Organigram Confirms Additional $2.5 Million Investment in Hyasynth Biologicals Inc. as Biosynthesis Pioneer Completes First Milestone Linked to First Sale of Commercial Product and Announces Executive Changes
As an early investor in biosynthesis, Organigram Holdings Inc. (NASDAQ: OGI) (TSX: OGI), the parent company of Organigram Inc. (the “Company” or “Organigram”), a leading licensed producer of cannabis, is pleased to announce it has funded an additional $2.5 million investment in Hyasynth Biologicals Inc. (“Hyasynth”), a private biotechnology company and pioneer in the field of cannabinoid science and biosynthesis. The announcement comes as Hyasynth makes the first sale of CBDa1 produced and extracted from yeast.
In addition to the investment, Organigram continues to have the right to purchase potentially all of Hyasynth’s cannabinoid or cannabinoid related production at, subject to the terms of its agreement with Hyasynth, a 10% discount to the wholesale market price for a period of ten years from Hyasynth’s commencement of commercial production.
Organigram initially advanced $5 million to Hyasynth in September 2018 in accordance with the terms of a Debenture Purchase Agreement (the “Agreement”) between the Company and Hyasynth. Today’s announcement represents the second of three tranches outlined in the Agreement and brings Organigram’s total investment in Hyasynth to $7.5 million. Organigram has a right to purchase a remaining $2.5 million of convertible secured debentures (the "Debentures") which would bring its total investment in Hyasynth to $10 million upon the achievement by Hyansynth of another designated milestone and compliance by Hyasynth with other specified terms and conditions.
Biosynthesis is most commonly known as the primary production methodology for insulin used in the treatment of diabetes. Unlike chemical synthesis, or agriculture methods, biosynthesis results in products and final ingredients that are pesticide-free and are based on natural ingredients. Hyasynth’s biosynthesis process uses patent-pending yeast strains and enzymes to produce pure cannabinoids (not synthetic) without relying on cannabis plants. In addition to the major cannabinoids such as CBD and THC, Hyasynth has also demonstrated and submitted patent applications on the production of minor cannabinoids for which traditional cultivation is cost prohibitive since these cannabinoids are found in only very low levels in cannabis plants. The minor cannabinoids are believed to be the next frontier of cannabis research and novel cannabis product development.