Melodiol Global Health Limited

$12M Proposed Cash Asset Sale to Strengthen Balance Sheet, with $2.2M of Earn Outs

Melodiol Global Health Limited (ASX:ME1) (‘Melodiol’ or ‘the Company’), is pleased to announce a non-binding Letter of Intent (LOI) with the Canadian based, Nacerna Life Sciences Inc. (‘Nacerna’). The LOI pertains to the sale of Melodiol’s cannabis production facility, equipment and land (‘Sale Assets’), located in Nova Scotia, Canada, for an initial cash consideration of $12m (C$11m).


Highlights:

  • Melodiol has signed a non-binding LOI with Canadian-based Nacerna Life Sciences Inc. to sell its Mernova production facility and land in Nova Scotia for an initial $12m in cash consideration
  • LOI includes two earn-out provisions totalling $2.2m which are payable to Melodiol on completion of each earn out provisions
  • Initial purchase price in line with previously attained appraisals on the building, equipment and land valuing it at between $10.4m and $12m (C$9.5m to C$11m)
  • Transaction proceeds sufficient to repay all existing secured debt, significantly strengthening the balance sheet
  • Transaction expected to allow for working capital to be deployed to Health House and Creso Pharma Switzerland to aid in future growth
  • Melodiol to keep its highly-established Ritual cannabis brand and products and will attempt to continue selling in the Canadian recreational market via sourcing and branded resale of third party production
  • In H1 2024, Health House and Creso Pharma Switzerland delivered combined revenues of $5.6m, representing an annualised figure of $11.2m, not including future sales of Ritual branded products in Canada
  • Ritual brand (which ME1 retains) accounted for approximately $6.9m (or 32%) of the Group’s total revenue in FY23
The transaction also includes two earn out provisions of $1.1m (C$1m) each, payable to Melodiol on (1) Nacerna reaching gross revenues of C$50m within 24 months from the closing of the transaction via the Sale Assets and (2) 15,000kg of cannabis being produced at the facility within 24 months of the closing of the transaction.

The initial consideration for the Sale Assets is at the top end of the independent appraisals received for the Sale Assets (refer to ASX release: 19 June 2024), which valued the Sale Assets between $10.4m and $12m (C$9.5m to C$11m). Furthermore, the initial consideration is sufficient to repay all of the Company’s existing secured debt, significantly improving the Company’s balance sheet, and is expected to allow for additional working capital to be deployed to Health House and Creso Pharma Switzerland. Health House and Creso Pharma Switzerland generated a combined $5.6m of revenue in the first half of 2024, an annualised run rate of $11.2m. Furthermore, the proposed transaction does not preclude Melodiol from retaining access to and generating revenue from the Ritual cannabis brand that had been produced at the Sale Assets. Following the transaction, Melodiol intends to leverage its ability to purchase third party produced flower (refer to ASX release: 27 May 2024) to attempt to continue marketing its Ritual products in the Canadian marketplace, thereby aspiring to retain some level of sales from the Ritual brand (which generated $6.9m of sales in FY23), even without access to the Sale Assets.

About Nacerna

Nacerna Life Sciences Inc. is a licensed medical cannabis and psychedelics health services provider. Nacerna is focused on enhancing the patient's journey while incorporating its proprietary infuser medical products into the standard of care. Nacerna offers its "Breakwater" branded micro dosing CBD/THC infuser products through national distribution channels.

Nacerna Life Sciences Inc operates from a 6,000 sqft Health Canada approved treatment facility and the Nacerna team has extensive experience in novel drug development utilizing cannabis and psychedelic compounds, as well as experience in performing clinical trials.

The Nacerna team over their career have successfully worked with Health Canada, Canada Veteran Affairs and other government bodies on a variety of projects.

Management commentary:

Chief Executive Officer Mr William Lay said: “The sale of the Mernova building, equipment and land is expected to be a pivotal step in the Company’s trajectory. Upon closing, we would be in a position to significantly improve our balance sheet, and focus working capital on Health House and Creso Pharma Switzerland, while also attempting to maintain a level of sales from the Ritual brand in Canada.

“We are pleased that the initial consideration is in line with the top end of the independent appraisals received for the Sale Assets, an outcome which highlights the quality of the assets the Company has built.

“Following the expected repayment of all secured debt, the Company will be in a stronger financial position, and able to focus all of its efforts on continued growth in the remaining business units, while aggressively pursuing its long-term strategic objective of group cash flow positive. We look forward to providing further updates in due course.”


Click here for the full ASX Release

This article includes content from Melodiol Global Health, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.

ME1:AU
The Conversation (0)
Compass Pathways Announces First Quarter 2025 Financial Results and Business Highlights

Compass Pathways Announces First Quarter 2025 Financial Results and Business Highlights

Highlights:

  • 6-week top-line data from Part A of COMP005 phase 3 trial in treatment resistant depression on track for late June
  • Phase 3 COMP006 in TRD on track for 26-week data second half of 2026
  • Cash position of $260.1 million at March 31, 2025
  • Conference call on May 8 at 8:00 am ET (1:00 pm UK)

News Provided by Business Wire via QuoteMedia

Keep reading...Show less
Compass Pathways Establishes Strategic Collaboration with HealthPort to Inform the Potential Delivery of COMP360 Synthesized Psilocybin Treatment in Underserved Communities

Compass Pathways Establishes Strategic Collaboration with HealthPort to Inform the Potential Delivery of COMP360 Synthesized Psilocybin Treatment in Underserved Communities

COMPASS Pathways Plc (Nasdaq: CMPS), a biotechnology company dedicated to accelerating patient access to evidence-based innovation announced today it is entering into a strategic collaboration with HealthPort, a multi-site comprehensive community health organization. HealthPort employs an integrated model centered around social determinants of health and this collaboration will help inform the potential delivery of COMP360 synthesized psilocybin treatment in underserved communities, if FDA approved. This agreement with HealthPort expands the set of collaborations that Compass has established representing a broad spectrum of settings where people living with treatment resistant depression (TRD) receive their care in the United States.

HealthPort offers an integrated model of care aimed at helping those with behavioral health conditions and people impacted by poverty, disability and trauma. HealthPort is an evidence-based practice supporting thirteen dimensions of social determinants of health, including the coordination of an integrated outpatient mental health and addictions health clinic. HealthPort has been operating facility, residential, and mobile based interventions of care in the lower Eastern Shore of Maryland for the past 45 years.

News Provided by Business Wire via QuoteMedia

Keep reading...Show less
Compass Pathways to Announce First Quarter Financial Results on May 8, 2025

Compass Pathways to Announce First Quarter Financial Results on May 8, 2025

Compass management will host a conference call at 8:00 am ET (1:00 pm UK)

News Provided by Business Wire via QuoteMedia

Keep reading...Show less
Compass Pathways Announces Dosing Complete for All Participants in Part A of Phase 3 COMP005 Trial of COMP360 Psilocybin for Treatment-Resistant Depression

Compass Pathways Announces Dosing Complete for All Participants in Part A of Phase 3 COMP005 Trial of COMP360 Psilocybin for Treatment-Resistant Depression

Highlights:

  • Participants received a single dose of either 25 mg of COMP360 or placebo
  • On track for disclosure of top-line 6-week primary endpoint results in late June

News Provided by Business Wire via QuoteMedia

Keep reading...Show less
Compass Pathways Announces Completion of Recruitment for the Phase 3 COMP005 Trial of COMP360 Psilocybin for Treatment-Resistant Depression

Compass Pathways Announces Completion of Recruitment for the Phase 3 COMP005 Trial of COMP360 Psilocybin for Treatment-Resistant Depression

Highlights:

  • Screening closed for all sites and final participants being scheduled for dosing
  • On track for top-line 6-week primary endpoint results in late Q2

News Provided by Business Wire via QuoteMedia

Keep reading...Show less
Compass Pathways Announces Publication of Results from COMP004 Study on COMP360 Psilocybin for Treatment-Resistant Depression

Compass Pathways Announces Publication of Results from COMP004 Study on COMP360 Psilocybin for Treatment-Resistant Depression

Highlights:

  • 52-week observational follow-up study from Phase 2b reveals single 25 mg COMP360 psilocybin dose offers longer-term antidepressant effects compared to lower doses, with average efficacy for a single dose of 25mg lasting about 12 weeks and substantially longer in a subgroup
  • Findings published in the March edition of the Journal of Clinical Psychiatry

News Provided by Business Wire via QuoteMedia

Keep reading...Show less

Latest Press Releases

Related News

×