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Thursday, Oct 6, 2022
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Skin in the game

A handful of San Diego companies are competing in the lucrative high-end skincare market, using a grounding in real science to produce and promote their beauty wares.

This development is evident in the recent $350 million acquisition of Carlsbad-based skin care company SkinMedica Inc. by Irvine-based drugmaker Allergan Inc.

Other local biotechnology outfits are also learning that their science has true value in the growing anti-aging skin cream market.

Carlsbad’s International Stem Cell Corp. is borrowing technology from its medical research to formulate a new line of regenerative skin care products. Encinitas-based Senté Inc.” was launched by two high-profile San Diego pharmaceutical executives, repurposing a substance used to treat burn victims to develop a cosmetic lotion. And Skin Authority Inc. in Carlsbad has partnered with Dole Food Co. Inc. to develop Vitamin D-rich skin creams, relying on peer-reviewed literature and medical advisory committees to inform its product development.

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All of the San Diego companies tout superior results in small clinical trials, and are using the science in the beauty equation to market their products.

‘Incredible Growth’

“Skin care is interesting because it’s such a burgeoning field — it’s got incredible growth associated with it,” said Faheem Hasnain, chairman of the board of Senté and chief executive of San Diego pharmaceutical company Receptos Inc. “When you start studying the intricacies and possibilities seen in regenerative science, you realize that there’s real demand for good high quality products that can actually make a difference.”

Called “cosmeceuticals,” these products are comprised of biologically active ingredients that are purported to have medical benefits. They tend to occupy a select and high-priced portion of the market, sold primarily in spas, medical practices or online.

The first wave of cosmeceuticals came in the 1990s when alpha-hydroxy complexes hit the shelves, but in recent years, stem cell-based regenerative compounds — as seen in the San Diego companies — have proven popular among company consumers.

The global cosmeceuticals market is growing 7.7 percent each year, and should reach about $32 billion by 2016, according to a report from market research firm Global Information Inc. The report found that while major segments include tooth whitening and lip protection are key market drivers, regenerative skin products are taking hold in a major way.

“New ingredients, such as stem cell and peptides for skincare-based cosmetics, are anticipated to alter the market landscape in the near future,” the report said.

Larger companies have taken notice. Allergan, a $33 billion market cap company whose top selling products include Botox and eyelash growth formula Latisse, took interest in SkinMedica’s full line of regenerative skin creams and acquired the private company last December. SkinMedica’s sales, at that point, had risen to about $65 million.

The acquisition was made to direct the company to “take a leadership position in the growing ‘physician dispensed’ topical aesthetics skin care category,” Allergan president and chief executive David Pyott said in a statement.

And a recent bidding war for Long Beach-based anti-aging skin cream maker Obagi Medical Products Inc. culminated last week in a $418 million sale to Montreal-based Valeant Pharmaceuticals International Inc.

Donna Queen, a former top Obagi executive, was recruited in 2011 by the International Stem Cell Corp. to lead its wholly owned skin care subsidiary, Lifeline Skin Care. The creams are based on certain chemicals excreted by stem cells that have been shown to help stimulate cellular growth and allow skin to look rejuvenated, according to the company.

The revenue from Lifeline helps subsidize the medical research done by the ISCC, whose primary focus is its stem cell-based therapies for Parkinson’s disease.

“It’s very capital-intensive to run a stem cell and regenerative medicine company, so we came up with the idea for this company as we were looking for creative ways that could generate income without diluting stockholders’ shares,” said Simon Craw, chief operating officer of Lifeline and executive vice president of the ISCC.

The company brought in about $2.2 million in sales last year from Lifeline, and much of it was routed directly to finance Parkinson’s research. The products run from $97 to $190 per bottle. Sales are solid and expected to increase dramatically this year, Queen said.

“We’re concentrating on professional channels — dermatologists, plastic surgeons and spas who recommend the product to a patient or a client,” Queen said. “Retail is more smoke and mirrors, but physicians can see through that. They want more advanced products than are available in department stores — in fact, they demand that.”

Melanie Palm, a cosmetic dermatologist with a private practice in Solana Beach called the Art of Skin MD, said that the trend toward marketing these high-end creams is on an upswing.

“Some of these biotechnology companies see cosmeceuticals as a great opportunity in the aesthetic market to bolster sales and hit an untapped portion of the market,” Palm said.

Palm sells such regenerative products in her office, and sometimes recommends that patients use them to speed up recovery after intensive medical cosmetic procedures. She said that the recent influx of high-profile marketing of regenerative skin creams is motivating patients to request these products from their doctors.

“Hopefully the physicians are really scrutinizing these products, and actually feel comfortable endorsing them,” Palm said. “One thing I do see is the climate’s a little tense between academics and private medicine over this issue — and the majority of dermatologists recommending cosmeceuticals are probably in private practice.”

This, however, isn’t always the case. Senté recently forged a contract with San Diego’s Scripps Health to sell its Dermal Repair Cream at various dermatology offices in the health care system’s network. The cream is priced at either $75 or $165 per bottle, depending on the size.

Senté was formed in 2007 by Hasnain of Receptos and Kleanthis Xanthopoulos, president and CEO of San Diego pharma company Regulus Therapeutics Inc.

After several years of development and medical testing, the company began marketing its first skin care cream last fall. It’s available in about 50 medical practices around the country. The company plans to quickly begin scaling up its production capabilities, having just announced a $2.1 million Series B funding round from private investors.

“We built the company and the product to focus on an audience that’s the most discerning around the science — most notably, dermatologists, and we want to really ensure that they understand the merits of our product, and the merits of our science,” Hasnain said.

Reaching More Customers

Celeste Hilling, president and CEO of Skin Authority, is taking a different approach to marketing her regenerative skin care products.

“Some physicians do carry our products, and spas and resorts, but the fact is that three out of four North Americans will have some form of skin cancer in their lives,” Hilling said. “We’re not reaching that many of them in a single doctor’s office or in a beauty store. Our goal is to reach out, and target larger volumes of consumers.”

Hilling’s products range from $25 to $150, and will be sold beginning in May in 150 GNC stores across the country.

“While the different San Diego skin care companies may have different angles on the tech side, we all know the future — and we’re embarking on this new generation of skin care products that’s going to be about regeneration and prevention,” Hilling said.

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