Ann: Panax Acquisition Completed, page-4

Looks like Brett came through with the goods. Would have been nice to have some mention of the commercial opportunities for the CBD extract though...

1 - 4 7 February 2017
ASX Code:
MXC

Panax Acquisition Completed Fully Licensed Operations to Commence Immediately at Leading Czech Republic Botanical Genetics and Breeding Facility

• MGC Pharmaceuticals has completed the acquisition of Czech-based medical cannabis company PANAX Pharma s.r.o (Panax)
• Acquisition delivers a strategic partnership with the highly respected Institute of Experimental Botany of the Academy of Sciences, Czech Republic (IEB AS)
• The IEB AS is a leading Czech research institute in plant biology, namely in plant genetics, physiology and biotechnology • The Ministry of Health of the Czech Republic has recently granted the IEB AS a 5-year medical cannabis license for the genetics, breeding and research program with Panax
• This license immediately enables MGC Pharmaceuticals to conduct medical cannabis breeding research at the IEB AS’s laboratories and scale up to 1,000m2 of dedicated greenhouse growing space, with ability for further scale up
• Panax genetics and breeding program will facilitate the growing of various strains of medical grade cannabis for the MXC research plan and operations
• Panax operations to now commence immediately at the IEB AS Institute


MGC Pharmaceuticals Ltd (ASX: MXC or “the Company”) is pleased to announce that pursuant to its announcement dated 15 December 2016, the Company has settled on the binding heads of agreement to acquire up to 100% equity in Czechbased medical cannabis company PANAX Pharma s.r.o. Completion follows the recent finalisation of independent legal due diligence on the Panax acquisition, operation of the business in the Czech Republic, together with finalisation of the formal research agreement with the IEB AS. Panax and MGC Pharmaceuticals’ executive team will now collaborate to develop a medical cannabis genetics and breeding research program. MGC Pharmaceuticals will immediately commence research operations at the IEB AS and its growing facilities in Prague following the IEB being granted its medical cannabis breeding license. 2 - 4 Summary of Panax Completion At completion of acquisition, the following share transfers have taken place and the Company now holds an 80% equity interest in Panax, with the right to increase this to 100% at its election detailed below: i. 25% equity in Panax issued to MGC Pharmaceuticals – share issue completed, ii. 55% equity in Panax issued for MGC Pharmaceuticals’ commitment to fund the first 12 months operating costs (capped at €700,000) – share issue completed, funding to now commence, and iii. An option (exercisable within 3 years following the end of the 12-month funding period) to acquire the final 20% equity in Panax at MGC Pharmaceuticals’ election for €600,000 of MXC ordinary shares to be issued on a 20-day VWAP at the date of option exercise. The Academy’s Institute of Experimental Botany will be responsible to drive the research progress and supervise the medicinal cannabis genetics and breeding operations. MGC Pharmaceuticals is to provide its expertise and technical know-how to facilitate the successful outcomes of the research plan. Panax and the IEB AS – Acquisition Rationale The strategic acquisition of Panax gives MGC Pharmaceuticals access to the world-class facilities of the Institution of Experimental Botany at the Academy of Sciences of the Czech Republic, located in Prague. The Institute of Experimental Botany has been granted a 5-year medical cannabis breeding license by the Ministry of Health of the Czech Republic for its research program with Panax. The project partners are now able to immediately commence research and breeding operations at the facility under the license. Panax Pharma s.r.o is a Czech Republic based medical cannabis company that has research access rights to the IEB AS facilities. The Academy of Botanical Sciences is a leading Czech research institute in plant biology, namely in plant genetics, physiology and biotechnology. The acquisition of Panax and its strategic partnership with the IEB AS, together with the IEB’s recently granted medical cannabis breeding license, enables MGC Pharmaceuticals to immediately commence research operations at the IEB’s facility. In addition, the acquisition provides the Company access to up to 1,000m2 of dedicated greenhouse growing space covered by the breeding license, with ability for further scale up in future operations. The Company will now start its research programs into a variety of medical cannabis plants with different CBD and THC yields. This strengthens MGC Pharmaceuticals’ research credentials and may potentially give the Company access to new genetic strains of medicinal cannabis for use in its products or in future clinical trials with medicinal cannabis. As part of this research, the Company intends to isolate the ideal genotypes of medical cannabis strains for specific medical indications and create a bank of strains that are ideal for specific illnesses. In addition, the Company will devise a breeding program to create protocols that maximise the quantity of Cannabinoids per square metre of growing. Following the acquisition of Panax, MGC Pharmaceuticals will own and control the exclusive rights to commercialise the research results and will be the holder of the research IP generated by this program with the IEB. 3 - 4

Nativ Segev, Co-founder and Managing Director, MGC Pharmaceuticals commented: “We are pleased to announce that our acquisition of Panax is complete. MGC Pharmaceuticals will now immediately commence its research operations at the world-class Institute of Experimental Botany of the Academy of Sciences of the Czech Republic. “On behalf of the Company, I look forward to updating the market in due course with the results of our research operations.” -- Ends --