Organigram Holdings Inc. (OGI) announced today that it has entered into a non-binding letter of intent with Hyasynth Biologicals Inc. Hyasynth is a biotechnology company that captured headlines several years ago with news that the company was capable of producing phytocannabinoids using genetically engineered strains of yeast; which allows the company to manufacture CBG, CBD, and THC for novel and specialized products, and as pharmaceutical ingredients.
Hyasynth was recently awarded by Health Canada a dealer’s license, which will allow Hyasynth to expand its operations beyond research and into commercial production
Under the LOI, Organigram will make a strategic investment in Hyasynth. The LOI also includes the possibility of Organigram entering into an off-take agreement with Hyasynth, in which Organigram could purchase a pre-defined quantity of a range of cannabinoids or cannabinoid-related production from Hyasynth.
Once the strategic investment is finalized, Organigram will have the right to purchase up to $10 million senior secured convertible debentures of Hyasynth, which would be completed in a series of three rounds. The second and third round would be contingent on Hyasynth attaining certain milestones.
Provided that Organigram engages in all three rounds the outstanding debt under the debentures would be converted into equity shares in Hyasynth which, if fully converted, would represent a considerable interest in the company. Additionally, Organigram will be granted certain investor rights and board representation.
“As a proven technology the use of bioreactors is an infinitely scalable process which should allow Hyasynth to produce pharmaceutical grade cannabinoids at a significantly lower cost than traditional plant-based production, which has numerous medical and adult recreational use applications,” said Organigram CEO, Greg Engel, in a statement. “The funding provided by Organigram will allow Hyasynth to refine and optimize its processes at scale via a contract manufacturer as well as fund a purpose-built manufacturing facility for production and also provides Organigram with the ability to purchase up to 25% of the cannabinoids produced by Hyasynth.”