Organigram Signs Three Year Supply Agreement with Avida Medical in UK

Rhea-AI Summary

Organigram has signed a three-year supply agreement with Avida Medical in the UK, its second international medical cannabis customer in the region.

Under the agreement, Organigram will supply 1,700 kilograms of high-quality cannabis flower, with 500 kilograms expected in the first year.

Avida Medical will gain exclusivity for three of Organigram's cannabis strains in the UK.

This agreement aligns with Organigram's strategy to expand beyond Canada, adding to its existing international agreements in Australia, Germany, and Israel.

Positive

• Organigram secures a new international customer, Avida Medical, in the UK.
• The agreement ensures the supply of 1,700 kilograms of cannabis over three years.
• Avida Medical receives strain exclusivity for three cannabis strains in the UK.
• The deal supports Organigram's strategy of global market expansion.
• Organigram now has agreements with seven international customers.

Negative

• The agreement's success hinges on the evolving UK market, which entails risk.
• No specific financial details of the deal were disclosed, creating some uncertainty.
• The focus on high-quality flower could entail higher production costs.

Insights

Market Research Analyst

Organigram's agreement with Avida Medical signals a significant step in expanding its footprint in the global medical cannabis market. The UK, identified as one of the largest patient populations using medicinal cannabis in Europe, presents a promising opportunity for growth. The three-year supply agreement, totaling 1,700 kilograms of high-quality cannabis flower, highlights the company's strategic move to capitalize on this burgeoning market.

For investors, this agreement may be seen as a positive development in the short term, as it strengthens Organigram's international presence and diversifies its revenue streams beyond Canada. It is essential to monitor how the company manages logistics and regulatory challenges in the UK market, which could impact the agreement's successful execution.

In the long term, the exclusivity granted to Avida Medical for three strains in the UK could provide a competitive edge, helping secure a loyal customer base and potentially higher margins. However, investors should remain vigilant about the overall market competition and evolving regulatory landscape in medicinal cannabis.

Financial Analyst

From a financial perspective, the three-year supply agreement with Avida Medical represents a strategic attempt by Organigram to diversify its revenue streams and mitigate risks associated with a single market dependency. The expected delivery of 500 kilograms in the first year alone can immediately boost revenue, providing a more stable cash flow. Additionally, this agreement helps in leveraging the company's existing production capabilities while enhancing its economies of scale.

The long-term success of this deal, however, depends on Organigram's ability to maintain product quality and comply with UK regulations. Any regulatory hurdles or quality issues could potentially impact financial outcomes negatively. Investors should also consider the currency exchange rate fluctuations that might affect the profitability of international transactions.

Healthcare Market Analyst

The collaboration with Avida Medical positions Organigram strategically within the evolving UK medical cannabis market. With the UK's patient population for medicinal cannabis expected to grow significantly, this partnership can potentially elevate Organigram's brand recognition and trust among healthcare providers and patients. The strain exclusivity could be particularly beneficial, allowing for differentiation in a competitive market and ensuring consistent demand for Organigram's specific products.

For retail investors, it is important to understand the potential for market penetration and growth in the context of the UK's regulatory environment. The UK's stringent quality standards mean that Organigram's emphasis on 'high-quality, indoor-grown' cannabis could cater well to the market's expectations, potentially increasing market share and establishing long-term patient loyalty.

• Over a three-year period, Organigram expects to supply 1,700 kilograms of high-quality medical cannabis flower to Avida Medical, with 500 kilograms expected to be delivered in the first year of the agreement.
• Avida Medical to become Organigram’s second international medical cannabis customer in the UK.
• Organigram to grant Avida Medical strain exclusivity in the UK for three strains.
• To date, Organigram has established international supply agreements with a total of seven medical cannabis customers in Australia, Germany, Israel, and the UK, aligned to its strategy to extend its reach beyond Canada into global markets.

TORONTO--(BUSINESS WIRE)-- Organigram Holdings Inc. (NASDAQ: OGI) (TSX: OGI), (the “Company” or “Organigram”), a leading licensed producer of cannabis, is pleased to announce its second international medical cannabis customer in the UK, Avida Medical, a full-service medical cannabis and specials medicines manufacturing business.

Organigram Signs Three Year Supply Agreement with Avida Medical in UK (Photo: Business Wire)

Subject to the terms of the Agreement, the Company expects to supply 1,700 kilograms of high-quality, indoor-grown dried cannabis flower to Avida Medical in the UK over a period of three years.

"We are pleased to partner with Avida Medical in the UK, marking yet another exciting milestone for Organigram's expansion into the global market. As frontrunners in the cannabis industry, we recognize the immense potential of the UK market. Our decision to further expand into this market stems from our commitment to ensuring patients have access to reliable, high-quality medical cannabis offerings,” said Tim Emberg, Chief Commercial Officer of Organigram. “With our extensive industry expertise in cultivation and production, we are poised to elevate accessibility and cater to the evolving requirements of patients in the UK. We are confident that this strategic move will not only strengthen our international presence but also reinforces our objective of advancing global access to medical cannabis,” Emberg concluded.

“Our agreement with Organigram exemplifies our commitment to providing the highest quality medicine and service to patients. The UK is home to one of the largest patient populations using medicinal cannabis in Europe, and this is set to grow exponentially over the next four years. As the market matures, it is those producers and manufacturers that have focused on ensuring the highest quality of their products and processes, that will determine the companies that succeed,” commented Paul Parkinson, Chief Executive Officer, Avida Medical.

“This is a hugely positive collaboration for Avida Medical and brings us a step closer to becoming one of the pre-eminent manufacturers of medicinal cannabis products here in the UK,” he added.

About Organigram

Organigram is a NASDAQ Global Select Market and TSX listed company whose wholly owned subsidiaries include Organigram Inc. a licensed producer of cannabis, cannabis- derived products and cannabis infused edibles in Canada.

Organigram is focused on producing high-quality, cannabis for patients and adult recreational consumers, as well as developing international business partnerships to extend the Company’s global footprint. Organigram has also developed and acquired a portfolio of legal adult-use recreational cannabis brands, including Edison, Holy Mountain, Big Bag O’ Buds, SHRED, SHRED’ems, Monjour, Laurentian, Tremblant Cannabis and Trailblazer. Organigram operates facilities in Moncton, New Brunswick and Lac-Supérieur, Quebec, with a dedicated edibles manufacturing facility in Winnipeg, Manitoba. The Company is regulated by the Cannabis Act and the Cannabis Regulations (Canada).

Forward-Looking Information

This news release contains forward-looking information. Often, but not always, forward-looking information can be identified by the use of words such as “plans”, “expects”, “estimates”, “intends”, “anticipates”, “believes” or variations of such words and phrases or state that certain actions, events, or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results, events, performance or achievements of Organigram to differ materially from current expectations or future results, performance or achievements expressed or implied by the forward-looking information contained in this news release.

Risks, uncertainties and other factors involved with forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information include termination of the Supply Agreement by either party prior to the three year term, customer demand and buying patterns and factors and risks disclosed in the Company’s most recent annual information form, management’s discussion and analysis and other Company documents filed from time to time on SEDAR+ (see www.sedarplus.ca) and filed or furnished to the Securities and Exchange Commission on EDGAR (see www.sec.gov). Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.

Although the Company believes that the assumptions and factors used in preparing the forward-looking information in this news release are reasonable, undue reliance should not be placed on such information and no assurance can be given that such events will occur in the disclosed time frames or at all. The forward-looking information included in this news release are made as of the date of this news release and the Company disclaims any intention or obligation, except to the extent required by law, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240528337587/en/

For Media enquiries:

Megan McCrae

SVP of Global Brands and Corporate Affairs

megan.mccrae@organigram.ca

For Business enquiries:

Andrew Miller

VP of International Business Development

andrew.miller@organigram.ca

For Investor Relations enquiries:

Max Schwartz

Director of Investor Relations

investors@organigram.ca

Source: Organigram Holdings Inc.

FAQ

What is the new agreement between Organigram and Avida Medical?

Organigram signed a three-year supply agreement with Avida Medical to provide 1,700 kilograms of medical cannabis flower in the UK.

How much cannabis will Organigram supply in the first year to Avida Medical?

Organigram expects to supply 500 kilograms of cannabis flower to Avida Medical in the first year.

What is the significance of strain exclusivity in the agreement with Avida Medical?

Avida Medical will have strain exclusivity for three of Organigram's cannabis strains in the UK.

How does this agreement align with Organigram's business strategy?

The agreement supports Organigram's strategy to expand its reach into global markets beyond Canada.

Which countries does Organigram have international supply agreements with?

Organigram has supply agreements with customers in Australia, Germany, Israel, and the UK.