What Everyone Is Missing About Neothetics (NEOT) Lipo 102 Drug Candidate…Potential Blockbuster Status

Lipo 202 for abdomenal fat reduction with injections.

Lipo 202 for abdominal fat reduction with injections.

Removing and reducing fat in Americans is a huge industry in the Aesthetics market. There are multiple ways to do this:

  1. Suction (traditional) Liposuction
  2. Laser Liposuction
  3. “Tickle” (vibration) Liposuction
  4. Water Liposuction
  5. Freezing the Fat (Coolsculpting)
  6. Heating the Fat (Vanquish, TruSculpt, Sculpsure, Ultrashape, Liposonix)
  7. Chemically with Injections (Kythera’s Kybella, Neothetics 102, 202)

There are positives and negatives to all the above methods. Some are more aggressive but have more downtime and risk. Pain is a limiting factor for wide acceptance with others. Devices tend to cost the physician $80,000 and up, which keeps costs high to patients. The public demands little to no downtime with reasonable costs.

Kybella’s FDA approval recently has opened up a new way to remove fat…using just injections. Kybella drug, deoxycholic acid, is a bile salt. It is normally excreted by the liver to aid in the breakdown of fat that is ingested. It has been shown to be effective in reducing the double chin fat through a series of injections. Most people will require between 2-4 treatments. The fat cell that is affected is permanently killed. That doesn’t mean your chin will stay the same after you are done with treatment. Residual fat cells will enlarge, if there is an overall weight gain due to eating habits, exercise change, or other systemic disease. There are already trials going on to use Kybella for other areas and it is just a matter of time that it will be approved for the excessive abdominal fat. It seems like a great way to remove fat…but there is one catch. There is swelling and discomfort for a few days at least. Most will overlook this minor point, but it is just this issue that makes room for Neothetic’s Lipo 102 to become a blockbuster. Neothetics doesn’t cause the fat cell to lyse (burst open) and therefore leads to significantly less inflammation and swelling.

Neothetics is researching Lipo 202 for abdominal fat reduction and Lipo 102 for fat reduction in the eye area for Graves disease patients (off label use for treating cosmetic unsightly fat bulges around the eye is obviously their intention). Neothetic’s Lipo 102 and 202 are both made with salmeterol xinafoate. Salmeterol is an asthma drug, a beta adrenergic agonist. In layman’s term, this drug acts like adrenaline (epinephrine). Fluticasone is a strong steroid and helps reduce swelling and is added to Lipo 102. The way Lipo 102 and 202 work on fat is that the salmeterol mimics exercise of the fat cell, by increasing the metabolism of the cell. Glycerol and fatty acids are expelled from the fat cell because it percieves (it is tricked into believing) that the body needs these energy sources. This will result in shrinkage of the fat cell. Just as with Kybella, multiple treatments are needed.

NEOT, Neothetics, Lipo 202 causes fat cell shrinkage

NEOT, Neothetics, Lipo 202 causes fat cell shrinkage

Neothetics NEOT Lipo 202 causes reduction of abdominal circumference

Neothetics NEOT Lipo 202 causes reduction of abdominal circumference

One of the big questions is: “How long do results last with Lipo 102 or 202?”. This question is being researched in a follow up study to the phase II study on abdominal fat using Lipo 202. Although a concern to investors, whether or not the results are long standing or not is almost irrelevant in the authors opinion. For a procedure that is 5 minutes from start to finish, with very little downtime, it’s perfectly acceptable to require touch ups months after treatment. This is the norm for Botox, dermal fillers, laser procedures, and skin tightening procedures.

The hidden gem with Neothetics is Lipo 102. There is currently no easy way to treat fat around the eye without surgery. Lasers have been tried and were abandoned because of numerous complications. If there were a way to reduce bulging fat around the eye with injections, it would be a HUGE drug. Kybella has too much swelling to be considered for this area. The eye cannot tolerate post septal swelling (within the orbit) without risk to visual loss. It is conceivable that the procedure would be similar to getting Botox around the eye, but in a slightly different area, with little to no downtime. Again, the need for touch ups would be perfectly acceptable to most patients as long as pain, risk, and downtime are minimal.

Neothetics’ Lipo 202 for treating abdominal fat in less than 5 minutes with injections seems like a great story. However, Lipo 102 has an even greater potential and without competitors for treating the bulging eye fat. With the recent acquisition of Kythera by Allergan, the other 2 large players in the aesthetics industry, Galderma and Merz, may want to have a competitor to Kybella. A fat busting injectable seems to fit in well with the offerings of either company, but it’s the authors opinion that Merz will eventually be the buyer of Neothetics later this year. With Kythera being bought by Allergan for $2 Billion, and Neothetics $146 Million Market Cap, with $70 Million in cash, it makes the buy out all more likely. In addition, there were several insider buys at the IPO price of 14 when NEOT went public late last year. There have been no insiders selling after the IPO despite the stock’s dip to just under 6 a few weeks ago. Since the purchase of KYTH by Allergan, the stock has moved up to 10.73 on large volume.

Disclosure: Dr. Weiner is a share holder of Neothetics (NEOT) and was a shareholder of Allergan (AGN) and Kythera (KYTH). At the time of posting this blog, NEOT had closed at 10.73.

4 Comments

  1. Dr Steve, do you know what phase the Lipo 102 is in? I know lipo 202 is in phase 3. As an investor, what do you think of data re: getting FDA approval. I’m with you on the clinical bonanza if it gets approved.
    Thanks
    Gary Gesualdi

    Owner non invasive Aesthetics practice in Chattanooga tn

    • I am pretty sure 202 will be approved, prob late next year. 102 is preclinical or phase 1.

  2. You say that 102 is the gem because it has little to no competitors, but what real competitors does 202 have?

    • Kybella will certainly be used on the body in the future. It’s inflammatory response is too strong to be used in the eye area.

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