Having successfully developed a number of drugs through to regulatory approval and commercial sales, Pharmaxis (ASX: PXS) is set to realise a $2 million windfall with the sale of their Australian distribution rights, a move that will focus the Company’s efforts towards their advancing cancer treatment clinical trials.
The deal will send the distribution rights for Bronchitol® and Aridol® in Australia, New Zealand and several Asian territories to Bioimpact, a wholly owned subsidiary of BTC Health (ASX: BTC). The deal is similar to the one struck by Pharmaxis in April when selling the Russian distribution rights, also for $2m.
Appointing partners around the world to handle marketing and distribution is part of the drug development company’s wider strategy to focus on what they do best – develop drugs. At the same time, Pharmaxis remains the sole manufacturer of Bronchitol® and Aridol® from their factory in Sydney which supplies appointed distributors in export markets around the world who will also take on regulatory matters in their respective jurisdictions.
By appointment and working with these partners, Pharmaxis maintains revenue from production on top of the distributor appointment fees received, but significantly decreases their operating costs.
“We set out our strategy of generating non-dilutive cash and cost savings from the mannitol respiratory business late last year when Bronchitol was approved in the United States. This agreement with BTC Health is part of that strategy which has also recently seen US$10m in milestone payments received from Chiesi and a $2m deal with GEN for the Russian Bronchitol rights,” said Pharmaxis CEO, Gary Phillips.
“Choosing the right distribution partner has therefore been a priority for us and I am delighted to have concluded this agreement with BTC Health who provide first class support for customers and patients.”
Bronchitol, FDA approved in November 2020 in the United States, is a treatment for cystic fibrosis as an inhaled dry powder to alleviate mucus from the lungs. Aridol, which has been on the market longer, is a lung function test designed to help doctors diagnose and manage asthma.
Within the Australian market, the two products generate approximately $1.4m in annual sales with Bioimpact securing the distribution rights on a 10-year deal.
The streamlining of operations comes at a time when Pharmaxis’ drug development pipeline is heating up. Earlier in the week, the Company reported impressive results from the first dosing of patients with the bone marrow cancer myelofibrosis using their lead asset PXS-5505. Unlike other treatments on the market which largely mask symptoms, PXS-5505 has game-changing potential with the functionality to modify cancer-causing cells rather than just mask them.
Given the interest around PXS-5505 from cancer researchers around the world and its medical properties that can be applied to liver and pancreatic cancer, the next stage of Pharmaxis’ clinical trials have been fully subscribed and are taking place in Australia and South Korea. Should the trials meet their stated FDA requirements, PXS-5505 would open Pharmaxis up to a market valued at more than USD $1 billion annually.
Following the latest update on their myelofibrosis trials, major shareholder Karst Peak confirmed an increase in PXS shareholdings from 8.90% to 11.27% in a show of confidence by some highly credentialed minds in the field of medical investment. Prior to taking up that 8.90% stake of Pharmaxis in April, Karst Peak are best known for their early-stage investment in Avita Medical when they took a 14.9% stake in the microcap that went on to a $1.5 billion valuation 2 years later.
The current trials being conducted by Pharmaxis have already been cleared by the FDA under the Investigational New Drug (IND) scheme which fast tracks the regulatory approval process.
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