There's been big news from MediPharm Labs Corp (TSXV: LABS) this week, after it announced that it had entered into a multi-year supply agreement with the Cronos Group (NASDAQ:CRON).
MediPharm Labs will supply Cronos Group with approximately $30 million of high-quality private label cannabis concentrate over 18-months, and, subject to certain renewal and purchase options, potentially up to $60 million over 24-months.
In addition, Cronos Group has selected MediPharm Labs' state of the art extraction facility in Barrie, Ontario, as a preferred partner to fulfill certain of its processing needs, under a separate tolling arrangement.
"With the continued evolution of the Canadian cannabis industry, we are excited to partner with Cronos Group in their journey to launch new products and secure MediPharm Labs' high-quality private label supply of concentrates."
-Patrick McCutcheon, CEO, MediPharm Labs.
MediPharm Labs also published strong Q1 2019 results this week, showing revenue of $22 million, a 115% increase over Q4 2018.
The company secured Gross Profits of $6.9 million—with a Gross Margin 31%—and an adjusted EBITDA of $4.3 million, demonstrating an 102% increase over the $2.1 million accrued in Q4 2018. Q1 revenue includes $7.6 million revenue for initial shipment of large private label cannabis oil contract with a large Licensed Producer.
MediPharm Labs has also received over $7 million in cash proceeds from warrant exercises subsequent to March 31, 2019.
THC Global Group Ltd (ASX:THC) was granted a medicinal cannabis export license by the Australian Office of Drug Control (ODC), boosting shares by 8% intra-day.
Securing the licence is a key milestone in developing a future export pathway of THC Global's Australian cannabis and places the company in an increasingly stronger position to take advantage of its industry leading manufacturing capability and global reach.
The company also confirmed its binding intention with EVE Investments Ltd to lease additional USDA certified organic land to bring the total leased land for the Northern NSW cannabis cultivation site up to a potential 150,000 square metres. The lease will be subject to THC Global confirming that the additional land is suitable for lodgement of a cultivation licence application with the ODC.
"Additionally, our success in using our bio-pharmaceutical manufacturing facility for other complex botanical extractions, including EVE's tea-tree product, confirms that we may be able to explore the development of novel cannabis-blended formulations in the near future."
– CEO of THC Global, Ken Charteris
The Supreme Cannabis Company (TSX: FIRE) has also been busy this week, after it released impressive Q3 2019 results, recording a net revenue of $10 million, a 382% increase from Q3 2018 ($2.1 million) and a 29% increase from Q2 2019 ($7.7 million).
The revenue boost was driven in-part by a 63% increase in sales revenue from adult-use recreational markets quarter over quarter.
During the quarter the company also worked with MediPharm Labs—a leading cannabis extractor—to produce its premium oil products line. Under MediPharm and Supreme Cannabis' three-year contract, 7ACRES will supply a minimum of approximately 1,000 kg of high-quality cannabis trim per year as input to MediPharm for the extraction and production of premium, high-terpene cannabis oil products.
"Our strong foundation built on cultivation IP, genetics and an excellent reputation among consumers leaves us well positioned to enter new and exciting product segments where we have a proprietary advantage over our competition. We approach our year end with the senior leadership team, strategic agreements and brands in place to drive growth into fiscal 2020."
–CEO of The Supreme Cannabis Company, Navdeep Dhaliwal
Supreme Cannabis also announced that its wholly-owned subsidiary, 7ACRES, has obtained Health Canada approval for five additional flowering rooms totalling 50,000 square feet of additional production space at its facility in Kincardine, Ontario.
The facility's annual production capacity estimate will increases from approximately 26,250kg to 33,580kg once the additional flowering rooms are complete.
However, as noted previously, Supreme Cannabis expects to realize further production efficiencies following the licensing of all 25 flowering rooms, whereby 7ACRES' potential capacity is anticipated to reach approximately 50,000kg
AusCann (ASX:AC8) announced that they're dumping the growing side of their business in favour of pill manufacturing. They've bet that hard shell capsules—pills that look like Panadol mini-caps—are the future since doctors are more likely to understand a pill than an oil.
The company spent $5.25m on an R&D facility in Perth in January, and will maintain a small cultivation unit for research purposes only. Although this may seem like a shocking decision, AusCann's strategic shift was already underway by the middle of 2018.
The company had a prototype pill by August, a manufacturer by November, and promises of the first pills for chronic pain on the market by June this year.
"We are not going to be growers, that's not our main aim. We'll have genetics… and we'll have some product that we'll grow in our West Australian site… but we're a pharmaceutical company and that's how we want to identify ourselves."
-CEO of AusCann, Ido Kanyon
The Canadian licensed cannabis producer, The Green Organic Dutchman (TSE:TGOD) also had an exciting week, after it formed a partnership with Califormulations to bring CBD-infused beverages to the U.S. market.
The company will collaborate with Califormulations to launch a line of TGOD-branded, organic, hemp-based CBD beverages, including shots, elixirs, ready-to-drink and sports recovery drinks that help consumers relax, sleep or become energized, depending on their needs.
"The focus is on creating a route to market for global beverage companies to be able to do formulation innovation work, as well as have a pilot bottling line and R&D capabilities."
-CEO of TGOD Brian Athaide
According the CEO of TGOD, Brian Athaide, beverages are a key growth opportunity for cannabis and hemp companies, and this partnership will give the business advantages in many areas.
The company also announced that one of its' wholly-owned subsidiaries, HemPoland, has entered into an agreement with Mediakos UG to be the exclusive distributor of CannabiGold—its premium hemp CBD brand—for the German pharmacy market.
HemPoland's CannabiGold products will now be available in pharmacies across Germany as well as through their respective e-commerce platforms, including Germany's ten largest online pharmacies.
iAnthus Capital Holdings, Inc (CSE: IAN), announced the unveiling of its national retail brand, "Be." at Canaccord Genuity's 3rd Annual Cannabis Conference.
The company plans to open its first Be. flagship store in Brooklyn in early 4Q 2019. Rebranding of existing stores will begin following the Brooklyn opening.
Additional flagships stores are planned for Miami, Atlantic City, Las Vegas and Orlando.
"Be. was created to align with what we see as the need for a cannabis retail experience where consumers can simply "Be. You". Be. is a place to empower self-expression and being a better version of yourself. Be. is a place where you will smile again."
–Chief Marketing Officer of iAnthus, Neil Calvesbert
MMJ Group Holdings Ltd (ASX:MMJ) will launch a new portfolio market capitalisation strategy after calculating its unaudited net tangible assets (NTA) as 40.01 cents post-tax, as of April 30, 2019. The NTA of a company is used as a valuation metric and with MMJ shares trading on the ASX at 23.5 cents, the share price represents a 70% discount to MMJ's NTA.
At the beginning of the year, MMJ's post-tax NTA was calculated at 22.35 cents illustrating the growth in NTA to date in 2019. The company has already confirmed it is working to reduce the gap between the share price and its net asset value.
MMJ went onto say that it believes it offers a compelling investment opportunity in the cannabis sector, while also noting that it is well-funded with $25 million in cash.
CannTrust Holdings Inc (TSX:TRST) also released financial results for the first quarter ending March 31, 2019 this week.
The company recorded quarterly revenue of $16.9 million, a 115% increase over the first quarter of 2018, with 67% being represented by the medical channel and 33% through the recreational channel.
Total active patient count reached 68,000 at March 31, 2019, a 70% increase over the first quarter of 2018. CannTrust sold over 3,000kg of dried cannabis equivalent, a nearly 200% increase over the prior year, at an average net price of $5.47 per gram.
"The CannTrust team delivered exceptional operational growth in the first quarter, with harvested production of over 9,400kg. This is a 96% increase in production over the prior quarter and reflects the impact of the investments made into our facilities, as well as process improvements to increase throughout."
– Peter Aceto, Chief Executive Officer.
Tilray Inc (NASDAQ:TLRY) posted strong results for Q1 2019, reporting a revenue increase 195.1% to $23.0 (C$31.0) million, compared to the first quarter of last year.
This was driven by the legalization of Canadian adult-use in 2018, the addition of hemp food sales from the Manitoba Harvest acquisition during the quarter, and strong growth in international medical markets. Excluding excise tax, revenue was $21.5 million.
Gross margin increased sequentially to 23% from 20% in the prior quarter. Gross margin in the first quarter of 2018 was 50%. Gross margin continues to be impacted by increased costs incurred with the ramping up of cultivation facilities in Canada and Portugal and acquiring third party supply.
Aurora Cannabis Inc (TSX: ACB), announced its financial and operational results for the third quarter ending March 31st, 2019.
The company experienced continued solid revenue growth averaging 20% across all key markets, driven by successful scale up of production and continued strong performance across the Canadian consumer, and Canadian and International medical cannabis markets.
Cash cost to produce per gram declined 26% to $1.42 per gram, as the initial impact of Aurora Sky's scale and efficiency began to be realized. Production volume increased 99% to 15,590 kgs, up 1,200% year-over-year. The increase in production accelerated through the quarter, with the majority of the harvested volume realized in the last half of the quarter.
Aurora also recorded an adjusted EBITDA loss improvement of 20% to $36.6 million, as the company continues to track towards achieving EBITDA positive results beginning in Q4 2019 as operations ramp up.
"I'm exceptionally proud of our company and team as Aurora continues to deliver on our domestic and international growth strategy. We achieved solid revenue growth and strong operating results in a quarter proven challenging across the industry. We are laser focused on building a long-term sustainable business."
– CEO of Aurora, Terry Booth
Watch this space for future weekly updates.
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