Creso Pharma - June Quarter 2 Update
(firmenpresse) - ASX Announcement
31 July 2018
Creso Pharma - June Quarter 2 Update
Highlights:
- Creso continuing to invest heavily in Canadian cannabis growing facility to fast-track completion of build in Q3 2018 with first revenues planned for Q1 2019
- Indoor Mernova facility, in Nova Scotia will complete in Q3 2018 with initial planting of 100KG of product planned
- Cresos acquisition of Kunna S.A.S. successfully completed and licence to cultivate in Colombia granted
- Successful product launches in Europe resulted in initial revenues and expected revenue growth will start to build from Q4 of 2018
- Global expansion of anibidiol® and cannaQIX® product ranges planned following successful Swiss launches
- Launch of Global Beer and Tonic Products with CLV Frontier Brands Joint Venture to commence in Q3 2018
Creso Pharma Limited (ASX:CHP) (the Company or Creso), is pleased to provide an update for quarter two ending 30 June, 2018.
The construction of Mernova Medicinals cannabis growing facility, the completion of Cresos acquisition of Kunna S.A.S. in Columbia, and Cresos decision to appoint a Chief Operations Officer for the Americas in June are important milestones in Cresos stated strategy to expand further its already strong presence in North and South America - two leading markets for the cannabis industry forecasted to be worth ~$48 billion combined, by 20283. The landmark legalisation of cannabis in Canada in October further supports this strategy and provides substantial opportunity for product growth and uptake.
There have been a number of important product developments in the second quarter of 2018. Product launches of anibidiol® and cannaQIX® in Switzerland resulted in initial revenues including confirmed reorders.
Market uptake and revenue growth in additional countries for both the animal and the human health products will start to build as of Q4 2018.
In addition, a number of positive product developments across Cresos focus areas have driven its global expansion and furthered its footprint in existing markets.
Mernova Medicinal Inc.
Construction of Cresos Canadian, Nova-Scotia based cannabis growing facility, a result of its acquisition of Mernova Medical Inc., is moving quickly. Creso continues to invest funds in order to fast track construction progress and have the facility built in Q3 2018 and fully up and running by Q1 2019 with initial revenues to follow. There is significant demand for recreational cannabis products, which will be fully legal in Canada in October 2018. Deloitte Canada has projected Canadas recreational marijuana market to be between CAD$4.9b to $8.7b. Deloitte Canada, Recreational Marijuana insights and opportunities, 2016
The granting of a growers licence for the Mernova facility is on track for Q3 2018 with the granting of the sales licence due in Q1 2019.
Once completed, Cresos 20,000 square foot, state-of-the-art fully GMP facility will be the premier cannabis growing facility in Canada. Similar-sized Canadian-listed cannabis cultivation companies, with facilities of between 15,000 and 25,000 square foot, have, on average, a market value exceeding CAD$65m. Canadian cannabis stocks, facilities between 15,000 to 25,000 square foot
3 Forbes Magazine, Legal Cannabis Industry poised for big growth in North America and around the world (source: Arcview Market Research & BDS Analytics)
In its first year of operation, the Mernova facility will produce three to four tonnes of cannabis, for which there is already established demand in Canada. With the ability to expand the Mernova facility by a further 200,000 square foot, Creso is well placed to become a dominant force in the Canadian cannabis market.
Kunna S.A.S.
Creso completed its acquisition of Kunna Canada Ltd. in July 2018. Licence to cultivate medical cannabis in Columbia has been granted to Kunna S.A.S, the wholly owned subsidiary of Kunna Canada Ltd. With all five licenses granted in Columbia the acquisition of Kunna and the granting of the cultivation licences makes Creso the only Australian-listed medicinal cannabis company with direct exposure to the Colombian market, which is expected to export more than 40.5 tonnes of medicinal cannabis oil by 2019.
The acquisition of Kunna follows a trend of global Cannabis companies moving into the Latin American Market. Recent transactions include Canopy Growth acquiring Spectrum Cannabis Colombia for ~$34.8m worth of shares and up to $61.2m in milestone payments, and Aphiras acquisition of a subsidiary of Scythian Biosciences and their Latin American licenses, in a transaction worth $193m.
Colombia is part of Cresos broader aim to establish operations which reach all key global markets.
Cresos Product pipeline
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Taken from Cresos July 2018 investor presentation
Creso Nutraceuticals - cannaQIX®10
The results from the launch of cannaQIX®10 in Switzerland earlier this year set a solid foundation for Creso to expand into additional markets.
In May, Creso signed a commercial agreement with Mediphos OTC Consumer Health BV Netherlands for the marketing and distribution of cannaQIX®10 in the Benelux region in September, following a successful initial revenue generating launch in Switzerland and Lichtenstein. At the time of signing, the first orders from Benelux had already been placed.
In the UK, alongside an agreement with Precision Health to launch Cresos e-commerce platform, discussions are taking place with potential partners to launch and market cannaQIX®10 through leading retail companies. Creso is also in advanced discussions for commercialisation with potential partners in Italy, Spain, and the Czech Republic.
In South and Central America the first regulatory notifications are progressing in Colombia and Mexico, and discussions with potential commercial partners in both markets are underway. Regulatory approval in Colombia is the gateway to access in other South American markets and consultations with possible partners have already commenced in Chile, among others.
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Creso Therapeutics - cannaQIX®50
Production of cannaQIX®50 has begun, with a launch in New Zealand for therapeutic use (under prescription) expected by year end, followed by a launch in Australia in 2019.
A commercial partner in New Zealand has been identified and the commercial Term Sheet has been signed.
Creso Animal Health - anibidiol®
Since its launch in Switzerland by Virbac in November 2017, anibidiol® has been very well received by vets and pet owners, demonstrating the products value and driving expansion in Europe.
As a result of this positive uptake, an expansion contract with Virbac is expected to be signed in Q3 which will potentially cover 15 countries across Europe and South America.
Launch plans for Q4 2018 are underway for two new life cycle complementary feed products for Virbac currently in production; anibidiol 8 plus - with 8 mg CBD and enriched with vitamins and minerals; and anibidiol 2.5 relax - with 2.5 mg CBD and enriched with vitamins and minerals.
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Creso Nutraceuticals - cannaDOL® Functional Topical Gel
Creso is in advanced stage of development of a natural CBD based topical formulation for muscle and joint pain relief in sport, and osteoarthritis.
cannaDOL® topical is being developed as part of an integral Pain Management system (combining cannaDOL® topical + cannaDOL® oral).
The launch of the topical formulation is planned for December 2018 through e-commerce channels in the UK with Precision Health following pan European registration, and with commercial partners through Europe and Latin America.
Creso Lifestyle - Cannabis terpene infused chocolates and beverages
Development of the first three products from Cresos terpene enriched Functional Chocolate line has been completed and market testing has shown very encouraging results. Creso has partnered with Felchlin Chocolatier on the development of the chocolate line, a premium Swiss Chocolate company with a B2B network in Europe and the US, which will collaborate with commercialisation contacts.
Branding has been finalised and discussions are taking place with potential commercial partners in Canada, Australia, Israel, and various countries in Europe.
Work on the range of terpene beers and the terpene Non-alcoholic Beverages (Sparkling Waters, Tonics, and Soft Drinks) by CLV Frontier Brands Pty Ltd (CLV), Cresos equal one-third joint venture with UK-based Baltic Beer Company Ltd and Canadian TSX Venture incorporated LGC Capital, is in progress. In Europe, the establishment of the R&D brewery in Tallinn, Estonia, has been completed and a UK portfolio launch for the first range of beers is set for September 2018, with branding, marketing and social media campaigns in the final stages of development.
The initial focus for bottled beers is the UK, followed by other European and global markets. Discussions are already advanced in Canada for partnership with a brewery in British Columbia (BC) to cover the provinces of BC and Alberta. Discussions are also underway with distributors in Australia, Israel and a number of other key markets.
Financials
The Appendix 4C report attached to this report contains the Companys cash flow statement for the second quarter of FY2018.
In the 3rd quarter, Creso will raise additional funds for its operations, primarily working capital. $2.7m is expected to be raised from the recently announced Options Entitlement Issue and a further $2.5m in cash will be sourced from loans to the Company. The raisings will supplement cash reserves, following considerable investments in the Companys operations, particularly the commitment of a total of more than $10m to the construction of the Companys cannabis cultivation facility in Nova Scotia.
---ENDS---
Notes to Editors
1) Creso Pharma has a portfolio covering five key areas of focus: Creso Therapeutics, Creso Nutraceuticals, Creso Animal Health, Creso Lifestyle and Creso Topicals. For further information visit www.cresopharma.com
About Creso Pharma
www.cresopharma.com
Creso Pharma brings the best of cannabis to better the lives of people and animals. It brings pharmaceutical expertise and methodological rigor to the cannabis world and strives for the highest quality in its products. It develops cannabis and hemp derived therapeutic, nutraceutical, and life style products with wide patient and consumer reach for human and animal health. Creso uses GMP development and manufacturing standards for its products as a reference of quality excellence with initial product registrations in Switzerland. It has worldwide rights for a number of unique and proprietary innovative delivery technologies which enhance the bioavailability and absorption of cannabinoids.
Forward Looking statements
This announcement contains forward-looking statements with respect to Creso and CLV, and their respective operations, strategy, investments, financial performance and condition. These statements generally can be identified by use of forward-looking words such as "may", "will", "expect", "estimate", "anticipate", "intends", "believe" or "continue" or the negative thereof or similar variations. The actual results and performance of Creso and CLV could differ materially from those expressed or implied by such statements. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Some important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition and government regulation. The cautionary statements qualify all forward-looking statements attributable to Creso and persons acting on its behalf. Unless otherwise stated, all forward looking statements speak only as of the date of this announcement and neither Creso nor CLV has any obligation to up-date such statements, except to the extent required by applicable laws.
Investor and Media Enquiries/Interviews:
EverBlu Capital
E: info(at)everblucapital.com
P: +61 2 8249 0000
+Rule 4.7B
Appendix 4C
Quarterly report for entities subject to Listing Rule 4.7B
Introduced 31/03/00 Amended 30/09/01, 24/10/05, 17/12/10, 01/09/16
Name of entity
Creso Pharma Limited
ABN Quarter ended (current
quarter)
89 609 406 911 30 June 2018
Consolidated statement of Current quartYear to date
cash er (6
flows $A000
months)
$A000
1. Cash flows from operating 7 195
activities
1.1Receipts from customers
1.2Payments for (365) (915)
(a)-research and
development
(b)-product manufacturing (39) (91)
and operating
costs
(c)-advertising and (196) (795)
marketing
(d)-management costs (189) (366)
(e)-staff costs (541) (744)
(f)-administration and (384) (1,157)
corporate
costs
1.3Dividends received (see - -
note
3)
1.4Interest received 66 75
1.5Interest and other costs - -
of finance
paid
1.6Income taxes paid - -
1.7Government grants and tax - -
incentives
1.8Other (provide details if (9) (8)
material)
1.9Net cash from / (used in) (1,650) (3,806)
operating
activities
1.1The Company received A$93,000 in cash receipts
during the December quarter. A year-end audit
adjustment for this amount was made after the
December Appendix 4C was
lodged.
2. Cash flows from (1,724) (1,724)
investing
activities
2.1 Payments to acquire:
(a)-property, plant and
equipment
(b)-businesses (see item - (202)
10)
(c)-investments - -
(d)-intellectual property- -
(e)-other non-current - -
assets
2.2 Proceeds from disposal - -
of:
(a)-property, plant and
equipment
(b)-businesses (see item - -
10)
(c)-investments - -
(d)-intellectual property- -
(e)-other non-current - -
assets
2.3 Cash flows from loans to 3,642 3,101
other
entities
2.4 Dividends received (see - -
note
3)
2.5 Other (cash acquired on - -
acquisition)
2.6 Net cash from / (used 1,918 1,175
in) investing
activities
2.1(Payments for the construction of the Mernova product
a) ion
facility.
2.3 During the quarter, Creso provided a loan of
EUR100,000 to CLV Frontier Brands Pty Ltd (JV) for
operating
costs.
3. Cash flows from - 1,228
financing
activities
3.1 Proceeds from issue of
shares
3.2 Proceeds from unissued 28 259
shares
3.3 Proceeds from exercise - -
of share
options
3.4 Transaction costs - -
related to issues of
shares, convertible
notes or
options
3.5 Proceeds from borrowings - -
3.6 Repayment of borrowings - -
3.7 Transaction costs - -
related to loans and
borrowings
3.8 Dividends paid - -
3.9 Other (provide details - -
if
material)
3.10Net cash from / (used 28 1,487
in) financing
activities
4. Net increase / 11,037 12,425
(decrease) in cash and
cash equivalents for
the
period
4.1 Cash and cash
equivalents at
beginning of
quarter/year to
date
4.2 Net cash from / (used (1,650) (3,806)
in) operating
activities
(item
1.9 above)
4.3 Net cash from / (used 1,918 1,175
in) investing
activities
(item
2.6 above)
4.4 Net cash from / (used 28 1,487
in) financing
activities
(item
3.10 above)
4.5 Effect of movement in 20 72
exchange rates on cash
held
4.6 Cash and cash 11,353 11,353
equivalents at end of
quarter
5. Reconciliation of cash Current quartPrevious quar
and cash er ter
equivalents
$A000 $A000
at the end of the
quarter (as shown in
the consolidated
statement of cash
flows) to the related
items in the
accounts
5.1 Bank balances 11,353 11,037
5.2 Call deposits - -
5.3 Bank overdrafts - -
5.4 Other (provide details) - -
5.5 Cash and cash 11,353 11,037
equivalents at end of
quarter (should equal
item
4.6 above)
-Fun
ds
hel
d
in
tru
st
for
equ
ity
to
be
iss
ued.
6. Payments to directors of the entity Current quart
and their er
associates
$A'000
6.1 Aggregate amount of payments to these (238)
parties included in
item
1.2
6.2 Aggregate amount of cash flow from -
loans to these parties included in
item
2.3
6.3 Include below any explanation necessary to
understand the transactions included in
items
6.1 and 6.2
6.1 Director and consulting fees paid to
Directors and/or Director related entities
$205,954
Corporate advisory fees paid to a Director
related entity
$32,019
7. Payments to related entities of the Current quart
entity and their er
associates
$A'000
7.1 Aggregate amount of payments to these -
parties included in
item
1.2
7.2 Aggregate amount of cash flow from -
loans to these parties included in
item
2.3
7.3 Include below any explanation necessary to
understand the transactions included in
items
7.1 and 7.2
N/A
8. Financing facilities Total facilitAmount drawn
available y at quarter
amount at end
Add notes as necessary quarter
for an understanding of end $A000
the
position $A000
8.1 Loan facilities - -
8.2 Credit standby - -
arrangements
8.3 Other (see note 8.3 2,827 -
below)
8.4 Include below a description of each facility above,
including the lender, interest rate and whether it
is secured or unsecured. If any additional
facilities have been entered into or are proposed
to be entered into after quarter end, include
details of those facilities as
well.
8.3 As announced on 23 July 2018, Creso is undertaking
a non-renounceable rights issue to raise up to
approximately $2,826,889 before
costs.
9. Estimated cash outflows for $A000
next
quarter
9.1 Research and development (464)
9.2 Product manufacturing and (132)
operating
costs
9.3 Advertising and marketing (292)
9.4 Management costs (166)
9.5 Staff costs (696)
9.6 Administration and corporate (580)
costs
9.7 Other (see note 9.7 below) (6,445)
9.8 Total estimated cash outflows (8,775)
9.7 (a) Payment of A$5.5 million for the construction
of the
Mernova production facility. As disclosed in Note
8.3 above, the funds from the non-renounceable
rights issue will be applied to the construction
of the cannabis growing facility in
Canada.
(b) In the next quarter, Creso will be transferring
US$85,000 (A$113,000) to
Kunna Canada for operating costs.
10. Acquisitions and Acquisitions Disposa
disposals of ls
business
entities
(items 2.1(b) and
2.2(b)
above)
10.1Name of entity Mernova Medicinal Inc. N/A
10.2Place of Nova Scotia, Canada
incorporation or
registration
10.3Consideration for - Cash payment of
acquisition or C$200,000
disposal
- 8,300,000
Exchangeable Shares
in
Creso Canada Limited.
Upon the satisfaction
of Milestone 1, each
Exchangeable Share
will be exchanged for
one fully paid
ordinary share in
Creso Pharma. The
approximate value is
$5.35 million based
on
Cresos share price of
A$0.645 on 27 July
2018.
10.4Nature of business Medicinal cannabis
producer
Compliance statement
1-This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.
2-This statement gives a true and fair view of the matters disclosed.
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--
Sign here: -------Date: 31 July 2018
(Company secretary)
Print name: -Sarah Smith
Notes
1.-The quarterly report provides a basis for informing the market how the entitys activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.
2.-If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standard applies to this report.
3.-Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.
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Datum: 31.07.2018 - 17:09 Uhr
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contact information:
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