From MS...
Net sales for Axiron, Acrux's lead product out-licensed to Eli Lilly, increased to USD 41.4 million for the quarter ended Sept. 30, up 28% from USD 32.4 million in the June quarter and 14% higher than a year ago. The solid result was achieved despite the 9.9% price increase that Eli Lilly instituted in December and again in May. We estimate that Axiron commands around a 14% share of the USD 1 billion topical testosterone market in the United States, and we continue to regard its metered-dose gel and applicator format as important points of differentiation compared with peer products.
Our fair value estimate for Acrux remains unchanged at AUD 1.10 per share. This implies that the shares are undervalued at current levels, and reflects the market's negative view regarding the company's growth prospects, given the increasingly competitive landscape. We see the staged development generic strategy, recently announced by CEO Michael Kotsanis, as positive for longer-term prospects. However, details remain too scant to be factored into our earnings forecasts. Acrux's no-moat and very high fair value uncertainty ratings remain intact, given its reliance on Eli Lilly to invest in sales and marketing of the lead product Axiron.
ACR Price at posting:
75.0¢ Sentiment: Buy Disclosure: Held
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