After transformation under new CEO, Leo Pharma touts innovation model and financial progress

Taking over as CEO for an aging company in dire financial straits and in need of a slim-down was a challenging assignment for Christophe Bourdon.

But under Bourdon’s watch, Leo Pharma is taking steps toward a rebound. Last month, the 115-year-old Danish private company reported that it cut its operating costs by 14% in 2023 while increasing its revenues by 7%.

Then, over the weekend at the American Academy of Dermatology (AAD) annual meeting in San Diego, Leo presented promising data for its top three assets on which much of its future will depend—atopic dermatitis treatment Adbry (tralokinumab), which was approved in 2021; topical JAK inhibitor delgocitinib, which could be approved next year for chronic hand eczema (CHE); and TMB-001, which is in phase 3 testing for congenital ichthyosis (CI).

“It shows you that the innovation model for Leo Pharma is accelerating,” Bourdon said in an interview with Fierce Pharma. 

Leo’s innovation model, which it revealed early last year, is to pursue external innovation as opposed to its long-held focus on internal R&D. In September, the company added that a new capital structure was in place. Under the new approach, the company set aside more than 4 billion Danish kroner ($587 million) to pursue business development and M&A opportunities.

The company is focused on acquiring assets to treat rare dermatological diseases, of which there are many with unmet needs, Bourdon said. Last year, the company brought on a new chief scientific officer, internationally recognized dermatologist and University of Copenhagen researcher Jacob Pontoppidan Thyssen, Ph.D., to assist in identifying opportunistic disease types as well as the biotechs and universities working on treatments to address them.

“Then basically it’s in-licensing or acquiring those assets,” Bourdon said. “Develop them in phase two, phase three, get the product approved, get the product reimbursed and then launching the product globally, this is what we’re good at.”  

To back up his claim, Bourdon pointed to Leo’s exzema treatment Adbry, which it acquired from AstraZeneca in 2016 for $115 million upfront. Five years later, after three successful phase 3 trials, Leo won approvals for the IL-13 inhibitor in the U.S. and Europe, where it is known as Adtralza.

Now, Adbry is the company’s prime growth driver (though Leo does not reveal sales of its individual products).

Leo hopes to follow the same game plan with newly acquired TMB-001. The company gained the asset two months ago after Timber Pharmaceuticals, a developer of rare disease dermatological products, filed for bankruptcy.

TMB-001 is a reformulation of Roche’s Accutane (isotretinoin), which was approved in 1982, and has been redeveloped to reduce its absorption into the skin and minimize its side effects. Leo hopes to gain approval for CI, which has no treatment options. The FDA gave the prospect fast-track and breakthrough-therapy designations in 2022.

Leo’s long road back

In its attempt to grow, Leo made big moves in 2015 and 2018 as it acquired the dermatology units of Astellas for $725 million and Bayer for an undisclosed sum. Leo's revenues topped the 10 billion mark in Danish kroner for the first time in 2017. But sales have been stagnant until the modest boost last year to 11.4 billion Danish kroner ($1.65 billion).

Despite the gains, Leo still has a big hole from which to climb. While it whittled its debt by 4 billion Danish kroner ($582 million) in 2023, the tab still comes to 11.1 billion Danish kroner ($1.62 billion).

After nearly of decade of net profit gains, Leo has been in the red for the last five years, with its 2023 loss of 3.6 billion Danish kroner ($528 billion) attributed to “non-recurring project impairments, tax asset adjustments and increasing interest expenses,” Leo explained in its annual report last month.

When he took over in April 2022, Bourdon’s mandate was to reduce costs drastically. The company had already laid out a plan to cut its head count by 1,000 and shut down its regenerative medicine innovation hub and tech centers in Asia and Boston. But Bourdon has taken it a step further, reducing Leo’s workforce from 6,000 to 4,300.

Why did Bourdon—formerly the CEO of Danish meme stock Orphazyme—want to run a company in such need of repair? 

“It’s a very strong brand and Denmark. Everyone knows someone that is or has worked for Leo Pharma,” Bourdon said. “I took the job because for me it’s a very fundamental question: How can a midsize pharmaceutical company with such a legacy in Europe continue to innovate? Rethinking our innovation model, I think, is a very inspiring question.”

Bourdon’s first take on Leo was that it had “a lot of inertia,” and it was important for him to explain to Leo’s employees why change was needed and to articulate the vision for the company.

“Despite all the tough decisions we have made, we’ve seen our engagement score go up,” Bourdon said of the periodic surveys Leo conducts to gauge the happiness and fulfillment of the staff.

Recent trial results

At the AAD meeting, Leo presented results for the first time for DELTA 3, an extension trial which evaluated the long-term safety of delgocitinib cream on 801 CHE patients, with no new safety concerns identified. The positive data backed up results from the DELTA 1 and DELTA 2 clinical trials, which demonstrated consistent safety profiles.

The primary objective in the successful DELTA 1 and DELTA 2 trials, which has already been reported, was to assess the efficacy of twice-daily applications of delgocitinib cream on CHE patients.

The safety question is crucial because of lingering concerns with JAK inhibitors. The only other topical JAK inhibitor on the market is Incyte’s Opzelura, which is the cream version of Incyte’s Jakafi.

Leo’s other late-breaker at the AAD meeting was a first look at positive results from the phase 3 ASCEND trial, which examined TMB-001 in CI. The study showed minimal systemic absorption of isotretinoin and that 59% of patients achieved a two-point or more improvement in scoring on the investigator global assessment scale. The scoring system assessed patients' levels of fissuring and scaling, which characterizes CI.