AFT Pharmaceuticals posts $11 million first-half loss after boosting R&D spend

AFT Pharmaceuticals managing director Hartley Atkinson rings the bell to signal his company's sharemarket listing at the NZX in Queen St, Auckland, with wife Maree Atkinson.

AFT Pharmaceuticals, the Auckland-based drug-maker, widened its first-half loss to $11 million from $5.8m after ramping up research and development and launching over-the-counter products in Australia and Singapore.

The figures confirm a market trading update the company supplied earlier this month. Cash on hand dropped to $16m from $28m the previous year and the company said it had the financial flexibility to increase cash reserves with further drawn downs available on its long-term debt facility though it currently has no plans to do so.

Operating revenue rose 1 per cent to $29.8m in the six months ended September 30, the company said in a statement.

Australia is now the company's main market with revenue up 14.6 per cent during the first half to $14.6m while sales in New Zealand dipped 10 per cent to $13.5m, reflect a drop in sales to retail pharmacies. Timing issues and product supply shortages limited sales growth in its home markets in the first half, the company said.

However, it anticipates sales accelerating in the second half, as they do historically due to seasonality, with more over-the-counter sales following launches and promotions and the introduction of a significant number of new hospital products in Australia where additional contracts for over A$3m per annum have been secured.

Significant seasonal promotional programmes was also carried out in New Zealand and Australia as has been done previously.

Selling and distribution expenses increased 42.2 per cent to $12.5m, compared to $9.5m in the previous corresponding period while research and development expenses doubled to $4.2m, along with $2.5m of the Maxigesic IV clinical trial which was incurred ahead of scheduled in March this year.

AFT's main product, the patented combination painkiller, Maxigesic, is now being sold in six countries and it's about to be launched into a further eight countries. Additional out-licensing and distribution agreements for Maxigesic oral dose has been increased to 111 countries, up from 98 on a year ago. Further clinical trials for Maxigesic oral dose forms are on track in several countries, including some centres in New Zealand and are expected to be completed in the 2017 and 2018 financial years.

Development of a handheld ultrasonic nasal mesh nebuliser, NasoSURF, used for sinusitis and post sinus surgery is on track with engineering pilot batches in production and the first regulatory filing in the key US market planned this year and the first licencing negotiations in 2018. Sales are expected to be generated from selling the devices, a per use change administered through RFID cards, and consumables.

The company it expected to hit break even in the 2018/2019 financial years from increased higher margin product sales in home markets, higher licensing income from existing and new agreements and increased Maxigesic sales from existing and new markets.

AFT shares are currently trading at $3.02 compared to the $2.80 price of its December 2015 initial public offering.