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- Medical Developments (MVP) expects a non-cash charge of between $7.5 and $8.5 million, following its annual asset impairment review
- Due to COVID-19, MVP moderated the growth outlook for its respiratory business, resulting in an impairment of the associated intangible assets
- The company remains convinced its “Flow” technology will deliver long-term value, but it hasn’t been able to unlock this value as yet
- MVP also expects a net loss after tax for the year ended June 30, 2021, of between $4.2 and $5.2 million, pre-impairment
- Shares have been trading grey at $4.37 at 9:49am AEST
Following its annual asset impairment review, Medical Developments (MVP) is expecting a non-cash charge of between $7.5 and $8.5 million within its June 30 accounts.
The Australian company delivers emergency medical solutions, and manufactures
Penthrox, a trauma and emergency pain relief product.
As reported in December 2020, Penthrox sales suffered due to the indirect impacts of the COVID-19 pandemic, but the company was expecting to see a recovery in Australian sales.
In a statement, MVP said its respiratory business had been adversely impacted by the pandemic over the 2021 financial year, moderating the company’s growth outlook and resulting in an impairment of the associated intangible assets.
While MVP remains convinced that its “Flow” technology will deliver long-term value beyond the manufacture of Penthrox, it hasn’t yet been able to unlock this value.
Consequently, the asset has been impaired.
In the company’s most recent half-year report, it stated research had continued with the CSIRO developing alternative manufacturing methods for generic active pharmaceutical ingredients (API) utilising the continuous-flow platform technology.
MVP states that lidocaine is the most advanced process being developed
under flow conditions, although access to specific equipment to support its scale-up has hindered progress.
MVP was focused on delivering an API manufacturing process at a lower cost,
with less carbon and physical footprint than traditional batch processing.
Despite the asset being impaired, the company said it will continue to pursue licensing and other opportunities for the technology.
The annual asset impairment review entailed a comprehensive assessment of MVP’s balance sheet assets and the company was encouraged to see it supported the carrying value of its Penthrox related assets.
However, MVP also announced that, based on preliminary unaudited accounts, it is expecting a net loss after tax for the year ended June 30, 2021, of between $4.2 and $5.2 million, pre impairment.
CEO Brent MacGregor said the extensive review has enabled the business to lay the foundation for future growth.
“Our European Penthrox market access strategy is now in place alongside a range of structural changes to support our growth aspirations.
“I am enthused about the opportunity ahead, and our ability to deliver on this opportunity.”
Shares were trading grey at $4.37 at 9:49am AEST.
