Testosterone therapy business Acrux Limited (ASX: ACR) today posted some disastrous sales numbers for its key Axiron product that is sold primarily into the US market.
Its commercial partner US pharmaceutical giant Eli Lilly reported net sales for Axiron of US$32.4 million for the quarter ending June 30 2015, which is a big fall from the prior quarter's US$39.1 million. The numbers are even worse compared to the prior corresponding quarter's US$47.1 million and paint a worrying picture for the future of Acrux.
In early March the US Food and Drug Administration (FDA) released an updated drug safety communication on requirements around the use of testosterone therapy products like Axiron and its effects appear to have caused a sales slump.
The FDA required that labeling on the products be changed to inform users of the possible increased risk of heart attack and stroke, while it also fired a warning to doctors to only prescribe the treatment to men who suffered from de facto low testosterone.
Given the sales crash through April, May and June this year the FDA's warning looks to have scared off both users and prescribers, with much conjecture in the market about how much testosterone use amongst men was for recreational purposes rather than medical.
The Axiron treatment is supposed to help with low energy levels among other things, which is interesting given that Acrux's management team seem somewhat low energy themselves when it comes to presenting the public face of the company to investors.
The stock is down 13% this afternoon to 86 cents, which seems a modest reaction to the disastrous sales numbers. In my opinion given the headwinds and management quality the stock looks one to avoid.
