Pharmaceutical company inches closer to making revenue

One of the nation’s most successful pharmaceutical companies, Pharmaxis (ASX: PXS), today received reimbursement approval for Bronchitol, a treatment for the debilitating lung condition, cystic fibrosis.

The government’s expert advisory body the Pharmaceutical Benefits Advisory Committee (PBAC) has recommended Bronchitol for listing on the Pharmaceutical Benefits Scheme (PBS) in Australia. There are 2800 CF patients in Australia, of which about 2500 are over six – the age for which use of Bronchitol was approved by the Therapeutic Goods Association in early 2011.

Pharmaxis has a market capitalisation of about $330 million. Chief executive Alan Robertson says the price for Bronchitol has not been finalised. Robertson expects the price to be lower than $13,000 per patient per year, which is the cost of the drug most commonly used for CF first released to the market 15 years ago.

“For us, it is important that everyone gets the opportunity to try Bronchitol, so we want to price it competitively,” Robertson says. “We are aware that CF patients will be on the treatment for a long time.”

People with CF, which causes lung function to decrease over time, rarely live past their early 30s. Bronchitol has been shown in trials to improve lung function by 8% over 12 months, and maintained for up to 18 months.

Robertson says the revenue will be significant for the company, which is now moving from a drug development to an operational phase.

The company is yet to make revenue from the drugs it has developed but now has two products approved for Europe, one for the United States and one for Australia.

The share price, currently just over $1, reached a high of over $4.50 in 2007, but has been as low as 56 cents in the past year. Robertson says it takes a long time to develop drugs and shareholder can get “impatient”.

That is not a failing of Robertson’s; he has been with the company since it started 23 years ago.

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