MGC Pharmaceuticals | 22 October 2018

judgement. Memantine helps control a different brain chemical needed for learning and memory.

Namzaric is a combination of memantine and donezepil. These drugs have been shown to improve

cognition and behaviour in people with AD, but do not slow down disease progression.

Estimating the potential medical cannabis resin market

in Europe

The market research group Grand View Research recently estimated that the global medical

marijuana market was worth US$11.4bn in 2015, and forecasts it to grow to US$55bn by 2025 due

to the increasing number of territories that have legalised the use of medical cannabis and the

increasing demand for cannabis in medical applications. It estimated that North America accounted

for a 49% share of the current global market, with chronic pain the largest indication, accounting for

a 40% revenue share.

We use the current experience of medical cannabis use in Israel as the basis to estimate the

underlying potential demand for cannabis resin in Europe for use in investigational medicinal

products. Sales of medical cannabis are licensed by the Israeli Ministry of Health for a number of

indications, including oncology-related pain and side effects of chemotherapy, phantom pain and

pain related to multiple sclerosis, diabetic neuropathy, post-traumatic stress disorder, intractable

epilepsy, intractable Crohn’s disease and severe fibromyalgia. In 2016, there were 23,500 active

licences in the Ministry of Health registry,

representing ~0.3% of the total population.

We use the 0.3% uptake of medical cannabis products in Europe as a guide to the potential

underlying demand that is likely to exist in Europe. If uptake in the EU was to reach a similar level

to that seen in Israel, and assuming a low average dose of 1mg/kg/day (the lowest dose used in the

Tzadok et al epilepsy study in Israel), we estimate the potential demand for cannabis in the EU of

approximately 37,000kg of cannabis resin equivalent each year.

At the wholesale price of €50 per gram of CBD resin that we model in our forecasts, this would be

worth €1.9bn per year. In practice, this demand would likely be met by a combination of cannabis

resin and cannabis flower products.

At present, the medical cannabis regulations in most countries in Europe are more restrictive than

those in Israel. If we restrict the analysis to the 195 million people in the eight European countries

with more liberal medical marijuana laws (listed on page 7), we estimate the underlying demand for

medical cannabis in those countries to be equivalent to 14,000kg of resin per year. We model

MGC’s API production in 2023 to be equivalent to 500kg of resin, which is approximately 3% of

estimated underlying demand in these eight countries.

Terms agreed for sale of MGC Derma

MGC has signed a binding term sheet for the sale of its MGC Derma business to the unlisted

Canadian cannabis investment company Cannaglobal for up to C$15m (A$16m), and a five-year

CBD and cosmetic materials supply agreement. The supply agreement includes an upfront order

and payment of C$1m for the purchase of raw materials from MGC. The sale is subject to

shareholders voting to approve the sale at the AGM in early November, and there being no material

adverse change in either MGC or Cannaglobal.

Consideration for the sale comprises C$9m in ordinary shares in Cannaglobal at settlement,

C$3.5m of shares payable on the achievement of certain revenue milestones, plus the future

Tzadok et al. Seizure 35 (2016) 41–44