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Biotech research outfit Veritas Pharma (VRT.C), which has locked up a multitude of big academics as it seeks to lock down the best strains to deal with pain and nausea, has taken a step into locking down its future by signing an LOI to acquiring Sechelt Organic Marijuana.

SOM has a commercial facility in Sechelt, BC, and has been an MMPR applicant since July 2014. While the success or otherwise of the application won’t change Veritas’ core business, getting a license secured would dramatically increase the market cap of the company, and help secure ongoing supply for its research.

CEO Dr. Lui Franciosi said in a news release, “This is a win-win scenario for Veritas and its shareholders. We believe this transaction is both tactical and value driven. Further and most importantly, it is representative of the steps we will take to secure and maximize our position along the medical marijuana supply chain.”

“With this acquisition,” he continued, “Veritas will control and have ownership of the entire process from developing our patented strains through Cannevert, to cultivation, thereby ensuring our medical marijuana product is ready for market, that is backed by scientific data.”

The deal is low cost to Veritas in that the LOI dictates, once Health Canada grants a permit to build, Veritas will owe $400,000 in cash and $400,000 in stock to the privco. The other side of that is, Sechelt is a fair distance from producing, but Whistler Medical Marijuana continues to supply the company in the meantime.

For now, VRT has increased its private placement financing announced mid-November to $1.425 million.

Meanwhile, the ongoing work to advance the company’s research and development in targeting the best strains to help with nausea, pain and PTSD continues. The most recent company research report indicated work is continuing at a strong clip:

In their initial animal studies, CTL has identified a number of cultivars with analgesic actions.  They are now performing secondary screening, in particular, the collection of dose-response data for all pharmacological types of actions.  The company continues to source more strains across Canada with potential therapeutic characteristics of interest.  From a finance perspective, it has been fiscally responsible while ensuring that a six-month operational window is in place at all times.  Its funding has been improved by obtaining grants to help reduce research costs for personnel salaries.  It has now accumulated a total of 16 committed personnel, comprising faculty, research associates, postdoctoral fellows, graduate students and co-op students.  For the remainder of the year, Cannevert aims to acquire more skilled workers, identify further appropriate cultivars or mixtures of cultivars with therapeutic potential, and initiate planning for future clinical trials.

— Chris Parry

FULL DISCLOSURE: Veritas Pharma is an Equity.Guru marketing client

Disclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.

Chris Parry

Chris Parry is a two-time Webster Award winning journalist who has been featured in the pages of The Vancouver Sun, The Province, National Post, Spin, Hollywood Reporter, FHM, Stuff, and Stockhouse. He was the first business journalist to identify and focus on the move to marijuana as an investment opportunity, and started Equity.Guru as a venue for honest, no punches pulled coverage of the North American public markets.

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