According to the statement on Tuesday, the Hiku board unanimously determined the Canopy proposal is a “superior” alternative to the WeedMD deal.
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The agreement proposal sees that Hiku shareholders will get 0.046 of a Canopy share per Hiku share–the equivalent of C$1.91 per Hiku share–representing C$269.2 million in valuation for the deal.
Alan Gertner, CEO of Hiku, said this transaction is an “incredible step” for the company.
“Ultimately, together we will continue to build one of the world’s most engaging and successful cannabis retail and brand business,” Gertner said in a statement.
Hiku shareholders will obtain a 33 percent premium from the proposed transaction with Canopy from the 20-day volume weighted average prices for the two companies.
An additional 21 percent will also be given based on the closing price of the two companies from yesterday’s trading session.
WeedMD confirmed the split with Hiku in a statement of its own. The company will obtain a C$10 million termination fee for its previous deal with Hiku, advanced by Canopy.
“[A]ll of our commitments are fully funded and we’re in a solid position financially and operationally to continue executing and delivering on all of our goals and objectives,” WeedMD CEO Keith Merker said.
Prior to Tuesday’s announcement, WeedMD obtained a supply agreement on July 5 for and undisclosed amount of legal cannabis product with the province of Alberta for the first year of adult-use sales starting on October 19.
The Investing News Network (INN) reported on a research note issued in June from Mackie Research Capital analyst Greg McLeish, who had reiterated his “Buy” rating to Hiku’s shares based on the proposed merger with WeedMD.
Investor takeaway
Branding has gained recognition as a key metric for investors to evaluate cannabis companies in the public sector.
This deal and confirmation of value by Canopy only sees to strengthen the position of branding in the cannabis space as the sector continues its maturation.
Overall, the cannabis industry has seen an uptick in acquisitions as companies seek to be fully prepared for the start of legalization in Canada.
At the end of Tuesday’s trading session. the market reaction for all the parties involved were down. Hiku declined 0.68 percent to close at C$1.46, WeedMD was down 0.49 percent to C$2.05, and Canopy dipped 1.52 percent to close at $C38.10.
Don’t forget to follow us @INN_Cannabis for real-time news updates!
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Hiku Brands is a client of the Investing News Network. This article is not paid-for content.
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“Canada has helped bring cannabis into the mainstream more than any country, first by implementing sensible medical laws, and now by passing the Cannabis Act and ending prohibition for all adults,” Alex Rogers executive producer of the ICBC said in an emailed statement prior to the show.
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If you missed the show, don’t worry – below is an overview of the show’s key highlights.
Consulting firm warns cannabis investors on potential bubble
Nic Easley, CEO of 3C Consulting, a strategic advisor for cannabis ventures, warned investors in his panel to be aware of an incoming bubble which will be worse, according to him, than the infamous dotcom bubble of the late ‘90s.
“To call the Canadian public cannabis market a bubble is a third of an understatement, because it’s three times worse than the dotcom bubble,” Easley said.
Despite the gloomy prediction, the consulting firm executive told the room that in his estimation, Canada– in the next two to three years–will be what he called the ‘glory days’ for the public markets.
Like other experts Easley indicated there will come a point where the product produced by Canadian LP’s will be plenty to service the entire Canadian market. These companies will need to diversify quickly in order to stay relevant in the eyes of investors, Easley said.
“If you buy 50 Canadian public companies right now, you are making a huge mistake as an investor,” Easley warned investors as he described the potential impact of a bubble crashing in Canada.
M&A activity strategies
During a panel focused on the recent trend of mergers and acquisition activity in the cannabis space Anthony Holler CEO of Sunniva (CSE:SNN) told the audience his company doesn’t have the same option as some of the larger public players to simply acquire assets and figure out how they integrate into their overall strategy later.
“We can’t do that, that’s impossible for us to do so we have to try and understand the work, understand where the market is going and say ‘we don’t have that skill set,’” Holler said.
Holler added he’s seen through these acquisitions people involved with them don’t end up as part of the transactions. Instead, he said, his strategy is to bring in the people at the center of his acquisition.
“We don’t buy people and then say ‘why don’t you get lost, we don’t need you,’” Holler said of M&A strategy.
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Cannabis’ growing presence in public markets
The second panel of the day was hosted by the director of listings development for the Canadian Securities Exchange (CSE), Anna Serin. The CSE seen a rush of cannabis listings thanks to its disclosure-based approach when it comes to US focused companies seeking to raise capital in Canada.
During the panel Serin said the CSE has 71 current cannabis issuers which represent a C$5.5 billion market cap. She told the audience over the past 12 months, CSE-listed companies have raised nearly C$2 billion with 58 percent of it in the cannabis sector.
“One of the biggest concerns from people listing with us was our liquidity, the cannabis sector has shot us through the roof and put us on the map,” Serin said.
Yasmin Gordon, a senior investment advisor for Canaccord Genuity told the room she has noticed a trend of less risk when it comes to financing options for cannabis companies. The entry of Canadian banks into the financing sector for cannabis companies adds to the de-risking trend.
The group of speakers for the CSE-led panel was asked about the high valuations cannabis companies are seeing when a lot of questions remain on the actual size of their revenues and potential legitimate growth.
Arthur Kwan, managing partner with Athena Capital Advisors and CEO of CannaIncome Fund Corporation, said he sees these companies still in the emerging phase with a bulk of their revenues arriving later–but still coming.
Kwan explained when looking at metrics such as revenue and earnings before interest, tax, depreciation and amortization (EBITDA) compared to previous years, prices for these companies start to become “a bit more reasonable… still expensive, but justifiable.”
For more stories coming out of the ICBC show floor be sure to follow @INN_Cannabis for all the latest in the cannabis public market.
Don’t forget to follow us @INN_Cannabis for real-time news updates!
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
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If you’re looking to invest in stocks, the TSX Venture 50 is always a good place to start.
With that in mind, every year the TSXV releases a list of companies it considers its top 50. Companies are chosen based on three equally weighted criteria: market cap growth, share price appreciation and trading volume.
That said, biotech and pharmaceutical companies weren’t as prominent on this year’s list. Instead, here the Investing News Network highlights the impact medical cannabis companies had in entering this space.
Here’s a closer look at those companies.
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Aphria (TSXV:APH)
Aphria is a major player in the medical marijuana sector throughout Canada. Their products include various types of cannabis, greenhouse grown, according to Health Canada’s guidelines.
In late April 2017, the company raised $100 million in funds to expand their production–$75 million of which is a bought deal financing, while the remainder is a debt financing over a five-year loan. According to the press release, 50 percent of the proceeds are expected to go towards the unfunded portion of Part IV Expansion, while the balance will go towards the working capital needed to support Aphria once the Part IV expansion is done.
Emerald Health Therapeutics (TSXV:EMH)
Licensed under the Access to Cannabis for Medical Purposes Regulations (ACMPR), Emerald Health Therapeutics cultivates medical marijuana in addition to selling a variety of dried cannabis and oils. The company’s wholly-owned subsidiary, Emerald Health Botanicals is a licensed producer of medical marijuana in Canada.
In mid-April 2017, the company expanded a previously announced bought deal financing from Eight Capital to $24.4 million.
OrganiGram (TSXV:OGI)
OrganiGram came onto the scene in 2013 as an organic medical cannabis company. Now, it is in the middle of a number of controversies. Following a recall for products sold in 2016, the company is preparing to defend itself in a lawsuit over the discovery of pesticides in their crops.
That said, in early April 2017, the company announced it had entered into a letter of intent to acquire Trauma Healing Centers. According to the press release, the two companies have worked together over the last two years in some capacity, and look forward to growing in the fast-paced Canadian cannabis sector.
Ceapro (TSXV:CZO)
Ceapro is a biotechnology company that provides “green” ingredients to manufacturers of personal care products, nutraceuticals, and developers of therapeutics. The company is developing proprietary extraction technology and its applications to the production of extracts from oats and other renewable plant resources.
In early April, the company released its 2016 financial results, highlighting total sales of $13,674,000, compared to $10,667,000 in 2015, representing a 28.2 percent increase over the year.
Don’t forget to follow us @INN_LifeScience for real-time news updates!
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
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**This article is updated each year. Please scroll to the top for the most recent information.**
The release of the TSX Venture Exchange’s TSX Venture 50 list is always exciting. Put out annually, it ranks the exchange’s strongest performers across five sectors: cleantech and life science, diversified industries, mining, oil and gas and technology.
Companies are chosen based on three equally weighted criteria: market cap growth, share price appreciation and trading volume. On average, the companies on this year’s list delivered a return of 72 percent in 2015.
For investors interested in the life science space, the TSX Venture 50 list may be a good place to start. This year’s list cleantech and life science category includes five life science companies, three medical marijuana companies and two cleantech companies. Here’s a brief look at the five life science companies that made the list, and an overview of how they performed in 2015.
1. VANC Pharmaceuticals (TSXV:NPH)
VANC Pharmaceuticals has a mandate that includes providing Canadians with affordable generic pharmaceuticals and over-the-counter healthcare products. Currently, the company has a several over-the-counter products, including Ferroheme, a bioidentical hemoglobin iron protein complex that helps with iron deficiency and anemia, and Pedia-safe, a polyvitamin drop for infants and children.
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Last year, VANC’s trading volume was 241,384,075. Meanwhile, its share price rose 119 percent during 2015, while its market cap grew 191 percent.
2. Tribute Pharmaceuticals Canada
In December 2015, Tribute Pharmaceuticals Canada and POZEN announced plans to merge and form Aralez Pharmaceuticals (TSX:ARZ,NASDAQ:ARLZ). The merger was completed at the beginning of February, and Aralez began trading later that month. The combined company is a specialty pharmaceutical company focused on cardiovascular issues, pain and other specialty areas.
Though Tribute is no longer trading, it nevertheless made this year’s TSX Venture 50 list, recording a 176-percent change in market cap in 2015. The company also saw its share price increase by 129 percent and had a 2015 trading volume of 140,738,060.
3. Medicure (TSXV:MPH)
Also a specialty pharmaceutical company, Medicure is focused on the development and commercialization of therapeutics for the US hospital market. In particular, the company has honed in on acute cardiovascular care, which it serves with AGGRASTAT. AGGRASTAT has been shown to reduce the rate of thrombotic cardiovascular events in patients with non-ST elevation acute coronary syndrome.
In 2015, Medicure saw its market cap increase by 155 percent. Meanwhile, its trading volume was on the lower side, at 8,038,156, and its share price was up 116 percent for the year.
4. bioMmune Technologies (TSXV:IMU)
bioMmune Technologies is engaged in harnessing the body’s immune system to fight cancer and autoimmune diseases. The company uses proprietary screening systems to identify novel compounds that are able to restore immune recognition and kill cancer cells. It also exploits the regulation of calcium channel activity, an important factor in controlling cells involved in the immune system. Finally, it is actively finding molecules that regulate CD74, a protein involved in the immune system’s ability to fight antigens.
Last year, bioMmune’s share price increased by 120 percent, while its share price rose 60 percent. Its trading volume came in at 8,444,124.
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5. Sernova (TSXV:SVA)
Clinical-stage Sernova is working on developing products for the treatment of chronic disease; it uses therapeutic cells transplanted into an implanted medical device in order to replace missing hormones or proteins. The company’s Cell Pouch System offers a versatile treatment for a number of chronic diseases. The company is currently conducing a Phase I/II clinical study in subjects with diabetes.
In 2015, Sernova’s trading volume was 36,704,930. The company’s market cap was up 118 percent, while its share price rose 100 percent.
Securities Disclosure: I, Vivien Diniz, hold no direct investment interest in any company mentioned in this article.
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2016 TSX Venture 50: Best Mining Companies to Invest In?
2016 TSX Venture 50: Best Technology Stocks to Invest In?