AFT Pharmaceuticals Limited (AFT) Earnings Call Transcript & Summary

Okay. Let's get started. [indiscernible] everyone. Good morning, and welcome to AFT Pharmaceuticals 2026 Annual Meeting. I'm David Flacks, the Chair of AFT. I first draw your attention to this important notice on the presentation, which, along with my prepared remarks and the slide presentation has been released to both the NZX and the ASX this morning and will also be put on to our website. On behalf of the Board, thank you for attending the 2026 Annual Meeting. We have this year enabled the option again to join the meeting by webcast, and we extend our thanks to those of you who have joined by this means. Before we start with the formal business of the meeting, a couple of housekeeping points. I'd be grateful if you could please switch your phones on to silent. And in the event of an emergency, please make your way through the door you came through, or I think through those doors, otherwise follow the instructions of the staff. First of all, let me begin by introducing you to your directors, Hartley Atkinson, who will be presenting to you shortly; Marree Atkinson; Andrew Lane; Allison Yorston; and on the far side, Ted Witek, who's traveled here from Canada. Also joining us today are Bryce Henderson and Rebecca Clark from our auditors, Deloitte, and they'll be able to answer questions later in the meeting, if need be. Our lawyers, Harmos Horton Lusk, are also present. I'd also like to introduce you to some of our senior management team who are here today. So if you could please stand as I call your name. Stuart Houliston is our new CFO and Company Secretary, who joined the company in June, if you could. Thank you. Ioana Stanescu, our Chief Scientific Officer; Vladimir Ilievski, our Regulatory Affairs Manager; Louise Clayton, Director of International Business; Scott Porter, National Sales Manager, New Zealand; and Scott Crawford, our General Manager, Promoted Products. Our Group Marketing Manager, Murray Keith, couldn't be with us today. And you can find details of all the directors and senior management team in the annual report and also on our website. So the company's constitution prescribes a quorum requirement of five shareholders. As you can see, this requirement has been met. Accordingly, I declare the meeting formally open. So the items 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 2nd of July, 2026. And in terms of the order of the meeting, to start the meeting, I will say a few words, following which AFT's Founder and Managing Director, Hartley Atkinson, will give his 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 questions as we address each resolution in the formal part of the meeting. There will also be an opportunity to ask general questions after Hartley has given his presentation. And of course, at the close of the meeting, we hope that you will join us for refreshments. It's my pleasure to report a year of record results for AFT Pharmaceuticals, a year of double-digit revenue growth across all our territories, record earnings and continued execution of our strategy of building a diversified global pharmaceutical company. At last year's meeting, I spoke about AFT building the foundation for our next phase of growth. This year, we have seen the company deliver on that promise. Total revenue rose 22% to $254.7 million from $208 million the year before, with growth across every one of our territories. Operating profit rose 39% to a record $24.4 million, ahead of our guidance, even as we continue to invest heavily in our international business hubs and our research and development program. Net profit after tax rose to $14.1 million from $11.4 million. Our products are now sold in 87 countries, up from 80 a year ago. I want to take a moment to place this performance in a wider context because I think our achievements are not often appreciated. By the standards of global pharmaceutical companies and the industry, AFT is a small company. As of today, we employ about 125 people worldwide. Yet in the year just ended, each of those employees generated more revenue than employees at global peers, including major pharmaceutical companies such as Merck, Pfizer and our peers across the Tasman. That efficiency is matched by growth. In a year in which most of the global majors' revenue growth was in low single digits and some saw revenue decline, AFT grew revenue by 22%. This extends a multiyear record of growth that over the last 2 decades stands at a compound annual growth rate of over 17% a year. Few companies in any industry of any size can point to a comparable record of enduring and uninterrupted growth. We've demonstrated an ability to carve out a position with a strategy that's focused tightly on what we're good at, identifying unmet clinical needs achieved through in-licensing or developing the right medicines and then distributing them efficiently through our markets and partners. An active research and development portfolio is at the heart of these efforts. Earlier this week, we provided investors and analysts with detail on the strength of the portfolio and the significant potential it offers. We are excited about these opportunities, and we'll continue to work hard to bring each of them to fruition. Hartley is going to discuss this in more detail. However, it now stands at eight patented products spanning a range of applications, which combined offer long-term potential much greater than our current total revenues. We also have a number of new products moving to commercialization that will support our near-term growth as well. We have balanced this sustained investment in growth with careful management of our financial position. AFT stands apart from many in the industry, especially smaller companies that repeatedly call on shareholders for more capital. We have funded most of our growth from earnings. Net debt at the end of the year was $38.6 million, which was up from $14.5 million a year ago, but well within our target range. The increase largely reflects a decision to hold higher levels of inventory to ensure continuity of supply for our customers amid current geopolitical tensions, together with inventory that came with our new South African product licenses. To support this, we secured a new and increased banking facility with BNZ of $50 million in December last year. The company remains well funded. Reflecting the strength of that result and your Board's confidence in the outlook, directors declared a dividend of $0.025 per share, up from $0.018 per share the previous year. So just to reiterate, 22% revenue growth, an increased dividend and with a further increase in our R&D expenditure in FY '27 for which we make no apology. Your Board is confident that AFT is in a strong position as we continue to pursue growth locally and globally. AFT remains committed to best practice governance standards and to operating sustainably. Our sustainability framework is built around six priorities aligned with the United Nations Sustainability Development Goals. We've detailed our performance against these standards in our annual report. But broadly, we delivered on all the material, environmental, social and governance targets that we set for the year. Highlights include: an expanded product reach; an engaged and committed workforce; and market-leading waste minimization efforts. Shareholders should note one change to our reporting this year. Following the New Zealand government's decision to raise the market capitalization threshold for climate reporting, AFT will no longer be classified as a climate reporting entity and will not publish a stand-alone climate-related disclosure. We have, however, reported on our climate resilience in some detail in Appendix 1 of our annual report. I want to assure shareholders that this does not change our commitment to building a resilient business in a changing climate or to managing emissions across our value chain. It's a practical choice to focus on the matters material to our business. Turning to Board matters. This year, Marree Atkinson, in accordance with NZX rules, retires by rotation today and offers herself for re-election. As Co-Founder and Chief of Staff, Marree has been integral to AFT since its establishment in 1997 and remains invaluable to the Board. Her fellow directors support her re-election. I also want to acknowledge our previous Chief Financial Officer, Malcolm Tubby, who retired in June. Malcolm had been with AFT since its earliest days and has been a key architect of the company's financial foundations as it's grown from a small New Zealand operation into a business selling into 87 countries, dual-listed on the NZX and ASX, and tracking towards $300 million in annual revenue. On behalf of the Board, and I'm sure all shareholders, I thank Malcolm for his professionalism, his integrity and his contribution and wish him a happy retirement. We are meanwhile delighted to welcome Stuart Houliston as our new Chief Financial Officer. Stuart joins the company from Sanford, New Zealand's largest integrated fishing and aquaculture company. He brings financial expertise from both public markets and a career in professional services, which will strongly support the future strategy and growth of the business. I should also note that the company this morning announced to the market that I will retire as Chair of AFT during the next 12 months. I will have served 12 years as your Chair prior to the next Annual Shareholders Meeting, and I will not make myself available for re-election at that meeting. I commenced as Chair ahead of the company's IPO and listing on the New Zealand and Australian Stock Exchanges at the end of 2015, and it's been an incredible journey. From revenue of $56 million in FY '15 to revenue of $254 million in FY '26 and forecasting $300 million plus for FY '27, with significant growth likely to continue in the years ahead. I will remain as Chair until a new Chair has been appointed and have said that I will be available to assist with the transition. I would like to thank Hartley and Marree for the opportunity to chair this unique organization, and I will remain very interested in the company's ongoing progress. So looking ahead, we expect to extend our growth record in the current financial year despite the uncertainties in the global trading environment. We remain confident of reaching the revenue target we set back in 2024 of at least $300 million for this financial year, and we expect operating profit of between $28 million and $32 million. In closing, I wish to extend my thanks to my fellow Board members for their support and guidance. I'd also like to thank our executive team and the broader AFT team whose efforts have made this record year possible and as I've noted, to stand among the very best in our industry. Lastly, many thanks to you, our shareholders, for your continued confidence and support. I will now invite Hartley to discuss our performance and prospects in greater detail. Thank you.

Thank you, David. Yes, look, everyone, thanks for turning up. And just to go through a presentation to give you an overview of kind of where we're at and what we're planning. So I think you've seen this slide before, but essentially, this one just looks and describes our business where we have our Australia and New Zealand business, where we have a strong field force. Then we have our R&D pipeline, which, as David has mentioned, now has eight patented products in drug development. We are working as well. What's quite important is our expanding global footprint, and I'll talk a bit more about that in the presentation. And then as well, we actually have got some product launches from drugs we've developed as well, which are ongoing at the moment. And we're still sort of driving to get some more countries. I'll talk about that a bit as well. We've got 87 at the moment, but that's certainly not the end game. So obviously that is me, and then to click through. So look, here's a slide of our growth over the years, which -- look, I thought it's quite a useful one to sort of take stock of. I mean it's interesting when I travel around, some people don't really think of AFT as a growth stock. So I'm not quite sure how you define a growth stock, but -- exactly. But look, every single year, forever and ever and ever, we've grown sales. Our CAGR, as David mentioned, is a bit over 17%. And certainly, it isn't in our plans and our intention to kind of slow anything down or to stop. We know this quite a lot when analysts sort of do analysis and things, they always sort of seem to have a couple of years later growth tails right off. But look, with all this R&D, which is a very long-term game, this is certainly not the plan. Our plan is to keep on growing and to keep on growing, you have to have something driving it, and that's what we're working on. So that just gives you a bit of an overview. And then look, just quickly to whip back to the history. We have sort of come a long way. We literally started in the garage with $50,000 start-up capital. Every helpful expert told us that sure enough, the big guys were squashes and we'd be gone burger. And then like in 2004, people seem a bit surprised, we started doing drug development. We didn't have any money, which is a little bit of a barrier, but we still started it. And then 2005, which is just after I think Air New Zealand had purchased Ansett, which is a bit of a bumpy ride, and we decided we were going to expand across the Tasman and all the experts that originally forecast that demise, sort of reemerged to assure us that Australia is a graveyard. But to be frank, Australia has been extremely supportive and very positive, and that was arguably one of the single most important decisions that we made and our Australian business presently is sort of really helping our overall pathway. And I mean, we did sort of run a bit short of money for drug development, which is why we floated. So that money we raised at the float, the $33 million, was very much to accelerate our drug development, which is really important. And if anything, at this point in time, we're doubling and tripling down on our drug development, which we see long-term, or medium and long-term one of the key drivers. I'm very pleased as well, though, literally last week, we got a third approval of a patented FDA-approved drug. So it was classified as tentative approval, but the reason for that is because there is an exclusivity provision that blocks it from being launched presently, but not that far away, we will have a launch. But we were really pleased to see that it is a totally different area. The first 2 drugs we had approved were our Combogesic tablets and Combogesic IV, which is the Maxigesic. So that was one area. And the next area was a dermatology product. So pleased, a totally different therapeutic area, and our team still navigated very well and achieved the U.S. FDA approval, which is, to be honest, the gold standard. I'm always interested, even when I go -- not even, but when I go to China, they'll kind of smile and mention geopolitical things, but then they'll always turn around in the next phrase and say, "and what does U.S. FDA think." So they do kind of have a steering sort of influence around the whole globe. And yes, look, just the sort of growth. This obviously looks at the profit on the right-hand side. You can see just the history of it was we did say we were raising money to accelerate our R&D. I think to be fair, too, we did indicate we will probably lose money, and we did. Probably people didn't love it at the time. But obviously, we were very focused on getting back into profit. What sort of happened a bit, and you can see from that graph, it has been a bit flat and bumpy over the last 4 or 5 years. There is some lumpy licensing income, which is that darker blue. So that did influence it a bit. But even ignoring that, the last sort of 2 or 3 years, there has been considerable investment in the new affiliates and also the R&D. But certainly, the sort of new affiliates are not profitable straight away. And one of our key aims is to drive them into profit, which we'll talk a bit more about in some of the following slides. So that's kind of where we're at in the whole scheme of things. And then this year, as David has mentioned, we're forecasting, say, $28 million to $32 million or call it, $30 million, and you can see that starts to profit growing upwards with the increase in sales, which is what we would expect and we plan to continue happening. Australia, as I mentioned before, look, it's a really important engine growth for our market. You can see on the left, we've had nice growth. Last year, it grew about 19%, which is very pleasing. You can see also on the profit side on the right, a little bit of bump a few years ago. That was actually specifically due to an expansion decision we made at the time to hire a doctor rep force in Australia. And that's actually been very important because really getting doctors to recognize your products to recommending them is actually the strongest form of marketing. Like you can stick stuff on television and do all that, but your local -- you go to your doc and your doc says, "Hey, this is good stuff. You should try this", has more of an impact in our experience than almost anything else. So certainly, we were keen to also make doctors aware of our products. And that was a bit of a drop there as we had to absorb the expense. But as you can see, we have absorbed that, and it's sort of moving upwards in terms of profitability. So Australia is really helping us also grow our expansion as well. New Zealand, our home market, look, clearly, obviously still important. We grew the market by double digits, 11%, which we're really pleased with. One of the most frustrating things last year was almost constant walls of negativity from the press about how bad things were, but we were still growing at double digit. We were ignoring all the doom and gloom and our sales guy, Scotty, did an excellent job of just getting a move on and selling stuff. So that was a very pleasing result in arguably what was a little bit of a depressed economy. But you can see the good thing about pharma as well is it doesn't really get influenced that much by economics. I can understand that if the economy goes down, people might not go out and buy their new Ferrari, but they don't say, "I got a headache, so I'm not going to go buy my headache medicine." So that's a really key sort of thing with the pharma business. And then Asia, of course, is on our back doorstep, actually having very pleasing growth at the moment, but a long, long way to go as well. There's a lot of ongoing potential. I still feel as though we're only scratching the surface. We're getting a great job done by Lorraine, who's standing next to our Crystaderm model in China at a sales meeting, and that's Leonard as well, who also works on our BD team. But you can see, look, sales are growing, but I still think there's a long way they can go. And we got a nice profit. Last year, we had a little bit of a bump associated with the doctor strike in Korea, because Korea is one of our better markets. But we're getting very good growth in Singapore, getting good growth in Indonesia and Korea is still growing. We're just starting to make progress in China. So that's sort of obviously one of the key markets being the second largest pharma market in the world. But it will take time, but we are making progress. And certainly, we're seeing -- things like our cross-border e-commerce sales are going very well. But what we are also focused on is inland China sales as well, which is a work in progress. And look, then our global map. So what we've talked about is affiliates and what we mean by that is where the red dots are, we have offices, obviously, Australia and New Zealand. We actually do have a reasonable office now in Sydney with a good team there that helps support our sales operations, have an office in Singapore and an office in Hong Kong. We bought a business last year in South Africa, and that's basically headquartered in Cape Town. So South Africa has been a lot of work to integrate the business and everything else. And it's still an ongoing work in progress, but that also will enable us to sell in other parts of Southern Africa as well. The main probably other markets are Namibia, a little bit Mozambique and also even smaller places like Mauritius, which don't sound much, but actually it's quite an interesting side market. And then we have an office in Detroit in the United States. Originally, the main thing we'd always thought about was using that to help to run licensees and maybe sell a few OTC products. Essentially, what's happened though over time as we're getting to understand the U.S. market more and selected products, we believe we will sell ourselves. And that's quite important because then that lets us drive it more ourselves, but also to access what is a significant part of the global market. So like essentially, if you look at all our markets with the red dots, so you go across to Canada and then up to the U.K., that's about 10% of the world market. So it's not that big. But if you put the U.S. in, for a lot of products, the U.S. will be 40% of the global market. So literally, we can access ourselves 50% of the global market. So that's quite significant. So certainly, that's why for the products we believe we can, we will sell ourselves in the United States. And we've certainly seen like this -- for example, that product I mentioned we got registered last week. I've had people approach me about as long as my arm saying, "Hey, we want to do that product in the U.S. We can do it for you. We'll do this. We'll do that." Which also makes me think, hold on, why are they all so mad keen to get their hands on it. There's a good reason. It's a really nice opportunity. So that's quite important. Obviously, the offices. And also, you may see just on the left-hand side next to the U.K., obviously, is Ireland, and we have a small office in Clonmel in the South of Ireland, and that helps us run the whole of the EU. So we do have quite extensive business at the moment across the whole of Europe. And you do need a European entity to actually do that for various technical reasons. There's a lot of things to set up with these things. They might sound simple. You put a dot on a map, and I tell you once a year that we got an office there. But honestly, there's a lot of complexity like with licenses, inspections, all these sort of things. Even in the U.S., for example, we have to have a state license in every state in the U.S. So the amount of paperwork to get your 50 licenses across the U.S. is quite an exercise. And that's all sort of things that we've been doing. And then the countries in yellow that map -- where the map is in yellow, that's where we're currently selling. Blue is where we are in registration or have an agreement, have not yet launched it. And white is where currently we're not operating. So there's a few obvious blocks, Venezuela presently. Maybe after Mr. Trump changed things, maybe we might get in there, but not on the immediate plan. India is certainly not on the plan, but we've had a lot of approaches from most of the major Indian companies for our iron injection, but we would rather wait until the value of it is greater before we license. Philippines, we are actually pretty close to signing an agreement for the Philippines with one of our existing Indonesian partners. And Japan, Ioana and I have probably had four or five trips to Japan in the last 12 months, had a lot of meetings with the regulator there, and we have actioned an option agreement, and we would hope to conclude that sometime in the next couple of months. So Japan would turn blue and then after that should turn yellow. So a lot of work. And Japan is third biggest pharma market in the world. Although just -- one way just to mention to look at it really, you should almost look at Europe as a block. So if you look at Europe as a block -- the biggest market is the U.S., Europe, then China, then Japan, and that's kind of how we're looking at it. So we are covering with pretty close relations all of those main markets. And then international, you can see on the far right, that's the number of countries. So look, good sort of growth. We just recently launched in a couple of new countries, had a launch in Egypt, which is still at a good solid population in Egypt and also launch in Taiwan as well. And seeing quite a lot of interest for our products out of Taiwan, which is still quite a nice market with 23 million people. So it's not a lot different from Australia, and there's some good potential there. So really, it's -- but in terms of sales, the bit that we're really working on really growing is the international part. So when we look at our 5-year plan and different things, that's where a lot of the growth -- not that I'm saying growth doesn't come from other places because sometimes what I know is people say is, "You're doing all this international work because you don't think Australia and New Zealand are going to grow much, do you." Like no. We still got plenty of growth plans, but we still see overall the biggest has been international. So that's that one. And look, the other thing, too, we did this just recently at a meeting we had, people sort of said, "Okay, you're talking about R&D pipeline, but how do you make your money out of it? What actually happens?" So there are different ways we make our money. We can or we not can, we usually get upfront payments. So when you sign a deal, they will usually agree to give you an upfront payment. So that's pretty helpful because that's a bit of money right now, and it helps to offset all the spend you had on R&D. Then they usually will agree to milestone payments. So it might be something like a payment when you get registration or when you launch or something like that. So once again, these are always helpful bits of money that come through to help offset kind of other costs. Most times or just actually every time, we have a supply contract. So we make the -- or get the product made for us and then we sell it to them, and we make a margin on selling it to them. And then the other thing with some parts of the business like Europe, we quite often do a profit share as well. So we might sell it to them at whatever price, and then we'll agree that the margin or the profit is x and then we split the profit accordingly. So that's quite a nice way of dealing with kind of local partners. We also have royalties as another mechanism where the company sells it and then they get net sales of $1 and then they pay a royalty of 7.5% or 10% or something like that, of their sales back to us as a royalty. And you can see looking at that bottom graph there, royalty income, you can see that has got a nice hockey stick sort of shape. So royalties over time are growing, and we would be working to keep that growing basically. And that's all 100% profit. So that's obviously a nice source of income. And on the top, you can see quite lumpy is your licensing income. So normally, if you do a deal in the U.S., you can get a big chunk of money. Other countries, less so. And sometimes countries like the Middle East and stuff don't really want to do a classic licensing deal, but then you have them a, say a distributor and you actually make a better product margin. So it doesn't sort of impact the economics that much, just where the money really flows from. But one positive is that we're very flexible, so we can do deals with lots of different people where sometimes some multinational companies are very fixed, like this is the rule, this is the only way where we will be more flexible. Often, you still get the same dollar result in the long-term. So it's that one. And look, what's really important as well is we have talked about the big chunk of R&D, those eight patented products, but there is a lot of other lower key development underway, and we also do, do a lot of in-licensing. So we recognize we can't develop everything. So what our team does is it goes around the world. We meet with people, like we go, for instance, the Bayer, USA. We've got this meeting called CPHI this year at Milano, and we meet lots of people. And also, we do meet individual companies as well. So basically, if we look -- we do have some large OTC products for the Australian markets where, for instance, we've done clinical studies. We're waiting for one study report, a couple of study reports at the end of this month, which is about now. So we've got a couple of big projects underway. I don't really want to announce to everyone what they are. But honestly, if we get one of them, people will be quite surprised. It's quite interesting, we've able to make quite a lot of progress in some quite interesting areas. So both of these products that we are working on for the Australian market have a sales market potential of in excess of $50 million. So they're not small. So we've chosen these and we're doing the work on that. Also, we do quite a lot of things, like if we have an existing range, we do new formulations, like we're pretty strong in iron products actually. And for instance, we have some couple of new formulations we're working on, and they'll come in and be launched sort of in the next few months. So we do, do a lot of that kind of work. And then also, we have a in-licensing approach, like I was mentioning, where we have a whole team because sometimes people say, "Well, Hartley, it just you, isn't it, he does everything else." Like, no, you got to be joking. We have a really thorough solid team that do a lot of work. We have people based in New Zealand, obviously, in our head office, but we have someone based in Amsterdam. We have another lady based in Zug in Switzerland. We have a guy in Australia, and then we have our own team here. So we do have people literally around the world to help us with this in-licensing. And you can see like -- if you look at -- just to give you an example, this bottom sort of table, we've got over 80 product dossiers submitted for registration. We've then got well over 100 in preparation and well over 100 in the pipeline, which will probably come in, in the next, say, 18 months or something like that. So there's a heck of a lot of work that goes on in these sort of areas. And our company, I believe, is very efficient at doing this sort of work. And we work with other close partners that we've worked with for 20 years. We have a team as well in China. There's 4 ladies in China that work with the guy that we work with a lot. So there's a lot of depth with how our team works, and we work with a lot of contract manufacturers right across the globe, from Europe to China to India to Malaysia, et cetera. And Canada actually is quite a big source as well. So that is a big part of our work is the in-licensing and some lower level drug development as well. What's also important is our existing products that we want to in-license. So -- I mean, sorry, that we want to sell, out-license once we develop them, and we've got quite a few extensions actually to our Maxigesic line. So even years and years later, we still got extensions that people are interested in. We've got a big range of hospital injectables. We have a big manufacturing partner based in Chengdu. And yes, we've literally got a big line of drugs there that literally cover $6 kind of billion worth of sales overall around the world, but about $700 million sales in our territories and in Europe, about another USD 1.75 billion. So we can develop very well priced drugs for those sort of markets, including sort of guaranteeing part of our own pipeline, which is really important. We're not reliant in this case on in-licensing. We're driving the development ourselves. And then we have a number of other projects that we're doing. And Pascomer is the latest one for facial angiofibromas. So we've got the -- as I mentioned before, the U.S. tentative approval. And off the back of that, we're getting a lot of interest, which is helping us for other markets as well. We've got a number of filings underway and happening right now or have happened. So that will be one of our new products that we're working on. This is -- quickly, this is our R&D pipeline. So we're talking about eight patented products. We have a -- we did get someone to do a bit of research as well into our company because what we sort of saw was, if you look at it, we were mainly judged as, say, a specialty pharma company and a specialty pharma company is someone that just sells products by licensing them in, but never actually develops anything themselves. And that was a little bit odd because we're spending $25 million or so on R&D and yet people sort of more or less saying to us, "I don't really understand the R&D pipeline. It's a bit complicated, so I'm not going to assign any value to it." So we got an expert who's had a lot of pharma analyst experience in Australia to take a look at it. He essentially valued three of this pipeline. So he took the Stability Program, he took the iron injection and then he took the -- trying to remember which other one he took. He took the Pascomer. Yes. Yes, so literally, there's eight of them, but he took three of them. And it was interesting that he got -- under his models, he got a valuation of about $12 to $16 a share, mainly totally driven by this pipeline. So either you can ignore it, but I would suggest that it shouldn't be ignored. And even like, for instance, with Pascomer, it is delayed, but you still got to market, say, in the United States in a couple of years' time or 2.5 years' time to be more precise that -- for instance, there's 15,000 to 30,000 patients, they call that 22,000. Maybe half of them get treated, say that maybe go down to 10,000, maybe you get half the market share, you say 5,000. But these sort of drugs in the U.S., the current product at the moment is about $60,000 a year treatment fees. So there's like, whatever we get, okay -- you can say, okay, we'll only get 2/3 of that or 1/3 of that. You can do the math. It's still an interesting number. And people can say, "Yes, yes, but you won't successfully do the registration, will you." But -- well, we have. It's already been done. And yes, it's delayed unfortunately. At the moment, we're still working out ways maybe we can tackle that. We've got some good ideas. But it's not a guarantee. But still, that product is waiting for March 22, 2029, and it is worth something. It's not worth nothing. So that's the sort of approach, I guess, by looking at this. So the Stability Project, I've got a slide on this. So this, we did a partnership where we're 80%, and it's with a U.K. company called Stablepharma. They are experts in actually vaccines where they can turn a fridge -- refrigerated vaccine into a fridge-free version. We've also signed a letter of understanding with them as well because we actually quite like that idea and think it's a good idea to sell. So when their products are ready, we'll be keen to do a commercial agreement with them. But this is like based on using their technology to turn refrigerated drugs into fridge-free. At the moment, we're targeting about USD 6 billion worth of drugs to turnover. So it's an interesting project. And also too, because there's multiple drugs, you've also got multiple shots on goals. So you're not reliant on just one thing, like, okay, at the end of the day, the worst comes the worst and one or two out of 12 don't work. It's not the end of the world. So there's that project. Pascomer Port Wine Stain, this is an interesting project. So it's similar to our Pascomer for facial angiofibroma, which is that rare orphan disease, except in this case there's 18 to 25 times more patients. So there's a much bigger potential market. And look, this one, it doesn't take much to do the numbers to work out. It's well over $1 billion worth of market potential. We have an injectable iron. So this is a new chemical entity. And we've been through FDA and got approval to do the final pivotal study. It is a lot of work actually. Like what most drug companies aren't successful at, even the big ones, is doing a truly global program. So what we've done is we've met a couple of times with the PMDA in Japan. So we opened the, what's called the IND, which once you open an IND, you're allowed to do the big human study. So the FDA gave us a tick for that. And then we met with the PMDA in Tokyo, and they approved that we can add Japan into the study. So it's a 1,366 patient global study. It's a big study, and that will be conducted in New Zealand, be conducted in India, in China, in Japan, in the U.S., in Europe and also Armenia because we have to cover far Eastern Europe as well. So basically, we're just going through the Chinese CDE presently and hoping that they will also allow us to add China in. And the sort of approach is that they say that the Japanese will say, "If you look, Japan is different. Japanese people are not the same as Caucasian people. Our medical system is different. But if you add about 10% of your patients as Japanese, then we will let you use that study for registration in Japan." So literally, we're trying to cover the whole of the world with this large clinical study. We've already done or had a clinical study done that shows it works really well. Like it's in about 140 patients, a Phase III study, but this big one covers all the ethnicities and allows a whole -- a global approach for the whole world, which is quite challenging, but it's something that we have worked hard on to get set up. So we have other ones. We have an antibiotic eye drop for drug-resistant eye infections. We have another one for what's called infantile hemangioma. So basically, it's strawberry birthmarks, babies are born with strawberry marks on them. The only global treatment at the moment actually is an oral agent that's relatively toxic. And then this one will be topical and less toxic. So it's just an example of -- what we're also trying to do is, in many ways, our hardest things were Maxigesic because the pain category is really competitive and a lot of players where a number of these have no competitors. So we're successful, we develop them, we're at it. And the main thing then is trying to develop the market and all that sort of thing. But certainly something like the infantile hemangiomais one of those. We have another one for topical keloid scars. So keloid scars is where you have a cut in a scar, and instead of healing over, it keeps growing and you get a big bump on it. And you can surgically -- actually, at the moment, the main treatment is surgical excision, which seems almost like an oxymoron given that you're going to get it growing again. So this is already a big market, and we've got a topical keloid scar treatment. Also is another thing that's quite common, more common than you think, called Burning Mouth Syndrome. It predominantly affects postmenopausal women. There are no registered medical treatments for this, and we are developing that. And we've got another just new project, which we've got an option on it, and we just have to check if the stability is all right. We will push the button on that about the end of this year. And that's actually a really big category, like at least $3 billion, and that's a very exciting project, but we just want to get it to that thing stage we know the formulation is stable. It should be, but we just want to be guaranteed. So just very quickly, I'll give you three slides just to talk a little bit more about the indications that the guys at Pitt Street Research took a look at in valuing our pipeline. So this is -- we're talking about the facial angiofibroma and the orphan drug. This is the clinical study we did. This lady on the right, you can see on the left-hand side, this is what she entered the trial with, there's growth on the face basically. It's something called Tuberous Sclerosis and they get something called facial angiofibromas, which just means growth on your face. And if you look at -- this is after 6 months treatment, and they have a rating scale, and she was sort of fairly typical, she has a 1-point improvement. But I don't know about you people, but I know if it was my face or my daughter's face, I know which one I'd rather have. So the stuff works. And yes, so that's -- that one has been approved by the FDA. We've got a number of licensing agreements, but we've noticed since we've got our FDA announcement, pretty much the phones run hot. Well, the phone doesn't run hot nowadays, but the emails run hot with a lot of interest in it from places like Taiwan, sort of Asia, a lot of interest in America, but I think I've already mentioned that we're quite keen to tackle that ourselves, and we've got a good understanding now of how we could tackle that. And globally, there's about 1 million patients. So it is rare, but not super rare. So that's a really exciting project, which we can start to generate some money sooner rather than later. The Stability Project, to give you a bit more -- actually, I've talked a fair bit about this. But look, it's -- there's a lab in Spain, in Madrid. It's very good scientists have done this sort of thing with a number of vaccine projects. So they're kind of well versed on it. And basically, we're literally working on the first two at the moment. We're just starting the third one, and we'll add the fourth one in very soon as well. But there'll probably be about 12 sort of drugs that we will develop and the sales are covering about -- a bit over USD 6 billion. It won't sort of be the thing that you'll get 10 times the price, to be honest. But if we can get it, so we may be 10% or 20% more expensive. It will kind of be a no-brainer. So that's our aim. We've obviously got to work through it. But it has got a clear advantage because honestly, a lot of hospitals are now overflowing with refrigerated drugs and practically it's becoming a real problem because all these new biologics and all this and GLP-1s and stuff, they're all refrigerated. So it's just more and more of them. So practically, it is honestly becoming quite a problem. But one of the important things though is that also having our own target market set up for our affiliates cover 10% of the world. America, we still need to see with this particular one whether we license it out or not. And then the other big chunk of the world is Europe, and we're very well set up in Europe for -- we do all our own registrations. When we first started and floated a few years ago, we had a consultant. They cost quite a lot of money. We've brought all that in-house, which isn't really simple. There's quite a lot of complicated bits and pieces, but we've got all that now where we do all the filings right throughout Europe ourselves from back here in little old New Zealand. So that really does save a lot of expense and also gives us a lot of efficiency. This is Stability Project. And one that actually is honestly really exciting, we get a lot of people wanting to talk to us about it is injectable iron. I mean iron is something that as a category is growing. It's about USD 3.5 billion sales presently, forecast to grow to about $7.4 billion in the next 5 years. Basically, the problem with iron injectable though is it's actually quite toxic. And what our carrier system does is it binds it really, really tightly because what happens is if it isn't bound really tightly, free iron breaks off, floats around the body and causes havoc literally. So we know from the big study we've done against the market leader, ours was so safe, we could give ours as one really big dose, where about half the patients presently with the global market leader have to have their dose a week apart. If you were thinking it was you, what a hassle to have to go back to the clinical doctor the next week to get yet another dose. And if you look at the adverse events, like we had about a 2% rate of adverse events on administration, the global market leader had 29%. So we were really well tolerated. And the other one is there's quite a lot of concern about something called hypophosphatemia, where your plasma phosphate drops, and that's quite nasty. And we don't have -- our study so far showed we had no impact at all on plasma phosphate while sure enough, the market leader, the phosphate level dropped even in not a huge number of patients. But look, we need to look at lots of ethnicity, so we can do that global approach. So this is the final Phase III study on top of one we've already done. So this one is reasonably close, and it is potentially a really valuable project. Vifor, a company in Switzerland was sold to CSL. Their main product was the injectable iron I'm talking about, and that was sold for about $11 billion. And just about most of the income was all the injectable iron. So people do recognize the value of some of these products if you can get them working and register globally. This one, too, gives you a bit of an idea. This is calendar years of just when these products will come online. So the facial angiofibromas will start to, we believe, sell that next year. At this point in time, it's a little bit of a hiatus in 2028. I still don't really see that as a problem because we've got a lot of work still to do with our different affiliates, which will really drive a lot of growth through '27, '28 and '29 anyway. And then you can see we've got a whole plethora of products coming in 2029 and then spreading out across the next few years. We're not really looking to keep on adding products into our R&D pipeline. We're kind of conscious that we need to execute a few things and tick a few things off. So we're really kind of focused on that. There may be one late-stage project maybe we might be able to do with someone, which we're talking to at the moment. But at this point in time, it's pretty much it. So it's certainly very positive. Everything takes time, but these dates will come around reasonably quickly as we know, with time. And look, just to kind of sum up and give you a quick summary of what we're doing. So look, very focused on this $300 million target, which we mentioned, as David said, back in '24. I think at the time, some people maybe thought it was a bit of a fanciful target, but it wasn't. It was a very definite target. So we're very firmly aimed on that. Also, look, we've got a lot of potential. And yes, sales are going fine at the moment. There's nothing bad to report. They're going good. And Australasian revenues are going well. A key part is our international business hubs. It's sort of pretty important. And what we're aiming and focused on this year is certainly getting our U.K. and South African entities into profit, which would make quite a lot of difference. Canada and the U.S., I don't really want to guarantee anything. It's still really kind of -- we've got a big launch coming in September at PAINWeek in the United States. We've got Mark Cuban agreed to support us. If you don't know, he's a famous American billionaire, owns a sports team, he's on Shark Tank, and he actually really likes Combogesic, and we've got a deal with him to sell it through something called Cost Plus, and we have a number of other outlets as well, which actually kind of circumvents the American insurance companies, which Mark Cuban also goes into bat against a little bit. So the American market is changing quite a bit, and we're sort of hooking our canoe onto that kind of change. Look, obviously, the R&D is something very focused on, loana and her team have got a lot of work to do, especially with that big study. So -- and we are hiring people, but not a lot of people. We're just adding the odd person on here and there, but we are obviously looking very carefully at that. And same with licensing, we can start to do some licensing deals now. We said that we're expecting about $3 million, but we will obviously work on trying to exceed that, but we won't know until later on in the year, really. And then look, yes, we're just still -- at this point in time, it's early in the year, and things are going fine and on track, and we would reiterate at $28 million to $32 million. And if anything changes, we'll obviously update you on that. So that's kind of a bit of an overview, hopefully, which we'll let you know what we've been doing and kind of where we're at. But certainly, we are excited and we're really pleased to see that we are crunching things off that we kind of said we'd do. And yes. So thank you for your support.

Hartley, thank you. As you can see, lots going on and some really exciting opportunities for us. Anyway, at this point, we're going to open the floor to questions on the financials, business update or any other matters you would like to raise. As you can see, directors and senior management are here, and I'll be happy to answer questions from shareholders at the end of the meeting as well when we're having refreshments. Any person who wants to speak, could you please raise your hand? I've got you, yes. And please could you state your name prior to asking your question. I also ask that you wait until you got the microphone because otherwise, those attending online will not be able to hear your question. I also ask that in the interest of fairness to all shareholders that anyone wanting to speak should be as concise as possible and considerate to other shareholders wishing to ask questions. So yes, sir. Gentleman over here.

Yes, Graham [indiscernible], shareholder. I was a little bit surprised at the lack of emphasis on or perhaps penetration in the Indian market. And I wondered whether the recent FDA that this country has signed has improved the opportunity for this company in that country?

Thank you. I might hand over to Hartley on that one.

Yes, to be honest, in the pharma world, the FDA makes pretty much negligible difference. We have had a few approaches and it's something we are entertaining. But I don't think it's the first cab off the rank. The iron injection would have the biggest potential. But to be honest, the dossier is not ready to file yet. And we have got enough money to develop it. So we'd rather develop it close to the time where it's going to be worth more. So we've had approaches from probably four or five of the top Indian companies. And yes, that product would suit that market quite well. And obviously, there's a good population. So yes, but some of the other products are not particularly necessarily well suited for the Indian market. So we're mainly waiting on that iron injection, but waiting until later.

Grant, I'll just get you the microphone.

Grant Tickell, Shareholders' Association proxy. I must say that having come to these meetings for a number of years, I always appreciate Hartley's clear explanation of the business and where it's going to. Congratulations on the stellar performance over the last year. I'll also comment on your corporate governance. Obviously, we rank -- the Shareholders Association rank all the companies on the NZX on their corporate governance. And I have to say AFT performs at a much higher level than its market capitalization. You're up there with some of the certainly top 20, top 30 companies. On the matter of the share price, I had a look in -- 2 years ago on the day of the meeting, the share price was $3. And yesterday, of course, we know where it is. And hopefully, it's heading towards $5. I recall both Hartley and David commenting on the market's lack of recognition of the true value of the company. So it's great to see that the market is now starting to understand AFT and what it does, how it does it and where it's going to. Just one comment. We note that you make a political donation, you donate to your local member of parliament each year. And I'd just like if you could comment on that, David?

Firstly, thank you very much, Grant, for coming along and being the proxy for NZSA. It's appreciated, and thank you for your kind comments. And thanks for the question. So yes, our annual report does report a political donation of $5,000. I'm not sure I would categorize it as a political donation as such. It's a payment for a dinner, which we go to with our MP, our North Shore MP, Simon Watts. We're unapologetic about the fact that we want to keep close to our local MP. And to be honest, if he was a green MP or he was a opportunity party MP, we would do the same thing. So maybe we need to look at how we sort of classify the payment for a dinner in effect. But thank you for raising it. Any more questions? Joeri.

Joeri Sels, Head of JS Alpha, with three questions, please. First one is on -- Hartley, as I haven't seen you for quite a while. The midpoint, $30 million you're forecasting for this year, can you just remind us what -- which royalties and license income that includes, please?

Stuart?

Yes. No, look, it's about -- I think we've budgeted in that about $3 million of licensing income and just under $4 million of royalty income really, he's nodding. So he's got his head around the figures real quick. But yes, it's about that.

Okay. So roughly the same level like last year?

Yes. I mean...

Second question is on -- at the Investor Day, I couldn't attend a few days ago, you showed the charts regarding -- basically, you reviewed the budget for R&D spend for '27 and '28. So you have a consecutive $5 million increase in both years roughly. And you seem to know already quite well the distribution over the first half year and the second half year. I was surprised about that accuracy. The question I have here, with this $10 million more spend, what's going to be CapEx and what OpEx roughly, please?

Yes. I mean, we sort of got a mixture -- haven't we -- I never pay much attention to the exact mixture, but it's about half. And normally, it's about half and half, isn't it, I think Stuart.

[indiscernible]

Yes, cash...

[indiscernible]

Because I noticed that consensus is still estimating flat CapEx at around $9 million to $10 million. And somehow I sense this will move up to maybe $12 million or $13 million or something like that. Okay. Last question is regarding Pitt Research. So I was delighted to read some more research, and I enjoyed the width and the depth of the research. But I'd like to flag one thing here and ask one question. I mean when new research comes up with such a rich valuation and traditional analysts are saying this company is worth $3, $4, $5 value and then there is -- there comes a valuation up with $12 or $15, I think they should back it up as strongly as possible and add reliability as strong as possible. And what I was missing in this report was numbers -- to be honest, I don't recall to have read a report of 30 pages where the analyst omitted the P&L, cash flow and balance sheet table. So that -- they must have this data. Otherwise, you can't value your existing or your pipeline business, and it's not part of the study. So this is something which I found strange. Having said that, one question regarding that. Was that a one-off? Or was it an initiation of coverage from Pitt so we can expect a yearly or whatever contribution?

Yes, they're covering us for this year. I mean, essentially, it's sort of like part of our IR in some ways, but we wanted someone to at least look at the pipeline because we have actually been told to our faces that it's a bit complicated. We don't quite know -- and I'm not -- there's no criticism. We don't know how to value it. So we don't. And yet the challenge is that, okay, you spend $25 million in R&D and if it's valued as a specialty pharma company, that minus $25 million, where we didn't spend a cent on it, you'd almost be better the other way. I mean Pitt Street have got a lot of stuff behind that. So I guess they don't publish everything like you're saying, but they did have a lot of numbers, as far as I was aware. To be honest, I know we published it and the comment about the valuation. We had no idea what it was going to be until it came out. I mean I was probably quite surprised. But to be frank, [indiscernible], he hasn't been too aggressive. He's put three of the products -- three of the projects and there's still five left, but if something could fall over, I totally acknowledge that.

Well, I certainly understand your happiness. So last question, I'll add on, on this one. So if it's regular or at least for a year, does the information flow into the consensus? Does that go to Reuters and Market Screener and Bloomberg?

[indiscernible]

Yes. So yes, the answer is yes. It would be available on market.

My question was if it's going to influence the consensus as this will become part of Bloomberg and Reuters estimates and worldwide, everybody can see what's happening?