On Wednesday April 16th, Apricus Biosciences (NASDAQ: APRI) announced the shipments of their first units of Vitaros, the company's topical on-demand treatment for erectile dysfunction ("ED"), to the UK partner Takeda Pharmaceuticals International:
Richard Pascoe, Chief Executive Officer of Apricus, commented, "We are excited to have completed the first of several product shipments of Vitaros® to different territories in Europe this year. With the commercial availability of Vitaros® in the United Kingdom, Takeda is in a position to finalize its pre-launch activities in an effort to be the first Vitaros® commercial partner to offer an on demand topical cream treatment for men with erectile dysfunction."
In September 2012, Apricus and Takeda entered into an exclusive license agreement to market Vitaros® in the UK. According to IMS Health, the erectile dysfunction market in the United Kingdom was worth approximately $225 million in 2013, the largest ED market in Europe. The product received regulatory approval in Europe in June of 2013 and in August of 2013, Apricus received the national phase approval to have the product marketed in the United Kingdom.
This has been a long waited event for investors who have seen vague estimates and timelines and patiently waited on the company to get to "launch". Now that it has launched, it's time to take another look at the agreements for revenues from royalties and sales.
APRI is a pharmaceutical company that develops and markets treatments for male and female sexual health. Vitaros is currently the only approved product, which treats erectile dysfunction. The company is also developing Femprox, a leading candidate for the treatment of female sexual arousal disorder. The company currently trades just under $2.40, and has a market cap of $90 million.
Review the estimates
APRI has licensed the rights to Vitaros throughout Canada, Europe, and Africa.
(Source: Apricus website)
As part of the deal, the company accepted upfront payments, along with milestone payments and royalties on sales. As the launch continues throughout Canada, Europe, and Africa, cash flow will increase for the company. While some of the payments were upfront, the majority were tied to the successful launch of Vitaros. All in all, the company has just over $200 million in payments that will come due.
(Source: Data compiled by the author from company press releases)
For all of the deals, the company has stated that in addition to the upfront and milestone payments, the company is also eligible for "double-digit tiered royalties".
Now that APRI has officially begun the launch of Vitaros, expect additional firms to being taking positions. I also expect upgrades as the roll out continues and sales start to ramp up. The company has announced their intentions of selling the rights to Femprox this year. While the company hasn't made any announcements yet, investors can expect news of a deal to be a catalyst for a higher share price.
Disclosure: I am long APRI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Editor's Note: This article covers a stock trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.