MGC Pharma announces $4m capital raise backed by new cornerstone investor
Health & Biotech
Health & Biotech
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Special Report: MGC Pharma has secured an important strategic investor as it prepares for a big year of growth.
MGC Pharma (ASX:MXC) has secured a $1m commitment from a new cornerstone investor, OT Capital Modiin, as part of a planned $4m capital raising.
OT Capital is an investment company with core interests in residential and commercial real estate, along with new investments in medtech and biopharma.
The fund’s investment followed an “extensive due diligence process, and it is fully supportive of the company’s strategy and operations”, MGC said. It also plans to materially support any future capital raisings and MGC’s plans to dual-list on the London Stock Exchange.
MGC will issue 31.25m new fully paid ordinary shares 3.2c each.
“As we continue to work towards our planned dual listing in London, the immediate and ongoing support from a strategic investor is a testament to the opportunity that our business offers investors in providing exposure to our unique seed to pharmacy strategy,” said MGC cofounder and managing director Romy Zomer.
The company’s existing shareholders are being looked after too, as MGC is extending the offer to them with a share purchase plan expected to raise up to a further $3m. It is priced at 2.7c for a discount of 15 per cent to the 5-day VWAP (volume weighted average price) as at February 12.
Eligible shareholders can apply for up to $30,000 worth of shares and include one free attaching option for every two shares subscribed for, exercisable at 4.5c on or before 31 August 2021.
The money raised will go towards accelerating production and sales of MGC’s cannabinoid-based medicines to existing and new distributors globally, and to continue the company’s recent strong sales growth trajectory.
Half year revenue stood at $2m after December, patient numbers rose from under 30 in August 2019 to over 800 by early January 2020, and was approved to sell MGC Pharma medicines in UK, Ireland and Brazil, with Peru currently pending, and first products are anticipated to be distributed in coming months in Poland, Germany and Czech Republic.
MGC received orders for 2,000 units of its new product line MP100 in January; import permits from the Australian Office of Drug Control have been received and deliveries are expected to start to Australian distributors in February.
This will nearly double the current total of MGC Pharma medicines prescribed to date.
MGC says it expects cost cutting as well as a focus on the pharma business to lead to an increase of revenue in the March and June 2020 quarters, based on existing orders received, demand from new territories such as Brazil and the UK, and increasing volumes from repeat customers.
“Having increased prescription numbers in January 2020 which now sits at more than 2,250, from a number of jurisdictions – most recently Latin America and Ireland — I am confident we will continue to see further momentum and growth in the short term,” Zomer said.
The company now estimates it will be producing 2,000 prescription medicines per month by June 2020 and fill 5,000 prescriptions per month by the end of 2020.
The company expects to reach operating cashflow breakeven (including overheads and corporate costs) at 5,000 prescriptions per month production rate, based on its current cost structure and product margins.
And it plans to increase production capacity at its Slovenian facility from 12,000 prescriptions per month to 20,000 prescriptions per month for minimal additional capital spending.
MGC has lodged the final documentation for an LSE listing in December 2019, having positioned itself to be one of the first medicinal cannabis to list in the United Kingdom following legalisation of medical cannabis there in November 2018.
“We continue to actively pursue a dual listing on the London Stock Exchange, and I look forward to providing further updates in due course,” Zomer said.
>> NOW WATCH: 90 Seconds With… Roby Zomer, MGC Pharmaceuticals