Epsilon Healthcare enters major long-term partnership with Canada’s The Valens Company, a leading global manufacturer of cannabis products.

The Valens Company has entered a long-term partnership with Epsilon Healthcare (ASX:EPN) to access its Good Manufacturing Practices Facilities (GMP) at Southport in Queensland.

Based in Canada, Valens is currently listed on the Toronto Stock Exchange (TSX:VLNS) and has applied to list its common shares on the Nasdaq. Epsilon’s Southport cannabis extraction facility is the largest in the Southern Hemisphere with TGA and EU GMP capability.

The partnership will see the first GMP manufactured products to be sold through Valens in Australia and New Zealand. It will also increase Valen’s future access to global markets including Latin America, Europe, the UK and Asia-Pacific and mark the company’s first foray into EU GMP medicine production.

Products will be distributed through Valen’s Australian distribution partner Cannvalate, a leader in the science, development, and commercialisation of cannabinoid-based prescription medicines with a large patent portfolio of novel cannabinoid.


Valens to fund Southport facility

Under the agreement Valens will fund all operational and capital expenditure of the Southport facility, operated by Epsilon’s wholly owned subsidiary THC Pharma.  In return  Valens will be granted preferential access for up to 85% of the operational capacity over the next five years, with an option to extend the arrangement for a further six years.

Valens will also provide operational and management consultancy at the Southport facility to bring their industry-leading intellectual property, technology, and team to take advantage of Epsilon’s GMP Manufacturing capability.

The 10,000 square foot purpose-built botanics extraction facility is capable of extraction of raw plant material, downstream purification, and isolation processing. It has its own QC lab and grade D cleanroom space for the manufacture of oral dose format products.

The agreement includes an exclusivity arrangement where Valens will not sell or supply any medicinal cannabis products in Australia or New Zealand other than through the Southport facility, where THC Pharma has the capability to manufacture and supply that product.

Epsilon Healthcare is the first ASX listed entity to fully own and operate end-to-end commercial medicinal cannabis production facilities under Australia’s cannabis regulations.

The company also owns numerous other medicinal cannabis assets including the Tetra Health clinic, and the Medimar Platform – an end-to-end ecommerce solution for nutraceuticals and cannabis.

Epsilon has a fast-growing turnkey cultivation solutions provider, based in Vancouver, Canada, including a hydroponics equipment and supplies wholesaler and retailer to service the rapidly expanding cannabis sectors in North America and Europe.


Epsilon to acquire AlternaMed  as part of deal

As part of the Valens partnership, Epsilon will acquire AlternaMed from Cannvalate. AlternaMed has a portfolio of three patent pending applications for novel cannabinoid therapeutic agents, targeting irritable bowel syndrome, menstrual pain, and smoking cessation.

AlternaMed additionally has a back-to-back access agreement with Cannvalate for access to a Sigma Pharmaceuticals operated Schedule 8 medicines warehouse, which may be used by Epsilon for the distribution of its pharmaceutical products.

Cannvalate have also agreed to appoint Epsilon as their preferred partner for all pharmaceutical manufacturing opportunities generated in the medicinal cannabis sector in Australia and New Zealand.


Partnership to expand each company’s global footprint

Valens CEO Tyler Robson said the partnership fulfilled its promise to achieve GMP manufacturing in 2021 and gain access to international cannabis markets through an asset-light approach.

“We are excited to work with the largest and most advanced cannabis manufacturing facility in the Southern Hemisphere to distribute GMP products,” Robson said.

“We believe this strategic partnership is an efficient use of capital towards accessing GMP quality products and accelerates our timeline to market dramatically.”

Epsilon CEO Jarrod White described the partnership with Valens as “transformational” for the company.

“We are excited to be working with Valens during such a flourishing time in their corporate trajectory, and Cannvalate, a leader in the medicinal cannabis and psychedelics market, to deliver the scale of operations fitting for our world-class pharmaceutical manufacturing assets in Australia,” White said.

Cannvalate CEO Dr Sud Agarwal said having worked with Valens for more than a year he had already noticed significant growth I their market share in the APAC market.

“Now with access to a GMP facility via our partnership with Epsilon we forecast a dramatic increase in demand both domestically and internationally,” Agarwal said.

At the time of writing Epsilon shares were 17 cents.

This article was developed in collaboration with Epsilon, a Stockhead advertiser at the time of publishing.

 This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.