The Proposed Transaction is expected to:
- provide Tetra with the most robust Pharmaceutical and Natural Health Products pipeline of any Cannabinoid company;
- provide Tetra with more pharmaceutical and natural health products;
- allow Tetra to sell these products worldwide;
- give Tetra access to Panag’s NHP portfolio which is not included in the present in-licensing agreement with Panag.
Tetra Bio-Pharma Inc., a leader in cannabinoid-based drug discovery and development, today announced it has entered into a definitive agreement with the shareholders of Panag Pharma Inc. for the previously-announced acquisition by Tetra of all of the issued and outstanding shares in the capital of Panag. Panag is a Canadian-based bio-tech company focused on the development of novel cannabinoid-based formulations for the treatment of pain and inflammation. Panag has developed innovative and patented formulations for the treatment of ocular diseases and other pain conditions such as general neuropathic pain. Their significant formulation expertise in the wellness market will allow Tetra to expand its commercial operations.
Dr. Guy Chamberland , CEO and CSO of Tetra stated, “In completing this acquisition of Panag Pharma we have not only acquired a large portfolio of cannabinoid derived pharmaceutical and natural health products but also a team of scientists that have a substantial amount of expertise in the field. Tetra Bio-Pharma looks forward to incorporating Panag into its operations and accelerating its various drug development programs including our second-generation inhaled program.”
Following the closing of the Proposed Transaction, it is expected that Panag will remain a separate subsidiary owned 100% by Tetra and provide Tetra with additional discovery and early phase drug development capacity. With this robust product pipeline, Tetra intends to continue to implement its out-licensing program to generate additional revenues via upfront payments, milestone payments, and royalties and actively pursue the clinical development of lead products.
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According to Dr. Orlando Hung , a co-founder of Panag, “The Panag team is very excited to have this well-timed opportunity with Tetra Bio-Pharma, allowing us to continue our decades of translational cannabinoid research. Utilizing the expertise and support from Tetra Bio-Pharma, we are confident that our partnership and combined skills will position us to bring effective and safe cannabinoid-based medications, as well as more innovative cannabinoid delivery systems to market to help managing patients with pain and inflammation.”
Pursuant to the Agreement, Tetra would acquire 100% of the issued and outstanding shares of Panag for an aggregate consideration of $12,000,000 , on a debt-free basis and subject to customary post-closing adjustments. The purchase price would be payable by Tetra delivering to the Vendors, on the closing date of the Proposed Transaction, (i) $3,000,000 in cash and (ii) $9,000,000 payable in common shares of Tetra (“Common Shares”), at a price per Common Share equal to the lesser of (i) the 10-day volume weighted average price of the Common Shares ending as of the date of the Agreement and (ii) the Discounted Market Price (as that term is defined in the policies of the TSX Venture Exchange) of the Common Shares as at the date that is three business days prior to the closing date of the Proposed Acquisition. The Agreement also contemplates the payment by Tetra to the Vendors of an aggregate amount of up to $15,000,000 in cash in milestone payments upon the achievement of operational targets associated with marketing approvals and commercialization of both human and veterinary drug products by the U.S. Food and Drug Administration (FDA) and the European Medicines Agency (EMA). Tetra is committed to fund Panag’s research in an amount no less than $1,200,000 annually for a period of ten years after the closing date of the Proposed Acquisition. The milestone payments would be accelerated in the event of a bankruptcy, insolvency, failure of Tetra to make its funding commitments to Panag, change of control or sale of all of the assets of Tetra at any time until December 31, 2028 . In addition, in the event of a change of control of Tetra within 24 months of the closing date of the Proposed Acquisition, the Vendors would be entitled to receive from Tetra an additional $10 million .
Two of the Vendors, Bill Cheliak and Gregory Drohan , are non-arm’s length parties to Tetra within the meaning of the rules of the TSXV. Mr. Cheliak is the Chairman of the board of directors of the Company (the “Board”) and Mr. Drohan is a director of the Company. The Proposed Transaction will not result in the issuance of securities to non-arm’s length parties as a group as payment of the purchase price exceeding 10% of the number of outstanding shares of the Company on a non-diluted basis.
The Board formed a special committee (the “Special Committee”) for purposes of evaluating the Proposed Transaction. The Special Committee was composed of Benoit Chotard and Carl Merton , both of whom have no interest in Panag or the Proposed Transaction. On December 24, 2018 , the Special Committee received a fairness opinion (the “Fairness Opinion”) from Paradigm Capital stating that the purchase price under the Proposed Transaction is fair, from a financial point of view, to the shareholders of Tetra. In light of the Fairness Opinion and of other considerations and upon the recommendation of the Special Committee, the Board approved the Proposed Transaction. Because of their interests in the Proposed Transaction, Mr. Cheliak and Mr. Drohan recused themselves from all meetings and discussions of the Board relating to the Proposed Transaction and abstained from voting on the resolutions of the Board approving the Proposed Transaction.
The Company expects that the Proposed Transaction will be completed in February 2019 . Completion of the Proposed Transaction remains subject to a number of conditions, including the receipt of the approval of the TSXV and such other closing conditions as are customary in transactions of this nature. There can be no assurance that such conditions will be satisfied and that the Proposed Transaction will be completed as described or at all.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
Date: February 4, 2019
Source: Yahoo Finance