Shares of thinly-traded nano-cap biotech Cellect Biotechnology Ltd – ADR (NASDAQ: APOP) are advancing strongly Wednesday. The Israeli company said it has entered into a commercial binding Letter of Intent with medical cannabis company Cannadoc to acquire all rights to the use of Cannadoc products for the reduction of opioid use, including accumulated data as well as ongoing and pipeline of clinical trials.
Cellect has developed a technology platform called ApoGraft that selects stem cells to improve the safety and efficacy of regenerative medicine and cell therapies, while Cannadoc is a pharma grade medical cannabis company.
The agreement also provides for Cannadoc supplying Cellect over the course of the next five years with a minimum of six tons of GMP pharma grade cannabis products valued at $18 million. The agreement also carries an option for a five-year extension until 2029.
As part of the agreement, Cellect will issue to Cannadoc 1.02372 million ADRs, representing 19% of its diluted share capital. Cellect will use Cannadoc's existing distribution channels for distributing the products.
"After a long learning process concomitant with developing our clinical pipeline, we chose to enter the medical cannabis field through the strategic alliance with a leading player and focus on the reduction in use of opioid drugs. We believe this alliance will create immense value for the patient community, the company and its shareholders," said Cellect CEO Shai Yarkoni.
Merger In The Cards
Apart from the strategic commercial agreement, the companies have also signed a non-binding LOI for a full merger.
According to the LOI, Cellect will acquire all outstanding Cannadoc shares from its parent InterCure Ltd (OTC: IRCLF), in exchange for additional Cellect ADRs, which will represent about 95% of the merged company.
The proposed merger is subject to definitive agreement, board approval and customary closing conditions, including approval by the Israeli Medical Cannabis Agency and Cellect's shareholders.
Cellect shares were rising 44% to $32.97 at time of publication.