AFT Pharmaceuticals narrowed its 2018 loss and expects to break even in the 2019 financial year as it dials back spending on research and development and lifts sales.
The Auckland-based maker of the Maxigesic painkiller reported a loss of $12.7 million, or 13 cents per share, in the 12 months ended March 31, compared to a loss of $18.4 million, or 19 cents, a year earlier. Operating revenue climbed 16 percent to $80.1 million, of which Australian sales jumped 33 percent to $49.2 million due to over the counter sales of Maxigesic since restrictions were placed on the sale of codeine across the Tasman.
Gross margin improved to 43 percent from 38 percent, and the pharmaceutical firm cut R&D spending 27 percent to $8.2 million.
AFT, which had been targeting a return to profitability in the 2018 or 2019 financial year depending on the timing of out-licensing agreements of its products, now expects to break even in the year ending March 31, 2019.
"Finalising with a suitable partner is paramount rather than completing an agreement with an unsuitable partner in order to make a pre-announced deadline," AFT said in a statement. "However, with the increasing sales, increasing gross profit and lower R&D spend, we are confident of breakeven in the FY2019 year independent of licensing income from additional agreements."
AFT held cash and equivalents of $6.8 million as at March 31 having slashed operational cash outflow by 43 percent to $10.9 million. A $7.1 million net drawdown on its loan with shareholder Capital Royal Group (CRG) helped keep the coffers full, and CRG dropped its requirement for the pharmaceutical firm to repay the loan before its March 2020 maturity. The lender also extended a further US$5 million at the company's option before Sept. 30 of this year. As at March 31, AFT owed CRG $30.7 million.
The company's home market reported a 7 percent drop in sales to $27.1 million after losing the sole supply contract for Metoprolol with government drug-buying agency Pharmac. Still, an increase in over the counter sales helped lift gross profit 19 percent, it said.
AFT's Southeast Asia revenue climbed 28 percent to $1.3 million with sales largely in Singapore, while Rest of the World revenue gained 27 percent to $2.5 million.
The drugmaker said over-the-counter products launched in 2017 are expected to keep driving sales growth in Australia, again citing the opportunity provided by the restriction on codeine, and similar moves in New Zealand by Medsafe could provide a boon in AFT's New Zealand market.
AFT said it's largely completed its R&D work with the bulk of its expensive projects completed, including positive results for its Maxigesic IV clinical trial in the US. Maxigesic is licensed or distributed in 125 countries, while its NanoSurf sinus treatment is being tested in its first clinical trials in Australia and New Zealand.
The shares last traded at $2.50 and have gained 8.7 percent so far the year, although are still down form the $2.80 price in its 2015 initial public offering when the company raised $33 million to fund its global expansion and clinical trials.