Low testosterone treatment Natesto driving Acerus Pharma growth, Mackie Research says

Following the company’s fourth quarter results, Mackie Research Capital analyst André Uddin remains bullish on Acerus Pharmaceuticals (Acerus Pharmaceuticals Stock Quote, Chart TSX:ASP).

This morning, Acerus reported its Q4 and fiscal 2018 results. In the fourth quarter, the company lost $4.4-million on revenue of $2.1-million, a topline that was down 12.5 per cent over the same period last year.

“We are pleased with the pace of the growth of the Natesto business — especially in Canada,” CEO Ed Gudaitis said. “We will continue to work with our partners in the U.S. and elsewhere to increase awareness of Natesto and accelerate growth of prescription volume. In addition, we will continue to leverage our existing relationships with key opinion leaders and to leverage complimentary products to continue to grow revenues in a cost-efficient manner.”

Uddin says the results were largely in-line with his expectations. The analyst says the company’s Natesto product, used to treat low testosterone in men, is gaining traction in the United States.

“Natesto total Rx achieved an all-time high in Dec. 2018 by increasing 27% sequentially in Q4,” the analyst notes. “Aytu’s Natesto Direct Patient Support program increased refill Rx by 52% sequentially in Q4, which also attracted more doctors to participate. Paid Rx increased 111% from Jan. to Dec. due to discontinuation of the zero revenue voucher program – which should improve margins on Natesto sales going forward. A Natesto spermatogenesis study (Phase IV) is currently underway to determine Natesto’s effects on sperm production in hypogonadal men – full results are expected in this summer. If the results are positive, Natesto would be the only testosterone replacement therapy that is clinically proven to preserve fertility in hypogonadal men – a key competitive advantage to drive Natesto sales.”

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In a research update to clients today, Uddin maintained his “Speculative Buy” rating and one-year price target of $0.50 on Acerus Pharma, implying a return of 257 per cent at the time of publication.

Uddin thinks Acerus will lose $0.02 per share on revenue of $15.9-million in fiscal 2019. He thinks those numbers will improve to break even on a topline of $25.5-million the following year.