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Biotech Stock Mailbag: Apricus, Avanir

Stocks in this article: APRI AVNR PATH AGN PFE

BOSTON ( TheStreet) -- An abbreviated Biotech Stock Mailbag for this holiday week.

Aaron L. asks:

I'm interested in your outlook for Apricus BioSciences (APRI). The new management seems to have a better handle on the company in that lots of the old drugs have been sold off and now they intend to focus on Vitaros and Femprox. Is this a good strategy for Apricus?

Apricus has done a good job cleaning up the mess left by departed CEO Bassam Damaj, who basically ran the company into the ground with a series of disastrous product acquisitions.

Damaj resigned on Nov. 7, 2012. Two months later, Apricus announced plans to focus on Vitaros for erectile dysfunction and Femprox for female sexual disorder.

Investors seem to be responding positively to Apricus' new direction. The gains this year are modest but better than steady losses racked up in the past. APRI Chart APRI data by YCharts

Apricus' considerable challenge moving forward will be to turn Vitaros into a successful ED product. Vitaros is a cream containing alprostadil, which works by diluting blood vessels. Using Vitaros, however, is not as easy as smearing the cream on the penis and waiting for the erection to happen. To be effective, Vitaros has to be applied inside the head of the penis, through the opening to the urethra.

It's a five-step process according to Apricus' instruction sheet:
1. Wash hands. Ready Vitaros dispenser (which resembles a syringe without the needle.)
2. Grasp tip of penis and "gently manipulate" the opening.
3. Apply as much Vitaros cream as possible to the opening of the penis by holding tip of dispenser above the opening and slowly depressing the plunger over 5-10 seconds. Apricus warns men not to insert the Vitaros dispenser into the penis.
4. Hold the penis upright for approximately 30 seconds to allow the cream to penetrate.
5. Wash hands because the cream can be irritating to the eyes.

Doesn't that sound like fun? I won't harp on it here, but Vitaros' main side effects are localized burning sensation and skin irritation -- neither of which are necessarily the nicest feelings to experience while trying to have sex.

Apricus isn't stupid. The company knows Vitaros is not a convenient or desirable ED therapy compared to Pfizer's (PFE) Viagra or Eli Lilly's (LLY) Cialis. It's going to be a niche product used only by men cannot take the ED pills for medical reasons or for whom ED pills don't work. Apricus believes this slice of patients is financially significant, but it's up to the company to prove it.

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