Ann: Zelda to merge with US-based Ilera Therapeutics, page-181

I've been thinking about this merger, and I'm not hating on it - but there is still a lot to be revealed.

I understand the arguments put forward around why it's not right, I do respect that point of view (I always consider amb005).

Especially for traders who were wanting a quick bump off the insomnia results - which is maybe why the SP suffered yesterday.

But for longs, I'm not so sure its a bad thing. Below are a few thoughts.

Looking at it from Illera's point of view. What do they get?

- They get Zelda's suite of clinical trials (insomnia, Autism, opioid reduction) and our pre-clinical research.

- They get our German & UK connections.

- Zelda's team and experience.

- The ability to conduct clinical trials in Australia & our generous R&D grants.

Looking at it from Zelda's point of view.

- We get Illera's "third party ongoing human clinical trials" (sleep, pain, anxiety, calmness & focus). Be great to know what stage these are at? There is some obvious cross over here with Zelda's trials.

- We get the Hope branded products for Autism in the US (ex PA) and the rest of the world.

- We get some key execs that have created a $40M US business in 2 years (even if we don't get the revenue). Osagie is ex GlaxoSmithKline and Dupont Merck which is not bad.

- Interesting Canadian connection - what stage is this at? https://www.newswire.ca/news-releases/ethicann-pharmaceuticals-forms-partnership-with-ilera-therapeutics-for-the-development-and-manufacture-of-botanical-thc-to-treat-chemotherapy-induced-nausea-and-vomiting-cinv--815198205.html

- A potential suite of dermatology products with an LA celebrity doctor, who looks like she has beautiful skin. Hmmm, BOT is my main stock, so I'm not as keen on this, but they seem well behind BOT - IMO.

Partnerships are entered into by companies when both parties feel like they have something to gain (most of the time anyway). Our directors obviously believe we have something to achieve here or they wouldn't do it.

They've had a 6 month 'getting to know you' period where Zelda has been working with Illera, so each side isn't going in completely blind.

The new company will have a lot more going on immediately with the addition of Illera even though there is some cross over.

Although the performance rights are activated relatively cheaply, I can understand why. You don't want dilution happening in 3 years when revenue is > $50M. You want them to achieve those goals quickly, get dilution out of the way - but also create exponential revenue growth. If (a big IF) they can meet those targets swiftly, then the market may not worry so much about dilution as the newly created revenue trajectory will be attractive to investors.

Richard has said he wants to get insomnia to market quickly after phase 2 results - now he can do this fast and with more buy-in from the US.

In the release they say they are releasing multiple products globally - how many and what?

Hope (Autism) has been launched, what is the plan to roll that out in Australia, the rest of the US and elsewhere? How does Hope fit in with the observational trials taking place at present and the symposium?

IMO - I'm not claiming to be right of course - I think there is still a lot we need to know. amb005 could very well be correct, and the SP suffers considerably. If it does, I will probably try and buy a few more in the "hope" that it's only a temporary blip.