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ASX stock of the day: Acrux (ASX:ACR) shares soar 36% on FDA approval

asx share price making all time highs represented by cartoon man flying high on a paper plane
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The Acrux Limited (ASX: ACR) share price is soaring today, up 36.36% at the time of writing to 22 cents a share.

Acrux shares closed at 16 cents a share yesterday but opened at 28 cents a share this morning before soaring all the way up to a high of 32 cents soon after. Even though Acrux has somewhat cooled off since, these new heights represent a 52-week high for the company.

So who is Acrux? And why are Acrux shares so convincingly on the march today?

An introduction

Acrux is a pharmaceutical company that describes itself as “dedicated to developing and commercialising topical pharmaceuticals”. It was incorporated in 1998. Ever since, it has developed and commercialised a number of topically applied pharmaceutical products in the US and Europe.

Today, Acrux aims to develop a “range of topical and dermatological generic products for the US market”. The company has three products approved for sale in the US, as well as a portfolio of topical products in development.

However, the company has had something of a rough trot over the past few years. Acrux no longer markets its flagship product Axiron (a testosterone replacement therapy) in the US after it lost patent protection. It withdrew it from sale back in 2017 due to competition from generic versions of this drug. It is still marketed outside the US, however. That is possibly why Acrux shares are, to this day, down 69% from the share price highs we saw back in 2016.

Even so, today Acrux has 14 generic products in its pipeline and has three products that have been submitted to the US Food and Drug Administration (FDA) for review. It also has an Evamist estradiol product, used in the treatment of menopause, available in the US market.

Why is the Acrux share price going gangbusters today?

Today’s extraordinary performance in the Acrux share price can largely be attributed to a market release the company announced this morning just before open. In this release, Acrux informed investors that the FDA has approved a generic testosterone product. This product is based on Perrigo’s Testosterone Topical Solution, which has a concentration of 30mg/1.5mL.

This news comes less than a week after Acrux announced the commencement of a new share purchase plan for existing retail shareholders. This plan was announced on 8 January and will run until 29 January. Shareholders can subscribe for up to $30,000 in new Acrux shares for a price of 15.7 cents a share.

But turning back to the FDA approval, the company had reportedly submitted an application for this product back in August 2018 that is a “generic equivalent” to the Perrigo product. Acrux is now able to manufacture and market this drug. The company was keen to point out that the Perrigo’s product that Acrux’s generic product mimics generated sales that “exceeded US$25 million” in the 12 months to September 2020.

Acrux had already entered into an exclusive sales, marketing and distribution agreement with another company – Dash Pharmaceuticals. Dash will apparently be responsible for “the commercialisation of the product in the United States”. This will include the “coordination of commercial manufacturing and management of marketing and distribution”.

Acrux CEO and managing director Michael Kotsanis had this to say on this news:

FDA approval is a major milestone for Acrux and its generic strategy. It is a testament to the hard work and dedication of the product development and regulatory team. We are excited to partner with Dash Pharmaceuticals to bring this product to market in the current financial year.

At the time of writing, the Acrux share price is sitting at 22 cents per share, giving the company a market capitalisation of $34.81 million.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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