Testosterone therapy manufacturer Acrux Limited (ASX: ACR) today posted net sales of US$39.1 million for its Axiron testosterone therapy product for the first quarter of 2015. The company also said it will benefit from an exchange rate tailwind compared to the prior corresponding period (pcp) thanks to the strengthening US dollar.
The stock lifted 5.3% to 89.5 cents in morning trade.
The sales result is flat on the pcp and likely coloured by the shadow of a US Food and Drug Administration (FDA) investigation into the safety of testosterone therapy treatments prescribed to men. It's worth noting the latest sales figures will only reflect a limited impact from the FDA statement released in early March 2015. At that time the FDA reiterated its requirement that the treatment should not be prescribed to men who have low testosterone for no apparent reason other than ageing.
The FDA also requires more stringent labeling on testosterone products to note the possible increased risk of heart attack and stroke in patients using the therapy.
The labels already carry heavy health warnings and finding room for more will be a task in itself, especially for a management team that appears light on effort. Acrux's most recent half-year presentation was the feeblest I have ever seen provided by a public company and in my opinion the stock is one to avoid.
Testosterone therapy does seem to have strong underlying demand, but given the regulatory risk and management quality I think there are far better opportunities available for investors with a little cash to spare.
