Zenabis Obtains EU-GMP Approval to Supply Medical Cannabis to Europe and Amendments to Health Canada License

Vancouver, British ColumbiaMay 20, 2020 – Zenabis Global Inc. (TSX:ZENA) (“Zenabis” or the “Company”) is pleased to announce that it has successfully received EU-GMP approval for its Atholville facility and expects to commence commercial export to the European Union in the third quarter of 2020.  In addition, the Company is announcing Health Canada approval of additional growing and processing areas at Zenabis Langley.

Kevin Coft, Chief Executive Officer of Zenabis stated, “We are very excited to be able to announce that Zenabis, in conjunction with our European Union partners Natrix Sciences Ltd. (formerly Starpharma Ltd. Malta) and ZenPharm Ltd., have received EU-GMP approval.  This is a tremendous milestone for the Company as it will allow us to supply bulk dried medicinal cannabis to the European market and allow ZenPharm the supply needed to serve their customers throughout Europe.  I would like to extend my thanks to the entire Zenabis team who have made this major achievement possible as well as to our European partners for their continued support in this process.  With our extremely competitive cost of cultivation at $0.63 per gram in the first quarter of 2020, we believe we can be incredibly competitive in the export of cannabis to the European Union.”

Receipt of EU-GMP Approval

Zenabis Global Inc. has obtained EU-GMP approval through its Malta-based European partner, ZenPharm Limited.  This milestone enables Zenabis to supply the European market with bulk dried medicinal cannabis flower through its ZenPharm joint venture.  Zenabis is a 43.5% owner of ZenPharm. ZenPharm is located within an existing EU-GMP facility in Europe managed by the other 43.5% owner of ZenPharm, Natrix Sciences Limited Malta (“Natrix”).  ZenPharma is regulated by the Maltese ‘Production of Cannabis for Medicinal and Research Purposes Act’, which allows for the cultivation, import, processing, and production of cannabis intended for medicinal and research purposes.  Zenabis’ EU-GMP approval provides ZenPharm with an approved supplier which will allow it to undertake the necessary regulatory requirements in order to achieve its own GMP certification for the packaging and processing of cannabis from the Maltese Medicines Authority.  The approval came after an intense 4-day inspection of the facility, which provided ZenPharm with confidence in the Zenabis GMP Quality Management Systems (“QMS”) and products.

Although this EU-GMP approval only pertains to cannabis supplied to ZenPharm, Zenabis’ now proven QMS provides the Company the ability to ship to GMP facilities worldwide for further processing and packaging, subject to the successful completion of QMS audits by other potential international clients.

Alan Mayo, Chief Quality & Compliance Officer of Zenabis stated, “Zenabis’ achievement demonstrates the commitment that the Company has towards a robust QMS and Quality in general. It is the result of investment by senior leadership and eight months of hard work, dedication, and perseverance by a group of individuals, most of whom had little to no previous GMP experience. I am so proud of the team because they have all come a long way.  In less than a year they overcame the challenge of obtaining such a strict pharmaceutical standard like GMP.”  Angele Azzopardi, Chief Executive Officer of ZenPharm said, “This milestone solidifies ZenPharm, a Zenabis subsidiary, as a vertically integrated seed to sale European pharmaceutical company that specializes in the development and delivery of cannabis-based treatments rooted in the fundamental medicinal standards of safety, quality and efficacy.  This achievement would not have been possible without the relentless efforts of the entire Company.  Furthermore, Malta has strategically put in place the regulatory gold standard for the European medicinal cannabis industry. ZenPharm’s incorporation shows confidence from Zenabis, as a Canadian licensed producer, in the value of setting up this operation in a jurisdiction that not only demonstrates a pioneering energy but also encompasses, through its competent authorities, a valuable ethos that is practical but not permissive”.

 

Timeline and Next Steps

Date, or anticipated timing Activity
December 21, 2017 Zenabis, as Sun Pharm Investments Ltd., received an initial letter of intent from Malta Enterprises for the processing of cannabis in Malta.
November 28, 2018 Zenabis entered into a letter of intent to establish a joint venture to convert Natrix’s EU-GMP certified facility in Malta to produce finished medical cannabis products using cannabis supplied from Zenabis’ facilities in Canada.
October 4, 2019 Zenabis receives notification from Malta Enterprise of acceptance of the amendment of its original letter of intent to reflect the joint venture with Natrix.
October 2, 2019 ZenPharm incorporated through the execution of a shareholders’ agreement and incorporation documentation approved by Malta Enterprises. Supply agreement executed between Zenabis and ZenPharm.
April 23, 2020 First shipment completed from Zenabis to ZenPharm to allow for completion of ZenPharm EU-GMP approval within the original Natrix’ EU-GMP facility.
July 2020 Anticipated completion of Malta Medicines Authority inspection of ZenPharm facility.
3Q or 4Q 2020 Anticipated first commercial shipments to ZenPharm for processing and shipment to other clients.

 

Commercial Potential

Currently, the packaging equipment installed at the ZenPharm facility has the capacity to package 7,000 kg per annum. While this is a fraction of the cultivation capacity of Zenabis Atholville, ZenPharm has an obligation under its shareholders agreement to undertake capital improvements as necessary in order to increase capacity to the extent market demand in the European Union exceeds these levels.

ZenPharm, on behalf of Zenabis, is currently engaged in extensive discussions with a range of clients in the European Union in order to commence product shipment. Zenabis is currently in the process of assigning its rights and obligations under its previously disclosed European commercial agreements to ZenPharm.

Olen Vanderleeden, Vice President, Strategic Development for Zenabis, said, “Our partnership with ZenPharm gives us direct access to the significant market opportunity for medical cannabis in the European market and represents a substantial revenue growth opportunity for Zenabis.  The market for medical cannabis in Europe is estimated to reach up to $22.3 billion by 2024 and our partnership provides us with the ability to participate in this market in a meaningful way.  Pricing in the European bulk market remains at a significant premium to the Canadian bulk market. We expect to focus our bulk sales efforts on the European market from the third quarter forward in order to realize on this market potential with our partners at ZenPharm.  Additionally, the qualification of our QMS opens up other international medical cannabis markets for us including the Middle East, Australia and others.”

Zenabis Langley License Amendment

Zenabis is also pleased to announce that it has received approval of the following amendments to its Zenabis Langley sales license: the addition of 3 processing rooms with a combined area of 7,173 sq ft; the addition of 10 drying rooms with a combined area of 10,176 sq ft; and a 40,574 sq ft expansion to its grow room.  Together, these license amendments have the impact of increasing the Company’s licensed capacity from 96,400 kg to 111,200 kg per annum.

 

About Zenabis Global Inc.

Zenabis is a significant Canadian licensed cultivator of medical and recreational cannabis, and a propagator and cultivator of floral and vegetable products. Zenabis employs staff coast-to-coast, across facilities in Atholville, New Brunswick; Delta, Aldergrove, Pitt Meadows and Langley, British Columbia; and Stellarton, Nova Scotia. Zenabis currently has 111,200 kg of licensed cannabis cultivation space across four licensed facilities. Zenabis has 3.5 million square feet of total facility space dedicated to a mix of cannabis production and cultivation and its propagation and floral business.

 

Zenabis expects its Zenabis Atholville, Zenabis Stellarton and Zenabis Langley facilities to be in steady state production in 2020. The Zenabis brand name is used in the medical cannabis market, the Namaste, Blazery, and Re-Up brand names are used in the adult-use recreational cannabis market, and the True Büch brand name is used for Zenabis’ kombucha products.

 

About Natrix Sciences Ltd.

Natrix Sciences Ltd. is an experienced pharmaceutical manufacturing company headquartered in Malta.  Natrix focuses on contract development and manufacturing of niche, innovative and complex pharmaceutical products for its customers.  Natrix has significant experience operating under EU-GMP standards and currently operates its pharmaceutical business from an EU-GMP-certified facility in Malta.

 

Forward Looking Information

This news release contains statements that may constitute “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information may include, among others, statements regarding the future plans, costs, objectives or performance of Zenabis, or the assumptions underlying any of the foregoing. In this news release, words such as “may”, “would”, “could”, “will”, “likely”, “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate” and similar words and the negative form thereof are used to identify forward-looking statements. In this news release, forward-looking statements relate, among other things, to: the Company’s organizational and strategic review and forecast of demand; the Company’s focus on aligning its resources to meet the needs of consumers; the expected timing and completion of current and planned conversion, expansion and optimization of our facilities, including Zenabis Langley; our plans for Zenabis Delta; the expected submissions of license amendment applications and site evidence packages; the licensing of our facilities and projected timing thereof; our expectations for our extraction projects, equipment and capacity; our expectations for processing output; our expectations regarding our packaging equipment; and the expected content of future operational updates. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether, or the times at or by which, such future performance will be achieved. No assurance can be given that any events anticipated by the forward-looking information will transpire or occur. Forward-looking information is based on information available at the time and/or management’s good-faith belief with respect to future events and are subject to known or unknown risks, uncertainties, assumptions and other unpredictable factors, many of which are beyond Zenabis’ control. These risks, uncertainties and assumptions include, but are not limited to, those described in the shelf prospectus dated April 9, 2019, a copy of which is available on SEDAR at www.sedar.com and could cause actual events or results to differ materially from those projected in any forward-looking statements. Furthermore, any forward-looking information with respect to available space for cannabis production is subject to the qualification that management of Zenabis may decide not to use all available space for cannabis production, and the assumptions that any construction or conversion would not be cost prohibitive, required permits will be obtained and the labour, materials and equipment necessary to complete such construction or conversion will be available. Forward-looking statements or information involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements or information contained in this news release. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. Zenabis does not intend, nor undertake any obligation, to update or revise any forward-looking information contained in this news release to reflect subsequent information, events or circumstances or otherwise, except if required by applicable laws

For more information, visit: https://www.zenabis.com.

Media Relations

Email: media@zenabis.com

Phone: 1-855-936-2247

 

Investor Relations

E-mail: invest@zenabis.com

Phone: 1-855-936-2247