MGC Pharma Soars 85% on the Australian Stock Exchange - Long Awaited Victory for MXC

Pharmaceutical industry

MGC Pharmaceuticals' Australian listing has soared by 85% due to the approval of its Covid-19 treatment in the OTC market. However, it's important to note that there is a limit to how high the price can go.

MGC Pharmaceuticals (ASX: MXC) (LON: MXC) has consistently been an underachiever, and it's about time for the share price to improve. Unfortunately, pharma development companies face the challenge of bearing the upfront costs of research and development before gaining insight into potential profits. Only after investing significant funds can we assess the likelihood of success.

The most significant occasion in MXC's finances is getting approval to sell their product. We can't be sure how successful it will be as we have to guess the amount of sales we'll make. However, we do know that without approval, there can be no sales at all. So, this is definitely an event. That's why MXC stock went up by 85% in Australian markets today. We expect the same to happen when the London markets open in a few hours.

has experienced fluctuations over the past year. The ASX share price of MGC Pharmaceuticals has been volatile, with frequent changes in value.

There is something worth noting - the ArtemiC™ COVID-19 remedy has been made available for over-the-counter purchase in the United States, which resulted in a $2 million order from the US distributor. This is definitely a positive development, but it's important not to get overly excited.

The MXC records demonstrate the reason why. The business is experiencing a loss of $8 million every six months. While they possess some assets, it is not enough to sustain them in the long run. It's not like receiving approval for a patent medication, where the production expenses are trivial, so any contracts they acquire, including the $2 million deal, will not instantly boost profits. Rather, they must sell their products, which requires additional expenditures.

The approval is definitely advantageous, but it's not a miraculous solution that can solve all issues. If there is a significant increase in the MXC, there is a high possibility that there will be a need for more funding. This could ultimately limit any significant increase in the price of the MXC.

According to those accounts, MGC Pharma has been cutting back on the amount paid to its directors. It's likely that a rights issue will be coming up soon, which may limit the price.

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