Numinus Wellness To Acquire Novamind In All Stock Transaction At $0.44 Per Share

Consolidation within the psychedelics space is getting underway, with the announcement this morning that Numinus Wellness (TSX: NUMI) will be acquiring Novamind Inc (CSE: NM) in an all-stock transaction. The proposed transaction is being pushed as a means of creating a “North American leader in psychedelic therapy and research.”

The proposed transaction is expected to result in Numinus having operations consisting of thirteen wellness clinics, four research facilities, and a bioanalytical lab, with the firm to have clinical trials underway for LSD, ketamine, MDMA, and psilocybin. The firm has referred to the pro-forma offerings as a “comprehensive clinical research offering,” based on Novamind’s DEA Schedule 1 licenses for research and Numinus’ own Health Canada licenses.

From a financial perspective, the combined entity is expected to have annual revenues of roughly $10.0 million on a pro-forma basis, while the combination is expected to result in synergies of roughly $3.0 million per year. Gross margins are estimated to be roughly 37.9% on a post-transaction basis. The path to profitability is also said to be shortened, although no specifics are provided.

Numinus’ current executive team is said to be relatively unchanged, with key personnel from Novamind entering employment agreements effective upon closing.

The transaction will see total consideration for Novamind to consist of $26.2 million on a fully diluted basis. Shareholders of Novamind are to receive 0.84 of a Numinus share for each share held, equivalent to a price per share of $0.44, which is a 51% premium to the 20-day volume weighted average price of the company.

While the premium is rather significant, it should be noted that the sales price represents a major loss to the majority of shareholders. Novamind debuted on the public markets last January, opening at a price of $1.50 per share. It didn’t sink below the $0.44 mark until well over a year later in January 22, after which it continued to fall as low as $0.18.

What’s more, as recently as January the company raised funds, at the time selling $5.0 million worth of stock at a price of $0.40 per unit to an institutional investor.

The transaction is expected to close in June 2022, following shareholder approvals of the transaction. Upon closing, Novamind shareholders will hold 18% of Numinus on a post-transaction basis.

Numinus Wellness last traded at $0.53 on the TSX.

Information for this briefing was found via Numinus Wellness. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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