Apricus Biosciences Inc (APRI) Loses a Bull After ED Cream Gets Hit with Problematic CRL


Apricus Biosciences Inc (NASDAQ:APRI) investors cut and run yesterday after the drug maker’s cream designed to treat erectile dysfunction (ED) just got a bad break from the FDA: the dreaded complete response letter (CRL).

Vitaros would have been the first Viagra in topical cream form, using active ingredient alprostadil to help widen blood vessels and subsequently boost blood flow. To make matters worse, this marks the topical ED drug’s second FDA rejection. Once Wall Street caught word, shares went clattering 67% yesterday to the market floor.

H.C. Wainwright analyst Ram Selvaraju is leaving the bullish camp, noting that now that the FDA has targeted safety challenges with APRI’s Vitaros, “the path forward appears unclear.” In other words, what data does the FDA want from APRI “at this point?”

In reaction, the analyst downgrades from Buy to Neutral on APRI stock while slashing the price target from $4.50 to $1, which implies a close to 4% downside from where the shares last closed. (To watch Selvaraju’s track record, click here)

This rejection means that as long as Vitaros exists in its present form, the FDA is denying the cream on challenges with chemistry, manufacturing, and control (CMC) as well as safety apprehensions regarding the 2.5% concentration of DDAIP.HCI enhancer in the formulation.

“We are surprised, as are management, by the FDA’s persistent concern about the carcinogenic risk of the enhancer at 2.5% concentration. It was an issue raised in the first CRL, and the company has addressed it with new two-year animal data in the current NDA package. […] We note that the 2.5% enhancer concentration is in the formulation that is approved and commercialized outside the U.S. In our view, if the FDA continues to consider the enhancer unsafe at 2.5% concentration, there may not be a viable path forward for Apricus to obtain approval for Vitaros in its current formulation. If the company and Vitaros’ licensor Allergan […] decide to pursue approval by using a lower concentration of the enhancer, additional clinical trials would have to be done, and there can be no guarantee that the efficacy would be maintained with a lower concentration of enhancer. Apricus expects to meet with the FDA to discuss the CRL in the coming months,” writes Selvaraju.

Following the CRL, the analyst is reducing his probability of success from 80% to 20% and postponing the earliest prospective approval from 2018 to 2019. By Selvaraju’s calculation, APRI’s firm valuation has taken a hit from $58 million, falling to $15 million.

By the close of September, the biotech player carried $8.5 billion in cash- but if APRI’s present cash position circles $6 million, this may prove insufficient should further clinical trials need to be conducted for the ED cream before a resubmission. Notably, this is APRI’s sole late-stage drug asset.

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