BioHarvest Sciences announced the signing of a binding Letter of Intent with Royal Emerald Pharmaceuticals, one of only seven Drug Enforcement Administration bulk manufacturing registration holders permitted to grow marijuana in the United States for drug related studies approved by the US Food and Drug Administration. This follows BioHarvest's October 25th announcement that it could produce unique compositions based on a CBD hemp plant that dramatically increase cannabinoid concentrations (by weight) versus the original plant. The 3-year initial term exclusive arrangement allows the supply of BioHarvest cannabis products for research purposes to pharmaceutical companies, research institutions and other DEA registered entities in the United States federally, and opens the door to advance cannabis research initiatives for drug development through cannabinoid compositions not found in nature.

Under the multi-year deal, BioHarvest will be REP's exclusive provider of cannabis that is produced from non- traditional cultivation methods for scientific, medical and research purposes across the DEA-regulated U.S. market. As part of the LOI, REP has participated with $1 million in BioHarvest's convertible loan investment instrument that closed its second tranche on November 15th. Cannabis-based medicines could be a boon to pharmaceutical companies that are threatened by the legalization of cannabis.

A number of studies have demonstrated a reduction in prescription drug use in Medicaid and Medicare populations directly resulting from the legalization of cannabis. Together, REP and BHSC can offer pharmaceutical companies consistent medical-grade cannabis at highly attractive manufacturing costs with signature patentable compositions tailored for addressing specific medical indications. Using a patented technology in which vital plant cells are grown in bioreactors, BioHarvest has the unique ability to produce medicinal grade cannabis with consistent compositions by increasing, controlling, and fine-tuning the concentrations of different major and minor cannabinoids.

This could help researchers to potentially develop previously unattainable cures for major health challenges such as ADHD, pain management, sleep disorders, and anxiety. Dr. Christopher D'Adamo, Director of the University of Maryland School of Medicine's Center for Integrated Medicine, described BioHarvest's technology as a major advancement. Under the LOI, and subject to the obtainment of the Israeli health authorities manufacturing license, the cannabis products supplied by BioHarvest will be produced in the facility in Israel.

The future establishment of a manufacturing facility at REP's premises in California is contemplated under certain conditions. The LOI also includes provisions with respect to future potential development of medical drugs by BioHarvest, REP and jointly.