MediPharm Settles Commercial Agreement Dispute With Tilray's Hexo For $9M

MediPharm Labs Corp. LABS MEDIF MLZ entered into a settlement agreement on September 29, 2023 to resolve a claim in connection with a commercial agreement dispute, for a total consideration value of $9 million.

On January 24, 2020, MediPharm Labs filed a statement of claim in the Ontario Superior Court of Justice against one of its long-term customers, HEXO Corp., regarding a long-term supply agreement for cannabis concentrates. The claim related to the payment of outstanding amounts due to the company for products shipped to and received by the customer and deposits owed to the company for committed amounts not yet shipped. MediPharm was awarded a favorable summary judgment in the Ontario Court of Justice in July of 2022.

The summary judgment was appealed by Hexo Corp. and a hearing at the Court of Appeal was scheduled for October 12, 2023. In connection with the settlement agreement, Hexo Corp. will abandon its appeal against MediPharm.

"This settlement will allow us to receive $9M in value, which will dramatically strengthen our balance sheet and allow us to invest in many organic and inorganic growth opportunities,” David Pidduck, CEO of MediPharm Labs stated. “We are also excited to establish a long-term relationship with Tilray, a global leader in the cannabis space. This agreement builds on MediPharm's many customers across multiple channels, multiple geographies, B2B segments and Pharma. I would like to thank the Tilray management team for their professional and pragmatic approach to this mutually beneficial settlement, and we look forward to working with them in the future".

Settlement Highlights

Upon the acquisition of HEXO Corp. by Tilray Brands TLRY, MediPharm and Tilray sought a resolution that was favorable to each party and established a long-term supply relationship in connection with the settlement agreement. Under the agreement, MediPharm will receive a total value consideration of $9 million including:

• $3 million immediate cash payment;

• $4.5 million in common shares of Tilray;

• $1 million in Tilray cannabis products, including high-quality flower and extractable bio-mass; and

• $500,000 supply agreement to provide Tilray with MediPharm products and services over four years.

This long-term supply agreement will allow MediPharm to establish a positive ongoing business relationship with a global leader in the cannabis industry. The deal is also expected to benefit Tilray through access to MediPharm's unique pharmaceutical products and services both domestically and internationally, including products produced under the company's US FDA Foreign Drug Site registration and Canadian Pharmaceutical Drug Establishment License.

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Photo: Courtesy of Louis Hansel via Unsplash