MGC Pharmaceuticals Ltd (ASX: MXC) has signed a multi-year supply agreement with European medicinal products distributor Mabsut Life, to supply cannabidiol (CBD) extract from its European extraction facility.
Under the binding agreement, MGC Pharmaceuticals will supply a specialised industrial-grade CBD extract, which has been developed and produced using the company’s leading European Research and Development (R&D) facilities.
The specialised CBD extract will be supplied to Mabsut Life and commercialised under Mabsut Life’s own CBD electronic cigarette brand and distributed throughout its sales network in Central and Eastern Europe in countries that include Germany, the Czech Republic and Austria.
The terms in the agreement set out a minimum supply by MXC of 12kg of extract per quarter which is set to generate approximately $1 million in annual sales for the company. Upon signing the agreement, the initial purchase order for 2kg of extract has been placed by Mabsut Life and includes an upfront payment of US$40,000 which MXC expects to receive within 2 weeks. The deal is for an initial two-year period.
MGC Pharmaceuticals Co-founder and CEO, Roby Zomer said the supply agreement with Mabsut Life builds on a number of transformational deals the company has recently executed that provides it with a diverse and growing revenue base.
“The deal also demonstrates the capacity of our Research and Development platform to develop formulas that are of the highest quality which can then be utilised for a number of purposes by our growing list of partners.”
Mabsut Life is a lifestyle and medical cannabis product manufacturer and distributor focused on the various segments of the emerging European supply chain, operating in Germany, the Czech Republic, and Austria.
Mr Zomer said there is potential for MXC to supply additional products to Mabsut Life as the agreement includes a right of first refusal for the supply of any future cannabis extract or other cannabis-based products that Mabsut Life may require.
MXC’s European extraction facility contains state-of-the-art extraction equipment which gives the Company a leading edge in the development and production of CBD extracts. The Company’s laboratory is currently undergoing GMP certification, and expects the CBD extraction facility to complete its GMP certification during 2018, at which time it will be fully certified to produce Active Pharmaceutical Ingredient grade (API) cannabidiol extracts. Mabsut Life CEO Moshe Wasserman said this is a strategic and important agreement with partners with whom his company plans to have on a long-term relationship with.
“The agreement reflects both our company policy and development plans, and this agreement is just the first of a series of agreements that we expect to make with MGC, taking advantage of the relationship of each company and bringing together these innovative, quality products to the new emerging markets.”
