Ann: Teva Launches Generic Version of Axiron in United States, page-7

I have traded this stock in the last 8 years, and have such a rich deep understanding of it.

I made big money buying in at the time of Eli Lilly deal and selling it at $4.76

Then I bought back in at $0.90 and sold at $1.50.

My average back in this time is $0.31

I think it is worth about $0.50 to $0.60 today.

One of the reasons it has been hammered is they stopped paying a dividend and many investors have to sell once a company is not paying a dividend. They could of reduced their dividend payout from $10m to $3m and still had cash reserves in my opinion.

This being said the loss on the patent is somewhat standard stuff. These generic companies treat it like a investment portfolio and have many cases going on, Watsons would of had 150 at least in the courts and many speculative. They hit on about 1 in 3. The case for this patent challenge was done by Watsons, when testosterone treatments were flying high about 4 years ago. Since then FDA has cracked down very hard on the abusive advertising of the product and sales have heart everyone. The study required for safety is not due to 2020. I think the FDA crackdown is a big over kill that will turn around for many reasons.
1) Males are aging in the US and this is a youth drug
2) Axiron helps with sex drive and libido.
3) Lot's of underserved low testosterone patients out their and this is the safest method of daily delivery, market size is at least 3x bigger.

On top of this Teva bought Watsons and its not really a priority as the whole market has slumped.

Thus it took 12 months for them to make decision for a generic launch. On the bright side it is 12 months of extra cash for ACR shareholders. Generics are about a 70% loss in revenue typically.

Eli Lilly are paying the legals on this. I would say the chance of winning an appeal is 50:50 but I factor a loss in my investor thinking. Surprise if they win I suppose and they will also get damages which is lots of free money.

They have a good strategy on the pipeline and will have enough cash for 2-3 years, assuming no more royalty revenue from Axiron. They should be able to strike up a deal to license one of their pipeline drugs in the next 18 months.

This is under the radar but will move very fast once one of the above happens.