InterCure Ltd. (TASE: INCR-L) is the 10th medical cannabis company to become listed on the Tel Aviv Stock Exchange (TASE) this year. The company signed an agreement to invest NIS 8.2 million in one of the eight veteran companies possessing a license to produce and cannabis and market it in Israel. InterCure will receive 40% of the ordinary shares and 50% of the preferred shares in the veteran company in return for its investment.
InterCure did not disclose with which grower it made the agreement. All of the companies currently growing cannabis obtained their license a decade ago when growing medical cannabis in Israel was first permitted and have been supplying the demand in Israel ever since. Meanwhile, none of them has contracted an agreement with an Israeli TASE-listed company except for Breath of Life (BOL) Pharma, which is in a process of mutual due diligence with Amir Marketing & Investments in Agriculture Ltd. (TASE:ARMK) for a $27 million investment. This agreement makes Intercure the first TASE-listed company to invest in a concern that already has revenue from cannabis. At the same time, the Israeli cannabis market is limited and like the other medical cannabis companies, the company with which InterCure has reached agreement is waiting for approval for exporting cannabis from Israel. This approval is being delayed for reasons that are not completely clear.
Meanwhile, the Israeli cannabis reform designed to bring new players into this market was recently completed. The new reform distinguishes between growing, processing, and distribution of the material. Some of the original growers have already contracted with processing and distribution concerns and are planning to distribute their products via the pharmaceutical chains as required under the reform. Some are still selling directly to their existing customers, a practice that is due to stopped. Some of them, such as BOL Pharma, have also set up processing and distribution activity. InterCure hinted that the company with which it made an agreement had processing and distribution capabilities and was one of the strongest and leading companies among the eight companies in the field.
InterCure is controlled by Alex Rabinovich (39%); other investors include Altshuler Shaham (8.9%) and Mordechai Ben-Shach (7%). The investment will be financed through NIS 9 million in credit from Rabinovich at the minimum legal interest. The company will give its controlling shareholder three-year options convertible into shares. The condition for converting the options into shares is that the company's share price exceed NIS 1 during the exercise period for two trading days or NIS 0.80 for three trading days. The company's share price, which was NIS 0.34 before the announcement, is now at NIS 0.87. The entire deal and the benefit for Rabinovich require approval from a meeting of InterCure's shareholders.
InterCure is a medical holding company with two existing activities: it holds 17.3% of Regenera, which develops drugs for treatment of nonarteritic anterior ischemic optic neuropathy (NAION) and is likely to develop additional product for the attractive market of preventing nerve degeneration. The aMoon fund, controlled by Marius Nacht, also recently invested in Regenera. InterCure also has a 9.3% holding in NovellusDx, which develops tests for cancer. Two European funds recently invested in this company, in addition to Israeli funds Pontifax and OrbiMed.
Despite these holdings, InterCure's market cap today before the announcement was NIS 26.9 million. Following the announcement, InterCure's share price skyrocketed 141%, putting its market cap up to NIS 65 million.
Published by Globes [online], Israel business news - www.globes-online.com - on June 24, 2018
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