Bod Australia has entered into a binding agreement to acquire Aqua Phase, a UK-developed technology that aims to increase the bioavailability of cannabis compounds.
Bod will pay up to GBP£3m (A$5 million) for the company.
The ASX-listen firm confirmed this morning (Thursday) that it has received firm commitments to raise A$1.5m at $0.08c per share to help fund the acquisition. Bod directors have participated in the raise.
A further capital raise with existing shareholders will aim to generate another $2m.
Bod chief executive Jo Patterson described the acquisition as “an exciting opportunity”.
“Improved bioavailability promotes faster onset, better efficacy, lower dosing and fewer side effects,” she said.
“Bod intends to leverage its strong track record of commercialisation to introduce a number of new products which should offer superior quality and better onset for patients and consumers.
“While the company will initially focus on cannabis, the technology potentially also unlocks opportunities with other lipophilic compounds.”
News of the acquisition came as Bod reported widening losses of $5.4 million in the 12 months to June 30, up 28% from FY21.
Revenue fell by almost 32% to $5m, with the growing popularity of flower cited as among the causes of the decline.
Bod said the increased loss was down to $1m of R&D income being recorded in FY21 and a $519,000 one-off cost associated with manufacturing issues in Italy where some products failed to reach Italian regulatory standards.
Sales revenue from its MediCabilis medicinal cannabis products fell 7% to $1.65m, with the company shipping 7,182 units to patients, 25% fewer than FY21.
“While sales are down on the prior year, reflecting the market’s move to THC flower, the consolidated entity continues to hold its market share in the CBD market,” the firm said.
Sales of CBD and hemp products to Bod’s global partner, Health and Happiness Group, also slumped, generating revenue of $1.3m, down 58%.
Bod blamed the decline on increased competition, slower than expected sales and the Italian manufacturing issues.
Meanwhile, the firm’s non-CBD over-the-counter health and beauty division also endured a tough year, with sales sliding 27% to $495,000.
Bod said it had $3.66m in cash and cash equivalents as of June 30.
“This, along with a planned equity raise, in the September 2022 quarter, provides the consolidated entity with significant financial flexibility to progress its clinical trial initiatives and international expansion opportunities across its medicinal cannabis and CBD and wellness suite,” it said
The acquisition of Aqua Phase, a firm developed by scientists in the UK, will see Bod use the technology as a delivery mechanism for its medicinal cannabis products. The ASX-listed firm said it could also generate revenue through licensing the technology.
The invention relates to “water-soluble cannabis product technology which makes lipophilic chemicals from cannabis compounds soluble in aqueous liquids, including water”.
Under the terms of the binding agreement, Bod will pay an initial GPB£1m (A$1.7m) on completion of the deal followed by two additional payments worth up to GBP£2m (A$3.4m), based on conditions being met.