Ann: Appendix 4E and Annual Report 30 June 2024, page-2

For those of you who don't read annual reports (especially on Friday afternoons), I have copied the entire Firebrick Chairman's Letter here, because if you have any interest in the company, this one is worth taking the time to read when convenient:

The World Needs Nasodine!

And Firebrick’s mission isto make it available to the world.

Nasodine^® Nasal Spray (“Nasodine”) is the world’s first broad-spectrum antimicrobial nasal spray. In the wake of COVID-19, it is needed more than ever; and I believe that over the next decades it could save countless lives and reduce suffering worldwide. I want to share with you the remarkable story of Nasodine and then explain the exciting new vision for Firebrick.

Why Firebrick is focused on PVP-I

Nasodine Nasal Spray is based on povidone-iodine or PVP-I, which is a broad-spectrum germ-killing agent that has been used for decades in hospitals as an antiseptic because of its broad-spectrum of activity – it kills all viruses, bacteria and fungi. It also works very fast (kills most germs in 30-60 seconds) and it is not prone to any viral or bacterial resistance. Most importantly, PVP-I is remarkably safe for use on the skin and wounds in hospitals.

At low concentrations (around 1/10th of that used in hospital antiseptics), PVP-I can even be used safely in the throat…and without losing any of its rapid killing power against viruses and bacteria (germs). This is what inspired Faulding’s development and launch of Betadine® Sore Throat Gargle in Australia in the 1980s. As a young product manager, I was lucky enough to be charged with managing the Betadine range and I developed and launched the gargle. As most Australians know, this product is now one of the most trusted and commercially successful OTC pharmaceutical products, and it was truly an Australian innovation. Based on available sales data, we estimate that more than 100 million Australian sore throats have been treated with the gargle since its launch.

After I left Faulding to pursue an international career in the pharmaceutical industry, I often reflected on the untapped potential of PVP-I beyond its use as an antiseptic and a sore throat treatment. Trained as a microbiologist, I was particularly enthralled with the opportunity to develop a nasal formulation that could be used to treat or prevent the common cold – after all, PVP-I kills all viruses, including the 200 or so variants that cause colds and flu.

In 2002, I became the CEO of Biota, a world-leading antiviral drug developer focused on new treatments for respiratory viral diseases, including influenza, RSV and the common cold. Biota was the company that discovered Relenza® (zanamivir), the world’s first effective inhaled drug treatment for influenza. Through Biota, I came to better understand the nature of respiratory viral diseases and the clinical and regulatory challenges of developing a new treatment. I also concluded that for the common cold, a targeted antiviral drug or vaccine approach would not work, because of the large number of viruses involved and their ability to rapidly evolve around targeted approaches.

However, PVP-I kills all respiratory viruses and because of its non-selective, untargeted mechanism of action, there has never been a case of viral resistance to this remarkable agent. So after leaving Biota, I became even more committed to finding a PVP-I based solution for the common cold.

The Firebrick journey: a story of Australian innovation

In 2012, I got together with Dr Stephen Goodall, a specialist in pharmaceutical development and manufacturing, and together we created Firebrick Pharma, with the mission to develop and bring to market a PVP-I nasal spray for the common cold. Twelve years later and after spending more than $10 million on R&D, we are realising that goal with the commercialisation of Nasodine Nasal Spray.

Our original plan was to follow in the footsteps of Betadine® Sore Throat Gargle and launch Nasodine in Australia first, where we believed (and our market research indicated) it would have had strong support from pharmacists and doctors. Having demonstrated success in Australia, we would then expand globally through pharmaceutical partnerships.

We spent severalyears developing and ultimately manufacturing a safe, high-quality and stablenasal spray product. In 2018, we showed it was safe in Phase 1 and 2 humantrials and in 2019 completed a Phase 3 trial that showed it was very effectiveas a treatment for the common cold when used early in the illness and in those with a confirmed viral infection. Soon after in 2020, we filed a dossier with the Therapeutic Goods Administration (TGA) seeking marketing approval of Nasodine.
Unfortunately, we had not counted on COVID-19 or the challenge of getting an Australian pharmaceutical innovation approved by the TGA if the product is not already approved elsewhere in the world (note: the TGA did not exist when Betadine® Sore Throat Gargle was launched).
The TGA said they had no concerns about the safety or manufacturing quality of Nasodine. However, they asserted that it has not demonstrated sufficient clinical efficacy. They maintained this position despite submissions from our clinical and biostatistical experts that the clinical data showed that the product was clinically effective in the treatment of the common cold.
In late 2023, after three years of battling the TGA for approval of what they acknowledged was a safe product, and in the wake of an extremely unhelpful and still inexplicable result in our second Phase 3 trial, we ruefully gave up on TGA approval as an initial springboard for making Nasodine available to the world.
Our original plan was to get Nasodine approved worldwide as a treatment for the common cold. After all, there are around 17 billion colds p.a. worldwide, so it’s a big market. However, it’s a very difficult one for a new entrant from a regulatory perspective, because the measures for assessing the impact of any treatment are subjective perceptions about symptoms; further, just how much symptom benefit one needed to be seen as ‘clinically effective’ is not established – and TGA never told us what the threshold was for them. So this makes getting through the regulatory approval process precarious, even when there are no safety issues.

The pandemic imperative

One very positive thing that came out of the 2020-23 period was that we completed and published two COVID-19 studies that showed that Nasodine not only eradicated the SARS-CoV-2 virus in vitro but that invivo it completely cleared the virus from the nasal passages of COVID-19 patients. In October 2023, Firebrick’s Chief Medical Officer, Professor Peter Friedland, presented a paper at the Australian Military Medicine Association conference in Perth titled: “Nasal disinfection as a front-line defence in future pandemics”. The paper highlighted the importance of making Nasodine available before the next pandemic. This is now an essential part of Firebrick’s mission as discussed below.

Yes, the world needs Nasodine – and before the next pandemic. Our view is that Firebrick not only has a commercial imperative but an ethical obligation to make this important product available to protect frontline healthcare workers as well as consumers in the event of a pandemic.

I vividly recall the massive stockpiling of Tamiflu and Relenza that occurred in 2005 and 2009 in response to concerns about bird flu and swine flu pandemics. In 2009, I recall the stockpiling of Relenza and how beneficial it was to Biota at the time, which received a royalty on sales. But this was dwarfed by the stockpiling of its competitor, Tamiflu: According to a CDC report, 70 countries stockpiled a total 220 million courses of Tamiflu at a cost of US$6.9 billion. Reportedly, the US still maintains a stockpile of 55 million courses of Tamiflu, which is being made available in response to the current avian flu concern.

Pandemic stockpiling: Nasodine is ready

Nasodine is anexcellent candidate for stockpiling alongside (or potentially in place of)antiviral drugs. Unlike the antiviral drugs, Nasodine is far less expensive,does not require a prescription, is easily self-administered, has nosignificant side effects (and can be used by every frontline healthcare workerto protect themselves, not just to treat people already sick. Moreover, it is active against all respiratory viruses, not just influenza, and viral resistance is not a problem with Nasodine.
The stockpiling of Nasodine as part of a pandemic preparedness program in the US is a substantial opportunity that could be as transformative for Firebrick.
Fortunately, Nasodine is now available in the US, and should there be a pandemic – whether avian flu or another coronavirus – then Nasodine is currently the only PVP-I nasal spray available that is pharmaceutical quality, has clinically-proven safety, has clinically-proven efficacy in reducing pandemic viral shedding (with COVID-19), and is supported by multiple peer-reviewed publications.
If there is a pandemic, we now have manufacturing capacity established in the US, Australia and soon in the Philippines, and our manufacturing partners should be able to quickly respond with more inventory to meet the worldwide demand that may occur for Nasodine. That capacity could be expanded by manufacturing in other countries as well.
Over the next months and years, we intend to lobby government and health authorities in those countries where Nasodine is available to add Nasodine to their pandemic preparedness program.
This is an ambitious plan and it will require financial resources and capabilities in the US that we are yet to build, but we are committed to doing so.
We will be actively exploring this opportunity during the coming year.

The prophylaxis opportunity

In the US, Nasodine’s claims are currently limited to promoting nasal hygiene, while in Singapore and soon in the Philippines, we can market Nasodine as a nasal antiseptic and have a much more expansive and commercially valuable set of claims.

What is an ‘antiseptic’? The word literally means “stops rot” and in practice it means an agent that ‘prevents infection’. In those countries where we can secure approval of Nasodine as an antiseptic (not necessarily a treatment), it opens the way for a potentially large market opportunity for Nasodine as a preventative against nasal infection, i.e., prophylaxis.

In Singapore, we can already actively promote Nasodine as a broad-spectrum antimicrobial nasal spray. Specifically, we have been approved by the Health Sciences Authority (HSA) – the equivalent of the TGA in Singapore – to promote Nasodine to consumers as the “nasal spray that kills germs” and for use in situations, such as commuting, travelling on planes, at work, and other situations, where you are concerned about catching “other people’s germs”. In Singapore, this effectively positions Nasodine as a prophylaxis (preventative) for all respiratory infections, not just the common cold.

This is a market opportunity that is potentially much larger than treatment of the common cold. Consider that on average in the US, adults get around two and a half colds each year; if this applied to Singapore with a population of around six million, the maximum potential available market for a common cold treatment could be 15 million units a year (2.5 x 6m). However, like all countries, there is a horde of embedded competitors aggressively fighting over this available market, so despite Nasodine’s innovative approach to treatment (killing the causative germs of cold symptoms), we can expect that the existing competition would not give up market share easily.

In contrast, consider the prophylaxis opportunity for Nasodine: There are approximately seven million people using public transport each day in Singapore and more than five million people going through Changi airport each month. That is a large number of people who might be exposed to ‘other people’s germs’ and want a nasal spray that will help protect them. Moreover, this need exists not just two or three times per year when people have colds, but potentially every day; and currently there is very limited competition for the prophylaxis need. In other words, the prophylaxis market opportunity for Nasodine could be much larger than the size of the common cold treatment opportunity in those countries where we can release it as an antiseptic for nasal use. Along with pandemic preparedness, this prophylaxis opportunity is now a key plank of Firebrick’s vision.

Partnering and pharmacy distribution is the goal

Online sales are not our long-term goal in any market. They are merely a way to seed the market in preparation for partnering and to create a basis for Nasodine’s availability in the event of a pandemic.

Going forward and as outlined in the ‘Firebrick Vision’ statement that follows, our goal in every country is to make Nasodine available through partners – like in the Philippines – who will drive sales through pharmacy distribution and recommendation, supported by advocacy from doctors.

The Singapore online launch has served as a gateway for Nasodine’s availability as a nasal antiseptic. However, our goal in Singapore is to gain pharmacy distribution as soon as possible and find a local or regional marketing partner to handle all marketing and distribution, with Firebrick receiving a royalty or license fee on sales.

We recently announced our amended agreement with our partner in the Philippines, SV More, which will allow them to manufacture Nasodine in the Philippines and promote it with a similar prophylaxis positioning as in Singapore.

However, the population in the Philippines is much larger (119 million in 2024) and we have a committed marketing partner in place that has indicated they are ready to push Nasodine through drugstores nationally and leverage doctor support for the product. Meanwhile, it is great for Firebrick because we can control the quality of the product without the working capital burden associated with manufacturing it ourselves and we receive a license fee on sales.

The Philippines opportunity and deal structure is an exciting one for us and an important model for all our partnering worldwide. This is the model we intend to pursue for partnering in all countries under our new vision: We intend to offer licenses to local marketing partners that includes the right to manufacture Nasodine for their market, with Firebrick controlling overall marketing strategy and product quality while receiving royalties on sales.

However, not all markets will allow the availability of Nasodine as an antiseptic for nasal use. Australia is currently one of those. Fortunately, the TGA’s regulations provide for importation for personal use by Australians, and I am pleased to report that many Australians including Firebrick shareholders have ordered Nasodine from our international website (nasodine.com) and legally imported it for their personal use; based on their reviews on our website, they are grateful to have access to it, even if it can’t be purchased through their local pharmacy. We hope that in future we can re-open productive discussions with TGA towards a pathway to approval in Australia.

Beyond the nasal spray

While we have been waiting for Nasodine to be approved in Australia, we have not been idle with our new product development (NPD) program aimed at creating innovative PVP-I products to follow-on from Nasodine Nasal Spray. Through our partnership with Probiotec, we are close to completing development of a range of Nasodine products that we intend to market as antiseptics, and we expect to be launched in the Philippines and any other market where we have pharmacy distribution and a partner in place to help build the Nasodine franchise. We look forward to announcing these new products and the launch of several of them in the coming year.

The vision

Our vision for Firebrick is now clear and is outlined in this annual report. That vision we expect will see Firebrick having a range of antiseptic products on the market in many countries, delivering growing royalties and license fees to Firebrick and building a significant market valuation for your company. Ironically, the setbacks of late 2023 have not deterred us, but spawned new and greater quests and a vision that in our view is even more promising, valuable and exciting than it was in the past, with an even greater opportunity for Firebrick to contribute to human health and reduced suffering in the world.

Dr PeterMolloy

ExecutiveChairman and Chief Executive Officer