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

Welcome, everyone, to the General Meeting of Shareholders for Little Green Pharma. Shortly, I will introduce Chairman, Michael Lynch-Bell, who will run through the formal order of business. But before I do, I'd like to quickly just run through the agenda of today's meeting. As I said, I will shortly introduce Michael, who will run through the formal items to be put to shareholders at the completion of that formal business. I will then also ask Paul Long, the CEO of Little Green Pharma, to present or to provide a short statement and update on the company and its operations to date and we will be then taking questions from shareholders. We have sort of 5 to 10 minutes available to do that. So if you do have any questions, please feel free to submit them using the Q&A button at the bottom of the screen, and I will put them to Paul at the completion of the full business. I would now like to introduce Michael Lynch-Bell, Chair of the meeting and Independent Non-Executive Director of Little Green Pharma, who will introduce his fellow Board members and conduct the formal business. Michael, over to you.

Thank you. Thanks, David, and good afternoon, everybody. Good morning from the U.K. I'd like to welcome everybody to our General Meeting of Shareholders for Little Green Pharma. And as David said, my name Michael Lynch-Bell, I'll Chair today's meeting. As the time is after 4:00 p.m. 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, Paul Long, our Chief Executive Officer; Angus Caithness, Executive Director; Peter Solomon, Executive Director; Dr. Neale Fong, Non-Executive Director; and Beatriz Banzo, Non-Executive Director. None of them are moving, but they are actually here, and I'm sure you'll see them at some point. I'd also like to introduce our Company Secretary, Mr. Alistair Warren. All shareholders were notified by letter dated the 10th of November 2023 of where to access the Notice of Annual General Meeting. Accordingly, the notice is taken as read. Further, I advise that Resolution 1 related to the Demerger of Reset Mind Sciences Limited has been withdrawn as announced to the ASX on the 19th of February 2024. Therefore, the sole resolution to be considered at this meeting relates to the change of auditor. The order of proceedings for today's meeting will be consideration of the sole agenda items set out in the notice. We will take questions from shareholders through the Q&A section of the Zoom application on this item of business. We'll then hold a vote on the sole resolution to be connected by a way of a poll by our Company Secretary, Al. The results of the poll will then be announced to the ASX after the close of the meeting. And as David said, after the close of the meeting, there will be a statement from Paul general Q&A. I wish to state that it's my intention to vote the proxies vested in me in favor of the resolution to be put before today's meeting. Details of the proxy appointment received by the number of votes, including whether the proxies 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 revoting 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'll now turn to the business set out in the notice of meeting. The first and only resolution approval of change of auditor. The resolution seeks approval for a change of the company's auditor to BDO Audit, (Western Australia) Pty Limited. 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 this resolution are shown on the screen. The proxy results votes received are for 77,015,073 votes, against 154,071. Those given the share discretion in favor 544,373. Does any shareholder have any questions or comments? This is now the opportunity to ask any questions on this resolution and I'll pause briefly.

No questions received, Michael.

Since there are no questions, I now access my power as Chairman to demand a poll on this resolution. We'll now conduct a poll on the sole resolution 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's Secretary. We'll now have a brief break while any poll forms are returned. Thank you. [Voting]

We will now resume the meeting. The Company Secretary will compile the results and announce them 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 4:08 p.m. Western Standard Time. On behalf of the Board, I'd like to thank you for your support. Obviously, I'd like to thank everybody for attending today's meeting. I'm going to hand over to David and Paul, our CEO, for a short Q&A session. David, it would be nice if we could unfreeze the pictures of the rest of the Board so that people see more than the screenshot, if that's possible.

No problem, Michael. We'll now make visible and audible, if required, each of the members of the Board. And similarly, I'd now like to introduce Paul Long, CEO of Little Green Pharma, who would like to give an update on the company, its operations and how it is progressing to date. And then as I said, at the completion of that short update, I will then invite Paul and other Board members as required to answer any questions that come through from shareholders. We have had some come through during the course of the webinar. So I'll put them to Paul and other directors as required. So Paul, I'd now like to introduce you to give a bit of a brief update to shareholders as to the company and its operations, and then I'll keep you on and put some questions to you in due course.

Thanks, David, and welcome, everyone. And just for clarification, I think I just wanted to jump in and give a bit of a background to the proposed Demerger. We did receive a few shareholder queries in relation to the Reset Demerger. So I just thought it would be really helpful today to address that here to investors. So thank you again for joining. So just a bit of a background really, but LGP started our psychedelic business in early 2021. In recognition of our expertise in botanical drug cultivation and given the rising tide of the North American psychedelic listings and following several successful clinical trials in the U.S. and the U.K. And as most investors and people on this call will be aware that Australia and in fact, the rest of the world continues to experience a mental health crisis which has significantly increased through the COVID pandemic. So we recognized early that psychedelic assisted psychotherapy really represented 1 of the more promising and modern pathways to help manage this crisis. And by late 2021, we obtained our schedule 9 license to cultivate psilocybin and we appointed an advisory Board to advise us on the psychedelics business and a proposed clinical trial. We then settled on a clinical trial that investigated the treatment of treatment-resistant depression using psilocybin with the trial design and indication chosen really specifically because of the impressive results that we had seen in North America. And by early 2022, we decided to rebrand the psychedelics business as Reset Mind Sciences. And we commenced the construction of reset specialized mushroom growing, which can -- and we really continued from there on the planning of the clinical trial. We also received an import license and permit to hold Schedule 9 psilocybin during this time. And roughly a year later, the psychedelic industry received an enormous boost with the announcement that from July 2023, psilocybin and MDMA would be down scheduled for the treatment of treatment-resistant depression and PTSD. And this was a world first with Australia becoming the first country to federally legalize the treatment of these indications with psychedelics and then shortly [ trial ], which is now perfectly aligned to the new psilocybin treatment pathways in Australia. And it's worth noting that the new treatment pathway for psilocybin and MDMA is relatively narrow and among other things, require psychiatrists to demonstrate prior experience in prescribing psychedelics. So as you can expect, this initial expertise is typically only available through participation in a clinical trial to treat these indications. So hopefully, that flags the importance of our investment into the clinical trial activity. And then at around about the same time, Reset [indiscernible] and formalized our strategic alliance with HIF, which would be a long-term quarter of [Technical Difficulty] Little Green Pharma. Under this HIF agreement, we agreed -- they agreed to help potential private insurance pathway and Reset also began cultivating its first batches of psilocybin mushroom in July 2023, acquired a lift over what can be described as a [Technical Difficulty] Western Australia and comprised of medical clinic, which we began fitting out [Technical Difficulty] psychedelic clinic operations [Technical Difficulty].

Well, we do seem to experience -- be experiencing some issues with Zoom. I might just turn your video off so it will be audio only. Sorry, ladies and gentlemen, we do seem to be experiencing some sound issues with Paul. If Paul can hear me, what may be appropriate is if you log in and log out and re-log in and that should be able to hopefully fix up the Internet issues at your end. But if everyone bears with us for a second, we'll be able to deal with that.

Okay. So just leave.

No, no. We've got you now, Paul, I can hear you loud and clear.

Okay. Sorry about that. Sorry, I'll -- David, where did I get up to in my spiel?

You were talking about the manufacturing facility in office space. So we got you there. And then we [indiscernible] last year. So if you were giving an update on the office space and the manufacturing facility and the fitting out of the clinic space for the psychedelics business.

Yes. Okay. No problem. Yes. So look, obviously, the fit out, as I was mentioning, is of the clinic in our -- clinic here in Western Australia is due to be completed in the next month or so. And then during this time, LGP and Reset had repeatedly considered investor and market sentiment with a view to the emerging Reset from LGP. So LGP, we were really keen to ensure that Reset would continue to take advantage of the R&D rebate [indiscernible] Australia, which was [indiscernible] in the dollar back for early start. [indiscernible] and Little Green pharma, once we've gone about cash benefits. So in the second Reset from LGP Group to raise the capital to enable that generous R&D. So under the prospectus or in the AIM-listed fund who had prior to have been legal in the U.K. and also a -- can I just check that you can still hear me?

Yes, we can hear you loud and clear. The camera is off, just so that we sort of put less bandwidth through the system, so to speak. So we can hear you loud and clear.

Okay. No problem. Yes. So unfortunately, as I mentioned, AIM took a different view to this opinion, believing that the investment would fall foul of the U.K. Proceeds of Crime Act, which essentially prohibits U.K. investors from investing in companies that undertake activities, which are currently unlawful in the U.K., of which psychedelic assisted psychotherapy is. So fortunately, for Reset in the Australian patients, Australia is the only country in the world where psychedelic therapy is legal. However, it definitely reduces the available pool of investors significantly and also narrows the pathway for liquidity. So anyway, to cover the long story short after many months or definitely a few months of back and forth discussion with the regulator, the company took the view that we did not have at the time or the funds to continue fighting AIM and any further, which left reset without a cornerstone investor, which led to the minimum subscription under the offer not being met, and the company really needed to rethink its plans. So look, while this is disappointing, clearly, the result now provides an interesting opportunity for LGP. And the LGP Board will -- meeting presently to discuss how it wants to take Reset business further. It's really important to note that we remain 100% convinced that psychedelic-assisted therapy will be a huge and important and exciting tool for the potential treatment of global mental health issues. And we remain absolutely committed to ensuring Reset maximizes its value to Little Green Pharma shareholders. So David, sorry about the interruption on that, but I just wanted to give that quick snapshot. And I think you mentioned before, there was a few questions that have gone through. So happy to take on board of those.

Great. Thanks, Paul, and I do apologize for the minor technical issues, but we will overcome those and have overcome them. And there are a couple of questions, and some of them may be covering off that have come through that may be covering off some of the topics that you just covered, but I think it's important to be clear with the shareholders in regulation to it. So the list is 3 to 4 around the same topic. So I might just hit that 1 straight off the top. Again, why did AIM refuse to grant approval for the U.K. investors to invest in Reset? And why probably more importantly, why is that not recognized earlier?

Yes. Okay. Yes, certainly. So as I mentioned, the issue really came down to an interpretation of the Proceeds of Crime Act or POCA, which prevents investment in the U.K. entities and companies undertaking activities that would be otherwise legal under U.K. law. The basis of POCA is actually pretty reasonable, to be honest. It's supposed to prevent criminals from recovering proceeds of crime and to deter and disrupt criminal activities, including modern slavery and money laundering and things like that. So however, unfortunately, and occasionally, it hooks legitimate businesses, particularly in more progressive companies, which are actually ahead of the U.K., such as the case here with our operations, unfortunately. But we are actually confident that the U.K. will likely follow the trend towards psychedelic legalization in due course because we saw this happen with cannabis. But unfortunately, AIM was just not willing to sign off on that investment at this point. But when LGP and U.K. investors initially considered the investment, the risk was known. However, the U.K. investment group was very confident that AIM would agree to their view that POCA would permit these sorts of activities with the U.K. investor even securing, as I mentioned before, King's Counsel opinion, confirming the investment would not breach the act. However, after months of negotiation, and in the end AIM refused to endorse the investment and hence, why we decided to withdraw the offer.

Thanks, Paul. A couple -- again, a couple in the same vein, so I'll just group them all together to make it easier to answer. So we don't answer the -- ask the same question over and over again. Now that the offers have been withdrawn or are withdrawn, when will investors get their subscription funds back?

Yes. Sorry, I should have probably mentioned that one. So yes, the refunds are currently being processed. So shareholders should have received an e-mail today or certainly latest tomorrow confirming the refund. And I assume that investors accounts should be refunded within the next few days.

Okay. Well, again, another big question. What's the plan for Reset to going forward? So what's the LGP's view on Reset and the business going forward?

Yes, yes, certainly. So now that Reset will remain within the LGP Group. The LGP and Reset boards will need to put their heads together to work through the best way forward for Little Green Pharma shareholders. The Reset remains a hugely exciting business with enormous range of possibilities. And as I said before, we're 100% certain that psychedelic-assisted therapy will emerge as a critical tool for the treatment of mental health issues globally. So the LGP Board is meeting shortly to consider a range of potential options. However, it's still a little bit early to provide a final strategy on the business. So we will need to keep the shareholders updated on that and provide an update in our next investor presentation or quarterly.

Look, we do have a few minutes more for questions. And there will be a number of questions coming through. And if we do miss you, I apologize, we'll aim to answer your questions directly and individually post this call. Now in terms of the clinic, what's the timing in terms of that being operational?

Yes. So the fit out, as I mentioned, is very well advanced. The final fit-out is due to complete in the next few months. The business is undertaking a range of activities to ensure the clinic is operational. However, we would hope to be treating our first patient sometime around midyear. This will be a huge milestone for the company and these patients will be revenue -- be able to create revenue and represent Reset's progression from a pure sort of R&D play into eventually into profitability. But in the meantime, Reset has already commenced its clinical trial and the first patients screened and ready to receive their first treatment. And we'll provide further updates in our next quarterly on that one as well.

Thanks, Paul. That does bring to an end of the Q&A segment of the investor webinar and the meeting. There are a few -- as I said, there were a few questions, but they're quite specific in relation to individual shareholders. So I won't air them through this format. They will be dealt with directly with those shareholders post this call. Thank you to you for giving yourself or providing that update in relation to Reset and the business moving forward. Thank you to the Board for making yourself available and participating in today's events and particularly thanks to the shareholders who've jumped on and participated and asked questions. It's a stack of good questions. So we appreciate you putting the effort in to firstly attend and participate in the meeting but also ask a number of questions that I think are quite pertinent to the shareholder group. So thanks, everybody, for your participation and hope you have a great day. The results of the meeting will be made available via an ASX filing, as Michael mentioned, a little bit later today. So thanks, everybody, and have a great day.