Premier Diversified Holdings Office

Premier Diversified Holdings Investment in Zed Therapeutics – Is PDH in the Marijuana Biz Now?

What is going on with Premier Diversified and Zed Therapeutics?

Back in September it was announced that PDH ( Premier Diversified Holdings ) picked up some shares in Zed Therapeutics. Specifically 5,144,000 shares for a consideration of $25,720.00. This values the shares around $0.005 CAD. The stake is almost 37% of Zed’s common stock. As a result we get a back of the envelope estimate of $70K total marketcap for Zed Therapeutics. Zed Therapeutics also added Premier’s CEO Sanjeev Parsad to the board of directors.

What is Zed Therapeutics?

At the time of this writing the Zed Therapeutics website appears to be down. A cached google result shows an under construction site:

Zed Therapeutics Home Page
The Zed Therapeutics website appears to be down but a cached version showed an under maintenance site.

Zed is based in Alberta, Canada. The companies self reported focus is “Medicinal Hemp” (vs “Medicinal Marijuana”). This appears to mean that their products will be focused on CBD with low or almost no THC. CBD aka Cannabidiol is found in marijuana and often associated with its healing and pain relieving characteristics. CBD reportedly does not cause a high. The high normally comes from the THC in Marijuana. Hence if you produce a product with CBD but no or little THC then you have something of interest to people who want the relief benefits of Marijuana but don’t want to get “stoned”. According to the press release Medicinal Hemp products have around 0.3% THC or less.

There is not a lot of information about Zed Therapeutics online.

Did Premier Buy the Shares?

Sanjeev provided a little more detail via a discussion on the Corner of Berkshire & Fairfax message board.

The shares were issued to us and 3 other insiders of MyCare who supported the company in the early days.  We (PDH) personally are not going into the medicinal hemp business…MyCare is.  The $0.005 per share is the minimum that has to be charged for the issued shares.  That is not the price of what any other shares will be issued at for ZED Therapeutics.  Cheers!
MyCare (aka GoEvisit ) is a PDH investment. It sounds like MyCare and it’s investors helped Zed earlier and this is equity in exchange for that help. What is not clear what kind of help they provided. Given the stake is close to 37% of the company I would assume the help was via cash. I also expect that this position will probably see pretty heavy dilution in the not so distant future. Parsad alluded to more stock being sold in his message board post albeit at higher prices. Higher prices would obviously increase the mark to market value of PDH’s position but also dilute at the same time.

What does this mean for Premier?

It is hard to say what to make of this investment. Without knowing any deeper details the Zed Therapeutics investment seems to be a speculative position that company acquired in exchange for helping out a startup. This is a very hot space for speculators and traders but it is not clear that anyone in the business has any durable long term competitive advantages.

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