Over the most recent quarter, MGC Pharma had 3,590 prescribed units to 1,428 patients, representing a 65% increase in the 6 months to 30 June 2020.
MGC Pharmaceuticals Ltd (ASX: MXC), a European based biopharma company specialising in the production and development of phytocannabinoid-derived medicines is pleased to announce its Quarterly Activity report for the three months ended June 30 2020.
Pharma Distribution and Company Operations
At the end of the June quarter 3,590 prescribed units were issued to 1,428 patients. The Company was very pleased with this result softening the impact on the business during the COVID-19 global pandemic, through an interruption to normal business operations in Europe during the June quarter.
As a key achievement, the Company surpassed its 3,250 milestones at the end of May 2020 and has issued a total of 3,590 prescribed units of its standardised affordable cannabinoid medicines across the UK, Australia, NZ, Brazil and Ireland at the end of June 2020. This brings the total number of patients prescribed MXC products to 1,428, a 65%
increase since the beginning of January 2020. The majority of MXC's prescribed products are CannEpil® and MP100 which are available under Special Access Schemes.
The COVID-19 pandemic had a direct impact on some of the operations during the quarter, specifically the Company's logistics and export licencing processes to move product out of Slovenia to market, and as a result, the Company had a reduction in cash receipts from sales for FYQ4 v FYQ3 2020. This bottleneck has eased during July and the Company is returning towards normalised operations and getting bulk product deliveries back to the market and generating sales revenues. Also with COVID-19 related restrictions easing in a number of countries, the Company's order book and sales pipeline for the coming months are reflecting the improved operating environment.
Due to strong sales since launch in early 2020, the Company is also expanding its Mercury MGC Pharma product line to including six new products which places the Company in a strong position to achieve its target of issuing 5,000 prescriptions per month by CYQ1 2021, as noted in the Company's June presentation. The Company remains on track to achieve this target as it further leverages delivery into existing contracts.
Three-year EU GMP licence granted
MXC was successfully granted a three-year renewal of its Good Manufacturing Practice (GMP) licence for EU compliance of its Slovenian production and compounding facility, following an annual audit conducted by the JAZMP, the government agency of medicinal products and medical devices of the Republic of Slovenia. The EU GMP licence is the most highly credentialled in the world for compliance and is essential for the production and manufacturing of pharma grade medicinal products.
As a result, MGC Pharma can continue to research, develop, manufacture and produce its suite of proprietary cannabinoid products from its Slovenian EU GMP production facility for the next 3 years before the next EU GMP audit.
During the quarter, MXC signed a number of distribution agreements to further expand its international footprint. The distribution agreements include an agreement signed with a leading Israeli cannabis company, IM Cannabis Corp, for the distribution of CannEpil® in Israel and agreements signed with K.S KIM International, a wholly owned division of SK Pharma, for the sales and distribution of ArtemiC and anti-viral treatments in Europe, Israel, Russia, the CIS countries and the Balkan region respectively.
Phase II clinical trial commences for COVID-19 infected patients
MXC commenced a Phase II double-blind, randomized, placebo controlled clinical trial to evaluate the safety and efficacy of a natural anti-inflammatory based formulation ArtemiC on patients diagnosed with COVID-19. This followed receipt of Ethics Committee approval on the 17th April 2020 for approval of the trial at Nazareth Hospital EMMS in Israel and on 28th of April 2020 at Hillel Yaffe Hospital in Israel.
The Phase II trial commenced in early May and in July was geographically expanded to the Mahatma Gandhi Mission's Medical College & Hospital in India, where a full ethical review was undertaken with ethics committee approval received. The trial in India is due to commence in the coming 1-2 weeks. MXC was also selected by the World Health Organisation to participate in a COVID-19 taskforce by reporting on the ArtemiC trial.
Subsequent to the quarter-end, the Company's received promising results from ArtemiC's safety and toxicity pre-clinical study which delivered no adverse results in standard toxicity measures from the full panel of hematology and chemistry blood tests.
The expenditure incurred on the ArtemiC Phase II clinical trial for the June quarter totalled $115k, and is expected to be a total of approximately $615k following the completion of the ArtemiC Phase II clinical trial at both Israel and India.
Ethics Committee Approval for CannEpil® Phase IIb Clinical Trial
In May 2020, the Company announced ethics committee approval was received from the Schneider Hospital in Israel for a Phase IIb clinical trial for MGC Pharma's proprietary formulation CannEpil® designed to treat drug-resistant epilepsy. The trial will be a randomised, double-blind, placebo-controlled, parallel design Phase IIb study of the safety and efficacy of CannEpil® and will recruit 103 patients between the ages of 1 and 18 years old. It is expected to commence in September 2020.
The expenditure incurred on Phase II clinical trial for the June quarter totalled $15k.
Successful research results for cannabinoid formulation on Glioblastoma – brain cancer
MXC's ongoing pre-clinical in-vitro research program focused on cannabinoid formulations in the development of treatment for glioblastoma multiforme ('GBM'), the most aggressive, and so far, therapeutically resistant, primary brain tumour yielded successful results.
The research is being conducted in collaboration with the National Institute of Biology and the Neurosurgery Department at the University Medical Centre in Ljubljana, Slovenia.
Results to date are as follows.
- On brain tissue samples from a total of 24 patients (including the 10 patients reported on in July 2019) confirm thatthe cannabinoid preparations can successfully inhibit tumour cell viability and cause a significant percentage ofglioblastoma cells to undergo "programmed cell death"
- Recent data from NIB, conducted on 14 additional GBM tumour tissue samples, support the direct novelcannabinoid formulations in the treatment of glioblastoma
Multi compound cannabinoid formulations are more effective than single cannabinoid preparations andimportantly are the intellectual property of MGC Pharma
There was no expenditure for the glioblastoma study in the June quarter.
MGC Pharma has completed renovation of a leased facility in Malta to be applied towards Clinical Research Organisation (CRO) activities which encompass its R&D and analytics services. The funding for this renovation came from Malta Enterprise, a government agency who provided MXC with a grant of €200,000. MGC Pharma is in discussions with the Maltese authorities and Malta Enterprise to extend the facility to manufacture its anti-inflammatory product, ArtemiC, which is currently undergoing a clinical trial in COVID-19 patients. The use of this facility will enable MXC to create a European manufacturing hub for ArtemiC, which is to be distributed in Israel, Russia and Eastern Europe by KS Kim, a subsidiary of SK Pharma, upon completion of positive clinical results. This renovation demonstrates MXC's commitment to its activities and rollout in Malta and to building a responsible and viable industry on the island CRO activities to support the island's emerging cannabis and pharma industries, and represents a unique opportunity for MXC to build a world class facility for the manufacture of ArtemiC. Upon completion of the facility, MXC will be in a good position to streamline global distribution via Malta's convenient shipping access to the entire globe, creating European hub for ArtemiC with distribution to Russia, Europe and Israel as determined by the agreement signed with KS Kim.
MXC qualifies to apply for potential EU grants to assist funding of this facility, which it is currently exploring.
Sale of MGC Nutraceuticals to US CBD and Hemp Wellness company
MXC signed a binding acquisition agreement to sell 100% of its MGC Nutraceuticals subsidiary to US-listed Onassis Holdings Corp (OTC:ONSS) along with an exclusive CBD and raw materials supply agreement, as announced in June.
Per the terms of the agreement, MXC will receive shares equating to a value of US$6 million in Onassis Holdings Corp as consideration for the 100% sale of the MGC Nutraceutical business. As part of the sale, the Company secures an exclusive supply agreement for the provision of MXC's CBD, raw materials and proprietary production intellectual property (IP) to Onassis for the future manufacturing and production of nutraceuticals products. Settlement of the transaction is expected by CYQ4 2020 with the completion of a capital raising by Onassis on the OTC.
The Company is a shareholder in Cannaglobal following the sale of its MGC Derma business in January 2019 and provides the following update on its operations, from a recent Cannaglobal update to shareholders.
Cannaglobal is broadening its wellness mandate into psychedelics and signed binding LOIs to purchase two world-class psychedelic plays: Sansero Life Sciences- a leading life science psychedelic company; and Rise Wellness – the definitive global psychedelic wellness retreat business. In addition, it is acquiring the balance of byMinistry.
Sansero is a biotech company focused on cultivation, research and potential applications for psilocybin. The company is developing novel formulations designed to replace antidepressants and anxiety medications with natural psilocybin- based pharmaceuticals. The team has over 30 combined years of research experience in plant biotech, tissue culture and genetics.
Reduction in operating costs and salary cuts formalised for Directors and management team
Further to the corporate cost-saving measures implemented earlier in the year due to the COVID-19 outbreak, the Company has formally revised remuneration agreements with its directors and senior management.
Effective 1st July 2020, MXC directors signed new director agreements which include a salary decrease of up to 60% for the 2021 financial year. Additionally, there is no longer a termination payment due to directors Brett Mitchell, Roby Zomer and Nativ Segev as detailed in their original service agreements, and as was referenced in the ASX announcement of 15 April 2020. Senior management remuneration has also decreased up to 30%. Director salaries totalled $115k in the June 2020 quarter compared to $424k in the December 2020 quarter.
The Company has also continued reduction in administration costs, and streamlining operating costs with $600k spent this quarter compared to $1.1m the same quarter last year.
Completion of $3.5 million placement
MXC successfully raised $3.5 million at $0.027 per share, issuing 129.63 million fully paid ordinary shares. New shares issued under the placement include one free attaching listed option for every two shares issued, exercisable and $0.045 on or before 31st August 2021. Canaccord Genuity (Australia) acted as lead manager to the transaction and the placement was well supported by new and existing institutional and sophisticated investors.
Events subsequent to the quarter-end
Subsequent to quarter-end, MXC was awarded an Import Licence and a cannabis cultivation research permit from the Australian Office of Drug Control. This Import Licence is very important for the Company as it allows the importation of any MGC Pharma Schedule 4 and Schedule 8 medicinal cannabis products into Australia directly by the Company, which was previously facilitated by third parties.
This also now allows MXC to bulk import its products directly resulting in significant cost savings to the Company including logistics and handling costs.
MGC Pharma also signed a binding term sheet with Cannvalate Pty Ltd to acquire 100% of the operating clinic-based assets, data and intellectual property of its wholly-owned subsidiary Medicinal Cannabis Clinic (MCC). MCC is a leading Australian medicinal cannabis clinic with a large and existing doctor and patient network.
MXC's acquisition of MCC's Assets, along with its import and distribution capability will reduce supply chain costs which will, in turn, lead to increasingly more affordable, high-quality cannabinoid medications for an expanding patient base across Australia. Settlement of the acquisition is expected by October 2020.
The Company has delivered material progress during the quarter on expanding licences and finalising product registrations in a number of jurisdictions as well as the establishment of key distribution agreements for several large target markets which significantly expands the potential patient base of MGC Pharma. As a result, the Company is well-positioned to achieve its milestone of 5,000 prescribed units per month, which is currently required to achieve cash flow breakeven at an operating level.
With the ArtemiC Phase II clinical trial underway and we look forward to updating the market with interim results from the human trial in early August, as recently announced.
The Company had $1.87m cash at the end of the June 2020 quarter. In accordance with Section 6 of the attached Appendix 4C, the Company confirms the total $149k was for executive director fees, non-executive director fees and corporate costs during the quarter.
Disclaimer: Past performance is not an indicator of future performance.
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