Auscann Group Holdings (ASX:AC8) is set to commence its first day of trading on the ASX today after completing a successful reverse takeover of TW Holdings.
During December 2016, the company raised the maximum $5 million under its prospectus offering by issuing 25 million shares priced at $0.20.
AusCann has a focus on medical cannabis and is well positioned to take advantage of the developing market by bringing together a strong team with relevant and complementary skill sets.
The team includes the largest legal producer of medicinal cannabis in North America, Canopy Growth Corp and Chilean medicinal cannabis grower Fundación Daya.
AusCann has joined the Canopy family of companies and partners that includes Tweed (the most recognised cannabis production brand in the world), Bedrocan, DNA Genetics, Cann Science, Indoor Harvest and Mettrum Health Corp (following its recently announced CAD$430 million acquisition by Canopy).
Background
AusCann believes that patients have the right to high quality, economical and clinically validated cannabis medicines.
AusCann has the ability to deliver these medicines by:
- Having access to expertise and relevant intellectual property in respect of:
- plant genetics and breeding;
- cultivation and production techniques;
- manufacturing techniques;
- cannabis medicines that are currently being prescribed for patients for a range of conditions internationally; and
- undertaking clinical studies in Australia;
- Having the expertise to operate under Australia’s cultivation and manufacturing requirements; and
- Being able to supply full spectrum plant extracts.
The company’s business model is based upon developing production of medicinal cannabis and partnering with leading researchers.
Commercialisation strategy
Auscann’s research activities will drive the company’s future earnings.
Results and knowledge gained from AusCann’s research activities are to continuously feed into current and potential commercial activities to optimise revenue and profit from these commercial activities.
Prior to AusCann being able to cultivate and manufacture Australian, it intends to import product suitable for chronic neuropathic pain, chronic pain and treatment resistance epilepsy from its Canadian partner Canopy to meet demand.
The average prices per gram of product in Canada ranges between CAD$5 -$12.
An average cost of production per gram in Canada is circa CAD$2.88.
AusCann’s revenue streams from these expected levels of Australian demand is being determined.
Current activities
AusCann’s research activities include:
- Clinical studies in the areas of chronic pain, chronic neuropathic pain and treatment resistant epilepsy; and
- Cultivation research and development.
AusCann’s current commercial activities include:
- Joint venture cultivation and production in Chile.
AusCann’s potential future commercial activities include:
- Supply of Canadian products to Australian authorised prescribers and third party clinical studies; and
- Cultivation, manufacture and supply of Australian medicinal cannabis products to Australian authorised prescribers
Use of funds
Given the maximum of $5 million was raised in the prospectus offering, this provides Auscann with total cash of $8.3 million.
Funds are to be allocated as follows:
- Horticulture research and development: $1.8 million
- Chilean joint venture: $1.35 million
- Analytical testing: $0.33 million
- Clinical trials: $2.77 million
- Medical education: $0.33 million
- Licence applications and fees: $0.21 million
- Termination fee: $0.2 million
- Working capital and offer costs: $1.3 million