Psychedelic Wellness-Focused Company, Delic Holdings, to Acquire Complex Biotech Discovery Ventures Ltd.

Published: March 2, 2021

Psychedelic Wellness-Focused Company, Delic Holdings, to Acquire Complex Biotech Discovery Ventures Ltd.

Delic Holdings Inc., a psychedelic wellness-focused company, has executed a definitive share purchase agreement (the “Agreement”) to acquire all of the issued and outstanding shares in the capital of Complex Biotech Discovery Ventures (CBDV), a licensed psilocybin and cannabis research laboratory focused on extraction, analytical testing, and chemical process development (the “Transaction”). Founded by award-winning chemist, Dr. Markus Roggen, and UBC Professor, Glenn Sammis, CBDV supports the psychedelic industry with high precision chemical analytics and metabolomic identification. Following the Transaction, CBDV expects to change its name to “DELIC Labs”.

Transaction Highlights

  • The acquisition of CBDV will further establish DELIC as a diversified psychedelics organization: The addition of CBDV will allow DELIC to add scientific-based research and analytics to its product offerings. CBDV recently received its Section 56 Exemption granted by Health Canada, enabling CBDV to focus on research and intellectual property development with psilocybin.
  • Building an Intellectual Property (“IP”) portfolio: CBDV plans to use its analytical tools for psychedelic mushroom compounds that advance clinical ‎and end-user testing. Development of psilocybin analogs that could be used in future medical ‎treatments.
  • Enhanced exposure of CBDV to drive growth: DELIC expects to drive customers to CBDV through its media platform, allowing CBDV to expand its current customer base and potential product offerings.
  • History of profitability: CBDV has a history of profitability, with a focus on extraction optimization, analytical testing, and chemical process development to advance the cannabis and psilocybin industry. Current and past customers are well-established global enterprises who require the cutting-edge cannabis and soon, psilocybin research, which CBDV provides services to.
  • Management expertise. Dr. Roggen, who will remain as an employee of CBDV following closing of the Transaction, brings a wealth of knowledge and industry experience to DELIC, in a critically important and evolving space.

Matt Stang, Founder and CEO of DELIC, commented, “Joining forces with CBDV is a foundational transaction for DELIC. Science and research is the backbone of the psychedelic renaissance and adding the talent, know-how and expertise of CBDV will bear fruit both now and in the years to come. The fact that the company has a world-class team, history of profitability, more than 50 blue chip clients, and is on track for significant growth, makes this a compelling acquisition for DELIC and one that makes it a pillar of the Company. Going forward, with the discussions we currently have in place with the many entrepreneurs worldwide within the DELIC ecosystem, we see an opportunity to potentially commercialize this science in the near term.”

CBDV is one of a handful of licensed research psilocybin labs in Canada and has an aggressive plan to build out a suite of novel compounds and delivery methods for the industry. The company is also a leading cannabis analytical and research company boasting clients that include some of the largest brands in the world. CBDV intends to apply for its dealer’s license, to eventually commercialize its psilocybin research and associated IP.

Dr. Roggen, CEO of CBDV, stated “This is a very exciting moment for us at CBDV. Partnering with DELIC was an easy choice. The combination will allow us to use their platform to share our findings with the psychedelic and medical community while also gaining new clients on the cannabis front. It’s a great opportunity to work in tandem with the DELIC team to help these new age treatments become accessible for all.”

Matt Stang continues, “The DELIC ecosystem will benefit greatly from the IP that will come out of CBDV. As new jurisdictions start to decriminalize and legalize psilocybin, we feel we will have the IP that everyone will want. On top of that, our roots in cannabis are deep and we feel we can direct significant revenue in our network towards CBDV’s cannabis business.”

Transaction Summary

Under the terms of the Agreement, DELIC will acquire all of the issued and outstanding shares in the capital of CBDV. The purchase price will be satisfied through the issuance of subordinate voting shares in the capital of DELIC (the “Consideration Shares”) equal in value to CAD $7,000,000 (the “Purchase Price”), to be issued at a price per share equal to the higher of: (a) the ten (10) trading day volume weighted average trading price (“VWAP”) of the Consideration Shares on the Canadian Securities Exchange (or such other recognized stock exchange upon which the Consideration Shares are listed for trading) (the “Exchange”) in the ten (10) trading days immediately prior to the date of the Agreement, and (b) the maximum discount under the policies of the Exchange applicable to the closing price of the Consideration Shares on the Exchange on the trading day immediately prior to the closing date. The Consideration Shares issued to the sellers of CBDV will be subject to certain contractual hold periods. In addition, each of the sellers of CBDV will enter into voting support agreements with a two-year term, pursuant to which they will agree to vote their Consideration Shares as directed by the board of directors of DELIC, subject to certain customary exclusions.

In addition, pursuant to the Agreement, for so long as Dr. Roggen holds not less than 10% of the shares in DELIC, and at least for the first two years following closing of the Transaction, DELIC agrees to appoint one nominee of Dr. Roggen to the board of directors of DELIC. In the ‎event Dr. Roggen ceases to have nomination rights pursuant to the foregoing, Dr. Roggen shall use ‎commercially reasonable efforts to cause his nominee to resign immediately. ‎

Dr. Roggen has agreed to execute an employment agreement with DELIC upon closing of the Transaction. In addition, Dr. Roggen and DELIC will enter into an earn-out agreement on closing (the “Earn Out Agreement”). Pursuant to the Earn Out Agreement, Dr. Roggen will be eligible to earn additional consideration for completing the Transaction of up to CAD$3,000,000, to be paid in Consideration Shares, subject to achievement of certain milestones. The milestone payments are as follows and will be based on the ten (10) trading day VWAP of the ‎Consideration Shares on the ‎Exchange in the ten (10) trading days prior to the ‎date the respective milestone.

The closing of the Transaction is subject to customary closing conditions, including necessary third-party consents and approvals, including approval of the Exchange, if required.

DELIC was formed in 2019 to address the growing interest in psychedelic wellness backed by science. DELIC was the ‎first psychedelic umbrella platform and is currently a trusted source for those interested in ‎psychedelic culture, psychedelic clinics, and more. ‎DELIC’s offerings include “Reality Sandwich”, a free public education platform providing psychedelic guides, news and ‎culture, “Meet Delic”, the first ever psychedelic wellness summit, and “The Delic”, an e-commerce lifestyle brand. ‎For more information, check out