Testosterone-therapy manufacturer Acrux Limited (ASX: ACR) today posted quarterly results showing sales of its Axiron product were up more than 19% on the prior quarter to US$47.1 million. Acrux also earned a milestone payment of US$25 million in March 2014, as the worldwide net sales of Axiron in the 2013 calendar year exceeded US$100 million.
Acrux lost around two-thirds of its market value from January 2014 after the U.S. Food and Drug Administration (FDA) announced that it was looking into potential adverse health effects of testosterone therapies like those produced by Acrux. This news spooked investors who rushed for the exits fearing the downstream effects on the sales of Axiron could be catastrophic.
However, today's news that quarterly sales have increased over the quarter ending March 2014, suggests medical professionals and users are still comfortable that the health benefits of testosterone therapy for men outweigh the known risks. This is also the FDA's current position, although it is yet to release the results of its current investigation.
Acrux has been one of the ASX's most shorted stocks recently as speculators sought to profit from the negative news flow surrounding the business. However, today's price spike may in part be a result of short covering, an effect that occurs when short sellers rush to close positions in the belief a stock has bottomed. This effect was also seen recently when another heavily-shorted biotech, Starpharma Holdings Limited (ASX: SPL), announced it had won regulatory approval to market its scientifically-innovative condoms in Japan and Australia.
Acrux is not out of the woods yet, but today's news suggest the worst of the storm may have blown over with potential for clear blue skies ahead.
Shares were up 9% to $1.26 in early trade.
