Last close As at 05/08/2026
NZD4.75
▲ −0.03 (−0.63%)
Market capitalisation
NZD499m
Research: Healthcare
AFT Pharmaceuticals has reported that the Auckland High Court has cleared it of certain contractual breach claims filed by PBL Solutions in April 2020, with the court maintaining that the opportunity for Pascomer (a topical formulation of rapamycin) in non-orphan indications was not under the scope of AFT Orphan Pharmaceuticals’ (AFTO’s) business in its legal case. While the ruling dismissed PBL’s claim for a lump sum payment for the assessed present value of Pascomer’s potential, the legal authority has directed AFT to share 35% of the potential (future) profits, which may arise in orphan or orphan-like indications in as well as outside Asia-Pacific. We note that AFT is pursuing Pascomer in non-orphan indications such as port-wine stains and is in the very early stages of development, hence the ruling does not have a near- to medium-term impact on AFT. Our valuation at NZ$644m, or NZ$6.14 per share, and estimates for AFT are unchanged.
Written by
AFT Pharmaceuticals |
Judgment clears AFT of lump sum payment claim |
Regulatory update |
Pharma and biotech |
31 August 2023 |
Share price performance
Business description
Analysts
AFT Pharmaceuticals is a research client of Edison Investment Research Limited |
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AFT Pharmaceuticals has reported that the Auckland High Court has cleared it of certain contractual breach claims filed by PBL Solutions in April 2020, with the court maintaining that the opportunity for Pascomer (a topical formulation of rapamycin) in non-orphan indications was not under the scope of AFT Orphan Pharmaceuticals’ (AFTO’s) business in its legal case. While the ruling dismissed PBL’s claim for a lump sum payment for the assessed present value of Pascomer’s potential, the legal authority has directed AFT to share 35% of the potential (future) profits, which may arise in orphan or orphan-like indications in as well as outside Asia-Pacific. We note that AFT is pursuing Pascomer in non-orphan indications such as port-wine stains and is in the very early stages of development, hence the ruling does not have a near- to medium-term impact on AFT. Our valuation at NZ$644m, or NZ$6.14 per share, and estimates for AFT are unchanged.
Year end |
Revenue (NZ$m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
03/22 |
130.3 |
18.9 |
19.2 |
0.0 |
18.5 |
N/A |
03/23 |
156.6 |
16.7 |
11.0 |
1.10 |
32.2 |
0.3 |
03/24e |
184.0 |
21.7 |
15.2 |
1.43 |
23.4 |
0.4 |
03/25e |
214.0 |
39.2 |
27.3 |
2.64 |
13.0 |
0.7 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
As a reminder, AFT Pharmaceuticals holds a 65% stake in its subsidiary, AFTO, with the rest (35%) held by PBL Solutions. The legal case is related to PBL’s claim that AFTO should have been allowed to pursue the Pascomer opportunity as a topical skin medicine and that AFT and Hartley Atkinson (CEO, AFT Pharmaceuticals) had breached contractual obligations by developing the Pascomer formulation. Further to this, PBL was seeking a lump sum payment, associated with an estimated present value of its 35% share in potential profits from the Pascomer opportunity. While the High Court ruling has dismissed certain of PBL’s contractual breach claims, including the claim for a lump sum payment, others were upheld. Most notably, the court supported the claim that AFT owes PBL a fiduciary duty related to Pascomer’s future prospects, which entitles PBL to a 35% share of any future profits, if realised, from the commercialisation of Pascomer in orphan or orphan-like conditions, in as well as outside the Asia-Pacific region. Although the decision is slightly disappointing for AFT, it does not obligate the company to incur any expense in the near-to-medium term.
Following the failure of its Phase II clinical trial for Pascomer to meet the primary endpoint in facial angiofibromas in July 2022, AFT is developing Pascomer in the treatment of a non-orphan condition, port-wine stains. It is currently in the very early stages of development and expects the ongoing pilot study to conclude in CY23. We note that the company has not yet realised any profit from the formulation and future opportunities are subject to regulatory approvals.
In addition, AFT believes that the latest ruling will not have any material impact on its FY24 operating profit guidance of NZ$22–24m. We believe that management’s stated revenue target of NZ$200m is achievable in FY25.
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Research: Investment Companies
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