AFT Pharma recently made announcements affecting several of its marketed products. Importantly, the Australian Therapeutic Goods Administration (TGA) has made an interim decision that all products containing codeine (a key competitor to AFT’s Maxigesic) are to be rescheduled to prescription-only as of 1 February 2018. Also, AFT has licensed its cold/flu product Maxiclear to Angelini in 16 European countries. Additionally, due to continued Metoprolol shortages, the New Zealand government pharmaceutical buying agency, PHARMAC, has requested proposals from alternative providers, potentially affecting AFT’s sales of the product.
With the TGA decision, all codeine-containing products, which are mostly combination painkillers and cough medicines, will require a prescription and will no longer be available over the counter (OTC) after 1 February 2018. With a key OTC competitor now re-scheduled, Maxigesic may increase its market share (currently <1%) in the Australian market for OTC ibuprofen and paracetamol/acetaminophen containing products, which is estimated by IMS Health to be ~NZ$400m.
AFT has licensed the combination cold/flu product Maxiclear (500mg paracetamol/acetaminophen and 5mg phenylephrine hydrochloride) to Angelini in 16 mostly southern and eastern European countries for undisclosed upfronts, milestones and royalties. The total addressable market in estimated to be approximately NZ$420m in the licensed areas by IMS Health.
Due to an ongoing global shortage of Metoprolol, PHARMAC has requested proposals for either a dual listing or sole supply of the beta blocker. As AFT is currently the sole provider of Metoprolol, it is possible it may lose the entire contract for the product, which accounts for ~4% of sales. Timing of a PHARMAC decision is unclear but proposals are due by 27 January 2017.
We are maintaining our valuation of NZ$461m or NZ$4.76 per share as we await further clarity on the financial impact of the recent announcements. We expect to update our valuation following clinical results from the NasoSURF and Maxigesic IV clinical studies.