Foamix Pharmaceuticals Ltd Hopes to Profit From Eli Lilly's and Amgen's Side Effect

What: Foamix Pharmaceuticals is up about 10% at 1:00 p.m. EST after releasing positive results from its phase 2 clinical study of FDX104.

So what: FDX104 is designed to prevent moderate-to-severe skin rashes in patients treated with the epidermal growth factor receptor antibody inhibitors (EGFRI), such as Eli Lilly's Erbitux and Amgen's Vectibix. The rash, while not as life threatening as the cancer that Eli Lilly's and Amgen's drugs are designated to treat, can get so bad that doctors need to reduce the dose or even discontinue the treatment altogether.

Foamix Pharmaceuticals trial enrolled just 24 patients, but the data look fairly strong. The patients acted as their own controls, putting FDX104 on one side of their face and placebo on the other. The drug side only had severe rash in four out of the 24 patients while the placebo side had a severe rash in nine of the 24. The difference was statistically significant.

Now what: Foamix Pharmaceuticals needs to talk to the FDA to figure out how to proceed but will likely have to run a phase 3 program before getting FDX104 approved by regulators. Like all small phase 2 trials, the biggest risk is that the efficacy difference between FDX104 and placebo isn't seen in a larger trial. The phase 2 data could be a fluke, but we won't know until larger trials are run.

There's also the potential for side effects from FDX104 to be discovered when it's tested in more patients, but the active ingredient, doxycycline, is a common antibiotic that's sometime use as an oral off-label treatment for the rash, so it's probably a low risk.

Investors in Eli Lilly and Amgen should keep an eye on the development of FDX104 because the companies will obviously benefit if FDX104 can help keep patients on their drug longer.

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