Bioxyne Limited Clarifies $28 Million Medicinal Cannabis Supply Agreement
BIOXYNE LIMITED (BXN) Share Update September 2024 Tuesday 17th
Bioxyne Limited Clarifies Medicinal Cannabis Supply Agreement Details
Bioxyne Limited (ASX: BXN), an Australian pharmaceutical and consumer health products company, has released further details regarding its two-year manufacture and supply agreement for medicinal cannabis pastilles, following a request from the ASX.
Instant Summary:
- Bioxyne has a two-year supply agreement for medicinal cannabis pastilles.
- The agreement forecasts $28 million in revenue over two years.
- The customer provided a non-binding forecast for the first five months.
- A deposit of over $900,000 has been received for the initial order.
- The supply agreement includes termination clauses for both parties.
- Payment terms improve with higher volumes.
- The customer is Montu Group Pty Ltd.
Agreement Details
Bioxyne Limited, through its subsidiary Breathe Life Sciences (BLS), has entered into a two-year manufacture and supply agreement for medicinal cannabis pastilles, commonly known as gummies. The agreement is expected to generate $28 million in revenue over the two-year period. This forecast is based on a non-binding forward forecast provided by the customer for the first five months, which was then extrapolated to cover the full twenty-four months.
The pricing within the agreement is fixed for the entire duration of the contract. Since the signing of the agreement in July, Bioxyne has already received a deposit exceeding $900,000 for the initial order. This substantial deposit underscores the customer's commitment to the agreement.
Termination Clauses
The agreement includes standard termination clauses for both parties. The customer, Montu Group Pty Ltd, can terminate the agreement if Bioxyne fails to supply the goods as per the agreement or breaches any non-remediable provisions. Similarly, Bioxyne can terminate the agreement if the customer fails to make payments or breaches any non-remediable provisions.
Volume and Payment Terms
The supply agreement also includes a turnover discount based on increasing volumes, which means that if the annual volumes exceed agreed levels, Bioxyne will offer a discount. Payment terms are contingent on achieving minimum volumes. If these volumes are met, more favorable payment terms will be introduced, benefiting both parties.
Forward Looking Statement
Bioxyne has issued a forward-looking statement regarding the revenue forecast. While the company believes there is a reasonable basis for making the forecast, it acknowledges that certain assumptions may not be met due to known and unknown risks. Therefore, the company advises against placing undue reliance on these forward-looking statements.
The announcement of a $28 million revenue forecast over two years is significant for Bioxyne Limited. This agreement not only provides a substantial revenue stream but also strengthens the company's position in the medicinal cannabis market. The initial deposit of over $900,000 is a positive indicator of the customer's commitment, which could boost investor confidence.
However, the non-binding nature of the initial forecast and the inherent risks associated with forward-looking statements may introduce some uncertainty. Investors should consider these factors when evaluating the potential impact on Bioxyne's stock price.
Investor Reaction:
Analysts are likely to view this announcement positively due to the substantial revenue forecast and the initial deposit received. However, the non-binding nature of the forecast and the associated risks may temper some of the enthusiasm. Overall, the market reaction is expected to be cautiously optimistic.
Conclusion:
Bioxyne Limited's clarification of its $28 million supply agreement provides valuable insights for investors. While the agreement offers significant revenue potential, the non-binding nature of the forecast and associated risks should be carefully considered. Investors are encouraged to monitor Bioxyne's performance and any further updates on this agreement.