Former fintech company 1-Page (ASX: 1PG) is seeing its new direction towards commercial medical cannabis paying off already courtesy of its German-based takeover target HAPA Medical Group.
HAPA has reported that after launching Germany’s first specialist medical cannabis clinic in Berlin, the venue is experiencing “very strong patient bookings since its opening,” on March 1, 2018.
The news means that 1-Page’s decision to turn towards medical cannabis could be a rather prudent one.
Earlier this year, 1-Page signed a conditional binding agreement to fully acquire the parent company of HAPA Medical Group. HAPA is an early mover in the German medicinal cannabis market offering its own pharmaceutical GMP-grade THC/CBD product lines to German patients through a network of medical cannabis clinics throughout Germany.
1-Page wants to buy out HAPA in its entirety in a cash and share deal consisting of a €1.3 million (A$2 million) fee plus 90 million 1-Page shares with €430,000 (A$667,000) already paid as a non-refundable deposit.
Bountiful German market
Germany has quickly taken pole position as the European leader of legalising (and commercialising) medical cannabis, outshining traditionally ‘laissez-faire’ regions such as the Netherlands in the process.
Unlike other countries which have also legalised medicinal cannabis, Germany is going a step further to reimburse patients by including cannabis directly into medical insurance schedules applied by healthcare and insurance companies.
Since Germany announced full federal legalisation of medical cannabis in March 2017, the country has seen significant growth in registered patient numbers nationwide.
For 1-Page, the move towards medical cannabis clinics in Germany means that HAPA’s strong early performance in Germany’s flourishing medical cannabis landscape makes for pivotal news — especially for 1-Page shareholders who must still vote on 1-Page’s intended deal to acquire HAPA.
HAPA currently offers its own pharmaceutical GMP-grade THC & CBD product lines to patients through a network of medical cannabis clinics throughout Germany.
HAPA also plans to extend this distribution to additional general medical clinics and pharmacies in the coming months via “partnering and distribution arrangements” that have still not been made public.
The company has said that it has identified sites and medical staff for several new specialist medicinal cannabis clinics expected to be opened in the second half of this year in Dortmund, Hamburg and Munich.
Irresistible overseas commercial potential
With a population of 83 million people, Germany is estimated to have the potential to become one of the world’s largest medical cannabis markets.
1-Page says that HAPA’s intended expansion plans create a far larger commercial opportunity compared to Australia and warns that the company could potentially choose to de-list from the ASX if the pursuit of greener pastures in Europe proves to be more commercially viable.
HAPA provides “access to a population catchment area in excess of Australia’s total population highlighting the significantly larger opportunity available in the German market,” according to 1-Page.
Under the German regulatory framework, its citizens are required to register as medical cannabis patients to receive medicinal cannabis products and the growth in the number of registered patients is far exceeding initial industry forecasts.
In Germany, the health insurance industry heavily subsidises the cost of cannabis-related medicines.
This policy choice has proved to be a key a key driver accelerating patient numbers and a key differentiator between the Australian and Canadian markets where there are limited health insurance subsidies available to patients seeking to use medicinal cannabis as an alternative to existing subsidised medicines, such as opiates and artificial pharmaceuticals.
Pivotal HAPA acquisition and possible re-listing
1-Page has said its Board is currently engaged in “active and ongoing discussions with the ASX” in relation to the requirements for completing the acquisition of HAPA.
1-Page intends to obtain full and final approval for its acquisition from both the ASX and its own shareholders in the coming weeks, with a shareholder meeting to approve the transaction already being pencilled in for later this year.
One potentially huge development and one that could drastically alter the future development of 1-Page as an Australian publicly-listed company, is the company admitting that it is exploring “other listing alternatives in certain overseas markets where interest from investors is significant including but not limited to Germany, Canada and the United Kingdom.”
According to an official statement, 1-Page said that “should the company seek to pursue an overseas listing it will take steps to de-list from ASX and expedite the completion of the acquisition and re-listing.”