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From quarterly earnings to production capacity expansions, Canadian cannabis companies continue to execute and work toward delivering value to its shareholder.
Although companies levered to this burgeoning opportunity have been under significant pressure, we believe the industry is nearing a bottom and this will create several opportunities for strategic investors.
Investors must be selective when looking at the cannabis sector and focus on companies that are led by a great management team, have a strong balance sheet, are differentiated from their peers, and undervalued when compared to the long-term opportunity.
Several Canadian cannabis companies reported developments today and we want to highlight some of these updates for you.
Canabo Enters Agreement to Develop Cannabinoid Treatments
This morning, Canabo Medical Inc. (CMM.V: TSX Venture) (CAMDF: OTCQB) announced a collaborative agreement with Terra Life Sciences to jointly work on the R&D and clinical application of cannabinoid-based treatments for specific conditions. The goal of the agreement is the development of formulations that target specific conditions and illnesses such as chronic pain or anxiety.
The Terra Life Sciences group owns and operates two Health Canada licensed GMP compliant facilities with capabilities to manufacture pharmaceuticals, over the counter nutraceuticals. Terra Life currently manufactures over 100 different products and has a manufacturing capacity of over 2.5 billion softgels per year, with access to an R&D department that includes 8 PhDs on staff.
Health Canada Triples Aphria’s Production Capacity
The long awaited license amendment from Health Canada has finally arrived providing Aphria Inc. (APH.TO) (APHQF) with of 57,000 square feet of additional production space. This will more than triple Aphria’s production capacity of medical cannabis from 2,600 kgs annually to 8,000 kgs annually.
This announcement is part of the company’s Part II expansion and Aphria expects the first harvest to be available for sale in the middle of August. This is a milestone for the company and marks the completion of the second part of a four-part expansion plan which is expected to be completed by July 2018.
Aurora Reports Strong Guidance for Fourth Quarter Earnings
Aurora Cannabis (ACB.V: TSX Venture) (ACBFF) reported its third quarter financial and operational results for the quarter that ended on March 31st this morning and the company issued some very favorable guidance for the upcoming quarter.
Aurora stated that it has been consistently growing revenues and is currently generating more than $2.0 million in revenue a month. During the third quarter, the company recorded net income of $100,000 on $5.2 million in revenue (reported $2.5 million in net income recorded during the same period last year).
Aurora is a company to watch as it continues to follow through on previously announced initiatives such as the construction of an 800,000 square foot production facility, executing on a national and international expansion plan, and improving the business by investing in technology, partnerships, customer service, and sales and marketing.
Aurora said it pro-actively managed new patient registrations in the third quarter to balance demand with its increasing production capacity, and to protect its reputation as a reliable supplier of premium products. As more product becomes available, Aurora expects to see new patient registration increase and see higher patient acquisition rates.
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