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Last close As at 30/03/2023
NZD3.30
▲ −0.05 (−1.49%)
Market capitalisation
NZD352m
Research: Healthcare
In an unexpected development, AFT Pharmaceuticals (AFT) has announced that it has received a complete response letter (CRL) from the United States Food and Drug Agency (FDA) on its application for Maxigesic IV, an intravenous form of its flagship pain relief medicine. Crucially, the observation does not appear to be related to clinical data but involves leachable compounds present in the drug product, which can be addressed fairly quickly, in our opinion. Revised timelines for the data resubmission and commercialisation will be communicated shortly. As a reminder, Maxigesic IV is already launched in seven countries and was out-licensed to Hikma Pharmaceuticals in the US in April 2021 for up to $18.8m in total proceeds. We will reassess our valuation of AFT in light of this development but expect a slight delay in commercial launch.
AFT Pharmaceuticals |
Maxigesic IV hits a roadblock in the US |
Regulatory update |
Pharma & biotech |
6 July 2022 |
Share price performance
Business description
Analysts
AFT Pharmaceuticals is a research client of Edison Investment Research Limited |
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In an unexpected development, AFT Pharmaceuticals (AFT) has announced that it has received a complete response letter (CRL) from the United States Food and Drug Agency (FDA) on its application for Maxigesic IV, an intravenous form of its flagship pain relief medicine. Crucially, the observation does not appear to be related to clinical data but involves leachable compounds present in the drug product, which can be addressed fairly quickly, in our opinion. Revised timelines for the data resubmission and commercialisation will be communicated shortly. As a reminder, Maxigesic IV is already launched in seven countries and was out-licensed to Hikma Pharmaceuticals in the US in April 2021 for up to $18.8m in total proceeds. We will reassess our valuation of AFT in light of this development but expect a slight delay in commercial launch.
Year end |
Revenue (NZ$m) |
PBT* (NZ$m) |
EPS* |
DPS |
P/E |
Yield |
03/21 |
113.1 |
8.2 |
7.1 |
0.00 |
N/A |
N/A |
03/22 |
130.3 |
18.9 |
19.2 |
0.00 |
N/A |
N/A |
03/23e |
155.9 |
27.0 |
20.4 |
4.04 |
N/A |
N/A |
03/24e |
194.2 |
43.5 |
30.0 |
5.94 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
The CRL on Maxigesic IV’s application in the US comes as a surprise given that the formulation has already received approval in 39 countries and has been launched in seven countries including the key European market, Germany. The new drug application (NDA) was backed by positive data from two Phase III studies: a randomised, double-blind, placebo-controlled trial in 276 patients and an open-label, multi-centre, single-arm, multiple-dose safety study in 232 patients. Maxigesic IV had reported a faster onset of action and higher pain relief compared to ibuprofen IV or paracetamol IV alone in the same doses.
Partner Hyloris has communicated that the FDA has not highlighted any issues related to clinical data and the deficiency is restricted to the quality, more specifically to revise a risk assessment of the required leachable compound study. The revised timelines and commercial pathway will be communicated shortly. While AFT is self-commercialising Maxigesic IV in its domestic Australia and New Zealand markets, commercialisation activities in other geographies have been out-licensed to regional partners. In the US, Maxigesic IV was out-licensed to Hikma in April 2021 for up to $18.8m in upfront and milestone payments as well as royalties on sales (of which $3.6m was received in H122).
We estimate Maxigesic IV to comprise less than 5% of international sales (or 0.5% of group revenue), being a fairly recent launch. We had been cautious in our estimates for Maxigesic IV in the US, pending FDA approval, and we will revisit our estimates and valuation to factor in this development. Nearer term, with over 20 products expected to be launched in Australia in FY23, domestic markets (over 85% of sales, the rest from Asia) should continue to dominate. Upcoming results from the Pascomer Phase II study, if positive, could add upside.
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Research: Healthcare
Scandion Oncology has announced the outcome of a rights issue of up to SEK93.7m. At the end of the subscription period (1 July 2022), approximately 80% of the rights issue has been subscribed, including c 66.5% from guarantors. Management has communicated that it has raised c SEK75m gross, which we estimate will result in a net cash injection of c SEK58m based on estimated transaction costs of SEK17m that were previously announced. Management will now register the rights issue with Danish authorities, at which point the total number of shares outstanding will be raised to 40.7m, an increase of 8.6m shares. We will adjust our forecasts and valuation once the final raise and fee amounts are included in the company’s financial accounts. Management estimates that this cash injection will fund the company into 2024; however, we note this may vary according to clinical trial timelines. We value Scandion Oncology at SEK586.5m or SEK18.3 per share.
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