Remember when MGC Pharma did a funding deal ($15m) with US Mercer Street Global Opportunity Fund. At the time, Roby Zomer (CEO) is on public record, saying, "This funding agreement in total is significantly larger than what we envisage being required. However, in the near term, it allows us to fast-track commercial activities and multiple preclinical and clinical trials until their completion."
Covid has been and gone. A missed opportunity!
The medis release mentioned that, "The issue [to Mercer] that will require a prospectus is expected to take place this month". Was this done? Was the company required to lodge the prospectus with the ASX under due diligence/full disclosure to investors and the market generally? This deal in my opinion is SP 'price sensative'!
Zomer then stated, "we are also now able to complete the acquisition of Medicinal Cannabis Clinic which provides us access to large new markets and patients in Australia, currently our largest market and revenue generator."
This is did not happen. Revenue hardly exists? To my knowledge the company's products are not distributed in Australia, nor is the company generating! Has the company obtained the Therapeutic Goods Administration's (TGA) approval - Australia's government authority responsible for evaluating, assessing and monitoring products that are defined as therapeutic goods - to trial, produce, market, distribute and sell its products (namily ArtemiC and medicinal cannabis-based epilepsy formula CannEpil clinical trial and Glioblastoma brain cancer research)? I suspect the company has not engaged the TGA regarding these products and their commercialisation.
Incidentally, SH's were not informed directly that the TGA issued "23 infringement notices totalling AUD$306,960 to the Company on the basis of the delegate’s reasonable belief that the Company had contravened therapeutic goods advertising laws in its promotion of medicinal cannabis products on the Company’s website and its social media platform." (September 2022).
For me, the company has not been upfront with investors. Zomer again states in the article link below, Mercer funds "$1.4 million [to] purchase [a] of Medicinal Cannabis Clinic". Where is this clinic?, was it purchased and when? Is it Australian licenced and accredited? Is it operational? What are the operational costs? How many does it employ? What research is being undertaken?
My interpretation is investors may have been mislead, nothing has been fast tracked, the $15m Mercer funds seems to have been wasted or vanished, and the company has failed in "...implementing its business commercialisation initiatives."
Now the company is cap-in-hand to Mercer for a further $5m.
Is this company participating in a Ponzi scheme? Do SH's need regulatory protection or intervention to protect their investment? Is 'greenwashing' occuring? The ASX and ASIC may well need to make inquiries into the corporate operations, conduct and governance arrangements of the company. A full forensic audit of the company accounts may be warranted to ally SH's concerns and the market generally.
There are so many other questions needed to be asked? The full media release is here:
https://cannabislaw.report/australias-mgc-pharma-15m-funding-deal-with-us-mercer-street-global-opportunity-fund/
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