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This article by Melinda Sherwood was prepared for the October 2, 2002 edition of U.S. 1 Newspaper. All rights reserved.

For ED, a Topical Treatment: NexMed hopes to profit where Viagra falls short

Even a slump in the economy can’t keep this company

down.

NexMed, a biotech firm headquartered in Robbinsville, is developing

a topical treatment for erectile dysfunction (ED) — a "liquid

Viagra," if you will — and it is expanding at a time when

most companies are scaling back. That new 32,000 square-foot building

on Twin Rivers Drive in East Windsor is the company’s new $10 million

manufacturing facility. NexMed is currently wrapping up the final

phase of clinical trials for Alprox-TD, a topical solution for erectile

dysfunction, and is in Phase 2 of ongoing clinical trials for Femprox,

a treatment for female sexual arousal disorder (FSAD).

By all appearances, NexMed seems poised to become a potent force in

the swelling market for sexual dysfunction treatments. But how can

it compete with the market heavyweight, Viagra?

By being the first topical treatment on the international market,

says NexMed founder and CEO Joseph Mo. Alprox-TD was launched in China

under a different trade name last year. "We offer two major advantages

(over Viagra)," says Mo. "Being a topical product, we don’t

have the side effects associated with a pill, and we are much faster

since we are introducing the product to the target site."

In addition to Alprox-TD and Femprox, the seven-year-old NexMed has

developed and patented several products at its 350 Corporate Boulevard

headquarters in Robbinsville, including a patch for urinary dysfunction

and a hand-held device used to treat herpes. It has also opened an

additional laboratory at Princeton Corporate Plaza and has a stake

in a Chinese generic drug factory in Zhongsan, a 40-minute drive from

Hong Kong.

In the United States NexMed’s ED product is still in its last phase

of clinical trials, and it could be months before it is reviewed for

Food and Drug Administration approval. Still, NexMed’s topical therapies

are way ahead of the pharmaceutical therapies being introduced by

Palatin Technologies of Cedar Brook Corporate Center (see story below).

Doctors and patients alike are beginning to appreciate the significance

of a non-pharmaceutical impotence treatment, according to sexual function

expert Andre T. Guay. "Patient preference is to take a pill and

not worry about it," says Guay, an endocrinologist and director

for the Center for Sexual Function in Peabody, Massachusetts. "My

bias is that the creams or gels would be preferable, particularly

when the active ingredient being used is a natural hormone that we

all have in us. And local therapy avoids systemic side effects."

Alprostodil, the active ingredient in Alprox-TD and Femprox, is indeed

a naturally produced hormone, a vascular dilator, which increases

blood flow to the regions on which it is applied. It is already on

the market in other impotence treatments such as Caverject, an injection-style

treatment by Pharmacia-Upjohn, and Muse, intra-urethral pellets made

by Vivus.

What is new about NexMed’s version of the ED treatment is its patented

transdermal "enhancer technology" called NexAct, which allows

drug compounds applied topically to be absorbed into the body quickly.

For men, NexMed has an applicator that drips drops of the solution

into the meatus at the tip of the penis. For women, Femprox is applied

as a cream.

Of the estimated 30 million men who suffer from ED, a good portion

of them (roughly 10 percent according to Guay) are not candidates

for Viagra due to health factors such as heart conditions, diabetes,

or low blood pressure. And about 18 percent did not respond to Viagra

in other tests, he adds.

NexMed’s assistant director of corporate affairs, Debora Carty, claims

that the company is already deluged with inquiries about Alprox-TD.

"There are many people to whom the topical treatment appeals,"

says Carty. "We get a wide range of inquiries from men and women

with vascular problems. I had an E-mail today from a cancer prostate

group and they are besieged with calls from men seeking Alprox-TD.

They are interested in finding a more patient-friendly solution now."

Such a solution would not replace Viagra, says Guay, but nonetheless

would be a welcome addition to the market. "Viagra is a first-line

treatment, no doubt about it, but we need a good second line drug

when men don’t respond to Viagra or when they can’t take Viagra,"

says Guay, a graduate of Boston College, Class of 1964, who has a

medical degree from New Jersey College of Medicine. "I think this

will be a very important second line drug."

To predict just how important, investors are looking at how much of

the ED market Alprox-TD is capturing in China and Hong Kong, where

it was launched under the Befar trademark last year. According to

company statistics, Alprox-TD captured 12 percent of the ED market

in China and 14 percent in Hong Kong. Royalties on those sales account

for $68,000 profits this year. At the same time, however, NexMed had

losses of $16.2 million, mostly for continued development of Alprox-TD

and Femprox.

Still, those numbers are apparently good enough to convince investors

that NexMed has something worthwhile here. This year alone the company

raised $11 million for continued development of Alprox and Femprox.

In June, the company raised $5 million from the Tail Wind Fund Ltd.,

a United Kingdom-based investor. The erectile dysfunction market is

expected to grow from its current worldwide size of $2 billion, to

possibly double that over the next three years, according to Tail

Wind. Also in July, NexMed raised $6 million in private placements

by Capital Research and Management Company; Solomon, Smith, Barney;

and Direct Capital. Security Research Associates Inc. of Larkspur,

California acted as the placement agent.

"Since our initiation in late 1996, we have been fortunate to

raise more than $76 million," says Mo. "It’s a tough economy

and our stock price is down but we still have a lot of people who

are very interested in us. I have to turn away investors on a weekly

basis."

Born in mainland China and educated in Taiwan, Mo finished

college in 1970 and then served a year in the Taiwanese military before

moving to the United States. He earned a masters in biotechnology

from the University of North Texas and then a Ph.D. in industrial

pharmacy from Purdue University. His career has included stints for

Johnson & Johnson, SmithKline, Rorer Pharmaceuticals, and Greenwich

Pharmaceuticals, where he was a divisional president for six years.

He lives in Lawrenceville with his wife and two teenage children.

As clinical trials wind down and construction on the new manufacturing

facility comes to a close, the next important step for NexMed is to

find a marketing and distribution partner to help get Alprox-TD and

Femprox launched here in the United States after FDA approval. The

company is looking for a top 30 major pharmaceutical company and is

in discussions with several. NexMed also has 22 more exploratory products

under development in its headquarters and in its laboratory in Princeton

Corporate Plaza. Among them: an anti-nausea patch, an intranasal product,

and a treatment for nail fungus.

So far, clinical trial results for Alprox-TD and Femprox have been

encouraging. In U.S. Phase 2 clinical trials of Alprox, the results

of which were designed to investigate the dose-response relationships

of the efficacy and safety of the product in 300 men with mild, moderate

and severe ED, 83 percent of the patients reported satisfaction with

treatment. The side effects were mostly mild to moderate and short

in duration. Femprox Phase 2 studies involved 98 pre-menopausal women

diagnosed with FSAD who were randomly assigned to one of four dose

levels, including placebo, and were required to use the product at

home up to 10 times during the 4 week trial. The trial results demonstrated

positive dose-related trends, with up to 77 percent response rate

reported at the highest dose in patients who reported arousal at least

50 percent of the time and who attempted intercourse at least three

times during the trial.

NexMed representatives seem pleased with the results. "What it

did was it showed that the product works," Carty confidently states.

Now if NexMed could only come up with a drug to give the economy a

much-need lift that would be something.

NexMed Inc.(NEXM), 350 Corporate Boulevard, Robbinsville

08691. Joseph Mo, chairman, CEO, and president. 609-208-9688; fax,

609-208-1868. Home page: www.nexmed.com

NexMed Inc., 1 Deer Park Drive, Suite E-3, Monmouth

Junction 08852. Je Phil Ryoo PhD, associate director, technology development.

732-329-1870; fax, 732-329-1510.

NexMed, 89 Twin Rivers Drive, Hightstown 08520.

609-371-8123; fax, 609-426-9116.


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