ANTG acquires Brisbane facility to keep up with medicinal cannabis demand

One of the country's largest medicinal cannabis companies Australian Natural Therapeutics Group (ANTG) expects to quadruple its production capacity following the acquisition of a licensed cultivation and pharmaceutical manufacturing facility near the Brisbane Airport for an undisclosed sum.

In April last year the Byron Bay-headquartered group struck a deal to merge with Canadian multinational Asterion Cannabis with plans to build a $400 million medicinal cannabis growing facility near Toowoomba, Queensland. That agreement fell through in early 2022, but the company has kept the Sunshine State in its sights.

"We’ve been negotiating for a number of months - not just the acquisition but also the license transference across to our company, both TGA (Therapeutic Goods Administration), GMP (Good Manufacturing Practices) licensing and ODC (Office of Drug Control) licensing as well," ANTG CEO Matt Cantelo tells Business News Australia. 

"The registrations that are attached to that facility actually include multiple formats, so it includes distillate which will go into oils and vapes, and it also allows for edibles and dried flower. So it has pretty much all the formats that that the cannabis patient might need."

This marks an upgrade to the group's existing licence to produce medicinal cannabis oil from its facility in Armidale, NSW - an operation that will now be strategically positioned as more of a bulk production facility to service Australian patients as well as customers in being Germany and New Zealand.

"Then we really focus Brisbane on being that high-end manufacturing at scale," Cantelo said.

"What we’ve seen over the last couple of years is the demand of Australian patients has just gone through the roof, and it’s been quite hard for the Australian industry to keep up with that demand, hence there’s still quite a large reliance on imported products.

"By acquiring this facility and getting it up and running in the early new year, we will alleviate that bottleneck not just for ourselves, but for other Australian growers as well because we'll be providing our services as 3PL and 4PL to other growers as well."

The expert believed the increased range of dosage formats would be a welcome development for both patients and doctors, ultimately creating more therapeutic pathways in the patient journey.

He said that in addition to supplying Australian patients, products coming out of the new operation will be going overseas as well.

"We're exceeding the minimum order quantity from Germany and they're asking for probably double the capacity next year," he said.

"In New Zealand we took a strategic equity position in our distributor over there called Nubu Pharmaceuticals, and they’re the largest distributor of cannabis in New Zealand at the moment.

"We actually were lucky enough to have the first cannabis flower registered for sale to patients in New Zealand. Other companies have now followed but it was a bit of a feather in the cap to have that first product being approved by the Ministry of Health in New Zealand."

The new facility houses multiple grow rooms and 14 GMP-certified areas, allowing ANTG to enhance its specialised genetic breeding program and bolster its flower production capacity. 

"There are four indoor grow rooms, so we’ll be producing high-quality cannabis flower in those four rooms as well. That’s in addition to our current capacity."

He said the Brisbane facility was acquired from a company called Rapid Growth, which were "90 per cent of the way and then decided to sell".

"We came in at the right time. We see that a lot in the industry – a lot of people out there are getting 70-90 per cent of the way, but whether it’s funding or expertise, they can’t quite get over that final hurdle," Cantelo explained.

Following the volatility that has affected manypublicly-listed medicinal cannabis companies in Australia, Cantelo says the industry needs to be looked at like any other sector with companies to be rewarded on performance.

"I think the problem the industry has had has been the sensationalism and the speculation of investors jumping on the shiniest and brightest thing - it’s led to a lot of people losing money," he said.

"I think that there's a new norm, and that new norm like any other sector is that companies in the cannabis industry need to be rewarded on their performance, and that comes down to profit."

He clarified ANTG was profitable in FY22 and should have a larger profit in FY23, although he was unable to disclose figures. He believed that being private was part of the reason behind ANTG's success.

"We’ve been able to stay nimble, we've been able to make our decisions on the hop. Some of those really important decisions that need to be made quickly, we’ve been able to do that without I suppose the burden of being public," he said.

"Not to say say that we won't consider that down the track, but it’s been very helpful for us to have the freedom of being independent to date."

Medicinal cannabis is now used by tens of thousands of Australians, with latest data from the Therapeutic Goods Administration (TGA) showing that more than 110,000 medicinal cannabis approvals were issued this year alone. 

New research from the University of Sydney's Lambert Initiative found that while many Australians are still medicating with illicit cannabis, the number of people accessing prescription products has risen dramatically. 

The survey found 37 per cent of respondents had received a legal prescription for medicinal cannabis – a significant increase from the 2.5 per cent of respondents reporting prescription use in the 2018 iteration of the Cannabis As Medicine Survey (CAMS).

When asked about how medicinal cannabis remains relatively expensive, Cantelo explained that the "huge investments that have gone into the industry have not really helped the price", and nor had the approach to medicinal cannabis from health insurers.

"Unlike other countries, our insurance companies don't cover cannabis as a medicine because it’s not registered," Cantelo said.

"In other countries such as Germany, insurance companies do pay out even though it's an unregistered medicine. I think that's that's our biggest problem. But the prices will start to come down as we see more capacity come on to the market."

He also highlighted studies ANTG was involved in as part of a strategy to get medicinal cannabis on the Pharmaceutical Benefits Scheme (PBS) for certain treatments.

"To do that we need to do full clinical studies and prove the efficacy of the product, and we're actually in the midst of going through that process with a number of partners," he said.

"At the University of Western Sydney where we're doing a pre-Alzheimer’s clinical data set coming up early in the new year. We're also working with Professor Matthew Dun at the University of Newcastle, looking at how high CBD and now moving into high-THC cannabis can affect cancer.

"We’re also doing a study on IBS (irritable bowel syndrome) with our high CBD products. To get that PBS recognition you have to do the research, you have to get it peer reviewed, and then registered with the Australian Government.

"We're in the midst of putting our money where our mouth is in that regard...we think it's our duty to invest in that research to give the Australian doctors, patients and the whole wider community some more confidence around the medicines."