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This is a personal comment. It may be a special situation that I am beginning to investigate, an update on one I already told you about in this column, in "Larry Oakley's Opinion" or "Larry Oakley's Stock Pick," or a comment on something that is happening in the economy or in one of the markets.
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Current Larry Oakley's Comment:
Date Posted: 03/07/12
Apricus Biosciences, Inc. (NasdaqCM: APRI)
Comment
I have followed Apricus for the last two years, having originally written about it in 2010. I decided to let you know about its recent progress in this update, because I bring you situations that should be important parts of your stock portfolio, & APRI is certainly one such situation.
A Brief Current Description of APRI
APRI is a San Diego-based, revenue-generating, specialty pharmaceutical company. It has commercial products & a broad pipeline across numerous therapeutic classes. It sells through its Apricus Pharmaceuticals USA, Inc. & NexMed (USA), Inc. subsidiaries, & through out-licensing in certain territories of its product pipeline & its NexACT(R) technology. It markets Totect(R) (dexrazoxane HCl), the only drug approved in the U.S. for the treatment of anthracycline extravasation. It also markets its Vitaros(R), approved in Canada for the treatment of erectile dysfunction, as well as compounds in development from pre-clinical through pre-registration for Sexual Dysfunction, Oncology, Dermatology, Autoimmune, Pain, Anti-Infectives, Diabetes, & Consumer Healthcare.
APRI expects to develop &/or acquire & then bring to market additional pharmaceutical products in areas of care that will benefit patient needs worldwide.
For more detail, check www.apricusbio.com. You also may want to check www.nexmedusa.com (its wholly-owned subsidiary’s site). On 2/22/2012, NexMed (U.S.A.), Inc. entered into a Vitaros Cream Clinical Supply Agreement with Warner Chilcott UK Limited. As part of that agreement, APRI will receive about $250,000 in exchange for the current ordered quantity of Vitaros.
CEO Dr. Bassam Damaj’s Recent Comments to Shareholders
"We believe that 2012 will be the most important in Apricus Bio's history so far. The Company is now shifting from a development stage company with little institutional ownership to a commercial revenue-generating global operation with hopefully long-term institutional investment support. The Company also expects to book approximately $4 million from Vitaros(R) collaborations signed so far this year. We believe that signing two major collaborations in the first quarter of this year is a good indication that the Company plans to have major revenues from Vitaros(R) collaborations & the beginning of product sales this year.
“The addition of a commercial oncology sales force with three marketed drugs to sell in the U.S. is a major step for the Company in its efforts to start generating its own direct sales. It's an important shift for the Company to begin selling our drug products ourselves in some territories as it can drive more revenue growth & places many of our commercialization timelines under our own control. Oncology supportive care is our first step in the U.S. with a sales force. Our goal is to expand into other focused disease areas moving forward.
"Apricus Bio's recently announced, institutionally-focused financing, now provides our specialty pharmaceutical company with the institutional investment support necessary to grow to the next level. Apricus Bio looks forward to much broader investment coverage by an expanded range of financial analysts in 2012.
“Apricus Bio is expanding the ownership of its stock from a predominantly retail base to becoming more institutionally held. Such financing has provided our Company with the important funding resources to directly grow Apricus Bio's value by filing for commercialization authorization for up to five drug products in 2012 & 2013; to launch newly acquired products; & to continue to acquire additional, revenue-producing drug products."
NexACT(R) Platform Products
1. Vitaros(R)
Vitaros(R) (alprostadil), APRI’s treatment for erectile dysfunction, is now partnered in the U.S., Canada, Germany, certain countries in the Middle East, the Gulf countries, Israel, & Italy. It entered into an exclusive licensing agreement with Abbott Laboratories Limited to market Vitaros(R) in Canada, beginning its launch in 2012. It also made a similar agreement with Sandoz, a division of Novartis, for Germany -- an important partnership to APRI not just for its large size, but also for it being able to bring back Novartis as a partner which demonstrates the confidence in its NexACT(R) technology & the drugs based on it.
The near-term focus for Vitaros(R) is to commence sales in Canada this year though its commercial partner Abbott, continue to generate revenue from partnerships for the product with major pharmaceutical companies, including some which the Company intends to enter into & announce in the near term. APRI may also market the drug itself in certain territories in Europe as it expands its sales force & presence.
2. Femprox(R)
Femprox(R) is a topical cream for the treatment of female sexual arousal disorder (FSAD). It has completed nine clinical studies, including the only successfully completed Phase III & the most advanced product in development for the disorder.
APRI expects to have guidance from the health agencies in the U.S., Europe, & Canada by the end of Q2 2012. Despite some setbacks in a similar space by third parties on other drugs in this space recently, APRI is still the most advanced & the only Company that ran a successful 400 patient Phase III clinical trial in FSAD & achieved statistical significance on the primary & secondary endpoints. Management believes Femprox(R) is unique not only because of its direct & local mechanism of action & safety profile, but also because of its relatively high response rate in its successful Phase III clinical trial. APRI also feels that this is a potential blockbuster product, which some have estimated to be a $4 billion dollar space with no approved products on the market yet.
3. MycoVa(TM)
MycoVa(TM) is a topical treatment for onychomycosis (nail fungal infection), APRI’s second partnered pipeline product utilizing its proprietary NexACT(R) technology. In December 2011 & January 2012, APRI completed two licensing agreements granting exclusive marketing rights for MycoVa(TM) with Stellar Pharmaceuticals, Inc. in Canada & Elis Pharmaceuticals in certain countries in the Middle East & the Gulf Countries (excluding Israel).
APRI’s regulatory strategy in the U.S. is to use its human blood & nail bioequivalency study against Lamisil(R) cream in conjunctions with the secondary endpoints from its three Phase III trials & file for approval using the 505b2 path. In Europe, it intends to file for approval using the non-inferiority analysis achieved against Loceryl(R) in its European phase III trial. Lamisil(R) is a registered trademark of Novartis & Loceryl(R) is a registered trademark of Galderma. APRI expects to have guidance from the health agencies in the U.S., Europe, & Canada by the end of Q2 2012.
APRI’s Commercial Sales Force
APRI launched its commercialization arm beginning in oncology supportive care in December 2011 with the acquisition of Topotarget USA, Inc. (since renamed Apricus Pharmaceuticals USA, Inc.), gaining a pre-existing sales infrastructure, sales team, & a revenue-generating product with what the Company believes to be a strong future growth potential & additional second use label. The oncology supportive care product platform was expanded through an agreement with PediatRx, Inc. in January, with co-promotion rights to two additional products in this space, Granisol(TM) & Aquoral(TM).
Totect(R)
Totect(R) (dexrazoxane HCL) is for the treatment of anthracycline extravasation, the leakage of chemotherapies from the vein into the surrounding healthy tissue. Totect(R) is the only proven protection against the potentially devastating effects of anthracycline extravasation. APRI also intends to grow the market potential for this product by filing a supplemental NDA this year for a second use of cardiac protection for Doxorubicin use based on the trials the Company has already run. The Company intends to further monetize Totect(R) by partnering the product throughout Canada & Latin America. There are presently 3,500 cancer centers in the U.S., all of which should eventually carry Totect. There are approximately 550,000 anthracycline infusions each year in the U.S. with estimates of extravasations calculated as high, occurring 1% of the time, & potential uses for the second label if granted by the FDA.
Granisol(TM)
Granisol(TM) (granisetron) is the only FDA-approved, oral, ready-to-use liquid solution of granisetron oral solution for prevention of nausea & vomiting associated with emetogenic cancer therapy & radiation. In addition to U.S. co-promotion rights, Apricus Bio purchased non-U.S rights to Granisol(TM). The present oral solution market for the anti-emetics is approximately $70 million in the U.S. with the overall oral market for anti-emetics above $3 billion.
Aquoral(TM)
Aquoral is an FDA-cleared, prescription-only spray for the treatment of Xerostomia (the medical term for dry mouth due to a lack of saliva). Xerostomia is caused by oncology, central nervous system drugs. The Company intends to detail the drug for the oncology use through its sales force & partner the CNS use.
The advantage of an oncology support sales force is that the same salesperson can help sell multiple products to the same end user, who in APRI’s case is the oncology supportive care nurse & the hospital pharmacist who stocks the product. Chemotherapy & radiation therapy may result in side effects & often the same patients can experience extravasation (therefore requiring Totect(R)), nausea (therefore requiring Granisol(TM)) & Xerostomia (therefore requiring Aquoral(TM)) in addition to pain, mucositis, & dermatitis in addition to other potential side effects. APRI also announced in January 2012 that it is in negotiations to acquire PediatRx & it currently expects to have an approximately 25 person supportive care sales force in addition to an additional 100 on-call nurses & a pharmacist call-center. APRI is also currently in negotiations to acquire additional products for this sales force.
NitroMist(TM)
APRI further expanded its commercial arm worldwide with the acquisition of ex-U.S. rights to NitroMist(TM), an FDA-approved & marketed nitrate vasodilator indicated for acute relief of an attack or acute prophylaxis of angina pectoris (chest pain) due to coronary artery disease (narrowing of the blood vessels that supply blood to the heart). In 2/2012, NovaDel Pharma Inc. sold APRI the rights to sell & license NitroMist(TM) in territories outside of the U.S., Canada, & Mexico. NovaDel has estimated the worldwide market for NitroMist(TM) to be more than $200 million. APRI intends to file for marketing authorization in Europe & certain other countries in the acquired territory in 2012 & has already initiated commercial partnering discussions.
My Opinion
I like this situation – I feel that it should be an important part of your stock portfolio.
In my early (12/14/2010) Comment editorial column, here’s what I said as my introductory statement: “This is one of the new situations I have been investigating that may help you to weather the current economy.”
Here is a portion of the “My Opinion” section of that 12/14/2010 editorial:
“I like APRI’s NexACT technology & the advantages it can provide to specific products & to any business partners that APRI deals with. I like its strategy, its financial strength, its strong management team, & the fact that it has already got its first important approval for a product that utilizes its technology.
“As I have always told my readers during the past 25 years, I strongly suggest that you do some investigation on your own. I bring you the results of my early investigation, but you have the responsibility of making your own investment decisions – do not give up that responsibility.
Important Note : “Since APRI has experienced net losses & negative cash flows from operations each year since its inception, through 9/30/2010, it had an accumulated deficit of $187,854,240. Its operations have principally been financed through private placements of equity securities & debt financing. Such deficits are relatively common in start-up pharmaceutical companies. The only advantage of such accumulated deficits is the ability to use some of them as loss carry forwards to substantially reduce tax liability after the company is generating profits.
“I mention the losses because you must base any investment decisions on whether you believe that the company has a large positive income producing potential. I feel that it does, & the news release of October 27, 2010 shows that Northeast Securities does as well – in fact, they published an initiation of coverage research report on Apricus Biosciences, Inc. (APRI) with an Attractive rating. They reported a closing price on 10/22/2010 at $1.72.
“Bottom line – emerging pharmaceuticals & bio R&D organizations base their future strategy on the market value of their R&D results. You must do the same – that’s why I strongly suggest that you do some investigation on your own.
“APRI’s last trade on 11/12/2010 when I started writing this early editorial was $2.09 on a volume of 148,231 shares. The average volume for the then past three months was 126,668 shares. The market cap then was $37.23 million.”
Note: Today, as I am writing my current editorial update on 3/7/2012 at 10.20 a.m. Eastern, here are some important current statistics:
Trading at: $3.15
Volume: 29,990 shares
Market Cap: $83.475 million
52-Week High (5/11/2011): $6.10
52-Week Low (3/6/2012): $3.07
Average Volume (3m): 331,246 shares
Shares Outstanding: 26.50 million
Float: 24.2 million
% Held by Insiders: 8.7%
% Held by Institutions: 18.6%
Shares Short (as of 2/15/2012): 2.42 million
One Year Target Estimated: $8.00
Next Earnings Date: 3/13/2012
Last Split Date (1.15 new for old): 6/21/2010
Total Cash (mrq): $26.2 million (pro-forma/post deal 12/31/11)
Total Debt (mrq): $4.00 million
Current Ratio (mrq): 3.24
Most Recent Quarter (mrq): 9/30/2011
Fiscal Year Ends: 12/31
I suggest that you check http://www.apricusbio.com
Contact
APRI is located at 6330 Nancy Ridge Drive, Suite 103, San Diego, CA 92121
The corporate phone number is 858-222-8041
Call Edward Cox, VP-Corp. Development & IR at 858-848-4249 or ecox@apricusbio.com.
You may also contact David Pitts of Argot Partners at 212-600-1902, or email him at david@argotpartners.com
My comments in this column are strictly my personal opinion. At times, I will include forward-looking information as that term is defined in the Private Security Reform Act of 1995. Such information & the related company are subject to many risks & uncertainties. There can be no assurance that actual results, business conditions, business developments, losses & contingencies, local & foreign factors, & other matters will not differ materially from those suggested in any of my forward-looking statements. Such differences are the result of all sorts of factors (some examples: market conditions, competition, advances in technology, acquisitions, mergers, potential litigation, personnel changes, market changes, capital availability, etc., etc.).
Do not run out & buy a stock just because I am enthusiastic about the situation. Call the company before you buy -- satisfy yourself first. I always include a phone number for that purpose. My purpose in this column is to respond to your request for my personal opinion. You have the responsibility of making your own investment decisions. Do not give up that responsibility.
My editorial coverage has always been, is now, and always will be without charge. That includes what I write in Conservative Speculator, and what I write in "Larry Oakley's Opinion, " "Larry Oakley's Stock Pick," "Larry Oakley's Comment," & "Larry Oakley's Bold Ventures" columns. It also includes what I write in such venues as articles submitted to other publications, interviews on radio & television, and at the investment seminars and conferences at which I am a featured speaker. By doing all my editorial work free of charge, I have the advantage of writing about what companies I particularly like. There are occasions when I will write about a company that is a paying participant on WallStreetCorner -- that's because I like the company. I always make it clear to them that editorial coverage is free and is not a part of the fee they pay to have their Profile researched, prepared, & posted at WallStreetCorner.
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