The Valens Company Inc. (TSX: VLNS) (OTCQX: VLNCF) (the “Company,” “TheValensCompany” or “Valens”), a leading manufacturer of cannabis products, today announced an exclusive partnership with Epsilon Healthcare Limited (ASX:EPN) (Epsilon), a diversified global healthcare and pharmaceuticals company, for access to Epsilon’s Good Manufacturing Practices (GMP) facility in Australia for manufacturing products, furthering its international expansion to GMP markets in Latin America, Europe, UK and the Asia-Pacific regions. Products will be distributed through Valens’ Australian Distribution Partner, Cannvalate PTY Ltd (“Cannvalate”), and will be the largest quantity of products provided to Cannvalate for distribution to date (collectively, the “Transaction”). The partnership is reflected in the terms of the Binding Heads of Agreement between the Epsilon, THC Pharma (the Epsilon’s wholly owned subsidiary, and owner of the Southport Facility), Valens, and Valens Australia Pty Ltd (Valens’ wholly owned subsidiary) (the “Agreement”).
With this partnership The Valens Company continues its “revenue first, capital efficient” strategy of expanding internationally. As part of the Agreement with Epsilon and Cannvalate, Valens will be provided with access to Epsilon’s GMP manufacturing capabilities at the Southport Facility (as defined below) located in Queensland, Australia, the largest cannabis manufacturing facility in the Southern Hemisphere, and the largest at domestic scale with complimentary Therapeutic Good Administration (TGA) and EU GMP capabilities. The partnership also marks the first GMP manufactured products to be sold through Valens in Australia, and provides Valens with the capability to deliver GMP-grade products to Latin America, Europe, UK and Asia-Pacific.
Key Transaction Details:
- The Valens Company, a leading Canadian manufacturer of cannabis products, has entered into a long-term partnership with Epsilon, for exclusive access to the Epsilon’s GMP Manufacturing Facility in Southport, Queensland Australia (the “Southport Facility’)
- Epsilon’s Southport Facility is the largest cannabis extraction facility in the Southern Hemisphere with TGA and EU GMP capability
- Valens to fund all operational and capital expenditure of the Southport Facility in return for preferential access for up to 85 percent of the operational capacity of the Southport Facility over the next five years, with an option to extend this arrangement for an additional six years
- Valens to provide operational and management consultancy at the Southport Facility to bring their industry-leading intellectual property, technology, and team to the Southport Facility to take advantage of Epsilon’s GMP Manufacturing capability
- Marks first foray into EU GMP medicine production for Valens
- The Agreement compliments its existing partnership with Cannvalate opening up GMP manufactured products to be sold through Cannvalate’s distribution network First products manufactured under strategic alliance expected to be delivered in the coming weeks
Epsilon’s wholly owned subsidiary, THC Pharma Pty Ltd (THC Pharma) operates a TGA and Office of Drug Control (ODC) licensed medicinal cannabis manufacturing facility with TGA and EU GMP capabilities in Southport, Queensland Australia. THC Pharma’s GMP Southport facility is a 10,000 square foot purpose-built botanicals extraction facility capable of extraction of raw plant material and downstream purification and isolation processing. The facility consists of its own QC lab and grade D cleanroom space for the manufacture of oral dose format products. Epsilon also owns a number of medicinal cannabis assets, including the Tetra Health clinic, and the Medimar Platform – an end-to-end ecommerce solution for nutraceuticals and cannabis. Epsilon also operates a turn-key cannabis cultivation solutions provider based in Vancouver, Canada.
“With this partnership we have fulfilled our promise to achieve GMP manufacturing in 2021 and we have gained access to international cannabis markets through the ‘Valens way,’ utilizing an asset-light approach that allows us to export to GMP markets globally. We are excited to work with the largest and most advanced cannabis manufacturing facility in the Southern Hemisphere to distribute GMP products, and look forward to advancing our product distribution capabilities through our continued partnership with Cannvalate. We believe this strategic partnership is an efficient use of capital towards accessing GMP quality products and accelerates our timeline to market dramatically,” said Tyler Robson, Chief Executive Officer and Chair of The Valens Company. “With the rapid unit volume growth coming out of our K2 facility that was built to GMP standards, we believe this agreement offers us the best of both worlds – access to GMP manufacturing without giving up on domestic revenue growth opportunities.”
Jarrod White, Chief Executive Officer of Epsilon noted, “This year alone, Valens has grown exponentially not only across provinces and territories in Canada, but in the US as well, which is an excellent platform for the growth we see forthcoming in the international Medicinal Cannabis market generally. Epsilon’s partnership with Valens as a leading manufacturer of cannabis products is complementary to our facility, being the largest TGA and EU GMP facility in the Southern Hemisphere. We are excited to be working with Valens during such a flourishing time in their corporate trajectory. Valens also shows a promising production throughput to scale up our GMP manufacturing capability. We look forward to furthering our partnership with Valens in the coming months as we accelerate the commercial production output from Epsilon’s wholly owned facility.”
Dr. Sud Agarwal, Chief Executive Officer of Cannvalate added, “Having worked closely with Valens for over a year, we have already noticed significant growth in their market share in the APAC market. Now, with access to a GMP facility via our partnership with Epsilon, we forecast a dramatic increase in demand both domestically and internationally. With New Zealand moving to a pureplay GMP market in October 2021 and the Australian Government indicating they will too in the very near future, we see this opportunity as building a significant competitive advantage for the Valens-Cannvalate partnership.”
This initial production run is the first milestone of Valens’ partnership with Epsilon. Valens anticipates that the partnership will see further expansion as it receives additional orders for GMP product globally.
Further details concerning the Transaction as set forth in Schedule 1 below.