Budding ASX Junior Pens Transformative Medical Cannabis Deals: Now Generating Revenue
PUBLISHED: 23-11-17
Running in parallel with a shifting legislative climate around the world, a fast-growing crop of so-called ‘pot-stocks’ has been lighting up multiple stock markets, including the ASX, for a good while now.
One nimble biotech company that’s rapidly establishing itself as a formidable player in this space is MGC Pharmaceuticals (ASX:MXC).
MXC was the second company to originally emerge in the ASX cannabis corridor, and with a whip-smart team that’s put in serious hours in the industry-leading Israeli medicinal marijuana scene, this ASX junior is rapidly coming into its own.
MXC has a wide-reaching global footprint, with facilities across Australia, Slovenia and the Czech Republic, and plans to expand into the Asian, UK and US markets.
This year, MXC been smashing milestone after milestone, and with a triad of high-impact deals, the company is now entering its revenue phase.
The first of these developments on its radar is a game-changer.
MXC’s Derma division has clinched its first exclusive binding sales agreement worth $8 million to supply Varm Cosmo, a well-backed Korean cosmetics manufacturer, with cannabidiol (CBD) products.
Under this agreement, MXC’s pharmaceutical division, MGC Pharma, will supply around 30 kilos of pure CBD per annum to MGC Derma. These products will be sold to consumers under a premium white-labelled Varm Cosmo brand, which will be launched in the coming month.
And the
first formal purchase order has now been received bang on schedule. This delivers the first material revenues for MGC Derma.
It should be noted, however, that MXC is still an early stage play and commercialisation should not be taken as guaranteed. Investors should seek professional financial advice for further information.
MXC is now in advanced stages of negotiation with Varm Cosmo for the two additional contracts, which will deliver MGC Derma products into new Varm Cosmo markets. These agreements are expected to be finalised in the coming
weeks to complete the full $40 million supply agreement.
This alliance is a major strategic entry point for MXC into the global cosmetics market, which was worth US$460 billion in 2014, and is expected to climb to US$675 billion by 2020.
In fact, the South Korean corner of the beauty market alone is estimated to be worth about $16.5 billion, making it one of the most lucrative in the world.
This transformative deal also sees MXC emerge as Australia’s highest paid cannabis supplier. …Not bad at all for an emerging ASX small-cap.
Pivotal news has also been happening on the pharma leg of MXC’s operations. At the beginning of November, this division
struck a strategic deal with specialist Australian pharmaceutical distributor, HL Pharma Pty Ltd, to bring its adult medical cannabis epilepsy product, CannEpil™, to Australian patients.
Since then, a
binding definitive exclusive supply agreement has now been signed, and the product will launch early next year.
The deal is set to generate significant medicinal cannabis revenues, with around $1 million expected in 2018… and that’s just from less than 100 patients that have already registered. There are more than 70,000 Australians living with the kind of drug-resistant epilepsy that the CannEpil product is targeting.
Beginning with adult epilepsy, the CannEpil treatment will be made available to Australian patients for less than AU$800 — a price considerably lower than competing products in the market.
The move has also been backed by Australia’s leading epilepsy services provider, Epilepsy Action Australia (EEA), and an initial group of five doctors with a starting pool of more than 50 patients.
This deal is another major win for MXC, and clears a direct pathway for debuting MXC’s medicinal cannabis products into the multi-million-dollar Australian market.
On top of that, MXC has also this week revealed that it’s penned yet another strategic agreement… a multi-year supply deal with European medicinal products distributor, Mabsut Life, to supply a specialised, industrial-grade CBD extract from its European extraction facility.
This latest notch on MXC’s belt is set to generate $1 million in annual sales.
With $9.5 million cash in the bank and no debt, MXC is in a financially well-muscled position to surge forward, as it delves head-first into this serious revenue-generating phase and ramps up its research and development efforts.
MXC is currently valued at $112.4 million and is rapidly blossoming… and if it continues on the sure-footed path it’s steadily maintained thus far, it may not be long before its small-cap days become but a hazy memory.
There’s obviously a lot going on here, so let’s catch up.
http://www.nextbiotech.com.au/buddi...medical-cannabis-deals-now-generating-revenue
(20min delay)