from m sta r We maintain our AUD 0.40 per share fair value...

from m sta r
We maintain our AUD 0.40 per share fair value estimate for Acrux following the release of quarterly net sales of Axiron by licensee partner Eli Lilly. Sales for the three months to 30 September 2016 came in at USD 39.0 million, down 6% on the previous corresponding period and up 33% on a sequential quarterly basis. Although volatility of sales is not unusual given timing of typical rebates to distributors in the supply chain, reported sales were above our estimates of around USD 25 million for the quarter. This had assumed entry of a generic challenger in this period following the adverse and surprise August 2016 ruling in the United States District Court for the Southern District of Indiana invalidating key Axiron patents.
from wilso ns
Surprisingly, we have seen no generic AXIRON launch from Watson Laboratories which has enabled a strong September quarter for Acrux’s royalty flows. Acrux’s global partner Eli Lilly announced US$39m in Q3 net AXIRON sales, which was well ahead of our forecasts. As the first manufacturer to file a generic, the Watson ANDA had 180 days’ available exclusivity but a third of that opportunity has now expired. We still see generic competition as inevitable, but this reprieve, for as long as it lasts, is positive for Acrux’s cash reserves and R&D objectives. Acrux’s balance sheet can sustain a period of renewal via its own generic drug pipeline and specialty drug development projects. Our price target is unchanged at 39cps. HOLD rating maintained.