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3. Bull, Bear & Beyond – AFT Pharmaceuticals: executive interview
7 Plays1 year ago
AFT Pharmaceuticals (NZX: AFT) is a commercial-stage specialty pharma company with strong roots in Australasia, its own salesforce and a growing global presence through licensing and distribution agreements.
In this interview, we speak to AFT co-founder and CEO, Dr Hartley Atkinson, about the company’s business strategy and key growth drivers as well as some of the exciting developments investors should look forward to in the next 12–18 months.
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About ‘Bull, Bear & Beyond’
'Bull, Bear & Beyond': features candid conversations with senior executives and from our own team of experts from across industries, exploring strategy, innovation, and the opportunities shaping their markets and 60-second pieces are a compressed summary of content designed to convey our message in a single, easily shareable hit.
About Edison:
Edison is a content-led IR business. We believe quality investment content should inform all investors, not just brokers. Our mission: engage and build bigger, better-informed investor audiences for our clients.
Edison covers 50+ investment trusts, read about them here: https://www.edisongroup.com/equities/investment-companies/
Original interview published on 26/09/2024 and reposted as a podcast
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Transcript
Welcome and Introduction to AFT
00:00:07
Speaker
Hello, I'm Sue Romanoff and today we're joined by the CEO AFT, commercial stage specialty pharma company based in New Zealand with Global Distribution. Welcome Hartley.
00:00:19
Speaker
i thanks very much, Sue.
Overview of AFT's Business and Products
00:00:21
Speaker
Great. So could you start with an introduction with AFT and your business model? Sure. We're a business that's listed on the Australian New Zealand Stock Exchanges, and we have a large sort of sales force around Australia and around New Zealand.
00:00:38
Speaker
We focus on a number of therapeutic areas, ah but also as well as that we do conduct our own research and development with novel patented products, ah and we sell those around the rest of the globe.
00:00:53
Speaker
And we also have a number of offices in different jurisdictions. So literally we're in about eight to 10 countries around the world. And then we have licensees or distributors in around 70 countries around the world.
00:01:07
Speaker
Yeah. I mean, ah your flagship product, Masagesic, makes up 20% of your revenues. Can you tell us a little bit more about the product and the anticipated growth?
Maxigesic: AFT's Flagship Product
00:01:18
Speaker
Yeah, look, Maxegesic is a patented combination of paracetamol or acetaminophen and ibuprofen.
00:01:26
Speaker
It has a synergistic ratio, and we have a number of different dose forms going from a tablet to rapidly dissolving nanotechnology tablet. to oral liquid and intravenous formulation.
00:01:38
Speaker
um And we this is our currently our largest selling product. And we are launching that around the world, literally in those 70 countries that I talked about. And over the next few years, we would anticipate that increasing to over 100 countries around the globe.
00:01:55
Speaker
Yeah, I mean, you have some other key products in your portfolio.
Market Leadership in Australia and New Zealand
00:01:59
Speaker
a number of them are market leaders in their categories. Could you recap those briefly also? We also do try and diversify our product sales. We have very strong positions in the Australian and New Zealand markets where, for example, we're the number one selling lubricating eyedrop in the whole Australian market. And Aussie is a nice, good sized market.
00:02:25
Speaker
ah for dry eye because it it's hot and it's a dry place. So certainly a good size market. ah New Zealand, for example, we're number one allergy company in the whole market.
00:02:36
Speaker
And then we have other positions as well. So we certainly have some good, strong marketing positions supported by a good sales force, a large sales force, and also sales and marketing effort as well.
00:02:48
Speaker
Yeah, I mean, 80% of your revenues comes from the domestic ah New Zealand market, um Australian, New Zealand market. I think international expansion is your key focus
International Expansion and Key Markets
00:03:00
Speaker
now. Could you cover off the key drivers and geographies you're looking at?
00:03:05
Speaker
we We really see this as holding a lot of potential going forward. So having said that, we still see expansion within our existing home markets. But um we're set up well in Singapore, in Malaysia, in Hong Kong, and that's effectively driving our Asian business. So we do see a lot of potential going forward in large, complex markets like China.
00:03:28
Speaker
And then we're also set up, recently purchased a company in South Africa based out of Cape Town. We see that as a good pivot for the ah sort of South Africa and Southern Africa.
00:03:41
Speaker
And then also in North America, we've set up an office in Detroit in the United States and also Toronto in Canada. So we're using that to drive and and work on our North American sales, which obviously is a really big market.
00:03:55
Speaker
And then in um Europe, we yeah have a ah so ah reasonable size sales office in London where we sort of have a big operation that we're working on in the UK.
00:04:06
Speaker
But then we also are working in Europe. We have a separate office in ah Ireland based in the south of Ireland. And we have a number of projects and things that are spreading out across the EU markets as well. So, yeah, that's our kind of expansion, certainly outside our home territories.
00:04:25
Speaker
Yeah, it was it was nice to see your successful US launch of masalgesic IV and rapid formulations.
Addressing the US Opioid Crisis with Combogesic
00:04:32
Speaker
How important has that been for you and what what has the traction been so far?
00:04:38
Speaker
Look, the first launch was Maxegesic, although in the US it's called Combogesic, um intravenous. And that was launched by Hikma, which is the third largest supplier of injectables to the United States market.
00:04:52
Speaker
um That was launched in February. um I still think it's it's early days. We normally find key parameters of things like getting listings on hospital formularies, Normally, that does take a period of time, and that's still very much a work in progress.
00:05:08
Speaker
And then for the tablets or the Combo-Jizic rapid formulation, we're in the process literally of launching that next month in October. um And we're launching that through a couple of companies as distributors, including Hikma.
00:05:24
Speaker
And we're actually also having follow-up discussions with a further company to increase our coverage in the United States market. Yeah, I mean, in the US, we have an opioid crisis here. So I think safer alternatives are probably an important factor.
00:05:42
Speaker
I mean, is that is that a key differentiator in your opinion? That was one of really the drivers behind starting M. Exegetic Drug Development. We recognised literally well over 10 years ago that opioids were a serious problem.
00:05:57
Speaker
um The challenge, though, is I think doctors need lots of alternatives. You know you can't just tell doctors off all the time, say don't do this, don't do that. You need to give them viable alternatives, and this is our our aim where Combagesic or Maxagesic is very much a product for moderate pain, helps to avoid the use of opioids or to minimize them in severe pain and really gives doctors an alternative ah to help them try and avoid opioids um in their patients.
Growth Strategy in China
00:06:27
Speaker
Yeah, I mean, China um is also, has been a difficult market for most international um folks ah to enter, but I think you're you're doing a good job there and maybe you can help us understand your strategy and your current progress.
00:06:46
Speaker
Look, we we have for a while had a cross-border e-commerce strategy, which is really like dipping your toe in the water and that's going okay. And it's like more than double this year's sales on last year.
00:06:58
Speaker
But really the key is the internal China sales. um We've got approval of our first product called Christoderms. in the China market. And what we've done is we've formed a distribution agreement with a significant China state drug company.
00:07:15
Speaker
ah We see that as a good partner because they have good connections into hospitals and into doctors. You know, the usual is well-funded being owned by the Chinese government. So,
00:07:28
Speaker
Yeah, look, we're we're working closely with Hayao, which is a company based in Hainan. um And yeah, look, we're working to really tackle and get to grips with the China market. But mainly they'll be the drivers, and that's really the key thing, local experts driving it.
Focus on R&D for Future Growth
00:07:46
Speaker
Yeah, I mean, even with this ah broad op portfolio of marketed ah drugs here, ah you're still focusing a lot of your efforts on R&D.
00:07:57
Speaker
Maybe you can kind of highlight some of the exciting products in the development pipeline. And look, um we see our own R&D pipeline as an important part of our business development going forward.
00:08:09
Speaker
um We run all our R&D ourselves, I should add. So our own clinical studies are run by our own staff. um and we do that very cost effectively.
00:08:21
Speaker
We've got a really nice pipeline, um we believe. um We've got a number of dermatology products. We've got a product ah for strawberry birthmarks, another product for keloid scars, another product for a female health condition called VLS, and also a product called Paskoma for an orphan drug disease as well. So that's our dermatology portfolio.
00:08:46
Speaker
um And then in the pain area, we have development for burning mouth syndrome, ah which is actually an under-recognized condition, but but quite common. um Then in eye care, we've got ah an eye drop for treating antibiotic-resistant eye infections.
00:09:04
Speaker
This product's commonly compounded at the moment. We know most major regulators, like, for example, U.S., don't like drug compounding. So we see that, you know, as a relatively low risk pathway ah that will be supported by the regulator.
00:09:19
Speaker
and We have a drug delivery system called NasoSurf, which is a very efficient ah drug delivery system. The technology actually originated from Russian scientists.
00:09:30
Speaker
And, um you know, for better or worse, certainly the Russians are very good. at ah technology and science, and it's a really interesting ah system. And then we're also looking at a potential novel a chemical entity that we're licensing in at the moment, um and that's our kind of last of our big projects for our R&D
Financial Goals and Revenue Targets
00:09:52
Speaker
pipeline.
00:09:52
Speaker
Yeah, I mean, that's a lot. I mean, you've had really great growth despite that. um I think the 200 million New Zealand revenue targets really, really within reach, right? So the next one is probably 300 million.
00:10:08
Speaker
When do you expect um ah to achieve that buy and you what what's driving all that growth? and we can confidently say during this financial year, we want truly pass that 200 million, which which is great.
00:10:22
Speaker
um We see, you know, it's always hard to put an exact date on it say this date. But, you know, we see that within the next sort of two and a half to three years, we're aiming at reaching that $300 million dollars target.
00:10:35
Speaker
And then we can start focusing on the next target. Yeah. So, you know, we've we've covered a lot here, so maybe you can cover off the the key catalysts and milestones investors should look for in the next 12 to 18 months.
Recent Developments and Future Opportunities
00:10:50
Speaker
Look, for us, what what we're really working on is the launch of the Combo-Gizic tablet ah in the US market and building that, and then, you know, seeing further growth in the intravenous with Hikma getting more hospital listings, which we're confident that they will.
00:11:07
Speaker
um The Crystiderm launch in China should happen towards the end of this calendar year. And then obviously it's building the sales from that. There's a very large population in China that can use this product. So that's certainly very attractive.
00:11:22
Speaker
And then it's taking some of our other markets like where we're just starting, like the UK, Canada, and South Africa, where they're all nice markets with good potential size. And really, it's sort of getting those going and building them in a meaningful manner over the next sort of few years.
00:11:41
Speaker
That's awesome. Thank you. Thank you, Harley, for the update. Thank you all for joining us here today. If you'd like to learn more about AFT, please refer to edisongroup.com. Thank you. Thank you. you