2012 Annual General Meeting
Address to Shareholders by Chairman and CEO
24 October, 2012
ADDRESS BY CHAIRMAN – MR. DAVID WILLIAMS
Last year I reported that our changed approach to the business allowed us to achieve a NPAT of $1.74 million for FY11. This year we recorded a record NPAT of $2.72 million.
All shareholders want to see share price appreciation and/or solid dividends that are supported by a promising future outlook:
- In the past year our share price has gone from circa mid 40 cents to circa $1.60.
- We paid a 3 cent dividend in October 2011, a further 3 cent dividend in April 2012, and a further 3 cent dividend this month.
- We have good prospects for Penthrox in Europe and elsewhere and near term prospects for our asthma devices. We are not in the business of giving earnings guidance but we think near term and medium term earnings growth is a distinct possibility.
We are a pharmaceutical and device company with no debt, cash reserves, profits, plenty of blue sky, and we are dividend paying. Our profits are up substantially in FY 2012 while revenue increased11%. Before I talk about the potential for future top line growth, I want to emphasize we still have significant opportunities to further increase margins.
I will leave it to John Sharman to talk about one such significant opportunity involving the CSIRO in a moment.
On the issue of growing the top line, the Company undertook a number of initiatives to further develop the international footprint of our pharmaceutical and devices businesses during the year.
Looking not too far forward, the possibilities for top line growth are very encouraging. There are new markets for our devices and for our pain relief drug and both have the potential to substantially increase our profit. However let me point out two highlights for the year:
- Some people have unfairly and inaccurately looked at us as being a ‘one product’ company (Penthrox) and at our devices business as the ‘also ran’ part of the business. Since late in 2011 we set out to innovate and introduce new asthma medical devices and as a consequence sales are up by 24% across the business and importantly 247% internationally. John Sherman will give you more information on some new business we have agreed only in the last few days.The success we have had with our asthma device sales has spurred us to look closely at our other devices and we expect to relaunch some other products during FY13.We expect devices overall to be a significant profit contributor in FY13.
- After the close of FY12, we completed our Penthrox trial in the Accident & Emergency departments of 6 hospitals in the UK. This is an important event because it is the precursor for us applying for registration in the UK and Western Europe. Success with such a registration could be a company making event. However, and in addition to this prospect; the data collected from our UK trial will be an important part of our Regulatory Dossier which we will use to support registration in many jurisdictions other than the UK. We have a number of registration dossiers being considered in other countries where this data and trial might be expected to improve our chances of registration.
As Chairman and the major shareholder, I am passionate about the future of the business and the prospects in front of us. Importantly the Board has confidence that we can build a business with sustainable profits, thereby creating shareholder value that is and will continue to challenge our historical share prices.
I would now like to invite John Sharman; our CEO to talk about the year just passed.
ADDRESS BY CEO – MR. JOHN SHARMAN
An exciting future
Last year we promised to continue to change the culture and structure of MVP and the way our company does business. Whilst FY2011 was a watershed year for our business I am delighted to report FY2012 delivered on our promise for significant growth, recording a NPAT of $2.7m, up 55% on the previous year. In 2013, MVP will continue its aggressive program of innovation, transformation and significant improvement.
MVP has a portfolio of world class products and a strong existing business. We are leaders in two of the markets we operate in and our portfolio of business opportunities is substantial and deliverable in the near term.
Regulatory strategy and growth markets
MVP’s regulatory strategy is to work pro-actively to complete clinical trials which will increase our geographical reach and the applications for our products. During the year we achieved a number of significant milestones.
European Clinical Trial
As we announced in February 2011, we commenced a pivotal trial in Europe, designed to secure the marketing approval of Penthrox in selected European markets. In July 2012 we announced the last patient had been recruited into the trial which was completed on time and on budget.
We have received the interim results of the European study and in our view, these results demonstrate the safety and efficacy of Penthrox and more importantly, demonstrate the benefits of using Penthrox in the Emergency Departments of hospitals (essentially a new market for Penthrox).
We and our advisors are working towards finalising the data presentation and we are hopeful the results will be available before Christmas. We expect our Marketing Authorisation Application to be submitted to select European Authorities by April 2013.
Colonoscopy trial at Royal Adelaide
In August 2012, a 250 patient “Penthrox versus conventional endoscopist provided sedation for colonoscopy” was successfully completed. The trial was a randomized multi-centre trial run by the Royal Adelaide Hospital. The preliminary results from this trial are excellent, with physicians achieving a 25% improvement in “time to discharge” using Penthrox over conventional pain treatments. There are more than 500,000 colonoscopies done in Australia each year and we believe this new market for Penthrox could be significant, domestically and internationally. We expect publication of these results before the end of the year.
Asthma Medical Device Trial
During the year we conducted two separate trials at the University of Western Australia on our new patented Space Chamber Plus asthma devices. The results confirmed our new Space Chamber Plus range as having ‘world’s best practice’ performance when compared against our major competitors. This underlines a significant competitive advantage of our products which we intend to fully exploit.
Innovation, Research and Product Development
During the year, MVP increased its investment, energy and focus in building its internal capacity for product innovation, research and development.
In July 2012, MVP announced it had entered an agreement with the CSIRO to deliver a new manufacturing process for Methoxyflurane. The project if successful will result in a manufacturing process which will significantly increase our production capacity and dramatically reduce the cost to manufacture. In addition, a successful outcome will create significant intellectual property for MVP and provide a long-term competitive advantage.
I am delighted to report that Phase 1 of the project has commenced and is successfully producing Methoxyflurane at laboratory scale.
Our new Asthma product range was launched in the first half of FY2012 and from that launch date MVP was able to:
- Win a three year sole supply contract with the New Zealand Government (together with our New Zealand partner);
- Secure a major distribution agreement with a leading German company (replacing the entire range of an international competitor’s products);
- Establish an European Head Office and commence sales of our asthma medical devices in Europe;
- Lodge an application with the US Food and Drug Administration to allow the sale of our Asthma Space Chamber Plus and Compact Space Chamber Plus in the US. We hope to receive approval to sell in the US before the end of FY2013.
In addition to the market-leading Space Chamber Plus range of medical devices, MVP has developed and launched the following products:
- Pulse Oximeter
- Asthma Nebuliser
- New face masks
- Emergency Equipment Bags
- Emergency Medical Cannulas
- Bag valve masks.
Looking forward, MVP has a number of products in development which it hopes to launch during FY2013 which include:
- A new Penthrox product
- An autoclavable space chamber
- A new Vet anesthetic machine
- An electronic Peak Flow Meter
- New Asthma face masks.Operations
Our strong and ongoing commitment to improve productivity and working capital will continue to deliver results in FY2013 and beyond.In FY2012 our key achievements include:
- 55% increase in Net Profit After Tax to a record $2,704,024
- 52% increase in Earnings Before Interest and Tax
- 43% increase in Earnings Per Share to 4.9 cents.
Productivity, operating efficiency and cost control
- 21% improvement in cash generated from operations (before taxes)
- Cash reserves of $3.5 million after paying $3.2 million on clinical trials and two 3 cent fully-franked dividend
- 40% improvement in Net Profit Margin to Sales ratio.
- Record sales achieved of $11.3m
- Record sales achieved in our Asthma device business
- Record unit sales of Asthma Medical devices into New Zealand
- Record sales for our pharmaceutical business
- 24% growth in medical device business.
Regulatory and Research
- Entering agreement with the CSIRO to develop world first manufacturing technology
- Successful listing of Penthrox by government authorities in the United Arab Emirates
- Applications for registration of devices in Europe and the US
- Completion of pivotal clinical trial in Europe and another trial in South Australia
- Smaller but significant trials ongoing in UAE, Iran and Brisbane.
Those who have followed the fortunes of the company over time know that Penthrox dominates the market for inhaled analgesia in Australia. With our UK clinical trial data, a much improved regulatory dossier and support for new clinical applications, we plan to dominate inhaled analgesia in Europe, New Zealand, the Middle East, and elsewhere.
Our Asthma Medical Devices are high quality, high performing and category leading. Our aim is to build this business to be a significant world supplier. We already have a number of good prospects in front of us.
Looking forward, our company has an enviable pipeline of “company making” opportunities and I look forward to reporting our success to you next year.