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A game changing treatment for Strawberry Birthmarks

Case Study:

Strawberry birthmarks are disfiguring, and potentially life-threatening tumours affecting 1-in-10 children worldwide. Current treatments are reserved for only the most severe cases, due to drug related side-effects. In 2022, Massey Ventures and the Gillies McIndoe Research Institute announced an agreement with AFT Pharmaceuticals to develop a life-changing new treatment for infants' and their families in over 100 countries.

Strawberry birthmarks affect 1-in-10 children causing disfigurement, threat to bodily function and sometimes life. Up to 85% of infants are left untreated, due to drug-related side-effects and may become disfigured for life.


Researchers at Massey Ventures and the Gillies McIndoe Research Institute are developing a new topical treatment for strawberry birthmarks that avoids these side effects.


"This will be a game changing treatment for children and their families, allowing more infants with strawberry birthmarks to be treated early to prevent them from ever becoming disfiguring or life-threatening." Says Dr Sean Mackay.


In 2022, Massey Ventures led commercialisation of the technology in a market worth an estimated $750M annually in US, Europe, and China alone. The new treatment has the potential to become the new standard of care. The IP was licensed to NZ-based multi-national AFT Pharmaceuticals to make the most of the life-changing medicine with plans to launch in over 100 countries.


Commercialisation Process

Dr Swee Tan and researchers at Gillies McIndoe Research Institute have a rich background in infantile haemangioma research. They have published many scientific papers contributing to the understanding of the potential stem cell origins and the involvement of the renin-angiotensin system in strawberry birthmarks, underscoring the effective treatment of this tumour with oral propranolol which is usually continued until the child is 12-14 months old. However, the treatment is reserved for only cases that are severely disfiguring or risk life and bodily function due to the treatment's side-effects such as sleep disturbance, night terrors, diarrhea, vomiting, bronchospasm, low-blood pressure, and hypoglycaemia.


Dr Sean Mackay heard about Dr Tan’s work during his time at Otago University and proposed a novel topical formulation might avoid many undesirable effects. Dr Mackay unlocked $1m in MBIE Smart Ideas funding to develop the drug delivery technology for topical application. This provided the biological proof of concept but also formed the basis of the provisional patent application.


There's a massive need for the topical treatment" says Dr Clint Gray, Director and lead researcher at Gillies McIndoe Research Institute. "Everyone can use it. Whereas currently, existing treatments are only used in the extreme circumstances."


Following the agreement, Dr Mackay’s mentor, Aki von Roy, had arranged a lunch between Dr Mackay and AFT founder and Managing Director, Dr Hartley Atkinson. During the chance encounter Dr Atkinson expressed interest in the technology.


Initially, Dr Atkinson had expressed reservations about dealing with universities due to previous difficult experiences. Massey Ventures sought to exceed AFT’s expectations and maintain a fast-moving industry pace to negotiate a fair and equitable licensing arrangement.


Negotiations progressed rapidly with AFT Pharmaceuticals who saw the project as a critical part of their aggressive growth ambitions. Within six weeks, the team arrived at a mutually beneficial deal, using PreSeed Accelerator Funding to accelerate the project and de-risk AFT’s global patent protection aspirations. The project is the first pharmaceutical deal in Massey Ventures history and opens the door for more to come.


"In terms of the efficiency of how both sides operated, we managed to surprise each other. From our perspective it was quite unheard of for a pharmaceutical company to move so quickly on a deal" says Dr Mackay.


AFT represented the perfect partner, being:

  • well resourced ($157M turnover and $11M R&D spend in the Financial Year 31Mar23);

  • experienced in developing a similar product line through conception to clinical trials;

  • Australasian, enabling significant potential export value; and,

  • highly motivated with global ambition to launch our breakthrough treatment in over 100 countries.


Due to the long runway to market for drug discovery, the project required de-risking. To achieve this, Massey Ventures identified technical and IP milestones with AFT that required de-risking, and built them into a ~$300K PreSeed Accelerator Fund proposal prior to the license agreement. The funding covered national phase filing in 27 key jurisdictions to support AFT's ambitious plans to deliver the treatment to children in 100 countries. The funding also afforded a larger, more robust dataset to validate the technology. Using PreSeed as leverage to de-risk the project was critical to the deal’s success.


The deal also utilises an ongoing risk-sharing model including milestone payments, licensing, and royalty revenues that constitute significant future value.


"This treatment has the potential to become the new standard of care for infants with strawberry birthmarks" says Dr Sean Mackay.


In a $750M market where less than 15% of patients receive the only competing product (due to potential side effects), the license deal may be worth several million dollars annually. Since the licensed IP remains in NZ, it creates significant potential export value for Australasia.


Most importantly, this breakthrough project is now in the hands of an innovative Australasian company with resources and connections to bring the technology to market in over 100 countries. The deal provides potentially life-changing treatment for the 85% of patients who would otherwise be left untreated, enabling significant global benefits for the children with strawberry birthmarks.

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