Kanabo notes Materia Malta has been awarded a commercial production license

Vox Markets
Vox Newswire
06:29, 14th September 2021

Kanabo Group Plc (KNB FOLLOW) has noted its acquisition target, Materia has announced its wholly-owned operating subsidiary Materia Malta Operating Ltd., (“Materia Malta”) has now received its Licence for the Production of Cannabis for the Production of Cannabis for Medicinal and Research Purposes (the “Licence”) from the Malta Medicines Authority. 

The receipt of the commercial production Licence is the final requirement for Materia Malta to begin commercial production and export of medical cannabis. 

Kanabo CEO, Avihu Tamir said: “Materia’s progress is remarkable. Subject to completion of the merger, the facility in Malta will enable Kanabo’s enlarged group to broaden its distribution across Europe and solidify our plan for a complete supply and distribution line.” 

Materia Malta is retrofitting an existing 34,000 sq. ft. facility in the Ħal Far industrial estate, which will ultimately be a state-of-the-art production hub used to process and formulate cannabis products. Materia Malta, which is already EU GMP certified, currently has an annual throughput capacity of 6,000kg, representing a potential sale value of €36MM based on a blended average sales price across several key European markets. 

Materia’s Malta facility will convert cannabis biomass into EU-GMP certified flower or oils to be distributed throughout Europe and the world. The expert Malta team brings together decades of collective pharmaceutical experience across the key departments of production, quality control, quality assurance, pharmacovigilance and security. 

Materia Malta has now begun the process of importing its first batch of raw material for commercial production and will begin fulfillment of its supply commitments across Europe imminently, starting with the initial target markets of Germany, Malta and the UK. The first product has already been successfully registered on the narcotics licence of Materia Deutschland GmbH ahead of its import into and across Germany. 

Deepak Anand, CEO of Materia, said; “We are delighted to be fully licensed and begin generating revenues from our Malta facility. I’d like to congratulate our entire team for helping realise our vision of a state-of-the-art processing facility, especially in working through the difficult circumstances presented by the pandemic over the last 18 months.” 

CEO of Malta Enterprise, the government’s economic development agency, Kurt Farruga commented; “We are delighted to see Materia achieve this milestone. We have been working closely with Materia since the beginning and the caliber of the team exemplifies the  type of company we are proud to support here in Malta. We fully expect Materia to be one of the industry’s long-term leaders.” 

View from Vox 

Investors will recall Kanabo’s announcement published on 26 July 2021 relating to the non-binding term sheet with Materia, to acquire Materia's European businesses (the "Proposed Transaction"), which includes Materia Malta. 

The acquisition of Materia will undoubtedly be transformational for Kanabo and now that Materia Malta has obtained regulatory approval, the Company can move straight to production and distribution into Europe, one of the largest markets for medicinal cannabis. 

Perhaps even more important for the strategic development of Kanabo is that having an EU GMP certified facility will position the Company as the leading licensed pathway for cultivators around the World to gain access to the large and rapidly growing European market. 

Whilst the acquisition remains the subject of ongoing Due Diligence, the rationale for both companies to complete the transaction are clear, and we therefore remain confident it will be successful providing another re-rating opportunity for  investors. 

KNB price chart

Reasons to FOLLOW KNB

Following the completion of the Materia acquisition, Kanabo will own and operate a fully licensed pathway into the most lucrative medicinal and recreational cannabis markets in the World, including Germany, which was recently valued at over €200m per year, and is anticipated to remain the dominant market as the European market grows to a forecasted total size of €3.2bn by 2025 (Source; Prohibition Partners).  

Whilst there remains some execution risk associated with the transaction and Reverse Takover under LSE rules, the potential for Kanabo to become one of the leading companies in this exciting space remains high. 

Disclaimer & Declaration of Interest

The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

Comments
Login or register to post comments

Recent Articles
Watchlist