Australian medicinal cannabis access company Cannvalate has confirmed Canada-based Global Wellness Strategies Inc will acquire 100% of its wholly-owned subsidiary Shanti Therapeutics in a $2.72 million deal focused on psychedelic MDMA-based drug development.
Through the acquisition, Global Wellness aims to become the world’s first company to work on solving the puzzle of chronic pain with MDMA-based medicines, utilising clinical trials for the purposes of advancing novel drugs.
Chronic pain is believed to have a significant psychosocial component which is not fully addressed by existing analgesics, nor are there currently any psychedelic drugs approved for patient use.
Global Wellness plans to conduct clinical research on a patent-protected, novel drug containing MDMA (3,4-methylenedioxymethamphetamine, or ecstasy) as the primary active ingredient with a view to improving the psychosocial component of pain.
Once a positive proof-of-concept clinical study has been achieved, toxicology and CMC (chemistry, manufacturing and controls) will be conducted before moving to investigational new drug status with the US Food and Drug Administration.
An unmet need
Global Wellness chief executive officer Meris Kott said the Shanti acquisition would focus on satisfying an unmet need in a growing market.
“Discovering new MDMA medicines and cures for pain management through clinical trials is a game-changing opportunity for all our stakeholders and we look forward to working closely with the Shanti team in changing the pain landscape,” he said.
“Most of us will know at least one person who lives with the relentless suffering of chronic pain … this is our opportunity to use a novel MDMA-based medication to alter that psychosocial component and commence the healing process.”
Research estimates the global chronic pain treatment market will experience a compound annual growth rate from 2020 to 2030 of 6.5% and total revenue in 2030 of around $206.6 billion.
Terms of the deal
Under the terms of the deal, Global Wellness will pay Cannvalate $2.72 million to acquire 100% of Shanti Therapeutics and all of its assets including application patents, intellectual property, formulae, compounds, solutions, research and data, techniques and processes, brand and trade names and trademarks.
Consideration for the sale will be fulfilled in the distribution of restricted Global Wellness shares in four tranches over an eight-month period.
Each tranche will be subject to a 30-day volume weighted average price, with the base share price set at $0.20 each.
A bonus consideration of $2.72 million will be paid to Shanti based on asset performance and the achievement of certain milestones.
Shanti will retain an option to appoint a director to the Global Wellness board.
Australian boutique investment management firm Peak Asset Management has acted as financial advisor to both parties in the transaction.