Medicinal cannabis leader in rapid growth mode

Upcoming Cannatrek Ltd

About Cannatrek

Cannatrek Limited is an Australian-based medicinal cannabis company, developing production, processing and distributing assets across Australia and around the world. Uniquely placed in the high-growth global medicinal cannabis industry, Cannatrek has a strong asset base, granted licenses and permits, revenues, and an outstanding team. Cannatrek is one of the first companies in Australia to be issued the full suite of medicinal cannabis licences.

Growing and production has commenced at its fully-permitted 3,200m2 facility in Queensland.  Its annual production capability of 3 to 5 tonnes represents potential revenues of $20 million or more.

An additional 160,000m2 glasshouse facility in Shepparton, Victoria is “shovel-ready” to commence phased construction. Once built, this will increase annual production capability to over 160 tonnes (estimated value $500 million or more). This will be a fully licenced facility and already has full Development Approval (DA).

Cannatrek’s vision has always focussed on complete vertical integration, allowing the company to control the entire product journey “from seed to patient”. This business model enables:

  • superior quality control;
  • greater market insight into prospective demand for new product development;
  • more stable supply chains and predictable inventory;
  • projected lower production and distribution cost; and
  • more stable enterprise – not relying on external partners for market success.

With economies of scale, Cannatrek’s “seed to patient” model will enable a price elasticity unrivalled by its local competitors. Cannatrek will be a low-cost producer of high-quality medicinal cannabis, available to consumers in Australia and overseas.

Cannatrek’s digital healthcare platform is being developed to complete the distribution and sales channels, providing access for up to 1 million patients, 35,000 doctors and 4,000 pharmacists. The continued development of Cannatrek’s website and new digital platform will streamline the entire doctor-patient journey via an e-commerce platform, telehealth and compassionate access support services.

 

12 October 2020 - Media Release | Cannatrek releases first products in Australia and secures valuable export agreement with LYPHE Group in the UK - available here

Local and Global Opportunity

The medicinal cannabis market has had significant growth in recent years following legalisation for both recreational and medicinal use.  From a predominately “illicit market” product in 2010 it has expanded around the world to a market of ~US$11.7 billion in 2018 and is expected to grow to around US$148.35 billion per annum by the end of 2026 – a growth rate of 26.4% per annum1

This growth has largely been driven by markets in Canada and several states in the USA where recreational consumption has been legalised, and in countries like Australia, UK and Germany where it has been legalised for medicinal use.

The Australian medicinal cannabis market is experiencing strong growth.  Sales are expected to increase from $30 million in 2019 to $150 million in 2021 – a 5x increase2.

Recreational use in markets such as Canada is placing pressure on supply of medicinal cannabis. Consequently, there is a need for high-quality products with known components, cultivated at large scale for consistent, reliable supply in many markets around the world.

With advantageous climate conditions and excellent clean green standards, Australia is well placed to be a key supply centre for Asia Pacific (APAC) and world markets.

Differentiation

Cannatrek has differentiated itself in the market through a “lowest cost-to-patient” approach to address the problem that medicinal cannabis currently remains out of reach for many who need it.

Having established itself in the market as a reliable supplier, Cannatrek wholesales private label quality products to its competitors, as it reinforces supply chains in a sector challenged by shortages. The Company’s current inventory – supplied by global partners – will shortly be boosted by locally produced product, reducing the reliance on imported product.

In a market where the need for published results from prolonged clinical trials prevents competitors from being able to differentiate – price has become a major differentiator. Cannatrek’s unique position in the market allows it to grow its own stock and deliver the final product to the patient, removing all middle channels, and retaining a margin that sustains its competitiveness.

To date, Cannatrek has provided medicinal cannabis to more than 1,700 patients and sold 18,500 units via more than 135 doctors and 350 pharmacists.

Today, Cannatrek is on the verge of deploying a proprietary digital healthcare platform, which connects doctors, patients and pharmacists with the Company’s products. This reduces consultative and administrative bottlenecks, streamlining the entire medicinal cannabis journey for all parties.

Revenues of $1.4 million in FY20 and $2.1 million over the last twelve months (LTM) to 30 September 2020 have been generated from the sale of imported products.  Cannatrek is well placed to continue this growth with local full production at the Queensland production facility at projected lower costs and better margins. This growth will be supported by signed distribution and supply agreements with leading domestic and international medicinal cannabis players, and a market leading patient access platform.

Investment Highlights

Seed to patient model

  • Fully-integrated medicinal cannabis business model across all verticals, delivers improved business stability, better margins and superior price elasticity
  • Focused on production of high-grade medicinal cannabis products, at one of the lowest global production costs, for export to high-cost, high-margin countries, and for local markets
 

Significant production capacity

  • One of Australia’s largest operational and fully permitted 3,200m2 research and production facilities located in Queensland, with TGA approved product release to local and export markets
  • Annual production of up to 5 tonne, with potential annual revenue in excess of $20 million
  • Cannatrek’s 160,000m2 high-tech glass house facility under planned phased development near Shepparton, Victoria, has received Major Project Status (MPS) from Federal Government
  • This facility will produce an expected 160-200 tonne p.a. with potential annual revenue of $500 million or more
 

Established digital channels

  • Online patient access hub via cannatrek.com, provides access and information to doctors, pharmacists and patients
  • As at 30 September 2020, sold over 18,500 units to over 1,700 patients via 135 prescribing doctors and over 350 pharmacies
 

Offtake agreements

  • Large-scale domestic and international offtake agreements in place with reputable parties underpinning development plans
  • Local manufacturing agreement in place with Australian licenced operators for the extraction of oil from the raw biomass harvested
 

Strong revenue position

  • Revenue of $1.4 million in FY20 and $2.1 million over 12 months (LTM) to 30 September 2020 – significant uplift expected with full production at Queensland facility, and growth in patient access
  • Strong focus on minimising operating costs and expenditure, whilst maximising digital technology integration during rapid project deployment
 

Solid leadership & management

  • Guided by an experienced board and management team with expertise across all aspects of the medicinal cannabis value chain
  • Successfully raised approximately $17 million to date fully funding current operations
Footnotes

1 Reports and Data titled ‘Medical Marijuana Market By Product Type, By Route Of Administration, By Distribution Channel, By Medical Application, And Segment Forecasts, 2016-2026’ - September 2019

2 Freshleaf Analytics – Australian Medicinal Cannabis Market – Patient, Product and Pricing Analysis Q3 2020 - September 2020

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Medicinal cannabis leader in rapid growth mode, controlling the product lifecycle - "from seed to patient"

More Info

Cannatrek Limted is a leading Australian medicinal cannabis company, developing production, manufacturing and digital healthcare distribution assets across Australia and globally.  The Company has a full suite of medicinal cannabis licences, providing complete control of the entire supply-chain and product lifecycle – "from seed to patient".

 

With an operational 3,200m2 growing facility in Queensland, yielding market ready product in commercial quantities, Cannatrek is also rolling out a digital healthcare platform for patients and healthcare professionals to serve the rapidly growing Australian medicinal cannabis market.

 

Cannatrek’s vertically integrated business model is working towards near-term profitability and cashflow positive operations, including the development of a unique digital health platform.

 

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