Currency in NZD
Last close As at 25/03/2023
NZD3.41
▲ 0.05 (1.49%)
Market capitalisation
NZD352m
Research: Healthcare
AFT Pharmaceuticals (AFT) has announced it has received FDA approval for Maxigesic Rapid tablets, a quick-release version of its flagship Maxigesic product line. Notably, this marks the first regulatory win for AFT in the US (the world’s largest analgesic market), valued at c US$7bn. While AFT awaits Maxigesic IV’s clearance in the US, we expect this approval to help it build initial commercial traction in this high-margin market. The Rapid tablets, a patented combination of paracetamol (325mg) and ibuprofen (97.5mg), has been authorised for the treatment of mild-to-moderate acute pain. Negotiations with potential distribution partners are ongoing, with plans to release other dose versions in the future. The market has reacted positively to the news, with shares trading up by 10% at close of business.
AFT Pharmaceuticals |
Big win with Maxigesic Rapid’s FDA nod |
Regulatory update |
Pharma and biotech |
2 March 2023 |
Share price performance Business description
Analysts
AFT Pharmaceuticals is a research client of Edison Investment Research Limited |
AFT Pharmaceuticals (AFT) has announced it has received FDA approval for Maxigesic Rapid tablets, a quick-release version of its flagship Maxigesic product line. Notably, this marks the first regulatory win for AFT in the US (the world’s largest analgesic market), valued at c US$7bn. While AFT awaits Maxigesic IV’s clearance in the US, we expect this approval to help it build initial commercial traction in this high-margin market. The Rapid tablets, a patented combination of paracetamol (325mg) and ibuprofen (97.5mg), has been authorised for the treatment of mild-to-moderate acute pain. Negotiations with potential distribution partners are ongoing, with plans to release other dose versions in the future. The market has reacted positively to the news, with shares trading up by 10% at close of business.
Year end |
Revenue |
PBT* (NZ$m) |
EPS* |
DPS |
P/E |
Yield |
03/21 |
113.1 |
8.2 |
7.1 |
0.00 |
52.4 |
N/A |
03/22 |
130.3 |
18.9 |
19.2 |
0.00 |
19.4 |
N/A |
03/23e |
152.2 |
17.6 |
13.4 |
2.57 |
27.8 |
0.7 |
03/24e |
189.7 |
31.3 |
21.7 |
4.22 |
17.1 |
1.1 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Maxigesic, AFT’s flagship product, is a double-action analgesic (patented combination of paracetamol and ibuprofen). Maxigesic Rapid uses the same combination, at 65% strength of the original tablet form, based on the company’s patented rapid release technology. We note that the patent for the dose ratio and rapid-release technology will expire in 2025 and 2039, respectively.
This approval will mark the first entry for AFT in the lucrative US market following the delay in receiving approval for the IV formulation due to certain packaging-related concerns (Hikma is the licensing partner for Maxigesic IV in the US). US is the largest analgesics market globally, pegged at US$7.2bn, and estimated to grow at a CAGR of 5.8% during 2023–2027. We believe this approval will help AFT build an initial commercial presence in the US, with user feedback likely to influence approval and launch of other dose formats, including the IV version. This also follows recent wins such as the approval of Maxigesic oral liquid (targeted at the paediatric population) in an additional 12 European countries and a distribution agreement for Maxigesic IV in nine Eastern European countries.
Maxigesic is the key commercial driver for AFT with plans for international expansion (73 countries by FY24) and the launch of new variants, such as the Maxigesic cold and flu/sinus and pain treatment kit in Australia. The anticipated US approval of Maxigesic IV is a key catalyst for the company in CY23, in our opinion. The R&D pipeline remains robust with multiple projects under development, including Maxigesic dry stick sachets (flavoured granules), the NanoSURF nasal nebuliser (targeting FDA submission by the end of CY24), Pascomer’s pilot study in port wine stains and an early-stage development programme for topical treatment of strawberry birthmarks. We expect development to support top-line growth in the near to medium term.
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Research: Industrials
Kendrion performed well in FY22 despite the difficult market conditions, such as delayed deliveries of raw materials, inflationary pressures and volatile demand. Organic revenue growth was 8% but margins were lower due to higher input prices and engineering costs. The energy transition will drive growth and higher margins at Kendrion over the next few years, bringing it close to its 2025 financial targets (average organic revenue growth of 5% and an EBITDA margin of >15%). The unweighted average of our three valuation methods points to a fair value of €22.8 per share.
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