THC Global Limited (ASX:THC) announced game-changing news today, after the company revealed that it has been granted the "most significant cannabis Manufacture license in Australia" for its Gold Coast-based Southport Manufacturing Facility.
This is a huge development, as the site—which houses the largest bio-pharma extraction facility in the Southern Hemisphere—is now capable of producing more than 12,000 kg of Good Manufacturing Practices (GMP) compliant Active Pharmaceutical Ingredient (API) isolate per year.
In the past we've identified Southport as "the crown jewel" of THC's business strategy, as it will be the "foundation on which the revenue of the company is built", once the facility becomes fully operational.
We discussed this idea at length in a research report published by The Green Fund earlier this year, where we identified the acquisition of a Manufacturing License for the facility as being one of the key catalysts that will drive movement in the stock price.
While the company does not presently provide revenue guidance, this view was also reinforced by a spokesperson for THC, who suggested that investors look to the Southport as an indicator of its earning potential for the coming year. This can already be seen taking effect today, as stock in THC Global jumped by 8.3 percent to 0.45 a share.
THC Global is now positioned to undergo significant growth, as these isolates— or equivalent quantities of full and broad spectrum extracts the company also produces—are experiencing extremely high global demand. This is because the majority of suppliers are currently inadequately equipped to meet the rigorous requirements of GMP standards.
"The licencing of THC Global's Southport Manufacturing Facility cements the Company's position as being primed and ready to be a significant player in the global cannabis market, particularly within the Asia Pacific region. We have been able to secure industry leading facilities including two licenced manufacturing facilities, an experienced executive team, and the technical expertise to deliver success."
– THC Global Chairman, Steven Xu
Compounding this is the fact that the Extract Market is expected to experience exponential growth in the near future, as regulatory and legislative changes improve both cannabis accessibility and product quality standards.
These factors mean that THC Global are in a strong position to become an industry-leader in both the Asia Pacific region and the broader global cannabis export market.
According to the CEO of THC Global, Ken Charteris, the Gold Coast-based Southport laboratory—which was purchased from Danish drug heavyweight LEO Pharma for $2.55 million last year—is the only extraction facility capable in Australia of producing high quality product at a global scale.
"The Manufacture Licence we have now received is the most significant Manufacture Licence granted in Australia to date, as THC Global has the largest bio-pharma extraction facility in the Southern Hemisphere," Charteris said.
"We are ready to commence GMP API production of medicinal cannabis at globally significant volumes and at very competitive prices."
"We expect to be supplying Australian patients with Australian produced medicinal cannabis by early 2020, as well as responding to the rapidly expanding global demand for pharma-grade GMP API isolates and formulated medicines," he said.
The activities of THC's Southport facility will also be aided by the company's licensed Manufacturing Facility in South East Queensland and the 150,000 m2 cannabis cultivation facility that it is currently developing in Northern NSW. THC Global has also advised that it intends to produce "proprietary finished medicines from these isolates and extracts, such as tinctures, oils, and capsules".
In addition to this, the company has confirmed that it will be pursuing further product development activities so the company can create "the next generation of medicinal cannabis".