Tag: $CPH

Creso Pharma’s wholly-owned psychedelics subsidiary, Halucenex Life Sciences Inc. making progress ahead of its planned Phase II clinical trials

Highlights:

• Following strong inbound interest, Halucenex has made the strategic decision to broaden the scope of its planned phase II clinical trial and apply for a further amendment to its Clinical Trial Authorisation (“CTA”) from Health Canada
• If granted, the updated CTA will allow Halucenex to include cohorts using Selective Serotonin Reuptake Inhibitors and not require patients to cease using prescribed medications a week prior to trial commencement
• A broadened CTA would provide Halucenex with additional trial data, allow a larger spectrum of patients and valuable insight into how psilocybin interacts with other medications
• Appointment of KGK Science Inc. (“KGK”) as contract research organisation provides additional expertise in a more cost effective manner KGK is a premium full service research organisation dedicated to providing clinical trial research that meets the highest quality standards
• Doctor of medicine and neurologist Dr Gosia Eve Phillips, MD, DABPN appointed as Principal Investigator
• Dr Phillips is an esteemed medical professional and has educational training from the University of Massachusetts Medical School, Columbia University and Harvard University
• Final submissions to ethics review board made and are now pending ethics approval

Creso Pharma Limited (ASX:CPH, OTC:COPHF, FRA:1X8) (‘Creso Pharma’ or ‘the Company’) is pleased to advise that wholly-owned, Canadian based psychedelics company, Halucenex Life Sciences Inc. (“Halucenex”) has executed on a number of milestones making progress ahead of its planned phase II clinical trials to test the efficacy of psilocybin on treatment resistant Post Traumatic Stress Disorder (PTSD).

Application for amendments to Clinical Trial Authorisation (“CTA”) from Health Canada:
Following a material number of enquiries from potential trial participants, Halucenex has made the strategic decision to apply for amendments to its currently approved CTA (refer ASX announcement: 28 February 2022) to include cohorts that are currently utilising Selective Serotonin Reuptake Inhibitors (SSRIs) and not require potential patients to stop using prescribed medications for a week prior to the potential Phase II trials’ commencement. The decision comes following ongoing engagement with potential patients, veterans affairs groups and the general public and will broaden the scope of the planned clinical trials. It will also provide Halucenex with additional data on how psilocybin interacts when used in combination with other medication commonly used by PTSD sufferers.

The Company anticipates that the receipt of an amended CTA should occur shortly, and subject to ethics approval, this will allow Halucenex to complete patient recruitment initiatives and begin administering first dosages.

Appointment of KGK Science Inc. as contract research organisation:
Following an ongoing review of service providers, Halucenex has also engaged leading research organisation, KGK Science Inc. (“KGK”)to assist with clinical trial initiatives. As a premium full-service contract research organisation, KGK is dedicated to providing clinical trial research that meets the highest quality standards. Led by a team of scientific research and regulatory experts, KGK combines cutting-edge clinical science with industry expertise to design clinical trials and claim substantiation strategies customised to meet the needs of clients. The Company has made the decision to appoint KGK following a review of clinical trial service providers. KGK will replace previously appointed investigator True North Clinical Research (refer ASX announcement: 17 March 2021), due to the group’s expertise in pharmaceuticals and natural health products and cost effectiveness.

Under its research services agreement with Halucenex, KGK will perform research services, including the development of the clinical trial protocol, preparations towards the Phase II clinical trials, data management and validation, statistical analysis and drafting of the final report (“Services”), for which the total set compensation payable to KGK by Halucenex will be CAD$339,440. The term of the Agreement will run until KGK has completed all services contemplated under the Agreement (“Expiry”), unless KGK terminates the Services at any time by providing Halucenex with 30 days of notice before the Expiry.

Dr Gosia Eve Phillips, MD, DABPN appointed as Principal Investigator:
Dr Phillips is a doctor of medicine and certified neurologist. She earned her Doctor of Medicine in 2001 and has also undertaken various educational practises through the University of Massachusetts Medical School, Columbia University and the Beth Israel Deaconess Medical Centre, Harvard University. Dr Phillips’ certifications include a licentiate of the Medical Council of Canada, a Diplomate, American Board of Psychiatry and Neurology, as well as a Diplomate, American Board of psychiatry and Neurology (subspecialty sleep medicine).

She has been recognised through the receipt of a number of awards including The Nickols Award, Department of Neurology, University of Massachusetts, The Practice-Based Learning Award, Department of Neurology, University of Massachusetts and The Professional Competency Award, Department of Neurology, University of Massachusetts.
As Principal Investigator, Dr Phillips will assist the Company as the physician leading the conduct of the clinical trial at the study site. Halucenex will leverage her extensive experience and background during additional trial preparation initiatives, throughout the trial and following to progress potential research or cooperative grants with government bodies and other large pharmaceutical companies. Final submissions made to Ethics Review Board: Halucenex has also successfully lodged its final submissions with the Ethics Review Board, on which an outcome is expected shortly. Ethics approval is a key component to the research process, which protects both patients and researchers during the initiative. The approval would be a major milestone for the Company and is expected to assist any future R&D initiatives undertaken by Halucenex in the ongoing use of psilocybin across various conditions.

Commentary:
Halucenex CEO and Founder Mr Bill Fleming said: “In the recent months, Halucenex has made considerable progress towards the commencement of what has the potential to be a ground-breaking research initiative. We have been completely inundated from several groups regarding potential participation in the study, highlighting the demand for an alternative treatment solution to pharmacological interventions. Further, by lodging an application to extend the scope of our CTA, we are expecting benefits from the additional data that the broadened scope will provide, including observing how psilocybin interacts with other medication being used as treatment for PTSD.

“We are confident that the appointment of both KGK and Dr Phillips will also be beneficial for the Company. KGK has extensive experience with pharmaceutical drug testing and development and provides a much more cost effective service offering. The appointment of someone as esteemed as Dr Phillips is also a great development for Halucenex. We look forward to working with both parties in the coming weeks.

“The Board and management will continue working with the independent ethics board and Health Canada for final approvals and expect additional updates to materialise shortly.”

Heads of Agreement secured with leading pharma and healthcare
products company, China Chemical & Pharmaceutical Co., Ltd.
(“CCPC”) to launch Sierra Sage Herbs LLC (“SSH”) products for
Taiwanese animal healthcare market

Highlights:

• Creso Pharma secures non-binding, non-exclusive Heads of Agreement (“HoA”) with China Chemical & Pharmaceutical Co., Ltd. (“CCPC”) (1701.TW)
• This HoA provides potential for access to the rapidly growing Taiwanese animal healthcare market and underpins Creso Pharma’s international expansion
• CCPC is focused on innovation, research & development, and manufacturing of pharmaceutical and healthcare products for use in humans and animals
• CCPC is a publicly traded company on the Taiwan Stock Exchange, with a market capitalisation of over A$321Mi
• CCPC has a dedicated animal healthcare division and sales team which works directly with veterinarians throughout Taiwan
• Products to be selected from the Sierra Sage Herbs range with initial focus on SSH’s innovative, plant-based Animal First Aid
• HoA has the potential to provide scope for Creso Pharma and CCPC to expand the range of current and future products for collaboration
• Creso Pharma and CCPC are working towards establishing a Collaborative Agreement on or before 31 August 2022, unless extended by agreement between the parties
• Taiwan has a growing petcare market – spending on pet care related products, which rose from US$283.2m to US$402.9m in 2019ii

Creso Pharma Limited (ASX:CPH, OTC:COPHF, FRA:1X8) (‘Creso Pharma’ or ‘the Company’)
is pleased to advise that it has secured a non-binding, non-exclusive Heads of Agreement (“HoA”) with leading pharma and healthcare products company, China Chemical & Pharmaceutical Co., Ltd. (“CCPC”) for the introduction of Sierra Sage Herbs LLC products to the Taiwanese animal healthcare market. The HoA intends to broaden Creso Pharma’s international exposure and provides the Company with an established in-country partner to potentially drive sales growth.

Founded in 1952, China Chemical & Pharmaceutical Co., Ltd. is a publicly listed company
(1701.TW), with a market capitalisation of ~A$321Mi The company is dedicated to innovation, research and development, and manufacturing of pharmaceutical and healthcare products for use in humans and animals. CCPC has its own in-house sales team directly servicing veterinary clinics with animal medications throughout Taiwan.

Under the HoA, the parties have agreed to enter into a Collaborative Agreement on or before 31 August 2022 (“Expiration Date”), with the parties being able to extend this timeframe by mutual agreement (“Collaborative Agreement”). The HoA can be terminated upon either party giving written notice at any time prior to the execution of a Collaborative Agreement. There has been no consideration set between the parties under the HoA.
This Collaborative Agreement is intended to set out the terms upon which Creso Pharma and CCPC will:

1. Commercialise select products from Creso Pharma’s target acquisition company, Sierra Sage Herbs’ (SSH) pet care product range in the Taiwanese market. The initial focus will be on SSH’s Animal First Aid product.
2. Explore further commercialisation options for current and future innovative products.
   Product interest extends to Animal Pain Relief, Animal Castile Wash, Bugs Be Gone and
   potential future innovative products from SSH/Creso Pharma’s product development
   pipeline.

The pet care market presents a market opportunity for Creso Pharma and SSH, due to the increase in more young Taiwanese choosing to own and raise pets instead of having childrenii. This has led to considerable increased spending on pet care related products, which rose from US$283.2m to US$402.9m in 2019iii.

About Sierra Sage Herbs Pet Care Products

SSH salves are fundamentally different from other products on the market. SSH’s herbs are
carefully sourced from organic farmers, with the products’ defining characteristic being a lipidinfusion process. Rather than using pre-made extracts, SSH infuses fresh and dried herbs in organic oils over low heat for an extended amount of time to maximise the potency and purity of the products.

Green Goo Animal First Aid’s powerful formula is fortified with calendula, yarrow, and comfrey to help soothe and repair minor wounds. It’s portable first aid for all domesticated animals.

Green Goo Animal First Aid: First SSH product planned for launch in Taiwan.

Commentary:

CEO and Managing Director of Creso Pharma, William Lay said: “CCPC is one of Taiwan’s
leading healthcare companies. Their products are widely used in hospitals and households
throughout Taiwan, which has led them to becoming a trusted provider. We’re delighted to
collaborate with such a great partner on developing a brand new market for our animal care
products. We view this development as a testament to the broader opportunity we see for the Green Goo range in other international markets.”

CEO and Co-Founder of Sierra Sage Herbs Jodi Scott said: “Pet parents love our Green Goo
products because they are all natural, plant based and highly effective. We’re delighted with the feedback we have received from product evaluations in Taiwan and are grateful for the great work done by CCPC to get us to this stage.”

Director of Animal Health Division of CCPC, Jason Wang said: “We are delighted to reach this milestone in our collaboration with Creso Pharma. The all-natural Green Goo product range is right on trend with expectations from pet owners in Taiwan and we are committed to maximising the potential of these great products.”

US House of Representatives passes the MORE Act – Creso Pharma continues to progress opportunities to capitalise on further US legislative change to legalise cannabis

Highlights:

• Marijuana Opportunity Reinvestment and Expungement (“MORE”) Act passed through the House of Representativesi – a major step towards federal legalisation of cannabis in the US
• Lawmakers approved the measure in a 220-204 vote on Friday, 1 April 2020 (US time)i
• The MORE Act is designed to remove cannabis from the US Controlled Substances Act and erase certain federal convictions
• The passing of the MORE Act into law would be expected to encourage broader investment and corporate activity in the US cannabis industry
• The passing of the Act through the House of Representatives takes it one step closer to making it into law, with the passing in the Senate still one requirement for it to become law.
• The MORE Act proposed a tax on cannabis sales which would be used to fund job training, mentoring, legal aid and other initiatives beneficial for socially and economically disadvantaged groups
• US cannabis market is anticipated to grow to US$130Bn by 2024ii – provides Creso Pharma with significant value accretive opportunities
• The passing of the MORE Act is extremely encouraging given Creso has increased its focus to the US market, with the pending acquisition of Denver based Sierra Sage Herbs.
• Following the closing of the Sierra Sage Herbs acquisition, Creso Pharma will be one of the only ASX-listed companies with established North American operations focused on the cannabis sector and any additional positive legislation changes such as the MORE Act have the potential to further benefit Creso
• Work towards proposed NASDAQ dual-listing continues to progress
• Several other US focused growth initiatives continue ahead of potential decriminalisation

Creso Pharma Limited (ASX:CPH, OTC:COPHF, FRA:1X8) (‘Creso Pharma’ or ‘the Company’) is pleased to provide an update on initiatives that will allow the Company to capitalise on the recent developments associated with the Marijuana Opportunity Reinvestment and Expungement (“MORE”) Act, which passed through the US House of Representatives on Friday, 1 April 2022 (US time). This highlights a major milestone in the potential decriminalisation of cannabis in the US on a federal level.

The MORE Act aims to remove cannabis from the US Controlled Substances Act. Should the Act also pass the Senate and ultimately be made into law, it would also erase certain federal convictions and essentially decriminalise cannabis for the first time, on a federal level. The MORE Act was passed by lawmakers in a 202-204 vote.

The new legislation provides Creso Pharma with a number of near term and significant opportunities to capitalise on a market that is anticipated to reach US$130Bn in sales by 2024ii.

Creso Pharma already has an established foothold in the US CBD market through its recent agreement with Sierra Sage Herbs, LLC (“SSH”) (Refer ASX announcement: 3 February 2022).

Upon completion of the SSH transaction, Creso Pharma will have an operating subsidiary in the US, which could serve as a platform for future M&A in the US THC sector, upon changes in federal legislation. Creso Pharma board members, William Lay, and Bruce Linton have extensive experience in this sector, having conducted over C$5Bn of M&A in the US THC segment specifically. The board and management team continuously monitor the regulatory landscape in order to be able to act quickly if and when regulations change.
Additionally, Creso Pharma’s Canadian subsidiary, Mernova Medicinal, produces industry leading THC products in Canada. If changes in regulations were to allow Creso Pharma to acquire US THC entities, the Company would leverage its leading standard operating procedures to ensure availability of products with similar quality levels in the US.

The Company wishes to advise that work towards its proposed NASDAQ dual listing (Refer ASX announcement: 31 August 2021) continues to progress pleasingly. Board and management are in

ongoing discussions with US consultants and advisors and are confident that the proposed dual listing will unlock considerable value for shareholders.

Commentary:
CEO and Managing Director Mr William Lay said: “The passing of the MORE Act through the House of Representatives is a positive development for cannabis legalisation. It highlights the ongoing shift and major acceptance of cannabis products and their use in the US, as well as the potential market opportunity that Creso Pharma can immediately capitalise on if the bill is passed into law.

“In planning for a scenario where the bill passes through the Senate, we have continued to work diligently to monitor the US market and identify opportunities to unlock value for shareholders. The Company also has contingency plans in place which may allow for exposure to the US market in a scenario where the MORE Act is not passed into law.

“We look forward to providing shareholders with additional updates over the coming months.”

Creso Pharma’s wholly-owned Canadian subsidiary, Mernova Medicinal Inc. reaches significant market share milestone and materially improves plant yields

Highlights:

• Strong sales growth continues in Nova Scotia – 5% market share achieved in the province across all product formats, market share as high as ~15% in some categories
• New FLUENCE SPYDR lighting installed in two of ten grow rooms at Mernova’s grow facility alongside improved nutrition products in all rooms; first room harvested with both new lights and nutrition products indicates an increase in plant yield of approximately 56%
• Remaining grow rooms to be retrofitted with FLUENCE SPYDR lights over course of FY22
• Improvements will allow Mernova to increase volumes and decrease cost per gram, benefiting from operating leverage
• Management team strengthened with the appointment of Mrs Micheline MacKay as Mernova’s managing director
• As a Creso Pharma Executive Director, the appointment of Mrs MacKay will further consolidate the Creso Pharma board and Mernova senior management team link

Creso Pharma Limited (ASX:CPH, OTC:COPHF, FRA:1X8) (‘Creso Pharma’ or ‘the Company’) is pleased to provide the following update on progress made through wholly-owned, Canadian subsidiary Mernova Medicinal Inc. (“Mernova”).

Mernova recently achieved a major milestone, achieving a market share of >5% in its home province of Nova Scotia for the first time during the week of 28 February through 6 March 2022. This milestone follows a consistent trend of increased sales in Nova Scotia since the end of Q2 2021 (refer to below chart). Ongoing sales growth is attributable to Mernova’s Ritual Green brand positioning as a premium product at a reasonable price, as well as the efforts of Mernova’s sales and marketing team, and Product Knowledge (“PK”) sessions conducted with budtenders and managers at individual dispensaries extensively throughout Nova Scotia since Q2 2021. The Company is now expanding the
PK training approach to new markets, with the objective of emulating the growth witnessed in Nova Scotia.

Additionally, Mernova’s market share in the product categories in which it participates in Nova Scotia (dried flower and pre-rolls only) is 7.9%, and its market share in the specific product formats that it offers (dried flower in 3.5g format and pre-rolls) is 14.6% (refer to below table).

This data further highlights the opportunity for additional growth presented by the upcoming introduction of the Ritual Gold oil vape product range (refer to ASX announcement: 21 February 2022) which will expand the Company’s product offering in Nova Scotia and is expected to launch in late Q2 or early Q3 of 2022. A January report from ATB Capital Markets estimated that the value of the Canadian recreational cannabis market will grow to C$4.8 billion in 2022, an increase of 19% from an estimated C$4.0 billion in 2021.

Separately, Mernova personnel have also progressed several initiatives to further improve its growing process to increase plant yield and quality. These activities consisted of investments in higher quality nutrition products, irrigation system upgrades and new FLUENCE SPYDR lighting.

The Company has completed its first harvest and drying process of a batch of its high-THC Black Mamba strain from a growing room with both the new lighting and nutrition products. The total yield of trimmed dried flower from this batch was a 56% increase in yield vs. the average of the 14 previous batches of Black Mamba harvested prior to the new lighting and nutrition.

The new lighting has now been installed in two grow rooms in the facility with the remainder of the rooms expected to be retrofitted over the course of FY2022. Upsurge in yield not only increases the total product available for sale, but also reduces the cost of growing on a per gram basis, given a high proportion of fixed costs within the growing process.

To underpin the Company’s rapid upward trajectory, recently appointed Creso Pharma Executive Director Mrs Micheline MacKay has also been appointed the Managing Director of Mernova. This provides a stronger link between the Creso Pharma board and the senior management team at Mernova.

Mrs MacKay has 22 years of experience in regulatory environments, including pharmaceuticals, medical devices, and government regulated industries. Her appointment will see her managing all business aspects for Mernova, and overseeing all operational areas including strategy, budgeting, forecasting, tracking and growth.

CEO and Managing Director, Mr William Lay said: “I’m incredibly encouraged by the progress our team has made with sales in Nova Scotia. To reach ~15% market share within certain sub-categories is a testament to the quality of our products, and the hard work and dedication of our production staff and sales and marketing team. We look forward to taking our successful Nova Scotia approach and methodologies to other markets as we target further sales growth. These figures also highlight the opportunity presented by the Ritual Gold oil vape range which will come to market later this year.

“Separately, I’m very pleased to see the ongoing improvements to our growing processes leading to such a significant increase in crop yield. By improving these processes, we will be able to take advantage of operating leverage as we push towards profitability in this business unit, which I view as a critical key performance indicator.”

“I’d also like to congratulate Micheline on her new role within Mernova. Micheline has been a strong contributor to our business over the last few years, has a tremendous work ethic and is the ideal person to lead the continued growth of this business unit.”

Significant progress made with Sierra Sage Herbs LLC to unlock United States product sales and manufacturing

Highlights:

• 35,000 CannaQIX 50 lozenge products from Creso Pharma Switzerland to be sent to Sierra Sage Herbs LLC (SSH) for initial sales run and, test and learn initiatives
• SSH to market and distribute CannaQIX products under leading CBD-focused Good Goo brand
• Product to initially launch through SSH’s ecommerce channels – the group has an established online customer base of over 150,000 consumers
• SSH’s online sales continue to grow pleasingly – ecommerce sales up 69% to date since 3 February 2022
• Customer online shopping sessions increased by 62% in the same period with a 3% conversion rate
• SSH has generated over 3.1m online impressions between 6 February 2022 and 7 March 2022 – highlights strong online presence ahead of sale of Creso Pharma products
• Sales anticipated to commence shortly, with objective to test consumer demand and preferences prior to closing of SSH and Creso transaction (expected Q2 2022), after which larger scale sales and manufacturing will commence
• SSH’s US based contract manufacturer has been able to prepare samples of ImpACTIVE product for review
• Upon finalisation of these formulations, ImpACTIVE sales anticipated to launch in Q2 2022
• Creso Pharma to leverage SSH’s contract manufacturer to expedite product manufacturing and lower overheads
• Ongoing value accretive opportunities between Creso Pharma and SSH being explored with additional developments expected shortly

Creso Pharma Limited (ASX:CPH, OTC:COPHF, FRA:1X8) (‘Creso Pharma’ or ‘the Company’) is pleased to advise that it has progressed a number of cross selling opportunities and contract manufacturing initiatives between existing subsidiary companies and its proposed acquisition target, Sierra Sage Herbs LLC (“SSH”) (refer ASX announcement: 3 February 2022). These developments have the potential to increase Creso Pharma’s sales footprint in the US, as well as expedite new product launches.

Creso Pharma Switzerland products to be sold through SSH’s leading Good Goo brand:
To progress potential cross selling opportunities across business divisions, the Company will shortly send 35,000 CannaQIX 50 lozenge products from Creso Pharma Switzerland to SSH which will be made available for sale through its leading Good Goo brand.

CannaQIX is Creso Pharma’s unique, standardised nutraceutical product containing hemp oil, vitamins and zinc, delivered in a sugar free lozenge formulation. The product is developed in Switzerland, with an innovative buccal delivery system that provides rapid absorption and high bioavailability.

The initial shipment to SSH will be sold under the group’s established Good Goo brand, which is focused on the marketing and sale of CBD-based products, with added hemp extract CBD for additional health benefits.

The cannaQIX 50 lozenges will be rebranded under the Good Goo brand and launched on SSH’s ecommerce channels. SSH has a strong online sales presence, having serviced over 150,000 customers across the US.

SSH has continued to significantly increase its online sales presence in the recent weeks. The group has achieved a 69% increase in online sales from 3 February 2022 to date, with customer online store sessions rising by 62% with a 3% conversion rate. This follows a significant increase in online mpressions to 3.1m between 6 February 2022 and 7 March 2022i
.
Creso Pharma is confident that this initial product launch will provide insight into consumer demand for its Swiss-manufactured product in the US and build a strong foundation for future product launches through SSH’s ecommerce channels. Both SSH and the Company are continuing to progress potential retail agreements for Creso Pharma Switzerland products, leveraging SSH’s established elationships with major US retail groups across the country.

Contract manufacturing of ImpACTIVE products in the US:
To progress product development and lower overheads associated with manufacturing, both Creso Pharma and SSH have completed sample contract manufacturing of a suite of sport CBD-based products through SSH’s existing contract manufacturer in the US. The products are now being shipped to ImpACTIVE in Canada, ahead of a proposed launch in Q2 2022.

SSH’s contract manufacturer has a dedicated product line set up for the group, which Creso Pharma plans to utilise for ImpACTIVE products which has the potential to lead to lower lead times on orders and more favourable order quantities compared to the Company’s existing manufacturers.

Creso Pharma and SSH continue to collaborate on opportunities to launch the ImpACTIVE brand across SSH’s established ecommerce channels and through key retail relationships over the coming months.

Management commentary:
CEO and Managing Director Mr William Lay said: “Our work with the team at Sierra Sage Herbs has continued to progress significantly ahead of the completion of the proposed acquisition. Over the last few weeks, we have been working with Jodi and her management team to progress initiatives that will allow Creso Pharma to commence a number of value accretive initiatives on closing of the transaction.

“The initial shipment of Creso Pharma Switzerland products marks an important milestone and will allow us to test the market, as well as learn how consumers will engage with the Company’s product suite. This will build an important foundation for us as we progress towards larger product launches upon closing of the transaction.”

“We are also very pleased with the completion of an initial ImpACTIVE product line through the group’s contract manufacturer. By leveraging SSH’s manufacturing relationships, as well as marketing, branding, e-commerce and big box retailer expertise and networks, we expect to significantly accelerate impACTIVE’s route to market. We anticipate to launch these products to consumers in the coming months, which will provide another revenue stream for the Company.”

Creso Pharma’s wholly-owned Canadian subsidiary, Mernova Medicinal Inc. progressing new product development, ongoing sales growth, and Canadian expansion opportunities

Highlights:

Launch of Ritual Gold – Mernova’s new vaporiser products:

• New one gram vaporiser product is expected to be sold to new and existing provincial partners in Canada during H2 CY2022
• Product utilises cannabis flower trim inventory and other biomass which are not optimal for retail sale – providing opportunity to increase sales across the division on an attractive margin basis
• 150kg of biomass prepared and ready to be sent to specialized manufacturer – will result in approximately 15,000 1g vape units
• Preparation for product registration and regulatory approval to begin concurrently to support expedited sales
• Global cannabis vaporiser market anticipated to reach a value of over US15.77Bn by 2028i

Ongoing sales growth in Nova Scotia:

• Mernova recently reached a record weekly retail market share in Nova Scotia of 4.8% with weekly sales over C$95,000 (A$104,429ii) during the weeks of both of 17 January and 3 January
• Strong demand witnessed from several provincial partners with sustained high performance in Nova Scotia

Expansion into a new province to broaden footprint:

• Mernova enters Saskatchewan via purchase order totalling C$57,000 (A$62,657iii). Saskatchewan is the fifth province in which Mernova has commenced sales of its leading, high-THC Ritual brands
• Saskatchewan is a lucrative market, with no cap on the number of cannabis retail stores and monthly cannabis sales of upwards of C$13.4miv
• Additional province expansion anticipated in coming months

Creso Pharma Limited (ASX:CPH, OTC:COPHF, FRA:1X8) (‘Creso Pharma’ or ‘the Company’) is pleased to provide the following update on progress made through wholly-owned, Canadian subsidiary Mernova Medicinal Inc. (“Mernova”), including product development initiatives through the preparation for a launch of a new range of vaporisers which is expected to drive increased revenue and incremental gross margin, as well as ongoing sales growth and provincial expansion in Canada.

Mernova vaporiser range:

The Company advises that it is preparing the launch of a new handheld vaporiser product, which will be sold under the Ritual Gold (or similar) brand. This will provide Creso Pharma with an entry point into the global cannabis vaporiser market, which is expected to reach a value of over US$15.77Bn by 2031v.

The new range will utilise Mernova’s top-quality, indoor grown, hand trimmed, hang dried, cured, artisanal, high-THC, craft cannabis flower which will be manufactured into one gram vape cartridges.

The range will use cannabis trim and other biomass which are not optimal for retail sale, resulting in potentially increased revenue from unused inventory. Mernova’s production process produces trim as a by-product, therefore providing a consistent supply of high-quality material for future vape production runs.

Mernova has prepared an initial 150kg of biomass of its leading Lemon Haze strain for shipment to its specialized vape manufacturer, which will equate to approximately 15,000 one gram vape cartridges.

Product registration with the provinces and Health Canada regulatory approval initiatives will occur concurrently with production; the Company expects to be able to commence sale of the new range during H2 CY2022.

Creso Pharma has been in discussions with potential provincial customers regarding the new range and early-stage interest is very encouraging. Mernova will leverage its leading brand and existing market footprint to initiate and drive sales growth of Ritual Gold once regulatory milestones have been achieved.

Ongoing sales growth in Nova Scotia:

Mernova has continued to witness strong sales through its established provincial groups which include the Yukon, New Brunswick and Ontario, as well as Nova Scotia. Most recently, the Company has achieved weekly sales of greater than C$95,000 (A$104,429vi) in Nova Scotia for the weeks of 17 January and 31 January, which equated to a 4.8% market share. The incremental increase in total market share highlights a record for the Company up from the previous record of 4.5% (refer ASX announcement: 31 January 2022).

Mernova continues to work with its established provincial partners and licenced wholesale groups to drive recreational cannabis sales. Additional purchase orders are anticipated in the coming weeks from all five provinces.

New province entry increases Canadian footprint:

Mernova advises that it has secured a purchase order from Saskatchewan totalling C$57,000 (A$62,657vii), highlighting the group’s entry into this market. Saskatchewan marks the fifth Canadian province into which Mernova has progressed sales of its Ritual
Green and Ritual Sticks product range. The new province is a lucrative market, with no cap on the number of cannabis retail stores and monthly cannabis sales upwards of C$13.4mviii.

Mernova is progressing multiple initiatives to grow market share in Saskatchewan and establish a presence with new customers and cannabis retailers in the region. Additionally, the company is currently pursuing new additional provinces for near term expansion.

Commentary:

CEO and Managing Director Mr William Lay said: “Mernova continues to progress, leveraging industry leading cannabis quality, and we anticipate that the launch of the Ritual Gold range will provide another revenue generating activity for the group.
“Importantly, the Ritual Gold range will utilise cannabis inventory and production by-products which are not optimal in their pre-processed form for retail channels. This will allow the Company to introduce a new product category that is expected to provide incremental revenue at high gross margins.

“Our recent progress in Nova Scotia highlights the ongoing demand we are witnessing for our high-THC products. and we are also excited to have entered the Saskatchewan market.

The Company is in well progressed discussions with further provincial partners, which would allow Mernova to further expand its distribution channels.”