Just a few years back, biotech Acrux had a healthy share price – it topped $4 at one stage which valued the company at over $600 million – and was paying dividends.

Now, you can buy the shares for a fraction of that – 26c as we  speak – since its main drug, Axiron, a testosterone, is facing mounting competition from generics which has slashed a healthy royalty stream.

And like Mayne Pharma and IDT Australia, Acrux is seeking to transition itself to focusing on the generic drug market in the US — just as that market has imploded, more than halving the share prices of Mayne Pharma and IDT Australia over the past year.

The loss of exclusivity over its Axiron drug in the US, which treats low testosterone, has hit its stream of royalty income from sales of the drug, as generic rivals have muscled in.

So, with $34 million in the bank, the pressure is on as Acrux pushes to enter the generic drug market in the US in a bid to to secure its financial future.

This saw the R&D spend hit $9 million in the year to June which could head higher as it moves further down the path of transitioning to a generic drug developer.

Near term, Acrux’s biggest bet is on an anti-fungal treatment.

In the next few months Acrux is to meet with the Food and Drug Administration — America’s industry regulator — as it tries to sort out how to access the market. Sales are likely from 2019.

Acrux has seven generic drugs in the laboratory, and reckons it will have about a dozen drugs under development by mid-2018, with the pressure on to get new products to market as its royalty stream from Axiron dwindles.

“$34 million is a very healthy cash balance,” Acrux chief executive Michael Kotsanis says.

“We’re ramping up the number of generics we are developing from seven to 12. Axiron royalties are in substantial decline and our expenses will grow as we move through the development plan.

“We’re actively using that cash to invest in a promising part of the US market where we can utilise our expertise.”

With their cost advantage generics now account for around 90 per cent of all drugs sold in the US, but command only around 20 per cent of the industry’s revenues, which is still dominated by the larger branded products.

The competition between generics and branded products is most intense in the oral and injected drug markets, Acrux’s Kotsanis says, with less competition in the transdermal or topical drugs market, where treatments are typically administered directly to the skin.

As a result, Axiron is confident that by targeting this sector of the market, this should help maximise revenues since the position of generics here is far smaller.

But it is the in-house developed treatment for fungal infections of nails which has the most near-term promise.

Its product is better than rivals, which are only around 17 per cent effective, Kotsanis says.

If he is correct, and Acrux wins access to the US, this could open the door to a small market which Acrux could dominate.

“We’re at a very interesting time for the company,” Kotsanis argues. “We’ve chosen to invest that cash into very interesting markets which are underserved.

“We are on a ramp up. We see a significant number of opportunities to pursue.”