PEAK PROCESSING LIMITED — Interim / Quarterly Report 2020

Jan 28, 2020

ALTHEA GROUP HOLDINGS LIMITED (ASX:AGH)

OVERVIEW & PERFORMANCE

ESTABLISHED

Australian licensed producer, supplier and exporter of pharmaceutical grade medicinal cannabis

EDUCATION

Providing medicinal cannabis education access and management services. Supporting eligible patients and healthcare professionals in navigating medicinal cannabis treatment pathways

EXPANSION

Operating in highly regulated medicinal cannabis markets. Currently in Australia and the United Kingdom. Expansion opportunities in emerging markets: Europe & Asia

ACCESS MADE SIMPLE

Althea Group Holdings Limited (ASX:AGH)

ALTHEA CONCIERGE: An online platform that is redefining patient access to medicinal cannabis

Australianmarketgainingmomentum	Continued patient growth: Surpassed December 2019 target of 4,000 patients▪Althea Concierge driving HCP growth: Over 432 prescribing HCPs▪▪Skye facility review: Proposed Skye facility on hold▪Portfolio expansion: Successful launch of Althea CBD100 product▪Solid financial position: Strong balance sheet with $22.36m cash. Well placed to meet financial obligations
Europeanmarketexpansion	▪Privately owned clinics: MyAccess Clinics officially opened in UK▪Encouraging patient trend: Early prescription trends following similar pattern to Australia▪Germany launch ready: Memorandum of Understanding signed with distributor in Germany

Production & Supply chain diversification

• Canadian production progressing: Production facility nearing completion
• Increased supply flexibility: Peak processing facility will be capable of producing infused cannabis products for the adult-use Canadian market and medicinal cannabis products

Key Market Statistics¹
ASX code	AGH
Listing price (Date of listing)	$0.20
Share price current price)	$0.45
Market capitalisation	$104.9m
Shares on issue	233.1m
GISC clarification	Pharmaceutical, Biotechnology & Life Sciences
¹As at 28 January 2020

Top 10 Shareholders	Total
Joshua Michael Fegan	56,250,000.00
Aphriainc.	12,250,000.00
PendalGroup Limited	12,000,000.00
MancannPty Ltd	10,000,000.00
HSBC Custody Nominees (Australia) Limited	9,166,878.00
HootchPty Limited	7,500,000.00
UBS Nominees Pty Ltd	5,288,685.00
National Nominees Limited	4,582,880.00
Citicorp Nominees Pty Ltd	4,547,326.00
PAC Partners Pty Ltd	3,242,347.00

Andrew Newbold | Chairman & Independent Non-Executive

• Extensive experience as director of numerous private companies and not-for-profit organisations
• 20 years' experience as a commercial lawyer and has played an integral role in the development of various businesses

Joshua Fegan | Chief Executive Officer & Founder

• Founder of Althea Group with extensive experience in business building, sales and marketing
• Proven business and strategy skills and previously held numerous senior management roles at national value-based retailer, Strathfield Group

Penny Dobson | Independent Non-Executive Director

• Accomplished business executive in healthcare industry and trained pharmacist in New Zealand, three decades at global pharma Merck & Co, in a variety of commercial roles
• Currently Deputy Chair of the Australian Nuclear Science and Technology Organisation Board, and a non-executive director at Invetus Pty Ltd

Alan Boyd | Independent Non-Executive Director

• Chief Financial Officer and Company Secretary of Ridley Corporation, an ASX-listed provider of high-performance animal nutrition solutions
• Alan has occupied the same position with listed biotechnology companies Avexa Limited and Zenyth Therapeutics Limited

BRIDGING CHART FOR QUARTER ENDED 31 DECEMBER 2019

Infield Sales TeamAustralia	Infield sales team in Australia who are charged with the medical education of HCPs about Althea medicinal cannabisproducts, which are supported by the Althea Concierge prescriber tool. The cost of educating doctors is a key driver of therecent results and is vital to Althea's continued success.
OperationalExpenses (OPEX)Australia	Support functions for Althea in Australia, including medical affairs and administration.
CorporateExpenses Global	Global support team assisting all areas of the group's operations.
OperationalExpenses (OPEX)international	Operational expenses for the global operations of the group. Althea UK and Peak Processing Solutions are covered in thisamount. The company undertook a vast amount of regulatory work in the UK during the December quarter, including inrelation to pharmacovigilance, health economics and strategy for the potential market authorisationof its product(s) inEurope. Also included are some MyAccess Clinics set up costs, which are non-recurring.Costs in the UK are expected to reduce in the quarter ending 31 March 2020, with management implementing cost controlinitiatives as a result of some regulatory headwinds experienced in the second half of 2019. Certainty over Brexit, as aresult of the general election held in the UK in December, should provide more stability in the regulatory environmentduring 2020 and beyond.
	In Canada, Peak Processing Solutions operating expenditure remains in line with the budget and forecast prepared at thetime of the acquisition.

Inventory	In December 2018, Althea's board of directors introduced a policy to hold approx. 12 months' worth of stock on hand at alltimesto ensure there are no disruptions to patient supply. Due to this company policy and amid increasing demand forAlthea products in Australia and the UK, the company invested in AUD$3.2 million of inventory in the December quarter.Peak Processing Solutions invested AUD$600,000 in cannabis active ingredients required for early production, which isslated for March / April 2020.
CapitalExpenditure(CAPEX)	The company continued to invest in its proprietary tool, Althea Concierge in the December quarter. The patient andprescriber tool will remain an integral part of Althea's high value proposition.Investment in the buildout of the Peak facility remains on track to be completed in the quarter ending 31 March 2020, asper the operational timeline presented to shareholders in July 2019. Expenditure on the Peak fit out remains within budget,as per the amounts communicated at the time of acquisition.
Peak Settlement	This is a one-off cost for settlement of the Peak acquisition, including Peak's existing plant (building) and equipment, and isin line with the use of funds presented to shareholders in July 2019.

Cost SavingsLogistics provider	Althea recently switched from a third-party logistics provider (3PL) to a new fourth-party logistics (4PL) provider inAustralia and expects to realiseapproximately 30% in savings per annum as a result. The change also helped realiseoperational efficiencies that will reduce the amount of Althea resources needed to manage orders on an ongoing basis assales continue to grow rapidly.
Skye FacilityDelayed for review	The Company is undertaking a review of its need for the proposed Skye facility and has put the project on hold due to theshift in the international cannabis landscape, particularly with respect to the increasing number of cannabis cultivators(growers). The company has a priority to allocate working capital to sales and distribution activities and will evaluatewhether at this point in time full vertical integration through ownership of the entire supply chain, including cultivation, willprovide the best strategy for delivering an efficient and cost effective supply of Althea medicinal cannabis products topatients globally.
	The review will focus primarily on ensuring that Althea continues to employ economies of scale in bringing itspharmaceutical grade products to market, including the potential to utilisecontract manufacturing organisations, such as

Althea's wholly owned subsidiary, Peak Processing Solutions.

Althea Group Holdings Limited (ASX:AGH)

Althea Group Holdings Ltd (ASX:AGH) is a global pharmaceutical company and supplier of medicinal cannabis. Althea also offers a range of education, access and management services to support eligible patients and healthcare professionals in navigating medicinal cannabis treatment pathways.

Product | Althea supplies patients with pharmaceutical grade, full spectrum medicinal cannabis products used by over 4,000 patients

Contract Manufacturing | A manufacturing service provider, specialising in contract and tolling services for the Canadian and International markets

SALES & DISTRIBUTION

PRODUCT & PRODUCTION

Proactive targeted HCP Acquisition Direct access patient destination

Direct Sales | Dedicated team of Healthcare Development Managers driving HCP registrations and education

Medical clinics | Own chain of private medical clinics with 3 in the UK

UNDER PINNED BY PROPRIETARY PLATFORM

Education, access & data | Online platform for patients, doctors and pharmacists for medicinal cannabis in Australia & UK

SALES & DISTRIBUTION

ALTHEA PATIENT GROWTH IN AUSTRALIA ALTHEA HEALTHCARE PROFESSIONAL GROWTH IN AUSTRALIA

Total Doctors

COGS (PRODUCT & MARKETING) VS REVENUE

• In the December quarter Althea Australia achieved 45% quarter on quarter growth, with $1.1m in unaudited revenue
• Cost of Goods Sold (COGS) refers to the cost of products, sales and marketing expenditure
• The graph depicts a point in time where revenue meets, and then exceeds, COGS
• HCPs can prescribe Althea medical cannabis products to as many patients as they see fit, therefore, the cost of onboarding prescribers reduces over time
• Althea's Australian operations are on track to reach profitability in CY2020

ALTHEA AUSTRALIA - GENERAL MANAGER

Diane Mitchelmore BSc

Professional Background:

• An experienced sales leader with strong experience within the healthcare sector, her most recent role at H&H Group which includes brands such as Swisse and Biostime
• Previously with Merck Sharp & Dohme Corp., a subsidiary of Merck & Co., Inc
• Diane has extensive Healthcare Professional (HCP) education and training experience which will be leveraged to enhance the knowledge base of HCPs within the medicinal cannabis field
• Track record of establishing challenging KPI's and leading high-performance teams to deliver against targets
• Commencing February 2020

BUILDING INDUSTRY LEADING SALES CAPABILITY

• Increase productivity and growth
• Develop future strategic sales plan
• Build a scalable sales & education model to support continued growth
• Maintain leadership in market

2019 Population

Potential medical cannabis patients5

Of the UK population could be medicinal cannabis patients by 2028 – Market Intelligence consultants 'Prohibition Partners' forecast.6

Forecast market value by 20216

UK – Market Opportunity Germany – Market Opportunity

2019 Population

Patients treated with medicinal cannabis in 2019 facilitated by insurance reimbursement1

Of the German population are covered by public health insurers2

Australian Comparison

Patients estimated to have accessed medicinal cannabis products as at 31/12/20193

–

Month on month patient growth4

–

Estimated active patients by end CY20204

POLITICAL UPDATE

General Election Outcomes

• Medicinal Cannabis mentioned in Labour Party manifesto for first time ever, following engagement with Althea
• Conservative Party majority government brings 5 years of stability

Brexit Stability

• 31 January 2020 Britain exits European Union
• Critical votes in Parliament completed, freeing up significant Government and Departmental time for agencies including Medicines and Healthcare products Regulatory Agency and the Drugs & Firearms Licencing Unit (Home Office) to refocus
• Expectation of increased efforts to resolve patient access issues around import-based product supply

Regulators

▪ Barriers to importing medicinal cannabis likely to be lessoned in 2020, as prescribing expected to increase in line with Althea's active lobbying

Private prescription items for unlicensed cannabis based medicines

NHS prescription items for unlicensed cannabis based medicines

ALTHEA UK PATIENTS

• To date, HCPs have provided 88 prescriptions for Althea medicinal cannabis products
• Althea estimates its product prescriptions represent circa 20%* of the privately treated medicinal cannabis market in England

FUTURE OUTLOOK

• Cost control initiatives implemented as a result of regulatory headwinds experienced in the second half of 2019
• Certainty over Brexit, as a result of the general election held in the UK should provide more stability in the macro regulatory environment during 2020 and beyond

Althea's own chain of private medical clinics in the UK, branded as MyAccess Clinics, as an independent end point for medicinal cannabis products.

3 Strategically located clinics

• London 2 sites
• Bristol 1 site

▪ MyAccess Clinics is only the second medicinal cannabis clinic in UK to receive a CQC licence

• Since November over 3,500 unique visitors
• Since November over 5,100 page views
• Hundreds of patient enquiries

MARKET FACTS

• In March 2017, Germany officially legalised medicinal cannabis
• Similar regulatory framework to Australia
• Pharmacists prepared an estimated 10,600 remedies containing cannabis or unprocessed cannabis flowers1
• A further 12,500 finished medical products containing cannabis or cannabis extract were distributed1
• Germany presents a significant opportunity for Althea based on the lack of medicinal cannabis extract products (e.g. cannabis oil) being available. Currently, a majority of prescriptions are for cannabis dried flower. Althea's extensive market research suggests significant HCP and patient demand for its range of 'extract' medicinal cannabis products

ALTHEA MARKET ENTRY UPDATE

• Research completed for Althea Concierge and development underway
• German distribution partnership agreed
• Sales team being recruited with training and rollout expected to commence in May 2020
• Product availability ETA first half 2020 (subject to German authorities)

PRODUCTS

ALTHEA PRODUCT SALES

• In Q4 CY19, Althea launched Althea CBD100 for Australia and export markets
• Althea CBD100 is expected to appeal to a new range of patients and substantially increase product sales
• Manufactured in Australia under international Good Manufacturing Practices (GMP) standards

Althea Concierge is a free online platform for patients, doctors and pharmacies to manage their medicinal cannabis needs.

PATIENT

▪ Find a doctor who can prescribe medical cannabis

DOCTOR

▪ Further education about Althea Medicinal Cannabis and enhanced registration tool

PHARMACY

▪ Discover the Althea product range

UPGRADES AND PRODUCT LEGAL PROTECTION

• Further planned platform upgrades and functionality enhancements in 2020
• Applications for Trademark registration to further protect proprietary position of tool is pending

PRODUCTION

Health Canada Licence

• Applied for one of the industry's first largescale infused cannabis processor licences
• Evidence package submitted with approval anticipated Q1 2020

▪ On track and on budget LICENCE PRODUCTION PLANT RETROFIT SALES

▪ Scheduled completion in Q1 2020

▪	Initial trial batches
	scheduled for Q1 2020

▪ Sales activities for product offtake initiated

Contract Manufacturing

A manufacturing service provider, specialising in contract and tolling services for the Canadian and International markets

Access to a potential C$4.34B legal recreational cannabis market in Canada

OPERATIONAL TIMETABLE PERFORMANCE TARGETS

	Q32019	Q42019	Q12020	Q22020
Acquisition by Althea
Facility Retrofit
Trial Batch Products
Anticipated Health CanadaLicence Approval
First Shipment

	Milestones	Payment	ETA*
Performance	Granting of Cannabis	5,705,402	March 2020
Target 1	Processing Licence	shares
Performance	CAD$7.0m Revenue;	5,705,402	March 2021
Target 2	CAD$2.0m EBITDA	shares
Performance	CAD$25.0m Revenue;	7,607,203	August 2021
Target 3	CAD$12.5m EBITDA	shares

*The time periods above reflect Althea's expectation as to the timeframes for completion of its acquisition of Peak and its future establishment and commercialisation. The time periods are indicative only and remain subject to change, including as a result of the occurrence of factors which may be outside of Althea's control

ACCESS MADE SIMPLE Althea Group Holdings Limited (ASX:AGH) www.althea.life

Althea Group Holdings Limited Joshua Fegan, CEO & Managing Director 1300 70 20 20 | contact@althea.com.au

Media Enquiries

Kirby Symes, Media Relations +613 9650 5096 | ksymes@althea.life

Althea Group Holdings Limited

ACN 626 966 943 Registered office: Suite 2, Level 37 360 Elizabeth Street, Melbourne Victoria, Australia 3000

Althea Group Holdings Limited ACN 626 966 943 (Company) has prepared this presentation (Presentation) dated 12 June 2019 to provide current and prospective investors in the Company with an update in relation to the Company, its subsidiaries and their activities. The information in this Presentation discusses the Company's operations and product range. It is not intended as a promotion of the Company's products. This Presentation contains summary information about the Company, its subsidiaries and their activities which is current as at the date of this Presentation. The information in this Presentation is of a general nature and does not purport to be complete nor does it contain all the information which a prospective investor may require in evaluating a possible investment in the Company or that would be required in a prospectus or product disclosure statement prepared in accordance with the requirements of the Corporations Act 2001 (Cth). This Presentation has not been and will not be filed with or approved by any regulatory authority in Australia, including the Australian Securities and Investments Commission (ASIC), or any other jurisdiction. The historical information in this Presentation is, or is based upon, information that has been lodged with the Australian Securities Exchange (ASX) and released on the ASX Market Announcements Platform. This Presentation should be read in conjunction with the Company's other periodic and continuous disclosure announcements which are available at www.asx.com.au (Company Code: AGH) or www.althea.com.au.

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