BCC to Enter Into Joint Venture With Israeli Pharmaceutical Company Panaxia
Differentiation into high-growth market segment under new “Salus Bio-Pharma” brand
JV will launch in Arizona & Massachusetts and, post closing of the acquisitions, in Nevada and Maryland.
TORONTO and TEL AVIV, Israel, Aug. 22, 2017 (GLOBE NEWSWIRE) -- The Canadian Bioceutical Corporation (the “Company” or “BCC”) (CSE:BCC) (OTCQB:CBICF) today announced the signing of a Term Sheet outlining the binding conditions under which it will enter into a Joint Venture (JV) agreement with Panaxia Pharmaceutical Industries Ltd. (“Panaxia”). Under the terms of the agreement, Panaxia will be providing proprietary, smokeless, pharma-grade cannabis-based products that have been proven to be in high demand, but have not been readily available in the U.S.
The products will be produced at BCC-operated locations under licenses owned or managed by the Company. BCC will also provide the raw cannabinoid materials for final product assembly, as well as be responsible for sales and marketing of these products through its Health for Life dispensaries and its wholesale channels. Panaxia will provide the capital and equipment to build out and equip the manufacturing facility, and will supply the non-active ingredients and compounds for formulation and packaging. BCC and Panaxia will split the revenues resulting from the sales of these products equally.
Panaxia currently sells its products in the U.S. through a JV with a third party in New Mexico only, where the company’s offerings have met with exceptional demand, selling out any inventory produced. The company believes its success is partly due to its “pharma-grade” approach to cannabis products, the efficacy of which has been demonstrated through clinical trials conducted in Israel. All products are being produced under Israeli pharmaceutical GMP protocols (the Israeli equivalent to FDA standards). Consequently, these products can be marketed in Israel as evidence-based products that deliver a metered and exact dosage which is standardized and repeatable.
The JV intends to open its first new pharmaceutical production site in Arizona, with expansion into Massachusetts and, subsequent to the closing of the previously announce acquisitions, into Nevada and Maryland. Each site will eventually produce all 32 offerings in Panaxia’s pharmaceutical product line.
Panaxia’s products are presently sold to patients with a variety of conditions such as PTSD, chronic pain, cancer, epilepsy, Parkinson’s, Alzheimer’s, anorexia and HIV/AIDS. The offerings sold through Health for Life dispensaries, and through BCC’s wholesale channels, will initially consist of the following standardized, pharma-grade, smokeless, measured dosage and delivery protocols:
- Sublingual Tablets – offering faster delivery as well as greater bioavailability compared to other smokeless ingestion methods, sublingual tablets may offer advantages for conditions where fast onset is required, such as breakthrough pain.
- Slow release tablets – for prolonged activity of the active ingredients, these products aim to deliver therapeutic blood levels of cannabinoids for up to 8 hours, with particular applications in the treatment of chronic pain.
- Pastilles, for buccal absorption of cannabinoids utilizing Panaxia’s patent-pending taste-masking technology.
- Rectal suppositories allowing for rapid absorption and reduced product metabolic degradation. These products deliver substantial benefits to patients who are prone to vomiting, or who have difficulty swallowing. Rectal suppositories may also be useful in treating certain inflammatory diseases of the intestine, such as proctitis, providing topical efficacy.
- Vaginal suppositories – offering topical delivery aimed at conditions such as PMS and endometriosis.
- Skincare – CBD-infused topical ointment for treatment of burns, local pain and psoriasis.
- Topical patches for transdermal delivery.
- Oral Spray Inhalers – increased convenience and delivering fast-acting relief. Additionally, Panaxia’s inhalers provide consistent dosage-specific delivery.
“Based on the traction Panaxia’s products are enjoying in New Mexico, we believe this joint venture has strong potential to become a material contributor to revenue and margin development,” said Beth Stavola, President of U.S. operations for BCC. “Not only will we address a relatively underserved segment of a rapidly growing market, we have no required capital expenditures, making this a very cost-effective way for us to expand product offerings to our patients.”
Michael Arnkvarn, Chief Marketing Officer for BCC, added, “Offering pharma-grade products of proven efficacy to a medical cannabis market that is shifting increasingly towards smokeless delivery is a very significant differentiator. Launch of the product line will be supported by an educational campaign targeted at physicians and the medical community, providing unbiased and research-backed information to increase awareness of the benefits of medical cannabis. Additionally, in those states we are currently, or expect to be operating, the enabling regulations detail an extensive list of chronic conditions for which cannabis and cannabis derivatives can be used, and which we will leverage with the launch of our new 'Salus Bio-Pharma' brand.”
Dr. Dadi Segal, Panaxia’s CEO, commented, "BCC, with its strict operating protocols, strong branding, deep retail experience and rapidly growing footprint, is the ideal partner to market our products to a growing U.S. audience.The joint venture is in line with our strategic rapid expansion into more states in the US market. We have found that holding medical cannabis products to the same high-quality assurance standards as those required for any pharmaceutical product, has resonated exceptionally well with our initial test market in New Mexico, and we look forward to replicating this performance with BCC in other US states."
Panaxia will build and operate final assembly facilities within the footprint of existing and future BCC cultivation facilities. Panaxia’s proprietary production technology allows a “last-mile” production of pharmaceutical cannabis products, wherein the premixed excipients are sent from the company's GMP central production facility in Israel. At the local “micro-sites” established in each state, cannabinoids are extracted and added to the premix. Panaxia is capable of building GMP micro-sites, which can each produce the complete, diversified product line, within the existing BCC cultivation facility. Panaxia will fund all capital expenditures related to the construction of these facilities, the first of which will be located in Health for Life’s new dispensary and cultivation facility in the Mesa suburb of Phoenix AZ. Completion of the new Panaxia assembly plant is anticipated for November 2017, with product available to the market before year-end. Additionally, Panaxia will assume financial responsibility for the operation of the sub-facilities. BCC’s costs will be limited to those related to the provision of operating space within its facilities, the supply of the cannabis “trim” required for extraction, and sales and marketing. All products will be sold under the auspices of licenses owned or managed by BCC and/or its subsidiaries.
The agreement provides exclusivity to BCC in those U.S. states in which it is currently operational, and those in which the Company expects to be operating in the near future, most notably, Massachusetts, Nevada and Maryland. Beyond that, BCC will have first right of refusal in any new U.S. market, apart from New Mexico, California and Colorado. The JV is based upon an equal revenue sharing of the sale of the products.
About Panaxia Pharmaceutical Industries Ltd
Panaxia Pharmaceutical Industries is a manufacturer of pharmaceutical dosage forms incorporating cannabinoids as an active ingredient. The company is part of a larger group of companies which have manufactured pharmaceuticals for more than 40 years. Together, the group produces more than 300 different conventional medication products, with a wide range of indications from sore throat lozenges to dermal fillers. The group sells into more than 25 countries and is very R&D oriented. Panaxia Pharmaceutical Industries has been developing and manufacturing pharmaceutical products based on cannabis derivatives since 2010.
About The Canadian Bioceutical Corporation
BCC, an Ontario corporation, through its wholly owned subsidiaries in the U.S., provides substantial management, staffing, procurement, advisory, financial, real estate rental, logistics and administrative services to two medicinal cannabis enterprises in Arizona operating under the Health for Life (dispensaries) and MPX (high-margin concentrates wholesale) brands. The successful Health for Life (“H4L”) brand operates in the rapidly growing Phoenix Metropolitan Statistical Area (MSA) with a population of 4.6 million people. The award winning Melting Point Extracts (“MPX”) brand is carried by over 40% of Arizona dispensaries. The Company also owns assets in Massachusetts, supporting cultivation, production and up to three dispensaries in Massachusetts, as well as is supporting development of a third licensed dispensary in Arizona.
BCC continues to expand its U.S. footprint, being in the process of acquiring a cultivation and production wholesale business in Las Vegas, Nevada, and three dispensaries and a production license in Maryland. The Company also leases a property in Owen Sound, Ontario, for which an application to Health Canada has been made for a cannabis production and sales license. In addition, the Company will continue its efforts to develop its legacy nutraceuticals business.
Cautionary Statement Regarding Forward-Looking Information
This news release includes certain "forward-looking statements" under applicable Canadian securities legislation that are not historical facts. Forward-looking statements involve risks, uncertainties, and other factors that could cause actual results, performance, prospects, and opportunities to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements in this news release include, but are not limited to, the Transaction and BCC's objectives and intentions. Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties and other factors which may cause actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic and social uncertainties; litigation, legislative, environmental and other judicial, regulatory, political and competitive developments; delay or failure to receive board, shareholder or regulatory approvals; those additional risks set out in BCC's public documents filed on SEDAR at www.sedar.com; and other matters discussed in this news release. Although BCC believes that the assumptions and factors used in preparing the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. Except where required by law, BCC disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
On behalf of the Board of Directors
The Canadian Bioceuticals Corporation
Scott Boyes, CEO
For further information please contact:
For the Canadian Bioceutical Corporation
T: +1 416 848 1397
For Panaxia Pharmaceutical industries Ltd