Wellnex Life has secured the funds to fast-track its entry into the newly opened-up and highly lucrative, over-the-counter medicinal cannabis sector and take advantage of e-commerce opportunities.

Health and wellness company Wellnex Life (ASX:WNX) has successfully raised $6.2 million via the issue of secured convertible notes, with a conversion price of 21 cents/share with a term to maturity of 24 months, minimum 12-month term and a coupon rate of 9% per annum.

Announced last month, the offer was adjusted to consider market conditions, but still represents a ~110% premium to the current share price.

Funds to accelerate growth

Since re-listing on the ASX in July last year, WNX has continued its upward trajectory with strong revenue growth from successful new products launches.

The company has an initial supply agreement with pharmaceutical giant GlaxoSmithKline, key distribution agreements and a pipeline of new product offerings.

The company recently confirmed leading supermarket retailer Coles will stock two of its owned brands – Wakey Wakey and The Iron Company.

The capital raise provides WNX a strong balance sheet to accelerate growth and margins along with repaying the notes.

Foothold in medicinal cannabis OTC sector

In 2020 a significant in Australia’s medicinal cannabis market occurred when the Therapeutic Goods Administration’s regulations changed to allow medicinal cannabis products to be sold as an over-the-counter medicine under the TGA’s S3 schedule.

Medicinal Cannabis is currently only available under the SAS-B scheme, which involves patients obtaining  a prescription from a registered doctor (S4 medicinal cannabis product).

The S4 market in Australia was worth $230 million in 2021 and is expected to increase to more than $400 million in 2022.

Funds from the capital raise will enable WNX to accelerate its path toward obtaining approval to bring a product to the high-growth, high margins OTC medicinal cannabis products market estimated to be worth $2 billion by 2025.

The process to obtain an S3 approval for a medicinal cannabis product is expected to take ~18 months. Given this timeline, WNX forecasts having a product in the market by the end of 2023.

Health & wellness e-commerce platform

WNX also plans to take advantage of the boom in online sales in the health and wellness space in recent times, exacerbated by changing purchasing habits throughout the covid-19 pandemic.

The company will also launch a health and wellness targeted e-commerce platform that will exclusively offer a comprehensive range of its newly branded health and wellness products to further accelerate revenue and margin growth.

The platform will enable WNX to increase its margins for its wholly owned brands eliminating margins normally charged by retailers and accelerating its pathway to profitability.

The platform is scheduled for launch in September.

Taking advantage of opportunities

WNX CEO George Karafotias says completion of the raise provides the company with funding to accelerate its growth and take advantage of opportunities.

“Wellnex has made significant progress in the last 10 months, with the launch of multiple new brands and a significant supply agreement secured with GlaxoSmithkline,” he says.

“With the funds raised we look forward to  progressing our aim of being a major participant in the fast-growing health and wellness market.”

Reach Corporate led the raise, assisted by Salter Brothers.

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.