Botanix Pharmaceuticals (ASX:BOT): Did it deserve to crash over 50% earlier this week?

Botanix Pharmaceuticals (ASX:BOT) crashed over 50% back on Tuesday after an update that left investors disappointed. A crash of this magnitude would suggest the FDA knocked back its drug or that it failed a clinical trial.

With Botanix having commercialised its treatment, neither was the case, so it’d have to be a pretty bad sales update. Indeed it was a sales update…but was it that bad to warrant ~$300m in shareholder value evaporating? Let’s take a look.

Who is Botanix Pharmaceuticals? And what is Sofdra?

Botanix has a gel (Sofdra) for the treatment of primary axillary hyperhidrosis (excessive sweating). You can only imagine that it would be a big problem, given how bad occasional sweating can be for us. Obviously it impacts people’s social lives, is a source of shame and stigma as well as anxiety that it will happen.

Sofdra works by binding selectively to the M3 receptors in the sweat gland and blocking acetylcholine so that sweat can be inhibited. There are 10 million people in the US for whom BOT’s drug could make a big difference – 3.7m who are currently seeking treatment and another 6.3m or so who have hyperhidrosis but are not seeking treatment. And Botanix’s model is driving sales through dermatologists, but also through its own platform that provides administrative and patient access support and provides seamless fills and refills.

A torrid journey to market, but a journey that looked good

For Botanix, has been a long journey to the market with a number of setbacks, particularly in 2023 when the FDA delayed approval because it wasn’t satisfied the instructions on the label were capable of being followed. Sofdra was FDA approved in mid-June 2024, making Sofdra the first and only new chemical entity approved for its indication.

The roll out began in February 2025 and big things were expected. Botanix raised $40m at $0.33 per share back in April, telling investors new patient arrivals were trending to over 500 per week and prescriber numbers were over 400 per week, plus 100% of eligible patients were ‘refilling’.

The company says things are still good, but investors are not convinced

Well, how can you say investors are convinced when shares more than halved? The bullet points would suggest there is good news including A$25m in gross sales in 6 months, that 2,300 unique prescribers wrote Sofdra prescriptions and that 16,000 prescriptions were filled across 6,700 patients.

‘We are pleased with the overall performance of Sofdra since its launch in February 2025,’ lauded Chairman Vince Ippolito.

‘The launch trajectory of Sofdra is trending in a positive direction, and we expect continued growth’.

With the 50% share price plunge, there’s a rapid disconnect between management and investor perceptions, and either of them could be wrong. Looking at it from the outside, we think the key concern is that growth is slower than investors would’ve expected.

Botanix boasted it was getting 500 new patients a week in April. In June, it got 957 new patients…for the entire month which would be 239 per week. Now yes, the company most likely is telling the truth that there are refills, but this may be a moot point if the number of new patients slows down.

If you look at the number of unique prescribers, this is slowing too with 314 new ones in June compared to 367 in May and over 500 in the months of April and March.

Investors in social media raised other concerns like the perceived cash burn rate and the timing of revenue receipts (i.e. when will Botanix actually get that money in the bank). The former of these may become more of a concern as the company told investors it was making further investments to accelerate growth including hiring more sales staff.

Conclusion

The question we put in the title of this article is did this company deserve to crash 50%? Short answer is no, not 50%. But it did deserve to fall on the back of an update like this, even if a 25-30% fall would have been more reflective.

It will take some months of accelerated growth for the company to return to levels seen back in April when it raised $40m in fresh institutional capital (At $0.33 per share). Only a return to previously seen growth levels will restore investor confidence in the company.

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