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Aspen’s shares summit to highest level since 2018

On positive Covid-19 drug trial.
The company says it is well-positioned to go into ‘quick production’ of the drug within its South African, Australian and European operations. Image: Supplied

Durban-based global pharmaceutical giant Aspen Pharmacare saw its share price surge 9.29% to R153 on Wednesday – its highest level since November 2018 – following UK reports that a drug it manufactures in SA has seen positive trial results for treating severely ill Covid-19 patients.

Aspen Pharmacare share price in the past month

The drug, known as Dexamethasone, is a corticosteroid used to treat various conditions. Doctors in the UK say the cheap and widely available drug has been part of trials of existing drugs to treat Covid-19, and has shown remarkable results for coronavirus patients on ventilators.

Dexamethasone has been shown to cut the risk of death of critically ill Covid-19 patients on ventilators by a third, and by a fifth for patients on oxygen treatment.

Read:
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In a brief Sens statement on Wednesday, Aspen noted the preliminary results of the “drug trial using Dexamethasone in the treatment of patients with Covid-19 requiring respiratory intervention” and the media coverage around this.

Aspen is assessing demand

“It is confirmed that Aspen owns rights to this product and distributes both injectables and/or tablets containing Dexamethasone in a number of countries. Aspen markets an injectable Dexamethasone in South Africa, which is manufactured locally by a third party,” the group added.

Speaking to Moneyweb editor Ryk van Niekerk on the RSG Geldsake show on Wednesday night, Aspen CEO Stephen Saad said Dexamethasone isn’t a new drug: it is used to treat asthma, and is widely used in oncology, among other areas.

The World Health Organisation (WHO) states that Dexamethasone has been used since the 1960s to reduce inflammation in a range of conditions. It has been listed on the WHO ‘Model List of Essential Medicines’ since 1977 in multiple formulations, and is currently off-patent and affordably available in most countries.

“We’ve been very fortunate to have [the product] in both the tablet and injection form and we’ve got it across our [production] facilities and outsourced facilities across the world,” said Saad.

“We’ve been busy today trying to work out real demand,” he added.

Aspen CEO Stephen Saad. Image: Supplied

“What we have seen with Covid-19 is that we have been very busy with our anaesthetic [drugs] portfolio across Europe … You have these big pulls in demand and sometimes the offtake isn’t there. Even in South Africa – where there [was initial] panic buying and then it dissipated. We’re busy trying to work out what is real demand and are looking internally to understand if we have all the components in place.”

Saad added that Aspen is “well-positioned to go into quick production” of the drug within its South African, Australian and European operations.

Enquiries from all quarters

Asked if the group has already seen a spike in demand, he said Aspen has seen enquiries for the drug “from everywhere”, including the South African government and the WHO.

“Our government has contacted us a couple of times already, wanting to understand the capacity and capabilities we have,” he said. “And, interestingly not just enquiring for South Africa, but for all of Africa, which I was particularly pleased to see … sort of working continentally.”

Read: Pandemic delivers R943m revenue blow to Netcare

In a statement on Tuesday, the WHO hailed the initial success of the drug trial in treating Covid-19 patients. It said that according to preliminary findings shared with it, the benefit was only seen in patients seriously ill with Covid-19, and not in patients with the milder form of the disease.

“This is the first treatment to be shown to reduce mortality in patients with Covid-19 requiring oxygen or ventilator support,” WHO Director-General Dr Tedros Adhanom Ghebreyesus said.

“This is great news and I congratulate the government of the UK, the University of Oxford, and the many hospitals and patients in the UK who have contributed to this lifesaving scientific breakthrough,” he added.

Commenting on Aspen’s possible windfall, Wayne McCurrie, portfolio manager at FNB Wealth and Investment, said: “I am not sure how beneficial any new treatment will be for the drug companies, as there will be massive pressure on them to provide any treatment at the lowest cost possible. Any ‘profiteering’ would be totally unacceptable socially and also there’s legislation around this.”

McCurrie said that it is however “very good news” in the global fight against the Covid-19 epidemic.

Listen to Ryk van Niekerk’s interview with Aspen CEO Stephen Saad:

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This was a good piece, with multitudes of positives coming from various ref. sources.
Why go spoil it with a single observed comment from Mr. McCurrie, clearly the market shares other sentiments. He his but one single mouthpiece. Traditionally such comments are almost obligatory followed by the question whether the same investing Guru is in/out of the said stock. That will then either add or deduct from the value of is comment.
My interpretation being Mr. Wayne either missed this one or is mixing social issues with investment matters and that makes for complicated mathematics, never mind economics.
Go Mr. Saad at least now you know where FNB W + Invest stands.

Wayne and the rest of his sour gang at FNB wealth missed out.
FSR shares are down and out… Wayne rather focus on your own stock.
MAybe next time you can tell us when to short FSR.

While Elsewhere we have better commentators:

BP Bernstein portfolio manager Gerhard Parkin said the news was positive for Aspen as it meant governments would buy the drug from the firm, with funds expected to be used to lower the debt that has worried investors and hit its share price.

“The market is focused on news that there is drugs available,” he added. “So the market is just hoping that we’re getting back to normal quicker than we thought.”

A jump in Aspen gave the Johannesburg All-Share index its best day since May 19, closing 3.36% firmer, while the Top 40 companies index surged 3.63%.

Wayne McCurrie, ever heard of scale of economics???? large volumes and small margins???

In the retail world it is common practice to have slow movers with very large margins and large movers with small margins, the trick, pal, is to get feet in the shop or have package deals with large margins products in the package.

ie in case you don’t get it, sell the low margin drug with a high margin applicator, some thing along those lines.

Yup… agree.

This is huge for Aspen. Imagine they able to supply the WORLD.
Think about that for a second.
They will be covering their Debt and back to being the darling it once was.

Dexamethasone is not the only corticosteroid???

Its about time Aspen did something. They have been my worst-performing stock for as long as I can remember.

One of the stocks that soured the SA market for me – bought at R278. Stupid is as stupid does.

End of comments.

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