Streamlining operations to focus on the most profitable side of their pharmaceuticals manufacturing business, Pharmaxis (ASX: PXS) has shored up its cash position via the sale of distribution rights in Russia for their cystic fibrosis treatment which is gathering international momentum.

The deal will send exclusive distribution rights in Russia to specialty company GEN İlaç ve Sağlık Ürünleri San. ve Tic. A.Ş. (GEN) in exchange for $2 million while Pharmaxis continues to manufacture and export Bronchitol® to Russia.

Cystic fibrosis is one of the world’s most inherited diseases that causes damage to the lungs which lowers the patient’s ability to naturally secrete fluid and mucus. As these fluids build up, they thicken to a point where they become more difficult to secrete via cough until intervention is undertaken to break up fluid using inhalables such as Bronchitol® which is approved for sale in Europe, the United States, Australia and other countries.

Key to the popularity of Bronchitol® amongst cystic fibrosis patients is its pocket-sized inhaler as an alternative to bulky nebulisers. With this convenience and high prevalence of cystic fibrosis in Russia, Pharmaxis has been actively working in partnership with GEN for the past 7 years in the region.

“Pharmaxis steered Bronchitol to approval as the first orphan drug approved in Russia following a change in legislation, listing on the Essential Drugs List and subsequently established a fast-growing business that brought a new drug to cystic fibrosis patients in Russia,” said Pharmaxis CEO, Gary Phillips.

“We have had a long and productive collaboration with GEN who have been our distributors in the Turkish market for many years.  Extending this relationship to encompass Russia and other related territories at this time will ensure that Bronchitol will be well supported by an experienced partner and with a leading position in cystic fibrosis care.”

Beyond the $2m that Pharmaxis will earn from the sale of distribution rights, there will be annual savings of more than $1m for Pharmaxis with GEN taking on the marketing and regulatory expenses of distributing Bronchitol® in Russia. Ongoing savings and the cash injection also provide Pharmaxis with opportunities to increase use of its manufacturing capacity if Bronchitol® continues accruing market share as a drug that requires ongoing consumption for effective treatment.

The sale of these distribution rights to GEN follows a similar strategy employed by Pharmaxis in the United States which is reaping rewards for the Aussie pharmaceuticals manufacturer.

Since partnering with pharmaceutical giant Chiesi as the exclusive distributor of Bronchitol® in the United States, the product has continued to gather sales momentum which included a $10m milestone payment to Pharmaxis subsequent to approval by the US late last year. This was separate to the percentage of Chiesi sales as well as a manufacturing margin payable to Pharmaxis for ongoing sales.

While Pharmaxis continues to secure recurring revenue from sales of Bronchitol® around the world, they are also actively recruiting patients for FDA-approved Phase 2 trials of their drug PXS-5505. A unique compound with potential disease-modifying functionality, PXS-5505 has shown encouraging results as a treatment for myelofibrosis – a rare form of cancer of which current treatments form a billion dollar industry to form a substantially more valuable asset than Bronchitol® if commercialised.

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*Owners of this website are PXS shareholders.