Shareholders of Acrux Limited (ASX: ACR) were rendered helpless in July as their shares plunged 20%, falling from 85 cents to just 68 cents.
Acrux is a junior pharmaceutical business which a market capitalisation around $120 million. The company uses innovative technology to administer medicines through the skin, including its flagship Axiron product which is used to treat adult males who have low or no testosterone.
Unfortunately for investors, Axiron sales were well down for the three months ended June 30 2015 at just US$32.4 million, compared to the US$39.1 million reported in the prior quarter. Sales for the period were also more than 31% lower than the prior corresponding period (the three months ended 30 June 2014).
Indeed, this can partially be attributed to stricter requirements issued by the US Food and Drug Administration (FDA) surrounding testosterone therapy products such as Axiron.
As fate would have it, labelling on the drug now needs to inform users of the potentially increased risk of heart attack and stroke while doctors have also been ordered to only prescribe the treatment to men who suffer low testosterone caused by certain medical conditions. That is, doctors can no longer prescribe the treatment due to ageing or various other reasons unless the reasons are FDA-approved.
Acrux's shares fell to a 52-week low of just 62.5 cents early last week but have since recovered to trade at 73 cents – up 7.4% since the beginning of the month. While there is no telling whether or not the shares can continue to climb in the near-term, Acrux looks like a company Foolish investors should avoid for now.
