AFT Pharmaceuticals Wins Appeal to Retain Full Profits on Pascomer’s Largest Market

Court of Appeal dismisses profit-sharing claim over Pascomer’s broader market applications

AFT Pharmaceuticals (ASX: AFP) has successfully defended its position in the Court of Appeal, with PBL Solutions Limited’s claim for profit-sharing on non-orphan Pascomer applications dismissed. The AFT Pharmaceuticals Pascomer Court Appeal outcome removes a potential encumbrance on the topical skin medicine’s largest commercial opportunity, Port Wine Stain (PWS) treatment, which represents a patient pool approximately 36 times larger than the Facial Angiofibroma orphan indication.

The Court of Appeal judgment, released on 8 March 2026, dismissed PBL’s appeal from a 2023 High Court ruling. PBL had sought a share of any profits AFT may earn from applying Pascomer to non-orphan conditions such as PWS. The ruling means AFT retains full commercial control over Pascomer’s broader dermatological applications without profit-sharing obligations to PBL beyond the agreed orphan drug scope.

PBL Solutions Limited, a company associated with a former AFT contractor, holds a 35% stake in AFT Orphan Pharmaceuticals Limited, an entity created to pursue orphan drug applications. Under the original agreement, AFT will continue sharing 35% of any profits earned from Pascomer’s orphan drug applications with PBL. The costs of the appeal will be shared between both parties.

Company Statement

“The company does not expect the judgment to have a material effect on AFT’s FY 2026 earnings guidance.”

The judgment itself remains confidential to the parties pending review for confidential information prior to public release. AFT has confirmed it continues reviewing the judgment and will make no further comment at this time.

What this means for Pascomer’s commercial pathway

The Court of Appeal ruling provides legal clarity on Pascomer’s commercial terms by distinguishing between orphan and non-orphan drug applications. Orphan drugs are medicines developed for rare diseases that may qualify for regulatory incentives and market exclusivity designed to make commercialisation economically viable for smaller patient populations.

AFT’s topical skin medicine Pascomer was initially developed for Facial Angiofibroma, a rare condition that qualifies for orphan drug designation. The Port Wine Stain market, however, represents a non-orphan application with significantly broader commercial potential due to its larger patient base.

The judgment confirms AFT will continue honouring its profit-sharing arrangement with PBL for orphan drug applications of Pascomer. Any profits generated from these rare disease indications will be split 65/35 in AFT’s favour. However, the ruling removes PBL’s claim to profits from non-orphan applications such as PWS treatment, allowing AFT to pursue commercialisation of these larger markets with retained economics.

For investors, this distinction is commercially significant. The PWS patient population is approximately 36 times larger than the Facial Angiofibroma indication, representing a substantially greater revenue opportunity if Pascomer achieves regulatory approval and market adoption for this broader dermatological application.

AFT Pharmaceuticals’ market position

AFT Pharmaceuticals is New Zealand’s largest domestic pharmaceutical company, dual-listed on the NZX and ASX. The company operates a diversified business model spanning over-the-counter (OTC), prescription, and hospital distribution channels.

AFT’s product portfolio comprises both proprietary and in-licensed medicines across multiple therapeutic categories, including patented, branded, and generic drugs. The company maintains a hybrid commercialisation strategy, directly marketing products in core markets whilst out-licensing to local distributors internationally.

AFT’s geographic footprint includes direct market presence in:

• Australia
• New Zealand
• Singapore
• Malaysia
• Hong Kong
• United States
• Canada
• European Union (excluding Ireland)
• United Kingdom

Beyond these direct markets, AFT has licensed its products to local distributors across more than 125 countries worldwide, providing global reach whilst managing capital deployment efficiently.

Investment outlook

The AFT Pharmaceuticals Pascomer Court Appeal judgment removes uncertainty around profit-sharing arrangements for Pascomer’s largest addressable market. By confirming that non-orphan applications such as Port Wine Stain treatment fall outside PBL’s profit-sharing agreement, AFT can pursue commercialisation of these broader dermatological indications with full economic retention.

The company has confirmed the judgment is not expected to materially affect its FY 2026 earnings guidance. Whilst the judgment remains confidential pending review, the disclosed outcome provides strategic clarity on Pascomer’s commercial terms as AFT advances regulatory and market development activities.

For retail investors and financial professionals tracking the biotechnology sector, this ruling represents a material development in AFT’s intellectual property and partnership structures. The legal certainty allows AFT to pursue Pascomer’s PWS opportunity, a market with 36 times the patient population of the orphan indication, without encumbrance from the original development partnership beyond its agreed scope.

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