REG - Hellenic Dynamics - Signing of MoU with Demecan Holding

Hellenic DynamicsAnnouncement

13/06/2023 07:00

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RNS Number : 4750C  Hellenic Dynamics PLC  13 June 2023

Hellenic Dynamics plc

("Hellenic Dynamics" or the "Company")

Signing of MoU with Demecan Holding ("Demecan")

 

-     Demecan is the only vertically integrated independent German company
licensed to grow, process and distribute medical cannabis in Germany

-     MoU is the first commercial agreement under Hellenic's expanded
strategy into contract cultivation

-     Advanced discussions underway with a number of other licenced European
distributors for POD agreements

 

London, 13 June 2023: Hellenic Dynamics plc (LSE: HELD), the specialist
cultivator and supplier of tetrahydrocannabinol ("THC") dominant strains of
medical cannabis flowers, announces it has signed a Memorandum of
Understanding ("MoU") with Deutsche Medizinalcannabis GmbH which trades as
Demecan Holding for the cultivation and supply of medical cannabis flowers.

 

Demecan is the only licensed independent German company that covers the entire
value chain for medical cannabis from cultivation through processing to
distribution. Demecan works with producers of medical cannabis worldwide to
ensure a reliable and continuous supply of medical cannabis for patients in
Germany.

 

This MoU represents the first commercial agreement for Hellenic Dynamics under
the expanded contract cultivation strategy it announced last week whereby it
will allow, for the first time, medical cannabis distributors to have their
own dedicated white label cultivation facilities by way of a Hellenic Dynamics
Product Outsourcing Development ("POD") agreement.

 

Under the MoU, Hellenic Dynamics will grow and supply medical cannabis flowers
from Demecan provided cultivars in an indoor cultivation area of 1,000 square
meters capable of producing circa 1,200 kg of medical cannabis flowers per
annum under Good Agricultural and Collection Practice ("GACP"). Demecan will
then process the delivered flowers in its own EU-GMP facilities for onward
sale to the German market. It is anticipated that the binding agreement with
Demecan will be in place in line with Hellenic Dynamics' cultivation strategy,
as per the Company's previous announcement.

 

Hellenic Dynamics is also in discussions with a number of other licensed
European distributors, who have their own GMP processing facilities for
similar POD agreements. The model allows distributors to fully define the
specific type of medical cannabis they want to receive using either Hellenic
Dynamics' strains or the distributor's own strains. Hellenic Dynamics will
then cultivate and despatch directly to the distributor, branded under the
distributor's chosen brand name. It is currently anticipated that customers
will be contractually obliged to take a POD area for a minimum of two years.

 

This outsourced model means that Hellenic Dynamics handles the entire fit out
of the POD and all cultivation requirements, with oversight from the
distributor if they so wish. Hellenic Dynamics' distributor customers can also
benefit from certain of the Company's relationships, for example the recent
MoU agreement it has with ELGO-DIMITRA, the Institute of Plant Breeding and
Genetic Resources located near Thessaloniki in Greece, which may enable POD
owners to have their products registered and IP protected in Europe.

 

Under this strategy of white label cultivation, Hellenic Dynamics intends to
have a select number of distributors utilising a POD agreement, while the
Company will continue as planned to produce its own crop of medical cannabis
plants. The medical cannabis markets in Europe are rapidly evolving and in the
last 18 months cultivators have been struggling with soaring energy costs. In
addition, many distributors have been building their own EU-GMP facilities. As
mentioned in the last Company announcement, Hellenic Dynamics, in adapting
with the market changes, has seen fit to expand its strategy to include the
production of customised GACP products cutting down its production cost and
the time to deliver products, which should enhance the business turnover and
generate earlier cash flows. This strategy also allows the Company to
diversify and accelerate cash flows whilst strengthening its relationships
with a number of key distributors across Europe and establish production at
scale.

 

Hellenic Dynamics remains committed to excellence and compliance across its
cultivation value chain.

 

Further details on the POD expanded cultivation strategy can be found at:
https://www.hellenicdynamics.com/investor/#s4
(https://www.hellenicdynamics.com/investor/#s4)

 

Davinder Rai, CEO of Hellenic Dynamics, commented: "This POD agreement
represents another development in the future of the Company's medical
cannabis cultivation and underpins the long-term value inherent in the
business and our operating model. We can allow distributors to grow the
products they want in their own dedicated white label cultivation areas, which
we then ship to their EU-GMP facilities for processing enabling us to widen
our client base and creating more value for our shareholders."

 

 

Enquires:

 

Hellenic Dynamics plc                                +44 (0)20
3818 7850

Davinder Rai
 davinder@hellenicdynamics.com

 

Cairn Financial Advisers LLP

Emily Staples / Jo Turner                           +44 (0)20
7213 0880

 

Peterhouse Capital

Lucy Williams / Charles Goodfellow            +44 (0)20 7469 0930

 

J&H Communications

George Hudson                                         +44
(0)7803 603130

About Hellenic Dynamics plc

Founded in 2019, Hellenic Dynamics is specifically focused on the cultivation
and supply of THC ("tetrahydrocannabinol") - dominant strains of medical
cannabis flowers, destined for the growing medical cannabis markets across
Europe. Hellenic Dynamics' core strategy is to develop and operate its 40,000
square metre active cultivation licence from its 195,506 square metre facility
located near Thessaloniki in Northern Greece. In full production, Hellenic
Dynamics is capable of producing over 54,000 kg of dried flowers per annum.

Hellenic Dynamics will take advantage of its relatively low cost base
resulting from a comparatively low cost of power, having its own running water
supply and the labour rates for skilled and semi-skilled labour in Northern
Greece.

25 European countries now allow medical cannabis via prescription and the
European cannabis market is expected to reach €43.3 billion per annum by
2027. Sales of Hellenic Dynamics' dried THC-dominant cannabis flowers and
extracts are initially intended for export into Europe's largest market -
Germany, in addition to other European markets including domestically in
Greece.

As the first medical cannabis cultivator to obtain a listing on the main
market for listed securities of the London Stock Exchange, Hellenic is
significantly different to the number of CBD (Cannabidiol) related companies
that have appeared over the recent years. Hellenic Dynamics cultivates
THC-dominant medical cannabis flowers. THC-dominant medical cannabis products
are only available via a medical prescription. Medicinal cannabis has been
approved for use both in the United Kingdom and Germany, plus 23 other
European countries, for conditions including but not limited to  chronic
pain, intractable chemotherapy-related nausea, anxiety, insomnia, Tourette's
syndrome, substance use disorder, multiple sclerosis, IBS, spinal cord
treatment, lack of appetite due to HIV/AIDS, cachexia, anorexia and glaucoma.
www,hellenicdynamnics.com

 

Caution regarding forward looking statements

Certain statements in this announcement, are, or may be deemed to be, forward
looking statements. Forward looking statements are identified by their use of
terms and phrases such as ''believe'', ''could'', "should" ''envisage'',
''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect",
''will'' or the negative of those, variations or comparable expressions,
including references to assumptions. These forward-looking statements are not
based on historical facts but rather on the Directors' current expectations
and assumptions regarding the Company's future growth, results of operations,
performance, future capital and other expenditures (including the amount,
nature and sources of funding thereof), competitive advantages, business
prospects and opportunities. Such forward looking statements reflect the
Directors' current beliefs and assumptions and are based on information
currently available to the Directors.

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