TORONTO–(BUSINESS WIRE)–FSD Pharma Inc. (CSE: HUGE) (OTC: FSDDF) (FRA: 0K9) (“FSD Pharma” or “FSD”) and Solarvest BioEnergy Inc. (TSX-V: SVS) (“Solarvest”), a technology company that developed an algal-based flexible production platform capable of producing health products, announced today that they signed a definitive collaborative research and development agreement. Under the agreement, Solarvest will conduct research using its algal expression technology to develop pharmaceutical-grade cannabinoids. FSD Pharma and Solarvest have made investments into one another and FSD has the option to enter into an exclusive license arrangement over a subset of the project and receive royalty rights over all of the products that result from the project.
Research Agreement: CBD Research Project
Solarvest will carry out a research project using its algal expression system for the purpose of developing a proof of concept that algae can express pharmaceutical-grade cannabinoids. FSD and Solarvest have allocated an initial budget of $1,000,000 for the CBD research project, over a two-year period, and created a joint scientific review committee to assess progress of the project against budgets and timelines.
License and Royalties
Upon successful development of proof of concept, Solarvest and FSD Pharma intend to enter into a license agreement under which Solarvest will grant FSD Pharma an exclusive, worldwide license over any use of prescription drugs that can treat diseases affecting the central nervous system. In consideration for the license, FSD Pharma will be required to pay Solarvest a royalty equal to 5% of the net profits from the sale of such products as well as reimburse Solarvest for the cost of production.
In addition to the licensing arrangement, Solarvest will pay a royalty fee to FSD Pharma on the sale or licensing of any products that result from the project, other than the FSD licensed indications, equal to 5% of the net sales or net license fees. Once Solarvest has paid an aggregate of $3,000,000 in royalty fees, the royalty percentage will be reduced to 3%.
Pursuant to the agreement, the two companies have made the following investments into one another:
a) FSD Pharma has issued 10,000,000 class B subordinate voting shares in the capital of FSD Pharma shares to Solarvest at a price of $0.30 per FSD share;
b) Solarvest has issued 3,000,000 units of Solarvest units to FSD Pharma at a price of $0.20 per unit. Each unit is comprised of one common share in the capital of Solarvest and one warrant, with each Solarvest warrant exercisable into one additional Solarvest share at an exercise price of $0.25 for a period of two years following the issuance; and
c) Solarvest has issued a convertible debenture to FSD Pharma in the principal amount of $2,400,000. The debenture has a term of five years, bears interest of 3 percent per annum, and is convertible into shares at a conversion price of $1.00 per share, provided that FSD Pharma will be required to convert the debenture should Solarvest shares close at a price of at least $1.20 for a period of 20 consecutive trading days.
“We are delighted to have forged this collaboration with the Solarvest team and their leading-edge research using the SVS algal technology to produce pharma-grade bio-synthetic cannabinoids,” stated Zeeshan Saeed, Founder and President of FSD Pharma.
Anthony Durkacz, Founder & Executive Co-Chairman of the Board of FSD Pharma, added, “This latest announcement is in line with FSD’s Board of Director’s strategy to invest in ground breaking R&D to find ways to revolutionize cannabis production through biosynthesis.”
“At FSD Pharma, we continue to explore new areas of science and are committed to identifying novel cannabis cultivation methods for medical purposes,” said Dr. Raza Bokhari, Executive Co-Chairman & CEO. “We are extremely excited to collaborate with Solarvest, and work towards identifying alternative methods of cannabinoid production using algal technology – methods that could one day lead to breakthrough medicines. If successful, these alternative methods could dramatically disrupt current cannabis cultivation methods for medical purposes. That, and the potential to create significant value for our shareholders, is something we are very excited about.”
“Solarvest has developed a suite of international patents based on using algae as a production platform,” said Gerri Greenham, CEO Solarvest BioEnergy. “The algae will be grown in sterile pharmaceutically approved cGMP facilities facilitating an FDA licensing program. A full growth cycle of algae is around a hundred hours whereas the growth of cannabis plants is measured in months. This short time period condenses research and production times. With our protein expression technology we plan on expressing individual targeted cannabinoids so FSD can formulate these pure actives into their pharmaceutical program.”