MediPharm Labs Signs $35 Million Private Label Cannabis Oil Sale Agreement with Option for Additional $13.5 Million
February 12 2019 - 5:30AM
MediPharm Labs Corp. (TSXV: LABS) (OTCQB: MLCPF) (“MediPharm”) a
leader in specialized, research-driven cannabis extraction and
cannabinoid isolation, is pleased to announce that its wholly-owned
subsidiary, MediPharm Labs Inc. (“MediPharm Labs” or the
“Company”), has entered into a significant sales agreement with a
leading Licensed Producer to supply approximately $35 million of
private label purified cannabis oil concentrates. Under the terms
of the agreement, the Licensed Producer will immediately purchase
upfront $7.66 million of cannabis oil concentrate from MediPharm
Labs’ inventory in February 2019. In addition, the Licensed
Producer will purchase a minimum of $27 million of cannabis oil
concentrate over a 12-month period commencing March 2019, with an
option to purchase an additional $13.5 million over the same
period, bringing the total potential aggregate value of the
agreement to over $48 million to February 2020.
MediPharm Labs’ private label program is a high
margin business for the Company, whereby it opportunistically
procures dry cannabis flower and trim from its thirteen product
supply partners, to produce proprietary cannabis oil concentrate
products for resale globally on a private label basis. This is
MediPharm Labs’ fourth private label sales agreement to date. In
total, these four agreements have aggregate potential value of over
$85 million in the 15-month period that commenced December
2018.
“As the cannabis industry continues to rapidly
grow and evolve, MediPharm Labs has quickly established itself as a
dominant player and leading provider of private label cannabis oil
concentrates to other Licensed Producers and branded product
manufacturers. We have also demonstrated the permanent need for a
specialized extraction provider to fulfill and secure the cannabis
supply chain for medical and recreational consumers,” said Pat
McCutcheon, CEO of MediPharm Labs. “With our significant first
mover advantage, deep expertise, leading-edge proprietary
technology to manufacture and develop high-quality cannabis oil and
concentrate products at commercial scale, we have quickly been able
to execute several major contracts already and continue to see
robust demand for our specialized products and services and are
well positioned to achieve strong revenue growth as a dominant
extraction company in the cannabis industry.”
As an agnostic supplier of pharmaceutical grade
cannabis oil concentrates to the global cannabis industry,
MediPharm Labs has demonstrated its ability to strengthen and
further secure the domestic supply chain for high-demand cannabis
oil. This new supply agreement, combined with a large, long-term
oil supply agreement previously announced with Canopy Growth
Corporation, represents less than 10% of MediPharm Labs’ annual
extraction capacity of 150,000 Kg, which is currently being
expanded to 250,000 Kg of annual extraction capacity, with
completion expected Q2 2019.
To date, MediPharm Labs has completed four
private label wholesale agreements for cannabis oil concentrate
supply (including Canopy Growth Corporation); five long-term
cannabis concentrate program (tolling) agreements with James E.
Wagner Cultivation Corp., Emerald Health Therapeutics, Inc., INDIVA
Limited, The Supreme Cannabis Company, Inc. and TerrAscend
Corp. Additionally, the Company has completed bulk purchases
and/or off-take agreements with thirteen Licensed Producers
securing dried cannabis supply to build MediPharm’s oil inventories
for private label sale. The Company also continues to make progress
on new partnership agreements with additional Licensed Producers
and branded product manufacturers for cannabis private label
manufacturing, as well as partnerships to purchase cannabis
concentrates for global export for private label and research and
development.
About MediPharm Labs
Corp.Founded in 2015, MediPharm Labs is a pioneer in the
cannabis industry and has the distinction of being the first
company in Canada to become a licensed producer for cannabis oil
production under the Access to Cannabis for Medical Purposes
Regulations (ACMPR) without first receiving a cannabis cultivation
licence. This expert focus on cannabis concentrates from its cGMP
(current Good Manufacturing Practices) and ISO standard-built clean
rooms and critical environments laboratory, allows MediPharm Labs
to work with its established, Health Canada-approved cultivation
partners to produce pharmaceutical-grade cannabis oil with a
competitive advantage. MediPharm Labs is research-driven and
focused on downstream secondary extraction methodology,
distillation, and cannabinoid isolation and purification. MediPharm
Labs provides B2B contract processing of cannabis to Canadian
authorized licensed producers and appropriate international
growers, supplying integrity-assured cannabis oil to qualified
companies for sale under their own brand. In addition, MediPharm
Labs will supply raw materials, formulations, processing and
packaging for the creation of ready-to-sell advanced derivative
products. MediPharm Labs was awarded Start-up of the
Year at the recent Canadian Cannabis Awards hosted by Lift
& Co.
Through its subsidiary, MediPharm Labs Australia
Pty. Ltd., MediPharm has also completed its application process
with the federal Office of Drug Control to extract and import
medical cannabis products in Australia.
For
further information, please contact: |
Laura
Lepore, Vice President, Investor Relations &
Communications |
Telephone: |
705-719-7425 ext
216 |
Email: |
investors@medipharmlabs.com |
Website: |
www.medipharmlabs.com |
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FORWARD-LOOKING INFORMATION:This news release contains
“forward-looking information” and “forward-looking statements”
(collectively, “forward-looking statements”) within the meaning of
the applicable Canadian securities legislation. All statements,
other than statements of historical fact, are forward-looking
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as at the date of this news release. Any statement that involves
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“may” or “could”, “would”, “might” or “will” be taken to occur or
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forward-looking statements. In this news release, forward-looking
statements relate to, among other things, strong revenue growth,
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establishment of operations in Australia. Forward-looking
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and unknown risks, uncertainties, and other factors which may cause
the actual results and future events to differ materially from
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factors include, but are not limited to: general business,
economic, competitive, political and social uncertainties; the
inability of MediPharm to obtain adequate financing; and the delay
or failure to receive regulatory approvals. There can be no
assurance that such statements will prove to be accurate, as actual
results and future events could differ materially from those
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place undue reliance on the forward-looking statements and
information contained in this news release. Except as required by
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