Investor Presentation May 2019
TSX:TRST NYSE: CTST
Investor Presentation TSX:TRST May 2019 NYSE: CTST Disclaimers - - PowerPoint PPT Presentation
Investor Presentation TSX:TRST May 2019 NYSE: CTST Disclaimers This presentation is for information only and shall not constitute an offer to buy, sell, issue or subscribe for, or the solicitation of an offer to buy, sell or issue, or subscribe
Investor Presentation May 2019
TSX:TRST NYSE: CTST
Forward-Looking Statement
Certain information contained in this presentation constitutes forward-looking statements under applicable securities laws. Any statements that are contained in this presentation that are not statements of historical fact may be deemed to be forward-looking statements. Forward looking statements are often identified by terms such as "may", "should", "anticipate", "expect", "potential", "believe", "intend" or the negative of these terms and similar expressions. Forward-looking statements in this presentation include, but are not limited to, statements with respect to accretive earnings, statements with respect to the funded production capacity which may not be achieved or realized within the time frames stated or at all, the anticipated size and or revenue associated with the adult consumer market in Canada and the global market for medical marijuana. Forward looking statements are based on certain assumptions regarding CannTrust, including expected growth, results of operations, performance, industry trends and growth opportunities. While CannTrust considers these assumptions to be reasonable, based on information currently available, they may prove to be incorrect. Recipients are cautioned not to place undue reliance on forward-looking statements contained herein. Forward-looking statements also necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; adverse industry events; future legislative and regulatory developments; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favorable terms; the early stage of the cannabis industry in Canada generally, realization of funded production estimates, income tax and regulatory matters; the ability of CannTrust to implement its business strategies; competition; currency and interest rate fluctuations; the estimated size of the adult consumer market for cannabis in Canada, the estimated size of the global medical cannabis market and other risks. Recipients are cautioned that the foregoing risks are not exhaustive. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. To the extent any forward-looking statements in this presentation constitutes “future-oriented financial information” or “financial outlook information” (collectively, “FOFI”), such information has been prepared by CannTrust to provide reasonable estimates of potential sales and production growth, among other things. FOFI contained herein, has been prepared by management to provide an outlook of CannTrust’s activities and results, and such information may not be appropriate for other purposes. CannTrust believes that the FOFI has been prepared on a reasonable basis, reflecting management’s best estimates and judgements, however actual results of
CannTrust disclaims any intent or obligation to update any FOFI, whether as a result of new information, future events or results or otherwise. Forward-looking statements contained in this presentation are expressly qualified by this cautionary statement and reflect our expectations as of the date hereof, and thus are subject to change thereafter. CannTrust disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Factors that could cause anticipated
Certain information contained in this presentation is based on management’s review of independent sources such as industry publications, surveys and forecasts that management believes to be reliable. CannTrust has not independently verified any of the information from third-party sources nor have it ascertained the validity or accuracy of the underlying economic assumptions relied upon therein. Statements as to the cannabis industry, CannTrust’s market position and CannTrust’s general expectations concerning the cannabis industry are based on market data currently available to CannTrust. Similarly, management believes that its internal research is reliable even though such research has not been verified by independent sources. While CannTrust is not aware of any misstatements regarding any industry or government data presented herein, the cannabis industry involves risks and uncertainties and is subject to change based on various factors.
Disclaimers
This presentation is for information only and shall not constitute an offer to buy, sell, issue or subscribe for, or the solicitation of an offer to buy, sell or issue, or subscribe for any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The information contained herein is subject to change without notice and is based on publicly available information, internally developed data and other sources. Where any opinion or belief is expressed in this presentation, it is based on the assumptions and limitations mentioned herein and is an expression of present opinion
and excludes all liability (to the extent permitted by law), for losses, claims, damages, demands, costs and expenses of whatever nature arising in any way out of or in connection with the information in this presentation, its accuracy, completeness or by reason of reliance by any person on any of it. This presentation should not be construed as legal, financial or tax advice to any individual, as each individual’s circumstances are different. Investors should consult with their own professional advisors regarding their particular circumstances.
Our Mission and Vision
By connecting people to products and education, we are showing people around the world how cannabis can elevate their lives We provide an outstanding return to those who invest their time, money and ideas in
We will strive to become the global leader in providing innovative cannabis products Mission Vision
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Founded by pharmacists in 2013, 19th license issued by Health
Canada
One of Canada’s most successful and trusted cannabis brands Standardized products that enable physicians to provide accurate
dosage to patients, similar to pharmaceuticals, and provide patients and consumers with a consistent experience
State-of-the-art cultivation and processing facilities:
Phase II 450,000 sq. ft. perpetual harvest greenhouse in Niagara, Ontario; 50,000kg in capacity in 2019 Phase III construction underway to add approximately 390,000
Manufacturing center of excellence in Vaughan, Ontario producing 10,000+ finished goods a day
Acquired 81 acres in British Columbia, as part of its previously
announced plan to acquire 200+ acres of outdoor cultivation land for extracts and future product innovation; 100,000kg to 200,000kg in capacity by end of 2020
Rapidly building capacity and capability to expand into new
categories: adult use market, over-the-counter, natural healthcare, health & beauty and pet care
Global reach through a series of partnerships and joint ventures
Company Highlights
CannTrust At A Glance
Leader in the Medical Market Portfolio of Leading Brands and Products
70,000+
Canadian patients
70%
Q1/18-Q1/19 Canadian patient growth
2,500+
Active physicians
#1 Market Share
In oil products Recreational Brands Medical Products
As of May 2019
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Trusted By Customers
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Winner of Seven Awards, Including
“Licensed Producer of the Year”
History of Leadership Built on Medical Expertise
March 2018 “TRST” delists from the CSE and begins trading on the TSX March 2018 Acquires a 25% equity stake in Stenocare, a Danish cannabis grower and producer; later makes history with the first shipment to Denmark through Stenocare in September 2018 February 2019 Begins trading on the NYSE under the ticker “CTST” June 2018 Opens Niagara Perpetual Harvest Facility, a 450k
October 2018 Launches recreational cannabis brands: liiv, Xscape, Synr.g and Peak Leaf June 2014 Approved by Health Canada as a licensed producer of medical cannabis in Canada; the 19th license awarded by Health Canada March 2019 Closes first of several land purchases as part of plan for outdoor grow August 2013 CannTrust Inc. is incorporated in Ontario October 2018 Peter Aceto joins as CEO, with former CEO Eric Paul becoming Chairman of the Board and Special Advisor June 2014 Filed patent for BrewBudz, single-serve brewing pods August 2015 Approved by Health Canada to produce medical cannabis oil (launched in 2016)
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Sales Growth Translating to Gross Profit
Well-Positioned to be a Leader in Global Cannabis
Continuing Sales Growth
CAD $mm
High Production Ramp
In Kg
Continued Active Patient Growth
CAD $mm
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4 21 46 8 17 2016A 2017A 2018A Q1 2018 Q1 2019 1,000 2,839 16,212 1,749 9,424 2016A 2017A 2018A Q1 2018 Q1 2019 1 13 26 5 8 2016A 2017A 2018A Q1 2018 Q1 2019 10,000 37,000 58,000 40,000 68,000 2016A 2017A 2018A Q1 2018 Q1 2019
Total Estimated Size: $100bn (2) Total Estimated Size: $50bn (2)
Global Medical & Recreational Legalization
Our Market Opportunity
Total Estimated Market Size by 2025: $150bn (2) Global Medical Market Global Recreational Market
Existing expansion of medical legalization in
the United States, Europe, Latin America and Asia
40+ countries have legalized cannabis in
some form
Currently driven by dried flower sales National recreational legalization in two
countries: Canada & Uruguay
Countries expanding from medical to
recreational legalization
Expansion driven by oils and extracts and
consumer packaged goods
Medical + Recreational Partially Legalized Medical + Recreational Legalized Partially Legalized Total Canadian Market Estimated Size:
$8bn (1)
(1) Source: New Frontier Data. (2) Source: Grand View Research.
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Goals for Further Success
Expand production capacity, while driving down cost Further develop extraction capabilities and invest in manufacturing and GMP facilities Invest in innovation and protect intellectual property Continue international expansion, including grow capabilities and distribution Solidify existing, and establish new strategic partnerships
Short- to medium-term Long-term 8
Investment Highlights: What sets us apart Industry-Leading Research and Innovation
1 2 3 4 5
Strong Medical Leadership Premier Operating Capabilities Dynamic Partnerships and Distribution Experienced Management
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DRIED FLOWER OILS TOPICALS CAPSULES
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Broad Range of Offerings Across Categories to Satisfy Patients’ Needs
#1 in Oils Product Innovation Curve 10
Network of physicians educating
Health Care Practitioners across Canada
Online education modules Over 100 patient support agents who
(as of April 2019)
Step-by-step instructions from
patient documentation to registration to prescription and product / dosage selection support
Same-day and free delivery options,
as well as telemedicine support for
Rapidly Growing Patient Base
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1
Historical Patient Growth (’000 Patients)
AWARD-WINNING PATIENT SUPPORT
Serving as a trusted resource for the medical cannabis community
70,000 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Today
Biosynthesis Perpetual Harvest Greenhouse Outdoor Grow
$2.00 per gram $0.15 per gram $0.005 per gram Approximate cost from seed to harvest CannTrust Niagara Facility
Indoor Grow (Best-in-class) 2019 2019-2020 2022-2024
$0.75 per gram CannTrust Plan Lower Cost
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EVOLVING CULTIVATION CAPABILITIES
Moving towards optimal efficiency
200+ Acres Secured
Consistent first-mover driving low cost, while maintaining high-quality product
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Previously Announced Annual Production Capacity (1)
Production Facility Size
450,000 sq. ft.(2) +390,000 sq. ft.(2) 840,000 sq. ft.(2) 119+ acres 200+ acres & 840,000 sq. ft.(2) 50,000 kg +50,000 kg 100,000 kg 200,000 to 300,000 kg
50,000 kg +17,000 kg +50,000 kg 200,000 to 300,000 kg
Current Niagara Facility (Phase I & II Completed) Phase III Niagara Expansion Completed Niagara Facility Estimated Future Production
(1) Subject to regulatory approval. (2) Square footage of perpetual greenhouse capacity.
+81 or more acres +100,000 to 200,000 kg Outdoor Grow
Timing
Current Q3 2020 Q3 2020 2020 2020+ 2019
100,000 kg +100,000 to 200,000 kg
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450,000 sq. ft. Niagara Perpetual
Harvest Facility with an additional
390,000 sq. ft. perpetual harvest
facility expansion in progress with enhanced technology
Higher yield per square foot compared
to traditional cultivation
Using cogeneration equipment for
lower power costs and heat recovery
Perpetual grow allows for maximum
efficiency of labor
Free energy from natural sunlight
GREENHOUSE & OPERATIONAL CAPABILITIES
A low cost producer with scale
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$0.75
Cost per gram
100,000Kg
Target 2020 annual greenhouse grow capacity through expansion
225g
Annual cannabis yield per sq. ft.
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OUTDOOR GROW EXPANSION
Additional low cost production for extracts and other product formats
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Plans to acquire over 200 acres of outdoor cultivation land
Recently purchased 81 acres of land in
British Columbia for outdoor grow
Plan to have plants in the ground
and the first harvest in 2019 subject to Health Canada approval
Currently fencing the property
and installing security systems and other infrastructure required for commercial production
Primarily to be used to produce oil
products as well as future product innovations as Canadian regulations expand to include new product formats plus dried flower
200+acres
Land planned for purchase for outdoor grow
100,000
to
200,000Kg
Estimated additional annual capacity
$0.15
Approximate cost per gram
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Multihead weigher machinery to
quickly and accurately weigh product
Capper and labeler technology Premier extraction capabilities
STATE-OF-THE-ART TECHNOLOGY
Automated trimming for rapid
production
10,000+/day of finished goods
units for the medical and recreational market
EFFICIENT PROCESSING FOR RAPID OUTPUT
Operating expertise and
technology that enables efficient encapsulation
Hard shell vegan capsules with
banding technology
BEST-IN-CLASS OPERATING EXPERTISE
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Patents issued in the U.S., Canada and
Australia
Patent pending in China and
European Patent office
Whole flower extract with: Tea Coffee Hot Chocolate
17 Cannabis Patents on Single-serve Beverage Pods for Keurig, Nespresso, Tassimo-type Brewers
Positioned for the Edibles & Medical Market in 2019 (1)
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INNOVATIVE & EXPANDING SUITE OF PRODUCTS
Building upon research and expertise to satisfy consumer demand
(1) Anticipated legalization by October 17, 2019.
Vast Partnership Potential
Beverages Manufacturing Pharmaceutical Mass retail Over-the-counter Natural health products Other consumer packaged goods …and more
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Retail store partnership Preferred status & shelf space in 200+ retail stores expected to open in
the next 18 months
Global partnership to conduct clinical trials, and develop innovation
targeting the veterinary and retail channels
Canadians spend ~$750mm annually on pharmaceuticals for their pets Canadians own approximately 16mm cats and dogs, who have the same
endocannabinoid system as humans, allowing for similar absorption
Canada’s largest generic pharmaceutical manufacturer and seventh largest
in the world
Partnership to develop proprietary and novel dosage forms
DIVERSE PARTNERSHIPS ACROSS CLINICAL, RESEARCH AND RETAIL
Furthering our innovation and commercialization capabilities
#1 Alcohol distributor in Canada Exclusive route to market partnership with CannTrust Route planning, sales tools, analytics and insights Invested in CannTrust with options for additional investment
Medical Recreational 18
Put your trust in CannTrust
Provide products to Registered
Patients who typically suffer from one
Distribute to patients through: Direct shipment Delivery through Canada Post or
Purolator
February 2018: launched guaranteed
same-day delivery service in the Greater Toronto area for Registered Patients
Implemented a patient assistance
program, CannTrust Access™, which makes Registered Patients with household annual income of <$30,000 eligible for a 30% discount
Experienced with provincial boards and private retailers
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National Access Cannabis preferred status and shelf space in 200+ retail stores expected to open in the next 18 months
Niagara and Vaughan facilities in close proximity to Toronto
MEDICAL RECREATIONAL
9 Provincial Supply Agreements
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Chief Financial Officer
Greg Guyatt Andrea Kirk
Quality
Jeffrey Zietlow
Vice President of Innovation & Product Commercialization
PeterAceto
Chief Executive Officer
Rob Schenkel
Technology
Brady Green
Production & Cultivation
Michael Camplin
Production & Cultivation
Len Walt
Chief Medical Officer
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Ian Abramowitz
Global Investments & Partnerships
Joel Friedman
Finance Global Investments & Partnerships
Adam Jerusalim Chris Lucky
Supply Chain & Manufacturing
Innovation & Global Regulatory
Bernard Yeung
Business Development & Marketing
Opportunities for Substantial Growth
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CONTINUE EXPANSION
into adult-use recreational markets by targeting specific consumer segments
3 LEVERAGE
existing medical platform to extend leadership into global medical markets
1 DEVELOP
innovative and efficacious products through science and technology to elevate patient and consumer lives
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GLOBAL GROWTH DRIVERS
Access to Asian markets due to proximity and
relations with Australia
19.8% ownership stake ROFR on offtake for significant supply of low cost
product
Benefits to CannTrust
Australian cannabis company focusing on low-cost,
high quality, medical production developing complete vertical integration with a similar business model
Developing 1.7mm sq. ft. of low cost greenhouse utilizing optimal
growing climate
One of the first Australian cannabis companies to be awarded
all medical cannabis licenses
1
Danish company that imports and markets medical
cannabis products via pharmacies and hospitals
Completed Europe’s first cannabis IPO on October 26, 2018 First mover - received approvals from Danish Medicines Agency Currently distributing oils and capsules through pharmacies and
hospitals
Access to European Union markets 19% ownership stake Stenocare is vertically integrated, providing
benefit as a standalone investment
Fully licensed in Denmark for operations and
sales
Benefits to CannTrust Company Overview Company Overview
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Pet Care products CBD sports drinks for athletic recovery Sublingual strips & sprays
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EXPANDING SUITE OF PRODUCTS BACKED BY CUTTING-EDGE R&D…
Cannabis-infused flavored coolers / sparkling beverages Medical / health & wellness products
…WELL-POSITIONED IN VARIOUS VERTICALS ACROSS CANNABIS
Medical Over-the-counter Natural Healthcare Health & Beauty Recreational Pet Care
Topicals and patches Confectionery Vapes
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With strains like Flix ’N Chill carefully curated for specific occasions,
Xscape takes the guesswork out of choosing which product is right for
you.
Peak Leaf aims to show consumers that cannabis can be a great
complement to an active & healthy lifestyle. By selecting strains connected to nature, we aim to bring out the best in people.
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We’ll turn liiv into the ritual by owning the instant before everyday moments to make them even better, together. Because when the daily grind gets the best of us, liiv is here to remind you to #ButFirstLiiv.
Synr.g enhances your social times. From your dinner party to a night
distinct and enticing flavors. 24
Why CannTrust Will Win
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INTELLECTUAL PROPERTY FOR GLOBAL MARKET LEADERSHIP FIRST-TO- MARKET PRODUCT DEVELOPMENT & INNOVATION GLOBAL MEDICAL LEADERSHIP: AN EXTENSION OF OUR CANADIAN ACHIEVEMENT EXPANSION INTO CONSUMER RELEVANT PRODUCT CATEGORIES