MGC Pharmaceuticals Ltd (ASX:MXC) (OTCMKTS:MGCLF) (FRA:H5O) enjoyed a productive December quarter and is progressing towards its target of achieving monthly cash flow breakeven by the end of 1H 2021 from around 5,000 units sold per month.
The quarter delivered strong global product sales generating revenue of $456,000 from 2,900 units of products sold - representing an increase of 67% growth from the previous quarter.
The company has also made material progress towards strategic dual listing on the London Stock Exchange, following the release of regulatory guidance notes for cannabis companies in September 2020.
GMP facility funded
During the quarter, the company qualified for the support for a non-dilutive cash grant and has started to receive around $5 million (€3.1 million) from Malta Enterprise to renovate and extend the company’s existing Clinical Research Organisation (CRO) facility in Malta.
This will include a fully functioning GMP certified manufacturing facility for liquid dose form and its COVID-19 anti-inflammatory product, ArtemiCTM.
Construction of new facility commenced in the December quarter and will be completed in mid-2021.
Upon completion, MGC Pharma will be in a strong position to immediately increase ArtemiCTM production volumes and reduce logistics costs via the Malta facility due to its optimal geographic location and shipping access.
ArtemiCTM trial completed
The ArtemiCTM Phase II Clinical Trial has met all primary and secondary endpoints and has been demonstrated to improve the health status of COVID-19 patients delivering a NEWS score of less than or equal to 2 with none of the patients in the treatment group required additional oxygen, mechanical ventilation or admission to intensive care - where all of these events were reported in the placebo group.
The trial met all the FDA requirements for a COVID-19 study including population diversity (age, medical history, and genetic diversity) and demonstrated a full safety profile with no drug-related adverse events.
MGC total global unit sales and new patients – moving towards 5,000 unites/month
Medicinal Cannabis Clinics acquisition
MGC Pharma recently completed the 100% acquisition of the operating telehealth clinic-based assets, data and intellectual property of Medicinal Cannabis Clinics (MCC), a wholly owned subsidiary of Cannvalate Pty Ltd, with over 300 patient consults conducted since completion on the 23rd of November.
Consideration of $1 million MGC Pharma Ordinary Shares (2/3 subject to trading restrictions) and $400,000 in cash has been paid for the acquisition.
Alongside revenue generated from consults, this acquisition provides the company with an operating platform with both import and export capacity that will significantly expand market access and provide control of the supply chain from manufacturing through to patients.
It also allows the company to continue providing its high-quality GMP certified medications to patients in Australia and further improves profit margins while keeping product at the current competitive prices.
This is the next step in building on-the-ground distribution assets allowing the company to wholesale and distribute directly to other clinics and pharmacies to reduce storage and distribution costs.
MGC Nutraceuticals sale advances
The sale of subsidiary MGC Nutraceuticals has advanced during the December quarter, as both the Company and Onassis have submitted the required documentation to the US SEC.
Under the terms of the sale and purchase agreement MGC Pharma will receive shares equating to a value of US$6 million in Onassis Holdings Corp and the Company has secured an exclusive supply agreement for the provision of its CBD, raw materials and proprietary production intellectual property (IP).
The process from submission to completion is currently expected to complete in H1 2021 and once the offering submission has been approved, Onassis will complete the capital raising which will enable the full and complete settlement of the MGC Nutraceuticals acquisition with MGC Pharma.
The average NEWS score of patients in the placebo group was 2.25 statistically significantly higher (p<0.04) than in the treatment group – 0/5.
Long-term cannabis market outlook
In early December 2020, the United Nations (UN) voted in favour of the removal of cannabis and its derivatives from schedule IV in recommendations from the World Health Organisation (WHO).
Cannabis and its derivatives are now contained under Schedule I of the 1961 UN Single Convention on Narcotic Drugs.
This creates a significant opportunity for MGC Pharma by removing red-tape that creates logistical limitations of the movement of products and creates an open pathway for easier and cheaper global distribution.
This will also enable significantly more commercial opportunities for MGC Pharma by allowing it to deliver its Mercury Pharma product line to new markets going forward.