On March 10, 2020 Pascal Biosciences Inc. (TSX.V: PAS) ("Pascal") is reported that it has entered into a non-binding term sheet (the "Term Sheet") with SōRSE Technology Corporation ("SōRSE"), pursuant to which it has agreed to exclusively negotiate a potential transaction (the "Potential Transaction") with SōRSE (Press release, Pascal Biosciences, MAR 10, 2020, View Source [SID1234555447]). In exchange for the exclusive right to negotiate a definitive agreement, SōRSE has agreed to purchase units of Pascal, each unit consisting of one share and one warrant of Pascal, for gross proceeds of US$250,000 on a private placement basis (the "Private Placement").

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Pascal intends to use the proceeds of the Private Placement for working capital purposes. Further details regarding the Private Placement, including the price of the units, the terms of the warrants and proposed closing date, will be announced. Completion of the Private Placement remains subject to the approval of the TSX Venture Exchange. All securities issued pursuant to the Private Placement will be subject to a statutory four month hold period.

Pursuant to the Term Sheet, Pascal has agreed to exclusively negotiate the terms of the Potential Transaction with SōRSE until May 27, 2020. Although Pascal and SōRSE have not yet finalized the binding terms of the Potential Transaction, Pascal expects that:

SōRSE will purchase Pascal’s cannabinoid programs in exchange for common shares of SōRSE valued at US$9.5 million.
Upon closing of the Potential Transaction, Pascal will hold at least 15.8% of the outstanding shares of SōRSE.
The Potential Transaction will be structured as a share purchase agreement whereby SōRSE will purchase all of the shares of Pascal Biosciences US, Inc. ("US SubCo"), a wholly-owned subsidiary of Pascal which, in addition to other assets, holds all of Pascal’s cannabinoid assets and employs certain personnel responsible for researching and advancing Pascal’s scientific programs.
Upon closing of the Potential Transaction, Pascal will focus on the advancement of its leukemia program which will not be transferred to SōRSE as part of the Potential Transaction.
As additional consideration for the sale of the cannabinoid assets, SōRSE will permit US SubCo’s employees to support Pascal’s retained intellectual property and scientific programs at no additional cost to Pascal, in accordance with a work program to be determined in the definitive agreement.
Upon closing of the Potential Transaction, SōRSE will invest an additional US$250,000 in Pascal on a private placement basis.
A binding commitment with respect to the Potential Transaction will result in an enforceable agreement only if Pascal and SōRSE negotiate and execute terms and conditions of a definitive agreement prior to the expiry of the exclusivity period, which is May 27, 2020. If entered into, the definitive agreement, and any ancillary transaction agreements, will contain representations and warranties, conditions relating to regulatory approvals, TSX Venture Exchange approvals and any required shareholder approvals, and other terms as are customary in comparable transactions of this nature. In addition, if the Potential Transaction results in the sale of more than 50% of Pascal’s assets, business or undertaking, as an additional condition to closing of the Potential Transaction, Pascal will be required to obtain approval of the Potential Transaction from its shareholders in accordance with Policy 5.3 of the TSX Venture Exchange. If a definitive agreement is not entered into and the Potential Transaction is not completed, Pascal will retain ownership of US SubCo and all rights to its cannabinoid assets.

If completed, the Potential Transaction would leverage SōRSE’s industry-leading formulation technology with Pascal’s cannabinoid programs for clinical trials. Pascal is the first company to identify a mechanism for cannabinoids to directly benefit cancer immunotherapy, and is also developing PAS-403, a cannabinoid-derived drug targeting glioblastoma. In addition, both of these programs would be funded and developed by SōRSE, which would expedite their path to human clinical trials.

SōRSE has developed a proprietary water-soluble cannabinoid emulsion technology (patent-pending) that enables increased bioavailability, accurate dosing, and over 12 months shelf stability. SōRSE is science and data-driven, with 53 employees, 30 of whom specialize in R&D and Quality Assurance. In 2019, SōRSE secured a $5 million raise and a $10 million strategic partnership with a third party and currently has multiple partnerships which provide profitable revenue streams.

"The potential of Pascal’s cannabinoid programs for clinical applications in cancer in combination with SōRSE’s proprietary emulsification methods offers a promising path for future medical applications of cannabinoid products," said Dr. Patrick Gray, CEO of Pascal Biosciences. "If a definitive agreement is entered into with SōRSE in connection with the Potential Transaction, it would come on the heels of recent, successful collaborative efforts with SōRSE that allowed Pascal to examine SōRSE formulations in several Pascal ongoing studies."

This press release will not constitute an offer to sell or the solicitation of an offer to buy nor will there be any sale of the securities in any state in which such offer, solicitation, or sale would be unlawful. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the United States Securities Act of 1933, as amended, and applicable state securities laws.