Q&A: MGC Pharmaceuticals is cultivating a seamless global supply chain

Written by Zoe Gross, edited and authorised by Jonathan Jackson. Published at May 15, 2018, in Question and Answer

MGC Pharmaceuticals (ASX:MXC) is a small-cap pot-stock that’s rapidly emerging as a leading voice in the buzzing medicinal cannabis space. Harnessing years of experience in the globally renowned Israeli marijuana sector, MXC is creating a highly supervised supply chain from planting to extraction. It already has wide-reaching global footprint, with facilities across Australia, Slovenia and the Czech Republic, and plans to expand into the Asian, UK and US markets. Finfeed.com’s Zoe Gross recently caught up with CEO, co-founder and managing director, Roby Zomer, to get an inside look at what differentiates MXC from its peers.

FF: Thanks for speaking with us today, Roby. First off, for readers who are only just tuning in to the MXC story now, could you give me a brief overview of the company and its key operations?

Roby: MGC Pharma is a global biopharma company with operations in Europe, Australasia and soon North America, focusing on the benefits of phytocannabinoids — namely, the extracts of the cannabis plant. We control the entirety of our supply chain, from seed to prescription and are focused on demonstrating the various benefits to be elicited from the cannabis plant. Having a supply chain that encompasses the entire process means that we can compete at every level of the current global cannabis market, from cultivation and production to supply of medication.

We have three sectors. Firstly, MGC Pharmaceuticals, which focuses on the research and development of medicines to treat conditions such as cancer and epilepsy. There’s also MGC Botanic, our European operations where we grow, cultivate, produce and process the cannabis that’s infused into the other divisions. Thirdly, we also have MGC Derma, a range of skincare products aimed at treating skin conditions such as psoriasis and acne.

We are building our business around perfecting and creating this pipeline for global scalability, as well as finding specific commercial ventures which we deem valuable as revenue drivers and business builders in the long term. These include our entries into the cosmetics market (MGC Derma), the nutraceutical and supplement market (MGC Nutraceuticals), and, of course, the pharmaceutical market.

It should be noted that this remains a speculative stock and investors should seek professional financial advice if considering this stock for their portfolio.

FF: Medicinal marijuana is a rapidly growing space that thrives in tandem with a spectrum of legislative changes around the world for example, the recent changes to export laws in Australia. The global cannabis market itself is now worth $55 billion. Tell me a bit about how you ended up in this sector. Why is this an important field, and where do you think it’s heading in the coming years?

Roby: The importance of medicinal cannabis and medicinal cannabis research is becoming increasingly clear due to the success of products currently available. This is forcing a seismic shift in mindsets which will drive growth in the sector in the coming years.

My background is within biofuel and the renewable energy sectors. There are many similarities across these industries and cannabis, like overcoming skepticism and competing with big businesses already established in the industry. This appealed to me, as well as the obvious curative powers of an asset, with the potential to have a global health impact. Both industries are pioneers and have a focus on significantly affecting quality of life for individuals all over the planet.

As for the dollar value of the market – I think we are at the tipping point where medicinal cannabis, as a pharmaceutical product, is beginning to get the acknowledgment it deserves, alongside its already established position as a lifestyle product, so the potential growth in current and new markets is exciting.

However, all that being said, at MGC, our core business is pharmaceuticals, and for that reason we think it’s very important the medicinal cannabis industry be built responsibly, considering the duty of care we have over our current and future patients.

FF: How is MXC positioned in relation to this blossoming industry?

Roby: Our recent announcement regarding operations in Malta, as well as our constant progress in Slovenia, ensure that MGC is uniquely well-positioned for the rapidly growing EU market. This, in combination with our global vision of holding a multi-pronged cultivation pipeline in Europe, Australasia and North America, secures our place as a significant presence in multiple geographies with rapidly expanding markets for various applications of our product line.

Driven by a strong product pipeline and GMP facilities in Europe, we have the ability to dynamically engage in new markets as they emerge. Our knowledge and certification puts us in a great position to provide products and services to various verticals, and partnerships with like-minded local distributors and research facilities means we are keeping ahead of the market and its needs.

All this goes to say that whichever way this unexpected market starts going, in terms of product demands, quality control and transparency, and other global shifts, we are ready and able to adjust ourselves accordingly.

FF: You’ve recently hit a major landmark with a letter of intent (LOI) from the Maltese government to construct a fully licensed medical cannabis facility. Tell me a bit more about that and what this means for MXC.

Roby: Firstly, receiving the LOI from Malta Enterprise, the industry building arm of the government, was a great landmark in achieving our vision of seed-to-pharma operations, as well as improved positioning for the European emerging market. Alongside the proposed advantages from the government itself, several positive elements such as suitable climate conditions allow us to have much more cost-effective raw materials, which will assist in achieving our target of affordable medication.

This, in combination with the advantages of building a central medicinal cannabis operation facility in Malta, a global central trading hub, positions us well for global industry growth. Recent changes in law (in various countries) indicate increased willingness and openness from governments to be a part of a potentially very lucrative industry.

MGC have been given an exciting opportunity in Malta as we are the only Australian company of five chosen to be awarded land in which to build a facility. We continue to work closely with the Maltese government to support local research, development and education.

Finally, as global markets open up, Malta will be a key factor in unifying our global supply chain. We imagine a reality where extracts produced in Malta, Australia or North America could be formulated and compounded based on our R&D facility in Slovenia, and then sent off to patients globally. This would truly be an expression of the seamless supply chain we are putting together.

It is early stages in building this supply chain, so investors should take all publicly available information into account before making an investment decision in this company.

FF: On top of that, CannEpilTM production has now officially kicked off. Tell me more about that.

Roby: This is a very exciting landmark for MGC, and for the industry at large. We have manufactured the first batch of CannEpil, which is now in the hands of Slovenian authorities, undergoing strict testing and validation, following which we will receive our permanent GMP compounding certification. Receipt of this certification will allow us to start our clinical research on CannEpil and to provide it to our prescribers and patient group in Australia. We see this as monumental as it represents the initiation of a product pipeline which will grow over time with new products. The first time is the hardest, and we are happy to see the light at the end of the tunnel, especially when that means CannEpil is one step closer to helping patients.

FF: MGC Pharmaceuticals has already got a diversified selection of cannabis-related offerings for example, your newly launched nutraceuticals line, a dermatology business, the CannEpil epilepsy drug. What other applications are you keen to explore next?

Roby: As a biopharma company, our focus is primarily on developing medicines and pharmaceuticals products as treatments for conditions such as cancer, chemotherapy side-effects, inflammation and other neurological disorders. The pipeline of products and research and development agenda has been explained in our most recent investor presentation.

In addition to this, MGC has already actively explored and utilised the beneficial properties of medicinal cannabis within our dermatological and nutraceutical products, and we are always looking for new opportunities that emerge within these sub-sectors.

Our research currently incorporates research into delivery systems, through proprietary formulations involving more than just phytocannabinoids, and even extends through to finding novel usages for by-products and exciting crossovers with other therapies.

FF: How does MXC stand out when compared to other medicinal cannabis companies?

Roby: I think that the most significant differentiator between us is that we are biopharma company with a global footprint built by a select group of advisors, that are experts in their respective fields, all bringing a wide-range of experience. This gives us the unique ability to explore various levels of product development and implementation, giving us multiple markets to develop and serve.

The second is our control of our entire supply chain, enabling us to deliver the highest quality products to the market, from our genetics R&D through to our analytical labs and GMP facility. The third would be our commitment to achieving the highest level of certification for our supply chain and our products. This is a laborious, time-consuming and an often frustrating endeavor, but we believe it pays off in our positioning as a market leader, as a consistent and dependable provider, and as a company that knows how to play by the rules in several geographies.

Furthermore, I would point out our consistent investment in R&D, the type that will benefit not only us, but the industry as a whole. Engaging with the academic world to ensure it is part of the future learning and training of doctors, pharmacists and scientists is crucial to ensuring that this shift is not just a blip, but a true change. Our engagement with leading universities in Australia, our joint project with RMIT, our clinical trials in Europe, these are all part of ensuring we are at the front lines of this emerging industry as it grows.

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of Maven Capital Pty Ltd (AFSL No. 418504). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

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