The Medical Developments International Ltd (ASX: MVP) share price has returned from its trading halt and is sinking lower on Monday morning.
In early trade the healthcare company’s shares were down as much as 8.5% to $6.51.
The Medical Developments International share price has rebounded a touch since then but is still down 7% to $6.61 at the time of writing.
Why is the Medical Developments International share price sinking lower?
The Medical Developments International share price has come under pressure today after announcing the successful completion of a capital raising.
According to the release, the company has raised approximately $25 million via a placement which was supported by new and existing investors in Australia and internationally. It raised the funds at an 8.5% discount to its last close price of $6.50 per new share.
Following the offer, Medical Developments International will have pro forma net cash of approximately $44.9 million.
The proceeds will be used primarily to accelerate the commercialisation of its Penthrox product in the European market, to strengthen the depth and breadth of the management team, and to complete clinical and other studies.
The company’s commercialisation strategy will be led by former CSL Limited (ASX: CSL) and Seqirus executives – incoming Chairman Gordon Naylor and CEO Brent MacGregor.
Similarities with CSL.
Medical Developments International’s incoming Chairman, Gordon Naylor, believes there are similarities between the company and CSL.
He commented: “There are parallels between MVP and my former employer CSL in two ways; firstly around Seqirus and what we achieved there in a short period of time. That business was driven from generating an annual loss of $250m to being a profitable high growth market leader within 3 years. Secondly, I am proud to have been part of the internationalisation of CSL from domestic roots to the global leader that the company is today.”
“For businesses like MVP which have experienced success in the local and relatively small Australian marketplace there is transition risk when expanding abroad into diverse international markets. The experience that MVP’s new CEO Brent MacGregor and I bring to the table is relevant to making that transition a successful one and executing on the international stage. The opportunity for the success of Penthrox in Australia to be replicated in Europe is immense and both Brent and I are excited by this challenge and look forward to executing on our strategy,” he added.
A non-underwritten share purchase plan will now be undertaken. It is aiming to raise a further $5 million at $6.50 per new share.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and Medical Developments International Limited. The Motley Fool Australia has recommended Medical Developments International Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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