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ACRUX LIMITED (ACR) - Transforming Topical Pharmaceuticals: CEO Michael Kotsanis on FDA Approvals, Market Strategy, and R&D Innovations
Curious about the future of topical pharmaceuticals? Michael Kotsanis, CEO of Acrux Limited, joins us to uncover the company's strategic endeavors and recent successes. With over 25 years of industry experience, Michael offers valuable insights into Acrux’s focus on developing and commercializing topical generic products for the lucrative US market, valued at $16 billion. He also shares the exciting news of their recent launch of Dapsone 5% Gel and the promising market response, along with updates on three other products currently under FDA review.
Get a behind-the-scenes look at Acrux’s robust research and development efforts, supported by their GMP-licensed facility and collaborations with contract manufacturers worldwide. Learn about the intricate process of drug approval and how Acrux aims to build a sustainable revenue stream through consistent product submissions and launches. This episode is packed with fascinating details about the competitive pharmaceutical landscape and Acrux's future prospects. Don't miss this in-depth conversation with one of the industry's key players!
Welcome to another episode of ASX Briefs, and today we have the pleasure of speaking with Michael Kotsanis, the CEO of Acrux Limited. Acrux is a specialty pharmaceutical company known for its development and commercialization of topically applied pharmaceutical products, With a strong track record and significant developments, w e're excited to delve into what's next for Acrux. Michael, thanks for joining me today and welcome to the podcast.
Michael Kotsanis:Thanks, Andrew, and thanks for inviting me.
Andrew Musgrave:Okay, can you start by just giving us a quick overview of Acrux and its strategic focus in the pharmaceutical industry?
Michael Kotsanis:I can. Acrux develops prescription pharmaceutical products that are applied topically, that is, to the skin, the eyes, ears or other body service areas. We've been around for around 25 years and we've got a track record of approvals and launches of products in that market dosage form in the United States, in Europe and some other countries as well, and our focus is, as you say, very much on the development and commercialization of an expanding range of topical generic products specifically for the US market. We focus on topical products because that's where we've got significant competence in our team of development scientists. We have around 25 scientists employed on staff working in Melbourne and the market for topically applied pharmaceutical products is about a $16 billion market in the US, so it's quite attractive for us. There's about 450 different drugs that are applied topically, that are approved and applied topically, and today we have only 15 of those in our portfolio, so that portfolio will grow. Clearly there's scope for that to grow, but it will grow as our human and financial resources allow over time.
Andrew Musgrave:Okay, and can you tell us more about the recent launch of the Dapsone 5% Gel in the US and what's the market response been to that so far?
Michael Kotsanis:Sure, the product was launched only, you know, literally a few weeks ago, in April. It's early days. The market's around a $15 million market, which is about 22 million Australian in size, and there's six companies competing in that market, but I think the important point is that's one product. We often get asked questions about each product we launch, which is fine, of course, but our goal is to bring multiple products to the market and develop a portfolio of our market products that generate a sustainable revenue stream, and this product, Dapzone 5%, is one example. We have three other products currently under review from the regulator in the United States, the FDA or Food and Drug Administration, and now our intention is to consistently submit products for review, get them approved and launch them, and Dapsone 5% is a great example. That was our most recent launch and it's actually our fourth product on market.
Andrew Musgrave:Okay, and just touching on those other products under review, what are the next steps for those particular products?
Michael Kotsanis:So when you submit a drug to the FDA, they review the dossier. It's thousands and thousands of pages of data that you need to submit in a pre-specified format, hitting pre-specified topics that the FDA wants to see. Without hitting those topics, then you don't get approval. Of course, at the end of that review process the FDA generally asks you questions to see clarification on the product that you've submitted and when they're satisfied, when the FDA is satisfied with your data, they will approve the drug, which means ultimately you can launch the product and it can be sold and used by patients and consumers in the US or wherever the product gets approved.
Michael Kotsanis:Obviously, we're targeting the US. So we have three products under review. They've all been under review for a period of time. Now we expect that two of them are coming up to an approval date. There's certainly two goal dates, with the FDA coming up fairly shortly and that's an important milestone for us. Once we get approval, we can then launch the product into the US market.
Andrew Musgrave:Okay, and the company has a robust R&D focus, so can you elaborate on the significance of your GMP licence facility and how it supports your product development?
Michael Kotsanis:Yeah, sure, we are licensed by the TGA, the Australian Regulatory Authority. The FDA also conducted a remote regulatory inspection last year for us. We don't actively manufacture at our Australian site though. We use contract manufacturers, and we have eight different contract manufacturers around the world. All of those manufacturers are FDA approved and capable of producing the product we've contracted with them at a commercial scale for the US market. So the significance for us isn't that we manufacture. The significance of our GMP licensed facility and capability is that it gives us credibility when we're talking to our commercial partners and our manufacturing partners for that matter, because that implies that we have robust processes, GMP process, around our development capability and can bring products to market. Obviously, the ultimate evidence of bringing products to market is FDA approval, but the TGA license is in fact a stamp of credibility for us when we're talking to potential partners in the US market.
Andrew Musgrave:Okay, and the company has recently secured a short-term funding facility with Radium Capital. So how does this facility support your strategic goals and how are the funds going to be utilized?
Michael Kotsanis:Yeah, that's a good question. We received around $1.49 million, which represents about 80% of the estimated R&D tax incentive for the 10 months to April 2024. It's a short-term facility. It'll be repaid when the R&D tax incentive is actually paid to us by the Australian Tax Office later this year. But that funding facility was put in place to more closely match the timing of our cash flow in relation to R&D expenditure and it's an instrument to help manage our working capital over time and our expenditure is lumpy, based on when we put things through products, through commercial manufacturing for development purposes, or launch mode when we need to manufacture, have products manufactured for commercial purposes. So it's basically to more evenly manage our working capital and cash flow.
Andrew Musgrave:All right, then, and just to wrap things up, what are some of the key milestones and developments that investors can look forward to over the next 12 to 18 months?
Michael Kotsanis:We do have two FDA goal dates coming up fairly shortly in the next few months. Once we receive feedback from the FDA that we have product approvals, we'll obviously announce that to shareholders through the ASX platform and then, once that happens, we'll move into launch mode and those products will be launched as soon as product is available, and that launch will also be communicated to shareholders as well. So our key milestones are always the submission of products for review to the FDA. We announce those. The approval is critical. Obviously, without an approval you can't launch. So once we have approval, the subsequent launch is also key to our success and ultimately our goal is to bring to market a portfolio of products that generate a sustainable revenue stream for the company.
Andrew Musgrave:All right, Michael. Well, thanks for the update today. It's been great to catch up and we look forward to further updates in the upcoming months.
Michael Kotsanis:Thank you, Andrew, and thanks for the opportunity to talk.
Andrew Musgrave:That concludes this episode of ASX Briefs. Don't forget to subscribe and we look forward to catching you on our next episode.