Medical product retailer Medical Developments International Ltd (ASX: MVP) climbed 12% higher today after announcing a distribution agreement for its Penthrox emergency pain relief product across Europe.
Penthrox is commonly used by doctors, ambulance workers and Australian soldiers in pain relief for traumatised victims of road traffic accidents or other emergency medical situations.
The drug is a market leader in Australia and the deal it has inked in Europe to distribute the product could be worth up to US$54.5 million. That includes an upfront payment of US$7 million and another US$37.5 million related to sales milestones potentially earned over the deal's length.
The business also has revenue streams from the sales of innovative asthma inhalation devices and posted a net profit of $731,000 on revenues of $5.5 million for the most recent half year. Growth in Penthrox sales was strong over the period and the company has applied for approval to distribute its product in Asia, Latin America and the Middle East among other regions.
Unfortunately Penthrox's potential is no secret and the expected growth into international markets in now reflected in the stock's price as it trades on more than 100x annualised forward earnings per share of 2.54 cents. The real key to making eye-watering returns on small caps is finding the Medical Developments International of tomorrow not today. Potentially, just like two of the businesses identified below.
