TRANSCRIPTION OF FINANCE NEWS NETWORK INTERVIEW WITH STIRLING PRODUCTS LIMITED
(ASX:STI) MANAGING DIRECTOR, PETER BOONEN, SALES AND MARKETING DIRECTOR, NEIL COVEY AND STIRLING DRUG DELIVERY DEVICE PROJECT LEADER, ROSS HARRICKS
Emma Pearson: Hello Emma Pearson reporting for the Finance News Network. Joining me today for an update is Stirling Products Managing Director, Peter Boonen. Also with us is Sales and Marketing Director, Neil Covey and Stirling Drug Delivery Device Project Leader, Ross Harricks.
Peter welcome. If I can start with you, can you give us a quick update on the Company following the recent acquisition of pathology business, Halcion and the signing of a Research Agreement with the US Government Agency for ImmunoXel?
Peter Boonen: Hi Emma. The Company continues to grow and the continued integration of product and opportunity into what we’ve built as a base continues to build. The US Government involvement in ImmunoXel for a small company like ours is absolutely extraordinary, the commitment that they’re putting in. But it’s not our Company; it’s actually the product and what they’ve identified in their independent testing of the product.
The pathology business we see as a great opportunity. It’s a great opportunity to integrate that into our pharmacy business and to have pharmacies actually as points of collection. And that’s as a result directly or the opportunity presents itself directly because there’s a total deregulation happening in Australia with regard to pathology and the protectionism that was around that industry. And that throws it wide open and through having our integration now into pharmacies, and these are the sorts of opportunities that we look for, where we’ve got the business on great terms and we’ve got the integration potential.
Emma Pearson: Now Ross you have spent most of your life working with medical device commercialisation, including with Cochlear and ResMed in their early days. You now head up the project management co-ordination of Stirling’s HDA Pulmonary Drug Delivery Device. Can you tell investors what the unique advantages of this product are?
Ross Harricks: Well most drugs are delivered orally through the gut into the bloodstream, but a lot of compounds can’t go that way, so there’s a difficulty of being injected or done other ways. Some drugs for the lung are delivered by breathing respiratory drugs and you would be familiar with the puffer you use for delivering for asthma sufferers, and that’s a dry powder.
Dry powders also have a problem in that they are good for local delivery in the lung but don’t go beyond that into the bloodstream very effectively. So our nebuliser technology takes a liquid form of the drug and converts it to a very fine mist, which you breathe in and that settles on the lung wall and delivers the lung, and also transfers very effectively into the bloodstream.
It has no moving parts, it has no fan, it creates its own – it drives a very high density nebulising gas or vapour into the lungs without fans, it’s very small and compact. So rather than having a separate wired power supply which makes it a desktop, you can actually put in a small portable as you’ll see in the picture, and at a very low cost.
So it takes a nebuliser from being something that has to be something in a fixed desktop environment into something you can carry in your purse, carry in your bag and carry around with you. And yet it can deliver the dose much faster than current nebulisers can.
Emma Pearson: And how is this development progressing?
Ross Harricks: We’ll have production prototypes by April next year and we will be then ready for pharma companies to run trials and work with them to trial their drugs and decide how to adopt them for using their drugs.
Emma Pearson: I believe Stirling has recently been approached by, and is in discussion with, two major pharmaceutical companies. Can you tell us how these discussions, or negotiations, are progressing?
Ross Harricks: Well, we hadn’t planned because of the timing I set in the production of the prototypes to see anybody until about the end of this year, but we were approached by two companies and we have started discussions with them. So I think that this has been very positive from our point of view.
Emma Pearson: If an exclusive partnership is concluded with a major pharma, what would this mean for Stirling Products?
Ross Harricks: Well a typical exclusive licence involves an upfront payment, then hundred percent funding of our joint development work. Then there’d be lump sum payments as each milestone is developed for development milestones, regulatory milestones, marketing milestones, and then there’d be ongoing royalty revenues.
Emma Pearson: Neil the Company has projected that it will be grossing around $1 million a month with a gross margin of about 40% as of first quarter next year, are you on target for this?
Neil Covey: Emma we’re definitely moving towards that target with both our current product range and products coming, and with the recent acquisitions that you would have seen in the press with pathology services into pharmacy. So we’re moving towards that. I’m conservative in the way that I try to project and forecast products. And I’m really all about building a major pharmacy business over the next one to three year period.
Emma Pearson: Stirling’s national sales team covers pharmacies across Australia, who do you target and what are your plans for the introduction of products?
Neil Covey: Emma we target all the key pharmacies as is typical in the industry, which is roughly around 3000 of the 5000 pharmacies out there. And the field force will cover those pharmacies in terms of taking product in, in terms of training and with the pharmacy assistants. And making sure that the product is presented properly and the people are aware of what are the benefits.
We have a range of products which we’re bringing out and there is lag time and sometimes when some of these are coming from overseas, but our aim is to bring out products of unique quality. We have a product that we are doing in strategic alliance with Kidney Health Australia. Now this is a product that’s been specifically designed for people with chronic kidney disease and there’s about two million in Australia. Kidney Health Australia have registered this product and we’re going to take it to market for them.
Emma Pearson: Last question and Peter I’ll direct this one to you. How would you summarise the main focus and direction of Stirling Products today?
Peter Boonen: Emma our opportunity with our Pulmonary Drug Delivery Devices is extraordinary, we’re in a very extraordinary period of time, where pretty well every single major pharma is seriously under pressure with blockbuster drugs all recently off-patent and coming off-patent. Like in monetary terms you’re talking loosely of about $400 billion worth of annual revenue that’s going to be affected, that they can’t protect.
Our Pulmonary Delivery Device does have the opportunity for patent extension for them and also to adopt the use of some of these products exclusively for whoever our partner’s going to be. But the tsunami that’s in process and is seriously coming, is the – and every single major is affected – but the opportunity is there and it is something that we uniquely have at this point in time.
Emma Pearson: Gentlemen thanks for the update.
