Why CPH investors should care about The HighBrid Lab
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Last week, Creso Pharma Limited (ASX:CPH, FRA:1X8, OTC:COPHF) announced that it plans to merge its business with Red Light Holland Corp (CSE:TRIP, FRA:4Yx, OTC Pink:TRUFF) to become The HighBrid Lab.
Following much shareholder speculation, Bruce Linton, strategic advisor for Creso Pharma, spoke to The Dales Report to explain the reasoning behind the decision and multitude of opportunities the merger will uncover.
Watch the video below:
A Quick Recap
Red Light Holland is an Ontario-based corporation engaged in the production, growth and sale of magic truffles to the legal recreational market within the Netherlands.
Creso Pharma develops cannabis, hemp-derived therapeutic, nutraceuticals and lifestyle products. Creso has also targeted acquisition Halucenex Life Sciences, an established psychedelics group, for acquisition.
The merger entity of CPH and Red Light Holland to be known as The HighBrid Lab, will create a leading global psychedelics and cannabinoid company, specialising in recreational products, applied science, technology and innovation.
The HighBrid Lab will be able to immediately commence selling in the US.
What Does The Partnership Mean?
In the interview, Linton explained the key reasoning behind the merger, namely the difficulty of being in this particular industry as an ASX listed entity.
ASX regulations have prevented CPH from entering the US THC market and exploiting opportunities in that market - the largest cannabis market expected to reach $53 billion by 2025.
The merger will solve that problem by providing CPH with a Canadian Stock Exchange (CSE) listing, allowing for exposure to US THC assets, global opportunities relating to magic truffles, as well as strong science coming out of Switzerland – in Linton’s words, “a playing field where the science tells us how to make better care for animals and for humans”.
It also combines the strong brand image of Red Light Holland and a nod to the science of Creso Pharma.
Whilst ASX shareholders were surprised by the merger announcement, (it caused a 17% drop in share price on the day of announcement (17/6/21) Linton assured shareholders that the merger should give CPH shareholders access to a more aggressive market opportunity.
As a major shareholder himself, Linton highlighted the main driver for investors - action in growing markets including more deals and greater revenues.
Stronger Together
The name of the new endeavour, The HighBrid Lab, was created to embody the “space where science, fun, and the grey zone of business all come together”.
A merged entity will allow for decreased double up of costs, and a much sharper focus on revenue generation than either company could ever do on its own.
Both entities present near term revenue generations, providing investors with even more regular global news flow despite the lengthy time frame of clinical trials.
The HighBrid Lab post COVID-19
Biotech innovation in the mental health space will see large strides taken in the post COVID world: Mental Illness will cost the world $16 USD Trillion by 2030.
As such, Bruce Linton discussed the prospect for policy makers worldwide to become much more receptive to a new class of mental health treatments - psychedelics.
With a strong cash balance and the creation of a skilled and passionate full time team, The HighBrid Lab is equipped with all the needed tools to be a strong mover in this space.
The Main Takeaway: Investors, just sit tight...
In closing, Linton left listeners with several key takeaways in why the HighBrid Lab merger makes sense and where shareholder value will be created:
- Lands in the right exchange (CSE) to move against any option
- Combined expertise opens access to more opportunities
- Access to the US THC market
- Consolidates cost base of being a listed entity to bring a stronger team into play
- Strong cash position
All these factors allow The HighBrid Lab to move with more speed than Creso Pharma and Red Light Holland could have ever done individually, with a bigger and improved breadth of opportunity.
Indeed, once the transaction is completed the HighBrid Lab will be the first fully complementary cannabis psychedelic company in the world.
For more details about the proposed merger read: What We DO and DON’T like about the proposed CPH Merger
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This material has been prepared by Jason Price. Jason Price is an authorised representative (AR 000296877) of 62 Consulting Pty Limited (ABN 88 664 809 303) (AFSL 548573) (62C), and a Director of S3 Consortium Pty Ltd (trading as StocksDigital).
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