Medigrowth delivers on its 2023 capital raising

It’s been a great couple of years for the Melbourne-based medicinal cannabis company Medigrowth Australia Pty Ltd. Back in mid-2023, Medigrowth raised $3.2m in new capital on the Australian crowd-funding platform Birchal. The company had generated just under $1m in revenue in the previous twelve months, but average monthly sales were growing at 20-30% p.a., so Medigrowth was confident of good times ahead.

And so it proved. When we caught up with Medigrowth recently, refreshing an Evaluation Report from mid-2023, Medigrowth’s revenue for calendar 2024 had grown to $2.5m. Medigrowth is now back on Birchal for its next funding round, and you can check out the latest version of that Evaluation Report, which Medigrowth commissioned from us, by visiting birchal.com/company/medigrowth.

Now is a great time to be building a medicinal cannabis company in Australia. Since 2016 around 1.6 million Australians have gained access to medicinal cannabis under the Special Access Schemes that were put in place in 2016 to make access easier, but the growth in patients, authorised prescribers and actual prescriptions since 2021 has been phenomenal. Consider just prescriptions. In the 2019-20 period there were around 83,000 prescriptions approved under ‘Special Access Scheme B’, the Scheme for patients that aren’t at death’s door but can still benefit from the product. This rose to 237,000 in 2021-22 and to 305,000 in 2023-24.

Quality products

The key for companies like Medigrowth to benefit from this strong patient demand is to have good portfolio of products, a good distribution network, and clinical data. Medigrowth argues that it now has all three.
It started with product.

From the get-go in 2021-22 Medigrowth insisted on pharmaceutical grade products, produced under the strict Australian GMP manufacturing guidelines, despite this not being a requirement until July 2023. It started with locally sourced product but now imports as well. The portfolio is growing all the time.

In mid-2023 there were just three products in the portfolio. Now there’s 12. And it’s not just CBD oil, but a variety of CBD and THC combination available now just as oral liquid but as flower for vapour deliver and even a pastille, that is, a ‘medical lolly’.

Solving access issues

Distribution has also been a point of differentiation for Medigrowth. Early on the company recognised that patient access to cannabis medicine was going to be challenging given the fact that cannabis was still mainstreaming.

So, the company created a telemedicine business called Haiku. Health allowing patients to talk to qualified physicians knowledgeable about cannabis and receive their prescriptions remotely.
Then there’s clinical data. Up until recently most of the world’s knowledge on the effectiveness of cannabis medicine had not come from ‘gold standard’ randomised controlled studies.

Medigrowth realised that such studies were necessary to promote widespread adoption of their products. Collaborating with Monash University, it picked autism as its first indication and in 2023 was able to generate some positive results from Medigrowth CBD 100, a 30 mL oral liquid where there was 100 mg of CBD in every mL of oil.

Great data from a maiden Phase 2

Autism is a suite of neurodevelopmental disorders characterised by difficulties in social and communication skills and often manifesting in a person having restricted interests and engaging in repetitive behaviours. An estimated 2-3% of American adults and children have an Autism Spectrum Disorder, so autism is a large market opportunity of unmet medical need.

The Phase 2 Randomised Controlled Study evaluated 29 children aged 5 to 12 with autism and evaluated improvement in terms of two measures of autism severity – the Social Responsiveness Scale and an EEG reading.

When the topline results were announced at the European College of Neuropsychopharmacology’s Annual Congress in October 2023 the company and its investigators had something to smile about. 12 weeks of treatment with Medigrowth CBD 100 saw the children register a statistically significant improvement in social functioning and a reduction of anxiety symptoms, while their parents there was also a statistically significant reduction in their stress levels. Medigrowth hopes to see these results published in a peer-reviewed journal this year.

Positioned for the next boom

Medigrowth’s founders, Adam Guskich and Todd McClellan, reckon they and their team have performed very well as they executed their 2023 growth plans. They’re back crowd-funding in 2025 in order to have the working capital to fund more growth and move the company towards profitability. We see potential for that profitability to come around the time cannabis comes back into favour in the public equity markets.

There was a time when investors couldn’t stop talking about medicinal cannabis. On stock exchanges all around the world companies were riding high in share price terms ahead of an expected boom in the number of patients that could benefit, now that medicinal cannabis was legal, and doctors had come to accept cannabis’s therapeutic potential across a range of health conditions.

Cannabis, however, has been boom and bust since around 2013. The most recent boom ended in February 2021 and most publicly traded cannabis companies in North America are now down 90% on that level. The good news is that the sector has been ‘base building’ since about June 2023 ahead of what could be the next boom. Medigrowth stands a good chance of being part of that boom.

You can review the Medigrowth full business model and achievements at www.birchal.com/company/medigrowth.
 

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