Acrux eyes up to $366m in Axiron deal

Drug developer Acrux Ltd could receive up to $US335 million ($A366.36 million) plus royalties from US-based pharmaceutical firm Eli Lilly and Company for exclusive rights to commercialise Acrux's underarm testosterone booster, Axiron.

Acrux chief executive Richard Treagus said the licensing deal was significant for Acrux.

"It takes Acrux into a comprehensively different financial position," Dr Treagus told AAP.

"I believe that this is one of the largest, if not the largest, licensing deals undertaken by an Australian biotech company."

The US Food and Drug Administration (FDA) is reviewing Axiron for the treatment of testosterone deficiency in men.

Under the worldwide licence agreement with Eli Lilly, the US company will receive exclusive worldwide rights to commercialise Axiron.

Acrux will receive an upfront payment of $US50 million ($A54.68 million) and $US3 million ($A3.28 million) on the transfer of manufacturing assets.

Acrux is also eligible for $US87 million ($A95.14 million) upon the issuance of marketing authorisation by the FDA, and up to $US195 million ($A213.25 million) in potential commercialisation milestones plus royalty payments on future global sales if Axiron is successfully commercialised.

"It puts us in a strong financial position and indeed it places us in a position, subject to approval of the Axiron product by the FDA, to commence payment of dividends to our shareholders," Dr Treagus said.

"Subject to the FDA's approval of this product, we plan to commence payment of dividends in 2011."

Dr Treagus said Acrux felt confident that its submission to the FDA on Axiron would meet the FDA's requirements.

"We expect a decision in the first quarter of next year: 2011," he said.

Dr Treagus said the royalty rates from sales of Axiron were confidential but comparable to similar late-stage licensing deals.

Acrux said the worldwide market for testosterone replacement products for men was more than $US1 billion ($A1.09 billion) and growing at more than 20 per cent per annum.

Dr Treagus said Axiron was the first testosterone replacement product that could be applied into the armpit of a patient, like a roll-on deodorant.

He said other testosterone replacement products had to be administered as gels over a large area of the upper body or via injection.

Men with low testosterone can suffer from weight changes, depression, low sexual desire and erectile dysfunction, all of which can affect their health and relationships.

Acrux shares were five cents higher at $2.43 on Tuesday.