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
DENVER, April 6,
2023 /CNW/ - (TSX: CWEB) (OTCQX: CWBHF),
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 (LSE:
BATS and 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: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.) 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.)](https://mma.prnewswire.com/media/2048094/Charlotte_s_Web_Holdings__Inc__Charlotte_s_Web_forms_Joint_Ventu.jpg)
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."
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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.
About BAT
BAT is a leading, multi-category consumer goods business with a
purpose to build A Better Tomorrow™ by reducing the health impact
of its business through offering a greater choice of enjoyable and
less risky products for adult consumers.
The company continues to be clear that combustible cigarettes
pose serious health risks, and the only way to avoid these risks is
not to start or to quit. BAT encourages those who would otherwise
continue to smoke to switch completely to
scientifically-substantiated, reduced-risk alternatives*†. In order
to deliver this, BAT is transforming into a truly consumer-centric
multi-category consumer products business.
BAT's ambition is to have 50 million consumers of its
non-combustible products by 2030 and to generate £5billion of New
Categories revenue by 2025. BAT has set stretching ESG targets
including achieving carbon neutrality for Scopes 1 & 2 by 2030
and eliminating unnecessary single-use plastic and making all
plastic packaging reusable, recyclable or compostable by 2025.
BAT employs over 50,000 people. The BAT Group generated revenue
of £27.65 billion in 2022 and profit from operations of £10.5
billion.
The company's Strategic Portfolio is made up of its global
cigarette brands and a growing range of reduced-risk*† New Category
tobacco and nicotine products and traditional non-combustible
tobacco products. These include vapour, tobacco heating products,
modern oral products including tobacco-free nicotine pouches, as
well as traditional oral products such as snus and moist snuff. In
2022, we had 22.5 million consumers of our non-combustible
products, a rise of 4.2 million from Full Year 2021.
* Based on the weight
of evidence and assuming a complete switch from cigarette smoking.
These products are not risk free and are addictive.
† Our vapour product Vuse (including Alto, Solo, Ciro and Vibe),
and certain products, including Velo, Grizzly, Kodiak, and Camel
Snus, which are sold in the U.S., are subject to FDA regulation and
no reduced-risk claims will be made as to these products without
agency clearance.
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About AJNA BioSciences
PBC
AJNA BioSciences PBC is a botanical drug development company
based in Denver, Colorado, focused
on natural pharmaceuticals that address mental health and
neurological disorders. AJNA's unique platform is designed for
rapid development of investigational new drugs by combining
specialized laboratory infrastructure and CMC capabilities with
top-tier clinical and regulatory expertise. AJNA's
commercialization strategy is flexibly designed for co-development
partnerships, IP licensing, and vertically integrated drug products
in a broad range of botanical species and clinical indications. As
a public benefit corporation, AJNA's business model maximizes
profitability and sustainability for both people and planet.
About Charlotte's Web Holdings,
Inc.
Charlotte's Web Holdings, Inc., a Certified B Corporation
headquartered in Denver, is the
market leader in innovative hemp extract wellness products under a
family of brands that includes Charlotte's Web™, CBD Medic™, and
CBD Clinic™. Charlotte's Web whole-plant CBD extracts come in
full-spectrum and broad-spectrum (THC-free) options, including the
world's only broad-spectrum CBD certified NSF for Sport®, which is
the official CBD of Major League Baseball©. Founded by
the seven Stanley Brothers,
Charlotte's Web ignited the CBD industry when the brothers came to
global prominence with the coverage of a young girl's astounding
reaction to their hemp extract. Their advocacy changed laws, public
perception, and research around the vast health potential of
plant-based solutions. The Stanleys built their business with the
mission to bring botanical options to health seekers worldwide.
Charlotte's Web branded premium quality products start with
proprietary hemp genetics that are American farm-grown using
organic and regenerative cultivation practices. The Company's hemp
extracts have naturally occurring botanical compounds including
cannabidiol ("CBD"), CBC, CBG, terpenes, flavonoids, and other
beneficial compounds. The Company's CW Labs R&D division
advances hemp science at a center of excellence in Louisville, Colorado. Charlotte's Web product
categories include CBD oil tinctures (liquid products) CBD gummies
(sleep, stress, exercise recovery), CBD capsules, CBD topical
creams and lotions, as well as CBD pet products for dogs. Through
its substantially vertically integrated business model, Charlotte's
Web maintains stringent control over product quality and
consistency with 20+ product lot testing for quality assurance.
Charlotte's Web products are distributed to retailers and health
care practitioners throughout the U.S.A, and online through the Company's
website at www.charlottesweb.com.
© Major League Baseball
trademarks and copyrights are used with permission of Major League
Baseball. Visit MLB.com.
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Forward-Looking
Information
Certain information in this news release constitutes
forward-looking statements and forward-looking information within
the meaning of applicable securities laws (collectively,
"forward-looking information"). In some cases, but not
necessarily in all cases, forward looking information can be
identified by the use of forward-looking terminology such as
"plans", "targets", "expects" or "does not expect", "is expected",
"an opportunity exists", "is positioned", "estimates", "intends",
"assumes", "anticipates" or "does not anticipate" or "believes", or
variations of such words and phrases or state that certain
actions, events or results "may", "could", "would", "might", "will"
or "will be taken", "occur" or "be achieved". In addition, any
statements that refer to expectations, projections or other
characterizations of future events or circumstances contain
forward-looking information. Specifically, this news
release contains forward-looking statements relating to, among
others, the ability of the JV to achieve its purpose, including
obtaining FDA approval of a new CBD-based botanical drug.
Statements containing forward-looking information are not
historical facts, but instead represent management's current
expectations, estimates and projections regarding the future of
our business, future plans, strategies, projections, anticipated
events and trends, the economy and other future conditions.
Forward-looking information is necessarily based on a number of
opinions, assumptions and estimates that, while considered
reasonable by the Company as of the date of this news release, are
subject to known and unknown risks, uncertainties, assumptions and
other factors that may cause the actual results, level of activity,
performance or achievements to be materially different from those
expressed or implied by such statements containing forward-looking
information. Although these statements containing forward-looking
information are based on assumptions the Company considers to be
reasonable based on the information available on the date such
statements are made, such statements are not guarantees of future
performance and readers are cautioned against placing undue
reliance on forward-looking information.
The material factors and assumptions used to develop the
forward-looking information herein include, but are not limited to,
international and political considerations; regulatory changes;
and the factors discussed throughout the "Risk Factors" section of
the Company's most recently filed annual information form available
on www.SEDAR.com and in the Company's most
recently filed Annual Report on Form 10-K and quarterly report on
Form 10-Q as amended, and other filings with the Securities and
Exchange Commission available on www.SEC.gov. Except
as required by applicable securities laws, the Company undertakes
no obligation to publicly update any forward-looking information,
whether written or oral, that may be made from time to time,
whether as a result of new information, future developments or
otherwise.
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SOURCE Charlotte's Web Holdings, Inc.