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Sol-Gel Hits New High Ahead Of Two Regulatory Catalysts

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Shares of Sol-Gel Technologies Ltd. (SLGL) have gained nearly 28 percent year-to-date as the company gears up to face the FDA in the coming months.

Sol-Gel is a clinical-stage dermatology company developing branded and generic topical drug products for the treatment of skin diseases. The company has two product candidates under FDA review - one whose decision date falls in April and the other whose decision date is set for August.

The two product candidates in focus are Epsolay and Twyneo.

Epsolay is encapsulated Benzoyl Peroxide Cream, 5%, proposed for the treatment of papulopustular rosacea.

Papulopustular rosacea is a chronic, inflammatory condition that primarily affects the face and is often characterized by flushing, redness, inflamed bumps, and pustules. The current treatment options like topical antimicrobials and systemic antibiotics have some limitations like insufficient efficacy resulting in poor adherence, systemic side effects and antibiotic resistance.

In two 12-week clinical studies, Epsolay demonstrated statistically significant improvement in both co-primary endpoints namely the number of patients achieving "clear" or "almost clear" in the Investigator Global Assessment and absolute mean reduction from baseline in inflammatory lesion count.

The FDA decision on Epsolay is expected on April 26, 2021. If approved, Epsolay is estimated to bring in peak sales of $75 million to $100 million for the company.

Up next is Twyneo, an investigational, antibiotic-free, fixed-dose combination of benzoyl peroxide, 3%, and tretinoin, 0.1%, cream, proposed for the treatment of acne vulgaris, with a decision expected on August 1, 2021.

In two 12-week phase III studies of Twyneo, there was a significant improvement in the co-primary endpoints , say, the proportion of patients who achieved at least a two-grade reduction from baseline and "clear" or "almost clear" on a five-point Investigator Global Assessment (IGA) scale as well as the absolute change from baseline in both inflammatory and non-inflammatory lesion counts.

If approved, the company expects Twyneo to record peak sales of $350 million to $400 million.

The company's pipeline also includes SGT-210, SGT-310 and SGT-510.

SGT-210, proposed for palmoplantar keratoderma, is in phase 1 proof-of-concept study, with top-line data anticipated in the third quarter of 2021.

Palmoplantar keratoderma (PPK) is a group of skin conditions characterized by the thickening of the skin on the palms and soles of the feet. If SGT-210 is approved, it may have a market opportunity of $500 million in the United States, with additional potential outside the U.S., according to the company.

SGT-310 and SGT-510, proposed for psoriasis & other dermatological Indications, are in research stage.

Collaboration with Perrigo:

Sol-Gel is collaborating with Perrigo Co. PLC for developing a couple of generic products. A generic version of Zovirax cream, 5%, used to treat cold sores, developed in collaboration between Sol-Gel and Perrigo was approved by the FDA in February 2019 and launched that month.

In addition, 11 generic topical dermatological products are being developed in collaboration between Sol-Gel and Perrigo. The launch of an FDA-approved generic drug, developed in collaboration between the two companies, is expected in the second quarter of 2021.

Cash Position:

The company ended 2020 with $28.5 million in cash, cash equivalents and deposits, and $21.7 million in marketable securities for a total balance of $50.2 million. The existing cash resources are expected to be sufficient to fund operations into the third quarter of 2022.

SLGL has traded in a range of $5.00 to $12.78 in the last 1 year. The stock closed Friday's trading at $12.50, up 10.82%.

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