- Valens expands exclusive licence for SōRSE cannabis emulsion
technology to include Europe,
Australia and Mexico in addition to Canada
- Amendment represents a nearly 20x increase in the
addressable population exclusively available to Valens and its
customers
- Provides a framework for Valens to obtain rights to
utilize the technology in the U.S. and other markets on a
non-exclusive basis in the future, creating the potential for
Valens customers to sell branded cannabis infused products
globally
KELOWNA, BC, Dec. 11, 2019 /CNW/ - Valens GroWorks Corp.
(TSXV: VGW) (OTCQX: VGWCF) (the "Company" or
"Valens"), a cannabinoid-based product company with industry
leading extraction, next generation cannabinoid delivery formats
and an ISO 17025 accredited analytical lab, is pleased to announce
that it has entered an amended manufacturing and sales licence
agreement with SōRSE Technology Corporation ("SōRSE") which
grants Valens an exclusive licence for Canada, Europe, Australia and Mexico to use the proprietary SōRSE emulsion
technology ("the Technology") to produce, market, package,
sell and distribute cannabis-infused products (the
"Agreement").
"This Agreement shows Valens' commitment to invest and broaden
its IP portfolio and enable its customers to bring differentiated,
next generation products to market," said Jeff Fallows, President of Valens. "As we move
into "Cannabis 2.0" in Canada, we
believe the products that offer consistent, high quality and
predictable user experiences, like those we are able to create with
SōRSE, will capture the lion's share of attention and be the
hallmark for brand development in a strict regulatory environment.
With this expanded agreement in place, we have extended this
opportunity for our existing customers to key international markets
and at the same time established a platform for international
consumer brands to add high quality, cannabis infused products to
their portfolios."
The SōRSE Emulsion Technology
The SōRSE emulsion technology transforms cannabis oil into
water-soluble forms for use in beverages, edibles, topicals and
other consumer products without the burden of cannabis taste,
colour or smell. The Technology allows these cannabis infused
products to maintain potency when heated, chilled or frozen and
provides a number of other key advantages as well, including: (1) a
faster observed onset time compared to other infused beverages and
edibles, (2) a significant reduction of offset time, (3) an ability
to use lower doses of cannabinoids due to the enhanced
bioavailability provided by the Technology, and (4) increased
consistency and stability with some product formulations achieving
more than one-year shelf stability with no evidence of
separation.
"We are proud to expand our partnership with Valens and leverage
their near-term access to various global markets," says
Howard Lee, CEO of SōRSE. "Over the
last year, our team of more than 40 plus professionals has
continued to actively focus on creating and developing innovative,
desirable products and formats of consumption for cannabis
consumers. As emulsion technology becomes more popular through new
delivery methods such as ingestion, transdermal, topical and more,
it is imperative that quality and safety in consumption leads all
innovation in this sector. This is a shared value and mandate that
our teams at SōRSE and Valens both prioritize. We look forward to
continuing this working relationship with Valens and introducing
our award-winning emulsion technology to the global markets."
Geographic Expansion
The Agreement grants Valens an exclusive licence to use the
Technology in Canada, Europe, Australia and Mexico (except in respect of medical
applications requiring clinical trials) during the initial 5-year
term, subject to certain performance milestones. This increases the
addressable market from 37 million in the current Canada only agreement to 700 million people in
the new Agreement, an increase of almost 20x. Furthermore, the
Agreement provides a framework for Valens to obtain rights to
establish non-exclusive agreements to sell cannabis-infused
products using the Technology in the U.S. market and other markets,
globally.
Bolstering "Cannabis 2.0" Platform
With the expanded exclusivity, Valens and its white label
clients are positioned to not only succeed in the Canadian market,
but also in the rapidly emerging legal cannabis and hemp-derived
CBD markets in Europe,
Australia, Mexico and beyond. The Agreement adds to the
Company's leading white label product offerings across numerous
"Cannabis 2.0" categories such as beverages, edibles, transdermal
products and more, enabling Valens to better serve its current and
future partners.
"We have seen incredible interest from our current and potential
clients regarding the SōRSE emulsion technology and we are thrilled
to finalize the expanded licence agreement with SōRSE," said
Tyler Robson, CEO of Valens. "We
expect the expanded exclusive territory will provide our clients
with improved visibility and greater opportunity as they look to
build global businesses around cannabis-infused products over the
long term.
This is an exciting time in the evolution of ingestible cannabis
products such as beverages and edibles. Historically, ingestible
products have been lacking the necessary technology to provide a
consistent, predictable experience, ultimately giving little reason
to consume in this manner. At Valens, we expect that properly
formulated, extract-based cannabis products, and infused beverages
in particular, could disrupt many established beverage categories
such as soft drinks, sports drinks, value-added water and alcohol,
the latter of which has a monthly spend per capita that is roughly
16 times higher compared to legal cannabis spend in Canada. We believe the ability to plan an
occasion and predict the outcome of use will be a game changer in
the market and be the catalyst to bring about the full market
potential of cannabis infused beverages and edibles, globally."
Future White Label Services
The Agreement furthers the existing relationship between Valens
and SōRSE and enables Valens to produce and sell SōRSE's portfolio
of branded products in Canada and
the other exclusive markets at the option of the Company. These
branded products include Happy Apple, a cannabis-infused sparkling
cider and Major, a cannabis-infused fruit drink, both recognized as
top selling cannabis beverages in the State of Washington, Pearl20, a
cannabis-infused food and beverage mixer, and the Utopia line of
cannabis-infused sparkling water, among others.
Agreement Summary
The consideration at closing for the exclusivity in the expanded
geography was US$10 million,
comprised of US$6 million in cash and
US$4 million to be issued in common
shares of the Company (the "Common Shares"). The Agreement
carries an initial 5-year exclusive term with a 2-year renewal of
the exclusivity, subject to certain performance milestones related
to operational and financial achievements (the
"Milestones"). As part of the Agreement, Valens will
transfer to SōRSE royalty payments calculated as a percentage of
sales (the "Royalty Payments") and the Royalty Payments will
be subject to an annual minimum of $2
million over the 5-year term. The Agreement also provides
for a continuation of the Agreement on a non-exclusive basis after
the 2-year renewal, subject to annual minimum royalty payments.
All Common Shares pursuant to the Agreement were issued at an
indicative price of CDN$3.0471, being
the volume-weighted average price of the Common Shares on the TSX
Venture Exchange ("TSXV") for the ten (10) trading days
ending December 9, 2019. The
Agreement remains subject to approval from the TSXV. All
Common Shares issued in connection with the Agreement will be
subject to a restricted period of four months and one day. There
are no finders' fees payable by the Company in connection with the
Agreement.
About Valens GroWorks
Valens GroWorks Corp. (TSXV:VGW) (OTCQX:VGWCF) is a
multi-licensed, vertically-integrated cannabis company focused on
being the partner of choice for leading Canadian and international
cannabis brands by providing best-in-class, proprietary services
including CO2, ethanol, hydrocarbon, solvent-less and terpene
extraction, analytical testing, formulation and white label product
development. Valens is the largest third-party extraction Company
in Canada with an annual capacity
of 425,000 kg of dried cannabis and hemp biomass at our
purpose-built facility in Kelowna,
British Columbia which is in the process of becoming
European Union (EU) Good Manufacturing Practices (GMP) compliant.
Additionally, our subsidiary Valens
Labs is a Health Canada licensed ISO 17025 accredited
cannabis testing lab providing sector-leading analytical services
and has partnered with Thermo Fisher Scientific to develop a Centre
of Excellence in Plant-Based Science. For more information, please
visit http://valensgroworks.com. The Company's investor deck can be
found at http://valensgroworks.com/investors/.
Forward Looking Statements
This news release contains certain "forward-looking statements"
within the meaning of such statements under applicable securities
law. Forward-looking statements are frequently characterized by
words such as "anticipates", "plan", "continue", "expect",
"project", "intend", "believe", "anticipate", "estimate", "may",
"will", "potential", "proposed", "positioned" and other similar
words, or statements that certain events or conditions "may" or
"will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the
projections contained in the forward-looking statements throughout
this news release. Forward-looking statements are based on the
opinions and estimates of management at the date the statements are
made and are subject to a variety of risks and uncertainties and
other factors that could cause actual events or results to differ
materially from those projected in the forward-looking statements.
The Corporation is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as expressly required by applicable law.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
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SOURCE Valens GroWorks Corp.