Canadian cannabis leader Canopy Growth announced that it closed an approximately $7 million stock offering for the recently formed Canopy Health Innovations.
Canopy Health is partly owned by Canopy Growth and private investors. The company operates as a pure research incubator whose mission is to increase the understanding of cannabis based therapies through research, to drive product innovation and to develop an intellectual property portfolio that can be built into commercial opportunities for Canopy Growth and its subsidiaries.
Plans to Commence Clinical Research Studies
Canopy Health will use the proceeds to establish general operations and begin clinical research into the effectiveness of clinically ready whole plant cannabis drug formulations and dose delivery systems on specific indications. The company will conduct clinical research in partnership with licensed third parties, including Canopy Growth.
Canopy Growth CEO Bruce Linton said his intention with Canopy Health is to build an extension of the business that is dedicated to product specialization. By defining how to apply specific cannabis profiles and delivery systems to certain conditions, Canopy will be able to drive physician acceptance and grow the market at the same time.
Pursuant to agreements between the companies, Canopy Growth will act as a primary supplier of cannabis products for clinical research. It will also act as a research partner through its Tweed Inc. subsidiary which recently acquired a Dealer’s License from Health Canada. This license allows Tweed to possess cannabis and cannabis by-products for the purposes of analytical testing. It also allows the company to use these products for the commercialization of intellectual property by Canopy Health.
Canopy Hires a Founding President and Director
Canopy Growth (CGC.TO) (TWMJF) also announced that Marc Wayne will join Canopy Health as its founding President and Director. Wayne is thought of as a pioneer in the Canadian medical cannabis field having co-founded Bedrocan Canada and serving as its founding Chair.
Wayne played a key role in helping develop the Canadian Consortium for the Investigation of Cannabinoids and turning it into a global innovator in education and research on the medical uses of cannabis. Effective upon the closing of the offering, Wayne resigned from his position as Managing Director of Canopy Growth Corp and as President of Bedrocan Canada Inc.
Completes $60 Million Capital Raise
This morning, Canopy Growth announced that it closed its previously announced $60+ million capital raise at $10.60 a share. The offering was underwritten by a syndicate of underwriters led by GMP Securities L.P. and Dundee Capital Partners, and including Cormark Securities, PI Financial, and Canaccord Genuity .
Canopy Growth intends to use the proceeds for potential real estate acquisitions and fit-up of growing operations at such locations. In the event such potential acquisitions are not completed, a majority of the funds will be used to expand capacity at its existing sites over the next 12 months. Additionally, the company expects to incur international development expenditures of approximately $2,000,000 primarily to further explore and develop international market opportunities where federally legal to do so.
The balance of the net proceeds will be used for general working capital purposes, such as potential acquisitions for both capacity and brand augmentation and related integration, and developing new product offerings. The company may reallocate these funds as market and regulatory indicators warrant in light of the anticipated legalization of a national recreational cannabis market and the ACMPR.
An Emerging Trend
Over the last quarter, we have noticed a trend in the emerging Canadian cannabis industry where licensed producers are significantly increasing their focus on the development of cannabis drug formulations and dose delivery systems for specific ailments and debilitating illnesses.
Earlier this month, Emblem Corp (EMC.V) (EMMBF) commenced trading on the TSX venture exchange after a very successful initial public offering. The company is comprised of three distinct divisions. One of the company’s divisions is Emblem Pharmaceuticals and it is focused on pioneering the next generation of Canadian medical cannabis by providing medication in standard pharmaceutical dosage formats.
Emblem Pharmaceuticals is a very attractive aspect of the business as it offers investors leverage to not only the legal cannabis market but also the cannabis pharmaceutical market.
In the second quarter of 2017, Emblem Pharmaceuticals President John Stewart will lead the launch of cannabinoid-based medications in customary pharmaceutical dosage forms such as liquids, gel caps, oral sprays, and inhalers.
Stewart has over 30 years experience developing and commercializing pharmaceutical products. He has launched 11 new products, including OxyContin, and was the worldwide President and CEO of Purdue Pharma, the largest privately held pharmaceutical company in the world.
Since inception, management has invested over $6 million in the company and executed flawlessly on the business plan to create a production facility that offers premium products. We are very excited about Emblem’s opportunity within the pharmaceutical market of the cannabis industry on account of its best-in-class leadership, its state-of-the-art production facility and its continued execution.
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 advice regarding 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
Authored By: Michael Berger
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