AusCann Group Holdings Limited (ASX:AC8) Managing Director, Elaine Darby talks about the company's recent capital raising, including progress locally and overseas with its production and medical programs.



Jessica Amir: Hello. I’m Jessica Amir for the Finance News Network. Joining me from Perth today is AusCann Group Holdings Limited (ASX:AC8) Managing Director, Elaine Darby. Hi, Elaine and welcome back.



Elaine Darby: Thanks, Jessica.



Jessica Amir: AusCann is developing a range of medicinal cannabis products. Just tell us where the business is at today.



Elaine Darby: The team has progressed really, really well in our development of a stable, standardised final dose form cannabinoid medicine. We’ve been absolutely thrilled with that progress that we’ve done there. Now, these medicines are all for the treatment of chronic neuropathic pain, is what we’ve developed them for. Our works are now well underway for manufacturing these pharmaceuticals in Australia. And we’re expecting the release of these products around April/May next year, which is fantastic.



Jessica Amir: Thanks, Elaine. Now to your capital raising, can you tell us more, first up starting with the purpose of the raise?



Elaine Darby: Some of the funds will go towards expanding what we initially envisaged for a manufacturing plant here in Australia. Also, some of the funds will go towards clinical trial work, for product registration.



The interesting thing with these medications is we can sell them straight off the bat, here in Australia and also overseas. However, if we also progress towards product registration, it just opens up more markets quite significantly for us, because it makes it much easier for doctors to prescribe. So, some of the funds will go there. Also in terms of our medical outreach programs, in terms of how we’re rolling them out in other markets, some funds will go towards that. And also to investigating various manufacturing opportunities there in Chile too.



Jessica Amir: And tell us about the size of the raise and the terms.



Elaine Darby: $33.4 million, as we announced on 5th July. So, that was through institutional and sophisticated investors. However, we also announced a share purchase plan to raise up to $8 million, so this is where current existing shareholders can participate. So, they’ve got the opportunity to be involved in that future growth by a company, which is really exciting.



So, the share purchase plan is underway at the moment. So, they're issued at a price of $1.05 per share, which is essentially about a 5 per cent discount on volume weight over the last five trading days. So, it’s a great opportunity there for existing shareholders to get involved with the company here and now. And that offer is on the table I think until about 2nd August.



Jessica Amir: And who’s got involved so far?



Elaine Darby: With the institutional raising for that $33.4 million, so we have both North American and Australian institutional funds who participated, which was wonderful. And also our major shareholder, Canopy Growth Corp (TSE:WEED), they came in as a cornerstone and they’ve now increased their shareholding slightly. So they’re sitting above that, just around 11 per cent at the moment.



Jessica Amir: And, Elaine, you’ve recently returned from South America. Just tell us about your Chilean operations.



Elaine Darby: Last month we announced the completion of our second harvest there in Chile. And we had a great yield there, which was about a 50 per cent increase of what we did in our first year there. So, we’re getting yields of about 1.2 tonnes per hectare, which we’re really excited with. We do have a 30-hectare facility available there in open greenhouse method. And we’re really looking forward to expanding this operation too over the years, as we develop further markets.



Jessica Amir: Thanks, Elaine. Now for those who don’t know, South America is significantly advanced in terms of the legislation of cannabis for medicinal and therapeutic use. So how is the market there developing?



Elaine Darby: South America is really quite interesting, because it really is almost like having this cascade effect of various countries now legalising over there. So essentially we saw in Chile... I mean, they’ve been since about 2016, and also Uruguay, but now we’ve got Argentina, Peru, Colombia, Mexico all now allowing medical use going forward. So, this is a really quite exciting market for us in South America. And what we’re finding from, in looking at those markets there, is similar issues to markets anywhere in the world.



And what I think we’ve really developed an understanding on is, as we’ve sort of progressed in this space, is that doctors not only just need the knowledge on how to prescribe cannabinoid medicines, because obviously that’s something that they’re still learning, but the access to actually suitable cannabinoid pharmaceuticals. And I think this has been really lacking and something that doctors really are wanting and needing.



So that’s why we’ve been quite conscious of that and why we’ve put a lot of effort and thought into actually making some true pharmaceuticals, cannabinoid pharmaceuticals, which we’re able to do now with these stable, cost-effective, reliable dose-form capsules that we’ll be releasing next year.



Jessica Amir: And lastly now, Elaine, before we let you go, what are the key priorities for the second half of this year?



Elaine Darby: We’ve now got all the licensing, we’ve got the expertise, we’ve got the IP and now we’ve got the finances, essentially to produce these superior cannabinoid pharmaceuticals here in this country. So now our key priority is really just getting on with the job. So we’ve got to finalise our commercial scale manufacturing operation here in Australia. So that’s really our key priority. And be on target for the release of product in the first half of next year. There’s a significant market demand, both here and overseas in this chronic neuropathic pain space, and, you know, we’re keen to meet this as soon as possible.



Jessica Amir: Elaine Darby, thank you so much for the update and congratulations on the capital raising.



Elaine Darby: Thanks very much, Jessica.





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