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XPhyto Therapeutics, the science-based cannabis group, advancing German goals with three year supply deal

Snapshot

The firm is developing analytical testing, processing, and formulation capability in Canada, while in Germany, the focus is research, cultivation, extraction, import, distribution, and manufacturing

XPhyto Therapeutics Corp. -

Quick facts: XPhyto Therapeutics Corp.

Price: 2.13 CAD

CSE:XPHY
Market: CSE
Market Cap: $103.65 m
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  • Bridging the gap between traditional cannabis-based medicine and modern science

  • Germany projected to have one of the biggest growing cannabis markets

  • Operates from a decommissioned German Air Force command center and nuclear bunker

What XPhyto Therapeutics does:

XPhyto Therapeutics Corp (CSE:XPHY) is a science-focused cannabis company developing analytical testing, processing, and formulation capability in Canada and research, cultivation, extraction, import, distribution, and manufacturing in Germany.

The firm has two exclusive five-year engagements with the faculty of Pharmacy at the University of Alberta, Canada to provide certified analytical testing capability, as well as extraction, isolation, and formulation facilities, and drug research and development expertise.

XPhyto has also acquired 100% ownership of the German cannabis company Bunker Pflanzenextrakte GmbH. The company operates from a decommissioned German Air Force command center and nuclear bunker near Munich, hence its name, which is the largest cannabis laboratory in Germany.

Europe’s biggest economy is projected to have one of the highest growth rates in the world for a cannabis market, with a 76.8% compound annual growth rate to reach $1.6 billion by 2022, according to research by Arcview.

The firm listed on the Canadian Securities Exchange (CSE) on August 6, 2019, under the trading symbol ‘XPHY’.

How's it doing:

XPhyto's plans for the German market were boosted, when on January 27, 2020, it told investors it had struck a three-year supply and distribution deal with Colombian cultivator PharmaCielo Ltd to serve its German medical cannabis business.

PharmaCielo will supply oils and isolates for XPhyto's medical cannabis products, such as oral films, transdermal patches, and topical treatments.

As part of the deal, PharmaCielo was issued with 500,000 warrants as XPhyto raised C$2 million from a private placing to expand its EU lab processing and storage capacity. The funds will also be used for regulatory compliance, product development, manufacturing, and distribution,

For 2020 and beyond, XPhyto has prioritized near-term revenue generation via the import and distribution of medical cannabis products into Germany.

XPhyto wants to begin the commercial import of cannabis oils and isolates in mid-2020, with a three-year minimum sales target of around 30,000 kg for extracted products, including 99% pure CBD and THC isolates, broad-spectrum CBD oils, and full-spectrum THC oils.

"In our estimation, PharmaCielo is one of the highest-quality large-scale producers in the world combining an industry-leading cost per gram with global Good Agricultural Practice (GAP) and ISO 9001:2015 certifications that are difficult for large-scale producers to achieve," according to Hugh Rogers, CEO of XPhyto.

Last summer, the firm bought German firm Vektor Pharma TF GmbH,  which specializes in thin therapeutic films, such as skin patches and oral strips, and possesses a slate of narcotics licenses.

Meanwhile, the German Federal Institute for Drugs and Medical Devices (BfArM)  granted Bunker Pflanzenextrakte a cannabis cultivation and extraction license for scientific purposes.

This, subject to security requirements, authorizes the company to cultivate and extract up to 70 different strains of Cannabis sativa and indica for scientific purposes at Bunker’s high-security facility in Bavaria.

Then in September 2019, the group announced a two-year European consulting deal with international cannabis expert Stephen Schroeder to design the hydroponics and extraction facility.

The following month, XPhyto struck a deal with an undisclosed top cannabis grower to exclusively distribute cannabis flower, extracts, isolates and crystallites across Germany. The latter produces more than 100,000 hectares of medical-grade hydroponic high THC flower and THC cannabis strains for extraction.

Also in September, the group said its pharmaceutical grade extraction and processing lab at the University of Alberta was ready for commissioning. The research will focus on treatments for inflammatory dermatology indications, oral and ingestible treatments for pain management and sleep disorders, it added.

The firm is also in discussions with multiple potential third-party collaborators seeking cannabis-related contract research and development (R&D) services.

Inflection points:

  • Start of commercial import of cannabis oils and isolates to Germany
  • Further build-out of European distribution

What the boss says:

In its last news release, Hugh Rogers, the chief executive of XPhyto said: "XPhyto is extremely pleased with its new and growing relationship with PharmaCielo. There are clear synergies between our businesses."

He added: "XPhyto looks forward to working with PharmaCielo as a preferred supplier for our European import and distribution business and to supply premium oils and isolates for our innovative medical cannabis products, such as oral films, transdermal patches, and topical treatments."

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