Ichthyosis

Van Scott and Yu

AHA Patent Positions

Richard Wildnauer

FDA Caveats

Corrections or additions?

Neostrata: More than Hope

This article by Elaine Strauss was published in U.S. 1 Newspaper on

February 24, 1999. All rights reserved.

by Elaine Strauss

Cleopatra would have been quite at home with today’s

leaders in the field of skin care. By luxuriating in milk baths, she

was exposing her skin to lactic acid, an alpha hydroxy acid that wipes

out the fine lines and wrinkles caused by overexposure to the sun

or by aging. Alpha hydroxy acids occur in citrus fruits and sugar

cane, tomato juice, apples and wine, as well as in milk. They can

help the skin shed its outer layer, the stratum corneum, where wrinkles

show themselves.

Princeton’s NeoStrata, a privately-held research-based company founded

in 1988, has started bringing carefully calibrated forms of Cleopatra’s

favorite beauty treatment to consumers during the past year under

the brand name "Exuviance." Nordstrom’s is a recent partner

in their enterprise.

Unlike the royal princess, NeoStrata approached skin care via research

studies involving pathologically dry skin. Interviewed at the company’s

headquarters on Research Way in the Forrestal Center, Richard Wildnauer,

NeoStrata’s president since 1995, notes the scientific basis underlying

his company’s cosmetic products. "We’ve gone beyond Charles Revson,"

he says, referring to Revlon’s founder, whom he quotes as summarizing

the cosmetic industry by observing, "All you’re selling is hope

in a jar."

NeoStrata’s founders, dermatologist Eugene Van Scott and dermatopharmacologist

Ruey Yu, met at Temple University in 1968. Their first joint publication,

in 1974, reported the effectiveness of alpha hydroxy acids to treat

ichthyosis, a genetic skin condition.

Van Scott and Yu’s collaboration was dramatic, scientifically, on

several counts: First, it resulted in an effective treatment for a

relatively intractable, unsightly skin condition. Second, it led them

to understand how alpha hydroxy acids affect skin, in general. Third,

it resulted in their recognizing, as alpha hydroxy acids, a number

of organic acids whose previous names did not reveal their common

structural features. And, fourth, they invented the abbreviation "AHA"

for alpha hydroxy acid. Entrepreneurs, as well as scientists, Van

Scott and Yu formed a company to commercialize their discoveries.

Founded in Branford, Connecticut in 1988, 14 years after their initial

publication, the company they named Polystrata grew into today’s NeoStrata.

Ichthyosis, the extreme dry skin condition that the

doctors studied at Temple, molds the lives of those who suffer from

it. In severe cases, it results in the formation of flakes on the

skin so thick that people with the ailment have been displayed in

circuses as "alligator" people. The genetic abnormality can

cover the skin of the face so thoroughly that its victim can barely

see out past the plastic-like encrustations on the face. "Ichthyosis

is not life-threatening, but it’s definitely life-altering," Wildnauer

says. "People with severe ichthyosis live as recluses."

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Ichthyosis

When Van Scott and Yu began their work on ichthyosis the standard

treatment was first, to apply glycolic acid, the simplest of the alpha

hydroxy acids, then to soak in the bathtub for hours, and, finally,

to tear off the outer layer of skin, Wildnauer says. In discovering

the efficacy of AHAs as a treatment for ichthyosis, he adds, "Van

Scott and Yu came up with a remarkable finding. It seemed too simple.

Not that much was understood about specific products for particular

problems. It took a number of years to convince the dermatologic community

and industry. The term `alpha hydroxy acids’ had never been used in

dermatological circles. The doctors taught the dermatological community

a little bit of chemistry."

Exploring the possible applications of alpha hydroxy acids beyond

ichthyosis, Van Scott and Yu learned that AHAs could be used to treat

other dry skin problems, to treat acne, and to minimize the fine lines

and wrinkles that come from skin damage due to sun or to aging.

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Van Scott and Yu

Now the heads of an independent research enterprise in Ambler, Pennsylvania,

Van Scott and Yu remain members of the NeoStrata board and their portraits

hang in the NeoStrata boardroom. Wildnauer and others at NeoStrata

refer to them with a combination of affection and reverence as "the

doctors."

In 1992 PolyStrata moved to 4 Research Way. "The doctors loved

the street name," Wildnauer says, "and they liked Princeton’s

research and academic focus. They thought that Princeton was a good

environment for marketing their treatment."

"PolyStrata is inactive at this point," Wildnauer says, explaining

the trio of legal entities in the privately-held NeoStrata family.

"TriStrata Technologies, a subsidiary of NeoStrata, holds all

the intellectual property. It issues licenses and collects royalties

and is located in Wilmington, Delaware, where there’s a more favorable

tax and patent enforcement environment. NeoStrata is the operating

company. It develops technologies and quality assurance. It takes

care of marketing and sales, and coordinates manufacturing." At

present NeoStrata licenses to Allergan, Avon, Bristol-Myers Squibb,

Chesebrough-Ponds, Collagen Corp., Elizabeth Arden, Erno Lazlo, Stiefel,

and Westwood.

NeoStrata’s more than 40 products are backed by legal muscle in the

form of more than 80 patents, and legal judgments upholding NeoStrata’s

exclusive right to license its technology. The patents cover both

the structure of the acids used in NeoStrata’s products and the purposes

for which the products are used. "Anyone who uses AHAs in skin

care products is using our technology," Wildnauer says, explaining

NeoStrata’s success in patent litigation. "Any claims relating

to aging are covered by our patents. Pore size, evenness of pigmentation,

laxity, fine lines and wrinkles are covered. How good is a patent?

As good as it will stand up in court."

"NeoStrata does not have a monopoly by any means," counters

Albert Rosenthal, a clinical professor of dermatology at Hahnemann

who has offices on Franklin Corner Road. "It is a perfectly competent

company, but they do not have all the patents and they are not unique."

Rosenthal prefers the products of a competitor that, like NeoStrata,

has a line for sale by doctors, but that has not yet been the target

of a NeoStrata lawsuit.

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AHA Patent Positions

Explaining why the dermatology community may not agree

with NeoStrata about the exclusivity of its AHA patents, Wildnauer

points out that NeoStrata did not begin to file lawsuits until last

year. The seven targets of the initial lawsuits were Beiersdorf, Clarins,

USA Inc., Chanel Inc., Neoteric Cosmetics Inc., Leiner Health Products,

Cosmair (L’Oreal), and Murad Skin Research Laboratories.

All five of the patents in question were reconfirmed, and one of the

defendants entered into a license agreement to settle the litigation.

"The doctors hate the litigation," says Wildnauer. "They

come up every Thursday for board meetings, but they’re not involved

in day-to-day management. We develop their research and keep filing

for patents. They’re not academicians. They want to see their developments

used."

The products derived from the research of the doctors fall into two

groups: an established cluster of items, brand-named NeoStrata, marketed

through dermatologists and plastic surgeons, and a new group of products,

brand-named Exuviance, whose distribution through salons and cosmetic

counters is now being established. A major step in bringing the Exuviance

line to the public was its debut in September at the Nordstrom flagship

store in Scottsdale, Arizona. "We weren’t just selling cosmetics,"

says Barbara Green, a spokesperson for the company. "We were doing

seminars on skin care from a pharmaceutical point of view."

Presently, medical products represent the bulk of Neo-Strata’s business.

NeoStrata products are sold in more than 40 countries. More than half

of NeoStrata’s sales are abroad. Plans for selling Exuviance products

extend to eight countries, which seem to have little in common besides

Exuviance. They are Singapore, Taiwan, Lebanon, Cyprus, Lithuania,

Denmark, and Sweden.

Wildnauer came into the picture as it became clear that the future

lay with marketing NeoStrata products not only to dermatologists,

but to consumers. Following three or four presidents, with relatively

brief tenure, Wildnauer will soon celebrate his fourth anniversary

as head of NeoStrata, a record for longevity. While his predecessors’

background was primarily in marketing, Wildnauer’s background includes

both science and business. Under his leadership NeoStrata has launched

new products in both professional and consumer markets. Within a year

of his assuming the presidency, NeoStrata turned its balance sheet

from losses to profitability.

When Wildnauer arrived in 1995 NeoStrata had its own sales force,

a non-essential component for a company whose strong points are research

and development. Neo-Strata’s first attempt to get out of sales came

through an agreement with Glaxo in 1997. Ortho Dermatological, a Johnson

and Johnson company, later stepped in. Ortho markets prescription

skin care products in the acne, antifungal, and aging skin categories,

including Renova and Retin-A. In January NeoStrata and Ortho formed

an alliance for the exclusive marketing and selling in the United

States of NeoStrata’s professional products, as well as of its consumer

Exuviance line to physicians.

When asked to describe what he did to turn Neostrata around, Wildnauer

responds with an upward eye movement as if the difficulty of his task

is still vividly with him. "I changed the focus of the company

to technology," he says, "and worked on organizational development,

plus personnel changes. A new element was developing and commercializing

the technology. Patents are just a piece of paper until you can show

a product."

Wildnauer has a sunny though hard-nosed philosophy about how NeoStrata,

relatively small, with approximately 50 employees, can work effectively

with a large company, if not make itself indispensable to a corporate

giant. "Distribution is the secret. You can have the best product

in the world, but if you can’t get it from here to there, it doesn’t

do anybody any good. The companies that are our potential licensees

are more and more open and adventurous. They know they have to get

to market quickly or someone else will get there first. A little company

and a big company can have a synergistic relationship. The big companies

let us develop the product, and they evaluate it. We depend on their

marketing."

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Richard Wildnauer

Wildnauer, 58, was born and grew up in the Pittsburgh area. He earned

a bachelor’s degree in chemistry from St. Vincent College in Latrobe,

Pennsylvania, in 1962. His doctorate from the University of West Virginia

came less than four years later. For two years he was a National Science

Foundation post-doctoral fellow at the University of Kansas in Kansas

City. His postdoctoral research dealt with enzyme kinetics, protein

structure and protein hydration.

His first industrial position was at Johnson and Johnson, where he

remained for 26 years. "I was fortunate to get into a J&J division

studying a disease condition, ichthyosis, rather than into product

development." He served as manager of new products and market

development for McNeil Pharmaceutical, vice president for research

and development at Janssen Pharmaceutica, and vice president for technology

and business development, as well as chairman of the skin care council

of research directors for J&J’s corporate headquarters.

Wildnauer earned an MBA from Rider in 1974. "I was frustrated

that scientists and business people didn’t understand what each other

was saying. I was interested in how to communicate. And I saw a lot

of wasted effort and spinning wheels."

Wildnauer and his wife live in East Brunswick. Their adult daughter,

who works in the computer area, lives in San Francisco.

Wildnauer’s career has spanned what he calls the three advances in

skin care in the last 30 years. "In the 1970s we learned that

sunscreens could prevent photo damage to skin, and that it was important

to use sunscreens early in life, and daily. In the ’80s, it was the

retinoids, acids related to vitamin A. They were first shown to be

an acne treatment, and then we learned that they were good against

fine lines and wrinkles. In the ’90s it was alpha hydroxy acids. Today

there are over 200 companies selling them."

Looking ahead to the next decade, Wildnauer thinks that

poly hydroxy acids (PHAs) will be the leading skin care product. Because

their molecules are larger than those of AHAs, they penetrate the

skin more slowly, and are less likely to cause irritation.

As far as NeoStrata’s balance sheet is concerned, Wildnauer foresees

the Exuviance consumer line as playing an increasing role. "For

physicians," he says, "we have a line of stronger products,

requiring the supervision of a doctor. But Exuviance takes the same

technology and makes it more elegant. Patients who have been cured

of a skin condition might be willing to continue skin care on their

own with Exuviance. The product looks good and has an aroma."

Levels of strength in the physicians’ line are higher than those for

the mass market. "Our mass market products have the highest levels

we consider to be appropriate without supervision. The well-established

name of NeoStrata in medical circles makes our consumer products more

acceptable in consumer circles. We are a dermatology company trying

to bring quality skin care to the consumer," says Wildnauer. "Our

goal is therapeutic skin care. We are a step above fashion. We won’t

change a product unless we have a new product better than what we

had before."

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FDA Caveats

Does NeoStrata’s array of products sound too good to be true? The

cautious U.S. Food and Drug Administration (FDA) can think of caveats.

Paula Kurtzweil of the FDA’s public affairs staff, cites them in an

article posted on the FDA web site dated March-April 1998. Their relative

newness, she points out, means that their long-term effects are unknown.

In addition, she quotes John Bailey, acting director of FDA’s Office

of Cosmetics and Colors, who finds it "a somewhat alarming idea

to put acids on the skin," and worries about the low barrier to

bringing AHA products to market.

At the behest of the FDA, Kurtzweil reports, the National Toxicology

Program of the National Institute of Environmental Science has since

1997 been studying AHAs and is expected to issue a report by the year

2000. Meanwhile, the FDA cautions consumers to take extra care with

AHA product by avoiding the sun when possible, using adequate sun

protection, and reporting adverse reactions to doctors or the FDA.

Aware of the safety issues the Cosmetic Ingredient Review Panel (CIRP),

the cosmetic industry’s self-regulatory body, issued its own guidelines

in 1997. Products for consumer use, the CIRP said, are safe when the

AHA concentration is 10 percent or less, the product has a pH of 3.5

or greater (the lower the number, the greater the acidity), and the

product is formulated so that either it protects the skin from increased

sun sensitivity or its package directions tell consumers to use sunscreen

products.

NeoStrata’s consumer products have an AHA concentration of 10 percent

or less; their pH is comfortably above 3.5, making them less acidic,

for instance, even than household vinegar, and their daytime products

include a sunscreen with a sun protection factor of 15.

Those who want their wrinkles to disappear now, rather than waiting

for decades, to make sure that no risk is involved, are enthusiastic

about Exuviance products. They are ready to rub on their sun screen

and join with Cleopatra and the folks at NeoStrata in raising a glass

to the alpha hydroxy acids.

NeoStrata Company Inc., 4 Research Way, Princeton

08540. Richard H. Wildnauer, president. 609-520-0715; fax, 609-520-0849.

Home page: http://www.NeoStrata.com.


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