By By Rob Waters and Simeon Bennett
Eli Lilly & Co., the maker of the impotence pill Cialis, bought exclusive rights from Australia’s Acrux Ltd. to an underarm testosterone lotion called Axiron for men with limited sex drive due to low levels of the hormone.
Indianapolis-based Lilly will pay Acrux a $50 million license fee plus $3 million when manufacturing assets are transferred, the companies said Tuesday in a statement. Acrux, based in Melbourne, Australia, may earn $87 million more if U.S. regulators approve the drug for marketing, $195 million in commercial milestone payments as well as royalty payments on future sales, the companies said.
Acrux filed a marketing application with the Food and Drug Administration in January, seeking to enter a global market for testosterone therapies worth more than $1 billion a year. A study in 2006 found that at least one third of American men older than 45 years have low testosterone. The problem can sap sex drive and cause impotence, osteoporosis and memory loss, according to the Mayo Clinic in Rochester, Minn.
If approved, the product “could provide a new treatment option for men suffering from low testosterone,” said Bryce Carmine, president of Lilly’s Bio-Medicines.
Results of a clinical trial released in September showed Axiron normalized testosterone levels in 84 percent of men after four months.
Acrux, which has never made a profit, expects to report net income of between $40 million and $44 million in the financial year ending June, it said in a statement. The company, which was spun off from Melbourne’s Monash University a decade ago and has 30 employees, plans to make its first dividend payments in 2011.
Acrux, which has raised $50 million from investors since its initial public offering in 2004, won’t be asking investors for more money to develop its other products, Richard Treagus, the company’s chief executive officer, said in a telephone interview Tuesday.
“We’ve got no intention to go back to the market and raise funds,” he said. “This licensing deal with Lilly certainly strengthens our balance sheet. It establishes a strong basis for what I believe is future sustainable earnings.”
The company’s agreement with Lilly is the largest licensing deal ever stuck by an Australian biotech company, and is a “new high water mark for Australian biotech” in terms of its size, said David Blake, co-editor of Bioshares, a weekly report on Australia’s health-care industry. He owns Acrux shares.
“Our expectation is you’re going to see a whole new range of investors come into the stock, and they’ll look at the stock very differently to how many smaller investors have,” Blake said in a telephone interview. “Those new investors are more likely to be institutional investors who have a different requirement in terms of the quantum of stock that they want to purchase.”
Eli Lilly & Co., the maker of the impotence pill Cialis, bought exclusive rights from Australia’s Acrux Ltd. to an underarm testosterone lotion called Axiron for men with limited sex drive due to low levels of the hormone.
Indianapolis-based Lilly will pay Acrux a $50 million license fee plus $3 million when manufacturing assets are transferred, the companies said Tuesday in a statement. Acrux, based in Melbourne, Australia, may earn $87 million more if U.S. regulators approve the drug for marketing, $195 million in commercial milestone payments as well as royalty payments on future sales, the companies said.
Acrux filed a marketing application with the Food and Drug Administration in January, seeking to enter a global market for testosterone therapies worth more than $1 billion a year. A study in 2006 found that at least one third of American men older than 45 years have low testosterone. The problem can sap sex drive and cause impotence, osteoporosis and memory loss, according to the Mayo Clinic in Rochester, Minn.
If approved, the product “could provide a new treatment option for men suffering from low testosterone,” said Bryce Carmine, president of Lilly’s Bio-Medicines.
Results of a clinical trial released in September showed Axiron normalized testosterone levels in 84 percent of men after four months.
Acrux, which has never made a profit, expects to report net income of between $40 million and $44 million in the financial year ending June, it said in a statement. The company, which was spun off from Melbourne’s Monash University a decade ago and has 30 employees, plans to make its first dividend payments in 2011.
Acrux, which has raised $50 million from investors since its initial public offering in 2004, won’t be asking investors for more money to develop its other products, Richard Treagus, the company’s chief executive officer, said in a telephone interview Tuesday.
“We’ve got no intention to go back to the market and raise funds,” he said. “This licensing deal with Lilly certainly strengthens our balance sheet. It establishes a strong basis for what I believe is future sustainable earnings.”
The company’s agreement with Lilly is the largest licensing deal ever stuck by an Australian biotech company, and is a “new high water mark for Australian biotech” in terms of its size, said David Blake, co-editor of Bioshares, a weekly report on Australia’s health-care industry. He owns Acrux shares.
“Our expectation is you’re going to see a whole new range of investors come into the stock, and they’ll look at the stock very differently to how many smaller investors have,” Blake said in a telephone interview. “Those new investors are more likely to be institutional investors who have a different requirement in terms of the quantum of stock that they want to purchase.”
