MGC Pharmaceuticals | 22 October 2018
The cannabis plant contains a complex blend of more than 70 compounds called cannabinoids. The
two principal components believed to be the key contributors to the medicinal properties attributed
to cannabis are the psychoactive compound tetrahydrocannabinol (THC), which is principally
responsible for the cannabis ‘high’, and the non-psychoactive cannabidiol (CBD). However, other
minor cannabinoids may also contribute to the medicinal properties.
Producing high-quality products at a competitive price
The core strategy of MGC’s Botanic division is to produce high-quality, cannabis-based products at
a competitive price. The low cost of goods produced will be a key driver of the ongoing profitability
of the company. As a first step towards this goal, it has established cannabis-growing operations in
the Czech Republic and Slovenia and has constructed a GMP-approved cannabis resin extraction
facility in Slovenia. The next phase will be to establish larger-scale cannabis-growing and
processing operations in Malta under a binding letter of intent signed with the government of that
country in April 2018.
MGC has established research collaborations in the Czech Republic, Slovenia and Australia in
order to maximise yields, to develop high-yielding strains, to optimise growing conditions and to
identify new cannabis-based products for treating additional medical conditions.
Second crop at greenhouse facility in Prague nears harvest
MGC harvested 400kg of medicinal cannabis biomass from 1,100m2 of outdoor greenhouse space
at its Panax operation in Prague in 2017, as shown in Exhibit 1. A second crop was planted in early
Q218, and is expected to be harvested in the current quarter.
MGC acquired 80% of Panax Pharma (Panax) in February 2017 in exchange for a commitment to
fund the first year of operations, capped at €0.7m. MGC has an option to acquire the remaining
20% of Panax for €0.6m of shares in MGC. Panax has a strategic partnership with the Institute of
Experimental Botany at the Academy of Sciences of the Czech Republic (IEB) in Prague, which
holds a medical cannabis breeding licence and provides access to 1,100m2 of dedicated
greenhouse growing space.
Exhibit 1: Cannabis plants growing at the company’s outdoor greenhouse in Prague
Source: MGC Pharmaceuticals