CURE Pharmaceutical, an innovative drug delivery and development company, announced that it has entered into a Memorandum of Understanding to acquire 100% of privately held Sera Labs for total up-front consideration of $20 million.

WHO: Sera Labs was founded in 2018 by Nancy Duitch and creates high-quality products that use science-backed, proprietary formulations and organic hemp. Its more than 20 products are sold under the brand names SeraRelief, SeraTopical, SeraLabs, Gordon’s Herbals, and SeraPets. The brands are priced affordably and sold in 9,000 national drug, grocery chains, and mass retailers. The company also sells products under private label to major retailers and multi-level marketers, as well as direct-to-consumer (DTC), via online website orders, including opt-in subscriptions.

CURE Pharmaceutical is the pioneering developer of CUREform, a patented drug delivery platform that offers a number of unique immediate- and controlled-release drug delivery vehicles designed to improve drug efficacy, safety, and patient experience for a wide range of active ingredients. As a vertically integrated company, CURE’s 25,000-square-foot, FDA-registered, NSF and cGMP-certified manufacturing facility enables it to partner with pharmaceutical and wellness companies worldwide for private and white-labeled production. CURE has partnerships in the US, China, Mexico, Canada, Israel, and other markets in Europe.

IN THEIR OWN WORDS: “Our acquisition of Sera Labs will add to CURE a growing brand portfolio and monetization platform that fits remarkably well with CURE’s development capabilities, products, and existing market verticals,” said Rob Davidson, CURE Pharmaceutical CEO. “By integrating Sera Labs’ products and processes with those of CURE’s, and leveraging our cGMP manufacturing facility to realize economies of scale, we will drive improved margins and profitability. This acquisition comes on the heels of our most recent pharmacokinetic study, which showed that our CUREform thin film technology improved cannabidiol bioavailability, and sets the stage for potentially exciting opportunities to apply our innovative dosage forms to Sera Labs’ products. We look forward to joining the forces of the Sera Labs and CURE teams and to Nancy Duitch’s continued leadership at the helm of Sera Labs and as a key member of CURE’s leadership team upon closing of the transaction.”

“Sera Labs has quickly become a standout leader in the CBD industry,” said Nancy Duitch, founder and CEO of Sera Labs. “We attribute our success to capturing a broad distribution network that serves major retailers/distributors and consumers with solution-oriented products and value-driven, trusted brands. The Sera Labs team consists of highly experienced experts who have a track record of creating multiple national brands by utilizing direct-to-consumer marketing to generate recurring revenue. The Sera Labs team has built brands that have generated more than $5 billion in retail sales during the course of their combined careers. We are most excited about the opportunity to vertically integrate with CURE’s domestic cGMP manufacturing and distribution, which will result in a streamlined supply chain. We are confident that with the novel and patented formulation technologies and know-how of CURE, we will be able to accelerate sales growth and achieve consistent profitability much more rapidly than could have been achieved on our own.”

DETAILS:

• CURE Pharmaceutical entered into a Memorandum of Understanding to acquire 100% of privately held Sera Labs for total up-front consideration of $20 million, comprising $19 million in CURE stock at a valuation of $2.75 per share, and $1 million in cash, with an initial, additional commitment of $4 million for working capital in support of the acceleration of growth.
• The transaction also includes the potential for an earn-out of up to $20 million in CURE stock at a valuation of $3.34 per share within two years of the closing of the acquisition, contingent upon Sera Labs achieving certain key financial targets. The structure of the earn-out is designed to align risk and reward between CURE stockholders and Sera Labs’ management, with a focus on strong operational alignment and financial execution.
• The transaction is expected to close, subject to a definitive agreement and customary closing conditions, by the fourth quarter of 2020.
• Sera Labs net sales (unaudited) for the most recent quarter ended June 30, 2020 and totaled $1.8 million, reflecting a steep sales growth trajectory and early strong reception for its novel products across the CBD-based beauty, health & wellness, and pet product markets.
• The increase in sales, as projected for the third and fourth quarters and beyond, is subject to this agreement’s new infusion of capital, and attributable to newly signed distribution agreements, the acceptance of additional retailers for CBD, and the explosive growth of Sera Labs’ digital opt-in subscription model, which is just beginning to show rapid growth in line with internal projections.
• Founder Nancy Duitch will continue to lead the company.
• February 2019 Sera Labs received a $5 million investment from from the Canadian based, Cannabis private equity fund, ToroVerde Inc