Acrux leads the way

Let’s finish the week with one of the best news story to come out of the Australian biotechnology for years.

This week Melbourne-based firm Acrux, which specialises in developing pharmaceutical products delivered via the skin, received approval from the US Food and Drug Administration for Axiron, a treatment for men with low testosterone levels that is delivered via an underarm roll-on.

This is big news. Only a handful of Australian companies have managed to develop a drug and have it approved by the FDA, so this is not only a shot in the arm for Acrux, but a massive boost for the entire Australian biotech sector.

Acrux signed a licensing deal with US pharmaceutical company Lilly in March and FDA approval should see Axiron on the market by April next year.

Acrux, which received a $50 million payment upfront from Lilly, will now get an $87 million milestone payment, plus future milestone payments and royalties. Acrux now has an impressive $145 million in cash sitting in the bank.

The royalty payments the company is now in line for are clearly substantial. The gobal testosterone market is put at $1.2 billion a year, with $1 billion of that coming from the United States, where the market is growing at about 20% a year. It is estimated 13 to 15 million men in the US may suffer from problems with their testosterone levels.

Not surprisingly, Acrux shares have surged 10% since the FDA news came through and are now sitting at around $3.30. Shareholders who have stuck with the company have now seen the shares jump sixfold in the last 18 months.

The money is one thing but the symbolism here is almost as important.

Acrux chairman Ross Dobinson described the FDA milestone as the “culmination of a decade of skill and commitment” and I think that is really the point.

Establishing biotechnology companies is a long, difficult and sometimes painful process. But when it’s done right – and Acrux proves Australia can do it right – it’s worth the effort and the wait.