In this week's "Rising High," The Fly's recurring series focused on cannabis and psychedelic stock news, The Fly looks back on an acquisition, earnings and analyst views.
KHIRON TO ACQUIRE PHARMADRUG GMBH: Khiron Life Sciences (KHRNF) announced Tuesday that it has entered into an agreement to acquire Pharmadrug GmbH from its parent PharmaDrug Inc. The company said, “Pharmadrug GmbH has been active worldwide for almost 40 years as a manufacturer and wholesaler of medicinal products and active pharmaceutical ingredients. Pharmadrug GmbH is EU-GMP and EU-GDP certified, fulfilling the European guidelines for the highest quality standards and holds a license to handle narcotics in Germany.”
Under the terms of the deal, Khiron will acquire all of the shares of Pharmadrug GmbH from PharmaDrug, in consideration for common shares of Khiron and a promissory note. An aggregate of 5,500,000 Khiron Shares are expected to be issued at closing, at a deemed price per Khiron Share of $0.16. The promissory note will be issued at closing in the principal amount of $1,100,000 and will be non-interest bearing and repayable one year from the date of issue in cash or, at Khiron's option, additional Khiron Shares issued at the 10-day volume-weighted average trading price per Khiron Share on the TSX Venture Exchange at the time of issue. The transaction is subject to customary closing conditions, including the approval of the TSX Venture Exchange. It is expected that the acquisition of Pharmadrug GmbH will constitute an "Expedited Acquisition" under the policies of the TSX Venture Exchange. The parties are targeting a closing on or before the end of July 2022.
CANNABIS EARNINGS: Khiron also reported a first quarter net loss per share of (C$0.03) on revenue of C$4.6M on Tuesday, which compared to a net loss of (C$0.04) on revenue of C$2.8M for the same period last year. Alvaro Torres, Khiron CEO and Director, commented, "Khiron is the top-selling medical cannabis brand in Latin America and one of the top-selling brands in the United Kingdom. Our unique approach will continue to generate double-digit revenue and gross profits quarter over quarter in markets poised to become significant in the coming years. Our focus is to leverage the infrastructure we have built to continue driving sales in our target markets while maintaining discipline in our expenses so we can achieve profitability in the near future, and then continue to look for more growth opportunities in Latin America and Europe."
Meanwhile on Monday, Entourage Health (ETRGF) reported Q1 revenue of C$15.8M with adjusted EBITDA of C$563,000, which compared to revenue of C$13.5M and an adjusted EBITDA loss of (C$432,000) in Q4. “Our focus on driving sales for top-performing products while rigorously adhering to our enhanced financial discipline will support our future growth even as we continue to strengthen our balance sheet,” said Vaani Maharaj, CFO, Entourage. “Revenue from all our sales channels is consistently growing, driven by expanded product availability across retail outlets, broader distribution channels, consistent flow-through of higher-margin products and customer-patient acquisition initiatives. By continuing to improve our operating efficiencies in 2022, we fully expect to see expanded margins while we continue to propel revenue growth through increased sales and market share gains.”
On Thursday, Canaccord analyst Shaan Mir downgraded Entourage Health to Hold from Speculative Buy with a price target of C$0.05, down from C$0.40. The analyst said the company's debt overhead is likely to present operational challenges.
On Friday, Canopy Growth (CGC) reported a Q4 loss per share of (C$1.46) on revenue of C$126.12M, which compared to a loss per share of (C$1.85) on revenue of C$167.38M for the same period last year. The company also said it expects to be adjusted EBITDA positive in 2024. "Canopy Growth is building the industry's leading portfolio of premium brands across North America. We've taken concrete steps to advance this ambition by strengthening our positioning in Canada, and further bolstering our U.S. THC ecosystem through the addition of two high performance brands in Wana Brands and Jetty Extracts. In the fiscal year ahead, we will remain focused on growing our market share in the key segments that will drive profitable growth and continuing to scale our premium brands across North America,” said David Klein, CEO.
Following the report, Benchmark analyst Mike Hickey downgraded Canopy Growth to Sell from Hold with a C$5 price target following the "disappointing" report that saw the company miss consensus on both revenue and profitability. The cannabis business continues a prolonged contraction and Hickey thinks the cannabis market in Canada will continue to struggle while adding that he doesn't see a near-term federal legalization path for Canopy in the U.S. He is not convinced that Canopy can grow premium cannabis at scale in Canada and views it as a sub-par operator versus U.S. MSO cannabis executives.
Meanwhile, Alliance Global Partners analyst Aaron Grey lowered the firm's price target on Canopy Growth to C$7 from C$8 and kept a Neutral rating on the shares after the company reported fiscal Q4 sales that came in below estimates and an adjusted EBITDA loss that was "well below estimates." Efforts to turn trends around in Canada continue and management is increasingly positioning itself for an eventual U.S. presence with the recent Jetty Extract acquisition, but he continues to await more consistent sales growth and a path to profitability.
Additionally, Piper Sandler analyst Michael Lavery lowered the firm's price target on Canopy Growth to $4 from $6 and keeps an Underweight rating on the shares. Canopy's sales trends remain under pressure across key parts of its business and its profitability is still "years away," Lavery said.
FLORA GROWTH LAUNCHES JUSTCBD ON AMAZON UK: Flora Growth (FLGC) announced Tuesday that its wholly-owned subsidiary JustCBD will be launching its line of Novel Foods registered CBD products on Amazon.co.uk. “With health and wellness playing an increasingly important role in customers’ lives, we are excited to increase the selection of quality CBD products offered to Amazon customers in the UK,” said Hussein Rakine, CEO of JustCBD. “The JustCBD team looks forward to working closely with Amazon to expand our product offering to other countries as our partnership and brand presence in the United Kingdom grows.” JustCBD’s product line is expected to launch on Amazon.co.uk in June of 2022 and will make available a portfolio of JustCBD’s gummies and tinctures.
INNOVATIVE INDUSTRIAL PROPERTIES PRICE TARGET LOWERED: JMP Securities analyst Aaron Hecht lowered the firm's price target on Innovative Industrial Properties (IIPR) on Thursday to $190 from $300 but kept an Outperform rating on the shares. The stock is down 37% over the past two months, reflecting investor concerns with two of its top 10 tenants - Parallel and Kings Garden - as these account for 19% of its net operating income, the analyst said. Hecht added however that while a higher risk premium on the operators in question is appropriate at this time, he also believes that the underlying value of Industrial Properties' portfolio is justified based on improvements in place, which support his net asset value estimates.
INTERCURE, COOKIES LAUNCH FLAGSHIP PHARMACY: InterCure (INCR) announced Thursday the grand opening of its flagship Cookies pharmacy in Be'er Sheva. The pharmacy is located in the center of Be'er Sheva in front of City Hall, in a building that covers an area of over 1,000 square meters. The company said, “The pharmacy premises and staff are uniquely adapted to serve Israel's rapidly growing medical cannabis patient community, which includes, among other things, the largest pharmacy safe room in Israel, with a capacity to store over a ton of medical cannabis products.”
OTHER CANNABIS/PSYCHEDELIC STOCKS: Publicly-traded companies in the space include Acreage (ACRHF), Akerna (KERN), Aleafia (ALEAF), Atai Life Sciences (ATAI), Awakn Life Sciences (AWKNF), Audacious (AUSAF), Aurora Cannabis (ACB), Ayr Wellness (AYRWF), BC Craft (CRFTF), Body and Mind (BMMJ), CanaFarma (CNFHF), Cannara Biotech (LOVFF), RIV Capital (CNPOF), Chicago Atlantic (REFI), Columbia Care (CCHWF), Compass Pathways (CMPS), CordovaCann (LVRLF), Clever Leaves (CLVR), Cresco Labs (CRLBF), Cronos Group (CRON), CV Sciences (CVSI), Curaleaf (CURLF), CURE Pharmaceutical (CURR), Delic Holdings (DELCF), Delta 9 (DLTNF), Fire & Flower (FFLWF), FluroTech (FLURF), General Cannabis (CANN), Goodness Growth (GDNSF), Greenlane (GNLN), Green Thumb (GTBIF), GrowGeneration (GRWG), Harborside (HBORF), Hemp (HEMP), HEXO (HEXO), High Tide (HITI), IM Cannabis (IMCC), India Globalization Capital (IGC), Indiva (NDVAF), Wellbeing Digital (KONEF), Lowell Farms (LOWLF), Lotus Ventures (LTTSF), MediPharm (MEDIF), MedMen (MMNFF), MJardin Group (MJARF), Neptune Wellness (NEPT), NewLake Capital (NLCP), Thermic Science (ENDO), Organigram (OGI), Planet 13 (PLNHF), Relmada (RLMD), RYAH Group (RYAHF), Sproutly (SRUTF), Stem Holdings (STMH), Small Pharma (DMTTF), Skye Biosciences (SKYE), Sundial Growers (SNDL), Sunniva (SNNVF), TerrAscend (TRSSF), Tetra Bio-Pharma (TBPMF), Tilray (TLRY), Trulieve (TCNNF), Tryp Therapeutics (TRYPF), Valens (VLNCF), Verano Holdings (VRNOF), Village Farms (VFF), Wesana Health (WSNAF), Zynerba (ZYNE) and 4Front Ventures (FFNTF).
Innovative Industrial Properties
+1.23 (+0.92%)
Flora Growth
+
Relmada Therapeutics
+0.45 (+2.50%)
Compass Pathways
+0.03 (+0.35%)
Atai Life Sciences
-0.06 (-1.64%)
ZYNE
+
Trulieve Cannabis
-0.519479 (-3.51%)
Tilray
+0.205 (+4.88%)
IGC Pharma
+
Green Thumb Industries
-0.2 (-1.79%)
Goodness Growth
-0.0082 (-0.52%)
Trees Corporation
+
Cronos Group
+0.085 (+2.97%)
CannTrust
+
CV Sciences
+
Aurora Cannabis
+0.06 (+3.83%)
InterCure
+ (+0.00%)
Canopy Growth
+ (+0.00%)
Entourage Health
+
Khiron Life Sciences
+