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Cannabis Stock Report: Aphria’s Billions

By Brandon A. Dorfman
Dec 06, 2017

Canada’s cannabis billionaire’s club added another member this week as Aphria Inc. (TSX:APH) shares jumped 16 percent to push the company’s market cap to over $2 billion. As trading closed on Tuesday, the company hit $13.53 per share. Aphria joins a select group of cannabis heavyweights, becoming the third stock to value at over $2 billion behind Canopy Growth Corp. (TSX:WEED), valued at $3.6 billion, and Aurora Cannabis (TSX:ACB), valued at $3 billion.

News of Aphria’s exclusivity deal with retail pharmacy chain Shoppers Drug Mart fueled the recent price spike. The company will supply the pharmacy chain with dried bud and oils for sale to patients via an online portal. Finalization of the deal is contingent on Shoppers Drug Mart receiving licensure from Health Canada. Analysts consider the deal, "a watershed moment for the industry."

Investors are upbeat over the expected legalization of marijuana in Canada come July 2018. Aphria Inc. stock has more than doubled since the middle of October, with analysts raising the 12-month target price to a bit over $13 per share. Nearly all analysts rate the stock as a “buy.” Some are comparing the Shoppers Drug Mart deal to when Constellation Brands Inc. acquired a stake in Canopy Growth.

It is "a major milestone for Aphria and for the sector at large," said one analyst.

TSX Defers Consideration of CanniMed

Why do today what you can put off until tomorrow… CanniMed Therapeutics Inc. (TSX:CMED) announced on Tuesday that the Toronto Stock Exchange (TSX) intends to defer consideration of CanniMed’s shareholder rights plan. TSX will do so as per similar practices and until satisfaction of non-intervention by the Ontario Securities Commission pursuant to National Policy 62-202 - Take-Over Bids - Defensive Tactics, as well as ratification of the plan by shareholders on May 28, 2018. Until then, the plan will remain in effect.

In late November, CanniMed rejected an offer from Aurora Cannabis (TSX:ACB), setting in motion a planned hostile takeover of the company. Further complicating matters was CanniMed’s announcement of the acquisition of Newstrike Resources Ltd. (CVE:HIP) for CAD $248 million. CanniMed enacted the shareholder rights plan to prevent Aurora from obtaining any shares of the company aside from those already offered in the original hostile bid. Aurora claims to have the support of shareholders holding 38 percent of CanniMed stock.

According to a release from CanniMed, shareholders with questions can contact the Company’s strategic shareholder and communications advisor Kingsdale Advisors. Full text of the shareholder rights plan can be found at www.sedar.com.

Aurora Closes Two Deals

Coffee is for closers… Following their late November announcement, Aurora Cannabis Inc.  (OTCMKTS:ACBFF) finalized the double acquisition of Larssen Ltd. and H2 Biopharma this week. Larssen, who is currently involved in 15 cannabis-related projects, is a consultant firm for the engineering and design of greenhouses. H2 is presently completing a cannabis production facility which will produce 4,500 kilograms per year.

As a result of the acquisitions, Aurora established the new subsidiary Aurora Larssen Projects Ltd. as their new greenhouse design and consulting unit. The company expects the new branch to play a vital role in the completion of the H2 Biopharma production facility. Officials from the company assume that the facility has the potential to expand over 46 acres of land in the future.

“These are two important acquisitions for Aurora that clearly show how our growing constellation of trusted partners and subsidiaries accelerate shareholder value creation through strategic synergies,” said Aurora CEO Terry Booth. “The addition of this latest facility will increase our capacity to serve the domestic and export markets, and signals our major commitment to operations in Quebec, Canada’s second most populous province.”

Investor Updates

Poor man want to be rich, rich man want to be king… On Wednesday Medical Marijuana Inc. (OTCMKTS:MJNA) announced that the company had a record-breaking month for revenue in November. With a third-quarter report that showed revenue up 200 percent, the company also surpassed their monthly sales record for the third month in a row. CEO Dr. Stuart Titus is on record as assuring investors the momentum will carry on into the new year.

And the king ain’t satisfied until he rules everything… Tuesday was another good day for Canopy Growth Corp. (TSX:WEED), as shares rose 1.4 percent during trading. The stock closed at CAD$18.25 on a lower than average volume of 1,854,358 shares. Some analysts cut their ratings for the company, with Canaccord Genuity dropping Canopy to a “sell” and Beacon Securities cutting them to a “hold.”

News and Notes

A diamond is forever… On Wednesday Blue Diamond Ventures Inc. (OTCMKTS:BLDV) announced the company had struck a deal with Oricann® Cannabis Grow Lights for the North American privileges to the product. Blue Diamond CEO Josh Alper noted that Oricann grow lights are ideally suited for the cannabis market due to their low operating temperatures, among other things. The company will engage customers in side-by-side tests of Oricann grow lights to document their benefits.

Looking ahead… Emblem Corp. (OTCMKTS:EMMBF) released their upcoming plans for the new year on Monday. President and CEO, Nick Dean, plans to focus on building capacity and increasing patient acquisition in the medical cannabis market. “We intend on leveraging our award-winning customer experience, our significant strengths in the medical segment and our dedicated focus on providing the highest quality products to become a major player in the recreational segment as well,” said Dean.

Quick Bites

But I got debts that no honest man can pay… CV Sciences, Inc. (OTCQB:CVSI) announced on Tuesday payment of the December 2017 installment obligation under its March 1, 2017, Convertible Promissory Note. The company paid in cash, avoiding conversion of the amount by the lender as per the terms of the Note.

Talk about plans, baby I got plenty… Axim Biotechnologies Inc. (OTCMKTS:AXIM) plans to complete the open-label Phase 2 clinical study of CanChew+® 50 mg Cannabidiol in the next 12-18 months. The study researches the effects of the drug on patients with IBS.

Until tomorrow...

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