Why the MGC Pharmaceuticals (ASX:MXC) share price is up 5% today

The MGC Pharmaceuticals (ASX: MXC) share price is soaring with news the company will acquire a clinical research company.

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The MGC Pharmaceuticals Ltd (ASX: MXC) share price is soaring today after news the company will acquire clinical research company, MediCaNL Inc.

MediCaNL will design, manage and run the biopharma company's future clinical trials.

The MGC Pharmaceuticals share price is up 5% on the back of the news. At the time of writing, it's trading for 6.3 cents. Let's take a closer look at the announcement MGC made this morning.

MGC's new acquisition

MGC Pharmaceuticals advised it will acquire MediCaNL, which it has employed for the last 2 years to run clinical trials.

The company said the acquisition would provide immediate savings for the company, cutting MCG's forecasted clinical trial expenses and streamlining its future preclinical and clinical processes.

MGC said MediCaNL also had 11 other clients and was working on 40 projects and clinical trials. In 2020, it generated nearly $1 million in revenue, with a profit margin of 25%.

The acquisition will cost MGC $6 million worth of its own shares, based on the volume-weighted average price per share 10 days from settlement. MGC will issue 30% of the shares to MediCaNL on acquisition. The other 70% will be issued in 4 instalments over 13 months.

MGC Pharmaceuticals said MediCaNL has worked on 7 investigational new products with the US Federal Drug Administration (FDA). Of these, 2 have been approved and 4 are ongoing. MGC says this shows the company has experience with global pharmaceutical regulators.

MediCaNL is to operate MGC's clinical trials in accordance with the European Medicines Agency, FDA, ICH Good Clinical Practice, and Israeli health regulations.

MediCaNL's CEO Nadya Lisodover will work for MGC as chief research officer after the acquisition.

Commentary from management

MGC Pharmaceuticals co-founder and managing director Roby Zomer said:

MediCaNL is led by some of the world's most renowned doctors and scientists who will be a great asset to the MGC Pharma team.

They operate at the highest levels of quality and integrity, enabling MGC Pharma to establish and nurture stronger relationships with regulators in the years to come as we expand our suite of products and undergo more clinical trials.

MGC Pharmaceuticals share price snapshot

The MGC Pharmaceuticals share price is having a great year so far on the ASX, with today's news bringing its latest boost.

Currently, the MGC Pharmaceuticals share price is up 220% year-to-date and has lifted 113% over the last 12 months.

The company has a market capitalisation of around $136 million, with approximately 2.2 billion shares outstanding.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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