THE AURORA STANDARD QUALITY AGILITY INNOVATION EXECUTION EXPANSION. Acquisition of CanniMed Therapeutics. March 2018

Transcription

1 THE AURORA STANDARD QUALITY AGILITY INNOVATION EXECUTION EXPANSION Acquisition of CanniMed Therapeutics March 2018

2 Forward Looking Statements This presentation (the Document ) by Aurora Cannabis Inc. ( Aurora or the Company ) has been compiled by management of the Company solely for informational purposes. The Document has been prepared and dated as of [January 31, 2018], and the information contained herein is current as of such date only. The Document under no circumstances is to be construed to be an offering of securities. Neither this Document, nor its delivery to the recipient shall constitute an offer to sell, or the solicitation of an offer to buy the assets described herein. It is provided solely for use by prospective investors in considering their interest. This Document is qualified in its entirety by reference to, and must be read in conjunction with, the information contained in the takeover bid circular of Aurora, dated November 24, 2017, to acquire all of the issued and outstanding common shares of CanniMed Therapeutics Inc. ( CanniMed ), as amended by the notice of change dated January 12, 2018 (Notice of Change), and the notice of variation dated February 5, 2018 (Notice of Variation), and the notice of variation and extension dated March 9, 2018 (Second Notice of Variation) (collectively, the Offer Documents ), as filed on the system for electronic document analysis and retrieval ( SEDAR ). A reader is not entitled to rely on parts of the information contained in this Document to the exclusion of others. Aurora has not authorized anyone to provide the readers with additional or different information. The information contained herein has been prepared to assist interested parties in making their own evaluation of the Company and its business and does not purport to contain all the information that prospective investors may require. Prospective investors should conduct their own investigation and analysis of the Company and its business and the information contained in this Document as well as any additional information provided by the Company. This Document includes forward-looking statements within the meaning of certain securities laws in Canada. These forward-looking statements include, among others, statements with respect to Aurora s objectives, goals and strategies to achieve those objectives and goals, as well as statements with respect to our beliefs, plans, objectives, expectations, anticipations, estimates and intentions. The words may, will, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and continue (or the negative thereof), and words and expressions of similar import, are intended to identify forwardlooking statements. In particular, this Document contains forward-looking information concerning: (a) the proposed benefits of the business combination of Aurora with CanniMed; (b) ability of the Company to successfully integrate CanniMed, and anticipated impact of the integration on the Company s operations, financial results. and access to markets; (c) expectations for future growing capacity, market growth, customer demand, product selection, and volume of patients; (d) expectations with respect to business and geographical diversification, completion of any capital project or expansion and the costs and anticipated timing with respect to such expansion; (e) risks associated with intellectual property, including the ability to protect intellectual property; and (f) the ability to renew licenses from Health Canada, and (g) the legalization of cannabis in Canada and other jurisdictions, and the timing related thereof and the Company s intentions to participate in such jurisdictions (domestically and internationally), if and when such use is legalized. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, which give rise to the possibility that predictions, forecasts, projections and other forward-looking statements will not be achieved. Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements. The Company strongly cautions readers not to place undue reliance on these statements, as a number of important factors, many of which are beyond our control, could cause the Company s actual results to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentions expressed in such forward-looking statements. The risks and uncertainties include, but are not limited to, those described in the Risk Factors section of the Offer Documents. The risk factors contained in the Offer Documents should not be construed as exhaustive and should be read with the other cautionary statements in the Offer Documents. A discussion of the risks and uncertainties facing the Company also appears in Aurora s Annual Information Form and other continuous disclosure filings, which are available at The foregoing list of important factors that may affect future results is not exhaustive. When reviewing the Company s forward-looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by Canadian securities law, the Company does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by the Company or on the Company s behalf. Such statements speak only as of the date made. The forward-looking statements contained in this Document should not be relied upon as representing the view of the Company or its management as of any date subsequent to the date of this Document. Neither the Company nor its management is under any obligation, and neither undertakes, to update any of this information at any particular time. Neither the Company nor its management assumes any obligation to update or revise forward-looking statements should circumstances or estimates or opinions changes. None of the Company or its affiliates or related partnerships and corporations or their respective directors, officers, partners, employees, agents or representatives makes any representation or warranty as to the accuracy or completeness of the Document or any statements, estimates or projections, and none will assume any liability for any representations (express or implied) contained in, or for any omissions from, the Document, or for any other written or oral communications transmitted to prospective investors in the course of their evaluation of the Company and its business. This presentation cannot be copied, reproduced or distributed in whole or in part to others, at any time, without the prior express written consent of the Company. To the extent that they are included in this document, certain financial metrics can be reported as non-ifrs measures, such as EBITDA (earnings before interest, taxes, depreciation and amortization). For the purposes of this Document, EBITDA is calculated as revenue less cost of sales and operating expenses. The Company believes that these non-ifrs measures are appropriate measures of the operating performance of the Company. The Company s calculation of these measures may differ from the methodology used by other issuers and, accordingly, may not be comparable to such other issuers. The Company believes that these measures are appropriate measures of the Company s operating performance because they facilitate an understanding of operating performance without giving effect to certain non-cash and overhead expenses. None of these measures are equivalent to net income or cash flow from operating activities determined in accordance with IFRS. 2

3 CanniMed Acquisition Strong Brands Well Connected Major Expansion Adding 19,000 kg per annum funded capacity Adding over 20,000 patients Expands international footprint To form core of Aurora s Medical Cannabis Centre of Excellence Adds drug delivery technologies Cannabis Oils Significant sales acceleration since launching oils in 2016 Phase 1 expansion - $1 billion revenue capacity with 70+% profit margins 12 million bottles / per 60 ml Completed first oils export to Australia and Cayman Islands Extraordinary capability and expertise Capsules Production Expected to accelerate growth in Canada and internationally For baby boomers looking for a safe, reliable way to manage their chronic pain symptoms and maintain an active lifestyle Topical Cream Recently launched leading trans-dermal topical cream Aurora Cannabis Inc. Management Presentation 3

4 $180B Medical Market Coming Online Over the Next Years Eight Capital 2018 Outlook: legalization will lead to Globalization International medical market growing at a 21% CAGR until 2025 Near to mid-term expansion through medical-focused opportunities Multiple GMP-certified facilities to export to international markets Country Population (MM) Medical Cannabis? Name of Regulation Year Voted In Implied Demand (kg per year) Medical Market Sizes Flower + Extracts If flower Only ($MM) ($MM) Active Medical Cannabis Laws Argentina ,820 $2,218 $3,564 Austria ,050 $434 $698 Australia 23.9 Narcotics Drug Amendment Bill ,470 $1,221 $1,963 Canada 35.9 ACMPR ,070 $1834 $2,948 Chile 17.9 Decree ,670 $915 $1470 Columbia ,860 $2,463 $3,958 Croatia ,660 $215 $345 Amendments 50/2013 Coll. & Czech Republic /2013 Coll ,650 $537 $862 Germany ,110 $4,124 $6,627 Israel ,130 $414 $665 Italy ,540 $3,056 $4,911 Jamaica 2.8 Dangerous Drugs (Amendment) Act ,440 $143 $230 Macedonia ,330 $107 $172 Mexico ,100 $6,490 $10,430 Netherlands ,370 $864 $1,388 Norway ,960 $266 $427 Puerto Rico ,010 $189 $304 Romania ,350 $996 $1,601 Slovenia ,330 $107 $172 Federal Act on Narcotics and Switzerland 8.3 Psychotropic Substances ,590 $424 $682 Turkey 78.7 Legal in 19 provinces ,510 $4,022 $6,463 Uruguay ,820 $174 $279 Subtotal ,358,840 $31,212 $50,162 Pending Medical Cannabis Laws or Countries of Interest Belgium ,490 $577 $928 Brazil ,516,940 $10,619 $17,066 Denmark ,610 $291 $468 Finland ,150 $281 $452 France ,120 $3,291 $5,289 Iceland ,190 $15 $25 Ireland ,310 $240 $386 New Zealand ,850 $230 $370 Poland ,780 $1,972 $3,170 Portugal ,920 $531 $854 Slovakia ,420 $276 $443 South Africa ,850 $2,785 $4,476 Spain ,530 $2,356 $3,786 United Kingdom ,310 $3,306 $5,313 United States Legal 29 states and D.C. - 2,349,140 $16,444 $26,428 Subtotal ,173,610 $79,154 $127,212

5 Integration Focused on Strategic Synergies Increase production capacity Develop new, commercially valuable intellectual property Drive growth of our international business Accelerate patient registration Aurora Cannabis Inc. Management Presentation 5

6 Domestic Capacity Expansion FACILITIES MOUNTAIN SKY VIE LACHUTE CANNIMED TGOD Footprint (square footage) 55, ,000 40,000 48,000 97,000 Relationship 17.62% ownership interest Supply agreement for up to 23,200 kgpa Status Operational since 2015 Licensed in January 2018 Completion by mid Completed and Licensed Nov 2017 Completion early calendar 2018 Working on GMP certification Commenced expansion Status BuIlding Larssen-designed 102,000 kgpa facility in Quebc Completing 14,000 kgpa facility in Ontario Capacity 4,800 kg/yr 100,000+ kg/yr 4,000+ kg/yr 4,500+ kg/yr 19,000 kg/yr Funded Capacity 116,000+ kg/yr Key features First purpose built cannabis facility EU GMP certified Highly automated, technologically advanced cannabis facility for optimized yield and low cost production built to EU GMP standards. Located at Edmonton international airport for superior domestic and global logistics Technologi cally advanced, specialty strains for premium products and medical research Completed to EU GMP standards Nearly completed, state-of-the art facility to be completed to EU GMP standards Current 7,000 kgéyr capacity to be expanded to 19,000 kg per year Key features Premium organic cannabis producer 1 VIII Capital, Cannabis Sector, July

7 International Expansion Adding 128,000+ kg per year capacity in Europe through Aurora Nordic Germany Sells cannabis through Pedanios, leading wholesale importer/exporter/distributer Denmark Owns 51% of Aurora Nordic where Europe s largest cannabis facility is being built at 1,000,000 sq ft European Union LOI with Creso Pharma Ltd. to market CMED medical cannabis brands Huge addressable markets with strong barriers to entry Requires EU GMP certification to participate Aurora is one of few companies with such certification Accelerating certification of CanniMed facility Leveraging both companies reach and distribution channels Cayman Islands First ever sale of commercial cannabis oils Aurora CanniMed Both Aurora & CanniMed ~588.8M = combined population South Africa Definitive agreement to supply cannabis products to Akula Trading 2 Pty Ltd. Italy Sells cannabis to the Italian government through Pedanios Australia 22.9% interest in Cann Group, first Australian company licenced to cultivate medical cannabis Australia First ever shipment of commercial cannabis oils 7

8 Vertical Integration Horizontal Diversification Aurora Industry Leading International Strategic Partnerships CanniMed Strong International Presence With Meaningful Distribution Partners Over the last two years, Aurora has completed 15 acquisitions and strategic investments, including: o o o Pedanios EU`s largest distributor of cannabis, based in Germany EU GMP certified LIQ Strategic investment in Western Canada s largest liquor retail chain. LIQ to convert existing retail outlets and establish new ones for the sale of cannabis for the adult consumer use market Radient Technologies Partnership for the high-throughput extraction of cannabinoids CanniMed has built strong partnerships that position it well for future growth: o o o Avaria CanniMed entered into an agreement with Avaria Health & Beauty Corp for the distribution of topical medical cannabis products, product development, and clinical research PharmaChoice Entered into Canada s first exclusive pharmacy distribution agreement for medical cannabis Canadian Cancer Survivor Network Partnered with Canadian Cancer Survivor Network for medical cannabis education Akula Trading 2 Pty Ltd. 8

9 CBD Value (%) Medical: More Balanced Genetics Offering Medical focused genetics will provide symptom relief for a variety of diseases through the THC-CBD entourage effect while mitigating the THC s high Facilitate bids for pharmacy supply agreements domestically and internationally with medically preferred concentrations / ratios Additional balanced strains to reinforce the medical market THC Value (%) Enhances ACB s medical offerings with 4 balanced ratio strains 9

10 Medical: More Resources to Address a Massive Market Reinforces Medical: Larger Global Market than Adult Use Rapidly growing global medical cannabis market to reach $180 billion in annual sales (Eight Capital 2 ) Higher margins, stickiness and increasing insurance coverage 1. Based on Health Canada patient count Combined patient base of 45,000 Represents >17% of total Canadian Medical Cannabis patients 1 Combined ACB/CMED will have one of the largest databases with info on strain type, symptoms, severity, level of relief, ratings / reviews, efficacy and side effects to drive product development Leveraging CanvasRx, the country s largest patient counselling service, with CanniMed s organically built network of over 5,000 physicians to accelerate patient registration 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Aurora Active Registered Patients Aurora + CanniMed Active Registered Patients 2. Eight Capital

11 Medical: Clinical Trials and Medical R&D Aurora has no active clinical trials CMED will fill that gap with various projects and initiatives in both clinical and other research studies: 1) CMED is involved in a number of pre-clinical and clinical trials into the effects of cannabinoids in various therapeutic areas, such as: neuropathic pain, arthritis pain, and neurological disorders 2) Partnership with Avaria Health & Beauty for clinical research and product development with a focus on topicals (first product launched). 3) Fagron partnership: leverage experience in their dermatological care products, oral administration aid and scar treatment

12 Science-driven R&D to create products with more narrowly targeted therapeutic indications Leveraging the strength of the CanniMed medical brand with physicians Medical: new higher margin products Aurora Cannabis Inc. Management Presentation 12

13 FINANCIAL SECTION 13

14 Financial Highlights Under the new terms of the transaction, Aurora will issue up to 25% less shares 1 The implied acquisition multiple paid by Aurora for CanniMed is favourable relative to the peer group trading multiples in the Canadian cannabis sector The acquisition provides double digit accretion to both earnings and EBITDA per share TEV / 2019E EBITDA 2 TEV / 2020E EBITDA 2 Shares Issued to CanniMed (millions) 46.4x 31.2x % Reduction 35% Reduction 21.0x 31.4x 12.7x 19.5x Aurora CanniMed (Implied Acquisition Multiple) Market Cap >$1 billion (Excl. Outliers) Aurora CanniMed (Implied Acquisition Multiple) Market Cap >$1 billion (Excl. Outliers) Original Offer Maximum Share Uptake Maximum Cash Uptake 1. Includes shares that would be issued for 700,600 CanniMed shares already owned by Aurora 2. As at the announcement date of January 23, 2018; based on consensus estimates and street research 14

15 Exceptional Revenue Growth Revenue development since Aurora commenced sales ACB WEED APH LEAF CMED ACB+CMED Aurora Cannabis Inc. Management Presentation 15

16 Capturing the Market The combined Aurora- CanniMed entity will capture ~23% of revenue market share (top 15 public LPs) Aurora has successfully increased its share of revenue in the cannabis space compared to the other top publicly listed Canadian cannabis companies Strong Market Penetration Revenue Market Share (Top 15 Public LPs) 1,2,3,4,5 Total Other 13 Canadian Comparables CanniMed Aurora 1.0% 4.5% 14.5% 11.9% 10.6% 9.1% 10.2% 11.6% 11.4% 9.8% 14.6% 9.3% 8.9% 8.3% 9.2% 8.5% 85.5% 88.1% 88.4% 85.7% 81.6% 80.9% 80.2% 79.4% 76.8% 23.1% Since Q1 2016, Aurora has grown its revenue market share from 1.0% to 14.6% Quarter Ended Quarterly Revenue (C$ Millions) 2017 Aurora: na na CanniMed: Combined: Sep 31-Dec 31-Mar 30-Jun 30-Sep 31-Dec 31-Mar 30-Jun 30-Sep 1. Public Disclosure; including audited financial statements and Quarterly MD&A 2. Total Other 13 Largest Canadian Comparables includes top 13 publicly traded operating cannabis companies in Canada, excluding Aurora and CanniMed (Canopy, MedReleaf, Aphria, Cronos, CannTrust, Supreme, OrganiGram, Hydropthecary, Emerald, ABcann, Maricann, Village Farms, Newstrike) 3. CanniMed revenue represents Bio-Pharmaceutical Products Revenue only 4. CanniMed shown on fiscal-year basis ended October 31 (i.e. 30-Sep 2017 corresponds to the 3 months-ended October 31, 2017) 5. Excluding all non cannabis related revenue for Village Farms; as a result, Village Farms has no recorded revenue for this period 16

17 Increased Scale, Better Access to, and Lower Cost of Capital An Aurora-CanniMed combination would create the largest publicly traded Canadian cannabis company by market capitalization, with a pro forma market capitalization of ~7.3 billion The combined entity will likely benefit from greater access to capital, a lower cost of capital and a strong position in the public markets Pro Forma Market Capitalization 1 (C$) 6,254 6,017 5,484 3,000 2,460 2, Pro Forma Canopy Aurora Aphria Cronos MedReleaf CanniMed CannTrust Hydropothecary Emerald Supreme OrganiGram ABcann Newstrike Village Farms Maricann 1. Pricing as at March 2, Based on public disclosure and includes top 15 publicly traded operating cannabis companies in Canada by market capitalization: i. Share count for all companies based on in-the-money securities using the treasury method, as required ii. CanniMed price assumed at March 2, 2018 closing price; including all dilutive securities iii. Pro Forma assumes maximum cash pro-ration; 72.5 million Aurora shares issued to CanniMed shareholders 17

18 Highlights - Strategic Synergies Driving Accelerated Growth Accelerated Patient Registration Science-Driven Product Development Production Expansion International Expansion Funded capacity 283,000 kg per year Patients 45,804 Last reported quarter - combined revenues $16.5M Employees > countries and Geographic presence expanding Revenue market share of top 15 public LPs (latest comparable publicly disclosed quarter) Genetics Clinical research 23.1% Expanded genetics portfolio 5 studies 18

19 Any Questions? For additional information, please contact: Marc Lakmaaker Director, Investor Relations Aurora Cannabis Inc. Tel: (647)

20 AGILITY INNOVATION EXECUTION EXPANSION Talented, experienced management team driving the sector's fastest growth in customers, revenues and shareholder value 20