Aytu BioScience buys US commercial rights to Natesto Nasal Gel

Natesto is the first and only nasal formulation of testosterone approved by the U.S. Food and Drug Administration (FDA) as a replacement therapy for men diagnosed with hypogonadism (low testosterone, or "Low T").

Aytu anticipates further expanding its current urology-centric sales force and initiating its promotion of Natesto into the $2 billion U.S. testosterone replacement market in July 2016.

The profile of Natesto is unique among currently marketed testosterone products, offering convenient and simple administration via a nasal gel applicator within seconds, but without the risk of testosterone transference associated with other topical products such as AndroGel and Axiron, which carry "black box" warnings on their product labels. Natesto was approved by the FDA in May 2014 and is protected by multiple Orange Book-listed patents.

Josh Disbrow, Chief Executive Officer of Aytu BioScience, stated, "Securing the rights to commercialize Natesto in the United States represents Aytu’s most significant transaction to date. This partnership further expands on our strategy to build a complementary portfolio of unique urology assets, and we expect Natesto to be a key value driver for Aytu going forward. Approximately thirteen million men in the U.S. have a form of Low T, and we believe that Natesto has significant potential to satisfy the needs of many men that are not satisfied with current Low T treatment options.

"We look forward to building a strong and long-lasting relationship with Acerus based on successfully establishing Natesto as an important treatment option in the U.S. Our current sales force is already preparing to engage prescribers given our focus on urologists and the key prescribers of testosterone replacement therapies."

Tom Rossi, President and Chief Executive Officer of Acerus, stated, "We are very pleased to announce Aytu as our U.S. commercial partner for Natesto. Management’s proven track record of launching and scaling successful commercial operations within the specialty pharmaceutical industry, and the fact that Aytu is focused on building a significant presence in men’s health, were instrumental in reaching this decision.

"We look forward to strengthening our relationship with Aytu in support of the planned U.S. launch of Natesto, and to supporting its growth in this important therapeutic market."

Under the terms of the exclusive license, Aytu will pay Acerus a total of $2 million upfront, and will additionally purchase of $2 million of Acerus common stock. Additional payments totaling an aggregate of $6 million payable in fiscal 2017 will also be made.

Acerus will also receive a supply price to manufacture the product calculated as a percentage of the U.S. net sales of Natesto, throughout the term of the agreement, which will last until at least February 2024, with the maximum milestone payable upon achievement of $125 million in annual U.S. net sales.