Reporting Season: TPI Enterprises signs European codeine phosphate supply contract

By Trevor Hoey. Published at Aug 6, 2018, in Special Reports

Name: TPI Enterprises Ltd (ASX:TPE)

Market Cap: $118 million

Last Closing Share Price: $1.38

Licenced poppy producer, TPI Enterprises Ltd (ASX:TPE) announced on Friday that it had entered into a significant multi-year supply agreement with one of Europe’s leading pharmaceutical contract manufacturing organisations.

Under the agreement TPE will ship Narcotic Raw Material from its plant in Melbourne to its Norwegian operations where it will be processed into Codeine Phosphate Active Pharmaceutical Ingredient (API).

The Codeine Phosphate API will then be delivered to one of the new customer’s several European formulation manufacturing sites for conversion into finished dosage tablets.

The agreement is for a three-year term with a minimum supply of six tonnes per annum, generating revenues of more than $9 million over the full period and $3.5 million in the 12 months to August 2019.

Few competitors in Australia

TPI is one of three licenced poppy processors in Australia, and the only one that’s Australian-owned.

It is one of only three companies globally that is vertically integrated from poppy growing through to tableting production.

TPI has developed an innovative, efficient and environmentally-sustainable extraction and purification manufacturing process which allows the company to deliver a highly competitive pricing platform.

The company’s strategy is to secure access to regulated downstream narcotics markets to leverage its reliable, cost-competitive upstream raw material capability.

Those considering this stock shouldn’t make assumptions regarding future sales, nor should they base investment decisions on performances to date. Those considering this stock should seek independent financial advice.

On track to meet or beat revenue guidance

TPI Enterprises chief executive Mr Jarrod Ritchie said: “This agreement illustrates TPI’s ability to effectively compete in this key segment of the opiates based API market, post the acquisition of the Vistin opiates business in October 2018.

“The strong customer demand we have experienced since the close of the acquisition has reinforced our belief that we are the most competitive producer of morphine and codeine based API products in the market today, and we are in the process of adding capacity at our Norway (Kragerø) facility to increase Codeine Phosphate production to meet this demand.”

Management took the opportunity to inform the market that it expected to meet or exceed revenue guidance of $20 million for the first half of 2018.

The company’s announcement prompted a 6.5 percent increase in the company’s share price on Friday.

The past performance of this product is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

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