Founded in 2015, Creso Pharma (ASX:CPH) is a global medicinal cannabis company that has developed, registered, and commercialized several cannabis-based pharmaceutical and nutraceutical products for both people and their pets.
Creso Pharma (ASX:CPH) is a global supplier of cannabis and hemp-derived products for both people and animals that has established a presence in almost every continent on the planet.
Since its origin, Creso has hit many milestones through a combination of innovation and acquisitions, which have allowed the company to further its global expansion and progress its four key focus areas; animal health, nutraceuticals, cosmetics, and therapeutics.
The CEO of Creso Pharma, John Griese, described the company's efforts as an attempt to build "a diverse global enterprise".
"Few cannabis stocks are currently commercial in countries across Europe and even less have established proprietary branded products such as Creso's CBD-based Nutraceuticals cannaQIX and anibidiol in human and animal health,' he said.
And when it comes to being a global enterprise, Creso has certainly covered a lot of ground, with a growing presence in Canada, Switzerland, the EU, Israel, Latin America, Australia, New Zealand and most recently in Africa.
Let's find out how Creso Pharma got to where they are today.
Filling Unmet Needs – Creso Pharma's Foray into Medicinal Cannabis
In 2016, while medicinal cannabis was still emerging and nascent, Creso Pharma saw a chance to embed itself firmly into the industry.
Operating out of Zug, Switzerland at the time, Creso sought to bring "pharmaceutical industry expertise and rigour" to the world of medicinal cannabis by being a cut above its competitors. In order to do so, Creso, armed with a pharmaceutically experienced team, ensured its processes were Good Manufacturing Practice (GMP) certified and met international pharmaceutical standards.
And despite Creso Pharma having a small market cap of $11.5m, which represented a mere fraction of competitors like GW Pharma's $4.4bn, Creso was one of the few pharmaceutical companies in the cannabis space to recognize the burgeoning nutraceuticals, pets, and cosmetic markets for cannabis products.
In order to source hemp for hemp-derived CBD products, Creso entered into an agreement to conditionally acquire a company based in Slovakia named Hemp-Industries, which already owned an existing hemp growing operation, outsourced CBD extraction and CBD product sales activities.
Through Hemp-Industries, Creso was able to generate early revenues through sales of Hemp-Industries' CBDium product, helping fund of the Company's therapeutic products business unit.
Creso Pharma is the first company to import medical cannabis to Australia
The imported product was a set of cannabis oils that came from the Canadian medical cannabis group, CanniMed, and that would now be available for prescription under the new legislation.
The monumental import followed an announcement made by Creso on the 2nd of February 2017, when the company revealed that it had entered into a Letter of Intent for the import and sale of cannabis products in the Australian market alongside Health House International.
Following news of the announcement, Creso Pharma stock jumped from AUD$0.16 in February, to AUD$0.57 by the end of March.
"This successful first import of medicinal cannabis products into Australia is an unprecedented achievement for both Creso Pharma and Health House International, and a groundbreaking moment for patients and the medicinal cannabis industry in Australia," said Creso Pharma Group Chairman and Co-Founder, Boaz Wachtel at the time.
Wachtel continued, "the Australian medicinal cannabis market is an important market for Creso and this agreement positions us strategically to facilitate and help meet the immediate but unmet need thus far of timely access to medicinal cannabis locally."
"Medicinal cannabis has been shown in a number of countries around the world to be alleviating a variety of medical conditions. CanniMed's first-rate supplies into Australia will help patients enormously, especially those in acute pain and for various chronic conditions."
Creso expands into Canada with Mernova Medicinal Acquisition
In July 2017, having just imported Australia's first shipment of medicinal marijuana, Creso Pharma Limited (ASX: CPH) continued its path toward global expansion when it entered into the Canadian cannabis market through the acquisition of Nova Scotia-based medicinal cannabis producer, Mernova Medicinal Inc for a total of C$10.1 million in cash and equity.
This effectively made Creso Pharma the only Australian cannabis company at the time operating and developing a presence within the world's largest legal medicinal cannabis market – Canada.
Shortly after the acquisition, Mernova's application for a cultivation license was accepted by Health Canada — one of only a handful to be issued in Nova Scotia.
Mernova possesses a GMP-compliant indoor growing facility in Windsor, Nova Scotia, which is designed to produce four tonnes per year of dry cannabis.
Creso's Mernova facility is predicted to generate approximately 700,000 grams of dried flower by the end of 2019, with yields from the Mernova facility exhibiting THC levels of 22.6% and 23.2%.
Creso also claims that while it plans to reach 4 tonnes of annual cannabis production from the facility, there is the capacity that the facility may be expanded to allow "for future increases of up to 10 times that amount."
The facility is currently at phase 1, with exponential production capacity increases to occur at phases 2 and 3.
Creso Pharma Launches Anabidiol and CannaQIX
In November 2017, Creso Pharma progressed one of its four key focus areas, Animal Health, when the company released its animal-focused range of CBD products named Anibidiol. Derived from industrial hemp, Anabidiol's active ingredient is the cannabinoid Cannabidiol (CBD), which doesn't get users intoxicated.
In the US alone, pet supplements and nutraceutical treats are growing at 3-5% per annum, with the total market at $1.6 billion in 2017. Sales of specifically CBD-based pet products went from $8 million to $32 million in 2017 alone. Brightfield Group also pegged the CBD pet market as having the potential to reach $1.16 billion in the U.S. by 2022.
Our experience in the market shows that our veterinary products respond to a real need and have a positive effect on behaviour in pets. Creso CEO, Dr Miri Halperin Wernli
According to Creso Pharma's website, Anabidiol "promotes well-being by supporting the immune system and natural response. Supports behaviour balance, the normal psychological function, and the nervous system. Contributes to the reduction of tiredness and fatigue."
Then, in December that same year, Creso Pharma teamed up with the Swiss Pharma OTC company Doetsch Grether to launch cannaQIX in Switzerland in Q1, 2018.
CannaQIX is Creso's proprietary formulated cannabidiol lozenge designed to help minimize chronic pain. Each cannaQIX lozenge contains full-spectrum CBD (CBD with other cannabinoids present) derived from hemp plant extracts, produced out of Switzerland.
Creso Acquires KunnaCanada & Gains Access to Latin America
In December 2017, just months after gaining access to Canada in July following the Mernova acquisition, Creso gained a foot in the door to the Latin American market when it completed the acquisition of 100 percent of the shares in Kunna Canada.
When Creso Acquired Kunna the company also acquired 100 percent of Kunna's Colombian registered subsidiary, Kunna S.A.S, which was given license to cultivate, produce, manufacture, market and export cannabis products throughout Colombia.
Creso Pharma stock climbed 2.94 percent higher at $0.35 following the deal in December 2017. When it comes to cannabis, Colombia is one of Latin America's most prominent marijuana markets.
Rodrigo Arcila Gomez, president of the Colombian Cannabis Industry Association, said: "Colombia can produce cannabis products at lower prices than competitors due to affordable land, relatively low wages and an abundance of skilled farmhands who cut their teeth in Colombia's booming flower business."
Creso enters Cannabis Beverage Market
In January 2018 Creso Pharma announced it would be joining forces with Canadian cannabis investors, LGC Capital Ltd and British brewer, Baltic Beer Company Ltd, to create hemp-derived and cannabis-derived beverages, a market which Zenith Global predicts will grow to over $1.4 billion by 2024.
The cannabis-infused beverage company, named CLV Frontier Brands Pty Ltd, plans to develop and commercialize a range of cannabis and hemp-derived alcoholic and non-alcoholic beverages containing various elements from cannabis plants.
Research and development for the company's cannabis beverage portfolio are underway in Switzerland, Estonia, and the UK in the hopes of creating a portfolio of premium craft beer containing unique terpene combinations.
Creso Pharma Launches CannaQIX in New Zealand
On the 2nd of July in 2018, Creso announced that it's cannabidiol lozenge cannaQIX 50 product, designed to alleviate chronic pain, would be launched in New Zealand through CB Distributors.
"We are really excited to introduce cannaQIX 50 to New Zealand with CB Distributors," says the company's CEO Miriam Halperin Wernli.
"For Creso, New Zealand is an important market as it forms part of its overall APAC strategy, a region where projections suggest 23 percent of the worldwide spend on CBD products will take place by 2022."
"[CB Distributors] is a young and highly motivated company with a genuine passion for the benefits cannabis can deliver to patients. This is a perfect fit with Creso's own philosophy and we anticipate a very successful collaboration."
Creso's announcement marked not only the company's entrance into NZ, but also its first CBD product in the APAC region, which has been projected to reach US$700 million in sales revenue by 2022.
Following the announcement, Creso Pharma stock went up 4 percent to $0.65 per share.
Creso Pharma Signs Agreement with SuperMedic to Enter Israel
In August 2018, Creso Pharma continued its expansion via a commercial agreement with SuperMedic, which allows Creso's cannaQIX range of hemp-based products to be launched, marketed and distributed across multiple countries in the Middle East with nutraceutical products also made available for sale.
The cannaQIX range of products for the Israeli market is hemp seed oil-based nutraceuticals using Creso's proprietary delivery technology and containing organic hemp seed oil with vitamins and zinc.
On the partnership with SuperMedic, Creso's CEO Dr. Miri Halperin said: "We are really excited to commercialize cannaQIX in Israel with SuperMedic. This is an important milestone for Creso as it provides us with a strategic foothold and frontline exposure to one of the world's most developed medical cannabis countries and opens the door for Creso for wider commercialization across the Middle East."
Launch of Creso Pharma's First Medical Cannabis Product in Brazil
In November 2018, Creso Pharma announced that it had begun importing and selling CannaQIX50 to patients in Brazil through its Brazillian partner MedDepot Brasil.
CannaQIX 50 is designed to treat patients that suffer from chronic and neuropathic pain, as well as cancer symptoms. CannaQIX is classified as "medicinal cannabis under medical prescription" in Brazil. The contracted term within the agreement is 3 years.
Creso Becomes First ASX-listed Cannabis Company With Dual Listing in Canada
In December 2018, Creso Pharma became the first ASX-listed company to achieve a dual listing on Canada's Toronto Venture Exchange (TSXV) just two months after Canada legalized cannabis for recreational consumption. And, thanks to Creso's Mernova acquisition, it was also the only ASX-listed company that owned a cannabis facility in Canada.
As the first G7 country in the world to recreationally legalize cannabis, Canada became (and still is) a centrepiece for the future of cannabis, with some predicting the industry will grow to US$6.5 billion by 2020. The dual listing effectively placed Creso at the epicentre of Canada, and therefore, the cannabis industry at large.
"The Canadian market was always an ambition and given our operations in Canada, Colombia, Europe and Australia, it not only makes sense but it is time we begin this process to meet investor demand," said Creso's CEO, Dr Miri Halperin Wernli.
"The recent landmark legislation for full, adult-use legalisation further demonstrates Canada's world-leading position in the cannabis industry and we look forward to reaping the benefits of this growing market."
Creso Pharma Secures Supply Deal With TerrAscend
In January 2019, Creso announced that it had entered into a three-year supply agreement with TerrAscend Canada, a subsidiary of TerrAscend Corp. to provide its premium cannabis product following Canada's legalization of cannabis in October 2018.
The agreement stipulates that Creso will sell a minimum of 100 kgs of cannabis flower to TerrAscend, with pricing dependent upon the grade/quality of the flower and if the flower has been grown to a GMP standard.
On the agreement, John Griese, Creso Chief Operating Officer said: "Creso is ticking off each step in its strategic plan and quietly building a diverse global enterprise. Few cannabis companies are currently commercial in countries across Europe and even less have established proprietary branded products such as Creso's CBD based Nutraceuticals cannaQIX and anibidiol in human and animal health."
"As a result of supply agreements like the one with TerrAscend, Creso now enters the Canadian market place with committed revenues from product destined for the legal cannabis markets."
PharmaCielo Acquires Creso Pharma – And Then Doesn't
In June 2019, PharmaCielo launched a takeover bid for Creso Pharma, which valued Creso at A$122 million. When the deal was announced, Creso Pharma stock climbed 30 percent in one day.
However, Creso informed the ASX that the company had brought in an independent expert to analyze the deal, and announced on the 1st of November that "the Share Scheme is neither fair nor reasonable and not in the best interests of Creso Pharma shareholders".
"In light of the change in the recommendation of the Independent Expert, Creso Pharma and PharmaCielo have mutually agreed that the SIA (Scheme Implementation Agreement) has been terminated.
"In connection therewith, on 11 November 2019, Creso Pharma and PharmaCielo executed an agreement of mutual release and settlement in relation to the SIA, whereby each of Creso Pharma and PharmaCielo agreed to release each other from all claims arising under or in connection with the SIA or the related transaction documents."
As a result of the cancelled deal, Creso Pharma is now required to repay the loans given by PharmaCielo, valued at around CAD$3.9 million ($4.3 million.) Furthermore, both Creso Pharma stock and that of PharmaCielo has plummeted since the fallout.
Creso Pharma's CannaQIX Hits Australia
On December 5th, 2019, Creso Pharma began sales in Australia. While the company had made headlines for importing Australia's first shipment of medicinal cannabis, it was two years later that Creso began selling its own products in the land down under.
Creso commenced sales cannaQIX 50 through Burleigh Heads Cannabis, an Australian cannabis distributor. Though cannaQIX 50 is being sold under the name 'LozaCan.'
Burleigh Heads Cannabis is a subsidiary of CDA Health Pty Ltd, which is an Australian business that facilitates patient access to medicinal cannabis products.
"We are pleased to announce the first delivery of cannaQIX® 50 in Australia," said Dr. Miri Halperin Wernli.
"Burleigh Heads Cannabis and CDA Clinics Australia continue to rapidly expand their patient reach with their extensive distribution network. This close partnership enables us to fulfill our mission of bringing life-improving products to patients in Australia."
"We're delighted to announce this progress and look forward to further new product introductions in the near future."
Disclaimer: Past performance is not an indicator of future performance.
Creso Pharma Brings CannaQIX to Africa
In December 2019, following the fallout of the PharmaCielo acquisition, Creso Pharma has continued its goal of developing a global presence – this time, in Africa.
The company will be bringing its flagship product 'CannaQIX' to nine countries in the continent through a joint venture with Pharma Dynamics — who have already paid A$300,000 to Creso Pharma.
As a result of the venture, CannaQIX will be distributed in South Africa, Namibia, Botswana, Zimbabwe, Swaziland, Lesotho, Angola, Mozambique, and Uganda. According to the company's recent press release, customers within the African market can expect to buy CannaQIX as soon as early 2020.
"We are very excited to work together with our preferred partner Pharma Dynamics for the launch of the cannaQIX product range into the first key countries in Africa," Cresos CEO, Dr Miri said.
Though despite the recent announcement and global expansion, Creso Pharma stock continues to dip, dropping 7.14 percent even after the news of entering the African market.
Risks Involved With the Creso Stock
While Creso Pharma has been continuing its goal of global expansion, news of the fallout of the PharmaCielo acquisition has certainly dampened investor enthusiasm when it comes to Creso Pharma Stock. The Creso Pharma share price has hit a record low of 12 cents as of December 16th, with many investors selling off Creso Pharma's shares following the failed takeover by PharmaCielo.
When the PharmaCielo deal fell through, Creso Pharma was required to repay the outstanding CDN$3.9 million loans advanced by PharmaCielo by 30 November 2019.
Now left with a limited cash balance, Creso has less than a year of cash runway. This presents an uncertain future for Creso.
However, there are upsides to Creso Pharma. The management team has a wealth of pharmaceutical experience, and the company has strategically targetted a wide array of markets.
The nutraceutical market is pegged to grow at 7.5% CAGR, according to a new study by PMMI Business Intelligence, from a $241 billion market in 2019 to $373 billion in 2025.
The pet health market, according to a new report from market research firm Packaged Facts, is expected to reach $6.7 billion dollars by the end of 2019. According to the report, "Product innovation featuring cannabidiol (CBD), an active ingredient in cannabis-derived from hemp, in products for humans and pets alike has arguably been the most discussed trend of 2019."
The CBD Cosmetics Market is expected to grow at 31.3% CAGR during 2019-2025 according to an analysis by Distribution Channel, and in 2015, the U.S. skincare market generated USD 12.83 billion.
With a global network, a pharmaceutically-experienced team and an expansive product pipeline that touches upon many fast-growing industries, there are many good things going for Creso Pharma.
Though with a plummeting stock value and questionable cash flow, things could go either way for Creso Pharma.
To learn more about Creso Pharma, visit their company HQ here.
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