Pharmaxis’ Shares Jump ~9% on Sale of Distribution Rights in Russia

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Summary

  • Pharmaxis’ shares rose on the sale of Russian distribution rights for Bronchitol ®.
  • The pharmaceutical research firm will get A$2 million distributor appointment fee.
  • The drug maker is raising A$4.4 million in a private placement.

The share price of Pharmaxis (ASX: PXS) jumped by ~8.9% per cent on Wednesday after the Australian pharmaceutical research company announced the sale of distribution rights in Russia for its cystic fibrosis product Bronchitol ®.

The company has sold the distribution rights to Russian pharma specialty company GEN İlaç ve Sağlık Ürünleri San. ve Tic. A.Ş. (GEN) for A$2 million, effective 1 May 2021, Pharmaxis said in a regulatory filing on 14 April.

The deal with help Pharmaxis save additional A$1 million per annum in terms of marketing and regulatory expenses.

Pharmaxis shares opened higher at A$0.082 against its previous close price of A$0.079. Extending opening gains, the stock gained as much as 11.39 per cent to hit a high of A$0.088. There was spurt in volume trade as 2,691,742 shares changed hands over the counter. The market capitalisation of Pharmaxis soared to A$ 31.40 million.

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Meanwhile, the benchmark ASX200 traded 46.20 points or 0.66% per cent higher at 7023.10 amid broad-based buying. On the sectoral front, 8 of 11 indices traded trading in the green, while IT sector was top performer, followed by A-REIT and others.

Among the individual stock, Resolute Mining Ltd (ASX: RSG) and Perseus Mining (ASX: PRU) were among the top gainers, rising 14.89 per cent and 6.72 per cent,  respectively.

Sale of Russian Bronchitol® Distribution to Lower Cost

Pharmaxis, engaged in the development of drugs for inflammatory and fibrotic diseases, has secured ongoing annual savings of A$1 million in marketing and regulatory expenses from the transfer of commercial and product responsibilities.

The drug maker, however, will continue to manufacture and export Bronchitol® to Russia from its factory in Sydney that also serves the US, European and Australian markets.  

Now, Pharmaxis will receive 70 per cent of the A$2 million distributor appointment fee and the remaining 30 per cent over a 12-month period.

The cystic fibrosis product is used for treatment of adults and children suffering from debilitating genetic disease that causes progressive damage to the lungs and other organs.

Pharmaxis Raising A$4.4M Capital

Pharmaxis has proposed to raise A$4.4 million via a private placement to institutional investors.

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Under the private placement, the company will issue 54,586,141 ordinary fully paid securities at an issue price of A$0.08, which represents a 1.3 per cent premium to the last closing price of A$0.079 on 12 April 2021.

The company intends to use capital to strengthen its balance sheet, support clinical program for myelofibrosis and skin scarring, and meet general working capital requirements and capital raising costs.

Post raising capital, the proforma cash balance of the company stood at A$20 million at the end of March 2021.


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