Federal authorities charged another doctor with health-care fraud after receiving kickback from Insys Therapeutics (INSY) in return for prescribing one of its highly addictive opioid products. In mid-2015, we reported on this story and urged caution with shares of INSY due to our expectation for future legal headwinds. Our prediction proved to be accurate and INSY has fallen by more than 75% since we published this article.
Although we continue to forecast increased volatility with INSY in the near-term, we expect to see the company acquired by a larger biotech firm interested in the cannabis industry this year and see significant upside to current levels. The Pay for prescriptions fallout has created an opportunity for retail investors familiar with INSY and their drug therapies, namely Syndros which got FDA clearance in July of 2016.
Biotech Bets Continue to Pay Off
The biotech sector will be one of the greatest beneficiaries of legal cannabis and companies focused on this opportunity have outperformed the market over the last quarter.
We highlighted Vinergy Resources (VIN.CN) (VNNYF) as a stock to watch after its acquisition of MJ Biopharma in mid-December and the market responded very favorably to this all-stock purchase.
Yesterday, Vinergy announced that it signed a letter of intent to acquire up to 51% of a European multi-national plant breeding company that has $14+ million in annual sales and adjusted EBITDA $2+ million.
Becoming a Global Cannabis Opportunity
The target acquisition has been providing customers with commercial agriculture services for more than 25 years. During 2016, the company shipped 35+ million plant products to its customers and it continues to see incremental growth opportunities.
Through Vinergy, the company will be able to expand into the European cannabis industry. As part of the acquisition, Vinergy will now have access to 2,000+ hemp and cannabis strains with the ability to supply those strains to global customers.
The terms and conditions associated with the transaction were not disclosed but management expects the transaction to close in tranches with the first being it the first quarter of 2017.
A Stock to Watch
We continue to be bullish on Cara Therapeutics, Zynerba (ZYNE) and GWPH as possible acquisition targets by Pharma companies as Jason Spatafora (@Wolfofweedst) stated in a July 26th piece for Forbes. We will keep you updated on progress in this sector as usual…
MAPH Enterprises, LLC | (305) 414-0128 | 1501 Venera Ave, Coral Gables, FL 33146 | new@marijuanastocks.com
