AusCann looks to tighten grip on Latin American medicinal cannabis growth spurt

source: https://smallcaps.com.au/auscann-dayacann-latin-american-medicinal-cannabis-growth-spurt/

By George Tchetvertakov – October 1, 2018

Khiron has its core operations in Colombia and is fully licensed for the cultivation, production, distribution and export of both tetrahydrocannabinol (THC) and cannabidiol (CBD) medical cannabis.

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One of Australia’s most prominent medical cannabis growth stories AusCann (ASX: AC8) has announced that its Chilean joint venture company DayaCann has signed a non-binding memorandum of understanding (MoU) with Canadian medical cannabis company Khiron Life Sciences (TSXV: KHRN).

Incorporated in 2014, AusCann holds the full set of necessary licences to grow and manufacture cannabinoid medicines in Australia.

However, the pharmaceutical company is initially targeting medications for neuropathic and chronic pain in Australia and Chile, whilst exploring global export opportunities.

With Khiron maintaining its core operations in Colombia, the working partnership could give AusCann a direct boost via its DayaCann subsidiary, quickly becoming a prominent producer with a defacto monopoly on production in Chile.

As a company, Khiron intends to address the unmet medical needs in a market of over 620 million people in Latin America. Today’s deal is therefore expected to further entrench DayaCann’s grip on both the Chilean market, but also help the company expand its coverage in the wider region.

In May 2018, Khiron listed on the Toronto Stock Exchange (TSXV) to become the first Colombian-based medical cannabis company to trade on any exchange globally.

The MoU has been agreed to develop a method of collaboration through which DayaCann, Fundación Daya and Khiron can offer “new alternatives of medical cannabis to patients in Chile” in addition to the ones already being provided by the duo.

Both parties have agreed to engage in cultivation, manufacturing and pedagogical research, and have also provisionally agreed scientific, commercial and political activities that present cannabinoid medicines as a viable medical option for patients with a wide range of ailments. As part of the agreement, Khiron has agreed to provide an as yet unspecified capital line to support the development of these activities.

Deal specifics

Under the MoU, DayaCann will provide cultivation and manufacturing services to Khiron, thereby expanding the company’s existing production level and further asserting the company’s dominant position as the only company in Chile to hold a medical cannabis production licence.

AusCann and Fundación Daya formed DayaCann in 2016 with the aim of becoming Latin America’s leading medicinal cannabis group. Since announcing the deal around 2 years ago, DayaCann has completed two harvests at its 30-hectare facility yielding a total of over a tonne of dried cannabis flower.

In June this year, AusCann reported that its Chilean growing operation had produced its second crop yielding 620 kilograms of dried cannabis product, an increase of over 50% on the 400 kilos yielded from its first crop in the previous year.

A portion of this cannabis is being used by the Chilean pharmaceutical manufacturing group, Knop Laboratories, to create medical cannabis products available to Chilean patients via a special access scheme.

“We are excited to be supplying them [Khiron] high-quality cannabinoid medicines and working together on addressing the needs of the Latin American market. The MoU will not only expand DayaCann’s presence in Chile but also give DayaCann wider access to the Latin American market,” said Ms Elaine Darby, Managing Director of AusCann.

This morning’s news helped AusCann shares to tick up around 1.5% to trade above $1 per share, thereby valuing the company at $176 million by market capitalisation, currently Australia’s largest medical cannabis development company.

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