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The ongoing coronavirus (COVID 19) pandemic has caught the world by storm and disrupted normal lives. From creating a bloodbath and continuous sell offs in the stock market to causing upheavals in the tourism industry, it has shaken almost every business sector across the globe.
With medical science abilities put to test to come up with a robust solution for this deadly virus, any positive update from the health care sector is keenly eyed by investors.
In this backdrop, we will acquaint you with one such healthcare stock listed on the Australian Securities Exchange, which had its stock up by 25 per cent after market close on 16 March 2020 after it intimated the market about the completion of its share purchase plan (SPP) and revealed its operational update- MGC Pharmaceuticals Limited (ASX:MXC).
A ‘Seed to Medicine’ bio-pharma corporation, MXC is engaged in commercialising phytocannabinoid derived drugs. The Company is based in Europe and its product offering presently taps two prevalent medical conditions –dementia and epilepsy.
Closure of the Share Purchase Plan- Raised $2.14 Million
MXC had announced a SPP on 17 February 2020; post which it received valid applications for a total of $1.14 million pursuant to the terms of the SPP. Australian-based directors Mr Mitchell and Dr Walker participated in the SPP. However, Overseas-based directors were ineligible to participate in it.
On 16 March 2020, the Company announced that it has raised a total of $2.14 million from a maximum of $4 million from SPP along with recently announced placement. It should be noted that this achievement is a result of positive investor approach and shareholder support in times when sell off and unprecedented market volatility is prevailing around.
Driven by the fear surrounding the COVID-19 virus outbreak, the past few weeks have demonstrated some nervous times for businesses, investors and economies as well. Amid this, MXC has been successful in raising the amount and its Board is reportedly very pleased with this result and the support received from shareholders.
The shares subscribed for under the SPP are due to be issued on 18 March 2020.
The free attaching options (one option for every two shares subscribed for, exercisable at $0.045 on or before 31 August 2021), are due to be issued shortly under a prospectus as set out in the Offer documentation.
The Company notified that the funds raised under the SPP and placement will be used to fund operations and the immediate required manufacture to fill existing and ongoing orders for its cannabinoid-based medicines (incl. CogniCann®, CannEpil® and MP100) in Australia, Latin America and Europe. The funds will also be utilised towards the ongoing operating expenses and general working capital.
Operations Update- Exercising COVID 19 Vigilance
On the operations front, MXC aims to maintain a strong balance sheet and will thrive to reduce costs where appropriate (incl. salary and cost reductions for executive management and key personnel).
The Company is based in Europe which, along with many economies of the world, is currently experiencing an unprecedented disruption due to the COVID-19 virus outbreak. This has caused major instability and uncertainty in the region.
As MXC’s operations, executive management, and key personnel are based out of Europe, the Company is vigilantly monitoring the situation and the health of its staff. It also takes its responsibility to shareholders, staff, and partners very seriously. As reported, MXC will continue to assess any potential impact to operations and forward planning as the pandemic scenario further evolves.
To protect and best manage the health of its staff in Europe, MXC has implemented appropriate policies. Moreover, the Company has experienced slight disruptions to parts of its raw materials supply chain, which is being managed to ease any disruption to manufacturing operations (on a daily basis).
Besides its COVID 19 vigilance update, the Company notified that its EU Good Manufacturing Practice compounding and manufacturing facility, based in Slovenia has completed its GMP audit review recently. MXC is currently expecting to receive a formal written status renewal confirmation in the weeks to come (from the regulatory authority).
Other Updates
MXC notified about receiving the down payment on the purchase orders, first shipments, a beefed-up purchase order volume and trail commencements. Let’s deep dive-
- MXC confirmed the receipt of ~$107k down-payment from ONIX Empreendimentos e Participações as part of the binding amendment to a supply and distribution agreement which was announced on 3 March 2020. The down-payment is for the first purchase order of 4k units valued at ~$330k.
The Company is underway working with ONIX, completing the registration documentation for all its cannabinoid medicine products for formal approval from Anvisa (the Brazilian National Health Surveillance Agency and regulatory authority).
- With the completion of production, MXC is all set to despatch its first units of CannEpil®, its Investigational Medicinal Product to patients in Ireland after receiving import approval from the Irish Health Products Regulatory Authority.
CannEpil® is formulated to cure epilepsy. It is expected to be delivered from the Company’s EU-GMP certified production facility in Slovenia into Ireland by the end of March 2020 (subject to the necessary export permit). MXC expects continued increase in product demand in Ireland and the EU.
- On 21 February 2020, the Company had notified that it had received an 85% increase to its January purchase order volume (from 2,000 to 3,700 units) for the immediate production and delivery of its Mercury Pharma line of proprietary prescription medicinal products. Pertaining to the same, the first 2,000 bottles of MP100 have been manufactured for the Australian market and are due for export from Slovenia.
The Mercury Pharma line has been receiving strong patient demand and was developed to deliver a cost focused medicine for ANZ patients. The Company believes that this order will more than double the number of prescriptions issued to date, to over 4,500.
- In the second week of March, the first set of patients commenced treatment in the Company’s Phase II Trial in collaboration with the University of Notre Dame Australia. The Trial is likely to access the impacts of CogniCann® (developed by MXC’s Clinical Advisory and Research team) with the definite intention to take care of the symptoms associated with dementia and Alzheimer’s disease.
It will be interesting to watch MXC unfolding its operations amid the ongoing crisis situation and gauge its stock movement. Today, on 17 March, the stock plunged 10% on ASX to $0.018 (1:32 PM AEDT).