The Epsilon Healthcare Ltd (ASX:EPN) share price is rocketing today, up more than 16% to 18 cents per share.
The company entered a trading halt on Monday before the market open pending today's announcement. Epsilon's share price closed at 15 cents on Friday.
We take a look at the announcement from the microcap ASX cannabis share.
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What did Epsilon announce?
The Epsilon share price is soaring after the company reported it has entered into a partnership with The Valens Company Inc (TSX: VLNS) for access to Epsilon's Southport Manufacturing Facility.
Valens is involved in the production of cannabis products. Its shares currently trade on the Toronto Stock Exchange, and it has applied to list on the NASDAQ.
The partnership with Epsilon will aid Valens' growth strategy into international GMP markets via access to Epsilon's GMP manufacturing capability at the Southport Facility. Southport is the largest cannabis extraction facility in the Southern Hemisphere.
Epsilon has been granted a licence to use Valens IP to streamline operations at its Southport Facility. Valens will also provide personnel and support.
As part of the partnership, Valens won't sell any medicinal cannabis in Australia or New Zealand that doesn't come from the Southport Facility. Valens will also "fund all future operational and capital expenditure" at the facility in return for access to up to 85% of the output.
What else is moving the Epsilon share price?
Epsilon's share price may also be getting a lift today from the company's accompanying announcement that it has entered into a Share Sale Agreement with Cannvalate Pty Ltd to acquire AlternaMed Pty Ltd. This includes Cannvalate's portfolio of IP covering 3 "novel cannabinoid therapeutic agents with a view to Schedule 3 medicines production".
Epsilon will issue some 28 million shares, worth $4.3 million at 15 cents per share, to acquire AlternaMed. The acquisition remains subject to customary approvals.
Commenting on the announcements, Valens' CEO, Tyler Robson said:
We are excited to work with the largest and most advanced cannabis manufacturing facility in the Southern Hemisphere to distribute GMP products, and look forward to advancing our product distribution capabilities through our continued partnership with Cannvalate.
Epsilon's CEO, Jarrod White, added:
Having worked with the teams at Valens and Cannvalate over the preceding months to achieve what is a transformational partnership for Epsilon and its Southport Facility, I am excited to see the maturing of Epsilon's core assets and business into commercial production with experienced partners from established markets.
With this long term strategic partnership now agreed, Epsilon is well placed to be a leading contract GMP manufacturer of medicinal cannabis medicines in the region.
Epsilon share price snapshot
The Epsilon share price is down 30% year-to-date. This compares to a gain of 10.5% posted by the All Ordinaries Index (ASX: XAO) in 2021.
Over the past month, Epsilon's share price is up 16%.
