Drug-maker AFT to invest in its biggest-ever clinical trial after $35.6m IPO

AFT Pharmaceuticals, the Auckland-based drug maker which debuted on the NZX today, will spend $8 million of the funds raised in its $35.6 million initial public offering on its biggest-ever clinical trial.

The company's shares, which sold in the IPO at $2.80 apiece, jumped 11 percent to $3.12 in their debut trade on the NZX main board this morning, valuing the company at $302 million. The stock rose as high as $3.20, and was recently at $3.10.

AFT was founded by Hartley Atkinson in his garage in 1997 with $50,000 in start-up capital after he was made redundant by Roche. It now markets more than 100 pharmaceutical products for retail, prescription and hospital use with all the drugs made by third-party manufacturers. Atkinson and his wife Marree retain a 75.35 percent stake in the company and received $3 million of the money raised. The remaining $32.6 million will speed up global expansion and research and development, including clinical trials on a number of drugs and devices in its pipeline.

Atkinson said the first clinical trial will be on 400 patients in the US in March next year on its intravenous formulation of the pain-killer Maxigesic, the company's best-known product. The study, the company's most expensive to date, is expected to take nine months and comes as it seeks Food and Drug Administration approval early next year to sell into the US.

The company's IPO prospectus said while the development of Maxigesic tablets was complete, it was working on different formulations of the pain-killer which it believed represented significant market opportunities with a simpler development path. These include oral liquid, powder sachets, PE tablets and sachets for pains associated with cold and flu, and the IV for post-operative use.

AFT plans to file for registration of these formulations in Australia, New Zealand, and certain countries in the European Union next year,except for the IV which would take longer.

A second clinical trial is planned for Christchurch in March on 30 patients for the Maxigesic IV. It's being conducted by Christchurch Clinical Studies Trust which is run by Richard Robson, a former boss of Atkinson's.

Also in the development pipeline is SURF Nebuliser, a handheld ultrasonic medical device for treating chronic sinusitis. The technology was originally licensed from a Russian scientist and AFT is further developing that and has added patents to it. A working prototype is being assembled in Hong Kong and Atkinson said they will conduct a clinical trial on the device next year with sales beginning in 2017.

AFT has principally sold its products in New Zealand and then in Australia for the past 10 years. More recently, it has begun selling products in southeast Asia, some European countries, and the Middle East. The prospectus says the company hopes to be selling Maxigesic tablets in more than 50 countries by the end of 2017 and into 100 countries by 2018.

On listing, 11.23 percent of the shares in the company are held by members of the public and Atkinson said the IPO had brought new investors to the sharemarket, including a number of doctors and pharmacist colleagues and even his local dentist.

"While it's great that all these people you know are backing your belief in the organisation, it's also a huge responsibility," he said. The 56-year-old intends remaining as chief executive saying he had "unfinished business".

The IPO prospectus says in the year ended March 31, AFT reported a net loss of $12.9 million on revenue of $56.4 million. In the first half of the 2016 financial year it posted revenue of $29.5 million and a net loss of $6.3 million.

No estimates of future financial performance were provided in the prospectus because the board said it wasn't "practicable to formulate reasonable assumptions".

(BusinessDesk)