Wellnex Life is cashed up after a successful share purchase plan and private placement, as it moves to be the dominant player in Australia’s new over-the-counter medicinal cannabis market.

Health and wellness company Wellnex Life (ASX:WNX) has raised $5.965 million under a Share Purchase Plan (SPP) and private placement.

WNX raised $2.815 million under the SPP, exceeding the $2 million target. The company also placed an additional $3.15 million, of which $3 million was from cornerstone investor Homart Pharmaceuticals – market leader in Australian-made health supplements, skincare and dairy products.

First mover in over-the-counter medicinal cannabis market

Funds raised will be used, in part, to progress (WNX)’s joint venture with OneLife Botanicals as Wellnex focuses on becoming one of the first companies to launch an over-the- counter medicinal cannabis product under Australia’s Schedule 3 (S3) classification.

The existing SAS market, forecast to be worth $423m in 2022 for Australia, has been limited by its prescription requirement which will soon be lifted under the S3 scheme.

S3 will lower the hurdle for Australians to get a medicinal cannabis product from a pharmacist without a prescription, which is why the company expects the new classification market to be significantly larger.

WNX has developed core competencies around required regulatory approvals and distribution networks, in combination with the production capabilities secured through its joint venture with OneLife Botanicals.

In a market expected to feature high regulatory hurdles for competitors and shelving priority for Australian pharmacies, WNX has positioned itself for a competitive advantage.

OneLife recently acquired state-of-the-art medicinal cannabis facility, MediPharm Australia, putting Wellnex a step forward in it’s goal to be a first mover.

For Wellnex, the deal secures unfettered access to the absolutely cracking assets of MediPharm’s lauded Australian facility.

Investment by Homart Pharmaceuticals to strengthen capabilities

Homart is a renowned and fast-growing Australian nutraceutical and dairy manufacturer and distributor with more than 150 employees.

The $3 million strategic investment made by Homart into Wellnex will provide WNX with manufacturing and product expertise, export network and contacts, as well as other strategic business values.

For 30 years, Homart has been manufacturing health supplements, dairy powder products, and skincare products for many companies in its licensed pharmaceuticals and dairy factory in Sydney.

Homart also distributes these products in Australia, China and many other countries and has  received more than 15 business awards for its advanced manufacturing, quality product, and successful business.

Funding boost for product launches

Funds raised through the SPP and private placement will also finance inventory required for new brand and product launches, including:

  • Launch of new e-commerce platform in November
  • Acquisition of teeth whitening brand Mr Bright in December
  • Planned launch of medicinal cannabis products under the Special Access Scheme (SAS) by the end of CY22
  • Launch of Pharmacy Own with CH2 in January 2023

WNX said the funding will strengthen its balance sheet and accelerate its already growing revenue. The company is seeking to take advantage of numerous opportunities the health and wellness market is presenting as it develops and grows.

Share Purchase Plan

Under the SPP and placement, new fully paid ordinary shares will be issued at 7.5 cents/share.  Shares are expected to start trading on the ASX on October 25.

WNX said new shares issued under the SPP will rank equally with existing WNX ordinary shares from their date of issue.

Reach Markets was the lead manager of the SPP and placement.

Focus on generating shareholder value

WNX CEO George Karafotias said the company was “overjoyed” to have seen such strong support from shareholders for its SPP, particularly amidst challenging market conditions.

“In addition, we are pleased to announce that Homart Pharmaceuticals has made a strategic investment into Wellnex which will further strengthen our manufacturing and product expertise and expand our export network and contacts,” he said.

Karafotias said the funds were a welcome boost to progress the company’s goal to be one of the first companies to offer an over-the-counter medicinal cannabis product in the Australian market.

“We are keenly focused on continuing to generate value for shareholders, with a strong pipeline of brand and product launches in the remainder of FY23 that will further accelerate revenue and margins,” he said.

This article was developed in collaboration with Wellnex Life, 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.

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