Healthcare minnow eSense signs two JV Agreements in four days; stock ends ~27% higher

Summary

• Healthcare companies are stepping up to the plate amid the COVID-19 pandemic, including small-cap healthcare players.
• The infectious disease has given rise to multiple opportunities for the healthcare sector, including the need for a treatment/vaccine, test kits, and personal hygiene products.
• Recently, a life sciences company, eSense-Lab signed two JV agreements.
• The JV agreement with Wise Winery aims to manufacture and sell terpenes infused sanitisers.
• The Company also entered a JV agreement with ANC Enterprises for developing and market a new range of hand sanitiser, skincare, and hair care products using terpenes.

The ongoing COVID-19 turmoil has proved to be an opportunity for healthcare companies. While some burgeoning healthcare players are engaged in the development of vaccine or treatment, some diagnostic companies are coming up with rapid virus detection test kits.

At this time, prevention is extremely important to weather the storm of COVID-19, and some healthcare companies are playing a significant role in this area by manufacturing sanitisers, masks, gloves, and other protective equipment such as PPE kits.

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With this backdrop, let us look at one ASX-listed healthcare minnow that has been actively pursuing opportunities to tap the unmet need and whose share price was up by an impressive 26.667% today.

Let us zoom lens on eSense-Lab Limited.

On 19 June 2020, ESE stock closed at A$0.019, surging by a remarkable 26.667% compared to the previous close. The Company has a market cap of A$2.85 million, with nearly 189.68 million shares trading on the ASX.

About eSense-Lab

ASX-listed, Israel-headquartered life sciences company eSense-Lab Ltd (ASX:ESE) is creating virtual plant-based formulations for medicinal as well as recreational use. The Company combines phytochemical characterisation, genetics, mRNA expression, along with unique formulations for generating broad models of rare or high value plants.

Moreover, eSense has developed virtual cannabis, having all the characteristics of the actual plant, with no psychoactive and heavily regulated cannabinoid compound, for bulk consumer consumption.

With R&D expertise in multiple areas, eSense-Lab has distinctive reverse-engineering abilities and game-transforming techniques, putting ESE at the forefront of the growing worldwide terpene market.

eSense entered into a binding JV agreement with Sassey Pty Ltd

On 18 June 2020, eSense-Lab Limited stated that the Company had entered into a binding joint venture agreement with Sassey Pty Ltd, the owner of Wise Winery. Concerning a limited supply of ethanol-based sanitisers in Australia, Wise Winery, recently, commenced manufacturing hand and surface sanitisers by using ethanol distilled from its own distillery in Eagle Bay, Australia.

Under the terms of the agreement, Wise Winery shall expand its sanitiser offerings to comprise ethanol sanitisers that are infused with distinctive terpenes of eSense.

eSense will offer its proprietary terpene mixes to the JV, under the agreement, precisely selected for their anti-viral potentials, and a cash contribution of nearly A$200,000 for operational expenses in JV. Moreover, Wise Winery will contribute A$200,000 of sanitiser components (base alcohol sanitiser along with packaging) to the joint venture. The JV will be owned equally by both eSense and Wise Winery. If necessary, eSense will make extra loan funds available to the JV for working capital purpose.

Additionally, on behalf of the JV, Wise Winery will also contract manufacture the sanitiser infused with terpenes. This deal will look into the new products extensively available through a distribution network of Wise via its online store.

Moreover, this agreement intends to manufacture a new range of liquid sanitisers infused with proprietary terpene mix of eSense. This joint venture to place its 1^st order of almost 2 million units of terpenes for infusing into sanitisers and this will make a revenue of nearly US$600,000 for eSense.

However, it is not projected that the terpenes infused sanitiser products will require approval from the Therapeutic Goods Administration (TGA) because they will be categorised as cosmetics.

It is expected that this order will only be partly financed upfront to an amount of A$150,000-A$200,000 and the balance of the order will be paid for from the profits of sales of the product.

With this JV, eSense will supply terpenes on a non-exclusive basis for an Initial term of 10-year.

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eSense entered a binding JV with ANC Enterprises

On 15 June 2020, eSense disclosed that it had entered a binding joint venture (JV) agreement with completely (100%) Australian-owned ANC Enterprises Pty Ltd. With this deal, ANC will formulate and manufacture several skincare, haircare, and hand sanitiser products containing proprietary terpene mixes of eSense.

Under the collaboration, eSense will offer specific terpenes exclusively manufactured for every product type, and ANC will be employed in the production of the resulting products.

In this JV, eSense will own 95% and rest 5% will be owned by ANC, based on initial cash contribution of A$95,000 by eSense and A$5,000 by ANC.

Moreover, ANC shall have a twelve-month option to expand its holding up to 50% through additional capital support. It is expected that the JV will pay an upfront amount of nearly A$100,000 for the terpenes and the rest after the sales of the products.

Bottom line:

With these recently signed joint venture (JV) agreements, eSense will surely cut the mustard for its long term shareholders. It is noteworthy that eSense has stepped up to the plate amid COVID-19 turmoil by providing terpenes infused sanitiser across the country.