Why this ASX biotech is printing 52-week highs

The Medlab Clinical Ltd (ASX: MDC) share price is rising after the company announced it has signed a Heads of Agreement with American Nutritional Corp Inc.

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The Medlab Clinical Ltd (ASX: MDC) share price rose 7.7% to a 52-week high of $0.56 in early Monday trade, although it has since dropped back slightly to $0.51 per share at the time of writing.

The strong start to the trading week occurred after the medical life sciences company announced that it has executed a Heads of Agreement with American Nutritional Corp Inc (ANC) to rapidly expand its nutraceutical business in the United States (US). 

The terms of the agreement

Medlab announced this morning that it has signed a Heads of Agreement with ANC to enter the US market with its existing range of nutraceutical products. ANC is a company based in the US with audited and approved manufacturing capabilities for several large institutional US brands. 

Several of Medlab's current and unique range of nutraceuticals are well-positioned for clients of ANC. In the near term, Medlab's products are expected to enter the medical and consumer markets with larger companies that have established branding and distribution. While Medlab will still feature on the label of these products, the aim will be to rebrand them to suit the client's general branding strategy. 

Commercial terms and specific distribution partners are still to be finalised via the execution of a definitive commercial agreement. At this stage, management expects the first launch of these products into the United States to occur in or around December 2019. 

Medlab also intends to examine other potential international destinations for its products as a number of these institutional companies either market internationally, or are intending to expand internationally in the short to medium term. Furthermore, there remains an opportunity for Medlab to expand its relationship with ANC by capitalising on their manufacturing capabilities in order to provide ongoing economies of scale for the local market.

Notable nutraceutical products that are of interest include Medlab's NanoCelle delivery platform, NRGBiotic, which is currently used in ongoing depression trials at the Queensland University of Technology, and MultiBiotic. All of these products are currently available for sale in Australian pharmacies. 

How has the Medlab share price performed this financial year? 

After a strong start to today's session the Medlab share price has fallen back to $0.51. Shares of the medical life sciences company have now risen 51.4% in FY20 following a number of bullish announcements over the last several weeks.  

Other cannabis stocks such as AusCann Group Holdings Ltd (ASX: AC8) and Creso Pharma Ltd (ASX: CPH) have also risen 5.8% and 6.4%, respectively, in Monday trade. 

Motley Fool contributor Tim Katavic has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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