Veritas Pharma (VRTHF) is raising funds during a great time of research for medicinal cannabis benefits. Veritas is an early stage pharmaceutical company developing innovative medicinal cannabis cultivars for specific disease conditions such as chronic pain, emesis (nausea/vomiting), and epilepsy.
On February 10th, 2016 the company announced Whistler Medical Marijuana Corporation as its principal supplier of cannabis cultivars. One of the uses for the funds raised will be to purchase this material from Whistler and supply it to Cannevert Therapeutics Ltd. (recently acquired as described below) for preclinical and clinical testing. Veritas Pharma CEO, Dr. Lui Franciosi commented, “the variety of cannabis that Whistler has to offer will ensure that Cannevert will have the best quality and quantity of material needed to conduct research.” Cannevert Therapeutics is an alliance partner of Veritas, alongside Whistler Medical Marijuana Corporation.
On December 18, 2015 Veritas entered into a Share Purchase Agreement with Cannevert Therapeutics Ltd., a group of academics at The University of British Columbia. Under the terms of the agreement, Veritas will invest $1.5m over the next 18 months through $250K quarterly installments. This is also a major use of funds raised. After the 18-month period, Veritas will own 80% of Cannevert. The balance of Cannevert will be acquired with Veritas shares based on independent valuation of Cannevert.
A very important consideration when raising funds is the shareholder base investing into the private placement. Too many times you see ‘the games’ being played with private placements such as shorting and selling right when the shares become free-trading. It is quite strategic for Veritas Pharma to move their private placement offering, previously announced on March 8, 2016, to the newly created online investment platform of ‘Bay Street Cannabis.’ The platform is Canada’s first crowdfunding platform specifically dedicated towards cannabis investors. Veritas’ raise represents the first on the platform, an exciting opportunity. The cannabis sector is complex to the say the least and an understanding of cannabis science, regulations, and other factors is important for investors in the space.
Veritas’ aim is to procure sophisticated investors, understanding the opportunity inside and out through this platform which is catered to the cannabis investor. It is commonly understood in these markets that it is the quality of the shareholder and it is 98% people which produce large returns. “Veritas is thrilled to be the first offering listed on the Bay Street Cannabis portal” said Veritas CEO, Dr. Lui Franciosi. “We believe that online investing portals are the future of investing in Canada and that, with the assistance of Bay Street Cannabis, we can share the Veritas opportunity with a more expansive and diverse shareholder base than we could have reached on our own.”
Bay Street Cannabis intends to provide cannabis companies across the country with the best access to capital. The platform offers investors who qualify access to companies in the cannabis sector. The company has a strong backbone by management. President, Marshall Farris has 25 years of experience assisting public and private companies with corporate operations, capital development, corporate communications and regulatory compliance activities. Bay Street Cannabis is operated by Ascenta Finance Corp. (www.AscentaFinance.com), a registered Exempt Market Dealer in the jurisdictions of British Columbia, Alberta, Saskatchewan, Manitoba and Ontario. As owner and principal of Ascenta Finance Corp., Mr. Farris has participated in raising over $100 million in capital financing for public and private companies. Mr. Farris has completed the Investment Funds Institute of Canada's Exempt Market Products Course. Tracy Mabone, Chief Compliance Officer, has over 20 years of experience in the legal and financial industries. She ensures that Ascenta Finance meets all compliance regulations and is the key contact for investors and facilitates the closing of financings for the firm. Tracy completed the Investment Funds Institute of Canada's Exempt Market Products Course and Officers', Partners' & Directors' Course in November, 2011.
The breakdown of the private placement is an offering of 3,125,000 units at $0.40 for gross proceeds of $1,250,000 (initially was 2,500,000 units for $1,000,000). Each unit consists of one common share and one-half warrant which entitles the shareholder to purchase one share of Veritas Pharma at an exercise price of $0.75 per warrant share for a period of 18 months from the date of issuance. The Company also grants agents an option to cover over-allotments (the “Over-Allotment Option“) which will allow agents to offer up to 468,750 additional Units. The Over-Allotment Option may be exercised in whole or in part, at any time prior to the closing date of the Offering. In the event that the closing price (or closing bid, if no sales were reported on a trading day) of the Company’s Shares as quoted on the Canadian Securities Exchange (the “Exchange”) or such other securities exchange, quotation system or market on which the Shares are listed and where a majority of the trading volume of the Shares occurs) exceeds $0.90 per Share for a price of ten consecutive trading days, the Company may, within five days of such event, provide notice by way of news release of early expiry, in which event the Warrants will expire ten days from the date of such news release.
The Company may, in its sole discretion, pay a finder’s fee to agents of the Company: (i) a cash fee in an amount of 8% of the proceeds raised by such finder as part of this Offering (including any proceeds pursuant to the Over-Allotment Option), and (ii) a number of finder’s warrants entitling the holder thereof to purchase that number of Shares of the Company (“Finder’s Warrant”) that is equal up to 8% of the number of Units placed through the finder as part of this Offering (including any proceeds pursuant to the Over-Allotment Option).
Following the raise, Veritas will have approximately 25 million shares outstanding, representing a small float. Current market capitalization is $9m with 21.2m basic shares outstanding, and 23.3m fully diluted.
Veritas Pharma Inc (VRTHF) is an early stage pharmaceutical company developing innovative medicinal cannabis cultivars for specific disease conditions such as chronic pain, emesis (nausea/vomiting), and epilepsy. Using a ‘lean and mean’ approach to product development, the company aims to select candidate cultivars using classical pharmacology techniques and then immediately evaluate them in the clinic to maximize both product value and shareholder return. Veritas’s scientists are an inter-disciplinary team that consists of chemists, pharmacologists, anesthetists, and clinical pharmacologists. Their focus is to use their knowledge to streamline the development of cannabis based treatments to capture considerable market share. Also through its wholly owned subsidiary, Sechelt Organic Marijuana Corp., has applied to Health Canada for a medical marijuana production and distribution license under the Marihuana for Medical Purposes Regulations (the “MMPR“).
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