Canada's FSD Pharma Inc (CSE:HUGE) said it is acquiring Therapix Biosciences Ltd (NASDAQ:TRPX) for $48 million in stock to create a company focused on the research and development of cannabinoid treatments.
Therapix Biosciences shareholders will receive $48 million of FSD stock upon closing of the transaction, a joint statement by both companies said.
The transaction is structured at a fixed price of $48 million representing approximately 130 million class B subordinate shares of FSD Pharma and nearly 10% of the company at this time. The final number of class B subordinated shares and percentage ownership of the company will fluctuate based on the 20 day average of FSD Pharma stock's closing price on the date the transaction is finalized.
The terms will be superseded by a definitive agreement, which FSD Pharma and Therapix intend to execute within 30 days.
"The intended acquisition of Therapix Biosciences at this time is a pivotal step in the evolution of our company by entering the high-value medical cannabis market," Raza Bokhari, a director of FSD Pharma and chairman of the M&A committee, said.
Shares Therapix soared 68.55% to US$7.45 in the premarket on Tuesday, having closed 2.79% higher at US$4.42 on Monday.
FSD stock in Canada closed on Monday 18.64% lower at C$0.48. In New York, the stock was 19.6% lower at US$0.36.
"In addition to growing products for the direct to consumer retail cannabis market in Canada , we are now developing a new class of novel cannabinoid-based treatments for several central nervous system disorders, including chronic pain, fibromyalgia, irritable bowel syndrome and several other disease areas," Bokhari added.
The acquisition allows FSD to step into several research programs such as Therapix' investigator-initiated Phase IIa study at Yale University Medical Center in the US for Tourette syndrome, subsequent preparations for starting Phase 2b studies at the Hannover and Munich University Medical Schools in Germany for Tourette, and collaboration with Assuta Medical Centers in Israel to develop therapeutic products in the field of sleeping disorders.
FSD Pharma through its wholly-owned subsidiary FV Pharma, is a licensed producer of marijuana under the Access to Cannabis for Medical Purposes Regulations. The company is based in Cobourg, Ontario.
Therapix Biosciences is a specialty clinical-stage pharmaceutical company. The company is based in Israel.
Reporting by Rene Pastor, contactable on email@example.com