Full Year Statutory Accounts
Perth, Oct 3, 2016 AEST (ABN Newswire) - MMJ PhytoTech Ltd (
ASX:MMJ) Directors present their report on the Consolidated Entity ("Group") consisting of MMJ PhytoTech Limited ("MMJ" or the "Company") (formerly PhytoTech Medical Ltd) and the entities it controlled at the end of, or during, the year ended 30 June 2016.
PRINCIPAL ACTIVITIES DURING THE PERIOD
The principal activities of the Group during the 2016 financial year consisted of:
- Completion of the acquisition of Canadian based company, MMJ Bioscience Inc;
- Progression of MMPR license in respect of the Group's medical cannabis cultivation facilities in Canada;
- Production and distribution of cannabinoid-based food supplements throughout Europe; and
- Pharmaceutical research and development of delivery technologies for the effective administration of cannabinoids.
Further details on the activities of the Group during the reporting period are set out in the Review of Operations section below.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
During the 2016 financial year, the Company completed the acquisition of Canadian based company MMJ Bioscience Inc and subsequently changed its name to MMJ PhytoTech Limited. As a result of the acquisition, the Group now controls operations across the entire Medical Cannabis value chain through the following core business units:
- United Greeneries - the Group's Canadian-based cultivation division which owns and operates the Group's federally licensed Duncan Facility. The Company also owns a second growing facility in Lucky Lake, Saskatchewan which is in the early stages of the MMPR license application process.
- Satipharm - the Group's European cannabis-based, pharmaceutical, nutraceutical and cosmetics processing and distribution division which holds a number of key international partnerships for the production and distribution of cannabinoid-based pharmaceutical, nutraceutical and wellness products.
- PhytoTech Therapeutics - the Group's Israel-based research and development division which is primarily focused on the development and commercialisation of new and existing delivery systems and devices that have the potential to deliver safe, effective and measured doses of medical cannabis to patients.
Subsequent to the end of the reporting period, MMJ advised that it had signed a binding Term Sheet with TSX-V listed company Top Strike Resources Limited (TSX-V: TSR) ("Top Strike"), for Top Strike to acquire 100% of the issued shares of United Greeneries and Satipharm respectively. The aggregate sale price of United Greeneries and Satipharm (C$40 million) represents approximately 97% of MMJ's market capitalisation (undiluted and based on a share price of A$0.24).
The transaction remains subject to a number of conditions, including shareholder approval. Post spin out, MMJ shareholders will, through their shareholdings in MMJ, have an indirect ownership in a fully-financed, growth-focused cannabis company with two key operating brands in United Greeneries and Satipharm.
GROUP OVERVIEW
MMJ PhytoTech Limited (ASX:MMJ) is a vertically-integrated bioscience company focused on developing and commercialising medical cannabis ("MC") and MC based therapeutics. The Company was formed from the July 2015 merger of MMJ Bioscience and PhytoTech Medical and is traded on the ASX under the symbol 'MMJ'.
MMJ's strategy integrates the entire MC supply chain combining MC cultivation, with pharmaceutical processing / advanced delivery technologies and R&D / clinical developments.
The Company controls operations across the entire MC value chain through three business units, strategically located in favourable jurisdictions with supportive regulatory frameworks in place.
United Greeneries - Cultivation of Medical Cannabis
The Company's cultivation division is operated under the Company's wholly owned subsidiaries, United Greeneries Holdings Ltd, United Greeneries Ltd and United Greeneries Operations Ltd and United Greeneries Saskatchewan Ltd (collectively referred to as "United Greeneries").
United Greeneries owns and operates the Group's two growing facilities, the Duncan Facility and the Lucky Lake Facility.
Duncan Facility
On 30 June 2016, MMJ advised that Health Canada ("HC") had officially approved United Greeneries as an authorised Licensed Producer ("LP") at the Company's flagship Duncan Facility under the Marihuana for Medical Purposes Regulations ("MMPR").
Significantly, this transforms MMJ into the first Australian-based company to receive a Canadian MC cultivation licence, and one of only a few companies globally with the capacity to commercially cultivate medicinal grade cannabis in a federally regulated environment.
MMJ's Duncan Facility is a state of the art MC operation with approximately 10,000 ft2 of cultivation area. To date, MMJ has spent approximately CAD$8 million on the construction and establishment of the Duncan Facility, which includes high compliance items such as a Level 8 Narcotics Vault and a full service in-house biochemical and analytical laboratory.
With highly scalable cultivation capacity of between 700-1,000 kg/year, Duncan has significant excess processing capacity that can be potentially utilised later by United Greenies to process internal or third party materials. The Duncan Facility is currently leased to MMJ with an initial term expiring on 31 April 2021, with two options to extend the lease for a further 5 years (total extension of 10 years).
Post year end, United Greeneries had executed a binding letter of intent ("LOI") with Cowichan Tribes in respect to the leasing of a 13-acre strategic land package ("Expansion Land") located immediately adjacent to the Company's existing Duncan Facility. The Company estimates that the Expansion Land could support up to 10 acres of greenhouse production space potentially yielding approx. 25,000kg/year additional cannabis, more than 25 times the current production capacity.
Lucky Lake Facility
The Lucky Lake Facility in Lucky Lake, Saskatchewan is a 62,000 ft2 modern, concrete agricultural facility sitting on over 18 acres of land which is 100% owned by the Company. The facility includes a potential residential property for future employees and has a vast supply of water and electricity.
The Lucky Lake Facility's MMPR application was submitted in March 2015 and is currently in the security clearance stage of review.
Potential integration into United Greeneries' Duncan quality control and distribution system, may allow for expansion of up to 11,700kg of MC product per annum.
Satipharm AG - Sophisticated Delivery Technologies
The Company's European pharmaceutical, nutraceutical and cosmeceutical division operates under its 100% owned subsidiary, Satipharm AG ("Satipharm"), based in Lucerne, Switzerland.
Satipharm is specialised in development and production of dietary supplements and cosmetics with a focus on legally accessible cannabidiol (CBD). From this development originated CBD Gelpell Microgel Capsules, a CBD product with a unique, controlled delivery system with enhanced oral bioavailability. Satipharm's vision is to become a global leading company in this segment through the development and commercialisation of cannabidiol based products.
Satipharm Gelpell (R) Microgel Capsules
MMJ began production of its Gelpell (R) Microgel Capsules in May 2015, and is committed to boosting the sales of its flagship product throughout regulated markets globally. The capsules utilise GACP/GMP produced Cannabis extract from MMJ's partner AI FAME GMBH / Ai LAB SWISS AG, which fulfills all criteria of the European Pharmacopeia and contains 92% purified CBD, with no THC or other cannabinoids present. The extract is then processed under an exclusive technology use agreement by Gelpell AG into proprietary micro-gelatine spheres and packaged under GMP protocols into a 10mg, 50mg and a 100mg presentation.
Satipharm International Partnerships
Satipharm has in place key international partnerships for the production and distribution of cannabinoid-based pharmaceutical, nutraceutical and wellness products, which includes its Swiss partners Ai Fame GmbH / AiLAB SWISS AG, an integrated cannabis-focused pharmaceutical compound manufacturer and Gelpell AG, a premium contract manufacturer of supplements and Phyto-pharmaceuticals.
In July 2015, Satipharm executed an agreement with Ai Fame for the exclusive right to market and distribute all Ai Fame MC products globally, significantly expanding the Company's MC product portfolio. However, the agreement was mutually terminated in May 2016. Both parties are now negotiating an enhanced agreement that includes additional products and services. The Company will provide an update on negotiations in due course.
In March 2016, Satipharm signed an exclusive License Agreement with Gelpell AG to develop and sell prescription MC drugs using Gelpell's proprietary technology. The agreement is the result of higher than expected safety and performance results in the Phase 1 Clinical Trial carried out on two doses of Gelpell CBD oral capsules.
This exclusive License Agreement is an extension to the existing agreement between Satipharm and Gelpell AG, which has enabled the Company to market and sell its oral CBD capsules throughout Europe.
The Company will develop and sell new MC prescription drugs using the Gelpell technology, and own all the intellectual property and rights in relation to the licensed products. Gelpell will be granted the exclusive manufacturing rights for the licensed products.
PhytoTech Therapeutics - Clinical Development of Oral Cannabinoid Products
MMJ's Israel-based subsidiary, PhytoTech Therapeutics, is responsible for the Company's R&D and clinical development activities. PhytoTech Therapeutics' key focus is on adopting and developing unique oral delivery technologies that have the potential to deliver safe, effective and measured doses of MC to patients.
Drug delivery technologies modify drug release profile, absorption, distribution and elimination for the benefit of improving product efficacy and safety, as well as patient convenience and compliance.
PhytoTech Therapeutics has implemented two exclusively licensed oral technologies in the development of its cannabis based prescription products, including:
1. PNL Technology: Pro-Nano Lipospheres for delivery of water insoluble substances with high bioavailability. The high bioavailability is obtained because the PNL based formulations spontaneously form miniature (diameter < 60 nm) drug-encapsulated micro-emulsion in the GI track. The formulation also enables dispersing the cannabinoid in water. The PNL technology was exclusively licensed from Yissum Research Development Company of the Hebrew University of Jerusalem Ltd in Israel, to develop cannabinoid based products for a variety of highly potential clinical indications on November 2014. The technology is backed by issued and pending patent.
2. Gelpell (R) Microgel pellets: Seamless gelatin pellets under 2mm packed in hard gastro-resistance capsule. The cannabinoids are bound and protected by three-dimensional natural gelatin matrix. This in-situ micro emulsion ensures accurate and consistent dosages and substantially enhance the bioavailability of the cannabinoids. The technology was licensed from Gelpell AG and is being utilised in PTL101 and PTL201 capsules, our two prescription drugs about to enter phase 2 clinical studies.
To view the full report, please visit:
http://abnnewswire.net/lnk/663U4E15
About MMJ Group Holdings Ltd
MMJ Group Holdings Ltd (ASX:MMJ) is a global cannabis investment company. MMJ owns a portfolio of minority investments and aims to invest across the full range of emerging cannabis-related sectors including healthcare, technology, infrastructure, logistics, processing, cultivation, equipment and retail. For MMJ's latest investor presentation and news, please visit: https://www.mmjphytotech.com.au/investors/
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