SAN DIEGO—Shifting its focus and resourcestoward generating revenues from commercialization of its drugpipeline—particularly Vitaros—Apricus Biosciences Inc. has sold its whollyowned subsidiary, Bio-Quant Inc., a specialty biotechnology contract researchorganization (CRO), to BioTox Sciences, a CRO based here.
Under the terms of the agreement, announced July6, Apricus will receive a minimum of $5 million in upfront and future earn-outpayments, with the potential for as much as $20 million over the next 10 years,based on BioTox's currently projected revenues. Additionally, Apricus hasretained all NexMed-related research conducted by Bio-Quant.
Founded in 2001, Bio-Quant is one of San Diego'smost experienced CROs for non-GLP contract drug discovery and preclinicaldevelopment services, specializing in oncology, inflammation, immunology andmetabolic diseases. Bio-Quant has clients worldwide. Revenues are generatedfrom preclinical contract services and housing services. During 2010, theBio-Quant CRO business helped advance Apricus' proprietary NexACT technologyand increase its product and product candidate portfolio from four products to13.
With the divestiture of Bio-Quant, Apricus Biohas decided to outsource its primary preclinical CRO work for its NexMedsubsidiary and narrow its focus on commercializing its late-stage products.
"While our Bio-Quant subsidiary has beendriving revenues over the past year, this divesture represents a key strategicdecision for Apricus Bio, as licensing revenues from Vitaros have increasedduring the first half of 2011, and are currently projected to constitute themajority of our revenue stream for the remainder of 2011," Dr. BassamDamaj, chairman, president and CEO of the company, said in a news release."The sale enables us to focus our efforts where we believe we willgenerate the greatest return on investment—speeding our specialtybiopharmaceutical drugs to market."
While Bio-Quant has been instrumental inadvancing the uses of NexACT technology and preclinical pipeline, "we have nowentered the commercialization stage with our first product and intend to focusour efforts on the generation of revenues from our drug pipeline," Damajsaid.
Apricus' top priority is to commercializeVitaros for the treatment of erectile dysfunction. Vitaros was approved formarketing and sales in Canada in 2010, and the company recently filed forapproval in Europe.
Management is in advanced partneringnegotiations for Vitaros in Canada and/or Europe, and expects to announce apartnership in the second half of this year, according to Apricus Bio.
Apricus expects that Vitaros will become themajority near-term revenue driver for the company as early as later this year,according to VFC's Stock House, a news service that offers investing opinionsand ideas on a variety of different stocks, options and companies. Until now,Bio-Quant has been driving the revenue stream for Apricus.
Meanwhile, the company also announced last monththat it filed for Vitaros approval in Switzerland. The move follows a positivereview from the Swiss medical authorities in May, and supplements an approvalapplication filed with the European medical authorities earlier this year. Theapplication in Switzerland was separate from the European filing, given thatthe Swiss regulators do not fall under the EMEA.
"Apricus is also paying close attention to Pfizer'sattempts to extend its Viagra patents. Should Pfizer be successful in theseattempts, it would reduce the competition on the market for Vitaros," VFCstated. "With near- and mid-term catalysts in play for Apricus, it's worthkeeping an eye on developments. Announcing a Canadian partner is key rightnow."
In addition, Apricus Bio is focused ondeveloping and commercializing the other 12 products and product candidates inits pipeline, including Femprox for female sexual arousal disorder, MycoVa fornail fungus and PrevOnco for liver cancer.
BioTox is a CRO founded in 2007 that focusesprimarily on GLP studies and has been interested in expanding its operations inSan Diego on the non-GLP side.
"We were actively looking for opportunitiesto expand our footprint in the discovery CRO area and add more in-vitro and in-vivo disease models to increase the range of services wecurrently offer to our clients," stated BioTox President Sami Abunadi in acompany statement. "Bio-Quant offers a long and successful history innon-GLP preclinical research in areas such as oncology, inflammation,immunology, metabolic diseases and high-throughput screening capabilities. Webelieve that this transaction will not only be revenue and earnings enhancingand highly valuable to our shareholders, but will also provide both a superiorand quicker entry point than the other build or buy options we considered."