CannaRoyalty, Antibe Therapeutics, Maricann Group Top Midas Letter Watch List
While the cannabis sector takes a breather following last week’s Cannabis Act passage, some interesting ancillary plays have arisen: CannaRoyalty Corp., Antibe Therapeutics Inc. and Maricann Group Inc. are all showing signs of breakout potential. We highlight each issue’s backstory and give an updated technical take going into tomorrow session.
As regular Midas Letter readers are aware, CannaRoyalty is no stranger on our radar screen. We placed the company on “Breakout Watch” back on May 8, believing imminent upside price extension was possible. We even predicted a $5.70/share short-term price target on the stock, which was a nickel away from its ultimate top-tick. We hope our readers capitalized on that one.
After CannaRoyalty subsequently released Q1 earnings on May 29, the stock sold off on the news. Despite soaring revenues and big advancement in overall business operations, the large net loss increase understandably gave investors pause. After all, investors had driven shares up about 64%, trough-to-peak, from April 13 to earnings release. A spell of profit taking became in vogue—but it didn’t last long.
After a shallow pullback where prices held firm at $5/share, CannaRoyalty is again up against its all-time highs. The stock made a strong move today—up $0.20 to $5.65/share (↑3.67%)—on news of Aurora Cannabis’ $115 million purchase of Anandia Laboratories Inc. CannaRoyalty owns 16.5% of Anandia, making its equity stake valued at approximately $19 million based on the acquisition valuation. Not only does the acquisition give the company more operating capital (should they elect to divest the equity position), it proves to the Street that management knows how to pick a winner.
Heading into week’s end, the key question is whether CannaRoyalty has enough gusto to smash through all-time highs and move appreciably forward. But given recent relative strength, increasing volume profile, low float structure and emerging leadership position in the high-profile California cannabis scene, odds of further price extension appear high.
After languishing for months following February’s $70 million bought deal cancellation and subsequent insider trading probe, investors appear to be dipping their toes back into Maricann Group stock. By avoiding any add-on damage caused by earlier events and delivering on important business milestones, the company’s core value proposition is coming back into focus. And there’s a lot to like.
In the time since the bought deal fiasco, Maricann has received an export permit from Health Canada, received Phase I approval for its Canadian expansion, entered into a LOI to acquire a Maltese License, and perhaps the biggest news of all—obtained GMP certification in accordance with the European Medicines Agency’s GMP standards.
The latter triumph is important, because it’s both rigorous to achieve and allows the company to export dried cannabis flower into rapidly growing European Union medical cannabis markets. They became only the sixth Canadian producer to be awarded this distinction.
Despite all of this, it’s apparent the company’s past sins continue to hang like a millstone around its neck. But that could be changing. The stock was among the biggest percentage winners on June 11 and has formed a progressive, upwards-slowing base from the $1.50-1.70 area dating back to April. Prices and volume continue to be contained, but all the ingredients are there for significant price extension ahead.
I might add that Maricann remains an attractive and reasonably priced asset for other LPs looking for established access into the European markets. This includes patented drug delivery technology used in other lipid-based drugs to address the oil and water solubility issue and medium/long term funded capacity of 95,000 kilograms per annum. At a market cap of under $250,000,000, Maricann’s top-line assets and business prospects seem appreciably less expensive than its peers.
After a long slumber, Antibe Therapeutics is showing signs of life.
The first quarter’s pre-eminent Canadian microcap mover soared ↑500% from January 1-March 20, reaching its apex on news that its lead drug, ATB-346, met its primary endpoint in the Phase 2B gastrointestinal (GI) safety study. Not only was the endpoint met, it exhibited an ulceration rate of 2.5% versus an ulceration rate of 42.1% for subjects on naproxen—the most prescribed nonsteroidal anti-inflammatory drug (NSAID)in North America.
With Antibe Therapeutics one clinical study away from significant drug platform monetization—and with profit takers long since vacating the stock—interest is starting to build in the name. The volume profile took a noticeable jump today, as investors take renewed interest in the stock.
I have never been a big microcap bio pharma investor, lacking the patience and fortitude to stick through the prominent boom/bust cycles such investing entails. But their lead drug looks promising, and in the company’s words, “…has blockbuster potential, and would provide physicians and consumers with radically safer alternatives to today’s NSAIDs and to the multi-dimensional dangers of corticosteroids and opiates.”
Antibe’s current price won’t last forever if enough investors buy into that thesis.
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