Aurora Cannabis Inc (TSE:ACB) (OTCQB:ACBFF) (FRA:21P) quest to become the premier medicinal cannabis everything-provider took another significant step today. The company staked a position in a leader softgel cap manufacturer, ensuring its medicine delivery pipeline is in good hands.
The announcement comes via a pre-market press release issued this morning. Aurora Cannabis disclosed it had inked a deal with Capcium Inc. to produce cannabis softgels for the medical market. The company’s 19.99% ownership interest in Capcium is financed via $10 million non-brokered private placement, and continues the trend of Aurora adding strategic pieces—both big and small—to buildout its entire medical supply chain.
Capcium intends to use the proceeds to expand its cannabis softgel manufacturing business, to be completed in Q4, 2019.
While cannabis investors are fully aware of the large deals (and here) Aurora Cannabis is making, it’s the smaller ones that are flying under the radar. When looking at the entire picture, we can grasp how the company is filling-in different pieces of its product portfolio to satisfy its medical delivery apparatus.
Here are the deals Aurora Cannabis have brokered since May alone:
|Capcium Inc.||softgel manufacturing||oral cannabis delivery||19.90%|
|Heinrich Klenk GmbH & Co.||medical cannabis grower||supply chain & distribution – Germany||collaboration agreement|
|CTT Pharmaceutical Holdings Inc.||oral strip developer/patent holder||oral cannabis delivery||9.14% ownership; optionality to 42.5%|
|Hempco Food and Fiber Inc.||cannabis supply/CBD extracts||raw supply/health supplements||
ownership increased to 52.7% (controlling interest)
|MedReleaf Corp.||full-scale medical cannabis provider||full-spectrum production, strains and refined goods||
100% upon shareholder approval
|CanniMed Therapeutics Inc. (previously brokered in January 2018)||full-scale medical cannabis provider||full-spectrum production, strains and refined goods||100% ownership|
No company has been this aggressive in acquiring the entirety of product cycle components to build out its medical portfolio. Some shareholders may not appreciate the premium or dilution which comes from the liberal use of shareholder capital, but there’s no mistaking a medical cannabis powerhouse is being built right before our eyes.
Aurora Cannabis Corp CCO Cam Battley on MedReleaf, Aphria and Earnings
Fortunately for investors, the market seem to be coming around to the notion that Aurora Cannabis is doing the right thing.
Irrespective of today gap-open move lower, shares have been surging over the past couple sessions. The stock gained ↑19.68% between June 5-6, despite the huge public float which will approach 1 billion shares once the MedReleaf deal finalizes (s/o is currently 561.52 million). By adding $904 million dollars in market capitalization so quickly on no ‘material’ news, Aurora Cannabis has dispelled the notion it had taken on more than it could chew. Investors are pouring money into the name in-line with the rest of the sector, which can be considered tacit market approval.
Time will tell whether Aurora’s spirited acquisition strategy was the right call. But with huge institutional backing, first-in advantage and an unparalleled full-spectrum medical cannabis portfolio, they’re sitting at the head table in terms of product distribution, delivery, visibility and cost. It may have been costly, but it’s a priceless position to attain at the stage of the industry growth cycle.
While the Capium deal may not generate much buzz from investors, they shouldn’t underestimate how those smaller deals are likely to generate outsized and long term shareholder value.
Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.
Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.
Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.