Shares of Epsilon (ASX:EPN) are trading substantially higher. Here’s why

Highlights

  • Epsilon has executed a manufacturing agreement with privately-owned Cannim Australia Pty Ltd, a cultivator of Jamaican cannabis flower.
  • Epsilon has, so far, not disclosed the exact revenue to be earned under this collaboration.
  • Backed by this announcement, the stock EPN rose 24% higher at AU$0.155 per share on ASX at 12:53 PM AEDT.

ASX-listed healthcare and pharmaceuticals company Epsilon Healthcare Limited (ASX:EPN) shared on 21 October 2021 that it has executed a binding term sheet and manufacturing agreement with privately-owned Cannim Australia Pty Ltd. Besides, the Company today also revealed that it has packaged and released for supply the first batch of Cannim’s ‘HummingBud’ dried flower products.

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According to today’s announcement, Cannim, a cultivator in Jamaica and Australia, will be engaging with Epsilon as an Australian GMP manufacturing partner at the Southport Facility in a two-year agreement.

The manufacturing agreement executed by the two parties would mean:

  • Epsilon’s world-class EU GMP compliant Southport Facility will produce medicinal cannabis products from Cannim raw material at scale for supply into the Australian market and global export.
  • Cannim will pay Epsilon for these manufacturing services on a per-order basis.
  • For the next two years, EPN’s manufacturing wing, THC Pharma, will get bulk imports of dried flowers for the packaging & release of Australian GMP dried flowers.
  • THC Pharma will also work on contract manufacturing opportunities for global third parties using Cannim’s cannabis material as an API, including supplying to parties referred to the Company by Cannim.

The Company revealed that till date, Epsilon has received 3 imports of Cannim’s cannabis starting material, with further imports on track for the balance of 2021 to be released as a final product during the balance of Q4 2021 and into 2022. In addition, Epsilon expects to continue to see ongoing purchase orders from Cannim and its partners throughout the collaboration with Cannim. 

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Bottom Line:

EPN’s matching high-volume EU GMP compliant Southport Facility with Cannim’s high volume GACP Jamaican medicinal cannabis places both companies in a strong position to deliver significant volumes of high-quality medicines for both the Australian and global export markets

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