosinase and collagenase enzymes respectively. The company aims to move one of these candidates forward in consumer testing by the end of 2016. In vitro, the compounds have shown a high potency and dose-dependent lowering of the messenger RNA expression of the enzymes, thereby holding the potential to impact alterations in skin tone, texture and pigmentation. Tests to date in monolayer cell cultures and culture human skin equivalents confirm their effect on messenger RNA. RXi plans to move these compounds, which both hold IP protection through at least 2029, on an expedited cosmeceutical development path with the aim to launch at least one on to the market through multiple partnerships, in and around 2019. Potential cash inflow received from the out licensing of the treatments would be earmarked for the funding of later-stage trials of existing clinical compounds in development.
RXi is developing RXI-231 – targeting tyrosinase – to improve skin appearance. Tyrosinase is the key enzyme involved in melanin synthesis, providing color to hair and skin. As shown in Exhibit 1, RXI-231 has shown a visible reduction of pigmentation in melanocytes in human epidermis tissue cultures, also displaying 100-fold potency over well-known skin lightening agent, kojic acid (marketed by Unilever, which registers annual global sales of more than $1bn per year). Collagenases are enzymes that break the peptide bonds in collagen. RXI-185, targeting collagenase matrix metalloproteinase-1 (MMP-1), has been selected for its potential in skin improvement/anti-ageing. Collagen reduces naturally in the ageing process or due to sun exposure eventually leading to wrinkles. Reduced collagen also causes acne scarring. RXI-185 therefore holds the potential to improve the appearance, texture and elasticity of the skin. RXi is focused on working on a topical delivery for both RXI-231 and RXI-185 and evaluating potential alternative delivery to enhance penetration past the skin surface to reach the lower layers of the epidermis and improve absorption in the skin for further impact.
Exhibit 1: Reduction of pigmentation in vitro – sd-rxRNA targeting TYR
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Source: RXi company presentation February 2016
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The cosmeceutical development path to market is potentially much shorter than that for therapeutics. Cosmeceuticals are not intended to treat or prevent disease and the regulatory requirements are less rigorous with in vitro lab work only required – no animal data – before human testing. The human testing process normally entails specific evaluation methods such as Chroma Meters to look at the degree of pigmentation or elasticity measurements of the skin to monitor changes over time. RXI-213 and RXI-185 are in functional safety testing and will move to consumer testing thereafter. Following product optimization, RXi anticipates the potential commercialization toward the end of the decade.
RXi estimates the total worldwide market for higher-end skin improvements, which includes retinols and other pigmentation products, at ~$2-3bn and growing 10% a year. Given the high potency of RXi’s compounds, distributors would initially target the premium cosmetic segment for anti-wrinkle, skin laxity, uneven skin tone and pigmentation. Consistent with other premium branded skin products, management indicates initial pricing of its treatments to the consumer would average $400-500 for a one-year supply. Thereafter, further branding would likely follow into lower priced market segments following industry precedent, eg Johnson & Johnson (J&J) RoC retinol originally sold in department stores, before cascading down market via the Neutrogena brand, and then arriving at supermarkets as Aveeno. For forecasting purposes we consider J&J’s anti-ageing cream, retinol, an apt comparator; under its various brands it commands annual revenue of ~$150m. Assuming the launch of just one of RXi’s lead compounds in 2019, we conservatively forecast peak sales of RXI-231 and RXI-185 around 25% of the retinol level, with a gradual build out of brands until patent expiry in 2029. RXi is exploring options for internal or collaborative development paths having received multiple requests from potential partners. Potential partners include large consumer goods companies such as Unilever, P&G, J&J and Shiseido and commercialization would likely span geographic regions. As guided by management we anticipate RXi will receive one-time milestones of ~$2m from each of several distributors based on prior similar industry collaborations. RXi management believes that royalties on sales to distributors of 3-5% are realistic based on industry norms.
Management also reports multiple potential follow-on compounds targeting tyrosinase and collagenase as possible candidates for development on a therapeutics path, which may be used through prescription in multiple areas such as ageing disorders, arthritis and blistering skin complaints.
RXi looks well positioned to move RXI-231 and RXI-185 forward on a cosmeceuticals path given considerable prior managerial experience in the commercialization of cosmetic products. CEO Geert Cauwenbergh has the background and expertise to help bring these programs forward, having worked a number of years for J&J in charge of developing the skin care franchise for the beauty and cosmetic consumer.