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MGC Pharma smashes major milestones

Published 06-AUG-2018 12:00 P.M.


9 minute read

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Specialist ASX pot-stock, MGC Phama (ASX:MXC), has released its quarterly activities for the period ending June 30 2018, reporting strong progress across all of its business divisions and clinching a string of major milestones.

Particularly robust progress has been seen within the MGC Pharma division, with the final GMP certificate and manufacturing licence received for its Slovenian facility.

Pivotally, this certification makes MXC’s facility one of the most advanced of its kind within Europe. This fully integrated facility also plays nicely into MXC’s ‘seed-to-pharma’ strategy.

The facility is now fully licensed to produce and manufacture pharmaceutical-grade medicines containing both THC (tetrahydrocannabinol) and CBD (cannabidiol) active pharmaceutical ingredients (APIs).

MXC has begun full-scale manufacturing of CannEpilTM—its first medicinal cannabis treatment for drug-resistant or refractory epilepsy — which will then undergo final independent validation by the National Institute of Chemistry in Slovenia ahead of planned exportation into Australasia and Europe. Sales of high-margin product lines and generation of material revenue streams are expected to follow.

MXC’s European facility at work, including production of CannEpil:

MXC has begun full-scale manufacturing of CannEpilTM

MXC has also delivered on its core ‘seed-to-pharma’ European strategy. The Maltese government has approved the first contract for MXC to establish a medical cannabis production facility on 4000 square metres of land granted by Malta Enterprise Corporation.

As always, it should be noted that MXC is an early stage play and anything can happen, so seek professional financial advice if considering this stock for your portfolio.

In May, the Maltese government legalised medical cannabis production, progressing MXC’s receipt and completion of final formal agreements from the Maltese government authorities, which is now expected during the next quarter.

Encouragingly, MXC is also in a solid financial position, with $9.9 million in cash. In April, the company completed a $5 million oversubscribed placement to bolster establishment of its medical cannabis cultivation and production facility in Malta.

A bit more on MXC’s Maltese operations: first binding LOI awarded

MXC has been the first company to negotiate and ink a binding letter of intent (LOI) with Malta Enterprise. Under the terms of this contract, MXC plans to cultivate and produce all THC and CBD strains of pharmaceutical-grade cannabis for medicinal purposes in its Maltese facility.

This is the cornerstone of MXC’s EU and UK-focused ‘seed-to-pharma’ strategy. The facility expands MXC’s commercial opportunities, allowing for the development and export of additional medical cannabis pharmaceutical products into key European and global markets, given that Malta is part of the EU.

Importantly, the European corner of the global pot market alone will be worth over €56 billion (A$126B) by 2020.

Design of the facility has already commenced, and construction will begin following receipt of final contracts, which are expected to be completed in the September quarter.

Supply agreement inked with New Zealand distributor

During the quarter, MXC penned a supply agreement with MW Pharma, a New Zealand-based medicinal cannabis distributor, for distribution of its current and future pharma-grade medical cannabis products into pharmacies, hospitals and universities throughout the country.

MW Pharma is responsible for obtaining all necessary permits and licenses for the export and sale of MXC’s products.

This provides a clear pathway for delivery of the of first MGC’s pharmaceutical products to patients via MW Pharma’s partner, Pro Pharma, and its relationship with over 250 pharmacists in New Zealand.

In turn, this will strengthen MXC’s position and distribution networks within the Australasian markets. The agreement also has potential to deliver revenue at high gross profit margins as MXC plans to begin manufacturing products at its GMP-certified Slovenian facility.

RMIT collaboration: International Library of Cannabinoids & cancer research

This strategic data library focused on researching, compiling and analysing information on cannabinoids has expanded, with recruitment of a further two specialist PhD students to concentrate on software development, data retrieval and analytical solutions of the library.

The research team is currently working to refine the original prototype database by creating algorithms that can retrieve data from public sources. Once completed, the library will be an internationally recognised, critical tool for research into the applications of medicinal cannabis.

Results are currently being used to further study into the efficacy, development and safety of personalised medicines, as well as assisting in the real-time care and monitoring of current medicinal cannabis patients, deepening doctors’ knowledge and understanding of the dosages and effects of cannabis as a medicine.

MXC will utilise this information by incorporating it into a world-first doctor and patient-accessible application where knowledge can be shared across the entire medicinal cannabis network.

The duo is constructing a state-of-the-art facility within the university grounds to house innovative research teams focused on breeding and pre-clinical research into melanoma and prostate cancers using medicinal cannabis. Students are preparing for the performance of a systematic review on the use of cannabinoids to treat melanoma and prostate cancers.

European Paediatric Conference – first access to CannEpil

MXC’s Scientific Advisory Board will present at the Cannapaed Symposium 2019 conference in Llubljana, Slovenia, for carers of children with epilepsy and other serious neurological disorders.

This conference is set to educate the UK and European markets about cannabis-based neurological medicines, and will enable MXC to increase awareness of its pharmaceutical products to these markets.

New MGC Nutraceuticals line launched

MXC recently launched its new Nutraceuticals range of CBD and hemp-enhanced products for retail customers. The premium range of vegan and gluten-free products is formulated for daily use, and contains high-grade phytocannabinoids, proteins and vitamins. It is manufactured using CBD extracted by MXC’s European operations.

These supplements are designed to promote normal immune system function, improve stress protection, and maintain muscle and bone structure.

The global nutraceutical market was valued at US$383 billion in 2016 and is expected to grow to around US$561 billion by 2022.

How much of this market MXC is able to attract remains to be seen, so investors should seek professional financial advice for further information if considering this stock for their portfolio.

MGC Botanicals flourish

Projects underway within the MGC Botanic division are also thriving. MXC’s deftly engineered collaboration with the University of Ljubljana has resulted in the production of a number of cannabis genetic strains which contain specific quantities of THC and CBD.

The purpose here is to develop key intellectual property for MXC; this is also part of the company’s future European cultivation strategy.

First milestone achieved from Czech Republic cultivation

In what has been a clear demonstration of its ‘seed-to-sale’ operations, MXC also successfully extracted CBD from the first crop harvest at its facility in the Czech Republic, which will be used in the production of its Nutraceuticals and Derma ranges.

MXC’s 2018 cultivation program in Prague of over 500 plants has reached the vegetation stage and is expected to be harvested in the third quarter.

Progress in MGC Derma

During the quarter, MXC launched CBD Herbal Replenish Cream, the second of three Derma Plus products planned for launch during 2018. As with all MGC Derma Plus products, the CBD Herbal Replenish Cream is research-backed and specifically engineered to improve the skin’s natural defence and stimulate regeneration.

MXC launched CBD Herbal Replenish Cream

An independent body conducted a study to assess the efficacy of the cream on a number of volunteers over a 30-day period — a 71 per cent improvement was observed in dry skin, as well as an 85 improvement in itchy skin; 92 per cent of volunteers also said they would use the cream on a daily basis.

More by way of key milestones comes from the successful launch of products within the MGC Derma and MGC Derma Plus collection at luxury retailer, Harvey Nichols UK, increasing sales and exposure for the brand.

Encouragingly, the initial launch success at Harvey Nichols’ flagship Knightsbridge store has enabled MGC Derma to already obtain priority shelf space to help advance sales from July onwards.

MXC’s products are now available in Harvey Nichols’ Beyond Beauty lounge, giving MXC an additional revenue-generating opportunity.

Of course how much revenue can be generated is yet to be seen, so investors should seek professional financial advice if considering this stock for their portfolio.

MXC’s Varm Cosmo white-label cosmetics supply contract has been delayed. MXC has advised that Varm Cosmo are currently completing retail and distribution pipelines, and intend to be moving forward with MGC Derma in the coming months. The company will keep shareholders informed of any material information on progress relating to this first binding contract and purchase order with Varm Cosmo.

MXC onboards global neurology and epilepsy expert

Last week, Associated Professor Wendyl D’Souza joined the MXC medical advisory board to lead research and development into medicinal cannabis treatments for epilepsy and other neurological disorders.

D’Souza is a renowned consultant neurologist and epileptologist with over 15 years’ clinical experience researching new and emerging treatments for common neurological disorders within a rigorous scientific framework. He is an authorised prescriber of medicinal cannabis and has over 3,000 registered patients with drug resistant epilepsy from currently available anti-epilepsy medications.

He will work alongside professors Uri Kramer and David Neubauer to lead MXC’s research projects into cannabis-based medicines as a treatment for neurological disorders. He will also lead a project into the further development and distribution of CannEpil and the next generation of medical cannabis medicines.

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