MGC Pharma signed binding term sheet to acquire Medicinal Cannabis Clinic

PERTH: MGC Pharmaceuticals Ltd, a European based bio-pharma company has signed a binding term sheet with Cannvalate Pty Ltd (CVL) to acquire 100% of the operating clinic based assets, data and intellectual property of its wholly owned subsidiary  Medicinal  Cannabis  Clinic  Pty  Ltd, a news release said.

Consideration due for the acquisition upon completion of settlement conditions includes $400k in cash and $1m in MGC Pharma shares.  Settlement of the transaction is to be within 90 days.

Medicinal  Cannabis  Clinic (MCC) is  a  leading  Australian  medicinal  cannabis  clinic  with  an  extensive  doctor  and  patient  network.

A  new  company  will be incorporated to hold all the MCC Assets which will be wholly owned by MGC Pharma. MCC, one of CVL’s family of cannabis prescribing clinics, was established in 2019 and has become one of  Australia’s  leading  medicinal  cannabis  clinics,  enabling  eligible  patients  to  access  high-quality  and  affordable medicinal cannabis products.

Since incorporation,  MCC has facilitated  over  4,000  medical  consultations  with  pre-screened  eligible  patients  and  has  shown  continued  month-on-month  growth.  The  clinic  utilises  video  telemedicine,  allowing  its  doctors  to  prescribe  the  range  of  cannabinoid  medications  available  in  Australia,  after  which, due to the clinic’s pharmacy partnerships, the product can be dispensed and delivered straight to the patient’s door, eliminating the need for multiple visits to both doctor and pharmacy.

Under the terms of the agreement, the new company will obtain relevant state and federal licences to allow for the import and distribution  of  medicinal  cannabis  products,  moving  MGC  Pharma’s  Australian  supply  chain  to  new  company,  allowing  it  to  continue  providing  increasingly  affordable  cannabinoid  medications  though  the  focused  reduction  of  importation, storage and distribution costs per unit.

In conjunction with the acquisition, MGC Pharma has secured the services of MCC staff to continue operations of new company,  ensuring  clinical  independence  and  excellent  clinical  governance  and  does  not  anticipate  any  changes  to  current  operations,  product  offering,  or  fundamental  business  ethos  of  MCC.

This  provides  both  MGC  Pharma’s  and  MCC’s  patients and business relationships with full confidence of continued operation at existing reputed levels of service and support.

The acquisition of 100% of the MCC Assets will expand MGC Pharma’s direct distribution network and enable a direct supply chain of MGC Pharma’s proprietary medicinal cannabis products to customers, cementing the Company’s fully vertically integrated Nature-to-Medicine business model.

The acquisition of the MCC assets, with import and distribution capacity alongside, will advance the medicinal cannabis industry in Australia by expanding patient access to affordable and experienced cannabinoid prescribing doctors and reducing  supply  chain  costs  for  MGC  Pharma,  leading  to  increasingly  more  affordable,  high-quality  cannabinoid  medications.

The  acquisition  of  the MCC Assets  will  also  result  in a  significant  decrease  in  logistics  and  operational  costs  for  MGC  Pharma by increasing the Company’s control of the product value chain from production to patient as the Company will receive higher profit margins on all three of its production, wholesale and clinic sales.

This will also improve MGC Pharma’s  cashflow earning potential and expedite the Company towards positive cashflow generation and operating profitability.

Roby Zomer, Co-founder and Managing Director of MGC Pharma, commented: “The acquisition of Medicinal Cannabis Clinics’ assets is an important part of our strategy to grow our distribution network and direct supply chain capabilities in both Australia and Internationally. Importantly, with the acquisition of MCC’s assets, MGC Pharma will be well on the way to achieving our cashflow breakeven targets.  We look forward to integrating MCC’s high quality network of clinics”.