Medical Developments Pain Free In Germany

This story features MEDICAL DEVELOPMENTS INTERNATIONAL LIMITED. For more info SHARE ANALYSIS: MVP

Brokers welcome the news that Medical Developments has received regulatory approval to market its pain-killing device Penthrox in Germany.

-Milestone payment expected in second half of 2018
-Global expansion strategy for Penthrox on track
-Catalysts include appointment of a distributor in the US
 

By Eva Brocklehurst

As Germany is the largest EU market, news that Medical Developments ((MVP)) has received regulatory approval to market its Penthrox product has been welcomed by brokers. This brings the total number of approvals in the EU to 15 nations.

First reimbursed sales in Germany will trigger a milestone payment of US$2m from the company's partner, Mundipharma, expected in the second half of 2018.

Bell Potter considers this approval marks an important milestone, as Germany is the largest user of opioids in Europe. The availability of Penthrox as an alternative non-opioid pain relief product should benefit patients and likely candidates are in the trauma setting.

The broker estimates that around 16m people visit accident and emergency centres in Germany in a year, with over 3m likely to be candidates for Penthrox. Bell Potter forecasts first revenue in FY19 and retains a Buy rating and $8.49 target for Medical Developments.

If Penthrox is only used to treat acute trauma pain in ambulances and emergency departments, Moelis estimates Medical Developments could achieve in excess of 1m units sold per annum.

The company expects sales to commence this month in the other EU countries which have approved Penthrox, commencing in Austria where the first order has been received.

The remaining 11 EU countries are expected to follow. Spain and Italy are the next two markets in focus after Germany. First sales in these will trigger additional milestone payments of US$3m collectively.

Moelis believes this is further evidence of the company's ability to deliver on its roll-out strategy for Penthrox and expects a total of US$5m in milestone payments will be recorded in FY19.

If Penthrox is only used to treat acute trauma pain in ambulances and emergency departments, the broker estimates Medical Developments could achieve in excess of 1m units sold per annum.

Any indications that the uptake established EU markets is progressing faster than expected will provide the evidence that Penthrox can be rolled out into the rest of the EU and later in the US.

Moelis envisages the next catalysts for the share price will be the appointment of a distributor in the US, expected in 2019. The broker retains a Hold rating and $8.08 target.

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