BioCentury
ARTICLE | Finance

Connetics chronicles

October 30, 2006 8:00 AM UTC

Connetics (CNCT), which last week agreed to be acquired by Stiefel for about $640 million in cash, has seen two big stock runs abruptly cut short when setbacks prompted investors to bail out of the dermatology play. Since its IPO in 1996, CNCT's strategy has been to in-license products that have been displaced after strategic reorganization of large drug companies and to develop reformulated versions of marketed products. Over the past nine years, the company has put seven products into the clinic, with four reaching the market. CNCT's most dramatic disappointment was in a Phase III scleroderma trial of relaxin late in 2000, which sent the shares down 75% and required the company to rebuild its story.In 2001, CNCT dropped its rheumatology program to focus solely on dermatology. This included selling Ridaura auranofin gold salt, a marketed rheumatoid arthritis therapeutic, to Prometheus Laboratories Inc. CNCT also acquired Soltec Research, which eliminated its royalty obligations for Luxiq and Olux dermatosis treatments, which are based on Soltec's drug delivery technology. The deal also gave CNCT worldwide rights to various topical delivery systems, including the Liquipatch gel matrix system. In 2005, Novartis (NVS; SWX:NOVN) launched a new formulation of antifungal Lamisil terbinafine in Europe using the Liquipatch system. CNCT hit a market cap peak of around $1 billion in 2004, the same year it in-licensed Soriatane, a marketed psoriasis drug from Roche (SWX:ROCZ). But difficulties at FDA and P&L disappointments then pushed the company's market cap down to about $262 million in July this year. Last week's news pushed CNCT up $5.36 (46%) to $17.07 on Monday, although the shares then fell back to close the week at $16.96, up $5.25. Stiefel would pay a 49% premium to CNCT's close of $11.71 on Oct. 20, the day before the deal was announced. The weekly stock price is tracked against selected events since 1996.- Alexei Ku A. 02/01/96 - Connective Therapeutics (now Connetics) completes IPOB. 8/27/97 - Announces that gamma interferon failed in a Phase III trial to treat severe atopic dermatitis C. 11/11/98 - Announces positive Phase III data for Olux clobetasol to treat dermatoses of the scalp, including psoriasisD. 3/2/99 - FDA approves Luxiq betamethasone foam to relieve inflammatory and pruritic manifestations of corticosteroid-responsive dermatoses of the scalpE. 5/31/00 - FDA approves Olux to treat dermatoses of the scalpF. 6/6/00 - Announces positive Phase II data for recombinant human relaxin to treat scleroderma G. 10/08/00 - Relaxin fails in a Phase III trial in scleroderma

H. 3/20/01 - Acquires Soltec Research, the drug delivery division of F.H. Faulding I. 9/30/02 - Raises 2002 revenue guidanceJ. 6/30/03 - Olux approved in EU to treat dermatoses of the scalp, including psoriasisK. 9/30/03 - Announces positive Phase III data for Evoclin clindamycin (formerly Actiza) for acne...