North American fund backs MGC Pharmaceuticals to the tune of $15m
Health & Biotech
Health & Biotech
A US investment group has agreed to provide medical cannabis company MGC Pharmaceuticals (ASX:MXC) with an initial $2.25m cash injection, and there is the possibility of further funding.
Mercer Street Global Opportunity Fund will provide the funding in exchange for convertible notes. The fund could provide as much as $15m to MGC.
“Mercer Street’s management team have played an active role in supporting and investing in many cannabis businesses in North America over the past several years, and have been active investors in ASX-listed companies over a long period,” Mercer Street Global managing partner Jonathan Juchno said.
“We are excited to have the opportunity to support the team at MXC as they execute on their business strategy.”
MGC is working on a number of cannabis-based treatments, including a spray that could potentially treat COVID-19, a CBD-based liquid formula called CannEpil for treating epilepsy and a CogniCann CBD-THC formula for treating dementia and Alzheimer’s.
The Perth-based company also agreed in July to acquire Australian cannabis business Medicinal Cannabis Clinic and its extensive doctor and patient network for $1.4m.
The network consists of 2,480 referring doctors and 60 pharmacies, and it has facilitated cannabinoid prescriptions to more than 4,000 pre-screened patients since July 2019.
MGC said the agreement with Mercer provided it with even more capital than it needed to execute its commercialisation strategy and take it through to cashflow break-even, which the company is on track to reach in early 2021.
“2020 has been an important year for our operational and commercial progress and we have now reached an inflection point in our growth,” MGC managing director Roby Zomer said.
“This funding agreement in total is significantly larger than what we envisage being required.
“However, in the near term, it allows us to fast track commercial activities and multiple preclinical and clinical trials until their completion.
“We are also now able to complete the acquisition of Medicinal Cannabis Clinic which provides us access to large new markets and patients in Australia, currently our largest market and revenue generator.”