Why the AFT Pharmaceuticals (ASX:AFP) share price is in focus

The AFT Pharmaceuticals (ASX: AFP) share price is one to watch today after the company signed a new US licensing deal with a major supplier.

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The AFT Pharmaceuticals Ltd (ASX: AFP) share price is one to watch this morning.

Shares in the Kiwi-Australian pharmaceuticals group could be on the move after the company announced a new licensing agreement in the United States.

Why is the AFT Pharmaceuticals share price in focus?

This morning, the company announced the signing of an exclusive license and distribution agreement with Hikma Pharmaceuticals USA (“Hikma”). The new deal is to commercialise Maxigesic IV in the United States with the major pharmaceuticals supplier.

Maxigesic IV is an intravenous, opioid free, postoperative pain relief medicine developed by AFT. Today’s agreement represents the first out-license of the Maxigesic family of medicines in the US market.

That’s an important milestone for the company and the AFT Pharmaceuticals share price is one to watch as a result. In today’s release, AFT also said it was targeting the US market for the tablet and liquid forms of the medication in the longer term.

What are the terms?

Under the terms of the agreement, Hikma will have exclusive rights for the sales, marketing and distribution of Maxigesic IV in the US. AFT will receive upfront, regulatory and commercial milestone payments of up to US$18.8 million in return.

The milestone payments comprise US$7.5 million based on triggers leading up to and including registration and first commercial sale of the product. US$3.6 million of those will be earned once Food and Drug Administration (FDA) approval is received. The trans-Tasman pharma group will also receive a profit share from in market product sales.

That’s potentially big news which puts the AFT Pharmaceuticals share price on watch this morning. Shares in the pharma group are down 28.0% in 2021 with a market capitalisation of $381.6 million prior to the open.

Foolish takeaway

Hikma is the third largest US supplier of generic injectable medicines by volume. AFT also said it is working to complete FDA approval for the tablet form of the medication.

Investors will be watching the AFT Pharmaceuticals share price ahead of its audited financial results in May.

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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