The Candian company which grows medical-grade cannabis will acquire all outstanding shares of Prismic for roughly US$17.5 million (CAD$23.4 million), to be satisfied by the issuance of 102.7 million Class B subordinate voting shares in FSD Pharma at a price of US$0.1704 per FSD share.
Shares in FSD Pharma closed 21.5% higher at $0.21 on Monday in the OTC Markets and 21.7% higher at $0.28 in Canada.
In addition, FSD Pharma has agreed to assume up to US$4 million of outstanding Prismic liabilities on terms to be mutually agreed by the two companies, some of which may, potentially, be settled by the issuance of additional FSD Shares. All the outstanding Prismic stock options and warrants will become exercisable into FSD Shares.
The company said the FSD shares to be issued to Prismic shareholders will be deposited “into escrow at the closing of the transaction” and be subject to an “18-month staggered time escrow release.”
Prismic is developing novel non-addictive prescription drugs with unique safety profiles with the goal of addressing the opioid crisis.
Advancing R&D into synthetic cannabinoids
“This transaction symbolizes FSD Pharma’s vision of acquiring a platform company to advance research and development of FDA-approved applications of synthetic cannabinoids and other synergistic molecules,” said FSD Pharma CEO Dr Raza Bokhari. “Led by Peter Moriarty, one of the founders of Shire Pharmaceuticals, Prismic’s management team has built a solid foundation for a specialty pharmaceutical company, and we look forward to providing them with milestone-based support in order to advance proprietary drug candidates through the various development stages.”
Bokhari said the acquisition was “very exciting” for FSD Pharma and represented “a paradigm shift in the development and outlook” of the company.
Prismic has exclusive worldwide licensing rights (except for Italy and Spain) to a patent-protected form of palmitoylethanolamide (micro-PEA with particle sizes of 0.6 – 10 microns), on which Prismic’s development platform is based and from which Prismic’s lead prescription drug candidate, PP-101, has been formulated. Such formulations take advantage of micro-PEA “synergistic” or “entourage” effect on certain drugs impacting the endocannabinoid system.
DEEP DIVE: FSD Pharma aims to have the world's largest hydroponic indoor cannabis production and processing facility
This essentially means that lower doses of those drugs may be administered together with micro-PEA to achieve the desired medecinal effect. This includes the potential combination of micro-PEA formulations with drugs such as THC, CBD, certain anticonvulsants, and opioids where studies have indicated opioid-sparing and tolerance delaying properties of micro-PEA may impact the development of dependence in patients. Prismic’s first prescription drug candidate, PP-101, a 600 mg tablet of micro-PEA, is expected to start a Phase 2/3 accelerated clinical development program in early 2020 as a medication to be administered with pregabalin, or Pfizer’s Lyrica for the treatment of fibromyalgia.
“We are excited to be entering into a new phase of growth with FSD Pharma,' said Prismic co-founder and chairman Peter Moriarty. "We believe our combined resources and highly competent leadership teams will position us to execute on our clinical development programs and on delivering highly effective products that safely address pain, inflammation and neurological disorders with high unmet clinical needs.”
FSD Pharma is headquartered at the former Kraft plant in Cobourg, Ontario in a large facility that sits on 72 acres of land. It grows medical-grade cannabis at its 25,000 square foot facility in Ontario, with an additional 220,000 expected to be added by the end of 2019.
The company intends to target all legal aspects of the cannabis industry: cultivation, processing, manufacturing, extracts and research and development.
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Contact Uttara Choudhury at [email protected]