Eli Lilly and Co. (LLY) recently entered into a deal with Australian company, Acrux, which should help strengthen Lilly’s men’s health portfolio. Lilly acquired exclusive worldwide rights to commercialize Axiron, which is currently being reviewed by the US Food and Drug Administration (FDA) for the treatment of testosterone deficiency (hypogonadism) in men.
As per the terms of the deal, Lilly will make an upfront payment of $50 million and $3 million on the transfer of manufacturing assets. Lilly will also pay $87 million to Acrux on the receipt of FDA approval for the product. Acrux could receive up to $195 million in commercialization milestones, and royalty payments on global sales of the product. Lilly expects to incur a charge of 3 cents related to this transaction in the first quarter of 2010.
The addition of Axiron should boost Lilly’s men’s health product offerings. Lilly’s lead product in this category is Cialis, which is indicated for erectile dysfunction. Cialis, which posted sales of $1.6 billion in 2009, competes primarily with Pfizer’s (PFE) Viagra and GlaxoSmithKline’s (GSK) Levitra.
The hypogonadism market represents a nice niche opportunity for Lilly. Hypogonadism is a disorder that affects approximately 39% of men over age 45. According to data from IMS Health, Inc. global sales of testosterone therapies have increased to more than $1 billion per year, with sales of testosterone gels in the US comprising $700 million.
Currently marketed therapies include Abbott’s (ABT) AndroGel and Auxilium Pharmaceutical’s (AUXL) Testim. Additional competition could be in the form of Endo Pharmaceutical’s (ENDP) Aveed, BioSante Pharmaceuticals (BPAX)/Teva Pharmaceutical Industries Ltd.’s (TEVA) Bio-T-Gel, and Repros Therapeutics’ (RPRX) Androxal.
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