Canopy Growth (TSX:WEED; NYSE:CGC) acquired C3 Cannabinoid Compound Co. for €225.9 million (CDN $342.9-million) in a transformative deal that furthers Canopy’s expansion in Europe with prescription medicines.
The transaction also gives Canopy access to a wealth of knowledge and intellectual property that C3 has developed in its nearly 20 years of research and development into synthetic and natural cannabis medical products.
C3’s primary medicinal offering is dronabinol, a pure chemical compound with standardized concentrations of THC (tetrahydrocannabinol), one of the active ingredients found in cannabis plants that is responsible for various pharmacological effects.
Dronabinol is available in Austria, Denmark, and Germany for nausea and vomiting refractory to conventional treatment in oncology and palliative care, and for cancer pain. In Germany, dronabinol can be prescribed for any type of chronic pain and for any condition in palliative care. In March 2017, Germany became the first country in the world to reimburse dronabinol, the first reimbursable cannabinoid agent in the country.
C3 has five medicines on the market and its commercial operations generated €27.1 million (CDN $41.5-million) in 2018.
C3 operates two state-of-the-art manufacturing facilities specializing in natural extraction and synthetic cannabinoid production. These plants have grown over the past 12 months to meet the growing demand for dronabinol and are scheduled for further expansion this year to accommodate estimated growth in the business. Four members of C3’s senior management team are remaining with the company.
Adding dronabinol to Canopy’s product offering in Europe and potentially other key markets will allow the company’s medical division, Spectrum Cannabis, to offer an expanded, medically validated suite of cannabinoid.
C3’s infrastructure of production, distribution, and sales and marketing significantly adds to Spectrum’s footprint in Europe, including an expanding product line and additional reach into pharmacy and medical specialists’ networks.
“This acquisition will allow us to offer more options to physicians across Europe, accelerate our commercial sales and increase our economic footprint on the continent, and drive forward new innovations,” Bruce Linton, chairman and co-CEO of Canopy, said in a statement.
“Our goal is to build on C3’s extraordinary reputation and decades of success as we move to an innovative continuum of medical cannabis therapies that will enable physicians globally to better treat their patients,” he added.
C3’s founding company, Bionorica SE, one of the world’s leading manufacturers of scientifically researched herbal medicines, and Canopy also entered into a separate cooperation agreement to collaborate in clinical research, IP development and distribution opportunities.
Prof. Michael Popp, owner and CEO of Bionorica, said, “Combining our knowledge, intellectual property, and reputation among clinicians and doctors in Germany, Austria, Switzerland and Denmark with Canopy’s expertise with natural full-spectrum medical cannabis products and ongoing clinical trials promises to better serve patients globally.”
With its substantial cash reserve, Canopy plans to continue making strategic investments and acquisitions that will drive growth, create competitive advantage, enhance its IP portfolio, and accelerate development and approval of cannabis-based therapeutics to continue to better serve its patients globally.
