Acerus and Aytu Bioscience to Co-promote Natesto in the United States
31 July 2019 - - Canada-based specialty pharmaceutical company Acerus Pharmaceuticals Corp. (TSX: ASP) (OTCQB: ASPCF) will be taking an expanded role in the commercialisation of Natesto in the US, the company said.

The company has entered into an amended and resaid licensing agreement with Aytu BioScience, Inc. (NASDAQ: AYTU), which will, upon closing, move the partnership from an out-license model to a co-promotion arrangement that the companies believe will leverage their collective product, marketplace and Men's Health experience to capture a significant share of the US market for Natesto.

Under the terms of the new agreement, Aytu returns the NDA for Natesto in the US back to Acerus. Going forward Acerus will assume all regulatory and clinical responsibilities and costs for the product in the US.

Acerus will take on a more expansive role in matters such as US marketing, reimbursement and medical strategy as part of the companies' joint commercialization committee, and will launch a specialist sales force focused on urologists and endocrinologists (Acerus Sales Channel).

Aytu will retain its primary care sales force (Aytu Sales Channel) and will continue to book all product net revenue while serving as the exclusive US supplier of Natesto to wholesalers, pharmacies and other customers that receive a direct shipment.

Financial payments will be based upon a tiered level of net revenue, post cost of goods sold, based on annual sales performance in the respective Acerus and Aytu Sales Channels.

To establish a high performing commercial footprint in the US, Acerus has engaged Syneos Health (NASDAQ: SYNH), a leading integrated biopharmaceutical solutions organization including the industry's largest Contract Commercial Organization, to be its commercialisation partner.

Syneos Health has extensive experience in Men's Health and with Natesto, and offers an end-to-end model that will enable Acerus to rapidly stand up a US commercial team; to scale across all aspects of commercialisation, including medical and regulatory affairs, managed markets, marketing and sales; and will provide greater flexibility and effectiveness in resource deployment.

Low testosterone is estimated to affect approximately 39% of men over 45 years old in the US; however, because the condition is underdiagnosed the overall prevalence is uncertain.

While patients have access to other treatment options, Natesto is unique in that it is administered in seconds via a convenient and simple nasal gel applicator, addressing the risk of testosterone transference associated with other topical products, which carry "black box" warnings on their product labels.

Natesto remains fully available and accessible to patients in the US.

As part of the amended and resaid partnership agreement, Acerus did not pay Aytu to regain the marketing authorization for Natesto in the US.

The royalty structure currently in place will be replaced with a pay-for-performance incentive structure intended to drive Natesto revenue growth in both Sales Channels.

The revised agreement extends the partnership to the later of 2027, the launch of an FDA approved, AB-rated generic equivalent to Natesto, or the expiration or invalidation of the last to expire Natesto patent.

Aytu will now pay Acerus a variable rate commission for sales made in the Acerus Channel as per the following schedule:

Up to the current status quo of Natesto net sales (USD 0 5.5m), Acerus will receive a commission equivalent to 25% of net revenue generated;

For the next USD4.5m in net revenue (USD 5.5m 10m), Acerus will receive a commission equivalent to 50% of net revenue generated; and

Above USD 10m in net revenue, Acerus receives a commission equivalent to the combination of 90% of urologists and endocrinologists related net revenues and 10% of Aytu's sales channel net revenue generated.

By investing into the commercialization effort behind Natesto in the US and continuing to work in partnership with Aytu BioScience, Acerus should realize increased financial value as growth in prescription volume and net revenue is accelerated.

While Acerus will receive a higher blended percentage of net revenue as it grows to USD 10m to offset its increase in commercial investment, in the long run both companies will benefit as improved sales will drive an increase in net revenue that will be split more equally.

Closing is conditioned upon Acerus raising capital, whether by way of equity or debt, of at least USD 10m on or before January 29, 2020.

Natesto is a nasal gel formulation of testosterone developed by Acerus Pharmaceutical Corp. and indicated as a replacement therapy for men diagnosed with conditions associated with a deficiency or absence of endogenous testosterone (hypogonadism).

It is the first and only nasally-administered testosterone product approved by the US Food and Drug Administration, Health Canada and South Korea Ministry of Food and Drug Safety, available in a 'no-touch' dispenser with a metered dose pump.

Acerus Pharmaceuticals Corp. is a Canadian-based specialty pharmaceutical company focused on the commercialization and development of innovative prescription products that improve patient experience, with a primary focus in the field of men's health.

The company commercialises its products via its own salesforce in Canada, and through a global network of licensed distributors in the US and other territories.