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The cannabis sector is in the early innings of a multi-decade growth cycle that should create more millionaires than the tech boom.
Today, want to provide an update on some of the corporate initiatives at some of the leading global cannabis companies.
Leading Biotech Company Announces New CFO
GW Pharmaceuticals plc (GWPH) announced the appointment of Scott Giacobello as Chief Financial Officer. Giacobello will be based out of Carlsbad, California. The previous CFO (since 2012), Adam George is the Managing Director – UK, a newly-created executive role with broad leadership responsibilities for UK operations.
Giacobello served as Chief Financial Officer for Chase Pharmaceuticals Corporation until Allergan acquired it. Chase was a clinical stage biopharmaceutical company focused on the development and commercialization of improved treatments for neurodegenerative disorders. From 2008 through 2015, Giacobello held senior level finance positions at Allergan, most recently serving as Vice President of Finance for Global Research & Development.
Under his new position, George will make sure the company’s UK operations achieve its goals, which include pipeline development, manufacturing scale-up, and European commercialization. He will continue as GW’s Secretary and will provide Giacobello with full support through the CFO transition.
We are favorable on this announcement and see significant long-term upside to current levels. GWPH is one of the best long-term cannabis investment opportunities and if the market continues to see weakness, a great buying opportunity will be created for potential GWPH investors.
Leading Canadian Cannabis Retailer Faces Legal Headwinds
Canopy Growth Corp (WEED.TO) (TWMJF) is facing legal headwinds after a law firm issued a lawsuit on behalf of a patient of Mettrum. The claim is for millions of dollars and states that Mettrum has failed to pay refunds to its customers for all the marijuana products in question.
Although these issues are mostly priced into shares of Canopy, we would not be surprised if WEED.TO and TWMJF traded lower off this news. The company has seen weakness over the last week and WEED.TO is down 5% during that time.
Aurora Announces New Acquisition
Aurora Cannabis’ (ACB.V: TSX Venture) (ACBFF) acquisition of Peloton Pharmaceuticals was approved. Peloton is a late-stage ACMPR-applicant and they are building a 40,000 square-foot cannabis production facility in Quebec. Aurora paid $7,000,000 of cash and stock.
In 2014, the facility received a “ready to build” letter from Health Canada. The company estimates that production is 80% complete and thinks it will be reading for a Health Canada inspection for a production license by the summer of 2017.
Although we are favorable on Aurora’s management team, its current expansion, its improving fundamentals and its balance sheet; the company’s current valuation keeps us on the sidelines.
While we have been very favorable on the company’s inorganic growth initiatives (acquisitions), these have increased the value of the company on a diluted basis. We believe a lot of the expected growth is already priced into Aurora and we plan to re-enter on weakness.
Important Investor Disclosures
Disclosure. Compensated Affiliate. This report was authored by and is property of StoneBridge Partners LLC. All information and data relied upon in drafting this report is publicly available. The author believes and considers its sources to be reliable, but does not guarantee the accuracy or completeness of any information contained in this report. Any and all information, data, analyses and opinions are provided for informational purposes only and is not intended, in any manner, as investment advice. Any projections or other information generated by StoneBridge Partners LLC regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. None of the material contained in this report is intended as a solution or offer to sell or purchase a specific stock or any other investment. This report is not directed to, or intended for distribution or use by, any person or entity that is a citizen, resident or located in any municipality, state, country or other jurisdiction where the distribution, publication, availability, or use of this report is contrary to any governing law or regulation. The securities discussed in this report may not be eligible for purchase and/or sale in certain jurisdictions or by particular individuals. It is important that you check any and all governing laws and/or regulations that may be applicable in your jurisdiction. Investing in securities of issuers organized outside of the United States, including ADRs, entail certain risks. The securities of non-United States issuers may not be registered with, nor be subject to the reporting requirements of the United States Securities and Exchange Commission. Please contact a Financial Advisor for professional adviceregarding any and all securities investments. This report is intended for informational purposes only. StoneBridge Partners LLC’s officers, directors, employees, affiliates, or subsidiaries may have positions in securities covered by StoneBridge Partners LLC. StoneBridge Partners LLC receives compensation from the company and/or has a position in the securities mentioned in this report
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