AFT Orphan Pharmaceuticals judgment

AFT Pharmaceuticals Limited,
Level 1, 129 Hurstmere Road, Takapuna, Auckland 0622, New Zealand
Incorporated in New Zealand ARBN:
ARBN 609 017 969





29 August 2023
AFT Orphan Pharmaceuticals judgment
AFT Pharmaceuticals (NZX.AFT, ASX.AFP) advises of the release yesterday evening by
the High Court at Auckland of its judgment upholding in part claims by PBL Solutions
Limited (PBL) against AFT, and dismissing others.
The substance of the claims made by PBL was that AFT should have provided AFT
Orphan Pharmaceuticals Limited (AFTO) the opportunity to pursue the drug
development opportunity for the topical skin medicine Pascomer
®
.
1
PBL holds a 35%
stake in AFTO and AFT owns 65%.
The High Court dismissed PBL’s claim for a lump sum payment for an assessed present
value of PBL’s claimed 35% proportionate share of future profits attributable to the
Pascomer opportunity.
The High Court also found that AFT had not acted dishonestly and that Managing
Director Dr Hartley Atkinson genuinely believed the Pascomer opportunity was not
within the scope of AFTO’s business and had not breached his director’s duties owed
to AFTO.
However, the Court found that AFT owed PBL a fiduciary duty in the context of
evaluating the Pascomer opportunity and that AFT breached that duty. The Court has
held that PBL is entitled to an account of a 35% share of the profits which are in future
made by AFT from Pascomer for orphan or orphan-like opportunities only. Any profit is
to be assessed after making allowance for AFT’s costs and expenses and direct labour
costs in relation to development of the Pascomer opportunity and for use of AFT’s
proprietary Crystaderm
®
technology in Pascomer. AFT has always acknowledged an
obligation for AFTO to account to PBL for its share of profits from the distribution of
Pascomer for orphan applications in Asia Pacific. The judgment extends that
obligation to any profits that may be earned from that orphan opportunity by AFT in
markets outside Asia Pacific.

1
Pascomer is showing promise as a topical treatment for facial angiofibromas (FA) associated
with Tuberous Sclerosis Complex (TSC), an orphan indication, and other non-orphan conditions
such as Port Wine Stain (PWS) birthmarks. “Orphan” drugs are pharmaceutical products
developed and prescribed for rare medical conditions.

AFT Pharmaceuticals Limited,
Level 1, 129 Hurstmere Road, Takapuna, Auckland 0622, New Zealand
Incorporated in New Zealand ARBN:
ARBN 609 017 969

AFT is not required to account to PBL for any profit which AFT may earn from the
application of Pascomer for treatment of non-orphan conditions such as Port Wine
Stain (PWS).
2

AFT notes that no profits from the Pascomer opportunity have been earned to date
or are expected to be earned in the near term. The timing and amount of any future
earnings on the Pascomer opportunity remain uncertain and subject to several
contingencies such as regulatory approvals.
AFT does not expect the judgment to have a material effect on AFT’s FY2024 earnings
guidance.
All parties now have four weeks to decide whether to appeal the judgment.
The Court’s orders allow the result of the judgment, but not the judgment itself, to be
published at this stage. As to the judgment itself, the parties have 5 working days to
identify any parts of the judgment they seek to have redacted for confidentiality,
following which a public version of the judgment will be released by the Court.
For and on behalf of AFT Pharmaceuticals Limited by Malcolm Tubby, Chief Financial
Officer.

For more information:
Dr Hartley Atkinson Richard Inder
Managing Director The Project
AFT Pharmaceuticals Tel: +64 21 645 643
Tel: +64 9488 0232

Released for and on behalf of AFT Pharmaceuticals by Malcolm Tubby, Chief Financial
Officer



About AFT Pharmaceuticals
AFT is a growing multinational pharmaceutical company that develops, markets and
distributes a broad portfolio of pharmaceutical products across a wide range of
therapeutic categories which are distributed across all major pharmaceutical
distribution channels: over-the-counter (OTC), prescription and hospital. Our product
portfolio comprises both proprietary and in-li censed products, and includes patented,
branded and generic drugs. Our business model is to develop and in-license products
for sale by our own dedicated sales teams in our home markets of Australia and New
Zealand and in certain Southeast Asian markets, and to out-license our products to

2
One of the most famous examples of PWS is that on the scalp of the former President of the
Soviet Union, Mikhail Gorbachev.

AFT Pharmaceuticals Limited,
Level 1, 129 Hurstmere Road, Takapuna, Auckland 0622, New Zealand
Incorporated in New Zealand ARBN:
ARBN 609 017 969

local licensees and distributors to the rest of the world. For more information:
aftpharm.com