Acrux reported its 3rd consecutive year
A number of milestones were achieved
of profit in the financial year 2011/12
in the worldwide commercialisation
and a first regular dividend of 8 cents
of Axiron® by Eli Lilly. The strong
per share was declared for the year.
growth of the testosterone therapy
Dividends and capital gains are both
market continued and Axiron’s share
exempt from tax for shareholders because of transdermal therapy prescriptions
Acrux is a Pooled Development Fund.
grew to nearly 13%. The first marketing
Further details of these tax concessions
authorisations outside the United States
for shareholders are on page 68 of this
were received in Canada and Australia.
The underarm administration patent
was granted in some markets and the
The significant increase in the market
patent examination process continued
value and liquidity of Acrux’s shares
resulted in promotion into the S&P/ASX
In addition, Recuvyra®, the first animal
health product utilising Acrux’s delivery
technology, was approved for marketing
in both the United States and Europe.
if this growth rate is maintained in the second half, total
Testosterone therapy sales in the United States were
sales of transdermal testosterone therapies in the US for
approximately US$1.6 billion in 2011, which was 24% higher
2012 are expected to reach $1.9 billion.
than 2010. The compound annual growth rate over 5 years
The rapid growth in sales has been driven by increasing
was approximately 25%. Transdermal therapies (topical gels,
awareness amongst both physicians and patients of
patches and Axiron) comprised 93% of sales in value terms.
testosterone deficiency and its effects, as well as an increasing
in the first half of 2012, total prescriptions for transdermal
pool of potential patients as the overall male population ages.
therapies were 30% higher than in the first half of 2012.
Lilly’s commitment to men’s health and Axiron
Lilly has established a reputation as a leader and innovator in
The managed healthcare system in the US is complex
men’s health, first with its erectile dysfunction treatment Cialis involving multiple organisations and channels. A large and now with Axiron.
number of individual managed care organisations (MCOs) receive premiums from members and meet the cost of
Cialis was launched second, or in some cases third, after
members’ healthcare, including the cost of approved
viagra which held a dominant market position in the erectile
dysfunction markets. however, Cialis now approximates viagra in share of markets globally, notably driven by sales
Typically the MCO will require its members to make a
outside the United States, which exceed US$1 billion.
co-payment towards the cost of medicines that are prescribed by doctors. The amount of co-pay required from the patient
Lilly’s achievements with Cialis globally and the synergy
may vary depending on whether the medicine is on a list
between the prescribing groups for Cialis and Axiron were
(“formulary”) of recommended medicines. The formulary may
an important factor in Acrux’s decision to licence worldwide
have more than one co-pay tier, with different levels of co-pay
commercial rights for Axiron to Lilly.
depending on which tier the medicine is listed.
Lilly continues to make significant investments in order to
when a new medicine is launched, the pharmaceutical
bring the benefits of Axiron to as many patients as possible.
company is required to negotiate a contract with each MCO,
These investments, which are intended to improve the
or with a Pharmacy Benefit Manager (PBM) that manages
prospects for Axiron in both the short term and the longer
medicine prescriptions for the MCO, in order to gain access
to its formulary. MCOs and PBMs may wait 12 months after a
• Promotion to specialist physicians, primary care physicians
product launch before they review and add new products.
whilst formulary access is building, pharmaceutical companies
• Expansion of manufacturing capacity to meet anticipated
may provide financial assistance to the patient so that he or she
rapid growth in demand for the United States and other
can afford the co-pay required for the medicine. Since launch,
Lilly has provided assistance, so that the out of pocket expense associated with Axiron is similar to established testosterone
• Additional clinical studies to increase understanding
therapies that already have formulary access.
Lilly has made good progress in achieving access to MCO and PBM formularies and notably the largest PBM added Axiron to its national formularies effective 1 July 2012. Acrux anticipates that Axiron’s formulary access will improve further in 2013.
Axiron gross and net sales, royalties
Under the agreement between Acrux and Lilly, Acrux receives
royalties on net sales of Axiron, and in addition is entitled to
Lilly launched Axiron to specialists (Urologists and
receive up to US$195 million in milestone payments which
Endocrinologists) in the United States in April 2011 and
are related to the net sales performance of Axiron. The first
subsequently to primary care physicians in June 2011. Primary
milestone payment of US$25 million is payable when the
care physicians are the larger segment of the market, but the
worldwide net sales of Axiron in a calendar year equal, or
specialist segment is important in its own right, as well as
exceed US$100 million, which Acrux expects to occur in the
acting as opinion leaders for the primary care physicians.
2013 calendar year, so that the milestone payment of US$25 million will be earned in Acrux’s 2013/14 financial year.
Since 2005, the topical testosterone gel Androgel® has held a dominant position in the market. in April
Axiron royalties are percentages of worldwide net sales.
2011, prior to the launch of Axiron, Androgel’s share of
net sales in a calendar year are recorded in tiers, with
total prescriptions of transdermal testosterone therapies
each higher tier attracting a higher royalty percentage up
was approximately 72%. in July 2012 this had fallen to
to a maximum percentage. Therefore the average royalty
approximately 63%, with Axiron gaining share of nearly 13%.
percentage was at the initial rate of 11% in the first year and is expected to increase within the percentage range as net
Competition amongst the market leading products intensified
in the first half of 2012, which slowed the rate of increase in Axiron’s market share. however, Acrux is confident that Lilly’s
Multiple factors are expected to combine to drive future
investments will result in its share continuing to grow.
growth of royalties from US$6 million that was earned in the 2011/12 financial year:
in the first half of 2012, gross sales of Axiron were in line with Acrux’s expectation, with higher market growth offsetting
slightly lower market share. however, net sales (gross sales
less rebates, discounts and returns) were lower than Acrux’s expectation, reduced by the patient financial assistance
• Reduction in the gap between gross and net sales
referred to above. Acrux expects the gap between gross and
• Addition of sales from markets outside the US
net sales to reduce from the fourth quarter of 2012 as the assistance decreases.
• increase in the average royalty rate as worldwide
Share of US transdermal testosterone therapy prescriptions
Lilly distributes products in 125 countries, including high
in the United States, Axiron is currently protected by granted
growth markets in Asia and South America, which Acrux
patents describing the formulation and delivery system, and
believes could be attractive future markets for Axiron. Lilly
the applicator device, with these patents expiring in 2017 and
is responsible for funding and obtaining regulatory approvals
2030 respectively. Acrux is pursuing additional protection
to market Axiron in territories outside the United States.
until 2026 through a new patent describing the underarm
Good progress was made during the year, with marketing
(axilla) application method. The axilla patent has already been
authorisations granted for Canada in April 2012 and Australia
granted in Australia, new Zealand, Singapore and South Africa.
in May 2012. Applications are under review by regulatory
in June 2012, the US Patent and Trademark Office (USPTO)
authorities in a number of countries in Europe and South
raised two objections to the pending claims contained in
America. Applications in other countries are in preparation.
Acrux’s axilla application patent. Acrux has confidence in the
Acrux expects to receive royalties from the first sales outside
claims and is preparing a response to the objections, which will
the United States during the 2012/13 financial year.
be filed in the second half of 2012.
Testosterone therapy sales outside the United States are currently modest compared with US sales. however, less than 10 years ago, US sales were approximately US$250 million,
which is equivalent to the testosterone therapy sales for
markets outside the US in 2011. Acrux believes that there is the
potential to grow the market very significantly by increasing the awareness and understanding of testosterone therapy in
those markets. Acrux is encouraged by the impressive growth
in sales of Cialis outside the US that has been achieved by Lilly.
As well as commercialising Axiron, Lilly has an exclusive
The first product developed by Acrux was the estradiol
worldwide licence to develop and commercialise animal health
spray for women to treat menopause symptoms. The spray
products utilising Acrux’s technology to deliver medicines
was approved by the FDA in 2007 and launched into the US
through the skin of animals. Acrux earns milestone payments
market in 2008. Branded Evamist®, the spray is distributed
on the approval of marketing applications, as well as royalties
in the United States by Acrux’s licensee Kv Pharmaceutical
(Kv). in 2009, Kv underwent a significant restructuring of its business, including a reduction in the size of its sales force,
Lilly’s animal health business, Elanco Animal health has
following a number of product recalls and the suspension
grown significantly during the time since the collaboration
of its manufacturing activities by the FDA. Evamist sales in
with Acrux commenced and is an important contributor to
the United States have remained below expectations, with
prescription numbers currently at approximately 13-14,000 per
Elanco is advancing the development and registration of a
month. Royalties from Evamist sales do not provide Acrux with
number of products utilising Acrux’s delivery technology.
During the year marketing authorisations were granted for
in August 2012, Kv filed petitions seeking relief under chapter
Recuvyra, the first of these products, by the FDA and by
11 of the United States Bankruptcy Code. Acrux has engaged
the European Medicines Agency (EMEA). Recuvyra, which
US legal advisors and expects the future distribution of the
contains the active ingredient Fentanyl, is for the control of
estradiol spray in the United States to be resolved during the
pain associated with orthopaedic and soft tissue surgery in
dogs. Following these approvals, Acrux earned milestone payments totaling $1.5 million from Lilly and will begin to earn in the meantime, Acrux is advancing the commercialisation royalties on sales of the product in the 2012/13 financial year.
of the estradiol spray in markets outside the United States. The Medical Products Agency (MPA) in Sweden has granted Acrux a marketing authorisation for this product, which
enables marketing approvals to be obtained in other European
Union countries under a Mutual Recognition Procedure. Discussions are in progress with potential distribution partners
for Europe. in addition, Acrux’s distributor in Switzerland has
received a marketing authorisation and distribution partners in South Korea and South Africa currently have marketing applications under review by regulatory authorities in those countries.
Acrux continues to evaluate other product opportunities, considering both the commercial value and the technical risk. Opportunities may utilise Acrux’s core transdermal delivery technology, or potentially other technologies. To date Acrux has chosen not to invest significant funds into the development of other products. Opportunities that the Acrux board believes merit investment will be brought to shareholders’ attention.
30 June 2012
30 June 2011
30 June 2010
Profit before capitalised development costs
Profit before tax
Profit after tax
Earnings per share
Net cash (outflow)/inflow before financing
Total revenue for the financial year was $10.7 million
net cash outflow for the reported period was $3.1 million
(2011: $93.5 million). Revenue related to product agreements
(2011: $26.7 million). Cash reserves at the end of the period
was $9.0 million (2011: $89.6 million), including Axiron
were $30.0 million (30 June 2011: $33.2 million).
royalties of US$6 million. The prior year included US$87
Receipts from product agreements were $6.4 million
million in milestone revenue from Eli Lilly. interest income
(2011: $86.0 million). The prior year included the receipt of
reduced to $1.6 million (2011: $3.7 million), as cash reserves
the Axiron milestone revenue from Eli Lilly. interest receipts
were reduced by the payment of $99 million in a special
added $1.4 million (2011: $3.9 million), on reduced cash
dividend to shareholders in April 2011.
reserves following payment of the special dividend.
Payments to suppliers and employees reduced to $5.6 million (2011: $9.6 million). income tax of $4.6 million was paid during
Reported operating expenditure was $5.8 million
(2011: $11.0 million). Royalty payments reduced to $0.3 million (2011: $3.0 million), as the prior year included
The purchase of plant and equipment produced a small outflow
royalty due on the US$87 million milestone revenue from
for investing activities of $0.1 million (2011: $0.7 million).
Eli Lilly. A foreign currency gain of $0.2 million was
The prior year outflow of $0.7 million included payments for
recorded for 2012 financial year, compared to a foreign
capitalised development expenses, offset by the sale of plant
currency loss of $1.8 million for the prior year, the result
of appreciation of the Australian dollar versus the US dollar prior to settlement of the milestone revenue.
Acrux receives royalties from Lilly on worldwide net sales of
The reported operating expenditure for the prior year of
Axiron and may also receive total net sales milestone payments
$11.0 million was reduced by the capitalisation of product
of US$195 million. Acrux’s financials in the forseeable future
development expenses. no development expenses were
will be largely determined by this revenue.
capitalised for the financial year to 30 June 2012. Total expenditure, including the amounts capitalised, for external
Axiron royalties are percentages of worldwide net sales. net
research and development expenses reduced to $0.9 million
sales in a calendar year are recorded in tiers, with each higher
(2011: $1.7 million) and for employee benefits expense reduced tier attracting a higher royalty percentage up to a maximum to $2.6 million (2011: $3.6 million). The reduction in total
percentage. Therefore the average royalty percentage was at the
employee benefits expense was the result of a reduction in
initial rate of 11% in the first year and is expected to increase
within the percentage range as net sales increase over time.
income tax benefit of $2.5 million was recorded for the
The first sales milestone of US$25 million is payable when
financial year compared to an income tax expense of
the worldwide net sales of Axiron in a calendar year equal,
$25.4 million for the prior year. Tax expense of $1.6 million
or exceed US$100 million. Acrux expects the first milestone
was offset by tax benefit of $4.1 million due to tax losses
of $100 million net sales to be exceeded in the 2013 calendar
from excess imputation credits on dividends received by the
year, so that the milestone payment of US$25 million will be
parent entity as well as amendments to prior year tax returns
earned in Acrux’s 2013/14 financial year. Acrux expects to
to include additional deductions due under the research and
earn a milestone payment of $50m in the 2014/15 financial
year and milestone payments totalling US$120 million over the 4 financial years commencing 2018/19.
Acrux’s operating expenditure is currently running at approximately $0.5 million per month, with a proportion engaged in ongoing work related to Axiron, which is reimbursed by Lilly. Acrux pays a royalty to Monash investment Trust until February 2017 of 3.5% of Acrux’s royalty and milestone income.
The British Journal of Diabetes & Vascular Disease Review: Autonomic neuropathy: a marker of cardiovascular risk British Journal of Diabetes & Vascular Disease 2003 3: 84The online version of this article can be found at: can be found at: The British Journal of Diabetes & Vascular Disease Additional services and information for Autonomic neuropathy: a marker of c
Journal of Clinical Neuroscience (2003) 10(3), 338–339ª 2003 Elsevier Science Ltd. All rights reserved. doi:10.1016/S0967-5868(03)00010-9Treatment of painful peripheral neuroma by vein implantationR.J. Mobbs BSc(MED) MB BS, M. Vonau MB BS FRACS, P. Blum MB BS FRACSDepartment of Neurosurgery, Institute of Neurological Sciences, The Prince of Wales Hospital, Sydney, AustraliaSummary Painful n