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Prescription Scar Gel Leads Oculus’ Charge in Dermatology
Published Thursday, October 08, 2015 by Daniel S. Levine
Scarring from wounds and surgical procedures have been a growing issue for dermatologists and plastic surgeons as patients express increased concern about their appearance. But scars also represent a growing multibillion-dollar market opportunity that Oculus Innovative Sciences (NASDAQ: OCLS) is targeting with its flagship dermatology product Celacyn.

Treatment options for scars have long frustrated physicians and patients. At one end are messy and goopy oils, creams, and wraps with limited benefits and unpleasant qualities. At the other end are invasive and costly procedures involving excising, freezing, and lasering away unwanted scars.

Oculus Innovative Sciences, the Petaluma, California-based company focused on dermatology products, introduced Celacyn in early 2015. It is a prescription scar gel that was granted 510K clearance by the U.S. Food and Drug Administration for the management of old and new hypertrophic and keloid scars resulting from burns, general surgical procedures, and trauma wounds. Hypertrophic scars are characterized by their growth within the boundaries of the injury and keloid scars by their growth beyond the borders of the injury. Together these two types account for some 169 million scars a year in the United States, according to the market research firm Frost & Sullivan.

Most topical products used to treat scars are silicon-based, but the mechanism of action in Celacyn is different, driven by Oculus’ hypochlorous acid-based Microcyn Technology. The body naturally produces hypochlorous acid to fight infection. The hypochlorous acid in Microcyn is similar to the natural hypochlorous acid produced by the body. Through the company’s patented process, Oculus is able to produce a superior hypochlorous acid-based product that is consistent, safe, and highly stable, as well as effective.

“Celacyn is an outstanding new tool for clinicians, a product they can use earlier in the scar management process, showing results that make patients happy,” says Robert Northey, Vice President of Research and Development. “It is working.”

Celacyn represents part of a broader strategy implemented under the new leadership of Oculus CEO Jim Schutz in 2014. Until then, the company had spread itself thin chasing a variety of commercial opportunities and relying on partners to handle sales, leaving the company’s success or failure largely in the hands of others.

The management team soon decided to focus on the dermatology market and put its full muscle behind that effort with its own sales team. It identified dermatology as an area that not only played to its existing product strengths, but had several attractive characteristics including an affluent patient base accustomed to paying out of pocket, large and growing markets specific to its existing and new products, the opportunity for a mid-size sales force to target a large segment of the market and a quick sales ramp for dermatology products that could help fund growth. 

To intensify that focus, Oculus at the start of 2015 launched its IntraDerm Pharmaceuticals division, which is developing and commercializing advanced dermatological products in the United States and internationally. The company was able to make several key hires for the new division with extensive experience in the specific markets that Oculus is focusing on with the Microcyn-based technology.

IntraDerm launched with two initial U.S. products: Alevicyn Antipruritic Gel, which is used to manage pain, burning, and itching associated with various dermatoses, including atopic and radiation dermatitis; and Alevicyn Dermal Spray, which is used in the management of debridement of wounds, such as pressure ulcers, diabetic foot ulcers, post-surgical wounds, and first- and second-degree burns.

The addition of Celacyn Prescription Scar Management Gel, which has been clinically proven to soften and flatten raised scars while reducing redness and discoloration and relieving scar-associated itch and pain, has been a big boost to the division. The product has quickly become its best seller and now represents approximately 45 percent of the division’s sales.

“Celacyn helped us expand our position in the dermatology market,” says Intraderm’s Vice President Tom Devine. “Rather than just have one brand focusing on atopic dermatitis, Celacyn allows the company to focus on two growing markets that our clinicians have been thrilled to utilize.” The global scar treatment market, which includes creams, oils, gels, gel sheets, elastic wraps, and sprays, is expected to grow to $31.9 billion in 2022, up from $16 billion today, according to the market intelligence firm Persistence Market Research. That represents a compounded annual growth rate of 10.3 percent. It attributes the growth to rising incidence of skin disease, greater spending on personal care, and the increasing concerns of consumers about personal appearance.

A point of distinction between Celacyn and its competing topical treatments is the Microcyn technology underlying it. Microcyn has the benefit of reducing inflammation, itching, pain, scarring and odor. Because it increases the delivery of oxygen to wounds, it accelerates the healing of tissue. Microcyn also provides a broad antimicrobial effect and has been shown effective against bacteria, certain viruses, fungi, and spores via a unique mechanism of action.

In the case of Celacyn, this provides important benefit because unlike competing products it can be used immediately on a new scar before healing is complete. Rather than interfere with the healing process it will help avoid infection and accelerate healing, arrest the biological cascade that leads to scarring, and begin to minimize the thickness and discoloration of scars. Even though it is a prescription product, Celacyn remains competitive with physician-based over-the-counter competitors.

“Celacyn is a great addition to our growing product portfolio - because it’s efficacious and reasonably priced, patients are pleased with the results AND don’t complain about the copay or insurance issues,” says Oculus CEO Schutz. “Celacyn is supported by solid clinical data and really speaks to the benefit of our Microcyn technology—use it early and often without concern.”

A randomized, double-blind study compared the efficacy, safety and tolerability of Celacyn Scar Gel with that of a comparator of 100 percent silicone gel, for the management of hypertrophic or keloid scars. The 16-week, multicenter study included regular clinic visits and investigators used the Vancouver Scar Scale to score each visit. The Vancouver Scar Scale (VSS) is a widely used evaluation that scores scars between 0 and 3 on measures of vascularity, thickness, pliability, and pigmentation. The lower the score, the less visible the scar. Investigators presented the data in a poster session at the 10th Annual Coastal Dermatology Symposium in Sonoma, California in September 2014.

Though the study was small with 44 patients, it produced impressive results for Celacyn compared to the silicone gel. At Day 56, the mean total VSS had decreased with Microcyn Scar Gel by 2.10 vs. 1.28 with comparator. This improvement continued to the end-of-study visit (16 weeks) reaching decreases with Microcyn Scar Gel of -2.70 vs. -1.83 in the comparator group. 

While pain and itch decreased in both groups, the Celacyn group experienced greater improvement. The Investigator assessment of efficacy was good or very good in 55 percent of subjects on Microcyn Scar Gel compared with 28 percent of subjects on comparator at the end-of-study visit. Overall Microcyn Scar Gel performed better than the comparator gel for the management of hypertrophic or keloid scars.  Both treatments were well tolerated. There were no adverse events related to treatment with Celacyn.

Dr. Ashish Bhatia, associate professor of clinical dermatology at Northwestern University’s Feinberg School of Medicine and Co-Director of Dermatologic, Laser & Cosmetic Surgery at The Dermatology Institute at the DuPage Medical Group, says one benefit of Celacyn is that “we can start using Celacyn immediately after surgery before the scar has manifested because of its Microcyn base.” He further says “There’s no burning or stinging, it’s easy to apply and it has a positive effect on healing and scars.”

Recently he surgically removed a large birthmark on a child’s face. In the past, they had tried other products but the child complained they were greasy, difficult to apply, and he didn’t like using them. Celacyn, though, is different. “It’s easy to apply, absorbs in the skin, and can be applied over the scar,” says Bhatia. “It’s aesthetically a lot more elegant, and that matters to people so they are more likely to continue to use the product.”

As Oculus moves forward with its strategy to grow its dermatology business, Celacyn will play a critical role as a likely point of introduction to new dermatologists. The company is focused on growing U.S. revenue in this market as it continues to build out both its sales force and its product pipeline. As new products launch behind it, Celacyn will serve as the company’s calling card.

For the first quarter of fiscal 2016 ended June 30, 2015, Oculus’ total revenue grew to $3.7 million for the first quarter, an 8 percent increased from the $3.4 million generated for the same period a year ago. Product revenues rose 37 percent during the same period. Net loss for the three months ended June 30, 2015, was $2.3 million, compared to net loss of $70,000 for the same period in the prior year. The higher net loss was due to a $1.5 million gain due to a change in the fair value of derivative liabilities recognized for the three months ended June 30, 2014, and an increase in sales and marketing costs in the United States for the three months ended June 30, 2015, as compared to the same period in the prior year.

As of June 30, 2015, Oculus had $8.8 million in cash and no material debt. The company says its strategic decision to enter the dermatology market with its own sales force is paying off.

“We are pleased to see the benefits of expanding our sales force in the dermatology market. Dermatology has strong pricing reimbursement and quick sales ramps and has resulted in significant sales growth for us in the United States,” said Oculus’ CEO Jim Schutz. “We believe our growth in dermatology sales will continue as we launch new products, grow our portfolio of products and hire additional sales people.”

About the Author 

Daniel S. Levine is an award-winning business journalist who has reported on the life sciences, economic development, and business policy issues throughout his 25-year career. He founded Levine Media Group in 2013 to provide strategic communications to life sciences companies. 

Levine most recently served as managing director of publications for Burrill & Company, a global financial services firm focused exclusively on the life sciences. There he headed corporate communications, served as editor of The Burrill Report, a monthly digital publication focused on the business of the life sciences, and hosted the publication’s weekly podcast. Since 2011, he’s served as the lead editor and writer of Burrill & Company’s acclaimed annual book on the biotech industry. His work with Burrill & Company began through the firm’s joint venture magazine startup The Journal of Life Sciences, where he led the creation of the publication’s website and served as web editor before advancing to editor. 

Prior to joining Burrill & Company, Levine worked as special projects editor for the San Francisco Business Times where he won numerous awards for his coverage of the biotechnology industry. His work has appeared in The New York Times, The Industry Standard, TheStreet.com, and other national publications. He is also the founder of the online magazine Disgruntled: The Business Magazine for People who Work for a Living and author of Disgruntled: The Darker Side of the World of Work (Berkley/Boulevard). Prior to that, he served as the San Francisco bureau chief for Adweek magazine. His coverage of the biotechnology industry began at the start of his journalism career while a business reporter at The Oakland Tribune. 

Before entering journalism, Levine spent five years in the investment banking industry and served as a vice president and general principal of Herbert Young Securities in Great Neck, New York. He holds a bachelor’s in English from Vassar College and a master’s in journalism from the University of California, Berkeley. 

Mr. Levine does not have a position in either OCLS or OCLSW and received compensation to write this article.

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