ELI LILLY’S $773m FOR ACRUX’S AXIRON TESTOSTERONE TREATMENT
March 23rd 2010 11:43
Tuesday March 16, 2010
Daily news on ASX-listed biotechnology companies
* ASX UP, BIOTECH DOWN: LIVING CELL UP 33%; USCOM DOWN 13%
* ELI LILLY’S $773m FOR ACRUX’S AXIRON TESTOSTERONE TREATMENT
* BIOGUIDE BRIEF: HERE’S TO ACRUX, ITS INVESTORS & AUSSIE BIOTECH
* CATHRX REVIEW MOOTS CAPITAL RAISING
* FLUOROTECHNICS FIRST SWISS SALE
* OBJ APPOINTS DR KEVIN HAMMOND PARTNERING MANAGER
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ACRUX
Acrux’s Axiron deal with the Indianapolis-based Eli Lilly is likely to be worth at least $US670 million ($A733 million) including upfront fees, milestones and royalties.
Announcing what may be the biggest Australian biotechnology deal Acrux said it was eligible to receive up to $US335 million in milestone payments, plus royalties on worldwide sales of its Axiron testosterone replacement treatment.
Acrux chief executive officer Dr Richard Treagus told Biotech Daily his company would receive $US50 million in upfront fees on signing the exclusive, global deal within 15 days.
“It really sets us up with a great partner,” Dr Treagus said. “We’re delighted.”
“We believe it’s quite possibly the biggest single deal for an Australian biotech,” Dr Treagus said.
Dr Treagus said his company was focused on US Food and Drug Administration approval and Eli Lilly would work with Acrux to gain registration, which he expected early next year. Last year Acrux said it expected registration “by the end of 2010” (BD: Sep 29, 2009).
He said that he hadn’t traded off royalties for milestone payments.
“Royalties will be at least equal to the upfront fees and milestone payments,” he said.
Careful not to disclose confidential details, he agreed that Biotech Daily’s “double digit royalty” question was “a good guess”.
Dr Treagus said that Acrux was forecasting a profit for 2009-’10 of $44 million to $48 million and there was an intention to pay a dividend, this year.
He said Eli Lilly had “a vision for men’s health” that made it an excellent partner for Acrux’s testosterone treatment.
Dr Treagus said sales of Eli Lilly’s erectile dysfunction treatment Cialis rivaled Pfizer’s Viagra.
In a media release, Acrux said Cialis sales were $US1.6 billion in 2009.
Acrux said it was “firmly on the path of becoming the first Australian biotech company to introduce a number of therapeutic products into global pharmaceutical markets”.
Acrux’s chairman Ross Dobinson paid tribute to the confidence that shareholders had shown in Acrux’s ability to commercialize its innovative product range.
“The Axiron licencing agreement with Eli Lilly, believed to be the largest licensing deal ever struck by an Australian biotech company, validates the commitment and support shown by Acrux's stakeholders, including our State and Federal Governments, over many years,” Mr Dobinson said.
“Acrux was founded as a spin-off from Monash University a decade ago and can now anticipate profitability, dividends and a suite of products in global pharmaceutical markets,” Mr Dobinson said.
Acrux said Eli Lilly had considerable commercial strength worldwide, with products distributed in 143 countries.
Acrux has a partnership with Eli Lilly’s animal health division, Elanco. A marketing application for the first veterinary product using Acrux’s technology was submitted to the FDA in late 2008 and Acrux expects the FDA’s review “in the near future”.
The deal provides substantial financial returns to Acrux, vindicating the $23 million investment made by shareholders in 2007 to fund the phase III development of Axiron.
Acrux will receive an up-front payment of $US50 million, $US3 million on the transfer of manufacturing assets, $US87 million on the issue of a marketing authorization by the FDA and up to $US195 million in potential commercialization milestones, as well as royalty payments on future global sales of Axiron.
Acrux said it expected no deduction of foreign withholding tax from any of the deal payments and that any tax liability on the initial $US50 million would not be significant, due to the use of past tax losses, but a third-party royalty of $1.9 million would be payable.
Acrux said its first profit would recover the majority of its accumulated losses since inception.
Acrux said that pending FDA approval of Axiron and the receipt of the associated payment from Eli Lilly, it intended to pay dividends to shareholders from 2011.
Acrux said it was a pooled development fund with a range of tax exemptions.
Dr Treagus told Biotech Daily that Acrux had a number of compounds in development and the upfront fee would provide “an opportunity to evaluate which to advance or accelerate”.
Acrux climbed to $2.60 but closed up five cents or 2.1 percent at $2.43 with 2.9 million shares traded.
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