AYTU announced a revised agreement with Acerus Pharmaceuticals that will expand the company’s partnership and accelerate the growth of Natesto® in the United States. That was just the first of several important announcements. Two additional company releases set the stage for a catalyst filled back half of 2019.Aytu BioScience may have gotten unfairly caught up in a market downdraft that allowed very few good stocks to escape. But, from a production perspective, the news from AYTU during the past ten days positions the company extremely well to rebound sharply once the aptly named China syndrome subsides. The excellent news for AYTU investors, which must be noted, is that while investors may have been searching for excuses to sell other biotech stocks, they didn't get any from AYTU. In fact, the past ten days had seen AYTU publish several potential milestone events that make AYTU more attractive now than they were when the stock was holding its 120% YTD gains. Even today, with a close at $1.37, the share is higher by more than 75% since the start of the year.
Each announcement brings significant potential.
Video Link: http://www.youtube.com/embed/gp9XnGRkK4s
AYTU Expands Acerus Pharmaceuticals Natesto® Agreement, Significant Impact to Growth Expected
First, on Julye 30, AYTU announced a revised agreement with Acerus Pharmaceuticals that will expand the company’s partnership and accelerate the growth of Natesto® in the United States. The terms of the deal were viewed by investors as mostly favorable to AYTU. Specifically, the announcement said that Acerus will take a significant role to fund and launch a U.S.-based specialty sales force which will promote Natesto® to urologists and endocrinologists. In addition, despite Acerus picking up almost all of the development cost, the new deal allows AYTU to book all Natesto® revenue and promote Natesto® to all other specialties including internal medicine and family practice, the specialties on which Aytu is increasingly focusing its efforts.
Also, Acerus is expected to soon launch a complementary U.S. commercial team and hire at least twenty-five U.S-based specialty sales representatives, an enhancement that will nearly double the size of the Natesto® field sales-force. The co-promotion is expected to increase the sales force coverage of targeted U.S. prescribers significantly, puts a higher promotional focus on urologists and endocrinologists, and enables Aytu to increase its promotional efforts in primary care and other specialties.
Drilling deeper into the new deal, the updated agreement will expand the two companies’ commercial partnership and amend and restate the original 2016 Natesto® exclusive U.S. license agreement. Notably, investors have been pointing to substantial benefit to AYTU under the new terms of the relationship. Specifically, Aytu will remain the exclusive U.S. supplier of Natesto® and retain all rights to revenues generated. In addition, Aytu and Acerus will continue to operate a joint commercialization committee in support of Natesto® and will now more closely collaborate on U.S. brand strategy and commercial initiatives. Natesto® total prescriptions grew 30% from fiscal 2018 to 2019, so this partnership is expected to drive even more growth of the brand through joint promotional efforts and a significantly expanded U.S. presence.
Natesto® Abstract Accepted as Late-Breaking Addition To ASRM Conference
The second piece of good news came in August when AYTU announced that the Natesto® Spermatogenesis Study results have been accepted for presentation as a “Late-Breaking Abstract” by the American Society for Reproductive Medicine (ASRM). The study results will be presented at the 75th ASRM Scientific Congress & Expo in Philadelphia, PA October 12-16, 2019. Investors have been anxiously awaiting the final results of the study later this summer, which can provide a catalyst moment for AYTU.
According to that release, the Natesto® Spermatogenesis Study results have been submitted in abstract form to ASRM, and complete results will remain embargoed until the date of the presentation, which is October 16, 2019. It may not be a stretch to speculate that the results are good or why the effort to get them included in such a high-profile meeting. Moreover, Dr. Ranjith Ramasamy, MD, Associate Professor and Director of Reproductive Urology at the University of Miami School of Medicine and the study’s principal investigator, will present the data in conjunction with Dr. Thomas Masterson, MD, Fellow in Reproductive Urology at the University of Miami School of Medicine. If he didn't like the results, he would probably stay away. That's just an opinion, however.
But, prompting more confidence in the results, the Natesto® Spermatogenesis Study poster is one of only six abstracts from around the world to be accepted for presentation by ASRM. Notably, abstracts are accepted for presentation based on the impact of the study findings. Once presented at the conference, the results are then expected to get published in abstract form in the Abstract Supplement to the journal Fertility and Sterility.
The Natesto® Spermatogenesis Study is investigating the impact of Natesto®, the only FDA approved, nasally-administered testosterone treatment, on sperm parameters. The Phase IV, single-site, prospective study is evaluating hypogonadal men, ages 18 to 55, completing a six-month treatment period with Natesto® to restore clinically low serum testosterone levels with the goal of maintaining sperm concentration, motility, and total motile sperm count. To date, interim results presented demonstrate that almost all subjects completing the six-month treatment period not only had serum testosterone levels return to the normal range, but all measures of semen parameters including sperm concentration, sperm motility, and total motile sperm count (TMSC) remained unchanged through three months and six months of therapy. Natesto® could become the first and only TRT product on the market that can provide the benefits of testosterone while not affecting male fertility.
ZolpiMist Data Published in the Journal of Pharmacy and Pharmacology
The third piece of potential milestone creating news was released on August 5th, when AYTU announced the publication of a clinical study in the journal, Pharmacy and Pharmacology, demonstrating that ZolpiMist, Aytu BioScience’s lingual spray formulation of zolpidem, achieves sleep onset more quickly than the oral tablet form of zolpidem (brand name Ambien®) in patients seeking short-term treatment for insomnia.
According to that release, this new scientific report describes a post-hoc analysis of data from the pivotal Phase 3 study of ZolpiMist. The four-arm crossover study compares 5 and 10 mg doses of the lingual spray (LS) and tablet formulations of zolpidem in 43 adults (N = 20 males, 23 females). The generally accepted blood serum therapeutic threshold for zolpidem in treatment of insomnia is a blood plasma concentration of 20 ng/mL. On average, ZolpiMist achieved this threshold more quickly than tablet zolpidem. The lingual spray (ZolpiMist) formulation achieved this threshold at 7.0 and 10.5 minutes, for the 10 mg and 5 mg doses, respectively. Tablet zolpidem achieved this threshold at 15.0 and 17.2 minutes, for the 10 mg and 5 mg doses, respectively.
The results and publication highlight an additional study measure to quantify sedation, the Digit Symbol Substitution Test (DSST), which is an assessment of attention, perceptual speed, motor speed, visual scanning and memory. The results showed a compelling difference in sleep-onset. The average time to achieve a 5-point change (from baseline) in DSST for ZolpiMist was 4.8 minutes and 8.0 minutes, for the 10 mg and 5 mg doses, respectively. Conversely, for tablet zolpidem, the time to achieve a 5-point change (from baseline) in DSST was 14.0 minutes and 16.2 minutes, for the 10 mg and 5 mg doses, respectively.
Conclusions in the report help illustrate the differences in administration modality and absorption of two formulations of zolpidem tartrate, with the oral tablet formulation being relatively slow compared to the lingual spray and subjects a drug to a first-pass metabolism effect. Thus, bioavailability of the tablet is generally low and slow comparatively. The comparisons indicate that the ZolpiMist lingual spray may enable a more than two-fold faster onset of sedation over zolpidem tablets. Moreover, as noted in the release commentary, AYTU stated that the new analysis demonstrates a more rapid onset of sleep and increased bioavailability of ZolpiMist when compared to zolpidem tablets. The company also noted that the novel oral spray form embodied in ZolpiMist may present patients with a more convenient form and a simple way to achieve rapid sleep onset.
Opportunity Grows as Data Supports Multiple Best-In-Class Drug Profiles For AYTU Pipeline
While trying to beat a market that declined by more than 767 points on Monday can be difficult, finding the stocks that are building its foundation beneath the carnage can expose substantial opportunities. Although the timing was bad for press releases, they come well-timed to beef up the potential from a drug pipeline that now has four potential best-in-class products already in the market.
Moreover, with Natesto® getting a big boost and a second journal publication ahead of the Spermatogenesis Study results, the final readout expected in October can be a catalyst event for Aytu BioScience. In addition, with ZolpiMist, Tuzistra XR, and MiOXSYS also positioned to do extraordinarily well in their perspective markets, the table may be set for significant growth in the coming months.
And, while no market goes straight up, when they decline opportunities can get exposed. Hence, with a trifecta of substantial news in the just the past ten days hitting the wires for AYTU, the stock may provide upside relief as investors again focus on promising stocks. Aytu BioScience should be one of them.
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