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FDA Approvals Expected to Put Apricus Bio on Profitable Path

APRICUS BIOSCIENCES INC.

President and CEO: Bassam Damaj.

Revenue: $4.97 million in 2010; $2.97 million in 2009.

Net loss: $29.51 million in 2010; $32.04 million in 2009.

No. of local employees: 20.

Headquarters: San Diego’s Sorrento Valley area.

Year founded: 1987.

Stock symbol and exchange: APRI on Nasdaq.

Company description: A pharmaceutical research and development company with multiple products centered on its patented drug delivery system, NexACT. Therapeutic areas include oncology, sexual dysfunction, autoimmune diseases, and inflammation.

August has been a huge month for San Diego-based Apricus Biosciences Inc.

The publicly held pharmaceutical company gained clearance from the U.S. Food & Drug Administration to sell two over-the-counter topical medications that incorporate its NexACT technology, which loosens space between cells to allow drugs to penetrate the skin. And it appears that there are many more to come.

“This is spectacular,” said Ed Cox, vice president of investor relations for Apricus. “We have a new way to make money.”

The company, which does not currently have any products on the market in the U.S., aims to turn a profit for the first time in 2012. The duo of FDA clearances came at a speed that surprised company leaders, Cox said.

A Sales Offensive

It prompted Apricus last week to set up a new company division focused solely on consumer health, through which it intends to build a collection of at least 10 consumer products by the end of the year and partner with a company that specializes in over-the-counter distribution and sales, he said.

“This will give us the ability to generate revenues in the near term,” Cox said. “Once we partner our products we can get them in the market very quickly.”

On Aug. 18, Apricus announced that it got the FDA’s go-ahead to sell an anti-fungal drug called Tolnaftate-D. The active ingredient in the drug is an already approved anti-fungal agent that’s currently used to treat jock itch, athlete’s foot and ringworm. It’s sold under several third-party brand names, most notably Merck’s Tinactin and Novartis’ Lamisil AF.

Less than a week later, on Aug. 23, Apricus got news that its second product, an anti-itch drug called Hydrocortisone-D, also won the FDA’s nod. The active ingredient of that drug is hydrocortisone, which is also an already-approved anti-itch agent used to treat insect bites, poison ivy and psoriasis, among other things. It is sold under brand names such as Cortizone, from Chattem/Sanofi Aventis, and Cortaid, from Johnson & Johnson.

Cox said that Apricus’ products may be rebranded when the company partners with a pharmaceutical marketing company.

With the approval of these drugs, the mainstay of the Apricus’ NexACT technology is now part of the U.S. monograph — the underlying FDA regulatory document. That means that NexACT can be combined with active ingredients listed in the monograph to develop a whole range of consumer products that can be sold over the counter in the U.S.

Opportunity Multiplier

“We have been working on obtaining such status for over eight months,” said president and CEO Bassam Damaj. “Being added to the monograph permits us to work with other companies in developing combinations of our NexACT technology with the potentially hundreds of active ingredients listed in the monograph.”

Cox said the importance of NexACT’s addition to the monograph “cannot be overstated,” and analysts who cover Apricus seem to agree.

Even though the company is seeking FDA approval for a potential blockbuster drug RayVa, which treats a condition called Raynaud’s phenomenon, and is nearing the commercial launch in Canada of its first product, Vitaros for erectile dysfunction, “the primary potential value of Apricus Bio remains, in our opinion, its NexACT drug delivery technology,” analyst Cathy Reese, with Opus Group Financial in Fort Lauderdale, said in a research report.

Including RayVa and Vitaros, Apricus has a current pipeline of 14 products and product candidates.

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