Ehud Barak’s way to NASDAQ may be through the Kendok merger with Select

Select andIntercure Two Israeli companies operating in the medical field, which saw sharp declines in their shares, announced yesterday the signing of a cooperation agreement and memorandum of understanding for a possible merger. Intercior, headed by Chairman Ehud Barak, owns (100%) of Keduk Company, the veteran of the Israeli cannabis market. Last April, Intercayor sought to issue Kendok at NASDAQ, but the issue was not implemented. Since then, the cannabis sector has had a tough time, and Intercure’s share has dropped 70%, to a current company value of about NIS 400 million. The current agreement may pave its way to NASDAQ without going through the IPO phase.

Select, which treats immune system diseases through stem cells, is managed by Dr. Shai Yarkoni, and previously traded on the Tel Aviv Stock Exchange. In 2017, the company switched to NASDAQ trading, and later that year, the TA was obliterated by Yarkoni’s statements that the local stock exchange was pulling the company down (“Every time NASDAQ trading raised us, the Israeli market dropped us back”). October 2017 until yesterday, Select Share lost 95% of its value, and is trading at a negligible value.

Select did succeed in preliminary experiments in humans, but had to raise capital at increasing levels of value, and so its share eroded. In its latest Q3 2019 financial statements, it announced that it would seek additional strategic directions beyond its stem cell operations, meaning the company appeared to recognize that at its current value, it would not be able to raise enough capital to promote its operations.

In the current agreement, Select does not immediately become a skeleton to absorb InterCure operations, as one would expect. The agreement has two components. One of them has already been signed and the other is in negotiations. Under the signed agreement, InterCure will receive 19% of Select’s shares and in return will transfer to Select a knowledge in the field of development and production of dedicated cannabis products for the reduction of use of opiate analgesics. $ 5 million for five years (2020-2024), then Kanduk will market these products under the “Select” brand in Israel and worldwide. It should be noted that Select has $ 6.75 million at the end of the third quarter of 2019, so it will need to raise additional capital to fund Smooth in the agreement.

The component of the agreement that is still in the negotiations is the complete merger of InterCure with Select. According to the non-binding Memorandum of Understanding signed between the companies, InterCure may receive 95% of Select for 100% of Canada’s merger into it, thereby becoming a stock exchange company. Select assets such as the lab, regulatory filing team, and company stem cell technology.

Following the announcement yesterday, Select’s share rose 46% and its value stands at $ 6.7 million – as stated, the value is lower than 90% of the price at its peak in October 2017.

Another agreement – with SuperPharm

Today, InterCure announced another agreement, this time with the SuperPharm chain, to sell 10 million tonnes of cannabis and its products over three years. If the products are indeed sold on such a scale, it is currently about 5% of the total Israeli market each year, and with tens of millions of dollars in revenue. The agreement also includes the products manufactured in Israel by the subsidiary Keduk, as well as the products of the Canadian Tilray Company, which are imported by Kendok to Israel.

The contract was signed after lengthy negotiations between the parties, which focused mainly on the profit margins that the Pharm Network will derive. Cannabis, and the presence of the products in a nationwide deployment, is becoming more important to the growing companies, and the products will now be sold at 41 SuperPharm stores.