Shares in KV Pharmaceutical Co have rocketed on the news that regulators in the USA have given the green light to a treatment for the prevention of premature birth.

The US Food and Drug Administration has granted approval for Makena (hydroxyprogesterone caproate) injection to reduce the risk of preterm delivery before 37 weeks of pregnancy in women with a history of at least one spontaneous preterm birth. The thumbs-up was given under the agency’s accelerated approval regulations, and additional studies must be carried out to demonstrate that the drug does, in fact, have a clinical benefit.

The treatment, the first to be approved by the FDA to specifically reduce this risk, has been developed by Hologic, a women's healthcare specialist based in Massachusetts. However the global rights are scheduled to be transferred to KV before the end of the week, upon the receipt of a $12.5 million cash payment.

Hologic has already received $79.5 million, plus reimbursement of its expenses relating to Makena, which was formerly known as Gestiva. KV is also required to make additional payments of $107.5 million, which will result in a total purchase price of $199.5 million.

This is all good news for KV, which has had a tough time, especially since two years ago when the FDA told the firm to stop manufacturing all of its products due to persistent manufacturing problems. KV has also had to face class-action lawsuits alleging misconduct and until the Makena approval, it looked as though it may struggle to carry on as a going concern. 

Now the St Louis-based company plans to retain a third party contractor to make Makena, and then distribute the treatment using its own sales and marketing team. Investors were pleased and KV's shares ended Friday at $3.68, a leap of over 140%.