Seeking Alpha
Value, growth at reasonable price, special situations, tech
Profile| Send Message|
( followers)  

A monumental change is beginning to take shape across America. Starting this year, the first of the baby boomer generation will retire. The boomers, all 77 million of them, lived through great social change and numerous wars, but their biggest battle now may be their health. As they age, the generation representing 26% of all Americans will collectively fork out billions of dollars more every year for their health. This is a trend that has garnered much attention from keen investors looking to gain from this change.

One healthcare niche that is flying under the radar, but will greatly benefit from this development, is sexual dysfunction. Due to the "sensitivity" of the issue, sexual dysfunction is typically not a subject printed on the front page of the Sunday newspaper or a matter discussed at the work water cooler. But it is a hot topic at investment banking and hedge fund companies worldwide. That is because the sector represents one of the largest untapped growth markets in the biotech industry.

Of course, Erectile Dysfunction (ED), or the inability to achieve or maintain an erection, is one of the most familiar. Viagra, a drug produced by Pfizer (NYSE:PFE), thrust the issue into the mainstream by becoming the first oral treatment in the late 1990s. (Who remembers those Bob Dole commercials?)

“Viagra targeted a huge potential market and educated men about erectile dysfunction,” says Dr. Bassam Damaj, CEO of Apricus Biosciences (NASDAQ:APRI), a company with multiple treatments for sexual dysfunction. “Viagra showed men that it is okay to speak about the issue with a doctor and that a treatment exists for the condition.”

The drug quickly transformed erectile dysfunction from a sector with little sales into a $3.7 billion dollar worldwide industry. The market is expected to expand to nearly $5 billion in the next couple of years. Rapid growth in this already large sector will continue as the boomers age and live longer lives.

Studies show that one in five men between the ages of 50 and 59 suffer from ED, with the number jumping to 60% by age 60. This trend is coupled with the fact that other ED-causing health problems such as heart disease, diabetes, and our ever-expanding waistlines become more prevalent every year. These diseases have contributed to the rapid increase of ED even in young men, leading some to consider it a possible health epidemic.

Damaj hopes to benefit from this swell of demand with Apricus Bio’s ED treatment, Vitaros. The alprostadil-based drug was recently approved in Canada and stands as first-line topical therapy for ED. “Vitaros provides the same results as current oral treatments, but does so faster with less risk and fewer side effects,” says Damaj.

For years, the PDE5 inhibitors, Viagra, Cialis(made by Lilly (NYSE:LLY)), and Levitra®(made by Bayer (OTC:BYERF)), have been monopolizing the ED market. However, these drugs cannot be taken by those with certain health conditions including heart diseases, hypertension, diabetes, and those considered obese. They also cannot be used after drinking alcohol or eating a fatty meal, to the disappointment of many men (and likely their partners).

Vitaros avoids these barriers by taking a different approach to solving ED through localized topical application. The drug represents the next generation of ED treatments that are safer and fit seamlessly into anyone’s current lifestyle. These on-demand solutions may break men free of the constraints of having to plan medication around their sexual encounters. Because of these benefits, these new treatments will likely absorb much of the projected future growth of the sector.

But the largest profits may spring from the yet-to-be-tapped niche markets of sexual dysfunction. The most prevalent being premature ejaculation (PE), when a man ejaculates before or soon after intercourse begins, often within a couple of minutes.

“It is a huge problem that people don’t talk about,” says Damaj. Yet PE is more common than the more publicized ED condition. Studies indicate that about 20% of men suffer from PE, which can cause distress for men and their partners.

Despite wide prevalence, the FDA has never approved a drug to treat PE. Millions of men are quietly searching for a solution to prolong sexual intercourse. This could represent a quiet but potentially multibillion dollar market waiting to be developed.

Damaj believes Apricus Bio can become the first to crack open this market. Clinical trials of Vitaros, as well as the Vitaros compound combined with local anesthetics, have demonstrated the ability to extend sexual intercourse with a high success rate. The company is looking to expand the use of Vitaros by securing PE as a second indication for the drug.

But these dysfunctions only affect half of the population. Women’s sexual health is often overshadowed; however, it represents a large and fresh area of medicine. Drugmakers are well aware of this and know finding a “female Viagra” may prove to be the holy grail of all sexual dysfunction treatments for women.

It is believed that millions of women suffer from the persistent inability to attain or maintain sufficient sexual excitement, known as Female Sexual Arousal Disorder (FSAD). Although there is a wide range of estimates, some studies suggest 30% of women suffer from the dysfunction. FSAD also becomes more prevalent in women who are postmenopausal or who have undergone hysterectomies, making it a potential growth sector as women live longer and desire more sexually active lives.

For well over a decade, some of the world’s largest biotech companies have scrambled to develop a working drug for FSAD. At least a dozen experimental therapies have been developed to treat the condition, with all failing to be effective or meet FDA safety standards.

“Much of the focus has been on chemical alteration,” notes Damaj of the failed treatments for FSAD during the last decade.

Not only are they risky, they do not work. Femprox is a non-hormonal topical cream being developed by Apricus Bio. Like Vitaros, the drug contains alprostadil and takes a very different route to solving FSAD.

“Apricus’ advantage is in that Femprox relaxes smooth muscle and increases blood flow, which boosts arousal,” the company CEO explains. A completed Phase III trial of 387 patients showed improved sexual arousal in 44% of women.

Flip through any Cosmopolitan magazine. Women are desperately looking for ways to improve sexual arousal, pleasure, and orgasm. Companies know that any FDA approved treatment for FSAD may be an instant multibillion dollar product and be, for women, what Viagra was for men.

Baby boomers’ attitudes toward sex are much different than previous generations'. With the advent of the birth control pill, they experienced unprecedented sexual freedom on their own terms. They could participate in sex for pleasure, without the consequences.

Now the generation that ignited a sexual revolution and launched the “free love” crusade is coming of age. But unlike their predecessors, this cohort has proven they do not simply follow life stages — they transform them. Boomers have high expectations of leading a more active sexual lifestyle and are more likely to seek out treatments for sexual dysfunction.

Over the next couple of decades, the number of people over age 65 is expected to double, leading to an explosion in demand for these products. Companies infiltrating this potentially massive market will reap billions. Luckily for the baby boomers, many promising treatments for sexual dysfunction may soon be available at the local pharmacy. These will improve their quality of life and make their aging a bit more, well, satisfying.

Source: Apricus Bio Seeks to Penetrate Untapped Sexual Dysfunction Market