AFT Pharmaceuticals Limited

Thank you for standing by and welcome to the AFT Pharmaceuticals 2023 Full Year Results Analyst Briefing. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the star one again. For operator assistance throughout the call, please press star zero. And finally, I would like to advise all participants that this call is being recorded. Your speakers today are Dr. Hartley Atkinson, CEO, and Malcolm Tovey, CFO. I'd now like to welcome Dr. Hartley Atkinson, CEO, to begin the conference. Dr. Hartley, over to you.

Good. Thank you very much. Thank you, everyone, for joining the call today. So, look, what I'd like to do is just to flick through the presentation. I'll do some of it, and Malcolm will do other parts, the financial parts, and then, as you said, questions. So, obviously, there's page number one, which refers to this full financial year. Then page number two is the standard disclaimer, so if you can please read that in your own time. Page number three, basically what we're saying is we're pleased to be declaring our maiden dividend and we're pleased to also have yet another year of record revenue. In fact, if you look at the graph on the bottom, you can see that over the last 10 years, we've almost, not quite, but almost quadrupled revenue, which we're really pleased with just getting that ongoing growth. And if anything, we're pleased to see it starting to almost slightly hockey stick as well, which is what we've been working hard to achieve. So the overall operating revenue grew 20% to $157 million, with primarily organic growth. We had a launch of 22 new products in Australasia, and we continued our international expansion. Operating profits, excluding licensing income, I think as we've tried to deal with before, we do have, which is positive in many ways, but also can skew things or make it harder to interpret. We do have some lumpy licensing income that comes around various milestones, mainly at the moment connected to max GZIC IV in the United States. If we just look at the basic operating revenue from product sales and profits from that, profits did actually grow 38% to 18.8 mil. And as we signalled at the half, what we had done is we did want to make the decision to put quite a lot more investment, 8 mil of investment into new Australian sales force and new global distribution capabilities and also new product development as well and new products. If we include the licensing income, we're getting profit of $19.7 million, slightly down on last year where we had very positive contribution from some lumpy licensing income. If you look at the graph, I guess, at the bottom on the right, I think that gives you a reasonable representation of how things are going. Very much FY17 was our first full year after listing where we'd explain to people that we did need to spend quite a lot on R&D and that we would make losses in the short term and then we did explain to people that we would aim to break even which we did then in FY19 and you can see that we are making steady progress and obviously that's what we're working on going forward. So we have our standard business areas, Australasia, Australia and New Zealand. We have about 150 products presently going out across 7,700 pharmacies with a majority of those in the Australian market. Asia, we have a range of products presently that are sold through licensees and distribution partners. We have strengthened things up though with offices, head office in Hong Kong, and offices in Singapore as well, and that's part of our aim too. The rest of the world, overall, we are commercialising product presently in 61 countries, including Australia and New Zealand, so take those out. It's 59 countries outside ANZ, and we do have agreements presently in more than 100 countries, so continuing to roll those out as well. Moving to the next page, number four, if you just look at the overall summary, we can see that we did get growth across all our markets. Basically, the major chunk of the growth came from our Australasian business, where we grew that by $26.3 million. International, if you include licensing income, it did dip from $13.1 to $11.7. If you smooth it out and take out the licensing income, which was over $6 million, we actually did grow product sales by 71%. So we did see good underlying product growth and we would be working hard to get that to pick up further. The growth primarily has been led by the OTC channel, but you can still see we're getting significant contribution from hospital business and prescription business, but certainly quite a lot of our growth did really come this last year from the OTC business. So that's that page. Moving on to page number five, looking to Australia, which is our key market presently. Sales grew 22.8% to 94.1 million. We had always kind of tentatively hoped we might hit 100, but we haven't quite. But certainly, obviously, that is a target we very much want to do, to move through that 100 million sales in the Aussie market. OTC Channel was a standout performer, up 29.7%. We got some really good growth in our pain segment, had a very good launch of our Maxagesic hot shrimp sachet, which also helped the result. We did invest a fair chunk of money in product promotion and also a new GP sales force, which we do believe in the long term can deliver some good results just to also increase that promotion to doctors as well. So that sort of did have a bump up, but look, we're not looking to hire any extra GP sales reps. We're really just getting that down and getting that going. Hospital channel, we saw a bit of growth, 14%, and that was mainly with injectable products. So that's that page, and moving on to page number six, New Zealand. We got pleasing growth. It grew 26% from $35 to $44 million. Certainly we saw things easing up after a release of COVID restrictions, and we got some good growth as well in our next GZIC product as well, which is very pleasing. Hospital, we grew 20%, and actually we got a lot of prescription growth too. That actually grew at 50%. Certainly we could see better access to GPs as the pandemic pressures kind of eased off. I think a lot of people didn't go to doctors during the COVID period, and that certainly restricted some of their sales, and we could see that turn around as things eased off. Moving now on from page six to page seven, just a summary slide talking about NPD, a new product pipeline. This is what we worked on a lot over the COVID period where we were restricted and basically we couldn't travel, but we were able to really pad out our pipeline and actually we're carrying on doing this. Basically we were able to launch 22 products during this last financial year. 11 of those were OTC and we had been able to, I think we talked at the half year, we had about over a three year period we had about 70 products or 72 products but even taking this financial year off we're still continuing to pad out our NPD pipeline and we've got 68 plan new product launches over the next three years. Some of these products, what we're also doing, there is definitely an angle where we believe we can significantly grow Singapore and Hong Kong by choosing those markets and putting some of the products we're launching in Australia and New Zealand and put them into those markets as well. And that's something that we're working on at the moment to really accelerate the product offerings in those markets. So moving on to page number eight, Asia. So basically sales rose by 24% to $6.8 million, which is a reasonable result, but certainly we do see better potential in Asia to accelerate and grow that more as time goes by. It takes a while to get some of these things into place. The OTC channel is still relatively small, but we certainly saw that starting to contribute more. If you look at the graph on the pie graph on the far right side, The OTC was relatively small at about 8% and now that's close to the 15% and we want to keep on growing that as well. So we are working through our Timor Global site. We have a number of products approved for cross-border trade into China. But there are other angles around that as well, which we're looking to expedite. Also looking at further product approvals and then launches in China, not just through the cross-border channel. Obviously, there's a lot of people in China. It is the world's second biggest market, so that's one that we are interested in and see some good potential. We have expanded our distribution capabilities across the region. We've launched in some new markets like for example we launched in Indonesia, I think the world's fourth most popular country and we also launched in South Korea as well and we're really pleased to see something like Mexagesic IV, the sales have gone very well in South Korea and certainly well ahead of their forecasts. So that's only the first six months and we see further progress kind of going forward. Moving on to slide number nine. Yeah, look, probably the important thing here, just to clarify, is that if you look at the top graph on the left, we had quite a lot of contribution last year. We had a big chunk, six point something million dollars of licensing income which we're obviously pleased to get. But it does make the result a bit lumpy and looks as though the sales went down, which it did overall. But if you take the licensing income out, we grew the underlying product sales and royalties grew by 71%. So they grew to $10.8 million and we see good potential for further growth going forward. Certainly a number like $10.8 is nowhere near where it should be and that's what we're working hard on getting that number up. We did make progress in other difficult regulatory jurisdictions. We were pleased to get our first US approval with Massachusetts rapid tablets. Presently we're having a number of discussions just working the best way to get the launch When I mean that, I mean the best way for AFT. There's various options there. Probably we look to sacrifice licensing income in return for a bigger profit share down the track, and that's really what we're talking to people about. And then also Europe. Europe's probably still our main market at the moment. There's Europe and the Middle East. So we're getting some good sales growth out of Europe. What we've done is we set up our own UK entity, AFT Pharmaceuticals UK Limited, and also some of that NPD that we are driving in New Zealand, Australia, we're also going to route that through up into the UK, which there is a good opportunity for that now because the key change is the UK does not sit in with Europe. So it literally sits out by itself and actually fits in quite nicely with Australia. So those two markets do go together quite well, and certainly the UK is a decent-sized market with a population of about 65 or 67 million people. So that is obviously a work in progress. We don't have any sales from it yet, but we should start to record our first sales during this financial year. Next, suggesting IAB launch, this, the upfront payment of about $6 million, that depends on the launch date. The launch date we said will be in calendar 24, so obviously that's going to have quite a swing factor on this year's profit, which is why we've actually pulled licensing income out. So all going well, assuming we get USFDA approval in October, the launch could be anywhere from February to March to April sort of thing. So it could slip into this year or it could slip out of this year. But overall, the big picture, that wouldn't be a disaster, but clearly it would have an impact on the profit for this year, just to explain that. You can see the graph top right, the number of countries continues to grow. I guess the only comment is although we look at countries, probably you also have to consider large countries like the US. We'll only tick that number off by one, but obviously makes more of a difference because the US is the world's largest farmer market. That's page number nine. Clicking on to page number 10. You can see a global graph where the aim we have is to turn as much of it possible from white and blue into yellow. So we are making progress. We're getting more yellow as time goes on. Yellow meaning where MexiGESA has been launched. So launched it across a good chunk of continental Europe now and also Canada and Mexico and Central America. So we're still working on licensing in more difficult markets like China. We've certainly got interest there, just come back from a two-week trip, meeting various parties in mainland China and also Japan as well. Brazil is the other market that's quite different and also quite challenging. So we are working on that as well. But look, we're making overall progress where we are getting more countries launched, which is the yellow colours. That's page number 10. Page number 11, what maybe isn't so apparent but we do believe is really important is the R&D pipeline. And we do see some significant potential for that in the medium to long term as well. As you can see, maxillofacial IV in the US, we're targeting approval. This calendar year, we have a PDUFA date from FDA of October 2023. And that's when they have to get back to us with a viewpoint on additional data, which was only just around something called extractable and legibles. which we got various US labs to do tests on it, and we worked closely with HICMA, who are very experienced in that area, who also helped us, so we would be hopeful that we should secure approval. Maxogestic dry stick, we continue to work on that and target to complete that during this calendar year. We've got a day-night variant, which we are filing at the moment, literally the first filing. And we also have a patented cold flu and sinus kit, which we have already launched in Australia as our first market. And we would look to commercialise that in some additional markets. And naso-stiff intranasal, we have had some challenges with that project. We visited the factory that makes the transducers in China. We're doing a bit of work around that. So that is delayed, but we still see that getting back on track and getting clinical studies underway next year. We really, we planned on them this year. So this can happen with R&D projects. They're not everything simple, and that's also why you do have a variety of projects, but we are confident we can still expedite that project. Antibiotic eye drop, this is potentially a pretty big market. We license in technology from a U.S. company, and we're just underway with the drug development presently. So this is for antibiotic-resistant drug infections, which could cause people to go blind. That's pretty important, and that's underway presently. Flicking to the next page, page number 12, got a number of projects here. Some are at early stage, some are quite well advanced. We have one we call SD, so that's been filed. We've got our first filing, it's a dermatology drug. Scrawly birthmarks, we licensed that from Massey Ventures, which is part of Massey University. Just doing the initial formulation work on that, so that has a patent on it. going out until the mid to late 20s, 30s. And that topical treatment is probably birthmarks, which does affect quite a lot of newborns, and certainly presently there aren't treatments that are topical for this sort of condition. There is an oral formulation, which is quite toxic, and therefore is only used in really serious cases. And this potentially also is a really big market as well. Gastroenterology is one of our focus areas. We've got a number of advances we've been able to make. We have a project we've called KW and we have three different dose forms. The first two we will be filing this year so that's really good progress and we've got a combination one which we're still in the development phase. got another enema that we're filing this year as well. And also, we do have work in CBD and we're making some good progress there. That is certainly a very crowded area. Our main target would be the Australian OTC market. And given it's just so crowded, we'd rather keep the timelines confidential on that one where most of our competitors from the rooftops when they've advanced something or other, but we'd just rather try and see if we can get to market first or second or something like that. So that's that page number 12 and clicking on to page 13, I will hand over to our CFO. Yeah, thanks, Hartley.

So looking on the top line, revenue up 20% to $157 million. Gross profit up 18%, $73 million. Operating expenses up a little bit more at 28%, as we explained, the main reason for that is the investment behind the new products and the full-time GP sales force in Australia. So operating profit of just under $20 million, which is in line with last year, but bear in mind that there's an additional $6 million licensing income in last year. So good growth if you extract the licensing income. We're back into a taxpaying position now, so the higher tax cost to leave us with profit after tax of $10.6 million. On the next slide, we're introducing EBITDA, and we will continue now to talk about EBITDA. Primarily, the banking facility is now the covenants are based on EBITDA, and our dividend policy is also based on EBITDA as a ratio to net debt. We're just showing at the bottom what the revenue and the gross profit looks like without the license income. Again, targeting the gross profit margin in that 45% to 50% range. Then we're obviously very pleased to be announcing a dividend today of 1.1 cents per share, which is 11% of our net profit after tax, a little bit lower than our policy. We've indicated that we want to get into that 20 to 30 range of normalised net profit. It will always be dependent on what our capital requirements are. And we were a little bit higher than we want to be with our target debt. So we want our net debt to be around about one times even at dark. At year-end, it was 1.4. And especially with the growth opportunities we've got going, we think that that is a proven way to start the dividend at 11%. If we turn on to the next slide, the balance sheet. So net debt is in line with last year at just under $30 million. The new facility with the BNZ goes out to April 2026 and it has no, there's one more repayment of $1 million in June and then there's no more repayments required on that facility. So repaid $4 million, by the time we would have repaid $4 million. In this year we've repaid $4 million, yes. The working capital, which is the current assets and the cash left for current liabilities, that grew in line with revenue at about 20%, so it's 48 million at the minute, and then our total equity is 73 million, up from 62 million last year. In return for the cash flow, so 11.6 out of the operating activities, 9 of that into investing activities and just under 7 mil of cash financing activities, that includes the 4 mil repayment. So that's really the 4 mil going at lower cash is the repayment at the net debt, with the net debt staying level at just under 30 mil. And so we have closing cash of 3 million. I'll turn it back to you then, Harlan.

Thanks, Malcolm. Just to summarise the outlook, we're looking at the momentum continuing in this new financial year, supported by growth in the existing Although we talk about new product launches, we are still getting growth in our existing products and certainly also with something like Maxagesic when we launch it in international markets, it doesn't just go straight up, it literally grows year on year on year and that's what we're also seeing in our local Australasian markets as well. So there's that ongoing growth from the existing portfolio, there's also new product launches is something we're very focused on as well, and also just sales growth in our core Australasian markets. When we say that, I think it's important then that leads on to the next point, just because we are working hard on our existing core Australasian markets. Doesn't mean to say we're also not really targeting where we do see the biggest potential upside growth in international Asia markets. And also things like expanding our UK presence where we set the company up. We've got people working there. You know, we've also taken over some of the Mexagesic launches ourselves. That means we will launch Mexagesic IB ourselves in the UK market. And we have other products ourselves that we're launching over this financial year ourselves in the UK market. Operating profit guidance is up to about $22 million to $24 million, excluding licensee income. So as the following note says, we are expecting licensee income, which isn't included in that guidance. If we're able to launch in this financial year, there is a further $6 million for maxi-GZIV in the U.S., So we need to get that FDA approval in October, and we need to be able to get the stock and time, et cetera, to be able to launch in this financial year. That potentially is another $6 million. Now, the guidance, I guess, is still subject. The other sort of swing factor is the U.S.-Mexico-Jesuit rapid commercialization strategy. So we are working on that presently with a number of parties. Probably ideally, we would launch the... rapid tablet at about the same time as the IV, so that could have an impact. We really can't say at this time because it's still under discussion. Generally, if possible, our ideal scenario would be not really focused around so much licensing payments, be more around profit shares where we have a bigger long-term upside for AOT, but can't really say at this stage because we're still working on it. And look, we definitely do have a target in mind of $200 million on a rolling 12-month basis. I mean, when we say that, if we were kind of performing exceptionally well, we might get there this financial year, but we think it's probably more likely to be a 14- or 15-month target, but certainly we can see it clearly in sight. And that growth is something that, you know, we are really focused on the growth. Profit obviously is important but I think in this last year we really saw the opportunity to really grow the business so we did invest a bit more which obviously resulted in a flat profit but even with a lot of extra investment like an extra $8 million we're still able to deliver what was a pretty reasonable profit and an interim dividend as well. So thank you very much and open for any questions.

Thank you. At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. And your first question comes from the line of Matt Montgomery from Forsyth Bar. Your line is open.

Hi there. Good morning. Good morning, Hartley and Malcolm. I might just start on the gross margin, if that's okay. The second half was close to 49% if we strip out The licensing income is always a bit second-half skewed, but it appears to be a very strong number aided by the strong OTC performance in ANZ. Can you maybe just talk to the dynamics here in terms of pricing, the impact of the mixed effect, freight costs, et cetera? And then I guess the key question is how sustainable do you think that level is around, say, 48% looking ahead on a full-year basis?

Yeah, thanks, Matt. Yeah, so the skewing of revenue is more OTC skewed as well. The prescription hospital tends to be more static. And the better margins that we are getting is out of OTC. So that is explaining the kick-up there. In terms of extra cost for freight, we are seeing in the main shipping lines the pricing has improved coming back. It's taking its time into New Zealand. We are seeing it start to happen now and Australia is happening in. So there is improvements in those freight costs and we did air freight a fair bit earlier this year, particularly with the hot drink that was selling so well. If we need to, we will air freight if we have to meet demand.

There's probably relatively more air freight in the first half as well. In the second half, we were really trying to avoid air freight as well, which may have helped the margin in turn as well, wouldn't it?

Yeah. So we see the margin going forward to be still in that, you know, the broad range is 45 to 50, but targeting the sort of upper half of that.

Great, that's very clear.

And then maybe secondly on Australia, just, you know, again, a pretty good number, just trying to get a feel of sustainability. Are you able to split out growth drivers between, say, mature products, you know, those that have been in market for a few years versus those that have been recently launched? Like, do you have a metric you can reference here in terms of like-for-like sales or, you know, of the incremental growth this year, how much of that It's from new products versus mature products.

Yeah, if we're launching a new product, we will try and make sure that there's plenty of stock in the wholesalers and in the trade. So normally our sales to the market will be exaggerated in the early months and then it'll come back a little bit as things settle down and the product takes off. So it does take a little bit of time to get a regular pattern of what's happening with the new products. But we're seeing growth pretty much across all the existing range and then, of course, adding new products on top of that.

I'll be quite keen for specifics if you have them. Of the 17 mil incremental increase in revenue in the financial year, 23 over 22, do you know how much of that would be from the new products that you've launched this year in dollars?

I haven't got that on my fingertips at the minute, but I can speak something out on that, yeah.

Okay, no, that'd be good. Thank you. And then maybe on the rest of the world, you know, the second half, if we strip out licensing, look pretty solid. Can you just talk to, you know, where specifically the growth is coming from? You know, is it a couple of key geographies that have sort of turned around post-COVID? Or is it sort of broad-based across markets? Yeah.

Yeah, it's very broad-based, to be honest, because things are very slow, like especially Europe during the COVID period, like we did. Start launching masochistic IV into places like Germany and Austria, you know, it really was slow because the sales force of our licensees couldn't get into it. customers like the hospitals because literally, you know, when the doctors are buried with COVID patients lined up in the corridor, they're not wanting to hear about a new drug. So we've just generally seen things start to pick up. So it is sort of general. I mean, although this is in Asia, we've seen some new launches in like Indonesia and Korea, South Korea, certainly the South Korean one's gone very well. much better than they forecast, but even though that started to contribute last year, it's probably going to contribute more this year because as those sales build. So it's really just new launches and then ongoing kind of growth. It's fairly broad.

It's not really any one specific area.

Great. That's clear. I might just leave it there and let others jump in. Thank you.

Thank you. Your next question comes from the line of Christian Bell from Jardin. Your line is open.

Hi, Dave. Can you hear me okay? Yes, thank you. Okay, cool. So first question for me. Your guidance of $22 to $24 million of operating profit, does that include you commencing sales in both Nexatetic IV and Rapid in the US? No.

No.

I mean, it has maybe some very small IV sales. There's no oral sales at all written in because it was too hard for us to put an estimate on when, how much, et cetera, until we'd done some sort of agreement. So certainly there's no MaxiJuicy oral. I think we might have put a tiny bit, like a couple of batches or something, at the end of the financial year for MaxiJuicy IV sales. So whether that happens or not, it's not really going to have any kind of incremental effect. It could potentially have upsides, but it's not going to have a downside as it launches later for the IV.

Okay, because, and forgive me if I'm wrong, and when you were recent, in one of your recent announcements, it mentioned that you'd be expecting sales to commence for Maxi IV, I think it was. towards the end of this year. Firstly, is that a true statement, or have I got that wrong?

Yeah, basically our present view with the FDA, the time we got the data back, and the PDUPA, so the PDUPA's October, so assuming that the approval is cleared, which we're hopeful, but can't guarantee it, but we believe it should be, then we would hope to be able to get stock into the U.S. market about February. If that swings and goes late, then we'll miss that. But the present plan is about February, maybe March, but that's quite close to the end of the year, so it's still possible it could flick into April, which would be another financial year. That may be a bit late, not the product sales targets, Sorry, what was that? I mean, the key impact of that is not really on the product sales targets. It's really on the licensing income makes a difference there. But in terms of effect on profit from product data, it's not going to make a lot of difference, to be honest.

Okay. Yeah, so what you're saying is while there is a chance that sales do commence in FY24, you're not really attributing much to that, which is reflected in your current guidance. Great. And so just, I mean, given that rest of world sales is probably, you know, the swing factor going forward, the US being an important country for that, are you able to give any sort of sense as to what type of sales you are expecting from that market? For example, do you think that it could do 10 times the average country sales as of today? Or... Just as a starting point.

For which one? For IV in the US?

Either one. Either one.

Yeah. Sorry. Sorry for the phone, Dave.

So... your average rest of world sales per country right now is about $140,000 a year. When you start selling, when you start selling Maxa G6, Rapid or IV, are you sort of envisaging the average, well, the amount of sales going into the US for one product, for example, being more like a million or... What are we kind of thinking?

Yeah, I mean, we have to, I guess, finalise that forecast for the rapid with a partner to have a firm view on it, certainly potentially. It is a significant market. It could have many multiples of the current per country sales. Yes. The IV, we're still working on forecasts with HICMA. Forecasts certainly are reasonable, like at least a million. And then they grow over time. It's not just a one-off thing like year one, year two, year three, year four, et cetera, continue to grow.

Okay, cool. And then just to follow on that line of thinking, so obviously Max the G-Stick has been successful in Australia and New Zealand, which is partially because a lot to do with the fact that it's pretty mature in these markets and you've had a lot of targeted marketing towards that. How realistic do you think it is that you will be able to replicate that sort of success in the US market given you're using a third party to sell and distribute?

Well, certainly we know that, I mean, we are meeting with HICMA literally in two weeks' time. We do know they've spent quite a lot of money with various U.S. parties to look at the sales and marketing, et cetera. They are successful presently. One can never be 100% confident, which is why I guess one of our things we've always said is that we're quite careful that we don't just do one global deal with a big farmer. We see it. It's safer to do it with various local, country or regional partners, which has been our approach. I mean, look, I mean, if we're selling 10 mil at the moment, our certain targets overall by the time we grow and add the different product lines in certainly would be a lot greater than 10 million, well, not obviously, but it is.

What kind of... Right, okay.

What kind of marketing will Hikma actually do? So using New Zealand and I assume Australia as an example, you've got TV ads and sort of all that kind of stuff selling. What type of marketing would Hikma actually be doing?

Yeah, given its IV though, it ends up being very much a rep-based promotional program really and then working with hospital formulary committees which is somewhat tortuous to sort of get different approvals really. So that particular, the IV line is very much a standard kind of pharma angle where you have reps and you have committees that you have to go through and So this is really a standard promotional OTC model. So they certainly do have risks and all of that, and that's the angle, really, in the US.

And before we move on to our next question, I will remind everyone, in order to ask a question, please press star 1 on your telephone keypad. Your next question comes from the line of John Hester from AFT. Your line is open.

Good morning, Hartley. Really nice result, boys. Well done. Just a question for you on the prospective licence income for next year. The $6 million, Hartley, is that US dollars or Kiwi dollars? That's Kiwi dollars, John. And it's $6 million on registration by the FDA, so $6 million on approval and then a further $6 million on the course.

Sorry, just to clarify, there's actually $6 million upon launch, so we're relying on HICMA making their first sales. So if we like October, we can get approval by the PDUPA date, assuming that's sorted out. Yeah, it's probably going to be about February till we get the stock, you know, maybe March. Yeah, yeah, yeah. I understand.

So just to be... There's no milestone on approval. No, there isn't, correct. Okay, okay. Fair enough. And you had just made some comments there about the ICMA's planned launch in the US, and I understand the flow process can take a little while. Have they given you sort of any estimate of what they believe the addressable market is? You know, people talk about PAM and all that sort of thing. Have they talked about that with you at all?

Yeah, we're just starting to do that now to really have, and so I can't give the exact figure presently, like we are meeting with them in two weeks' time in New Jersey to sit and go down through a number of items, including that. So, I mean, it is a reasonable-sized market. Obviously, it is the biggest market. So we're just still working through exactly. I mean, usually we're a bit slower the first year and then build. We've generally seen that with Most of our markets year one, as I was saying, year one, year two, year three, it kind of builds year upon year. The fastest market we've seen is South Korea, which has actually kind of rocketed, but not a big country, but yeah.

Yeah, okay. I don't want to harass you on this, but would you expect that the market in the US is sort of north of 10 million U.S. for maxillofacial IV, or is it underneath that number?

I think the sales at Hickman would make, should be north of 10 million, not straight away, but yeah, we would almost have to be.

Okay. Just on, you mentioned South Korea there, and you've got... You've got Asia and also international. So South Korea, is that in Asia or is that in the international slide?

Yeah, that's in Asia. So basically the area we're looking at is Southeast Asia plus China plus Japan plus Korea.

Right. Okay, so the Asia operating revenue says on the slide that I'm looking at went from 5.5% to 6.8%. So three is somewhere in that 6.8, right? It was on slide eight in the pack.

Correct. So they've only really just launched the IV, but certainly we've seen them, they've re-forecasted about two or three times so far due to sales growth being further ahead than they expected. So it's certainly pleasing to see some good progress in that market for a start.

Yep. And on slide nine, with your product sales going up from about $6 million to about $10.5 million, it looks like, based on that slide. So what's been the standout sort of country there?

It wasn't really one country. Yeah, honestly, it was just broad-based, and we've got some new launches that have just started in places like France, but they haven't really been, you know, they're just sort of getting orders just in at the end. I mean, we had about at least $2 million of orders got stuck to waiting for a container, you know, so things like that are, I guess, a business as usual, but quite frustrating, but it is just what it is.

And, unfortunately, in the interest of time, we do need to move on to the next question, and your next question is from Sam Arcand from Mint Asset Management. Your line is open.

Morning, Hartley and Malcolm. Quick questions on the Aussie GP sales force that you brought in. So initially I think you said that it's going to be about $10 million and it's come in at $8 for the year. What's the reason for that? Why did that miss?

Yeah, we were able to, I mean, that was a combination of marketing and also the Salesforce cost. I've been able to pull that back a little bit without affecting the end points. I mean, that's really why there's a little bit of variance there. We are able, what we've also done with the Salesforce this year actually is we've taken the whole It did start off as a contract deal, of course, to get it underway quickly. We've taken it in-house, which has been quite a lot of work, but that does save us money going forward, which will, yeah, we'll see those savings soon this time of year. But a lot of the money was marketing money, so with new product launches, we still had been needed to spend money to make sure the products were successful, so a lot of it was around that as well.

Right, so it wasn't nothing related to them, you know, not hitting the sales targets and maybe there's an exponent of compensation related to the sales targets?

No, it's just really about some swing factors. We've probably saved a little bit on various sort of marketing and co-op costs and stuff. Yeah, but it's just swings and roundabouts, really. I mean, we are doing quite a few things. I mean, I'll just be careful, but we're doing what we're saying, but we're doing a lot of things and often working to save money, like we're switching some suppliers, we're doing other things in-house, we're advertising costs and promotional costs, we've got our own graphic designer. in-house and able to make some savings there. See, there's a whole lot of things going on as well, you know, that we're also working on that side of it as well as expanding the business. But, yeah, those things were able to make some savings and that's probably why you've seen that.

Yeah, okay.

Thanks for that. I'll leave it there in case there's anyone else.

That does conclude today's Q&A session, and if there are no further questions, I would like to thank our speakers, Dr. Hartley and Malcolm, for today's presentation, and thank you all for joining us. This now concludes today's conference. Enjoy the rest of your day. You may now disconnect.