Wellnex Life has successfully raised more than $6 million from investors to finance its wholly owned online retail channel in a move the company expects will increase margins.

The additional cash will also be used to develop an over-the-counter medicinal cannabis product to capitalise on recent changes to pharmaceutical drug scheduling.

Wellnex Life (ASX: WNX) raised $6.2 million from investors through a convertible note, which offered 9% per annum interest with a 24-month maturity and a conversion price of $0.021, providing the company with a healthy balance sheet to pursue its growth plans.

“Wellnex has made significant progress in the last 10 months, with the launch of multiple new brands and a significant supply agreement secured with GlaxoSmithKline,” Wellnex CEO George Karafotias said.

“With the funds raised, we look forward to progressing our aim of being a major participant in the fast-growing health and wellness market.” 

Online sales channel to improve company margins

The capital raised through the convertible note will be put to use in a number of ways, including the development of a health and wellness e-commerce platform designed to capitalise on the recent uptick in online shopping.

Australia Post’s Inside Australian Online Shopping e-commerce reports show 9.2 million Australian households were shopping online in 2021, accounting for $323.7 billion in sales.

To take advantage of this, Wellnex is launching its own online platform to sell the company’s existing products directly to consumers. The platform will also feature its own online-only health and wellness brand.

In addition to increasing the company’s presence in the marketplace, this online channel will allow Wellnex to increase its margins on the products it owns because the margins traditionally charged by physical retailers will instead be owned by Wellnex Life.

Following this successful capital raise, Wellnex expects its platform will go live in September this year.

Drug scheduling change creates new market opportunity

Wellnex Life will also use the newly raised funds to accelerate its development of an over-the-counter medicinal cannabis range following changes to regulations introduced in December 2020.

Under the new Therapeutic Goods Administration (TGA) rules, certain low-dose (150mg per day or under) cannabidiol products have been rescheduled as Schedule 3 (S3) drugs, meaning consumers can purchase TGA-approved products from a pharmacist without a prescription.

By some estimates, the market for these products could be worth more than $2 billion by 2025, up from $230 million in 2021.

Wellnex has already applied to the TGA for the necessary approvals, and with this process currently taking 18 months Wellnex expects to have its own products on shelves by the end of 2023.

The funds raised will be used to acquire all the required approvals.

To stay up to date with the latest Wellnex Life news and announcements, register your details on the Wellnex Life investor centre.

Reach Corporate provides Corporate Advisory Services, including managing investor communications on behalf of Wellnex Life Limited and will receive fees for its services.

Sources

• Wellnex Life ASX Announcement, Wellnex Life succcessfully raised $6.2 million to accelerate growth and increase margins
• tga.gov.au, Over-the-counter access to low dose cannabidiol
• auspost.com.au, Australia Post: 2022 Inside Australian Online Shopping – eCommerce Industry Report