SASKATOON, Saskatchewan & OAKVILLE, Ontario--(BUSINESS WIRE)--CanniMed Therapeutics Inc. (TSX: CMED) (“CanniMed”) and Up Cannabis Inc. (wholly-owned licensed producer of Newstrike Resources Ltd. TSX-V: HIP) (“Up Cannabis”) are pleased to announce that they have entered into a definitive Supply Agreement for a variety of medical cannabis strains. Among other things, the Supply Agreement will provide the raw material (whole bud material) required to meet the surging domestic and international demand for CanniMed oils and oil derivative products, including capsules. The two companies will also collaborate on a THC-rich, whole dried flower, medical cannabis product, demanded by patients.
Up Cannabis’ supply commitment under the agreement will be filled by a combination of its existing inventory of 970 kg of finished cannabis product together with ongoing production at its Brantford facility of the two cannabis strains commencing in early January 2018. Under the terms of the supply agreement, Up Cannabis will produce and make available to CanniMed up to 1,500 kg of cannabis, conditional on Up Cannabis receiving an amendment to its license to permit the sales of cannabis. The term of the agreement is 15 months, subject to renewal by the parties.
This agreement is just one example of the type of value-added synergies existing between the two companies, which when combined will create enormous benefit for shareholders, patients and, on the opening of the recreational adult-use market, Canadian consumers. It is anticipated over the course of this initial supply agreement, the contract could contribute roughly $15 million in revenue to CanniMed from oil sales, based on current market pricing of medical cannabis products.
“This is the first of many anticipated synergies between CanniMed and Up Cannabis, and demonstrates the accretive combined value of the two companies. With sales of CanniMed® 1:20 oil surging, this supply agreement allows continued growth to meet increasing demand for our medical cannabis products domestically and internationally,” said Brent Zettl, President and CEO, CanniMed. “Access to consistent supply is the key differentiator in today’s fast-growing medical cannabis market. Between CanniMed’s expanding facilities in Saskatoon and Up Cannabis’ Ontario operations we can supply both the medical and recreational market, with a projected 2019 combined production capacity of 45,000kg.”
Jay Wilgar, President and CEO of Up Cannabis, stated: “This supply agreement will allow us to officially begin sales of medical cannabis products under the CanniMed brand and collaborate on the development of new products for the medical market. Together with the CanniMed acquisition, this will position our collective team as a clear market leader. We are excited to embark further on our partnership together and to leverage our growing capabilities in Brantford and Niagara for our combined interests.”
About CanniMed Therapeutics Inc.
CanniMed is a Canadian-based, international plant biopharmaceutical company and a leader in the Canadian medical cannabis industry, with 17 years of pharmaceutical cannabis cultivation experience, state-of-the-art, GMP-compliant production process and world class research and development platforms with a wide range of pharmaceutical-grade cannabis products. In addition, the Company has an active plant biotechnology research and product development program focused on the production of plant-based materials for pharmaceutical, agricultural and environmental applications.
CanniMed, through its subsidiaries, was the first producer to be licensed under the Marihuana for Medical Purposes Regulations, the predecessor to the current Access to Cannabis for Medical Purposes Regulations. It was the sole supplier to Health Canada under the former medical cannabis system for 13 years, and has been producing safe and consistent medical cannabis for thousands of Canadian patients, with no incident of product diversion or recalls.
About Newstrike and Up Cannabis
Newstrike is the parent company of Up Cannabis, a licensed producer of cannabis. Newstrike, together with its strategic partners, is developing a diverse network of high quality cannabis brands. For more information visit www.up.ca or www.newstrike.ca.
Notice Regarding Forward Looking Statements
This news release contains forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of CanniMed and Newstrike to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
These forward-looking statements include, but are not limited to, statements relating to our expectations with respect to: the amendment of the cultivation license of Up Cannabis to allow for sales, projected oil sales revenue by CanniMed, the market for cannabis oils, the timing and outcome of the proposed acquisition of all the issued and outstanding common shares of Newstrike; the anticipated benefits of the agreement to the parties and their respective security holders; projected 2019 combined production capacity of 45,000kg of CanniMed and Newstrike; and impact of the supply agreement. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. In respect of the forward-looking statements and information concerning the cannabis supply agreement and anticipated benefits and completion of CanniMed’s acquisition of Newstrike, CanniMed and Newstrike have provided such statements and information in reliance on certain assumptions that they believe are reasonable at this time, including assumptions as to the amendment of Up Cannabis’ cultivation license to allow for sales; the ability of the parties to give effect to the supply agreement in a timely manner; the annual revenue to be generated by CanniMed from oil sales; and the receipt of all shareholder, regulatory and court approvals for CanniMed’s acquisition of Newstrike. There can be no assurance that the proposed transaction will occur, or that it will occur on the terms and conditions contemplated in this news release. The proposed supply agreement could be modified, restructured or terminated, the amendment of Up Cannabis’ license could be delayed, and the revenue to be generated from oil sales could be adversely affected by production or supply delays and changes in market prices. Moreover, the combined 2019 capacity of CanniMed and Newstrike assumes the completion of CanniMed’s acquisition of Newstrike and there is no certainty that the acquisition of Newstrike will receive all required approvals or will be completed. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this press release.
Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on other factors that could affect the operations or financial results of CanniMed and the completion of its acquisition of Newstrike are included in documents on file with applicable securities regulatory authorities, including the management information circular of CanniMed dated December 8, 2017, available on sedar.com.
The forward-looking statements contained in this news release are made as of the date of this release and, accordingly, are subject to change after such date. CanniMed and Newstrike do not assume any obligation to update or revise any forward-looking statements, whether written or oral, that may be made from time to time by us or on our behalf, except as required by applicable law.
None of the Toronto Stock Exchange, TSX Venture Exchange and their Regulation Services Providers accept responsibility for the adequacy or accuracy of this release.