PORTLAND, Ore. – Phylos, a modern crop science company, announces entry into an innovation relationship with one of Canada’s leading producers of recreational cannabis and cannabis-derived products, Organigram Inc., a wholly-owned subsidiary of Organigram Holdings Inc.
In this innovation relationship, Phylos will provide process and technical expertise to enable the manufacture of production-ready first generation (“F1”) hybrid cannabis seeds in Canada and to accelerate the launch of products containing THCV, a rare and novel cannabinoid that is gaining popularity for its wellness, energy and focus benefits.
“Across the industry, growers spend thousands of hours each year managing mother rooms and fighting pathogen outbreaks caused by dirty clones. We created Production-Ready Seed to enable breeding of vigorous, uniform plants with intentionally selected, stable and highly desirable qualities that today’s consumers seek,” explains Ralph Risch, CEO of Phylos. “Organigram, like Phylos, believes that seed-based cultivation is the future of cannabis production. By converting their clonal propagation system to seed they expect to significantly reduce operating costs and continue to drive improved margins.”
Trial data suggests that compared to other seeds currently available on the market, Phylos Production-Ready Seed produces plants that rival those grown using a clonal production system. Results from multiple trials found that mature plants grown from Phylos’ Production-Ready Seed deliver yield, potency, terpene profiles, vigor, and phenotypic uniformity that is similar to or exceeds clonal-based plant production.
“Phylos is committed to advancing the science of cannabis genetics as the industry continues to evolve,” says Alisha Holloway, PhD, Chief Scientific Officer at Phylos. “Our seed-grown plants have been tested through multiple rounds of breeding cycles and trials, and consistently deliver uniformity that has not yet been demonstrated by other seed lines in growth pattern, size and habit, color, flower initiation time, potency, and percent/composition of terpenes.”
Streamlining production systems with production-ready F1 hybrid seed allows for more efficient cultivation. Seed-based production delivers healthy, vigorous plants with consistently outstanding, uniform traits. Growers utilizing seed-based production systems often find an easier path to scalability, while maintaining or improving profit margins. You can learn more about transitioning to seed-based production in our webinar: Scale and increase profitability with uniform seed-grown production. For more information or to shop Phylos Production-Ready Seeds, please visit seeds.phylos.bio.
Strategic Rationale and Opportunities
This transaction is poised to strengthen Organigram’s capabilities as follows:
Organigram would become the first Canadian licensed producer to release high potency whole plant derived THCV in Canada based on Phylos’ genetics platform;
Enabling Organigram to modernize cannabis production and employ seed-based production at scale;
Providing Organigram with access to new, proprietary genetic identification tools that are expected to enable efficient and rapid development of unique, proprietary cultivars driven by consumer preferences; and
Enabling Organigram to develop seed-based F1 hybrid genetics for key Organigram brands such as SHRED, providing future opportunities to offer ‘turn-key’ U.S. and International licensing of seed-based genetics and an established cannabis brand when and where legal.Convertible Loan Details
Under the terms of the Loan Agreement, Organigram will advance up to US $8 million to Phylos in three tranches. Organigram advanced Phylos an initial US $3.25 million on the date hereof (the “Initial Closing Date”) with a commitment to fund up to an additional US $4.75 million over two tranches within 12 and 24 months from the Initial Closing Date, upon the completion of certain milestones.
The Convertible Loan will accrue paid-in-kind interest (“PIK”) at a rate of U.S. Prime + 3.5% (with an overall cap of 11%) subject to certain conditions. The maturity date of the Convertible Loan will be on the fifth anniversary of the Initial Closing Date subject to one-year extensions and subject to certain conditions. The Convertible Loan (principal and PIK outstanding) is convertible into common share equity of Phylos under certain circumstances (including but not limited to federal legalization or decriminalization of cannabis in the United States).
About Phylos
Phylos is a cannabis genetics company focused on helping growers of all sizes to succeed commercially with seeds that produce the highest quality cannabis in the most cost-effective way. Phylos supports commercial-scale cultivation with the industry’s first Production-Ready Seed: premium, phenotypically stable, fully-feminized F1 hybrid seeds that deliver exceptional flower quality, potency, vigor, and yield. Phylos also leverages its proprietary technologies and its cultivation, extraction, and formulation expertise to provide partners with unparalleled THCV genetics and natural, safe and effective ingredients.
About Organigram Holdings Inc.
Organigram Holdings Inc. is a Nasdaq Global Select Market and TSX listed company whose wholly owned subsidiaries include: Organigram Inc. and Laurentian Organic Inc., licensed producers of cannabis and cannabis-derived products in Canada, and The Edibles and Infusions Corporation, a licensed manufacturer of cannabis-infused edibles in Canada.
Organigram is focused on producing high-quality, cannabis for patients and adult recreational consumers, as well as developing international business partnerships to extend the Company’s global footprint. Organigram has also developed and acquired a portfolio of legal adult-use recreational cannabis brands, including Edison, Holy Mountain, Big Bag O’ Buds, SHRED, SHRED’ems, Monjour, Laurentian, Tremblant Cannabis and Trailblazer. Organigram operates facilities in Moncton, New Brunswick and Lac-Supérieur, Quebec, with a dedicated edibles manufacturing facility in Winnipeg, Manitoba. The Company is regulated by the Cannabis Act and the Cannabis Regulations (Canada).
