This ASX small cap drug company could more than triple in value: Broker

AFT Pharmaceuticals Ltd (ASX: AFP) is worth at least triple its current value and perhaps much more according to the analysts at Pitt Street Research, who have recently published new research on the company.

This ASX small cap has a strong market position

The analyst team said the company was one of few ASX healthcare companies which had increased its revenue every year for close to two decades off the back of its core Maxigesic product -a fixed dose paracetamol-ibuprofen analgesic which is the number one seller across Australia and New Zealand in its category.

Pitt Street said that while the local markets continued to grow well, there was also a large opportunity offshore.

They said:

Overseas is where the growth engine will be and the US is the most consequential near-term commercialisation. The FDA approved Maxigesic IV (known as Combogesic IV in the US) in October 2023, following which AFT moved to establish hospital formulary access through the standard US hospital market entry pathway. Maxigesic IV's key selling point is that it is opioid-free. The opioid crisis has created sustained institutional and regulatory pressure on US hospitals to reduce opioid prescribing, and analgesics that can provide clinically meaningful post-operative pain relief without opioid exposure occupy an increasingly attractive formulary position. Maxigesic IV is positioned directly into this demand environment.

Pitt Street said management was guiding to at least NZ$300m in FY27 revenue, supported by nine licensing agreements closed in FY26.

This compares to revenue of NZ$254.7 million in FY26, up 22%.

But the company is also building a broader clinical pipeline, which Pitt Street said, "positions AFT as a diversified pharmaceutical platform rather than a single-asset analgesic company''.

The research report added:

Over the past three to four years, AFT has undertaken an expansion of its commercial and clinical focus beyond the Maxigesic franchise. Even though Maxigesic is still its best-selling product, it is no longer fair to call it a 'one trick pony' – AFT is a diversified branded pharmaceutical platform rather than a single-product business that happens to also have some pipeline assets.

These included treatments for anaemia, eye infections, scarring and skin infections.

Pitt Street Added:

Looking at the pipeline: multiple products are now registered and generating revenue in new markets, several late-stage clinical programs are approaching monetisation, and two significant partnership structures have been established to extend the company's injectable manufacturing and formulation capabilities.

Shares are looking cheap at current levels

Pitt Street values the company at $10.55 per share as a base case and $13.39 in an optimistic case, compared to the current share price of $3.29.

The legacy business alone they value at $4.57. AFT is valued at $345 million.

The post This ASX small cap drug company could more than triple in value: Broker appeared first on The Motley Fool Australia.

Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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 Scott Phillips.

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