Small penny stock Tetra Bio-Pharma Inc. making big moves through acquisition of Panag Pharma Inc.
Tetra Bio-Pharma Inc. (OTC:TBPMF)(TSXV:TBP) is a Canada-based development stage company that engages in the development of biopharmaceuticals and natural health products containing cannabis and other medicinal plant-based elements. They announced Tuesday that they would enter into a non-binding proposal to acquire all of the equity in Panag Pharma Inc., another Canadian-based cannabis company that specializes in using cannabinoid-based formulations to treat pain and inflammation.
The deal has an aggregate initial payout of about $12 million, with $3 million in the form of cash and $9 million payable in common shares of Tetra. Additionally, the proposal also involves clauses where Tetra will pay the vendors up to $15 million in cash if certain predetermined milestones are achieved. Milestones include reaching operational targets if the U.S. Food and Drug Administration (FDA) and the European Medicines Agency (EMA) commercializes their drug products.
Panag will remain a subsidiary of Tetra and will provide Tetra with additional discovery and early phase drug development capacity.
While the stock is currently considered relatively risky with a three year monthly beta of -.59 and negative earnings per share, Richard Giguere, CEO of Tetra Natural Health believes that through the acquisition of Panag to globally commercialize their products that they can “expect to generate revenues from these products by Q4 2019 following completion of the acquisition.”
Despite the positive news, Tetra share prices remained almost unchanged at close on Tuesday, falling US$.0003 to US$0.789, a .04% decline. The company had an IPO in July 2011 but had sparse trading activity until around September 2016. Since its IPO it is up about 25 percent and up 471 percent in the past two years.
Exciting opportunities afforded through the transaction
According to Dr. Guy Chamberland, CEO and CSO of Tetra, the two companies have been working together for over a year and thinks now that they’re combined they “will have a robust product pipeline of cannabinoid derived drugs for development as prescription or OTC drugs.” Chamberland views Panag as “a group of world-renowned cannabinoid experts that will help take Tetra to the next level as a pharmaceutical company.”
Dr. Orlando Hung, the co-founder of Panag, feels similarly. He said in a statement that they “are very excited to have the opportunity to continue our decades of cannabinoid research work and partner for commercialization with Tetra Bio-Pharma.” He said especially with the global opioid crisis and Panag’s focus on pain management that “the timing is perfect as there is an urgent need for non-opioid medications to treat pain and inflammation.”
Tetra could be the next GW Pharmaceuticals
Even before this acquisition, an analyst at Paradigm Capital reported considerable optimism towards Tetra, rating the company stock a “Buy” with a 12-month price target of $1.75. This target equates to a projected return of 121 percent from its current market price. The analyst’s view resulted from the November 1 news of Health Canada’s approval to begin clinical trials on a vaporized version of its cannabis drug used to treat fibromyalgia pain. This means that Tetra could pique stock investors’ interest as a solid undervalued penny stock to buy cheaply before it takes off.