Market Flashes

Distribution Agreement Secured for Innovative Hemp Derived Therapeutic Products in Pakistan, Philippines and Other New Markets

15 Feb 2021 | by: Patricia Miller

Up to CHF1.71m (AUD2.48m1) minimum order quantity across CannaQix 10, Cannaqix 50 and CannaDOL product lines.

Highlights:

  • Creso enters into Distribution Agreement with Route2 Pharm Pvt Ltd in Pakistan, for the exclusive distribution of Creso Pharma’s products into Pakistan and Philippines, as well as non-exclusive distribution into other potential target markets (‘Agreement’)
  • Agreement contemplates combined minimum order quantities for the first contractual year of up to CHF1.71 million (AUD$2.48 million – based on the CHF/AUD exchange rate of $1.45, as calculated per the table on page 2 of this release) across CannaQix 10, Cannaqix 50 and CannaDOL product lines, pro-rata subject to timing of product registrations.
  • Agreement follows a landmark decision by the Government of Pakistan allowing Pakistan to enter the billion-dollar Cannabidiol (CBD) market.
  • Pakistan has a population of over 216 Million people and a wide range of unmet needs that can be addressed by a targeted portfolio of products
  • Other potential target markets include Cambodia, Afghanistan, Azerbaijan, Bangladesh, Georgia, the Maldives, Myanmar, Tajikistan, Turkmenistan, Uzbekistan, and Vietnam (‘Potential Target Markets’)– takes potential addressable market to 750 Million people.

Creso Pharma Limited (ASX:CPH, FRA:1X8) (‘Creso Pharma’ or ‘the Company’) is pleased to announce a comprehensive distribution agreement with leading nutritional supplements company, Route2 Pharm Pvt Ltd (‘Route2’), to import, market, distribute and sell the Company’s innovative hemp derived therapeutic products exclusively into Pakistan and Philippines (being the “Exclusive Territories”), and non-exclusively into other potential target markets including Cambodia, Afghanistan, Azerbaijan, Bangladesh, Georgia, the Maldives, Myanmar, Tajikistan, Turkmenistan, Uzbekistan, and Vietnam (being the non-exclusive ‘Potential Target Markets’).

Route2 is a subsidiary company of Route2Health (www.route2health.net). Route2Health has over thirty years of pharmaceutical sciences experience and produces and distributes world-class herbal remedies and dietary supplements. It is based in Pakistan and has United States Pharmacopeia (USP) GMP compliant manufacturing facilities and global partnerships.

Under the terms of the 3 year Agreement, Route 2 has exclusivity rights over the Company’s cannaQIX® and cannaDOL product lines in the Exclusive Territories, subject to Route 2 achieving minimum order quantities (“MOQ”) for each product line in the first contractual year, being 1 January to 31 December (“Contractual Year”).

First Contractual Year minimum order quantities are as follows:


Product

MOQ (CHF)

MOQ (AUD)

cannaQIX® 10

123,250

178,712

cannaQIX® 50 (various package sizes)

1,402,500

2,033,625

cannaDOL, 0.1%

78,000

113,100

cannaDOL, 1%

108,000

156,600

Total

1,711,750

2,482,037

The minimum order quantities only become applicable three months after each product is registered in each Exclusive Territory, and Route 2 shall launch and commence distribution within 6 months after such product registration, with minimum order quantities in the first contractual year being adjusted pro rata relative to the date that a product is registered and launched in an Exclusive Territory. Route 2 is responsible for obtaining all such necessary and legally required registrations, authorisations and certifications.

For the second and third contractual years of the Agreement, the Parties will negotiate in good faith to set new minimum sales targets.

In the event that minimum order quantities are not realised within any Contractual Year, Creso has the right to terminate the Agreement upon giving Route 2 six months written notice, with such notice to be given on or before 31 March of the following Contractual Year.

The Agreement may otherwise be terminated by either party in the event of a material breach, or bankruptcy of the counterparty.

The Agreement follows a landmark decision made by the Pakistan government in September 2020, which will allow the country to enter into the billion-dollar cannabidiol (CBD) market, through a focus on cultivating cannabis and hemp for therapeutic products. Route2Health has a strategic association with Highnoon Laboratories Limited (PSX: HINOON) (‘Highnoon’), one of Pakistan’s most successful and progressive pharmaceutical companies. Under the Agreement, both parties have agreed, subject to further regulatory approvals, to leverage their combined international reach to distribute and sell Creso’s products into additional markets including the Philippines and Cambodia, as initial priorities, as well as Afghanistan, Azerbaijan, Bangladesh, Cambodia, Georgia, the Maldives, Myanmar, Tajikistan, Turkmenistan, Uzbekistan, and Vietnam.

This considerably broadens Creso’s international footprint and unlocks a number of large market opportunities. Pakistan has a population of over 216 Million people and a wide range of unmet needs that can be addressed by Creso’s targeted portfolio of products.

Creso has a growing portfolio of cannabis and hemp-derived products that focus on four key areas including therapeutics, nutraceuticals, animal health, and cosmetics. The Company currently has a portfolio of 13 products, eight of which have been commercialised and are generating revenues, as well as a strong product development pipeline.

“This Agreement has the potential to take Creso into markets with a combined population of over 750 million people. Our mission is to deliver access to affordable, high quality, broad spectrum, GMP products for the betterment of people’s lives everywhere. We’re delighted to conclude this important partnership, through which we hope to provide the opportunity for millions of people to have access to our innovative products.”

Non-executive Chairman Adam Blumenthal

“We are very excited to progress this partnership with leading global cannabis company Creso Pharma. There exists a vast amount of real-world and strong clinical evidence which supports the safety and efficacy of hemp- based therapeutic products. The basis for this partnership is a shared commitment of bringing affordable, high quality products to market which improve peoples lives. We intend to fully leverage the financial and marketing strength of our group to deliver on this mission.”


Tausif Khan, the Chairman of Route2 and Highnoon Laboratories

“Our company has thirty years’ experience of successfully bringing products to market. These products draw on our knowledge in both pharmaceutical sciences and time-tested herbal remedies. We have been strongly encouraged with the recent regulatory breakthrough on CBD in Pakistan, which will result in the removal of obstacles to patient access. We continue to work closely with the relevant authorities to pave a way for patients and consumers to gain access to the benefits of Creso’s innovative hemp-derived therapeutic products.”


Shahnawaz Baig, Managing Director of Route2

Proposed Issue of Incentive Securities to Key Employees

The Company has also agreed to issue the following securities to certain key employees of the Company (or their nominees) under the Company’s Employee Incentive Plans, subject to obtaining shareholder approval at a general meeting.


Employee

Performance Rights

Options

Miri Halperin Wernli
(Technology, Innovation and Distribution Head)

10,000,000

10,000,000

Jorge Wernli
(Commercial Director of Creso Pharma Switzerland)

4,000,000

2,000,000

Total

14,000,000

12,000,000

Each Performance Right shall convert into one fully paid ordinary share upon the satisfaction of certain vesting conditions with performance milestones to be agreed, subject to ASX and shareholder approval, and shall expire on the date which is 3 years from the date of shareholder approval.

Each Option shall be exercisable into one fully paid ordinary share at an exercise price of $0.30, on or before the expiry date that is 2 years from the date of shareholder approval, and are also subject to certain vesting conditions subject to shareholder approval.

Further details on the material terms of the Performance Rights and Options, including the applicable vesting conditions will be set out in a Notice of Meeting to be sent to all shareholders in due course.

The purpose and commercial rationale for the proposed awards are to:

  • Reward the employees for their performance in respect of the 2019 and 2020 financial years, during which neither of the proposed recipients were awarded incentive equity securities, notwithstanding the considerable work undertaken to grow the Company’s business and revenues in Canada, Switzerland, Europe, Australia and South Africa.
  • Incentivise the ongoing commitment and performance of Miri Halperin Wernli and Jorge Wernli and to promote their retention in the business. Both Miri Halperin Wernli and Jorge Wernli are very experienced and highly sought-after industry professionals with key technical and commercial expertise which the Board considers to be integral to the day-to-day operations of the Company and the execution of its strategic growth objectives.

-Ends-

Authority and Contact Details

This announcement has been authorised for release by the Board of Creso Pharma Limited. For further information, please contact:

Investor Enquiries
EverBlu Capital
E: [email protected]
Ph: +61 2 8249 0000

Released through:

Ben Jarvis
Six Degrees Investor Relations
Ph: +61 (0) 413 150 448

About Creso Pharma Limited

Creso Pharma Limited (ASX:CPH) brings the best of cannabis to better the lives of people and animals. It brings pharmaceutical expertise and methodological rigor to the cannabis world and strives for the highest quality in its products. It develops cannabis and hemp derived therapeutic, nutraceutical, and life style products with wide patient and consumer reach for human and animal health.

Creso Pharma uses GMP (Good Manufacturing Practice) development and manufacturing standards for its products as a reference of quality excellence with initial product registrations in Switzerland. It has worldwide rights for several unique and proprietary innovative delivery technologies which enhance the bioavailability and absorption of cannabinoids. To learn more please visit: www.cresopharma.com

About Route 2 Pharm Pvt Ltd

Route to Pharma is a wholly owned subsidiary of Route 2 Health and located in Lahore, Pakistan. Its manufacturing facility is approved by the Drug Regulatory Authority of Pakistan to manufacture herbal and nutritional products and is both GMP and ISO certified. The group has a number of notable national and international partnerships, including with Highnoon Laboratories, Himalaya and Engelhard Arzneimittel.

To learn more please visit: www.route2health.net

About Highnoon Laboratories Ltd. (PSX: HINOON)

Highnoon Laboratories Limited was incorporated as a private limited company in Pakistan in 1984, converted into a public limited company in 1985 and its shares are quoted on Pakistan Stock Exchange since November 1994. The Company is principally engaged in the manufacture, import, sale and marketing of pharmaceutical and allied consumer products. The registered office of the Company is situated at 17.5 Km, Multan Road, Lahore.

To learn more please visit: www.highnoon-labs.com

Forward-looking statements

This announcement contains forward-looking statements with respect to Creso and its respective operations, strategy, investments, financial performance and condition. These statements generally can be identified by use of forward-looking words such as “may”, “will”, “expect”, “estimate”, “anticipate”, “intends”, “believe” or “continue” or the negative thereof or similar variations. The actual results and performance of Creso could differ materially from those expressed or implied by such statements. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Some important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition and government regulation.

The cautionary statements qualify all forward-looking statements attributable to Creso and persons acting on its behalf. Unless otherwise stated, all forward-looking statements speak only as of the date of this announcement and Creso has no obligation to up-date such statements, except to the extent required by applicable laws.


IMPORTANT NOTICE AND DISCLAIMER

PAID ADVERTISEMENT

This communication is a paid advertisement. ValueTheMarkets is a trading name of Digitonic Ltd, and its owners, directors, officers, employees, affiliates, agents and assigns (collectively the “Publisher”) is often paid by one or more of the profiled companies or a third party to disseminate these types of communications. In this case, the Publisher has been compensated by CRESO PHARMA LTD. to conduct investor awareness advertising and marketing and has paid the Publisher the equivalent of five hundred thousand USD to produce and disseminate this and other similar articles and certain related banner advertisements. This compensation should be viewed as a major conflict with the Publisher’s ability to provide unbiased information or opinion.

CHANGES IN SHARE TRADING AND PRICE

Readers should beware that third parties, profiled companies, and/or their affiliates may liquidate shares of the profiled companies at any time, including at or near the time you receive this communication, which has the potential to adversely affect share prices. Frequently companies profiled in our articles experience a large increase in share trading volume and share price during the course of investor awareness marketing, which often ends as soon as the investor awareness marketing ceases. The investor awareness marketing may be as brief as one day, after which a large decrease in share trading volume and share price may likely occur.

NO OFFER TO SELL OR BUY SECURITIES

This communication is not, and should not be construed to be, an offer to sell or a solicitation of an offer to buy any security.

INFORMATION

Neither this communication nor the Publisher purport to provide a complete analysis of any company or its financial position.

This communication is based on information generally available to the public and on an interview conducted with the company’s CEO, and does not contain any material, non public information. The information on which it is based is believed to be reliable. Nevertheless, the Publisher does not guarantee the accuracy or completeness of the information. Further, the information in this communication is not updated after publication and may become inaccurate or outdated. No reliance should be placed on the price or statistics information and no responsibility or liability is accepted for any error or inaccuracy. Any statements made should not be taken as an endorsement of analyst views.

NO FINANCIAL ADVICE

The Publisher is not, and does not purport to be, a broker-dealer or registered investment adviser or a financial adviser. The Publisher has no access to non-public information about publicly traded companies. The information provided is general and impersonal, and is not tailored to any particular individual’s financial situation or investment objective(s) and this communication is not, and should not be construed to be, personalized investment advice directed to or appropriate for any particular investor or a personal recommendation to deal or invest in any particular company or product. Any investment should be made only after consulting a professional investment advisor and only after reviewing the financial statements and other pertinent corporate information about the company. Further, readers are advised to read and carefully consider the Risk Factors identified and discussed in the advertised company’s SEC, SEDAR and/or other government filings. Investing in securities, particularly microcap securities, is speculative and carries a high degree of risk. Past performance does not guarantee future results.

FORWARD LOOKING STATEMENTS

This communication contains forward-looking statements, including statements regarding expected continual growth of the featured companies and/or industry. Statements in this communication that look forward in time, which include everything other than historical information, are based on assumptions and estimates by our content providers and involve risks and uncertainties that may affect the profiled company’s actual results of operations. These statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results and performance to differ materially from any future results or performance expressed or implied in the forward-looking statements. These risks, uncertainties and other factors include, among others: the success of the profiled company’s operations; the size and growth of the market for the company’s products and services; the company’s ability to fund its capital requirements in the near term and long term; pricing pressures; changes in business strategy, practices or customer relationships; general worldwide economic and business conditions; currency exchange and interest rate fluctuations; government, statutory, regulatory or administrative initiatives affecting the company’s business.

INDEMNIFICATION/RELEASE OF LIABILITY

By reading this communication, you acknowledge that you have read and understand this disclaimer in full, and agree and accept that the Publisher provides no warranty in respect of the communication or the profiled company and accepts no liability whatsoever. You acknowledge and accept this disclaimer and that, to the greatest extent permitted under applicable law, you release and hold harmless the Publisher from any and all liability, damages, injury and adverse consequences arising from your use of this communication. You further agree that you are solely responsible for any financial outcome related to or arising from your investment decisions.

TERMS OF USE AND DISCLAIMER

By reading this communication you agree that you have reviewed and fully agree to the Terms of Use found here https://www.valuethemarkets.com/terms-conditions/ and acknowledge that you have reviewed the Disclaimer found here https://www.valuethemarkets.com/disclaimer/. If you do not agree to the Terms of Use, please contact valuethemarkets.com to discontinue receiving future communications.

INTELLECTUAL PROPERTY

All trademarks used in this communication are the property of their respective trademark holders. Other than valuethemarkets.com, the Publisher is not affiliated, connected, or associated with, and the communication is not sponsored, approved, or originated by, the trademark holders unless otherwise stated. No claim is made by the Publisher to any rights in any third-party trademarks other than valuethemarkets.com.

AUTHORS: VALUETHEMARKETS

valuethemarkets.com and Digitonic Ltd and our affiliates are not responsible for the content or accuracy of this article. The information included in this article is based solely on information provided by the company or companies mentioned above. This article does not provide any financial advice and is not a recommendation to deal in any securities or product. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance.

ValueTheMarkets do not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above piece. ValueTheMarkets have been paid to produce this piece by the company or companies mentioned above. Digitonic Ltd, the owner of valuethemarkets.com, has been paid for the production of this piece by the company or companies mentioned above.

Valuethemarkets.com, Digitonic Ltd (and our owners, directors, officers, managers, employees, affiliates, agents and assigns) are not responsible for the content or accuracy of this article. The information included in this article is based solely on information provided by the company or companies mentioned above.

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

    RNS Responses