Investor Presentation November 2014

Investor Presentation
November 2014
This Confidential Presentation (the “Document”) on the proposed financing (“the Transaction”) by Mettrum Ltd. (“Mettrum” or the “Company”) has been compiled by management of the Company solely for information
purposes. The Document has been prepared and dated as of October 3 , 2014 and the information contained herein is current as of such date only. The Document is for the confidential use by the recipient in order
to assist such recipient in deciding whether to proceed with an in-depth investigation of the Transaction contemplated herein. The Document is not, and under no circumstances is to be construed to be, an offering of
securities. Neither this Document, nor its delivery to the recipient shall constitute an offer to sell, or the solicitation of an offer to buy the assets described herein. It is provided solely for use by prospective investors in
considering their interest.
The information contained herein has been prepared to assist interested parties in making their own evaluation of the Company and its business and does not purport to contain all the information that prospective
investors may require. Prospective investors should conduct their own investigation and analysis of the Company and its business and the information contained in this Document as well as any additional information
provided by the Company.
This Document includes forward-looking statements within the meaning of certain securities laws, including the “safe harbour” provisions of the Securities Act (Ontario) and other provincial securities law in Canada.
These forward-looking statements include, among others, statements with respect to our objectives, goals and strategies to achieve those objectives and goals, as well as statements with respect to our beliefs, plans,
objectives, expectations, anticipations, estimates and intentions. The words “may”, “will”, “could”, “should”, “would”, “suspect”, “outlook”, “believe”, “plan”, “anticipate”, “estimate”, “expect”, “intend”, “forecast”,
“objective” and “continue” (or the negative thereof), and words and expressions of similar import, are intended to identify forward-looking statements.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, which give rise to the possibility that predictions, forecasts, projections and other forward-looking
statements will not be achieved. Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements.
The Company strongly cautions readers not to place undue reliance on these statements, as a number of important factors, many of which are beyond our control, could cause the Company’s actual results to differ
materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to: general economic
conditions; pending and proposed legislative or regulatory developments in Canada including the impact of changes in laws, regulations and the enforcement thereof; reliance on funding models in Canada;
operational and infrastructure risks including possible equipment failure and performance of information technology systems; intensifying competition resulting from established competitors and new entrants in the
businesses in which the Company operates; insurance coverage of sufficient scope to satisfy any liability claims; fluctuations in total patients and customers; technological change and obsolescence; loss of services
of key senior management personnel; privacy laws; structural subordination of common shares; leverage and restrictive covenants; fluctuations in cash timing and amount of capital expenditures; tax-related risks;
unpredictability and volatility of the price of the Company’s securities; dilution; and future sales of the Company’s securities.
The foregoing list of important factors that may affect future results is not exhaustive. When reviewing the Company’s forward-looking statements, investors and others should carefully consider the foregoing factors
and other uncertainties and potential events. Except as required by Canadian securities law, the Company does not undertake to update any forward-looking statements, whether written or oral, that may be made
from time to time by the Company or on the Company’s behalf. Such statements speak only as of the date made.
The forward-looking statements contained in this Document should not be relied upon as representing the view of the Company or its management as of any date subsequent to the date of this Document. Neither the
Company nor its management is under any obligation, and neither undertakes, to update any of this information at any particular time. Neither the Company nor its management assumes any obligation to update or
revise forward-looking statements should circumstances or estimates or opinions changes.
None of the Company or its affiliated or related partnerships and corporations or their respective directors, officers, partners, employees, agents or representatives makes any representation or warranty as to the
accuracy or completeness of the Document or any statements, estimates or projections, and none will assume any liability for any representations (express or implied) contained in, or for any omissions from, the
Document, or for any other written or oral communications transmitted to prospective investors in the course of their evaluation of the Company and its business. An investor will only be entitled to rely on those
representations and warranties contained in the definitive agreement or agreements which constitute the financing.
Use of this Document is restricted to parties to whom the Company delivers the Document and the recipient and its representatives shall keep confidential all information contained herein or otherwise provided in
connection with the proposed financing which is not already public or which is not subsequently made public, and will use the Document only for the purpose set forth above. In addition, each recipient will not copy,
reproduce or distribute the Document in whole or in part to others, at any time, without the prior express written consent of the Company.
There are a number of non-IFRS measures used in this Document, including EBITDA (earnings before interest, taxes, depreciation and amortization). For the purposes of this Document, EBITDA is calculated as
revenue less cost of sales and operating expenses. The Company believes that these non-IFRS measures are appropriate measures of the operating performance of the Company. The Company’s calculation of
these measures may differ from the methodology used by other issuers and, accordingly, may not be comparable to such other issuers. The Company believes that these measures are appropriate measures of the
Company’s operating performance because they facilitate an understanding of operating performance without giving effect to certain non-cash and overhead expenses. None of these measures are equivalent to net
income or cash flow from operating activities determined in accordance with IFRS
At a Glance
November 2013
Number of Employees
Facilities & Offices (3)
Bennett Rd.North. Bowmanville, ON (licensed for 650kg/yr with ~600kg/yr capacity)
Bennett Rd.South Bowmanville, ON (pending license for 8,000kg/yr)
AgriPharm, Creemore, ON (pending license for 4,000kg/yr)
Recent Share Price
$1.60 (as at October 31, 2014)
Shares Outstanding – basic
fully diluted
Market Capitalization – basic
fully diluted
Insider Ownership
Cash & Cash Equivalents
Total Debt
Enterprise Value
Mettrum Highlights
 Fully licensed medical cannabis producer & vendor
‒ Licensed by Health Canada since November 1, 2013 (on first facility)
‒ Commercial sales of 12 strains since January 2014
 Established client base
‒ ~2,100 registered clients to date
 Fully operational production (up to ~600 kg/yr), customer service & operations facility in
Bowmanville, ON with 2 additional completed facilities pending licensing
‒ Purchased and completely renovated second Bowmanville large scale (~8,000 kg/yr) facility which is ready for
inspection in Q4 2014
‒ Purchased AgriPharm: anticipated ~4,000 kg/yr production facility in Creemore, June 2014 and expected to be in
production in Q4 2014
 Well capitalized
‒ January 2014 - $6mm private placement (to fund expansion into new facility)
‒ July 2014 - $34.5 million private placement concurrent TSXV listing via CPC RTO
‒ October 2014 – Projected listing on TSXV
 Proven management and board
Management & Board
Senior Management
 Proven entrepreneur, including a founder of HIP Interactive (1999) in which he helped
CEO & Executive Chairman
build sales to $500+ million; Chairman of Blammo Games Ltd. (2011 – 2014)
Michael Haines
Peter Kampian
Trevor Fencott
Chief Legal Officer &
 Former CFO of Algonquin Power Income Fund (TSX:AQN) and experience with
various capital market initiatives on the TSX, including a cross border income trust
 Former IP and corporate lawyer at Goodmans LLP and former Head of Business &
Legal at Fuse Powered Inc.
Brad Rogers
Chief Operating Officer
 Former VP of Product Realization of Mood Media (TSX:MM) the worlds largest instore media marketing specialist found in over 800 retail stores in 40 countries
Peter Miller
President - Agripharm
 Former Business Development Officer of Esri Canada, a Deloitte “Canada’s 50 Best
Managed Companies” winner.
Grant Koehler
 Former National Sales Manager – Pain Specialty for Valeant Canada and Regional
Sales Manager for Valeant Pharmaceuticals (TSX:VRX)
EVP Sales & Marketing
Board – Independent Directors
Don Wright
 Former Chairman & CEO of TD Securities
Norman Inkster
 Former Commissioner of the Royal Canadian Mounted Police
William Assini
 Former Partner and SVP of PricewaterhouseCoopers LLP and current Director and
Chair of Audit Committee of Investors Group Investment Management Ltd.
Dr. Joshua Tepper
 President & CEO of Health Quality Ontario
The MMPR Market Opportunity
 On October 1, 2013, Health Canada’s Marihuana for Medical Purposes Regulations
(“MMPR”) came into effect, legislating that the only way to access cannabis for medical
purposes will be through commercial, licensed producers
 “First-mover advantage” to register clients and establish the meta-brand with physicians
and patients
Personal-use and designated-person production licenses (in-home growing by individuals)
Direct supply from Health Canada
Requirement for physician consultation and lengthy application form (20 pages)
Licensed commercial producers (with comprehensive bookkeeping requirements)
Strict production quality standards (assessment & control, cleanliness, manufacturing)
Greater legal enforceability (incl. mandatory minimum sentences for home production)
Security regulations for producers (background checks, product tracking, surveillance)
Market Growth Potential
 The legal medical cannabis market in Canada is projected to grow to over 300,000 patients
by 2024
 Mettrum is one of 22 licensed suppliers in Canada today and one of only a very few
currently producing and selling
 Mettrum currently has ~2,100 registered clients
Market Assumptions
Number of Patients (000s)
Source: Health Canada (for number of estimated patients by 2019 and 2024, being 189,486 and 308,755, respectively)
Note: Assumes equal growth in number of users added per year
MMPR Application Process
 Screening
‒ Verify all relevant information has been provided, and required documents included
 Enhanced Screening
 Security Clearance Checks
‒ All Responsible Person(s) in Charge (RPICs), Officers and Directors
‒ Conducted by RCMP (Organized Crime Branch) primarily to assess risk of diversion.
 Review
‒ Validate information and documents provided. Security plans reviewed.
 Pre-License Inspection (PLI)
‒ When security measures are in place, a PLI will be scheduled
 License Issuance
‒ Once the inspection is deemed satisfactory, the license will be issued
Bennett Road North
Bennett Road South
AgriPharm (Creemore)
 Head Office, Lab, R&D,
and Production Facility
 Will become primary production
and delivery centre
 ~15,000 sq. ft.
 ~60,000 sq. ft. on 7 acres of land
 Scalable, modular construction
on 80 acres of appropriately
zoned land
 650 kg / year License
 Anticipated ~8,000 kg / year
 Anticipated ~4,000 kg / year
 51 current employees
 ~$1mm Capital Investment  ~$5.5mm Capital Investment
 ~$3.4mm Capital Invested
The Registration Process –
Creation of a “Subscription” Client
Doctor completes Mettrum’s
Health Canada approved
prescription form
‒ Duration of prescription
‒ Grams / day
Patient completes
Mettrum’s patient
registration form
Subscription client created
Documents available on
Product shipped as
ordered via bonded
courier (Canada
Why Do Clients / Doctors Choose Mettrum?
 Mettrum’s core strategy is to grow a professional and reputable healthcare product
 Professional doctor interface – The “Mettrum Spectrum™”
‒ A consistent dialogue to be used between physicians, their patients and Mettrum’s CSR
‒ Ranks products based on relative THC content
Why Do Clients / Doctors Choose Mettrum?
 Specially-created Mettrum app for faster and more accurate patient onboarding
‒ Paperless patient profiling
through proprietary app
‒ Simplifies paper work
redundancy and streamlines
patient sign up
‒ Manage and update patient
profiles for easy physician and
Mettrum collaboration
‒ Accessed via tablet device, or
personal computer
‒ Displays product order history
for physician review and
‒ Empowers and educates the
physician with product
Why Do Clients / Doctors Choose Mettrum?
 “Pharma” branding / packaging – focus on
medical not street image of cannabis
 Medical-grade product
‒ 12 strains available from genetic library of over
50 strains
‒ Products cover the entire Mettrum Spectrum™
 Strong customer (client / doctor) support and
‒ Fully-staffed (9 currently and growing) call center
in Bowmanville with trained and knowledgeable
customer service representatives
 Simplified ordering and fast, efficient shipping
‒ Patient-retention focus
‒ Online orders begin October 2014
Patient Acquisition Strategy
 National sales team in place
 Extensively familiar with target physicians and how to engage them
 Regular communication with growing database of patients and physicians
 Continuing education for physician to inform on medical cannabis
 Developing technology to improve physician/client engagement, assist with
product selection and tracking patient order history
 Established brand leadership – the Mettrum Spectrum
 Finely tuned customer service team and process
Investment Summary
Fully licensed for up to 650 kg/yr (on first facility) with 2,100+ registered clients
Established and rapidly growing “subscription” client base
Operating at full production capacity of ~600 kg/yr at first licensed facility
Executing on growth strategy:
Acquired an incremental total of ~12,000 kg/yr of production capacity (licenses pending)
Sales force continues to grow physician relationships and client growth
Well capitalized for growth and expansion
Reputable and proven management and board
Research Coverage
Marc Robinson