Little Green Pharma Ltd (LGP) Earnings Call Transcript & Summary

Welcome, everyone, to today's Annual General Meeting webinar for Little Green Pharma. My name is David Tasker and I'm the moderator for this meeting. Shortly, I'll introduce Little Green Pharma Chairman, Michael Lynch-Bell, who will, in turn, introduce the Board, advises President and provide an overview of the agenda. But before I do some minor housekeeping matters, the agenda will comprise of the formal meeting, after which time company presentation and the presentation from subsidiary company, Reset Mind Sciences, will be given. At the completion of these 2 presentations, the Q&A session will be held where I will put any questions you have directly to the Board and executive where relevant. If you have any questions specific to the resolutions being presented, please submit these in writing using the Q&A box on the screen. I will put these to the chair on your behalf. I'd now like to hand over to LGP Chairman, Michael Lynch-Bell, to formally start the meeting. Thank you, Michael.

Thank you, David, and welcome, everybody, to the Annual General Meeting of Shareholders for Little Green Pharma Limited. Good afternoon and good morning, depending on where you are. As you know, I'm Michael Lynch-Bell, and I'll be chairing today's meeting. As the time is now after 3:30 p.m. in Perth and a quorum of shareholders is present, I formally declare the meeting open. I'd like to introduce my fellow directors and the management team in attendance today. Hopefully, you can see on the screen, so: Fleta Solomon, Executive Director; Angus Caithness, Executive Director; Neale Fong, Non-Executive Director; Beatriz Vicén Banzo, Non-Executive Director; and Paul Long, Chief Operating Officer and our incoming Chief Executive Officer. I'd also like to introduce our Company Secretary, Alistair Warren. In addition, we have a representative from BDO, our external auditor, Ashleigh Woodley, who's present and is there any questions or matters to be directed to the auditors. And lastly, our external counsel, Hamilton Locke, represented by Jeremy Newman is also present. All shareholders were notified by letter dated the 31st July 2023 of where to access the notice of this Annual General Meeting. Accordingly, the notice is taken as read. The order of proceedings for today's meetings will be, as David has pointed out, consideration of the agenda items as set out in the notice. We'll take questions from shareholders through the Q&A section in the Zoom application on each of the items of business as we deal with those matters, followed by a vote on the resolutions to be conducted by a way of a poll by our Company Secretary. The results of the poll will then be announced to the ASX after close of the meeting. We'll then briefly introduce our incoming CEO, Paul Long, and reflect on Fleta's time as CEO of Little Green Pharma. This will be followed by a company update presentation presented jointly by Fleta and Paul. And lastly, we'll hold a discussion on any questions from shareholders received in advance of the meeting as well as any further general questions any shareholder may have submitted via the Q&A section in Zoom. And as part of the Little Green Pharma presentation, we'll also hear from our CEO of Reset. I wish to state that it's my intention to vote the proxies vested in me in favor of each of the resolutions to be put before today's meeting. Details of the proxy appointments received by the number of votes include whatever the proxy is directed to vote in a particular way, abstain or is open to be voted at my discretion will be shown on the screen for your information. It's not my intention to read voting exclusion statements or voting prohibitions which may apply to resolutions. Voting exclusion statements and voting prohibitions are set out in full in the notice. I will now turn to the business set out in the notice of meeting, financial statements and reports. The first item of business is to receive and consider the financial report for the company and the related reports of the directors and auditors for the financial year ended the 31st of March 2023. No written questions to the auditor under section 250PA of the Corporations Act were received by the cutoff date, 5 business days before this meeting. However, progressions may be directed through myself to our auditor in relation to the conduct of the audit, the audit report, the company's accounting policies or the independence of the auditor. Taking into consideration the comments already made in my address, does anyone have any questions or comments on the financial statements or reports? And for any shareholders attending by a Zoom application, this is now an opportunity to ask any questions, and I'll pause briefly for those.

No questions have been received, Michael.

Thank you, David. As there are no questions, as this matter does not require a vote, we'll move on to the first formal resolution, Resolution 1. Resolution 1 is in respect of the remuneration report. It seeks approval for the adoption of the remuneration report for the financial year ended the 31st of March 2023. A copy of the resolution as set out in the notice meeting and the proxies received in respect of the resolution are shown on the screen. And you'll see set out for, against, abstain and those that I can exercise at my discretion in favor. Does any shareholder have any questions or comments? This is now your opportunity to ask any questions. I'll pause briefly.

No questions have been received, Michael.

Thank you, David. So since there are no questions or comments, I now exercise my power as Chairman to demand the poll on the resolution. Resolution 2, reelection of Director, Dr. Neale Fong. This resolution seeks approval for the election of Dr. Neale Fong as a Director of the company. This is an ordinary resolution requiring 50% or more votes to be in favor to be passed. A copy of the resolution is set out in the notice of meeting and the proxies received in respect of the resolution are shown on the screen as before: for, against, abstain and those to vote in favor and at my discretion. Does any shareholder have any questions or comments? This is now your opportunity to ask any questions, and I will pause briefly.

No questions being received, Michael.

Thank you, David. Since there are no questions or comments, I now exercise my power as Chairman to demand a poll on this resolution. Now to Resolution 3, approval of 10% placement facility. This resolution relates to the approval for the company to have additional capacity to issue equity securities provided before in listing rule 7.1A on the terms and conditions in the note of the meeting. This is a special resolution requiring 75% of all votes to be in favor to be passed. A copy of this resolution as set out in the notice of meeting and the proxies received in respect of this resolution are shown on the screen for, against, abstain and those for me to vote in favor of my discretion. Does any shareholder have any questions or comments? This is now the opportunity to ask those questions.

No questions have been received, Michael.

Thank you, David. Since there are no questions or comments, I now exercise my power as Chairman to demand a poll on this resolution. As one of the next resolutions concerns myself, I'm now going to hand the chair of the meeting over to Fleta.

Thank you, Michael. Resolutions 4A, 4B and 4C, approval of nonexecutive retention rights. These resolutions seek approval for the issue of retention rights to directors of the company. Specifically, Resolution 4A, for the issue of up to 140,000 nonexecutive retention rights to Michael Lynch-Bell. Resolution B for the issue of up to 70,000 executive retention rights to Dr. Neale Fong. And Resolution 4C for the issue of up to 70,000 nonexecutive retention rights to Beatriz Vicén Banzo. Each ordinary resolutions requiring 50% or more votes to be in favor to be passed. A copy of the resolutions as set out in the notice of meeting and the proxies received in respect of this resolution are now shown on the screen. Concerning Resolution 4A, does any shareholder have any questions or comments because now is the opportunity to ask? Concerning Resolution 4B, does any shareholder have any questions or comments? Because this is your opportunity to ask. Concerning Resolution 4C, does any shareholder have any questions or comments? Since there are no further questions or comments, I now exercise my power as Chairman to demand a poll on Resolution 4A, Resolution 4B and Resolution of 4C, and I now hand the chair back to Michael.

Thanks, Fleta. Resolutions 5 and 6, approval of issue of executive retention rights. Resolutions 5 and 6 seek approval for the issue of executive retention rights, specifically, Resolution 5 for the issue of up to 1 million executive retention rights to Fleta Solomon and Resolution 6 for the issue of up to 1 million executive retention rights to Angus Caithness. Each ordinary resolutions requiring 50% or more votes to be favored in favor to be passed. A copy of the resolutions are set out in the notice of meeting and the proxies received in respect of this resolution are shown on the screen. Concerning Resolution 5, does any shareholder have any questions or comments? This is now your opportunity to ask.

No questions have been received, Michael.

Thank you, David. Concerning Resolution 6, does any shareholder questions or comments? Again, this is your opportunity to ask.

No questions have been received, Michael.

Thank you. Since there are no other questions or comments, I now exercise my power as Chairman to demand a poll on Resolution 5 and Resolution 6. Resolution 7A and 7B, ratification of issue of placement shares. These resolutions seek approval to ratify the prior issue of placement shares, specifically Resolution 7A to ratify the issue of 777,007 placement shares issued under Listing Rule 7.1. And Resolution 7B to ratify the issue of 27,000,771 placement shares issued under Listing Rule 7.1a. Each of our ordinary resolutions requiring 50% of more votes to be in favor to be passed. A copy of the resolutions are set out in the notice of meeting and the proxy to proceed in respect of this resolution are shown on the screen. Concerning Resolution 7A, does any shareholder have any questions or comments? This is now your opportunity to ask.

No questions received, Michael.

Thank you. Considering Resolution 7B, does any shareholder have any questions or comments? Again, this is your opportunity to ask.

No questions received, Michael.

Thank you, David. Since there are no questions or comments, I now exercise my power as Chairman to demand the poll on Resolution 7A and Resolution 7B. Resolution 8, which is the approval of issue of director placement shares. Resolution 8 seeks approval for the issue of 277,777 placement shares to Fleta Solomon by way of cash subscription. This is an ordinary resolution requiring 50% or more votes to be in favor to be passed. A copy of the resolution is set out in the notice of meeting and the proxies received in respect to this resolution are shown on the screen. Does any shareholder have any questions or comments? Again, this is your opportunity to ask any questions at this stage.

No questions have been received, Michael.

Thank you, David. Since there are no questions or comments, I now access my power as Chairman to demand a poll on this resolution. So that is the end of the resolutions. We'll now conduct a poll on the resolutions being put to the meeting. If you are a shareholder, proxy, corporate representative or authorized attorney and wish to vote at this meeting or change your previously submitted proxy vote, then e-mail your previously requested poll form to the Company Secretary. We will now have a brief break while any poll forms are returned. Thank you. [Voting]

We will now resume the meeting. The Company's Secretary will compile the results and announcement to the ASX following the end of this meeting. Ladies and gentlemen, that concludes the formal business of the meeting, and I formally close the meeting at 03:49, I think, in Perth, Western Standard Time. On behalf of the Board, I would like to thank you for your support. Thank you, everyone, for attending the formal part of today's meeting. I'd now like to invite Fleta to introduce Paul, the incoming CEO of Little Green Pharma, following which I will say a few words reflecting on Fleta's time as CEO. Fleta?

Thank you, Michael, and hi, everyone. I'm really excited today to share a pivotal moment for Little Green Pharma. Today, we welcome a new CEO who is no stranger to [indiscernible], Paul Long, who's been our current COO. Paul has been with LGP since the beginning of 2018 and has been an integral part of the leadership team since he joined the company. I couldn't think of a better person on the planet to take on this integral role for this fabulous company. And for the last while, it's been Paul managing the operations, creating new sales opportunities and working on important partnerships, which makes this a very seamless transition. What you'll soon learn about, Paul, is his consistent positive energy that he brings into wherever he goes, whether it's in a social setting or in the workplace. And what he does is create an incredible workplace culture. And personally, I think it's a workplace culture that makes a company successful. I've actually worked with Paul for the last 20 years in various companies we've started and we actually studied together at uni many years ago. So I know Paul pretty well. In one instance, Paul was integral in selling Australia's largest provider of workplace health programs, a company called Onsite Health Solutions. This was sold to the Sanitarium Group, of which he was the driving force behind. Our history together and his proven track record in strategic leadership makes him an excellent choice for the LGP CEO role. It was very much a unanimous decision across the Board to support his appointment. Amidst any market volatility, Paul's strategic acumen will navigate us through and he won't be shy of making any tough decisions that need to be made. He's the ideal leader for these times with a unique ability to think outside the square and also particularly when problem solving, and I know that his brain just doesn't stop ticking over. In closing, please join me in congratulating Paul Long as CEO of Little Green Pharma. Our future is brighter than it ever has been under his capable leadership.

Thank you, Fleta, and good afternoon, everyone. Fleta, I'd just like to say that, firstly, thank you for the really kind words. But your passion and vision has been really the driving force behind Little Green Pharma's success for the last 7 years, and I've got absolutely no doubt that your ongoing contributions will be pivotal and really shaping our future journey and looking forward to our continued working journey together. I'm really honored in the trust of the board and that you have shown and placed in me, and I certainly am committed to upholding these values and standards that have made us one of the most trusted medical cannabis brands in the world. And whilst they're very big shoes to fill, I'm really confident that we'll navigate this transition seamlessly together with our amazing team, and I really look forward to continuing to build the Little Green Pharma brand across the globe. Thank you.

Thanks, Fleta. Thanks, Paul. Before I congratulate Paul, it will be very remiss of me not to first reflect on Fleta's achievements with Little Green Pharma over the years. And of course, this is not a farewell speech as she remains very much a big part of LGP, but rather a timely celebration of all of her achievements with LGP to date as well as a look to the future. First of all, it's fair to say there wouldn't be an LGP without Fleta. Fleta founded the company to help create cannabis medicines for a young girl inflicted by refractive epilepsy. And since that time, has maintained a relentless focus on bringing this transformative medicine to as many patients as possible. Since its beginnings in 2017, Fleta has been the face and soul of Little Green Pharma, working tirelessly in our engagement with all key stakeholders and sparing LGP's expansion beyond Australia to include European patients and markets as well. This journey has taken Fleta around the world, including almost 2 years living in Switzerland through the COVID pandemic as part of LGP's European engagement and overall, has consumed a significant part of her life. As a medicinal cannabis panache, she has become extremely well known in the Australian and European cannabis industries and has used their considerable relationship building skills to cultivate long-term professional and personal connections with LGP's partners and advocates across both continents. Fortunately for us, whilst she's stepping aside from the CEO role, she's not going anywhere and we'll continue to bring her trademark Fleta flair and professionalism to LGP. Fleta has stepped aside primarily to focus on those areas of the business for which she reserves a special passion, be it communications, market positioning, ESG and branding. As we noted in our annual report, LGP has not historically spent a great deal of time focusing on investor and other nonmedical stakeholder engagement. So we expect to see some significant changes in this space. We also expect there will be a certain business as usual feel to transition. Paul -- and as Fleta said, Paul, Fleta and the LGP team worked together very closely for over 5 years now with Paul and Fleta also having worked together very successfully in another business for many years prior to that. It's safe to say both know each other well, respect each other enormously, and we'll continue to work closely together for years to come. As such, I'd like to say on behalf of the Board, the LGP team and our stakeholders around the world. Thank you, Fleta. This is a watershed moment for the company. You have been the foundation stone of LGP since the beginning and so much to the credit for everything LGP has done goes to you. We issue the very best for you in your new role and look forward to you seeing the results of your efforts in areas about which you are so closely passionate. And I suppose, well let me say something about you. Congratulations on a very well earned appointment. As Fleta said, the Board was unanimous. And of course, we've worked together with you for many years, and we know you well. It's another significant moment in our history. Alongside Fleta, you've been a pillar of strength, enthusiasm and [indiscernible] for the company. And I think both I and our investors and stakeholders are very excited to see you take the reins. I and the Board wish you every success and your success will be our success. So, thank you. What I'd like to do now is hand over the floor to Fleta and Paul, who will take you through an updated presentation of the group.

Thanks again, everybody, for joining the call today. Uploaded this morning to the ASX platform was an updated investor deck in long form, which you can refer to. However, we're just going to do a short form presentation due to time constraints. Great. So it's always worth pointing out, first of all, how Little Green Pharma is different. So we'll move forward onto a couple of slides. Not only are we a first mover in our industry, but we are the most trusted medicinal cannabis brand as we set new standards of excellence, which our doctors and wider stakeholders recognize and really appreciate. We're also known for the research we conduct looking into the benefits of cannabinoid therapies for a range of indications. And in particular, the quest initiative, which looks at much-needed real-world evidence, and Paul is going to speak to this in a bit more detail shortly. If we look at the Australian market, so we'll move on to the next slide, it's estimated that in 2022, 1.7 million units of medicinal cannabis products were dispensed with an estimated retail value of about $245 million. Based on recent available data from the TGA, LGP is dominating the oil market in Australia with the top-selling products in 2 out of the 5 categories. And we have the second top-selling product in one of the categories. We've been hard at work developing our flower culture [ bales ], which is starting to make an impact on the flower side of sales as well in Australia, and this is where our focus sets for the Australian market moving forward. The Penington Institute has guestimated the likely growth form path of the Australian market based on the 2022 figures available and have come up with 3 possible scenarios based on a slow, and accelerated growth forecast. Therefore, and you look at the graph on the screen, you can see that the likely -- the growth trajectory is somewhere between the slow rate of 20% growth, which would see retail sales of approximately $550 million and the accelerated rate of 60%, which could see retail sales up to $1.5 billion over the next 2 years. But again, I must stress this is just an industry guesstimate based on the lack of accurate data that's available in Australia. With what is available, we estimate that LGP has roughly 10% of the Australian market. Europe, let's move on. The spotlight is well and truly on the European market with the industry experiencing some really great growth. And this is fueled by the increasing legalization of cannabis and a rising demand for alternative treatments. It has the potential to become the world's largest market and a few key countries rely heavily on imports to meet demand. And again, Paul is going to speak to this again shortly. I just wanted to do a recap on the Danish facility, so moving forward in the slides, which really is in a league of its own. With the potential of producing up to 30 tonnes of biomass per annum -- so just one more slide, Paul, and thank you, it boasts a 21,500-square meter glasshouse cultivation footprint, has a huge post-harvest GMP manufacturing facility and a GMP testing lab. And all of this was acquired for about $20 million. And when you compare this to other facilities, it was such a bargain, and in fact, LGP's net tangible assets are higher than our current market cap due to this purchase. Some companies have spent over $100 million on much smaller facilities even in Australia. So we truly think this operation is a real gem and is right in the market where we want to be. Also noting is that Denmark -- or worth noting is that Denmark is the only country in the world to mandate a no pesticide policy. So our Danish operation is 100% pesticide-free. Okay, moving on to our business model. It's a vertically integrated one where we can do everything in-house, including the growing and manufacturing of our medicines. What we're finding currently is that the industry is consolidating to gain access to the various activities of the supply chain, which, of course, we've already got. So having control over our supply of flower, for example, is really important for future growth and security of a consistent supply, which appears to be a current issue in the industry for groups or those groups who rely on third-party flower supplies. If we move on to our growth strategy, this remains unchanged. It's about building sales, leveraging manufacturing expertise and capacity to unlock high-value markets and innovate products for short-term gains and long-term growth. So moving on, we can actually demonstrate our growth through year-on-year increase in revenue, which is largely based on Australian sales to date, and this has been hugely important for us. We can also demonstrate our tangible value, which if you look at the graph on the right, and as I mentioned before, reveals our net tangible assets, which are actually higher than our market cap and enterprise value. And it suggests that LGP is undervalued. You can also see we've worked hard to reduce the debt we had when we purchased the Danish facility a couple of years ago. So moving on, when you look at the quarterly cash receipts across the industries, looking across the ASX-listed groups over the past 12 months, you can see that LGP is faring really well in comparison to other groups whose financials are made available to the public. It focuses on medicinal cannabis sales only as opposed to groups that might have revenue in recreational markets such as Canada. So we've actually factored that in, where you can see it's trending in the right direction. So moving on, we are fully committed to achieving our cash flow breakeven and in the near term as we push further along the profitability pathway. So this graph that you can see here is intended to show our journey to cash flow breakeven with and without the R&D rebates, which are indicated here by the red and the orange lines -- the dotted lines. And in the green line, of course, shows our increasing revenue. And the blue line when our operational costs or our operating costs which are generally track in the right direction. So this will be a good comparison for us to refer to in the future as we move forward. So how are we going to increase our sales to push further along that profitability pathway? Well, that's what Paul is about to explain to you how we're going to do it.

Next slide. Okay, we just jump on to the next slide, please. Excellent. So as Fleta mentioned, all eyes are on Europe. But obviously, the Australian market is a significant foundation for Little Green Pharma. And as Fleta mentioned, there is significant growth opportunity. So a big part of our focus here at Little Green Pharma is the Australian market, but we have very -- been very fortunate in our first-mover advantage into many of the European markets, and I'd like to touch on a few of those in these slides. But what we do see is the potential in Europe. It has the potential to be the largest medicinal cannabis market in the world. And we have, as Fleta mentioned, one of the largest facilities in -- right in that region. So a huge advantage to us as that market begins to open up. And over the next few slides, I'll take you through some of the key countries that are really significant that we're focusing on in the region. Next slide. So the first country is Germany. So Germany has a current market size of approximately EUR 270 million, but a total addressable market of $8 billion. And we continue to drive and focus on the German market into several sales agreements, and we're continuing to explore more. Just recently, there was a draft bill to delist cannabis as a narcotic in the region. And we expect that, that will have a significant influence on demand into 2024 if that bill passes. But certainly, a significant opportunity and big growth opportunity with the delisting of the narcotic. It will open up the opportunity to do things like telehealth and things like driving in the region, if that is passed. So we're very well positioned into the German market through partnerships, and we have our facility less than 2 hours drive from the northern border of Germany. On the next slide, I'll touch on France. So the French opportunity has been a government-run trial, and we've been out of that for the last 2.5 years. The initial results across almost 2,000 patients showed a 91% positive results to -- within the trial. So that was very significant in the hope that the French government will decide to open up the medical cannabis market next year. Little Green Pharma has sent approximately 70,000 units into France. And currently, our products have been prescribed for approximately 80% of patients in the region. So we are incredibly well positioned to maximize on this opportunity. It is a large country with 67 million people and Little Green Pharma is the #1 brand across all the existing prescribing doctors within the trial and certainly well-known brand for patients in the region. So the trial has been extended to a third year until March 2024, and we are a part of the groups to understand what that would look like next year, and we see a significant opportunity to build on that market share we've been able to gain through the government run trial. On the next slide, we'll briefly touch on Italy. That's largely being driven by a government tender pathway for access. And what that has driven is it forces a very high-quality standard and limits the competition significantly. So in 2022, we won a tender and there's further tenders coming, we expect very soon. But at the moment, it's a limited pathway with only a few companies across the globe able to meet the expected quality commitments to actually delivering into those tenders. So we continue to think Italy is a significant opportunity for us in the region. Next slide is Poland. We just recently announced that we were granted a marketing authorization just earlier this month. That was about 2.5 years in the making for Little Green Pharma. It's a very -- it's a competition market. There's only 6 companies currently in the Polish market across -- approximately 11 or there's 11 products in the market. And it's a very difficult technical submission, as I mentioned, to gain a marketing authorization, and so to have the 12th product on the market is significant for the company. And we have a very significant partnership with the group in the region, and we expect to be delivering our first shipment in the coming months as we announced. I'll briefly now touch on the next slide, which is our research and innovation division. And there's 4 key areas. The first area as Fleta did mention, we've been focusing on is the product expansion. We currently now have 16 products across varied deliveries at the moment into the market and very soon, that will be 19. We have 15 validated flower strains into the market, which has been a significant part of our flower growth into the Australian market and into the European market, and that will soon be 20 new strains. On the validation studies, we're part of 5 studies. And so this is the change, the market strategy. The most relevant to mention there is the QUEST publication, which has been accepted for a publication. The results from that study, we can't share with you yet, but they are clinically significant. And we believe it's one of the largest quality of life studies conducted on the globe. And as I said, it will be published very soon. And this will enable us to really go back to our entire supply chain, but in particular, doctors and patients to show them the benefits of our products, specifically within the Australian region. The third area, just on the next slide is drug registration. There's a number of pathways that we're exploring as a company, but the most significant to mention would be the obesity study. We've progressed into a mice model now and we expect to see results later this year and progressing incredibly well and certainly a big opportunity in a big market. And finally, the drug development. We've progressed from proof of concept on our novel polymer formulation, which is our oil formulation, and we are now progressing into optimization, which really focuses on the sustained release or some -- an unmet need that exists in the market using a drug delivery technology with our products to bring a new drug development product to market. Back to Fleta.

Thank you. Yes, that's great. Thank you for the update. So hopefully, now you've got a good idea about what we've been working on behind the scenes to get to where we are today. But also what our longer-term plans are in Europe and also Australia and where we make the -- or we plan to make the real returns for our investors, which is in that European space. So we're always planning with a long-term view. So although we might not get the benefits upfront with some of the activities that we do, for example, in France, with the trial that Paul was just explaining, we believe that the greater returns will be gained in the longer term for the efforts that we're actually putting in now. So this is a real difference in the industry, and I feel that this is a very unique philosophy for a company to have, but I love it because we're planning for the future. So as we come to a close, I just want to highlight another point which I think also might have an effect on our share price, and this is the current slide that you can see now. And that is that there is a really big difference between the North American cannabis industry and the Australian and European medicinal cannabis industries. What you might not know is that ASX-listed medicinal cannabis stocks have historically tracked North American-listed cannabis stock performance. So if it's going down in the U.S., it's generally going down in Australia, too. However, what is really interesting and necessary to understand is that the U.S. and Canada imposed different and very heavy taxes which are really threatening cannabis companies over there. So in the U.S., for example, there is a tax code called 280E. And this prohibits businesses engaged in the sale of cannabis from deducting normal business expenses, essentially resulting in income tax being calculated based on gross income, not net income. And in Canada, an additional -- in addition to income tax, there's a federal excise tax of $1 per gram of cannabis sold or 10% of the per gram price, whichever is the greater. So when investors look at many of the North American cannabis companies, who are struggling to make a profit and burning endless amounts of cash, of course, it's going to have a dire consequence, not only on the future viability of the company, but on investor sentiment, who can see the real struggles of these companies. So generally, when America sneezes, the rest of the world catches the cold. And I don't think it's any different for the local medicinal cannabis industry here in Australia. So when you look at Australia and Europe, these jurisdictions do not subject companies to the same taxing regulations. In fact, in Australia, businesses can claim tax deductions, as you may know, the business costs and are eligible for R&D rebates making it a favorable country to do business in. Therefore, I think it's absolutely necessary and essentially just to not draw any connections between the Australian industry and the North American industry given the tax regimes, which are having a dire impact on these groups. So based on these structural differences, we firmly believe that the Australian cannabis market should be regarded as fundamentally different investment propositions. So I do think that this could be having an effect on our share price as we follow the U.S. market. But what's exciting is that we're not in the same position and we have -- and I'm talking collectively for all Australian businesses in the cannabis space, we have a great opportunity ahead of us. So finally, and staying on the U.S. theme, and we'll move to the next slide, we can learn a huge amount from what's happening there. So regardless of the negative tax implications, the cannabis industry is having a substantial economic impact. So with the legalization and growing acceptance of cannabis sales -- cannabis, sorry, sales have actually outpaced those of opioids, chocolate and even the craft beer industries. And it's even surpassed products like Viagra and paid music streaming services. So I wanted to share this with you, and you can see it in the graph on the slide here. And we think that the trend in the U.S. is highly likely to play out in other markets, including Australia and in Europe as well. So the takeaway from this slide is that the medicinal cannabis industry is still in its infancy in Australia and Europe, and it has some great growth control, which is clearly what LGP is targeting in the longer term. So with all of that said, we have come to the conclusion of the presentation. There are a lot more information in the slide deck that you have available on the platform, but I just wanted to keep it a little bit shorter today. So thanks for being present here. And I'm about to let Shaun Duffy, the CEO of Reset Mind Sciences, take the center stage and give us a great update. And I know Paul wouldn't want me doing this, but this is officially handing over the captain's hat at LGP. So she's all yours, Paul.

Thanks, Fleta. I'm not going to put that on though.

I don't even think you do. Thank you.

Shaun, over to you.

Thanks, Dave, and thanks, Fleta and Paul. Hello, everyone. My name is Shaun Duffy, I'm the CEO of Reset Mind Sciences, which as you probably know by now, is the psychedelic-focused subsidiary of Little Green Pharma. Before we get into what we've been doing at Reset, I did want to take just a moment to give you the backdrop against which -- the industry in which we're operating and the problem that we're trying to solve in there. There's a whole back story to psychedelics, which many of you may be aware of is endless literature, podcasts, documentaries and the like on the history of psychedelics, which I won't delve into here. But suffice to say, there's been an extensive body of work around the world, researching the use of psychedelic to treat mental health. And when it is used, it's generally used for conditions like depression and anxiety, post-traumatic stress disorder and now looking at areas like obsessive-compulsive, eating disorders, addiction. So these are the areas that the research is going. We've seen a real resurgence of research over the last decade around the world using primarily psilocybin, which is the active ingredient in magic mushrooms and MDMA to treat mental illness. And if -- why is this all happening? I'll just put some stats up here around just what we see in Australia, and Australia is very much representative of what we see in the Western world. But where we are at the moment, and unfortunately, the broader statistics are a little bit old, we haven't had them updated since COVID. But before COVID, 1 in 5 Australians had some sort of mental health or behavioral condition in the previous 12 months. And I think we would all know that COVID only exacerbated those. We saw endless media during the COVID pandemic of the mental health challenges that presented for so many people. So the stats generally speaking, at any point in time, is somewhere between 1 and 4, 1 in 5 Australians are experiencing mental health challenges with depression and anxiety at the top of the list. I think what I found and -- what I found since I've come into this role is the -- how widespread this is? Every conversation I have with people now, they want to tell me about the mental health challenges that they have either experienced personally or within their family. And I found that those statistics of 1 in 4 or 5 anecdotally seem to be very true because everyone that speaks to me has either had direct experience or has only one removed from someone that has. And probably the statistic that really raised my eyebrows the most since we've been working in this area is that within Australia in our population of 26 million, 27 million in people, we issue nearly 5 million prescriptions for antidepressants per year. And so the level of antidepressant prescription is only going up and up, and we only seem to be hearing more and more about a mental health crisis. So it's particularly topical, those of you in Australia that are on the call that watched Four Corners on the ABC last night was on this very point on the widespread use of antidepressants and some of their broader effects. So that's the backdrop that has led people of researchers and the mental health community to really look for something different, look for an alternative way to treat mental health conditions. And that really led to the resurgence in research that has been happening around the world over the last decade. And that really has built on the earlier work that was done through the 1950s and '60s looking at the use of psychedelics to treat mental health conditions. So perhaps if we just got the next slide, Colin. I'll have a -- I'll just give you a very quick overview of what we've been doing at Reset and where we're going. For any shareholders that are interested in delving into this in more detail, feel free to get in contact with me, and I'm happy to spend some time going through the detail with you. But we are, at the moment, a 100% subsidiary of Little Green Pharma. We were incorporated nearly 2.5 years ago, and there had been a fair bit of background work going on before we actually formed the company. And our initial premise when we set the company up was that all of the knowledge and the infrastructure and the licenses and the capability that have been built up within Little Green Pharma over the last 5 years was probably going to be quite transferable over the psychedelics, particularly on the psilocybin drug cultivation front. So we were able to very quickly assemble a highly credentialed team of experts that's both within our advisory Board, expert consultants we've been able to use and then those that we've been able to get involved with the clinical trial, which I'll talk about in a moment. But it's been really pleasing that we've been able to assemble a quality of team that we haven't had to compromise on quality in any way, shape or form. Each of the top experts in their fields that we wanted to get involved with the company have all been eager to do so. So we do feel we've put together some very high-quality expertise. The work that we're doing was obviously with a view that at some point down the track, that we may see psychedelics more widely available to the community beyond just clinical trials. And so the TGA released the decision earlier this year to ban scheduled psychedelics from the 1st of July in very limited circumstances. And it placed us in an extremely advantageous position in that the body of work we've assembled over the last 2 years couldn't have been more relevant to the new rules that have come in. If we had 9 of those rules were coming in when they were, we probably wouldn't have done anything different from what we had done over the previous 2 years. So we were really well placed to take advantage of that. And I feel confident in saying that certainly, at the moment, that we're helping playing a meaningful role in the formation and the development of this history in Australia. Next slide, please. So what I'll do just briefly is I'll touch on prior to the rules that came in from the TGA, what our main -- 2 main areas of focus were and then how we've responded to those rules that have come in. So looking at initially, one of our main areas of focus is on cultivation of mushroom and manufacturer of psilocybin from those mushrooms. And so in order to do that, we built a custom-designed boutique lab, that's really a proof of concept facility. You can see it there in the photo. It's a transportable facility that was built by a company, I've got their logo there, Biora, that builds agricultural research chambers. They're used in a lot of cases for crop research. They can artificially produce pretty much whatever climatic conditions you want inside that chamber. And we've had a customized for -- to be optimized for mushroom cultivation. So we employed an expert mycologists which is the science of growing mushrooms to design the facility. And it took us a bit over a year, probably getting on towards 18 months to fully construct this facility. It had to be designed from scratch. We did experience quite a few delays with COVID and all the interruptions that came with supply chains. But we're very pleased to say earlier this year, it was fully completed and transported down to our side. It was manufactured in the industrial area of Perth, and that photo there was the day that we loaded it on to the back of the truck and sent it down to LGP's cannabis cultivation facility. So as we said, at the moment that facility is installed at LGP's cannabis cultivation site. It's operational. We are optimizing all of our cultivation techniques at the moment, running the sort of experiments with different substrates, different atmospheric conditions, CO2 levels, humidity levels and the like. But it's certainly performing as we wanted it to and our focus is on the cultivation activities there. We will then move -- once we're happy with our cultivation practices, we'll then move on to looking at producing a pharmaceutical-grade drug from those mushrooms. So we're actually waiting at the moment. We expect the Therapeutic Goods Administration to release what's called a Therapeutic Goods Order, which sets down all the technical requirements and specifications for new drugs in the market, which they are expected to release for psilocybins. So once we know that, then that will help in form our production planning. Next slide, please. The other main aspect that we've been doing, and it really comes -- it comes back to the way that psychedelics are administered to patients in clinical trials and the way we see it moving down the track, is it's a very different model to cannabis, to LGP, our parent company and to most drug treatments that you see around the world. And the way psychedelics are administered, it's actually in conjunction with an intensive period of psychotherapy. So the way a typical psychedelic treatment regime works is a patient will have up to 3 months of intensive psychotherapy. And in 2 days, interspersed over that 3-month period, they'll take a dose of the psychotic drugs. So there's an intensive preparation period for the patient. They take the drug and then intensive integration therapy over the following 3 or 4 weeks and then they repeat the dosing and the integration therapy afterwards. So all going well, a patient only actually takes the drug twice. So a very fundamental element of the administration of psychedelic drugs is the therapy -- the accompanying therapy. And so we strategically really wanted to develop our own therapy protocols and refine and test them. The only way to do that is to -- is in a clinical trial environment. So going back 18 months ago, probably even nearly 2 years ago, we initiated the planning for what will be Western Australia's first clinical trial using psilocybin. And I'm very pleased to say that we're on the cusp now of getting to patient recruitment in this trial. We've got our ethics approval sign off. We're in our final governance sign-off process, and then we initiate the site and start patient recruitment. It's been a long road to get here. We are conducting the trial at one of Western Australia's main public hospitals, Fiona Stanley Hospital, at Harry Perkins Research Institute which is co-located at that site and navigating all the approvals of the state government to get a Schedule 9 drug substance in there and conducting this has been onerous, but we've persisted and got through. So our trial is led by -- you can see there, Professor Sean Hood. He's our principal investigator, who is essentially the head of the trial. And I think I am not overstating it to say that Professor Hood would the most respected voice in psychiatry in Western Australia. he is the Head of Psychiatry and the Faculty of Medicine at the University of Western Australia and was previously the Head of the Anxiety and Mood Disorder Clinic at the Charles Gairdner Hospital. So it's been a real privilege to work with Professor Hood over the last couple of years putting this trial together, and I know that he's highly engaged in this process and very excited about it. We've also got Dr. Stephen Bright, who's a clinical psychologist. He is on our Clinical Advisory Board and has been integral as an adviser to the formation of Reset, and he will be the lead psychologist, lead patient therapist on our trial. Next slide, please. So we've been working away on those areas, the cultivation and production and then also the clinical trial with a view to developing therapy protocols. And then earlier this year, the Therapeutic Goods Administration really surprised everyone in the psychedelics field by announcing that from the 1st of July this year, that under very prescriptive circumstances, which I'll give you a quick snapshot in a moment, that psychedelics could be prescribed for treatment-resistant depression in the case of psilocybin and for PTSD in the case of MDMA. Now they laid down some very, very strict parameters. And so I would say these are baby steps. We're certainly not at the point where the floodgates have opened. But in my view, it's actually been a really responsible way to start navigating the use of those medicines outside of the clinical trial environment. And this step really caught the attention of the psychedelics world globally. It's actually the first time anywhere in the world where the medicinal benefits of psychedelics have been recognized with the drug scheduling of the regulators in the country. So where all the boxes are ticked, and a psychiatrist is able to describe these drugs, they actually move down the TGA's drug scheduling from Schedule 9 to schedule 8, which -- that recognizes the medicinal benefit in them. I was over in the U.S. in June for the Big Global Conference in the field of psychedelics, first physical gathering of the industry since COVID. And any time I opened my mouth with an Australian accent, everyone wanted to speak to me and understand what was happening in Australia. The focus of the world is definitely on this ruling from the TGA. Next slide, please. I would say that what they have done, as I mentioned, there's a lot of hurdles that have to be jumped. It's actually -- for a psychiatrist to prescribe, it's actually only really in practice and not too below a clinical trial. I've just laid out here that a trial -- to prescribe, a psychiatrist as to have fully documented treatment protocols, which is onerous. They have to go through Independent ethics committee and get approval. They have to go to the TGA and get what's called authorized prescriber designation which says that they have expertise in this field, and they have to comply with the guidelines from the college of psychiatrists. Now all of that for an individual psychiatrist is onerous and really too much to ask. So all of a sudden, the work that we've done on our clinical trial, which is for treatment-resistant depression, which already has fully documented protocols and has already been through an ethics committee approval process has become an incredibly valuable resource for psychiatrists looking to commence treatment under these new rules from the TGA. So this has become a real focus of what we've been doing at Reset over the last 6 months of how we translate that body of work that we put together for the clinical trial into these new rules and commence patient treatment outside of a clinical trial environment. Next slide. And so in conjunction with that, one of the areas that is hugely topical in the industry since the TGA rules came about is the issues of affordability and access to treatment. Because certainly, as the way clinical trial protocols are laid out and the way that the TGA expects treatment to be done in the early days, it's a very labor-intensive treatment that the patient is -- we generally have 2 therapists with them at all times over that 3-month period, which is onerous. But what we found is we've had strong interest from a West Australian-based health fund, HIF, and we formed a strategic alliance with them to start exploring how we translate this treatment out into the real world, how they might be able to ultimately provide coverage for their members. We're going to do some -- they put some money towards developing a proof-of-concept clinic. We're going to actually start doing this treatment. We're going to study the health economics around the treatment along with administering to the patients and then that opens up the possibility of them potentially being able to offer coverage for members down the track and then potentially Reset and HIF developing specialist treatment clinics together beyond this initial proof-of-concept point. So this has been a really landmark event and something that across, certainly, the Australian industry really drew the attention of the whole psychedelics industry that a health insurer has actually taken -- more than taken notice, has actually taken action and put them [indiscernible]. Next slide. So just closing, we've spoken for some time about demerging Reset from LGP. And I know that this has gone on longer than was originally anticipated. But it's really a product of what's been happening in the industry. I won't deny that over the last 6 months or so since the TGA announcement, our limited resources have been distracted away from the demerger to maximizing this opportunity that was quite unexpected from a regulatory perspective. We're so well placed with the body of work that we had done in the 2 years prior that we really had to make hay while the sun shines and having -- being able to put this relationship in place with HIF has been hugely valuable for us from a strategic perspective. It's also given us some time to get our cultivation activity to finish our grow room and get our cultivation activities up and running and now we're also on the cusp of our clinical trials starting. So we've really reached a level of maturity now as a company where it's appropriate, I think, now that we come out of Little Green Pharma. We have quite a different risk profile, quite a different focus than Little Green Pharma does and also our activities now will start to require their own level of investment, which I think is appropriate that funds going into that now are from people that are investing specifically into the development of psychedelics. So where we're at the moment, we've really been pushing hard on getting all the paperwork together in the background over recent times. We are very well advanced in that process. We intend to get that out to shareholders, hopefully during September within the next month. A vote will be required by Little Green Pharma shareholders. And essentially, what we'll be asking shareholders to vote on is distributing out Little Green Pharma's ownership of the company out to shareholders. So essentially, Little Green Pharma shareholders would hold a separate share in LGP and Reset, and then LGP shareholders would have a priority entitlement into a capital raising that we will look to do within Reset. So that's something that we're working on. I hope we have that out to you shortly, and we will need to convene another meeting to action this. So I'll close on that note. Very happy to take questions from people during the general Q&A, but thanks for taking the time to listen.

Thanks, Shaun. Great presentation and also to Fleta and Paul for your presentations. As mentioned, there is an opportunity now to ask any questions of Paul, Fleta, Shaun, all members of the Board. Obviously, we have had very detailed presentations, so there may not be any questions forthcoming, but I will open the floor for a few minutes to see if there are any questions that are forthcoming. As I said, it looks like very detailed presentations have led to a limited need for question and answers. So on that note, I will thank all presenters -- sorry, Paul, Shaun and Fleta for your presentations. I'd like to thank the Board for their participation today and obviously, the shareholders for their interest in both the AGM proper and the presentations that followed. So ladies and gentlemen, on behalf of the Board of Little Green Pharma, I'd like to thank you all for your participation today.

Thank you, everybody.

Thanks, everyone.