Medical Developments International (ASX:MVP) has a tentative contract with the Mundipharma network in Europe to take back the distribution rights for its pain relief drug, Penthrox, in all 27 member states in the European Union.
The stock jumped over 14 per cent to an intra-day peak of $7.15 in early morning trade.
Medical Developments International (ASX:MVP) share price chart
The company has already set up a European office and appointed Mundipharma veteran Stefaan Shatteman as head of Europe.
MVP will pay €3m ($4.9m) in staged instalments over the six month handover period plus a 5 per cent royalty on sales capped at a maximum of €5m from September 1, for a total payment of $13m.
MVP sold the rights to commercialise Penthrox in Europe to Mundipharma in 2015 for $US54m ($74.4m), royalties and a share of the profits.
At the time it was a little company making $1.5m in profits and just $11.6m in revenue.
Last year, the profit figure hadn’t changed but revenue doubled.
MVP said in the annual report last year the drug was yet to be launched in most of Europe, including in the main markets of Germany, Italy and Spain, because of regulatory delays. Sales had grown by 401 per cent and it had 1058 customers on the continent.
Today the company said it had 568 customers in Europe.
The move to buy back the sales and distribution rights is because Mundipharma is scaling back its Europe operations.
“We are the beneficiaries of the enormous effort and expense Mundipharma has invested in pre-marketing activities, marketing approvals, patient trials, clinical data and initial market launches,” MVP chairman David Williams said.
“Mundipharma is going through a significant reorganisation. As a result of these unusual circumstances we are able to access the local European experience of well-qualified staff and all of the work and materials relating to our business.”
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