Quarterly Activities Report and Appendix 4C

Quarter ended September 2018

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On track for launch of validated cannabinoid medicines in 2019

Highlights

  • Completion of successful pilot production of AusCann's final dose form cannabinoid hard shell capsules

  • This success enables the move of the production process into a commercial facility in preparation for Australian market and export supply in 2019

  • These medicines will then be taken through AusCann's clinical development program for registration of an approved cannabinoid pain management pharmaceutical product

  • Well-funded to execute on its growth strategy following A$35 million Placement during the quarter

Tuesday, 30 October 2018 - Medical cannabinoid pharmaceutical company AusCann Group Holdings Limited (ASX:AC8) (AusCann or 'the Company') is pleased to provide an overview of its activities for the three months ended 30 September 2018.

Operational

On target to supply Australian produced cannabinoid pharmaceuticals to patients in 2019.

AusCann made a significant step towards commercial product supply, announcing the successful completion of pilot production of its final dose form cannabinoid capsules.

Following an industry best practice pharmaceutical development project involving expertise in Colorado, and Australia, AusCann has created a patient centric, capsule-based cannabinoid medicine for sufferers of chronic and neuropathic pain.

Around 1.9m Australians suffer from chronic neuropathic pain. Chronic neuropathic pain is ongoing pain caused by an abnormality of, or damage to, the nerves. Current treatments for this target patient group have limitations in efficacy and notable side effects.

The Australian TGA guidance document on the use of cannabinoids for chronic non-cancer pain provides: 'patients who used medicinal cannabis for non-MS related neuropathic pain were more likely to experience a 50% reduction in pain and a reduction in pain scores compared with patients taking a placebo'

AusCann's work has focused upon the development of a novel effective, stable oral dose form that enables reliable dosing and ease of administration for doctors and their patients.

Currently medicinal cannabis is administered via oral liquids, oral sprays, soft-shell gelatin capsules containing cannabinoids dissolved in oils, or inhalation of dried material or extracts. The shortcoming of these products however is the poor stability of the active cannabinoids, resulting in variability in the composition and the efficacy of the

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formulations. This has been a significant issue for doctors prescribing these products. AusCann's hard shell capsules solve this issue by providing consistent and stable dosage of the active ingredients.

With the pilot study completed, AusCann is moving into commercial manufacture, aiming to release its first capsule-based pharmaceuticals for clinical trial and patients in the first half of 2019.

AusCann has lodged a patent in respect to the intellectual property of the dose form it has developed. The Company has also ensured that international Good Manufacturing Practice standards were followed in the design and manufacturing process. This will also enable export to key overseas markets.

Medical Outreach Program

In addition to solving the issue of a reliable dose form for doctors, AusCann continues to work in addressing doctor's other key concern, which is access to reliable clinical information on the use of cannabinoid medications. Significant progress was made with AusCann's Medical Outreach Program to drive engagement and educational programs of cannabinoid medicines with the Australian medical community. The medical outreach team, led by AusCann's Chief Medical Advisor, Dr Danial Schecter, released a series of online cannabinoid medical courses for Australian health professionals post period end. The Program provides Australian medical practitioners and health professionals with the necessary information to confidently make informed decisions regarding the use of cannabinoid medicines.

Progress with Chilean Joint Venture DayaCann

AusCann continues to work towards its goal of supplying high quality cannabinoid medicines to the Latin American market through its Chilean joint venture DayaCann, established with Fundación Daya.

DayaCann is the only company in Chile to hold a medical cannabis production licence, and subsequent to the period end, the company signed a non-binding MoU with Canadian listed medical cannabis company Khiron Life Sciences. The MoU is intended to facilitate the provision of new medical cannabis products to patients in Chile. To achieve this, the parties will engage in cultivation, manufacturing, educational, scientific and commercial activities that present cannabinoid medicines as a part of normal patient management practices. As part of the agreement, DayaCann will be supplying Khiron with high quality cannabinoid medicines and Khiron will provide funds to support the development of these activities.

Corporate

Capital Raising

During the quarter, the Company completed a A$33.4 million Placement to institutional and sophisticated investors from North America and Australia, in addition to raising A$1.9 million via a Share Purchase Plan. The proceeds will be used specifically to fund cannabinoid pharmaceutical R&D and clinical studies, in addition to expanding AusCann's operations in Chile and Australia, whilst promoting medical outreach programs in new international markets. The successful capital raising has AusCann well-funded to execute

AusCann Group Holdings Ltd ACN 008 095 207www.auscann.com.au

Email:info@auscann.com.au

Phone: +61 8 9561 8834

Suite 8, Level 2, Shenton House, 57 Shenton Avenue, Joondalup, WA 6027 AUSTRALIA

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on its growth strategy as it progresses towards the commercialisation of its cannabinoid medicines.

Leadership Transition

AusCann announced a leadership transition with Ms Elaine Darby advising of her intention to step down as Managing Director. This is part of the Company's transition from a start-up company focused on the complex licensing and product development aspects of this sector, to a pharmaceutical production and sales business. As a result, the AusCann leadership is transitioning to reflect the broader skills and experience needed to guide the Company through this next phase of the Company's development and growth.

The Board has commenced a comprehensive executive search and Ms Darby will continue in her role to ensure an orderly transition process until an appropriate time to hand over leadership responsibilities is agreed with the Board.

During the quarter, Dr Paul MacLeman joined the Board as an Executive Director. Dr MacLeman brings over 25 years' experience in the pharmaceutical sector and will lead the CEO search process.

In October, the Company also appointed Quentin Megson as Chief Operations and Financial Officer in order to provide support for Ms Darby and Dr MacLeman, and ultimately for the incoming CEO. Mr Megson has experience in both the finance and operational activities of agricultural and pharmaceutical businesses as well as being involved in the early stages of a listed company.

Trading on US OTCQX market

AusCann also commenced trading in the US on the OTCQX market under the stock symbol ACNNF. Trading on the OTCQX supports the Company's strategy to broaden its international investor base, particularly in North America where it has a number of strategic agreements in place, while also enabling greater accessibility and liquidity of the stock.

AuCann Managing Director Elaine Darby commented: "I am pleased with the progress AusCann made in the September quarter specifically with the results from our development work bringing us closer to releasing our proprietary cannabinoid capsules.

Delivery of a consistent and stable dosage of the active cannabinoids has been an issue that plagues the industry. Our capsules will truly be a game-changer in the world of cannabinoid medicines for doctors and patients, solving issues around quantity and administration, and giving a consistent treatment outcome time and time again.

AusCann has a presence across the whole medicinal cannabis supply chain, and together with our partnerships and well-funded balance sheet, we look forward to releasing our capsule-based products in the first half of 2019."

ENDS

AusCann Group Holdings Ltd ACN 008 095 207www.auscann.com.au

Email:info@auscann.com.au

Phone: +61 8 9561 8834

Suite 8, Level 2, Shenton House, 57 Shenton Avenue, Joondalup, WA 6027 AUSTRALIA

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For more information, please contact:

AusCann

For Investment Enquires

For Media Enquiries

Elaine Darby

Quentin Megson

Elodie Castagna

Managing Director

info@auscann.com.au

FTI Consulting

info@auscann.com.au

+61 8 9561 8834

elodie.castagna@fticonsulting.com

+61 8 9561 8834

+61 8 9321 8533

ABOUT AUSCANN

AusCann Group Holdings Limited (ASX:AC8) is an Australian-based pharmaceutical company that aims to produce high quality, economical, and clinically validated cannabinoid medicines. AusCann is bringing together leading expertise and operations across all aspects of the medical cannabis value chain, beginning with cultivation and production, through to manufacture and distribution of products. Through partnerships with industry experts, existing leading market participants and doctors, AusCann is building operations and educating the medical community about the benefits of cannabinoid medicines.

Incorporated in 2014, AusCann holds the full set of necessary licences to grow and manufacture cannabinoid medicines in Australia. The company is initially targeting medications for neuropathic and chronic pain in Australia and Chile, whilst exploring global export opportunities.

AusCann Group Holdings Ltd ACN 008 095 207www.auscann.com.au

Email:info@auscann.com.au

Phone: +61 8 9561 8834

Suite 8, Level 2, Shenton House, 57 Shenton Avenue, Joondalup, WA 6027 AUSTRALIA

Appendix 4C

Quarterly report for entities subject to Listing Rule 4.7B

Appendix 4C

+Rule 4.7B

Quarterly report for entities subject to Listing Rule 4.7B

Introduced 31/03/00 Amended 30/09/01, 24/10/05, 17/12/10, 01/09/16

Name of entity

AusCann Group Holdings Limited

ABN

Quarter ended ("current quarter")

72 008 095 207

30 September 2018

Consolidated statement of cash flows

Current quarter

$A'000

Year to date (12 months)

$A'000

1.

1.1

Receipts from customers

-

-

1.2

Payments for

(a) research and development

(776)

(776)

(b) product manufacturing and operating

-

-

costs

(c) advertising and marketing

(70)

(70)

(d) leased assets

(32)

(32)

(e) staff costs

(365)

(365)

(f) administration and corporate costs

(785)

(785)

1.3

Dividends received (see note 3)

-

-

1.4

Interest received

71

71

1.5

Interest and other costs of finance paid

-

-

1.6

Income taxes paid

-

-

1.7

Government grants and tax incentives

-

-

1.8

Other (provide details if material)

-

-

1.9

Net cash from / (used in) operating

(1,957)

(1,957)

activities

2.

Cash flows from investing activities

2.1

Payments to acquire:

(a) property, plant and equipment

(564)

(564)

(b) businesses (see item 10)

-

-

(c) investments

-

-

Cash flows from operating activities

+ See chapter 19 for defined terms 1 September 2016

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Disclaimer

AusCann Group Holdings Ltd. published this content on 30 October 2018 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 29 October 2018 21:41:12 UTC