Acrux signs dermatology products deal

Specialty pharmaceutical company Acrux (ASX:ACR) has signed an agreement giving newly-formed San Francisco bay area company Napa Biosciences the rights to use Acrux's drug delivery technology in a number of dermatology products.

Napa will develop prescription products for fungal nail infection, acne, wound healing and baldness, plus over-the-counter products treating acne and pruritis, using Acrux's patented technology to enhance the topical delivery of proven FDA-approved drugs.

In return for the rights to its intellectual property, Acrux will receive milestone payments of US$1 million for prescription products for four defined indications on the completion of the first phase III trial for each product, plus US$1 million for each product on marketing approval for that product in either the USA, France, Germany or the UK.

Acrux will also receive royalties on worldwide sales and a share of any sub-licensing by Napa plus a 20 per cent equity stake in Napa before it completes its next capital raising.

"The business model that Napa has is very similar to Acrux's business model," said Acrux CEO and managing director Igor Gonda. "They take existing, effective, safe drugs that have some kind of problem with delivery, and put them into a better delivery system."

"Napa is a team with experience in development and commercialisation of dermatological products," said Gonda.

Napa's first products will use Acrux's technology and products. While Acrux is currently developing products for trans-dermal delivery, Napa will be developing drugs purely to treat skin diseases.

"The expertise in dermatology [is something] we do not have, and Napa does have it," said Gonda. "Also, they've got access to venture capital financing in the United States for this kind of venture."

Napa is currently looking at raising US$5 million and a condition of the agreement with Acrux stipulates that the company must raise the money by 6 October 2005.

"[Napa] will be responsible for organising and paying for the clinical trials," said Gonda.

While the exact timetable for these trials is not yet known, Gonda said that it will be less than ten years. "Because [Napa] is taking existing drugs and putting them into a better delivery system, the length and cost of these clinical trials, and also the number of clinical trials, should be abbreviated compared with the development of completely new drugs," he said.

At some stage Napa may seek to partner with bigger pharmaceutical companies but Acrux will not be investing money into that venture, said Gonda.