Drug company's shares surge after deal signed in world's largest market

Wednesday, 28 April 2021

AFT Pharmaceuticals chief executive Hartley Atkinson says the US pharmaceutical market is key for the company,

Shares in AFT Pharmaceuticals soared as much as 18 per cent after it signed its first distribution deal in the United States, the world's largest drug market.

The Auckland-based company said on Wednesday it had signed an exclusive licensing and distribution deal with Hikma Pharmaceuticals for the commercialisation of its intravenous, opioid-free Maxigesic IV post-operative pain relief medicine in the US. Based in the United Kingdom, Hikma is the third-largest supplier of generic injectable medications by volume in the US.

The deal gives AFT a foothold into a post-operative pain management medication market worth an estimated US$745 million (NZ$1 billion) in 2019, and expected to grow to US$1.7b (NZ$2.4b) by 2028. The company’s product offers an alternative to opioids in the US, where addiction to the drugs has become an epidemic.

“It is the largest pharma market in the world, so therefore it certainly is the key market to get,” said AFT managing director Hartley Atkinson.

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“The opioid epidemic is the worst in the United States of anywhere in the world unfortunately, so they are looking for alternatives. At the moment they still use opioids for post-operative pain relief and then they discharge patients also on oral opioids, so it really fits in well to the market dynamics as well.”

Under the deal, AFT will be paid as much as US$18.8m on reaching set commercial milestones and will then be paid a share of the profit from sales in the US market. AFT expects most of the benefits to come from the profit share agreement, Atkinson said.

AFT is about to file for approval for the drug with the US Food and Drug Administration, a process expected to take about 15 months, paving the way for sales in about 18 months, he said.

It has licensing agreements already in place in Europe, Asia and Ecuador.

Over the longer term, AFT is also targeting the US market for the tablet and liquid forms of the medication, he said.

The company is working to complete US FDA approval for the tablet form of the medication, a process that was held up due to Covid-19 travel disruptions, he said.

Atkinson said the last 12 to 15 months had been “challenging” for AFT.

The company had expected to conclude its agreement with Hikma in March and the delay forced it to downgrade its earnings guidance, he said.

Shares in AFT were up 13 per cent to $4.52 in midday trading on the NZX, having earlier soared as much as 18 per cent to $4.70.