Apricus craters as FDA rejects erectile dysfunction cream again

Apricus' stock fell 73% in after-hours trading.

The FDA has issued a complete response letter for Apricus’ topical erectile dysfunction (ED) drug Vitaros for the second time, sparking a massive after-hours slump in its share price.

Apricus stock had been ascending over the last few days on anticipation of a positive verdict for its lead candidate, but pretty much all those gains have been wiped out as investors dumped the company, driving its shares down 73% into penny stock territory.

The San Diego biotech says the FDA has problems with the chemistry, manufacturing and control (CMC) elements of the marketing application, as well as—potentially more seriously—the safety of the formulation. Vitaros is a 2.5% alprostadil cream formulated with DDAIP-HCl, an ingredient designed to increase absorption through the skin. The FDA previously turned down the product in 2008.

Alprostadil has been used for decades as an injectable vasodilator therapy for ED, but has fallen out of favor following the approval of orally active drugs such as Pfizer’s Viagra and Eli Lilly’s Cialis.

By developing a topical formulation, Apricus has been hoping to offer a locally acting alternative to oral drugs that avoids systemic side effects and could be an option for patients who can’t take oral meds because they have other conditions such as cardiovascular disease or diabetes or who have had prostate surgery.

The biotech’s CEO, Richard Pascoe, had no guidance to give on how long the program might be delayed today, saying, “We are assessing the content of the complete response letter with our regulatory experts, including the information that may be needed to resolve the deficiencies and the time it would take to obtain such information with the goal of providing the market an update on our assessment in early March of this year.”

The CRL is also a disappointment for Allergan, which originally developed Vitaros and has an option to regain rights to market the drug in the U.S. With the company unlikely to receive a $25 million opt-in payment from Allergan anytime soon, it is also looking financially stretched. Fourth-quarter results aren’t in yet, but Apricus was sitting on just $8.5 million in cash reserves by the end of the third quarter of 2017, thanks in part to a deal with Ferring which licensed ex-U.S. rights to Vitaros last year.

It also has its RayVa alprostadil formulation in clinical development for Raynaud’s syndrome, but has indicated it is waiting for a partner to come on board for that project before starting phase 2b testing. In 2016, it was forced to shed staff and nearly all its R&D projects after abandoning its fispemifene testosterone-boosting candidate for men with  secondary hypogonadism and sexual dysfunction.