Argent BioPharma signs 10-year exclusive global licence for four cannabis genotypes
Argent BioPharma (ASX: RGT) has entered a 10-year exclusive worldwide licensing agreement with Thai Phytomed International Co., Ltd. (“TPI”) covering four proprietary cannabis genotypes. Argent is to receive a 15% royalty based on profits generated from commercialisation of the licensed genetics.
TPI is responsible for funding commercialisation, so the deal offers a way to turn legacy cannabis genetics into potential royalty revenue without further capital from Argent.
Headline terms:
- Term: initial 10 years, renewable for a further 10 years
- Royalty: 15% of profits from commercialisation of the licensed genetics
- Funding: TPI funds commercial development and obtains the required approvals
- Ownership: retained by Argent
The agreement covers four cannabis genotypes developed and maintained within the Argent BioPharma Group:
- MXC-THC-10/3
- MXC-THC-81/5
- MXC-THC-40/3
- MXC-THC-40/2
The underlying genetics and associated intellectual property remain owned by Argent BioPharma (UK) Ltd, formerly MGC Pharma (UK) Ltd, which is wholly owned by Argent BioPharma Limited. The company stated the arrangement does not constitute a sale or transfer of ownership of the genetics or associated intellectual property.
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How the licence is structured
Rights granted to TPI
TPI receives exclusive global commercialisation rights to commercially cultivate, propagate, process, extract, manufacture, market, distribute, sell, import and export the licensed genetics and products derived from them. These include flower, extracts and cannabinoid active pharmaceutical ingredients, subject to applicable regulatory requirements.
The licence has an initial term of 10 years and may be renewed for a further 10 years on the same terms by written confirmation of both parties.
Royalty and protections for Argent
The commercial terms are summarised below.
| Term | Detail |
|---|---|
| Royalty | 15% of profits generated from commercialisation of the licensed genetics |
| Calculation | Undertaken quarterly |
| Scope | Commercialisation conducted directly by TPI, through TPI-controlled operating entities and through permitted sublicensing arrangements |
| Termination right | Argent may terminate if no commercial sale of licensed products has been made within 24 months after delivery of the licensed genetic material |
| Funding and approvals | TPI funds commercial development and obtains and maintains the cultivation, handling, manufacturing, quality, product, import and export approvals required in each jurisdiction in which it operates |
The agreement also permits TPI to establish sublicensing arrangements to support international commercialisation, subject to the commercial, reporting, intellectual property and compliance protections contained within the licence.
What Argent keeps
Argent retains ownership of the genetics and associated intellectual property. It also retains the right to use the licensed genetics for internal pharmaceutical research and development.
The agreement does not include rights to:
- CannEpil®
- CimetrA®
- The company’s other pharmaceutical products
- Clinical dossiers, formulations or proprietary drug delivery technologies
What a genetics licence means for investors
A royalty-based licence lets an owner of an asset allow another company to commercialise it in return for a share of the income. Here, the royalty is calculated on profits rather than revenue, and ownership stays with Argent rather than being sold outright.
Retaining ownership means Argent keeps what the company describes as long-term economic participation. Any royalty depends on commercialisation by TPI, and the company describes the arrangement as an opportunity to generate potential future royalty revenues.
The deal follows the global licensing of CannEpil®. Argent said it has continued to review its historical asset portfolio for non-core assets that specialist external partners can commercialise, as it moves toward a more focused pharmaceutical and intellectual property business centred on immune modulation, anti-inflammatory therapeutics and CimetrA®.
TPI is a Thailand-based cannabinoid supply and commercialisation company focused on connecting the Thai cannabis industry with regulated international medical markets.
Roby Zomer, Executive Chairman, Argent BioPharma
“This agreement is another example of how we intend to unlock value from Argent BioPharma’s historical asset base while continuing to simplify and sharpen the strategic focus of the Company…”
Willy Kruh, Executive Chairman, Thai Phytomed International
“The high THC (38-42% THC) and Balanced Genetics (12-14 % THC / 12-14% CBD) both represent existing needs in the market…”
What happens next for Argent and TPI
Three terms of the agreement set the path forward:
- 24-month sale milestone: Argent may terminate the licence if no commercial sale of licensed products has been made within 24 months after delivery of the licensed genetic material.
- Quarterly royalty calculations: royalty calculations will be undertaken quarterly.
- Renewal: the licence may be renewed for a further 10 years after the initial 10-year term, by written confirmation of both parties.
For investors, the arrangement is a capital-efficient way to monetise non-core assets while Argent keeps its internal focus on its core pharmaceutical portfolio.
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