AFT Pharmaceuticals Limited (AFT) Earnings Call Transcript & Summary

Okay. [Foreign Language] Kia ora and good morning, and welcome to AFT Pharmaceuticals Annual Meeting. I am David Flacks, Chairman of AFT. These are indeed strange times, and following the adjournment of this meeting on the 12th of August, we decided to reschedule with a virtual-only meeting amid the current uncertainty. I would like to thank you all for attending today and for your patience. We'll be using some slides during the meeting, and for those of you online, you'll be able to see these and follow along. They're also available on the NZX and ASX websites as well as on AFT's investor website. Let me begin by introducing you to your directors. Hartley Atkinson is here with me and he'll be presenting to you shortly. Jon Lamb is online. Doug Wilson is online. Marree Atkinson will also be presenting to you later as she is standing for reelection as a director. And our U.S.-based Director, Jim Burns, of course, is also online. Our auditors, Deloitte, and our legal advisers, HHL, are online and as with the other directors, are available to respond to questions later in the meeting. Our senior management team are also online for this meeting. You can find details of both directors and senior management in our annual report and on our website. Before we get into the order of meeting, I would like to draw your attention to how you are able to ask questions and vote in this virtual meeting. [Operator Instructions] In order to vote, you'll need to select the voting icon on your screen and then select how you would like to vote. Again, details are set out in this slide and also in your virtual meeting guide. The company's constitution prescribes a quorum requirement of 5 shareholders. I can confirm that this requirement has been met. Accordingly, I declare the meeting formally open. The items for business -- of business for this meeting and the resolutions to be considered by shareholders are contained in the Notice of Meeting, which was sent to shareholders on the 15th of July. And in terms of the order of the meeting to kick off, I will say a few words, following which AFT's CEO, Hartley Atkinson, will give a presentation. We will then consider the formal business and resolutions of the meeting. In relation to the resolutions, there will be opportunities for shareholders to ask specific questions as we address each resolution in the formal part of the meeting, and there'll be an opportunity to ask general questions after Hartley has given his presentation. [Operator Instructions] In the face of so much uncertainty and turmoil in markets both here and offshore, it is immensely gratifying as both a shareholder and Chair of AFT to recount the great progress the company has made since I addressed you last year. AFT has not totally escaped COVID-19. It has led to delays in clinical trials and difficulties in getting our products to market, particularly to the Northern Hemisphere. But these challenges pale in comparison to the enormous challenges faced by companies both in New Zealand and globally. Perhaps more importantly, they have only marginally detracted from what must be regarded as a pivotal year for AFT. Our financial performance has been strong. For the first time, we've broken through $100 million of revenue to reach $105.6 million, a 24% improvement on the prior year, and our underlying operating profit for the 2020 financial year was up 87% to $11.4 million. Operating cash flow has grown at an even faster rate, rising to $14.9 million from just over $1 million a year earlier. We've benefited from growth across all of our businesses. Hartley will cover these points in more detail. However, in summary, our New Zealand and Australian businesses have grown revenue by 12% and 22%, respectively, extending a record of AFT sales growth that now spans 2 decades. Further afield, our Asian and international businesses have also delivered impressive growth in the 2020 financial year. While our family of Maxigesic pain relief medicines attracts the headlines, our success is built on 130 separate products. The strength of this portfolio is testament to our team's ongoing success in implementing our AFT strategy. Simply put, we're focused on identifying customers' health care needs and then drawing on our internal resources and our extensive international network of partners to develop and commercialize innovative treatments to improve health. This strategy has supported our growth over many years, and we expect it to continue to drive growth in the future. As most of you will know, our portfolio of medicines is particularly strong in pain relief, eye care, allergy and health supplements, but we continue to broaden our offer where we see acute patient need. Our product, DiaRelieve, which is pictured on this slide, is a family treatment for diarrhea profiled in this year's annual report and is a great demonstration of this capability. It was launched in New Zealand in May 2019 and remains the only specific treatment available for children even though they are disproportionately affected by diarrhea. Hopefully, many of you will have tried most of these or many of these products on this slide. Maxigesic is the engine of growth in international markets and continues to gain traction. The tablet form of the medicine is now sold in 28 countries, up from 20 a year ago, and we continue to see potential for sales in as many as 125 different territories. We also see strong potential for other dose forms. These include the intravenous form of the medicine, Maxigesic IV, which was last year approved for sale by the TGA, Australian Therapeutic Goods Administration, and also Maxigesic oral solution, which has been specially formulated for children. These dose forms of the medication and others in the pipeline represent the early stages of a commercialization program that has the potential to underpin AFT’s growth over the next decade. We continue to work hard on our R&D program, which is centered on Maxigesic dose forms and other products, such as Pascomer, a treatment for a rare skin disease; and also our NasoSURF, which is a nasal drug nebulizer, which again Hartley will give more details about in his presentation. As a direct result of our strong performance and our robust outlook, we've begun to put in place a more conservative capital structure that we expect will improve our free cash flow and provide us with more flexibility to fund the anticipated growth. Firstly, at the end of the financial year, we repaid our existing CRG debt and refinanced with a $43.2 million facility from the Bank of New Zealand at significantly more attractive terms and interest rates. More recently, CRG sold down its 13% holding in the company so that the CRG investment fund that held the stake could return capital to its underlying investors. I would like to acknowledge the support CRG has provided with both equity and debt over the last 5 to 6 years. Alongside the CRG sale, entities associated with Hartley and Marree Atkinson also sold around 1.3% of their holdings. At the same time as these sale downs, AFT raised $12 million of new capital with a share placement and a share purchase plan. We were pleased to be able to make the share purchase plan portion 16.7% of the new capital raise against a free float of 11%, which meant that retail shareholders were given the opportunity to proportionately increase their shareholdings in AFT. The capital raise has been primarily used to reduce debt and our plan is to progressively continue to reduce debt to a level at which the Board believes it is appropriate to consider developing a dividend policy. Another significant benefit of the capital restructure is that it has increased the free float of the company. The number of shares readily available to be traded has more than doubled to 31% of the shares on issue, 11 -- from 11% prior to the capital restructure. This has made our shares more attractive to a broader range of investors, and we're already seeing the benefits. Through the capital raising and the placement, we've welcomed institutional investors onto the share register both from New Zealand and Australia. The Australian institutional investors are a particularly welcome addition as it represents a beachhead into the vibrant Australian health care investment community. We believe our strong business presence in that market and our unique growth story has the potential to attract the broader investor following across the Tasman. All these factors should, over the longer term, increase trading in our shares both in New Zealand and through our secondary listing on the Australian Stock Exchange. And as a direct result of this increased liquidity, we expect faster and more accurate recognition of the value your company creates for shareholders. CRG’s share sale has also precipitated changes on your Board. Nate Hukill is the President and CEO of CRG, and he was appointed by CRG and has now resigned from the Board. We're grateful for the contribution Nate has made since he joined the Board in 2014. He has been tremendously supportive of the company and wish -- we wish him well for the future. Nate’s departure is the first change to the Board since we listed 5.5 years ago. As I mentioned last year, your directors work together very well. We have a strong mix of skills across the pharmaceutical industry, sales and marketing, finance and governance. The Board goes through an annual evaluation process and a skills matrix exercise, and the information we've gathered as part of this will have an important bearing on who we select as Nate’s replacement to the Board. A search is already underway, and we're looking for someone who will have complementary skills and attributes to your current Board members. As part of our governance responsibilities, we are strongly committed to sustainability. Last year, we began to look at how our business and our community initiatives align with the UN Sustainable Development Goals, which represent a larger and robust vision for positive change. The progress we have made is detailed in our annual report. In the current year, we've determined it will work -- we will work to progressively develop and incorporate into our governance framework a strategy to account for and report on progress towards improvements in relevant environmental and social factors. We will report more to you as we make progress. For more information on how your company is governed, you can review our 2020 Corporate Governance Statement, which is available on our website. It sets out the principles your Board adheres to and how we have reviewed governance issues throughout the year. Finally, in closing, on behalf of shareholders, I would like to acknowledge and thank Hartley, the rest of the executive team and the broader AFT team for their diligence and commitment to the company over the last year and particularly over the last few months. The COVID-19 pandemic continues to test the mettle of our people. It has imposed significant constraints on how they engage and service customers and how they collaborate with colleagues. Nevertheless, the team has worked together well to manage supply to our international licensees and the flow of product to our home markets. They have executed well on our strategy. I would also like to thank my fellow Board members for their contribution, their enthusiasm and their unwavering commitment to seeing the company make the most of the significant opportunities we have both here in New Zealand and offshore. We have entered the new financial year in a stronger position than we have ever been. We expect to expand and grow our portfolio of medicines in Australasia and grow international sales of Maxigesic to drive another record result for this financial year. Our current expectation is for an operating profit of between $14 million to $18 million. This figure excludes any licensing fees for new agreements that may be reached during the current year. This is an exciting time for AFT and we thank you, our shareholders, for the faith you have shown in the company and your ongoing support. Thank you. I would now like to invite Hartley Atkinson, AFT's Founder and Managing Director, to address you.

Thank you, David, or maybe keeping with our international focus, I should say [Foreign Language]. So now look, onto things that I'm probably more qualified to speak about AFT Pharmaceuticals rather than international language capabilities, to look at the next slide, please, Slide 17, our financials at a glance. So look, just to have a bit of a look at this because this kind of shows you and gives you an idea about our progress over the years. If you look at the top slide, this shows our operating revenue over time. And what is pleasing is that to date, we've never had a down year every year. Despite sometimes various challenges, we've managed to improve and grow sales year-on-year. And you can see this last financial year, we grew sales by around 24%, and we've got a CAGR of 14% over the last 10 years. Looking down as well at the bottom, you can see on the left, operating cash flow. So look, when we floated what we said to our shareholders at that time, we said, "Look, we are raising capital to further expand our Australian operations but primarily to undertake a big chunk of R&D work." Now we told them that this would drive a loss in the initial stages. So I think generally, people kind of nodded but probably maybe they were slightly disappointed or taken aback when the losses we predicted did eventuate. But you can see the important thing is we've always said to people that this was a short-term investment process and then we will turn it around for profit. So you can see on those 2 bottom slides, the cash flow has improved very strongly last year, growing to $14.9 million free cash flow. And then also, you can see the profitability sort of was at the worst point or the highest losses in FY '17. And that was when we're really knee-deep in our major Maxigesic IV studies in the United States, which are relatively expensive. And then you can see that we've grown and turned around, made a small operating profit last year and the year before, and we're looking at growing that during this financial year. So look, that's a sort of good snapshot of kind of where we're at historically. So to look at the next slide, please, if we can. This shows our revenue growth in both our home and international markets. So looking at the graph, the bar chart in the middle, the FY 2020, we got pleasing growth in our existing markets. Australia, you can see, grew by over 20%. New Zealand grew by around 12%. But our international markets of Southeast Asia and outside Southeast Asia, you can see that we got more significant growth of 55% and 130%. And if you look at those pie graphs on the far right, what we're starting to see and we would predict that this would carry on is those bits of the pie outside Australia and New Zealand being our traditional home markets, they're starting to expand, where FY '19, we had under 10% was attributable to Southeast Asia and international, whereas now it's spread out and grown to be 13.3%. And going forward, as we launch Maxigesic in more countries and we work on expanding our Asian business, we would see that this part would grow more. What I guess we do need to stress though is I think sometimes, people have seen this as an indication that maybe our Australian or New Zealand sales are going to remain static. And look, nothing could be further from the truth. We've put a huge amount of work into in-licensing product development specifically -- mainly for our Australian business but also for the New Zealand business as well. So we'll talk about that more later but just to reassure people that we're looking at growing across all our markets and not just one sector. So looking at the next slide if we can, please, the abbreviated consolidated income statement. Look, without getting lost in the numbers, what we're really looking at, if you look down in the third row, underlying operating expenses and other income, what we're seeing here is that although our expenditure increased from 2019 to $34.6 million and we increased our spend to $36.8 million, what's pleasing is we're starting to see the benefits of operating leverage. So as the business is growing even though we're spending a bit more money proportionately as a percentage of sales, it's coming down. And we would expect to see this carry on, on an ongoing basis. Although with a number of new product launches in Australia, et cetera, we would still see we would be continuing to increase spend, but we will gain operating leverage going forward, which is positive. So if you look at the next slide, please, the abbreviated balance sheet. Look, the key sort of takeaways here is that there were a few things we talked about over the last few years. One of them was people talked to us about their debt. They said, "Look, the interest rate, we see as relatively high." It was 13.7% or something. And also to -- it had a fixed end date effectively at the 31st of March 2020. So last financial year, it appeared. If you look over there, you'll see $41.75 million as a current interest-bearing liability. So what we did at the end of the year is we refinanced that with a standard banking facility with the BNZ that we've worked with for a number of years. We have a very good working relationship with them. So effectively, we've refinanced. So that now becomes a noncurrent interest-bearing liability. But importantly, it's at a lower interest rate and it's also long-term debt. So there's a number of things, I think, that people pointed out to us over the years since we floated. We do listen to people. We do work on these things. Sometimes, they take a bit of time. So hopefully, what you can see is we've refinanced the debt. We've dropped that down to a lower interest rate, more in keeping with the bank -- standard banking facility. We've done the small cash issue, which has decreased debt levels, which is another point. The other point people made to us too was opening up the share register. As David has pointed out, we've significantly increased the free float. And as well, the other thing that people indicated they'd like to see is a simplification of the capital structure. So we did originally had some preference shares. Now all the shares are plain and simple ordinary shares. So we've sort of addressed all those sort of key points from a financial aspect that we're pointed out to us over the last 2 or 3 years. So we've made good progress and we're pleased with that. So that's that slide. And to look at the next one, please, abbreviated cash flow. The important take-home part here really is that first line, where in 2019, we had free cash flow of just over $1 million, and that improved significantly last year to almost $15 million. So look, that's positive. We do always work very closely with cash, just remembering that we started our business literally with $50,000 start-up capital in a garage. So as a management team, we're very aware of the value of cash, very aware of cash flow. So this is always something we run our business to very tightly. So to look at the next slide, please, if we can. So look, I want to talk about growth now, some of the things we're working on. This -- the key part of our business, as we've shown you to date, is still presently our Australasian business. Although we obviously talk a lot about the Maxigesic and the international business, we still do have strong growth plans for our local Australasian business, especially Australia, where really we can make lots and lots of progress from where we are. We've made some good progress. Maxigesic holds the #1 position in the paracetamol and ibuprofen category in the Australian market. The market share lead has actually increased. We're now up over 11 percentage points market lead over our next competitor product. And then in other categories like eye care, where we're also strong. HYLO-FORTE, our preservative-free lubricating eye drop, has reached the #1 position in that market as well. So that's very nice technology. It's patented German product that we in-licensed. When we first launched it, people said, "Look, it's probably too expensive. It'd be difficult to sell." But the sales and marketing team have done a very good job to educate the market in the positive properties of this product, and it's now reached the #1 position, which is great. We're also looking though at other preservative-free eye care products. For example, NovaTears, we grew that. We licensed that from a German company. We grew that by 89% in the last financial year, which was a great result. On the New Zealand side, we're also working on the business there, where we launched about a year ago, our Vitamin C Liposachets. It's a liposomal vitamin C product. The absorption is about 80% greater than standard vitamin C. So that's got a lot of positives of things like improving and assisting your immune system, which obviously, at the moment, is a point of concern that a lot of customers and patients are looking at. You can see the pictures on the left there. This is the range. So rather than rest on our laurels with just one Vitamin C Liposachet product, we've launched a further kid's version of it as well. We've launched a new flavor, blackcurrant. And as well as that, we've launched a vitamin D product as well, where that has improved absorption in comparison with standard vitamin D. As well as that, we've -- you would have read we've also worked on and still working on our cannabis area. The first part of that is our Hemptuary range, which is based around hemp as opposed to cannabis. But this is really the first part of the range. You can see the pictures down the bottom. We're conducting presales at the moment, and we're aiming to launch this range in October. So this is a whole range of hemp products around -- we have a whole range as well of skin products called TopiDerm. So this sets as an extension of our existing TopiDerm range under the Hemptuary brand. So look, this is good. We're seeing some progress in this area, and this is the first part of it. Just to summarize as well in terms of new medicine registrations. We did a lot of work on this about a couple of years ago. We did a lot of in-licensing. We're starting to see the benefits of that this year, but they'll be greater next year as well. At the moment, we're targeting 11 new approvals across Australia and New Zealand. But next year, we would project that, that will swell to 38. So there's a lot of investment. A couple of years ago went into in-licensing and over these last couple of years, including this year as well, a lot of investment in regulatory fees with the TGA and also Medsafe. So that will help to drive the existing Australasian business, which is very, very important still to the company despite our external focus as well. So to look at the next page if we can, please. So this is the rest of the world outside Australia and New Zealand, where I think as you would see from -- or recall from the pie graphs previously presently represents just over 13% of our overall sales. One of the key aims over the next 5 years is really to significantly grow the contribution from Rest of World and also Southeast Asia and Asia as well. You can see looking at some of the [ licensees ] or our distributors, we've got the standard Maxigesic pack, which we sell in Australia, New Zealand and actually quite a few other countries like the Middle East. Our alternative trade name is Combogesic, which we use in some jurisdictions where we're not able to use Maxigesic. Often, the regulator may see that as somewhat of a therapeutic claim in some areas. So we have Combogesic. You can see that's one of the packs here from Eastern Europe. Combophen as well is the Belgian pack, which we've just been launching. Easolief Duo is from our Irish licensee, which we launched about 2 years ago, 18 months ago. Dolostop Duo is from Kern Pharma. Combodex is from our partner in Israel. And then we have Dolerin, which is from the Nordics. And Duoval is from our German partner, Ever Pharma, who we're just launching literary right now in Germany. So it's really getting these different countries launch them, and that will drive further growth. So we are looking overall in the next sort of 2 years roughly tripling the number of countries that Maxigesic is sold in. Importantly as well, looking down at the bottom left, you'll see Maxigesic IV, and you see the Maxigesic Oral Liquid. So the first cab off the rank is the Maxigesic IV, and we're just rolling out launches at the moment in Australasia but also later on this financial year in Europe as well. So adding different dose forms is also a key part of our international growth. And then also, too, over time, we see the Maxigesic sales grow kind of year-on-year. So really, it's that mix of adding the countries, growing the Maxigesic sales within that country then adding new dose forms. All of that compounds to fuel our international growth. I should just mention as well. It sits on its lonesome a little bit inconspicuously maybe on the very bottom right. It says launch of Tmall site. I should talk a little bit about this. What -- you may have seen the announcement a month or so ago. We have done with a Tmall site for China. So basically, some of our product was certainly historically sold through daigous. That market now is less significant due to the impact of COVID, where a lot of foreign students clearly are not in Australia and New Zealand, where as they used to be. But the direct channel through something like a Tmall site then becomes much more important. And so we are launching that in late September. During the first sort of launch and basically, we want to be up fully online in time for the famous 11/11 sales period. So certainly, the Tmall site in that channel is a very important part of our international sales going forward as well, so we can channel our Australasian ANZ products into the market. So to look at the next slide, if we can, please. So this talks a bit about our pipeline. So we are -- as well as selling product, we are a drug development company. So we are developing line extensions to Maxigesic to amplify our sales around that. So the Maxigesic IV, at the moment, we've registered that in the first tranche of countries, so 21, so 18 in Europe, Australia, New Zealand and UAE. But clearly, look, there's lots more countries and we've got lots more filings. Our team is working very hard on this at the moment. And markets such as the U.S., it's very important and we're filing -- we'd expect to file in there during this financial year. And we have further filings in Europe and then filings in Asia as well and a number of other countries. The oral liquid, which is the kiddie's version, the children's version, sets like a syrup sort of product. That's underway in registration in Europe, Australia and New Zealand. Children's medicine is always very complex from a regulatory perspective. So certainly, this is a big project, a complex project, but one that is well underway at present. We also have a Maxigesic Hot Drink. So it's a bit like, if you think about cold and flu, you put the powder and put a hot water in a mug and you take that. So this is our Maxigesic Hot Drink, and that has been filed. The first filing in the world went on in December 2019. So the registration is underway. But clearly, there will be a lot more filings for that as well. Maxigesic Rapid is a nanotechnology version of Maxigesic. It's fast-dissolve product, and that has been successfully developed. We licensed that technology out of the United States. And at the moment, we are looking at filing that towards the end of either this year or during the first half of next calendar year. So that's a line extension. We've got a patent application, which, if granted, would go out to 2039. So also Maxigesic Cold & Flu, we are working on that. The first filing for that has occurred in the middle of this calendar year. So that's mainly the Maxigesic portfolio. Pascomer, as David has mentioned, is our orphan skin product, dermatology drug. At the moment underway is the first of a global multi-center, multinational studies. That's underway in the United States, Australia, New Zealand and Europe. So it's a big job. Orphan drugs are drugs that are used for rare diseases. So usually, there's not a lot of patients in each country. So you have to run them across multiple countries. Then also, NasoSURF is our patented drug delivery device. We've successfully completed the pilot scale batches and also successfully completed the major engineering batches in July. So in terms of development, that is well underway. Or effectively, the technical parts of the device have been completed successfully, which was quite challenging. But the team has done really well with that. And now we're working on moving on to start the clinical study program, which would follow on. To look at the next slide, please. So yes, look, just a little bit more detail around what we've talked about. Here, you can see the Pascomer. The picture on the right, there's a picture of a girl who has -- the condition is called tuberous sclerosis. And then as part of that disease, they get facial angiofibromas or these growth on their face. What Pascomer does is it actually takes this right back. So there's an FDA rating scale, and you rate it on a scale of 1 to 5. So basically, this girl will probably be about a 3. And using Pascomer, we would anticipate that would take it back to a 0 or a 1. So you see the growth really regress in size. So basically, the difficult thing about the active ingredient is it's unstable. It oxidizes. So we are able and have managed to successfully develop a stable formulation that's stable at room temperature for at least 2 years. We are soon to get the 30-month data. So we will be hopeful we might get 3 months -- 3 years, sorry, shelf life. But I mean, regardless, 2 years is quite sufficient for a pharmaceutical product, but 3 years would be a really nice bonus. We successfully licensed this in North America to an American company called Timber Pharmaceuticals. And the nice thing about that deal is they are responsible for the R&D costs going forward in terms of the clinical trial expenses. So what that means is it doesn't cost AFT money going forward on our R&D budget. So that was an important part of that deal. So there's a lot of work done with this project. When we first came across it, it was only an idea. And literally, we've done a lot of work. We had to get it granted orphan drug designation. We had to do a lot of preclinical work, had to go through the FDA. You have to get it what's called an IND approved, which means -- IND stands for investigational new drug. Once that is opened, you're allowed to use the drug in human studies. So all this work has gone into it, including a lot of formulation development work to get a formulation. So basically, presently, the first study is underway. It's called a Phase II study, and that should be completed next year. And after that, we'd have to do a further study, and we would hope and plan to complete that sometime in 2023. So this is more of the kind of longer-term drug development part of our portfolio. And looking at the NasoSURF below, you can see a photo of it. It's a sort of about the size of the can of soft drink. So it's very small. It runs off a cell phone battery, but it has a very high rate of drug delivery. I mean, for example, there is a German system, but that's literally 10x bigger than this, plugs and the mains. But it only performs 1/10 as well as this system. So ours, we have licensed some patents off a Russian inventor, and we've used these patents to develop a drug delivery device called NasoSURF. So instead of having an injection, you can take the drug intranasally. And that has numerous patents that go out until 2036. So at this stage, we've completed most of the device development, but we now need to start the clinical development, which we're working on presently. So that's that part of it. So flip to the next slide, please, if you can. Look, this is just a graph to show you -- to give you an idea of the pickup in the number of countries where we're working on selling Maxigesic in. You can see on the sort of far left back in FY '14, we were selling it literally only in 2 places, Australia and New Zealand. They're kind of home markets. And yes, this is one of the reasons why we did the float. We took on the extra capital once we realized this product could sell in multiple countries, but to do that took a lot of extra studies, will cost money, and that's really what started the whole journey. And you can see the number of countries is starting to grow. Last year, we either sold or were producing orders for 43 countries. And then this year, we're aiming at 66. And next year, we're aiming to get that over 120. So that's the sort of progress that we're working on with launches. So maybe to look at the next slide, if we could, please. So this is also, as you'll recognize, a map of the world. And what we're doing is we're just using this to show the progress as we license Maxigesic around the world and then we launch it. So countries in blue is where we have licensed the product. Countries in yellow is where we've launched it or in the process of launching it right now. Countries in white are ones we still have to complete licensing deals. So some of those countries are quite important. Clearly, large markets like the United States, we're working on. Brazil, we're working on. China, we're working on and Japan as well. So those are sort of the major kind of blocks that we're looking to fill in, and that's why a lot of work is going into this year. But as well as that, the number of countries in yellow is starting to expand. We just -- as I was mentioning before, we just launched in Germany, which is a decent-sized market, and then we'll launch -- also, we're expecting to launch reasonably soon in Russia as well, which obviously is a huge chunk of the map. But also, it's a good-sized market with a population of 140 million people. So we just completed a Russian inspection at our manufacturing plant. We had to do it virtually because of COVID. They weren't allowed to travel. That's an example of how everyone could pivot and sort of work around the COVID problem, and that was successfully completed. Having said that, I mean, our teams were working during the small hours of the morning because it was on Indian time, not New Zealand time. So it just gives you an example of how our team has been really flexible and good at working in, as David has pointed out, at quite extraordinary times. So it's that slide. And to look at the final slide, please, outlook. So look, this is just summarizing where we're at, what we're working on. So a key driver is to further drive and expand our international sales. So it's -- as those graphs we've shown you showed it's accelerating the number of new countries that we're launching in, also importantly, it's adding new line extensions, especially the first instance, the Maxigesic IV, which a lot of market research has come out -- or not a lot, but some has come out, which actually shows it has a really good sales potential in multiple countries. So that, for us, is a key project, the Maxigesic IV. It's especially relevant, too, because there's still -- it's sort of gone a bit quieter, but it still exists. It's been overshadowed maybe a little bit by COVID, obviously. But the opioid crisis is still alive and well and a major problem in many markets like the United States, Europe. Even Australia has the eighth highest per capita use of opioids in the world. So doctors and regulatory bodies are still looking for stronger analgesics that are an alternative to opioids. So that's really where Maxigesic IV has a great place. So extending the international licensing is another key and significant project we're working on, where we have China, Japan and the United States. So collectively, these are the 3 largest markets in the world, with the U.S. still clearly being #1. But China now is moving up the ranks and is #2 with Japan being #3. We have had some success. You've seen -- you may recall recently, we licensed an additional 6 EU nations, the Maxigesic IV. And then also, we are progressing commercialization of a number of places where we did licensing deals last year, like, for example, Canada, we're getting close to launch there. Germany, we've already launched. Cyprus, we're about to launch, et cetera. So it's important that we work through that as well. So lots of things that we're working on. Also, driving increased upfront payments does have significant potential to have upside, where larger territories such as the U.S., Japan or China traditionally get more significant upfront fees for a licensing deal. So that's another reason why that is attractive to conclude a deal within those territories. Driving our local sales is obviously important. We've got Australia and New Zealand Maxigesic sales, number of new OTC launches. We've got the Hemptuary range we showed you, but lots of other products we're launching as well. We're launching Combolieve Day/Night product in Australia at the end of this month. We licensed that patent a while ago off an Australian inventor for that product. So that launch is underway literally in the next few weeks. Also, we have worked on some COVID-19-related product launches. We've had some good sales of our hand sanitizer products, and we're doing some research work around that, which I would hope to update you on over the next few months, which could be some exciting data. And then the key thing really is all this funnels into our profit growth. We are still expecting the profit in the range of $14 million to $18 million, which will be a growth of 23% to 58% over the prior year, if we can conclude some significant licensing deals. And this could potentially improve upon this, but we obviously have to do that first. Then as well, additional cash flows, we're looking and working on targeting -- getting our debt down to about the working capital level, which we see is about $23 million to $28 million. And then yes, once we've done that, then as a Board, as a company, we certainly want to look to things like dividend policies and things like that, which is certainly something we know that shareholders hold dear to their hearts. And we certainly have an empathy with it, and that's something that we're working towards. So look, thank you very much for your attention. Apologies, we couldn't hold a physical meeting. We very much wanted to. But obviously, I'm sure you can understand other circumstances intervened. Thank you.

Thank you very much, Hartley. Okay. We're now going to respond to Q&A and questions that have been asked. And this is a new experience for us as well, to be honest. So we'll do our best to get to your questions. We probably will group some questions together where we can. And if for some reason we don't get to your question, we'll endeavor to respond later by e-mail. But we'll certainly have a go to see how the technology works.

So I have got a question here from a shareholder. In regard to partnering with RooLife, how do you see AFT products performing against current available products in China? I guess this is just following on from an announcement we made a few months ago, I think, about RooLife. Hartley, do you want to...

Yes. Look, I think as we alluded to in the presentation, the launch will really only start to occur from late this month. I mean, there are existing orders which we are in the process of filling. So we have got obviously forecasts and budgets. We'll have to see how we perform against those. But I mean, I guess the key point is that China is a large market. I mean, we know there's 1.3 billion people, but there is a decent-sized middle class of 200 million, 300 million. And we do see there's a good opportunity for selling a number of our products such as the eye care products, such as the liposomal vitamins and those sort of products through the Tmall sites. That's really what we're working on. It's probably too early to give you a definitive answer to that. But we still see that it's got a good potential, which is why we're pursuing that.

Thank you. We've got another question here about COVID-19. So COVID-19 impacts are more positive or negative? If COVID impacts are positive, after COVID-19, will the business be stronger? I guess we've had some upsides and some downsides. But where do you think we'll be after the...

Yes. Look, I mean, the business is still growing. We see COVID as having some impacts in some areas. I think we've already said publicly, it hasn't helped enrollment in our studies or things like that. However, we're seeing in places like Europe and stuff, trials started enrolling quite nicely about 3 months ago. So things really started to return to normal in terms of the business environment. And we've seen in Australia, obviously, there's been some lockdowns in Melbourne. And New Zealand, we've had some repeats as well. So we've seen there have been some impacts. But basically, the business has been able to pivot, where we've got a number of COVID products as well. We've got our existing products, too. So really, we see that overall, we're tracking along fine. We are developing some products which may be impacted a bit by COVID. We have the liposomal vitamins and the vitamin C, which sales of that are probably helped by COVID. But then once COVID fades away or vaccines developed, I mean, people still get colds and flus and things like that. So these will be seasonal products that patients still take and customers still take during the winter months. So this just also shows why it's important to have a broad portfolio so you're not totally reliant on one area of your business. So I mean, with COVID, we've seen some areas stronger, some areas a bit weaker. But overall, we're growing. And hopefully, once the vaccine arrives, as I'm sure you've been following these numerous vaccines being developed, look, we still see that we've got a broad portfolio. And it will keep on growing as long as we focus and deliver on our business plans. So we see COVID there as obviously a serious issue, and it probably doesn't help the everyday running of the business. But we still see that we'll grow sales. And once it is tackled by a vaccine or something like that, we still see the business will carry on and grow.

Okay. Thank you. I don't think we've got any further questions at this stage. So we'll come to the formal matters requiring resolution, and these are as outlined in the Notice of Meeting. And as I said before, there will be an opportunity to ask questions on these matters that are being put to shareholders. As is now required by the listing rules of the NZX, a poll will be conducted for each of the resolutions, and that will be conducted at the end of the formal business, although you'll be voting through your screen. As mentioned previously, to vote, you select the voting icon on the screen and select how you would like to vote. Your Board supports each of the resolutions being put to the meeting. And as stated in the Notice of Meeting, each director intends to vote all shares and undirected proxies held by them in favor of these resolutions. Proxies have been appointed for the purposes of this meeting in respect of approximately 13 million shares, representing about 12% of the total number of shares on issue. Resolution 1 relates to the remuneration of AFT's auditors. The proposed resolution is to authorize the directors to fix the auditor's remuneration for the current year. In accordance with the Companies Act, Deloitte has been automatically reappointed as the company's auditor. Details of the statutory audit fees paid to Deloitte for the financial year ended 31 March 2020 are set out in the 2020 annual report. The 2021 audit fees are expected to be comparable to last year's with provision for an increase, as the audit scope broadens with the company's expansion. I now propose as an ordinary resolution that directors are authorized to fix the fees and expenses of Deloitte as auditor for the 2020 financial year. Just checking to see if there are any questions around that resolution. There is another question, but we'll come back to that under general business. So no questions on this moving -- motion rather, so we'll now move to the next resolution. And resolution 2 relates to the reelection of Marree Atkinson as a Director of AFT. As required by the NZX listing rules, Marree is required to retire and stand for reelection this year. The Board recommends Marree as an executive director and unanimously supports her reelection. As I mentioned previously, Nate Hukill resigned as a director after CRG sold down its holding. He had been due to be reelected. Hence, Marree is the only director required to be reelected this year. I'm now going to invite Marree to swap places with Hartley and to address the meeting on her proposed reappointment. Marree?

Thank you, David. Good morning. Reelection gives me a chance to not only reflect on how far we've come over the past couple of years since I'll last did this, but also to reflect on how far AFT has come since 1997, 23 years ago when we started. As I look at the goals that we've set and achieved over the life of this company, I feel very proud. As you've just heard from Hartley and from David earlier, we've had many milestones in the past year, including sales of over $100 million, launching Maxigesic Oral and IV dose forms in a large number of new territories, licensing deals and many more launches rolling out steadily. Our goal setting continues daily, and we continue to have many opportunities to keep the growth growing strong. Reelection is the time to consider the value that I offer AFT and its stakeholders as a Board member. I've been involved in the business from the beginning. I've worked across all areas of the company, from accounts to sales, filming TV ads, regulatory affairs, logistics and marketing. We have now almost 100 employees who undertake all these tasks that Hartley and I once did by ourselves, albeit on a much smaller scale. But our combined knowledge -- historic knowledge covers almost every part of the operation. Each employee has been personally employed by either of us, if not both, to ensure the company continues to move forward with the strong ethical values we've started with and the focus that we need to succeed. Being a part of this company every step of the way means I offer technical knowledge base of the company within a complex and regulated pharmaceutical industry as well as a wealth of knowledge of our people and our daily operations at AFT. My executive role at AFT involves working relationships across the entire organization with employees of all levels on a day-to-day basis. This maintains my knowledge of operations. I'm a strong believer in good governance and will continue to make this a priority in my Board position. I'm personally responsible for health and safety, ethics and also diversity reporting, which are all important roles for the well-being and safety of all our employees. We've achieved a lot so far. But as you've heard, there's a lot more on the horizon. And as Chief of Staff, I feel I'm an important link between our employees and our Board. And I'm eager to be part of the next stage. Thank you for your ongoing support. Thank you.

Thank you, Marree. I now propose as an ordinary resolution that Marree Atkinson be reelected as a director of AFT. Are there any questions on this particular resolution? Okay. I can see no questions on this resolution. So we're now into voting. Again, to vote, please select the voting icon on your screen, which is just pictured on the screen now and select how you'd like to vote. Just give you a minute to do that. [Voting]

So proxies received prior to the meeting in respect of the resolutions are now going to be shown on your screen, just for your information. And now on to general business. Are there any items of general business to be discussed?

We have got another question that's come through in relation to -- or just an update on the opportunity for AFT around cannabis-based products. Again, I'll hand over to Hartley on that.

Yes. Look, I think you can see that we've started the progress with the actual launch of our Hemptuary range. We continue to work on the cannabis area as well. Perhaps don't want to signal too much publicly, but I guess you can see that we are launching Hemptuary right now. And cannabis is still an area where we see it makes a lot of sense for us to include this within our existing categories within our Australasian markets because it's relatively cost-effective to add some additional products in rather than being a cannabis-specific product, where one has to build a whole company operation/field force around relatively narrow product offering. So we see that's actually particularly suitable for our business to be able to add it in to the existing portfolio. So clearly, yes, that's something we're working on. And I guess I'll just have to say, watch this space in the future for some further developments, but the first one you can see with our Hemptuary happening right now. And other ones, we would plan and been working on to follow. Thank you.

Okay. Well, look, thank you very much. There don't appear to be any further matters of business for discussion. So I'm going to declare the meeting as closed. Apologies again that we can't offer you a sausage roll and a cup of coffee or a cup of tea and further discussion with us individually, but let's hope that we'll be able to do that next year. Well, I'm sure we will hope that.

Yes.

So on behalf of the Board, thank you very much for your attendance at our 2020 Annual Meeting. We will announce the results of the polls to the stock exchanges as soon as they're available. Thank you very much, indeed. Goodbye.

Thank you.