AFT 'swimming with the tide against opioids' with Maxigesic, says CEO

Friday 4th August 2017

AFT Pharmaceuticals' combination ibuprofen/paracetamol painkiller Maxigesic is well-positioned to capture Australian and US market share as those markets move away from opioid painkillers such as codeine, managing director Hartley Atkinson told shareholders at the company's annual meeting in Auckland.

In Australia, the company believes its sales of 26 million doses of Maxigesic in the last financial year should grow strongly as codeine-based painkillers are phased out as over-the-counter pain remedies towards the end of the 2017/18 financial year.

And while Maxigesic is not yet licenced for sale in the US - a process which is also not expected to start until late in the next financial year - the product was "swimming with the tide against opioids", Atkinson said. Opioid addiction has reached epidemic proportions in the US and is responsible for thousands of deaths annually.

Independent director Doug Wilson told shareholders: "Maxigesic is an alternative to opioids in the US market because it's stronger than existing non-opioid pain relief."

The US Food and Drug Administration has accepted Maxigesic's medical properties but the North American markets of Canada, the US, and Canada are not yet among the 124 countries where Maxigesic could, in theory be sold.

In Australia, some 750 million doses of codeine-based painkillers were distributed last year, and AFT believes between 40 and 47 percent - between 300 million and 352 million tablets annually - of customers will switch to an over-the-counter alternative analgesic. AFT's market share in Australia currently sits at 1.5 percent, compared with 7 percent in New Zealand.

New Zealand market growth is constrained by the fact Maxigesic is not available for prescription by doctors because the drug is not funded by the government buying agency Pharmac.

"Pharmac would be looking for a very, very low price that wouldn't be commercially attractive to us," said Atkinson. "It's already priced very keenly, but Pharmac would want a much lower price."

However, different markets called for different strategies. For example, the new Italian market for Maxigesic was showing strong growth from prescriptions.

In answer to questions from a shareholder representing Milford Asset Management, Atkinson confirmed the firm expects to break even either late in the current financial year or early next year after listing on the NZX two years ago and investing heavily in growth that has pushed the company into two years of planned losses.

Atkinson said it was too early in the year to confirm earnings guidance, but there was "nothing that's surprising us untowardly".

Independent director Nate Hukill, representing 13.4 percent shareholder and specialist healthcare investor CRG, praised AFT as a company that had grown impressively with very little capital deployed and which was only at the beginning of its potential to sell in multiple global markets

"There's no reason AFT can't be one of the most successful companies in New Zealand history," he said, observing that "making it through our due diligence process puts AFT in the top 2 percent of companies we consider worldwide".

Atkinson said it was only the 2018 financial ear that Maxigesic would become AFT's largest single product and start driving overall growth, with 80 percent of planned rollouts achieved by 2020.

"That's when sales will be much more significant from Maxigesic," he said.

(BusinessDesk)

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