Bio-pharma company MGC Pharmaceuticals (ASX:MXC) has struck a $1.4m deal to acquire Australian clinic business Medicinal Cannabis Clinic and its extensive doctor and patient network.
MGC has signed a binding term sheet agreement with parent company Cannvalate to acquire 100 per cent of Medicinal Cannabis Clinic in exchange for $1m worth of MGC shares and $400,000 in cash.
A new, wholly-owned Australian subsidiary for MGC Pharma will hold all of the operating clinic based assets, data and intellectual property of Medicinal Cannabis Clinic.
Europe-based MGC Pharma specialises in the production and development of high quality phytocannabinoid-derived medicines.
The acquisition will expand MGC’s distribution network in Australia as well as its global supply chain.
“The acquisition of Medicinal Cannabis Clinic’s assets is an important part of our strategy to grow our distribution network and direct supply chain capabilities in both Australia and internationally,” MGC Pharma co-founder and managing director Roby Zomer said.
Established in 2019, Medicinal Cannabis Clinic is geared to providing patients with affordable access to experienced cannabinoid prescribing doctors.
An Australia-wide network of 2,480 referring doctors and 60 pharmacies work with Medicinal Cannabis Clinic, and its Special Access Scheme has facilitated cannabinoid prescriptions to more than 4,000 pre-screened patients since July 2019.
MGC says Medicinal Cannabis Clinic has one of the leading patient databases in Australia.
The clinic business operates a video telemedicine system to allow prescribing doctors to provide the full range of cannabinoid medications available in Australia to patients.
Cannabinoid products are dispatched directly to patients’ homes, eliminating the need for several visits to doctors and pharmacies.
Medicinal Cannabis Clinic staff will continue their work with the clinic business, ensuring clinical independence and governance, and MGC Pharma does not anticipate any changes to the operations, product offering, or business ethos.
The acquisition follows MGC recently receiving an import licence from the Office of Drug Control, and the addition of Medicinal Cannabis Clinic to its portfolio is seen as the next step in MGC building on-the-ground distribution assets in Australia.
The import licence allows MGC to directly import to Australia its CannEpil for drug-resistant epilepsy, CogniCann for dementia/Alzheimer’s, and its Mercury Pharma range.
MGC says the acquisition will allow it to increase control over its inventory and retail prices, as well as improve its profit margins.
Under the takeover, MGC’s new holding company for Medicinal Cannabis Clinic will obtain relevant state and federal government licences for the import and distribution of medicinal cannabis products, effectively moving MGC’s supply chain to the new holding company.
MGC says the addition of Medicinal Cannabis Clinic is an important step towards its growth target of 5,000 units/month, the point at which the company will be cashflow positive.