31/08/2022 - MGC Pharmaceuticals Ltd.: Preliminary Final Report

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MGC PHARMACEUTICALS LTD

ABN 30 116 800 269

Appendix 4E and Unaudited Preliminary Financial Report

30 JUNE 2022

For personal use only

M G C P H A R M A C E U T I C A L S L T D

MGC Pharmaceuticals Ltd provides the following information under Listing Rule 4.3A:

Details of reporting period and the previous corresponding period

REPORTING PERIOD	PREVIOUS REPORTING PERIOD
Financial Year ended 30 June 2022	Financial Year ended 30 June 2021

Results for announcement to the market

	30 June 2022	Change %		30 June 2021
Revenue	$			$
4,646,988	56.84 %		2,962,897
Net (Loss) from ordinary activities	(17,138,732)	(7.98%)		(15,871,978)
after tax attributable to members					2021
			2022
			Cents		Cents
Earnings / (loss) per share			(0.67)		(0.83)
Net tangible assets per ordinary share*			0.21		0.43

* The calculation on net tangible assets per ordinary share includes right-of-use assets and lease liabilities.

Commentary on results

• 2022 delivered a year of significant business growth, with strong sales amounting to ~$4.6million for the Group, being an increase of 56.84% from the previous year. Sales of ArtemiCTM together with the Company's phyto-cannabinoid medicine products ($2.7m) drove the major sales growth and record revenue result for the financial year, and consulting services provided by its wholly owned subsidiaries MedicaNL and Medicinal Cannabis Clinics (MCC) . The Company also completed or advanced a number of critical clinical trials during the year as set out in the Review of Operations below, which is evidenced with $2million incurred on R&D activities.

Review of Operations

Highlights

Research & Development

• Preliminary results from a pre-clinicalin-vitro study into CimetrATM's method of action in inhibiting cytokine production indicates that CimetrATM moderates the body's release of pro-inflammatory cytokine related to indications such Rheumatoid Arthritis, Inflammatory bowel disease, Asthma, Psoriasis and Chronic obstructive pulmonary disease.
• Commenced CimetrATM Phase IIb Clinical Study to determine the most effective concentrations of the active ingredients for dosage, and further validate the anti-inflammatory and immune modulating effects of the product. Completed CogniCann® phase II Clinical Trial on patients with dementia and Alzheimer's disease during the year, with trial results demonstrating the ability of CogniCann® to inhibit the deterioration in the behaviour of patients with dementia.
• Completed Pre-clinicalin-vitro Glioblastoma research study, with published final results which demonstrate that MGC Pharma's proprietary formulations were cytotoxic to Glioblastoma tumour and stem cells, reducing the cells' viability and inducing caspase-dependent cell apoptosis (or cell death).
• Commenced Clinical Study into the efficacy of MGC Pharma's ArtemiC Support® in improving the functional status and symptomatology in patients suffering with Long COVID. Positive Study results were published in July 2022 indicate that ArtemiC Support® is effective in reducing Long COVID symptoms, including Dyspnea, Cough, Asthenia, Headache and Mental Confusion.

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Operations

• Construction of Maltese GMP commercial production facility completed, and GMP certification audit process commenced in Q3 2022.
• MGC Pharma delivers Swiss PharmaCan's ~A$1,000,000 order of ArtemiCTM in November 2021.
• Record year on year sales of phytocannabinoid products in FY 22, with 17.9K units sold worldwide, amounting to ~$2.7million in revenues.

Licences, Approvals and Distributions Agreements

• US Sales and Distribution Agreement signed with US entity AMC Holding Inc (AMC) for a range of MGC Pharma's proprietary products, resulting in a ~$1.4M (US$750,000) advance payment from AMC, including collaboration on US clinical trials.
• AMC Sales and Distribution Agreement amended in August 2022 to include ArtemiCTM.
• Strategic partnership agreement entered into with international pharmaceuticals company, Sciensus Rare, for the exclusive distribution of MGC Pharma's CannEpil® and CogniCann® products in key European territories including Ireland, and the UK.
• Free Trade Certificate Issued for MGC Pharma's ArtemiCTM allowing marketing of the product in the European Union.
• Slovenian Intellectual Property Office grants Patents for MGC Pharma's CimetrATM and CannEpil® products, providing commercial protection for the product's unique formulations and manufacturing processes for a period of 20 years.

Corporate

• December 2021 ~A$10.3M (£5.5M) equity raising successfully completed, led by UK based institution investors and a US investment fund.
• MGC Pharma's Head Office relocated to London as part of the Company's corporate restructuring, which includes the appointment of a UK based Chief Financial Officer alongside the Company's Group Financial Controller, and Chief Commercial Officer responsible for driving global sales growth of the business.

Research and development / clinical trials

CimetrA™ Pre-clinicalIn-vitro Method of Action Study

Preliminary results from a Pre-clinicalIn-vitro study have indicated that MGC Pharma's proprietary product, CimetrATM has a wide-ranging application as an anti-inflammatory treatment, through the modulation of the production of pro-inflammatory cytokines.

The study undertaken by Israeli contract research organisation Science in Action built on previous studies commissioned by MGC Pharma, and examined the mechanism of CimetrATM's anti-inflammatory effect in Human Peripheral Blood Mononuclear Cells (PCBC).

The study has found that CimetrATM moderates the body's release of pro-inflammatory cytokines by effecting their gene expression and transcription factors.

Specifically, the preliminary results of the study have demonstrated the effective blocking of the mRNA expression of IL-32, the pro-inflammatory cytokine related to Rheumatoid Arthritis, Inflammatory bowel disease, Asthma, Psoriasis and Chronic obstructive pulmonary disease.

Previous clinical trials had indicated that CimetrATM is effective in inhibiting a cytokine storm, which is seen as a sudden increase in different pro-inflammatory cytokines, including IL-1,IL-6 and TNF-α, associated with COVID-19, and was able to treat symptoms of both mild and severe cases of the disease.

Following this successful study, MGC Pharma plans to further explore aspects of CimetrATM's profile and mechanism of action and begin planning the next phases of its clinical development.

CogniCann® Phase II Clinical Trial

The 18 week, double-blindcross-over Clinical Trial with 22 Australian patients, was undertaken in conjunction with the University of Notre Dame in Western Australia and involved eligible patients commencing a six-week treatment course with CogniCann®, before switching (crossing over) to a six-week course of placebo, with a two-week

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'washout' period between the two arms. The study's objectives were to assess the safety and efficacy of CogniCann®, including the assessment of the behavioural benefits of CogniCann® on dementia patients measured using several evaluation tools including a Neuropsychiatric Inventory - Nursing homes (NPI-NH) Questionnaire and a Cohen-Mansfield Agitation inventory Questionnaire.

The study results demonstrated that there was no difference in the safety profile between the CogniCann® and Placebo groups, indicating that CogniCann® was safe to use by patients with dementia. Furthermore, the results showed that after 44 days, patients in the Placebo group experienced a deterioration in their condition, based on their NPI-NH score, compared with the stable neuropsychiatric profile of those patients treated with CogniCann®, indicating that the early-stage use of CogniCann® may be beneficial in the treatment of dementia patients.

Aggressive behaviour is one of the most serious of the disturbances experienced by dementia patients, and is a common cause for psychiatric referral, admission to hospital and drug treatment. During the 44-day study period the treatment group's Cohen-Mansfield Agitation Inventory Aggressive subscale improved by 13%, compared with the Placebo group which improved by 4%. This important finding indicates that CogniCann® not only improved in the health status of the patients, but also the improved the quality of life of the families and caregivers that are taking care of dementia patients.

Glioblastoma Pre-clinicalIn-vitro Study Results

Final results from the Company's pre-clinicalin-vitro Glioblastoma research study, conducted between 2019-2022, demonstrated that MGC Pharma's proprietary formulations were cytotoxic to Glioblastoma tumour and stem cells, reducing the cells' viability and inducing caspase-dependent cell apoptosis (or cell death).

The study was undertaken on biopsy samples taken from 18 patients, and over 5,800 cell tests over the course of the study, to determine the most effective concentrations and ratios of Cannabidiol (CBD) and Cannabigerol (CBG) in the treatment formulation. The results of the study have demonstrated the efficacy of cannabinoids in treating Glioblastoma, as well as determining the most effective ratio of CBD:CBG in inhibiting the tumours' viability, setting off the cascade of biological processes leading to the apoptosis (cell death) of the Glioblastoma tumour and stem cells. With Glioblastoma stem cells being the main cause of the disease's progression, and which are highly resistant to standard therapies.

With the results of the research study demonstrating the cannabinoid treatment's viability, MGC Pharma is now planning additional research programs to further demonstrate the formulation's efficacy as a treatment for Glioblastoma.

ArtemiC Support® Long COVID Study

During the year MGC Pharma, in conjunction with partners Swiss PharmaCan AG and Glow LifeTech Ltd, commenced a Clinical Study to determine the influence of MGC Pharma's proprietary supplement ArtemiC Support® in patients with Long COVID syndrome, a condition associated with an infection of COVID-19.

The ArtemiC Support® Long COVID Study which received Ethics Committee approval from Spanish Foundation, IDIAP Gordi Gol, commenced in December 2021, with results of the study released by the Company on 14 July 2022.

The study, which enrolled 150 patients suffering from Long COVID and administered ArtemiC Support®, an Oral Spray, measured their progress using a Post-COVID Functional Scale (PCFS) and a 10-point Likert scale 1, 2, 3 and 6 weeks after treatment initiation. During the study the symptoms measured included:

1. Dyspnea - shortness of breath
2. Asthenia - abnormal physical weakness or lack of energy
3. Anosmia - loss of senses of smell
4. Ageusia - loss of sense of taste
5. Cough
6. Headache
7. Mental confusion

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