Aurora Cannabis (ACB) and EnWave Corporation announced that the companies have entered into a royalty-bearing commercial license agreement, providing Aurora with the exclusive rights to EnWave’s patented Radiant Energy Vacuum (REVTM) drying technology for the production of cannabis materials in the European Union, excluding Portugal. Aurora has also secured exclusive license options for both Australia and South America, excluding Peru, exercisable pursuant to minimum REV™ machine purchase order requirements. Additionally, Aurora has signed a non-exclusive sub-license to use REV™ technology in Canada.
The companies furthermore announce that Aurora has placed a purchase order for two of EnWave’s 120kW REVTMdehydration systems for its Aurora Sky and Aurora Sun facilities in Canada, as well as the intention to purchase a third 120kW REVTM dehydration system for its Aurora Nordic facility in Denmark within sixty days. The REVTM dehydration systems will be used to increase throughput of material for extraction and use in derivative cannabis products. Aurora has also acquired a 10kW pilot-scale REV™ machine for product development, protocol development and R&D.
Strategic Partnership Forged
EnWave’s patented REV™ technology is a rapid, low temperature, continuous drying method that maintains the optimal terpene profile, flavour, as well as other product attributes during the drying process. The company’s vacuum-microwave technology enables uniform drying with flexible moisture content, unattainable with freeze drying or air drying. Aurora and EnWave have agreed to enter into an Intellectual Property Agreement with the intent to jointly-develop new innovations relating to REV™ technology that are applicable to the cannabis industry. All intellectual property developed under the IPA will be owned by EnWave, but any realizable commercial value will be shared on an undisclosed basis with Aurora. All other terms of the IPA are confidential.
Pursuant to the License, Aurora will share an undisclosed percentage of the royalties generated through the sub-licensing of EnWave’s patent portfolio to sub-licensees in the jurisdictions where the Company holds the exclusive rights to REV™ technology. EnWave and Aurora will jointly benefit through economic alignment by working together to propagate the global cannabis industry with REV™ machinery.
Strategic Equity Investment
To further cement the economic alignment between the companies, Aurora has made a $10 million strategic equity investment in EnWave. Pursuant to the terms of a share purchase agreement between the parties dated April 25, 2019, Aurora has purchased 5,302,227 common shares in the capital of EnWave at a deemed price of $1.886 per share, based on the volume weighted average trading price (“VWAP”) for EnWave’s shares on the TSX Venture Exchange for the five (5) consecutive trading days to and including April 22, 2019. As consideration for the EnWave Shares, Aurora issued to EnWave 840,576 common shares in the capital of Aurora at a deemed price of $11.8966 per share, based on the VWAP for Aurora’s shares on the Toronto Stock Exchange for the five (5) consecutive trading days to and including April 22, 2019. The EnWave Shares represent approximately 4.91% of the issued and outstanding common shares of EnWave on a non-diluted basis.
EnWave received conditional approval for the transaction from the TSXV on April 12, 2019. The TSX and NYSE have conditionally approved the listing of the Aurora Shares on such exchanges. Each of the EnWave Shares and the Aurora Shares will be subject to a hold period of four months and one day from the date of issuance pursuant to applicable securities laws.
Management Commentary
“EnWave’s technology offers very significant benefits that further improve the economic returns on our Sky Classfacilities,” said Terry Booth, CEO of Aurora. “The technology provides us with industrial-scale flow-through, reducing working capital requirements, accelerating time to market from harvest, as well as increasing our ability to produce bulk-sale cannabis for extraction and use in derivative products. Our ownership interest in EnWave and the exclusive license arrangement in many of our current and target markets creates the potential to generate additional financial synergies.”
Brent Charleton, CEO of EnWave, stated, “EnWave’s growth continues to accelerate, and we are delighted to have Aurora as an investor, industry partner and technology collaborator to further the enhancement and propagation of EnWave’s REV™ drying technology. This partnership brings together two innovation leaders in the cannabis industry, and we look forward to working closely with the team at Aurora to deliver further value to our stakeholders.”
CapEx and Working Capital Savings
Inclusion of EnWave’s REV™ technology in the design of the Aurora Sun and Aurora Nordic facilities will result in significant CapEx savings on drying space (smaller footprint) and related HVAC investments. Inclusion of the technology in the existing Aurora Sky facility will also free up space, which can be repurposed to increase the economic output of the facility.
EnWave’s REV™ technology furthermore reduces drying time from 5-7 days to less than one hour, resulting in significant working capital savings and speed to market of product. The technology has certain additional benefits, including the support of industrial scale flow-though, accelerating the ability for large-scale processing of cannabis and CBD-rich biomass into intermediate or finished product.
License Agreement Details
Aurora will have an exclusive license, with sub-licensing rights to EnWave’s REV™ technology in the European Union (excluding Portugal) and exclusive options to secure the same rights in South America (excluding Peru) and Australia. Aurora will pay EnWave a royalty on all cannabis products processed using the REV™ machinery. Aurora will receive an undisclosed share of royalties derived from any cannabis product dried with REV™ technology by sub-licensees in jurisdictions where it holds the exclusive license. Aurora will have a non-exclusive sub-license to the EnWave technology in Canada and will pay EnWave a royalty on cannabis product processed in Canada using REV™ machinery. (Original source)
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