A company selling an asthma monitoring device, which is 11 per cent owned by Rich Lister pubs baron Bruce Mathieson, experienced a sharp jump in its share price on Friday after signing a deal with Indian pharmaceutical giant Cipla.
Respiri came out of a trading halt on Friday morning after announcing it had signed a sales and distribution deal with Cipla where the global group will initially order 2000 of the ‘wheezo’ units for sale to doctors and pharmacies in Australia and New Zealand.
Shares in Respiri initially bounced more than 50 per cent to 16.5¢ before giving up most of those gains by late morning to be 13 per cent higher at 12.5¢ by 11.30 AEST.
The ‘wheezo’ device is an egg-shaped product which is held up to a person’s windpipe and monitors the rate of wheezing. It is connected to an App which collects the data and gives a readout of wheezing rates. Respiri has had a chequered history on the ASX and has spent years trying to commercialise the device.
Respiri chief executive Marjan Mikel said on Friday that a large amount of work had been undertaken over the past few months to reduce the production cost of the ‘wheezo’ devices. He said the Cipla agreement would generate gross product margins of between 30 per cent and 40 per cent from the start of calendar 2021.
He said it would take time to win over the medical community. “We’re up for the challenge,” he said. “That’s certainly why we needed an 8oo pound gorilla in the form of Cipla,” he said.
Cipla is listed on the stock exchange in India and has a market capitalisation of $US7 billion ($10.1 billion).
Mr Mikel said Cipla’s sales force in Australia had coverage of 15,000 doctors and 4000 pharmacies.
He said there were 2.7 million suffers of asthma in Australia and Respiri’s business model was based on trying to reach 2 per cent penetration over 18 months.
Bruce Mathieson, the Melbourne-based hotels baron holds an 11 per cent stake in Respiri, which has had a chequered career on the ASX. It was previously known as Isonea.
Mr Mikel said Mr Mathieson was a hands-off investor. “He lets me get on with it,” he said.
Mr Mikel arrived as the new chief executive in December and said the group needed to show a track record to investors to build credibility.
“The company has had a chequered history and a lot of false starts,” he said.
He said he was trying to bring a sharper commercial focus to the business. “The organisation was in perpetual R&D mode,” he said.
The former chief executive of Respiri, Mario Gattino, began legal action against the company in the Federal Court for unlawful dismissal. The company is defending the action.
Mr Mikel emphasised that Respiri was a medical device company and that widespread adoption of the ‘wheezo’ as part of asthma monitoring programs would be gradual.
“It’s going to require a behavioural change on behalf of the medical community’.’
Mr Mathieson’s hotels group has had a long-standing partnership with Woolworths, which has had to put on ice until 2021 a plan to de-merge its $10 billion liquor, hotel and gaming operations because of the COVID-19 pandemic.