Skin deep

Chief Executive, The, July-August, 2008 by Jennifer Pellet

Like all the other assets of his specialty pharmaceuticals company, Alfred Altomari, the newly appointed CEO of Princeton, N.J.-based Barrier Therapeutics, hails from Johnson & Johnson. But while most of those assets--namely patent licenses for dermatology products not deemed worthy of development--were happily offloaded by the powerhouse drug company in exchange for an ownership stake, Altomari was originally off limits.

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"When Geert Cauwenberg founded the company in 2001, he was prohibited from taking a lot of people--including me," recounts Altomari, who was running J&J's dermatological franchise at the time. "In fact, I was the one who negotiated that non-raiding clause."

Even then Altomari was intrigued by the concept behind the fledgling company: commercializing innovative dermatological products that had been abandoned by J&J due to their limited market potential--limited, that is, by Big Pharma standards. "J&J was looking for the next block buster, for something that ends with the word billions," notes Altomari. "The idea was to license patents with potential, see them through the development process and take them profitably to market using a leaner, smaller sales force."

Two years later, when Altomari got the chance to join Cauwenberg in that mission, he grabbed it. By then, Barrier had products in clinical development and was readying its commercialization phase, an ideal time for Altomari to step in as vice president of business development. Over the next three years, he developed a sales force and launched three products: Vusion, a diaper rash cream; Solage, a treatment for solar lentigines or liver spots; and Xolegel, a treatment for seborrheic dermatitis or recurring skin rash. Along the way Barrier went public (2004), and Altomari moved into the post of chief commercial officer and then COO.

The skin business, however, wasn't always smooth. In 2005, two pipeline setbacks sent Barrier's stock price tumbling into the single digits, where it remains today ($4.11 at press time). The first came when the FDA requested more data for Vusion, a drug that was later approved. But the second setback--of Hyphanox, an oral drug then in Phase III clinical trials as a treatment for vaginal candidiases--hit harder. "In our industry, if you're going to fail, you want to fail early," says Altomari.

Altomari, who took the helm at Barrier in March, is now charged with shepherding its remaining drug candidates to market and steering the company--which reported a loss of $46 million on revenues of $29.7 million in 2007-out of the red zone. "The Street is speaking to us, saying, 'You guys better get profitable,'" he says. "So I need that top line to grow, and I need to watch what we spend."

His big bet toward the former is Hyphanox, which continues in Phase III clinical trials. But Hyphanox is at least a year, maybe two, away from launching, which leaves Altomari to play to Barrier's other strengths--its niche market focus and lean operating philosophy. "Because we're focused on treatments that are typically prescribed by specialists--in our case dermatologists and pediatricians--rather than primary care [physicians], we can operate with a much leaner sales force," he points out. "To market to primary care doctors, you need a sales force of 1,000 reps. But I can get to the specialists with 60."

Barrier also has the luxury of eschewing the expensive R&D processes that are essential--and expensive--for most pharmaceuticals. "We have a pipeline for the next decade, and our patents go as far out as 2021," says Altomari, who cites Hyphanox, Rambazole (for psoriasis and acne), Pramiconazole (for onychomycosis) and Hivenyl (for allergic reactions) as the drugs currently at the head of that pipeline.

"If we get any one of those across the goal line, it could mean hundreds of millions in sales," he says.