Charlotte's Web Formed Joint Venture With BAT And AJNA Biosciences To Seek FDA Approval For Proprietary Full Spectrum Hemp Extract Botanical Drug; Bat Acquired 20% Stake For $10M, With Charlotte's Web And Ajna Each Owning 40% In JV

Author: Charles Gross | April 06, 2023 10:52am
BAT acquires 20% stake for US$10 million, with Charlotte's Web and AJNA each owning 40% Renowned neurologist Dr. Orrin Devinsky, Chief Medical Advisor for AJNA, to lead the project Charlotte's Web Holdings, Inc. ("Charlotte's Web," "CW" or the "Company"), the market leader in full-spectrum hemp extract wellness products, today announced it has formed a joint venture (the "JV") with AJNA BioSciences PBC ("AJNA"), a botanical drug development company focused on mental health and neurological disorders , and a subsidiary of British American Tobacco PLC (NYSE:BTI) ("BAT"), which is contributing US$10 million as the JV's initial investor. AJNA is partially owned and was co-founded by its president, Joel Stanley, the former CEO and Chairman of the board of Charlotte's Web, together with certain other founding members of CW. Charlotte's Web (TSX:CWBHF):. The World's Most Trusted Hemp Extract and Official CBD of Major League Baseball (MLB). (CNW Group/Charlotte's Web Holdings, Inc.)" alt="Charlotte's Web (TSX:CWEB) (OTCQX:CWBHF):. The World's Most Trusted Hemp Extract and Official CBD of Major League Baseball (MLB). (CNW Group/Charlotte's Web Holdings, Inc.)"> The JV was established to pursue FDA-approval for a novel botanical drug to target a neurological condition identified by the JV leadership team, which will be comprised of CW, AJNA and BAT representatives. This novel botanical drug will be developed from certain proprietary hemp genetics of CW. The JV plans to engage with the FDA to file an Investigational New Drug ("IND") application and commence Phase I clinical development in 2023. BAT holds a 20% equity interest in the form of preferred units following its US$10 million investment and has the right to participate in future equity issuances to maintain its pro rata equity position. Charlotte's Web and AJNA each hold 40% of the JV's voting common units. This is in consideration of contribution by CW of a license permitting the JV to use certain proprietary hemp intellectual properties, including clinical and consumer data, and by AJNA of laboratory and regulatory services, clinical expertise and the provision of clinical services. The JV plans to use the initial US$10 million investment for the clinical development of a novel hemp botanical IND. Orrin Devinsky, M.D., Ph.D., renowned neurologist and researcher and AJNA's Chief Medical Advisor, will lead the JV's clinical and regulatory strategy. Dr. Devinsky is an early stakeholder in AJNA and is the Director of New York University (NYU) Langone's Comprehensive Epilepsy Center and a Professor of Neurology, Neurosurgery, and Psychiatry at NYU Grossman School of Medicine. He was a principal investigator for the development of the cannabis-based FDA approved drug, Epidiolex®. Epidolex was approved in 2018 for the treatment of seizure disorders, Dravet and Lennox-Gastaut syndromes, which are rare and severe forms of pediatric epilepsy. "As one of the first clinicians to research novel cannabinoids, I am very excited to work on this project. I believe the properties of cannabis and hemp are well suited for the FDA's new Botanical Drug Development pathway", Dr. Devinsky said. Jacques Tortoroli, CEO of Charlotte's Web said, "This joint venture is a capital efficient way for Charlotte's Web to unlock the value of its intellectual property to advance development of effective botanical alternatives to current neurological pharmaceuticals." James Barrett, Commercial Director of Wellbeing and Stimulation at BAT, said: "Our investment in the Joint Venture reinforces our commitment to Charlotte's Web and represents another step for BAT in our exploration beyond tobacco and nicotine. We continue to transform our business, through strategic investments in innovative consumer, new sciences and technology businesses, as part of our purpose to build A Better Tomorrow." Subscribe to Charlotte's Web investor news. Related Party Transaction Due to its ownership of a US$56.8 million convertible debenture of the Company (the "Debenture"), which is convertible into 19.9% ownership of the common shares of the Company (the "Common Shares") at a conversion price of C$2.00 per Common Share, BAT is considered a "related party" to the Company under applicable securities laws. As such, the formation of the JV (the "Transaction") will constitute a "related party transaction" within the meaning ‎of Multilateral Instrument 61-101 - Protection of Minority Shareholders in Special ‎Transactions ("MI 61-101"). ‎In the absence of exemptions, the Company would be required to obtain a formal ‎valuation for, and minority shareholder approval of, the "related party transaction". For ‎the Transaction, the Company intends to rely on the exemption from the formal ‎valuation requirements and the minority ‎shareholder approval requirements of MI 61-101 contained in Section 5.5(a) and Section 5.7(1)(a) of MI 61-101 (Fair Market Value Not More Than 25% of Market Capitalization), respectively, on the basis that neither (A) the fair market value of the subject matter of, nor (B) the fair market value of the ‎consideration for, the Transaction, insofar as it involves interested parties, exceeds 25% of the ‎market capitalization of the Company, as determined by the Company's board of directors acting in good faith, in accordance with MI 61-101‎.‎ Further details will be included in a material change report to be filed by the Company. The material ‎change report will be filed no more than 21 days prior to closing of the Transaction due to the ‎timing of the announcement of the Transaction and the anticipated closing thereof occurring in ‎less than 21 days.‎‎

Posted In: BTI CWBHF TSX:CWEB