Kintor Pharma Eyes Regeneration With Over-The-Counter Cosmetic Treatments

Key Takeaways:

• Kintor announced it will commercialize its KX-826 as an over-the-counter hair-loss drug, after it failed to show efficacy in clinical trials
• The new product could provide the company’s first recurring revenue, though it could face difficulty competing with regulator-approved products like Rogaine

By Edith Terry

When Suzhou biotech company Kintor Pharmaceutical Ltd. (9939.HK) raised $240 million in its 2020 Hong Kong IPO, it sold investors on Proxalutamide, its drug to treat prostate and breast cancer, and Pyrilutamide, for male pattern baldness and acne. Now, it seems, the company is placing its bets on the latter drug, as it seeks a less rigorous, low-regulation route to bring the product to market in a series of over-the-counter drugs.

That’s the key takeaway from Kintor’s announcement last week detailing its plans for the commercial launch of KX-826, one of two flagship Pyrilutamide drugs, in its drive to generate its first revenue. Its decision to move ahead with the drug comes even after Kintor disclosed last November that KX-826 had underperformed a placebo group in a phase three clinical trial. That led the company to abandon its earlier plan to win approval for the treatment as a licensed drug and take the cosmetic route instead.

Such a route is common for many treatments sold over-the-counter, including a wide range of health supplements, which are subject to far less regulatory scrutiny about their effectiveness.

Kintor’s latest announcement said KX-826 was approved as an International Nomenclature Cosmetic Ingredient (INCI), a designation overseen by the U.S.-based Personal Care Products Council. Investors initially gave the news a big hurrah, bidding up Kintor’s shares as much as 11% in early trade the next day. But the enthusiasm quickly waned and the stock closed up by a more modest 1.9%.

Such loss of enthusiasm is a recurrent story for Kintor, whose shares have lost nearly 95% of their value since their IPO, including big losses after its Proxalatumide drugs struck out for both anti-Covid applications and one form of prostate cancer treatment. In that process, the company’s market value has shriveled from more than $1 billion to just $60 million. All the while, it has failed to generate any revenue and has subsisted on cash raised from its IPO and three previous funding rounds in 2021 and 2022.

Kintor said it launched its over-the-counter hair-loss treatment using KX-826 “into the international market recently.” It didn’t provide any potential revenue forecasts for the product, saying only it would “provide a solid stream of revenue and cash flow” for the company.

Given its revenue-less, cash-burning situation, it’s not surprising that Kintor’s latest annual report laid heavy emphasis on cost control. In addition to trimming its R&D spending by two- thirds last year, its administrative expenses also fell by 34.6% to 86.4 million yuan ($12 million) on salary adjustments, and it said it would undertake a new round of staff cuts. The company still had 456.3 million yuan in cash and 110.5 million yuan in unutilized bank facilities at the end of 2023, after reporting a loss of 1 billion yuan for the year.

In re-focusing on cosmetic applications, which generally don’t require approval from most drug regulators, Kintor is following in a path of other companies that have gone to market with products claiming to treat male-pattern baldness. Kintor is also developing KX-826 and another Pyrilumatide product, GT20029, to treat acne.

Difficult Regulatory Road

Getting regulatory approval for hair-loss drugs is far more difficult than the over-the-counter route, and only two such drugs, finasteride and minoxidil, have been approved by the Chinese and U.S. drug regulators. Kintor claims that KX-826, a topical application, acts directly to treat target areas of the scalp and has no side effects.

Kintor’s two controlling shareholders and co-founders are both doctors, Chairman and CEO Dr. Tong Youzhi and Dr. Guo Chuangxing, which may explain their tenacity in developing their drugs. Both attended Peking University as undergraduates and went on to get PhDs in the U.S. Guo worked for a former subsidiary of Pfizer (PFE.US) until founding Kintor with Tong using their own financial resources, according to the prospectus from the company’s 2020 IPO.

The company’s research into baldness treatment, formally known as Androgenetic alopecia (AGA), only began in 2018, and has a smaller market than its cancer drugs. According to independent research in Kintor’s IPO prospectus, the market for prostate cancer drugs in China was estimated to reach 12.3 billion yuan in 2023, while the domestic market for AGA drugs was 2.3 billion yuan.

The shift to cosmetic applications is a gamble, but one that could still pay off. Others in the sector for baldness treatments, like Yonghe Medical (2279.HK), have avoided the expensive and lengthy clinical trial approach by adopting other non-drug strategies – in Yonghe’s case by offering hair transplants. A wide range of non-drug topical products for balding or hair thinning are available in the U.S. Still, Rogaine, the marketing name for minoxidil, accounted for nearly 60% of the overall global market for hair loss treatment in 2018, followed by private label products, according to Statista.

Shanghai-based Cutia Therapeutics (2487.HK) generates revenue from its treatments for scalp disease and care products, including AGA, but is also losing money. Its share price has held up slightly better than Kintor’s, but is still down by 67.2% since its listing in June last year. Cutia generated 137.6 million yuan from scalp disease and care products last year, up 1,000% from 2022, and it earned a gross profit of 71,000 yuan. But it lost 1.9 billion yuan for the year, nearly double what Kintor lost.

That shows there’s still a clear market for hair loss products, but Kintor will need to show it can tap into that market using the easier but less-reputable over-the-counter cosmetic route. Its interim report due out next month is unlikely to show much progress just yet, but could include some initial sales results that would represent some much-needed revenue. Investors will also be looking closely for signals on how Kintor expects its newest business to grow.

This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.