MGC Pharmaceuticals | 22 October 2018

Extraction facility in Slovenia granted full GMP certification

The company completed the construction of a clean room and CO2 extraction facility in Ljubljana in

Slovenia in April 2017. In July it was formally granted full GMP certification of the processing facility

and a manufacturing licence for the production of cannabis-based medicines. Receipt of the licence

enables the commercial-scale production of GMP-grade medical cannabis pharmaceutical

products. It will enable MGC to be licensed for distribution of CannEpil, CogniCann and other

medicinal cannabis products.

In October 2017 MGC harvested 4,000kg of biomass from a low-THC cannabis strain (hemp) crop

at its open field farm on leased farmland in Slovenia. A proportion of the hemp crop will be

processed to produce food-grade CBD for use in the company’s nutrient and MGC Derma

cosmetics products, with the remainder sold in the European market as Aquiol.

Larger-scale cannabis growing and processing in Malta

In April 2018 MGC received a binding Letter of Intent granting approval and a contract by Malta

Enterprise Corporation to establish a medical cannabis production and cultivation facility on

4,000m2 of land. MGC is in the process of obtaining a formal contract to commence construction of

the facility, which will also house a research hub and, once approved, a GMP-certified production

and manufacturing facility. Under the terms of the contract, MGC will be obliged to spend a

minimum of €4.3m (A$6.5m) over the first three years on the construction and operation of the

facility, and to employ at least 25 Maltese people as part of the local workforce.

Thanks to its warm Mediterranean climate, the Maltese facility should produce high-yielding

cannabis crops with a relatively low cost of production.

The establishment of the facility in Malta will be a key part of the company’s plan to expand its

greenhouse growing capacity to around 5,000 m2 over the next three years. While we model a

further expansion of growing capacity to 10,000 m2 by 2022, at this stage it is not clear whether this

further expansion would take place in Malta or in another location.

Research and breeding programmes underway in three

countries

MGC has established R&D collaborations with universities in each of the countries where it has

operations, including the IEB in the Czech Republic, the University of Ljubljana in Slovenia and the

Royal Melbourne Institute of Technology (RMIT) and the University of Sydney in Australia. The

goals of the collaborations include:

 optimising growing conditions to maximise cannabinoid yield per square metre of greenhouse

space;

 breeding new high-yielding cannabis strains, including high-CBD and high-THC strains;

 identifying cannabis strains suited to treating specific disease symptoms; and

 conducting preclinical studies of the use of cannabinoids to treat a range of medical conditions,

including cancers such as melanoma.

Distribution agreements in place for wholesale supply

MGC has started putting in place supply and distribution agreements as it prepares for commercial

sales of its pharmaceutical-grade cannabis products.

The first agreement was an exclusive regional distribution deal with Mikro+Polo for the sale in

Slovenia, Croatia and Bosnia of the API material that will be produced from MGC’s extraction

facility in Slovenia.