Extension to Major Development, Licence and Supply Agreement
The Medical House PLC ("TMH" or the "Company") (AIM:MLH), the drug delivery specialist, is pleased to announce that it has agreed to extend the term of the Development, Licence and Supply Agreement for its ASI disposable autoinjector which was signed in December 2006 with a leading global pharmaceutical company. TMH has recently commenced work on the pre-commercial phase of the agreement's development programme.The original agreement was for an initial supply period of five years with projected revenues to TMH of £27 million, of which £18 million was for technology access, or licence, fees. The agreement now has an initial supply period of at least six years and, at the request of TMH's partner, may be extended to approximately 16 years.
Revenue projections for the revised agreement are now c. £34 million of which c. £23 million are for licence payments in respect of TMH's proprietary ASI technology. The minimum payments to TMH under the agreement are also being increased to £20.5 million over the revised initial six-year term of supply, of which c. £15 million is in licence fees.
Under the new terms of the agreement, and included in the forecasted revenues, TMH will receive a total of £3million in respect of pre-commercialisation licence fees with £2 million being paid immediately with further payments totalling £1 million being paid quarterly up until April 2009.
The project to customise a specific variant of the ASI autoinjector under this agreement has made excellent progress, including achievement of key regulatory approvals. The ongoing pre-commercial phase of the development programme will result in additional development monies to TMH of approximately £900,000 over the next 18 months.
As previously reported, and in order to focus on ongoing projects and new opportunities in development and licensing of its drug delivery technologies, the Company is actively pursuing options in relation to its orthopaedic sub-contract engineering and manufacturing business, which could include a disposal.
Ian Townsend, Chairman, The Medical House PLC, said:
"We are very pleased to further increase the scope, and extend the term, of this deal.
The agreement to extend the term not only reflects the strong relationship between ourselves and our partner, but also underlines the significance of our ASI technology, and this particular project, to both companies. The immediate licence payment of £2 million will considerably enhance the financial profile of the Company and demonstrates the strength of commitment to this agreement by both parties.
For reasons of commercial confidentiality, we have so far been unable to disclose the identity of our partner, however we feel that this extension, and upfront licence payments will further assure shareholders of the scale and significance of this agreement. We also look forward to updating the market on our partner's identity in due course.
I see this as a major landmark in the Company's development and, as we look to concentrate our efforts of developing and licensing our proprietary medical device technologies.
"Finally, I would also like to pay tribute to all my team who have worked so hard to bring about this success; we are all looking forward to a great deal more in the future."
Publish Date: Monday, November 05, 2007