Business Will Be Amongst Largest Such Operations in U.S.
Transaction Will Provide Near-Term Path to Revenues
Kalytera Therapeutics, Inc. (TSX VENTURE: KLY and OTCQB: KALTF) (the “Company” or “Kalytera”) announced today that it has signed a Letter of Intent (“LOI”) to acquire a majority interest in Oregon 01, LLC (doing business as “Clean Bi Design”), which will operate a hemp-based cannabidiol (“CBD”) extraction facility in Amity, Oregon. Under the LOI, Kalytera has agreed to invest USD $3.5 million for the acquisition of a 51% interest in the business. Closing is expected to occur on or about October 1, 2019.
Kalytera’s CBD Extraction Business
The Clean Bi Design extraction business will be among the largest such operations in the U.S., capable of producing 600 kilograms of CBD isolate per shift, per month. The extraction facility will be both GMP certified and FDA compliant, and equipped with state-of-the-art equipment for extraction, distillation and isolation. The facility is scheduled to commence operations by Q4 2019.
“Kalytera is focused on establishing a leadership position at the interface between both medical and consumer CBD markets,” stated Robert Farrell, President and CEO of Kalytera. “With the acquisition of Clean Bi Design, we will become a vertically integrated industry player, with both development programs for CBD pharmaceuticals, as well as a CBD production facility capable of providing GMP quality CBD for U.S. and international markets. Most importantly, this transaction provides Kalytera a near-term path to revenues. We have the necessary relationships with growers and customers in place to enable start of operations within six months, and we expect to report initial revenues from CBD isolate sales by Q4 2019.”
“For the consumer CBD market, it is vitally important that we be able to produce pure CBD that is both GMP and FDA compliant, and our Oregon operation will be both GMP and FDA compliant,” stated Farrell. “For the medical market, we are developing CBD pharmaceuticals, including our late-stage clinical program developing CBD for the prevention of graft versus host disease (“GVHD”), and earlier-stage development programs evaluating proprietary cannabinoids for treatment of pain, uveitis and psoriasis. With the acquisition of this extraction operation, we will be able to supply our own requirements for CBD, including for new product development programs for the treatment of inflammatory diseases of the GI tract.”
Kalytera’s Consumer Products Division
The acquisition of Clean Bi Design is an important step in Kalytera’s overall strategy to expand and diversify its operations. As part of this strategy, Kalytera has established a new Consumer Products Division to support the growth of the Company’s expansion into the CBD consumer products market. Ezra Eickmeyer, previously CEO of Cascadia Growers, and Sunrise Consulting Group, will lead the operation as Division President, bringing over a decade of relevant industry experience.
“We are delighted to partner with the Clean Bi Design team in the operation of this business. They have extensive expertise in building and running this type of operation, and have agreements in place with both hemp suppliers and CBD customers,” stated Mr. Eickmeyer.
Kalytera to Launch E-Commerce Website
In addition to the Clean Bi Design CBD extraction business, Kalytera’s new Consumer Products Division is also planning to launch an E-Commerce website that will support online sales of consumer CBD products derived from hemp, including CBD oils and other CBD consumer products. The platform will support Kalytera’s own family of brands, selling CBD wellness products to all legal CBD markets across the U.S.
“By leveraging Kalytera’s expertise and position in the pharmaceutical industry we will be able to provide the highest quality CBD products possible to both the medical and consumer CBD markets. We intend to become an industry leader in the CBD market,” stated Zac Simma, Co-CEO and CFO of Clean Bi Design.
- Kalytera will purchase a 51% interest in Oregon 01, LLC, which owns the Clean Bi Design extraction business in Amity, Oregon.
- The USD $3.5 million purchase price is payable in cash. Closing is expected to occur on or about October 1, 2019.
- Completion of the transaction is subject to certain conditions and the receipt of all required regulatory and third party approvals, including the approval of the TSX Venture Exchange.
- Diversification: With the creation of its Consumer Products Division, Kalytera will expand beyond CBD pharmaceutical product development, providing Kalytera with access to the large and growing market for CBD consumables, both in the U.S. and internationally.
- Focus on GMP Products: Kalytera believes that GMP quality CBD products will account for the majority of consumer demand, and the Company’s Oregon extraction facility will be both FDA compliant and GMP certified.
- Vertical Integration: Upon close of the transaction, Kalytera will be one of the few truly vertically integrated companies in the CBD industry, with assets owned and under development across multiple verticals of the industry, including extraction, processing and pharmaceutical product development.
- Focus on Near-Term Revenues: Kalytera’s hemp-based CBD extraction business is fully licensed and permitted, and will become operational, and begin generating revenues, by Q4 2019.
Kalytera Therapeutics, Inc. (“Kalytera”) is pioneering the development of a next generation of cannabinoid therapeutics. Through its proven leadership, drug development expertise, and intellectual property portfolio, Kalytera seeks to establish a leading position in the development of novel cannabinoid medicines for a range of important unmet medical needs, with an initial focus on graft versus host disease and the treatment of acute and chronic pain.
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This press release may contain certain forward-looking information and statements (“forward-looking information”) within the meaning of applicable Canadian securities legislation, that are not based on historical fact, including without limitation in respect of its product candidate pipeline, planned clinical trials, regulatory approval prospects, intellectual property objectives and other statements containing the words “believes”, “anticipates”, “plans”, “intends”, “will”, “should”, “expects”, “continue”, “estimate”, “forecasts” and other similar expressions. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risk that future clinical studies may not proceed as expected or may produce unfavourable. Kalytera undertakes no obligation to comment on analyses, expectations or statements made by third parties, its securities, or financial or operating results (as applicable). Although Kalytera believes that the expectations reflected in forward-looking information in this press release are reasonable, such forward-looking information has been based on expectations, factors and assumptions concerning future events which may prove to be inaccurate and are subject to numerous risks and uncertainties, certain of which are beyond Kalytera’s control. The forward-looking information contained in this press release is expressly qualified by this cautionary statement and is made as of the date hereof. Kalytera disclaims any intention and has no obligation or responsibility, except as required by law, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.