Apricus Biosciences, Inc.’s APRI shares gained 7.7% after the company announced that it has entered into a license agreement with Allergan AGN under which it will regain the U.S. development and commercialization rights to Vitaros from the latter.
We remind investors that Warner Chilcott (now a subsidiary of Allergan) had gained U.S. rights to Vitaros from Apricus in 2009.
Terms of the Deal
Apricus paid Allergan an upfront payment of $1 million and has also agreed to make a regulatory milestone payment of $1.5 million in return for exclusive rights to develop and commercialize Vitaros in the U.S. Allergan can exercise a one-time opt-in right to take over all the commercialization activities, if the FDA accepts Vitaros’ new drug application.
If Allergan opts in, Apricus will be entitled to receive up to $25 million in upfront and launch milestone payments plus a double-digit royalty on net sales of Vitaros. On the other hand, if Allergan decides against opting in, Apricus will be responsible for Vitaros’ commercialization and in return pay Allergan a double-digit royalty on net sales of Vitaros. Moreover, Allergan retains the right to launch an authorized generic version of Vitaros under a profit share arrangement with Apricus.
Vitaros, a topical cream, is Apricus’ sole marketed product approved in the EU and Canada for the treatment of erectile dysfunction (ED). The drug is being marketed in these territories under separate licensing agreements with different partners including Takeda Pharmaceutical Company Limited TKPYY among others.
Apricus is looking to file for approval for ED in the U.S. in 2016. Upon approval, Vitaros will be the first and only FDA-approved topical treatment for ED.
As per data provided by IMS Health, the U.S. represents the world's largest ED market with sales crossing $3 billion in 2014. Currently, 20 million men are estimated to suffer from ED in the U.S. with about 600,000 new cases being diagnosed each year.
Considering that Vitaros holds significant commercial potential in the U.S. upon approval, we are encouraged by Apricus’ decision to reacquire its U.S. rights from Allergan. Currently, prescribed treatments for ED include Pfizer Inc.’s PFE Viagra.
Apricus is a Zacks Rank #2 (Buy) stock. Takeda is another favorably ranked stock in the health care sector, also carrying a Zacks Rank #2.
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