Shares in biotech Acrux have plunged more than 25 per cent after a US licensing deal for its testosterone replacement therapy was ended.
Shares in biotech Acrux have plummeted after Acrux and US-based pharmaceutical giant Eli Lilly and Co agreed to end their licensing deal for Axiron, a testosterone replacement therapy for men.
Axiron was the first testosterone replacement product that could be applied like a roll-on deodorant on the armpit of a patient.
Melbourne-based Acrux secured a licensing deal with Eli Lilly in 2010, which Acrux described at the time as one of the largest, if not the largest, licensing deals undertaken by an Australian biotech company.
Under the deal, Acrux could receive up to $US335 million plus royalties from Eli Lilly in return for exclusive rights to commercialise Axiron.
"Termination of the license in the US is effective immediately and termination of license outside the US will be effective 90 days thereafter," Acrux said in a statement on Wednesday.
"Global rights to the product will revert to Acrux."
Shares in Acrux dropped 7.5 cents, or 28 per cent, to 19 cents, reducing the company's market value by $12.5 million.
Acrux said generic treatments for testosterone deficiency were creating commercial uncertainty, and the testosterone market was declining.
The costs of a clinical trial required by the US Food and Drug Administration to determine whether an increased risk of heart attack or stroke exists among users of testosterone were also uncertain, the company said.
Acrux is also appealing a US court decision that held that patents for the Axiron formulation were invalid.
Generic versions of Axiron were launched in the US by pharmaceutical firms Perrigo and Teva in July and August.
Eli Lilly and Prasco also launched an authorised generic version of Axiron, from which Acrux received royalties on sales.
Acrux said it is committed to asserting its intellectual property rights for Axiron and the court appeal on the patents issue will continue.
Eli Lilly's global sales in the year to June 30 of $US143 million was down from $US149.3 million in the prior year.
Acrux's royalty revenue from Axiron fell 10 per cent to $A22.8 million in 2016/17, refelecting the decline in global sales.