Aytu BioScience (NasdaqCM: AYTU), a specialty pharmaceutical company focused on global commercialization of novel products addressing significant medical needs, announced on Wednesday that their partner SUDA Pharmaceuticals has completed the submission of ZolpiMist™ (zolpidem tartrate oral spray) for regulatory approval to the Australian Therapeutic Goods Administration (TGA). In the announcement, SUDA, who filed the submission and holds the global license to ZolpiMist™ outside of the U.S. and Canada, further disclosed that the TGA has accepted the ZolpiMist™ Marketing Authorisation Application (MAA) and has initiated its review process. ZolpiMist™ is the only FDA-approved oral spray formulation of zolpidem tartrate, the active ingredient marketed in the U.S. under the brand name Ambien®.
The news follows AYTU’s previously announced licensing agreement with SUDA Pharmaceuticals, who is granted rights to sell and sublicense ZolpiMist™ to markets outside of the United States and Canada. Taking swift advantage of their global opportunity in their respective markets, SUDA announced in March that they had already executed multiple sublicensing agreements with multi-national pharmaceutical companies in China, Chile, Brazil, and throughout Southeast Asia. SUDA also stated that they are in active negotiations to secure additional sublicensing agreements that will expand ZolpiMist™’s market presence in Mexico, Europe (specifically in Spain, Italy, France, and Germany), Korea, Middle East, and North Africa, UAE, and Kuwait.
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The AYTU-SUDA Licensing Agreement Opens Global Doors
According to the press release from AYTU in March, the Aytu-SUDA licensing agreement places SUDA in a position to lead commercial development and sublicensing efforts for ZolpiMist™ in major territories outside the United States and Canada, including Europe, Asia, Australia, and Latin America. To reciprocate, the terms of the global licensing agreement call for SUDA to pay Aytu a portion of each upfront licensing payment as well as negotiated milestone payments received from sub-licensees. Also, AYTU will receive ongoing royalty payments on sales generated by SUDA’s sublicensees as ZolpiMist™ is launched in their respective territories.
The combined marketing and sales initiatives from both AYTU and SUDA may help to set in motion an aggressive program to capitalize on a global sleep-aid market that is signaling a continuation for robust growth. In the U.S., big pharma names like Merck (NYSE: MRK) have found a lucrative market for its drug Belsomra®, which has been able to generate upwards of 600,000 prescriptions annually in the United States market. But, even with competitors pushing their best entries into the lucrative sleep-aid market, research is showing that the insomnia market remains largely unsatisfied. And, that’s what ZolpiMist™ is looking to exploit.
In comparison studies, ZolpiMist™ is showing itself to be a potential best-in-class alternative to other marketed sleep-aid drugs because of its fast-acting, oral-spray delivery of zolpidem tartrate, the active ingredient used in market leader Ambien. And, because ZolpiMist™ is easy to use, has faster onset relief, and does not require pill swallowing, it has a strong potential to earn substantial prescription rate growth in a market that sees more than 30-million zolpidem prescriptions written each year in the U.S. market alone.
Also, despite the brand name recognition and success of Sanofi’s (NasdaqGS: SNY) Ambien, critics say that the drug can be slow-acting and sometimes hard to swallow for some patients. ZolpiMist™, on the other hand, metabolizes quickly through the oral mucosa when delivered by oral-spray dosing and is proven to provide a much faster onset of sleep against competitive products. Thus, while Ambien may win the popularity contest for name recognition, the management teams at AYTU and SUDA believe that they can win prescription rate growth through educating both consumers and physicians about the benefits and strengths of ZolpiMist™.
A $50 Billion Sleep-Aid Market – And AYTU Wants A Big Share
The opportunity that AYTU is exploring with the SUDA agreement is that they can take advantage of the proven benefits of ZolpiMist™ and target to a global sleep aid market that is currently estimated to generate roughly $50 billion in annual revenue. And, the market is growing, with estimates expecting the market to rise to nearly $80 billion in 2022. Thus, when taking into account that the U.S. market is roughly a $2 billion opportunity for sleep-aid sales, the strategy to team up with SUDA makes tremendous sense and can expedite global growth for ZolpiMist™.
Now, with AYTU and SUDA looking to get the TGA approval in Australia, investors that were starved for an update can now bank on continued growth outside of the U.S. markets. And, with SUDA expected to add several additional countries from their ongoing negotiations to sub-license ZolpiMist™, the cumulative effect for prescription rate growth may shift into high gear in the coming months.
Investors should also realize that the potential from a combined SUDA-AYTU global revenue model for ZolpiMist™ can be lucrative. During a recent conference call, in fact, AYTU pointed to the potential revenue of roughly $50 million by earning just 1%-2% of the total $50 billion prescription sleep-aid market. Now, with SUDA doing much of the heavy lifting outside of the U.S. and Canada, not only is achieving that number possible, but exceeding it once the marketing and sales programs are fully implemented may be likely.
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