Acrux's sales impress

Acrux's share price has jumped 11% after the company reported sales of US$47m for its Axiron testosterone treatment for the three months to 30 June, up 19% on the previous quarter and unchanged from the same quarter last year. Total sales for the financial year came to $US181m, up 46% on the previous year, generating $22m in royalties for Acrux and a milestone payment of $25m.

This is a surprisingly positive result given that the number of Axiron prescriptions written has fallen 25% since the FDA launched an investigation into the safety of testosterone products earlier this year, and speaks to the power of Axiron’s US distributor, pharmaceutical giant Eli Lilly, which has been able to raise prices and reduce rebates to health insurers despite falling volumes (see Acrux: The bear case on 16 Jul 14 (Hold – $1.025)).

The company also announced that its executive chairman, Ross Dobinson, would revert to the role of non-executive chairman following the appointment of a new chief executive, Michael Kotsanis. Kotsanis is currently chief commercial officer of Synthon, a mid-sized Dutch biopharmaceutical company. He was previously president of the Europe, Middle East and Africa (EMEA) division of US-based Hospira – the world’s largest producer of injectable and infusion therapies.

Though Axiron’s distribution and pricing is entirely controlled by Eli Lilly, we expect Kotsanis to add value to the commercialisation of Acrux’s several other medicines still in development and look forward to hearing from him when he joins the company in November. Acrux’s share price is up 25% since 16 Jul 14 (Hold – $1.025) and 61% since we recommended the stock in Ignore the FDA and buy Acrux on 13 Jun 14 (Speculative Buy – $0.80). We continue to recommend that you HOLD.

Note: Our model Growth Portfolio owns shares in Acrux.