Retraction & Correction of May 28, 2020 News Release
ACCESS Newswire
9 min read
PENTICTON, BC / ACCESSWIRE / July 23, 2020 / EastWest Bioscience (the "Company" or "EastWest") (TSXV:EAST) reports that, on July 8, 2020, the US Securities and Exchange Commission (the "SEC") issued an order of suspension of trading in shares of EastWest traded on the US "over-the-counter" market (the "Order"). The Order referenced the accuracy and adequacy of information that was contained in the press release of EastWest distributed on May 28, 2020 regarding the U.S. Food and Drug Administration's (the "FDAs") approval of the Company's hand sanitizers (entitled "Eastwest Bioscience 80% Ethyl Alcohol Hand Sanitizer Receives FDA Approval").
This news release is a correction and clarification to the May 28, 2020 release. Under FDA rules, hand sanitizer is considered as an "over-the-counter" ("OTC") drug that requires National Drug Code ("NDC") number to be marketed to consumers. Additionally, an NDC number is mandatory for the manufacture of hand sanitizers.
EastWest has secured hand sanitizer supply both in the US and Canada to ensure that it can meet demand in an efficient manner on both sides of the border. Per FDA regulations, to be able to distribute hand sanitizers to American consumers, the manufacturers of these hand sanitizers must be entities with NDC numbers registered with the FDA and not Orchard Vale Naturals. Contrary to the Company's May 28, 2020 news release, the Company nor its manufacturing subsidiary have received FDA approval for its hand sanitizer.
By having the manufacturer's NDC number listed with the FDA and not that of Orchard Vale Naturals, EastWest is in fact abiding by FDA's mandatory requirement. The Company did not communicate this clearly in the previous news release and would like to ensure the public that our supply manufacturing NDC number is registered with the FDA. The market on both sides of the border is flooded with questionable hand sanitizer products and having the manufacturer's NDC number listed with the FDA helps assured quality assurance traceability.
In Canada, our raw materials supplier has procured an agreement with an existing Health Canada licensed bulk material supplier of hand sanitizer. This hand sanitizer is then shipped to our contract manufacturer in Ontario and our Penticton, BC facility for further processing, including packaging, bottling and labelling. The product is then shipped to our customers from each facility.
Processing at the facility in Penticton is conducted by Orchard Vale Naturals ("OVN") which is the supplements and health products manufacturing division of EastWest. As a health supplement manufacturer that is Health Canada Licensed (License #301957), OVN was able to obtain permanent Natural Product Numbers ("NPN") for the hand sanitizers. It is important to distinguish the ability for OVN to obtain permanent NPNs for companies that have been granted temporary authorization by Health Canada to manufacture and sell specific hand sanitizers and hard-surface disinfectants. OVN has the ability to manufacture hand sanitizers on site, it also has its Health Canada yearly inspections and Health Canada approved Standard Operating Procedure to ensure all products released by OVN are produced under strict Good Manufacturing Practices.
The facility in Ontario is Health Canada Licensed and provides additional benefits including: shipping logistics savings to our East Coast customers and more importantly, on-site bottling production capability. Supply of packaging material has been an issue globally in the industry at the moment due to COVID-19. Access to these packaging materials ensures that our hand sanitizers can be packaged and delivered to our clients in a timely manner.
These hand sanitizers are marketed through Sangster's Health Centres stores using the Sangsters Brand (NPN #80101027). Sangster's Health Centres is the retail division of EastWest with retail locations throughout Canada, predominantly in the Prairie.
These hand sanitizers are also marketed to independent retailers, wholesalers and distributors using the Natural Advancement brand (NPN #80101027). Additionally, EastWest provides private labelling and contract manufacturing for retailers and distributors who would like to use their own brand name(s).
In the May 28, 2020 news release, EastWest communicated that it has now initiated marketing its hand sanitizer in the United States. To reiterate previous comment, EastWest would like to assure the public that it is following FDA requirements and will be distributing and/or exporting any hand sanitizer products under the source manufacturer NDC number. Additionally, EastWest has also secured hand sanitizer manufacturer in the USA with FDA-listed NDC number that will allow EastWest to fulfill any US orders and eliminate cross border export logistics overhead.
As a wellness company with a Health Canada licensed facility to manufacture health supplements and a national chain of Health Centres, EastWest understands firsthand the importance of consumer health and safety. It has conducted its due diligence to ensure that any products it manufactures and/or distributes are safe to be consumed by its customers and have followed regulations on both sides of the border to ensure that this is the case.
The TSX Venture Exchange ("TSXV") halted trading in EastWest stock as a response to the SEC suspension of trading of EastWest shares in the OTC alternative markets in the US. It is important to point out that EastWest is currently trading on the pink sheets in the US through a symbol that the Company did not initiate.
In late June, EastWest management was contacted by phone by the SEC in relation to the Company's May 28, 2020 news release and the US market reaction to the news. They had questions regarding the FDA approval process and, more importantly, they were concerned about the concurrent trading volume on the OTC alternative markets. During the call, the SEC analyst also provided several names that may have been involved in suspicious trades possibly contributing to the volatility. All of the Company's Investor Relations arrangements have been filed with the TSX Venture Exchange and disclosed in accordance with TSX Venture Exchange Policies.
We informed the SEC that EastWest did not initiate the trading symbol or listing of EastWest shares in these alternative markets.
The SEC officers enquired about the management trading history and asked if we had sold stock in the recent run-up. We pointed out that EastWest management has, in fact, been purchasing stock in the open market since April until now. In addition, EastWest management has just completed a debt conversion at $0.05 with a significant portion of the debt being converted by senior management. The recent market volatility has negatively impacted both efforts from financial perspective.
The company has received no further communication from the SEC and, in light of the foregoing, is completely surprised by the subsequent trading halt.
About EastWest Bioscience Group
EastWest Bioscience is a vertically integrated wellness company with the infrastructure to become a global giant in the Hemp & CBD consumer health market. Since it was founded in 2016, EastWest continues to grow as a high-quality producer, manufacturer and distributor of multiple lines of premium health and hemp products. EastWest currently has more than 200+ NPN's in its stable of products.
EastWest's Hemp consumer product lines are divided into four distinct brands: 1) Natural Advancement - natural biopharmaceutical health supplements; 2) Earth's Menu - all-natural hemp superfoods; 3) Natural Pet Science - pet food and pet supplements; and 4) ChanvreHemp - all-natural health and beauty products.
In Canada, EastWest has a 34,000 Sq. Ft, Health Canada-licensed, GMP (Good Manufacturing Practices) - certified manufacturing facility and produces premium nutraceutical brands, offering natural products for a preventive care lifestyle. EastWest and Benchmark Botanicals (BBT-CSE) also have a Joint Venture Intent to accelerate acquisition of Processor, Analytical and Research and Development licenses under the Cannabis Act in EastWest's Penticton facility. These three classes of the Cannabis Act license will allow Benchmark and EastWest to build out an extensive extraction, laboratory, and research facility at EastWest's Health Canada Certified facility.
In the USA, EastWest USA has a Joint Venture with Azema Sciences, securing for EastWest first rights on Azema's output of bulk CBD and finished CBD products manufactured, and which are ready for sale in the USA and globally. EastWest Science USA ("EastWest USA"), EastWest's US operating division, will be the preferred distributor for Azema's finished goods. These finished products will include CBD creams, tinctures and salves which are products not currently in EastWest's catalogue. Additionally, EastWest will have first right of refusal to all potential opportunities relating to Azema's Kentucky based CBD processing facility. Based on a legal opinion provided by the Company, the TSX Venture Exchange did not object to the Company selling into the states covered by their legal opinion.
ON BEHALF OF THE BOARD OF DIRECTORS
EASTWEST BIOSCIENCE GROUP
"Rodney Gelineau" Co-Founder, Chief Executive Officer and Director
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain "forward-looking statements" under applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to the terms and conditions of the Acquisition. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; and delay or failure to receive board, shareholder or regulatory approvals. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Corporation disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
