Is Aytu BioScience’s (NasdaqCM: AYTU) Natesto® About To Upend The Testosterone (TRT) Drug Market?

April 18 12:34 2019
Is Aytu BioScience\'s (NasdaqCM: AYTU) Natesto® About To Upend The Testosterone (TRT) Drug Market?
AYTU is capitalizing on a combined $7 billion market opportunity with three potentially disruptive products on the market – Natesto®, Zolpimist™, and Tuzistra® XR. Natesto®, AYTU’s flagship product, is showing first of its kind results that may position AYTU to benefit from a TRT market potential of more than $1.8 billion.

Aytu BioScience (NasdaqCM: AYTU) stock has been on a roll, trading higher by roughly 150% YTD. However, with AYTU now capitalizing on three potentially disruptive products on the market with Natesto®, Zolpimist™, and Tuzistra® XR, the path of least resistance for the stock may be to continue the upside momentum.

And, even as investors enjoy the increasing attention from analysts at Northland Capital, Ladenburg Thalmann, and Zack’s, who have each upgraded the stock, the near-term focus should still reside with Natesto®, AYTU’s flagship testosterone replacement therapy (TRT) drug. In just the past three months, Natesto® has published some compelling data from its ongoing Spermatogenesis Study that may position the drug as a best-in-class alternative to competing TRT drugs like Androgel®, Testim®, and Axiron®.

Hence, if the final results confirm the previously reported data, then Natesto® may serve up a significant catalyst for AYTU that can lead to substantial market share growth for the drug and in turn, provide a likely lift to the stock price for AYTU. Moreover, with the final results from the Spermatogenesis Study expected this summer, investors won’t have long to wait to know if Natesto® will ignite a paradigm shift in the TRT market.

So, what’s so compelling about Natesto®? Well, several things come to mind, and each will play an important role in positioning Natesto® as the TRT of choice for prescribing physicians and patients.

Natesto® Gives Aytu BioScience A Lift

Natesto®, AYTU’s flagship product, is well on its way to proving itself as a best-in-class TRT drug and is continuing to distance itself from its TRT drug competitors. From a safety perspective, there is no comparison. Currently, Natesto® is the only FDA-approved, nasally administered TRT on the market and is not required to have the most severe of FDA warnings, the Black-Box warning. It’s closest competitors can’t say the same, with market leaders like Androgel®, Testim®, and Axiron®, each mandated by the FDA to include the severe Black-Box warning on its packaging that highlight the severe side effects associated with each drug. Not only is Natesto® the proven leader from a safety perspective, but from a results standpoint, it is showing distinct characteristics that have resulted in increased physician attention, record-breaking revenue contributions, and all-time high new prescription rates for the past four quarters.

Possibly the most significant advantage besides user safety is that men taking exogenous testosterone as a short-acting nasal gel formulation, specifically Natesto®, saw preserved sperm counts and motility, along with improved testosterone levels, according to an interim analysis of a post-approval clinical trial. Moreover, that benefit is significant, leading Tom Masterson, MD, chief urology resident at the University of Miami to believe that Natesto®, because of its short-acting formulation, “can mimic normal physiology.”

Other physicians are agreeing with that theory, with the lead investigator of the Spermatogenesis trial, Ranjith Ramasamy, MD, hypothesizing that the shorter duration of action of testosterone in the nasal gel formulation would result in some conservation of gonadotropin-releasing hormone (GnRH) pulsatility, less inhibition of the HPG axis, and preservation of spermatogenesis. Thus, the strength in Natesto® may actually lay in its short-acting, relatively low dose of 11 mg of testosterone per dose three times per day compared to other exogenous testosterone formulations on the hypothalamic-pituitary-gonadal (HPG) axis that are known to inhibit spermatogenesis.

Preliminary Results Of Spermatogenesis Study Are Compelling

The preliminary results from the ongoing SpermatogenesisStudy are proving that less may be more. In a recent interview, Dr. Ramasamy, Director of Reproductive Urology at the University of Miami, noted that “the levels of testosterone in men rise about an hour or 2 after administration [of Natesto®] and seem to drop off about 2 to 4 hours after the peak.” According to Dr. Ramasamy, “that is closer to normal physiology than other delivery systems in which the levels of testosterone are pretty high during the day and therefore could lead to some of the side effects that we see with testosterone.” Notably, Natesto® is not showing those similar adverse side effects common to most every marketed TRT drug on the market.

To date, the phase 4 prospective study enrolled 56 men aged between 18 and 55 years who had low levels of testosterone (baseline mean, 233.97 ng/dL), with the median age at 37 years old. Compared to other studies, the Spermatogenesis trial is evaluating mostly younger men that have one or two hypogonadal complaints, with the typical issues they face being lack of energy, fatigue, and some level of erectile dysfunction. However, in addition to Natesto® providing an improvement of these symptoms, one of the most notable differences thus far is that Natesto® is not making the quality of life worse for users, a distinction from other testosterone replacement drugs that can cause severe and unintended side effects.

Of greater importance, however, is that motility (live, moving sperm) as preserved at a median of 51.5% after six months of therapy. That distinction may prove that Natesto® could be used in men who have low testosterone levels and are interested in preserving fertility. To support that theory, Dr. Ramasamy noted that the investigative team is seeing early confirmation of their initial hypothesis about the nasal gel formulation in this interim analysis. He remains confident that because Natesto® is a short-acting formulation of testosterone that is dosed in lower quantities that some of the GnRH pulses and the LH and FSH that are released by the pituitary gland are still maintained, compared with the other forms of testosterone therapy, which can cause complete suppression of the hypogonadal-pituitary-gonadal axis.

Natesto® Study Showing First Of Its Kind Results

What can’t be understated is that the trial results thus far have generated a first of its kind result and offers the only known data that may show Natesto® to be the only TRT drug able to provide the benefits of testosterone replacement while at the same time preserve fertility. More specifically, Natesto® may become the only TRT drug that can make such a claim. And, if the results are confirmed later this summer, the market opportunity for Natesto® can be substantial and exclusively target the approximately 20% of men with Low T (2 million men or more) that are still in their ‘family formation’ years, but because of the effects that TRT can have on fertility, until now couldn’t be treated with testosterone.

However, beyond serving just that specialized market segment, Natesto®, in general, may be the best choice for treating physicians to prescribe as an overall best-in-class TRT option. Notably, Natesto® is safer, and it is proven to work as effectively as other marketed TRT drugs, has a shorter duration of effect, and can be dosed conveniently throughout the day. Also, with the final data release from the Spermatogenesis trial expected in roughly three months, AYTU could be in store for a catalyst of significant proportion. Moreover, if the results confirm the data already released in previous announcements, the rewards for both AYTU and its investors can be substantial. The potential for Natesto® to virtually own a 20% subset of the $1.8 billion market population could is very real. However, having a sizable market share in addition to that 20% sub-market opportunity adds fuel to the Natesto® growth strategy and to the overall marketing objectives for Natesto.

A Rally Far from Over For Aytu BioScience?

The rally in share price may indeed get attributed to the expectations for Natesto®. Not only is the drug writing its own story, but the clinical significance of the Natesto® Spermatogenesis Study is likely to be a game changer for how doctors treat their TRT patients. Perhaps that’s why few analysts or investors have shrugged at the statement made by the lead investigator in the Spermatogenesis study, who commented that if the results remain true, Natesto® could cause a “paradigm shift” in how men with low-T are treated, especially to those who wish to preserve their fertility.

If Natesto® is indeed a game-changer that can cause a paradigm shift in how men who need testosterone get treated, that may be justification for the recent runup in share price. However, with Northland Capital setting a 12-month price target of $10.00 per share, substantiated by their valuation models, the recent surge may only be a prelude to future appreciation.


Disclosure: The author is LONG Aytu BioScience stock and will not buy or sell any shares in AYTU within 72 hours after this article’s publication. For full disclaimer, please click here. This article also appeared on Soulstring Report.

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