Neptune Wellness Solutions (NASDAQ:NEPT) Brings Additional 200 Metric Tons of Capacity Online

By |


Midas Letter

The Digital Businesss Channel for Cannabis, Crypto and Technology Stocks.

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.

Neptune Wellness Solutions Inc (NASDAQ:NEPT) (TSE:NEPT) (FRA:NTU) CEO Jim Hamilton shares his thoughts on the emerging CBD product space. Hamilton notes that CBD now has a greater market share than Vitamin E in the US and notes that CBD products are on track to surpass Omega 3 products in demand in the next year. Unlike many in the space, Neptune Wellness is not a brand company; instead, it is a B2B company focused on its core competency of extraction. Neptune Wellness has 200 metric tons of capacity coming online, in addition to 6000 tons of existing capacity. Hamilton thinks there will be an explosion of cannabinoid-based scientific research soon and believes Canada , with its unique regulations, has the opportunity to be a research hub.


Narrator: Neptune Wellness Solutions is a health and wellness products company founded in 1998 and is headquartered in Laval, Canada. The company is engaged in the extraction, purification and formulation of science-based products.

Neptune Wellness offers speciality ingredients such as MaxSimil, a patented ingredient that enhances the absorption of lipid-based nutraceuticals and various other marine and seed oils.

In January, Neptune Wellness its Health Canada received its license to process cannabis, which allows the company to manufacture and purify cannabis extracts and cannabis oil, and to sell its services to other license holders. Production activities are expected to start soon at Neptune’s 50,000 square foot, certified facility in Sherbrooke, Quebec.

Neptune Wellness Solutions is listed on the Toronto Stock Exchange and the NASDAQ, and trades under the ticker symbol NEPT.

Brandon Colwell:   And I love those clips, it gives our viewers a little bit of a recap before coming on. Here with Jim Hamilton, CEO of Neptune Solutions. How are you doing today? Or, Neptune Wellness Solutions – Forgive me, forgive me!

Jim Hamilton: Brandon, it’s a great pleasure to be here and this is the first time we’ve been together.

Brandon Colwell:   It is.

Jim Hamilton: And you know, I had this, like, it’s Valentine’s Day, and I was getting a little bit, you know, misty, that I was going to see James again. I’m a little heartbroken he’s not here, but Brandon, it’s great to meet you.

Brandon Colwell:   I’m a little heartbroken he’s not here.

Jim Hamilton:       He’s got to do his job, right?

Brandon Colwell:   I know, I’m with you! But for yourselves, your company has actually been around for quite some time. When you were in here in December, you were giving our viewers a little bit of an update of who you are and what you’re doing, but recently you’ve had a development: on February 13th, you had your financial released. Can you talk a little bit more about that?

Jim Hamilton: Yeah, Brandon, thank you. Yes, we’ve been around for a while; we’re long-time nutrition products company and nutrition products people, and we love the cannabis space. We think the parallels between wellness and nutrition products in this space are just unbelievable, and we’re big believers in the space.

And we started a journey to diversify our business into cannabis about three years ago, I think, with the whole regulatory process, which as you know, and your viewers know, and all the guests you have here know so well, it’s a long journey, and it’s a very detailed and steep hill to get through. But we had our license granted right after New Year’s, January 4th, by Health Canada, and we received our first inventories in very recent, last little while. And our processes and manufacturing of extracts has begun, Brandon. So we’re very excited by that.

So we announced yesterday our third quarter fiscal results, and indicated to investors that manufacturing has now begun, and that’s really exciting for us.

Brandon Colwell:   Fantastic. Yeah, and it is a very long process. It’s unfortunate, because it’s fantastic to see Canada and really the world, it’s all really catching on very, very quickly now. It’s great to see these steps moving forward, but I think there were some stumbles along the way, and I think that really delayed a lot of the legislation, which also delayed a lot of the companies as they’re going down that path. But when you’re looking into nutraceuticals and you’re looking into wellness products, this is the area of cannabis I think I’m most fascinated by, because of the amount of uses of cannabis that we currently know, and there’s a lot of uses that we’re still going to be finding out for the next little while.

Very, very intrigued to see companies like yourself making headway.

Jim Hamilton: Brandon, just look at consumers and your own experience when you consume products at home, right? You no longer consume, for example, a vitamin that’s a single entity; frequently, it’s a formulated product for eye health or for digestion or for what have you. This industry will rapidly go that way, where we’ll have condition-specific formulas designed for your particular situation, need, ambition, in a delivery form that is most kind of pleasing for you in that particular case.

So if it’s recreation, maybe a beverage, but if it’s for chronic inflammation or pain or what have you, maybe it’s a capsule that you take on a daily basis. So I think we’re going to see really on the dawn of diversification of our business in terms of formulations and delivery forms. This is a really exciting time, and we – you know, Brandon, as a company, love to be in the extraction formulation delivery form space, because when you look at markets like California, example, north of 60 percent of the products sold are some form of extract delivered into a unique delivery form.

And when you look at the pending legislation happening in Canada with edibles, you know, we’re going to see, probably a parallel process happening here in Canada. And many of your viewers I know are aware, and some of your guests have talked about, the whole phenomenon with CBD.

Now, an interesting statistic for those who know a little bit about consumer products and nutrition: CBD, even though it’s been Federally illegal by the DEA and the FDA, is a category in the United States bigger than the Vitamin E supplement market. The thing about that, so a lot of our consumers know, or viewers know about Vitamin E; it’s now bigger than Vitamin E, and it’s on track to be larger than the Omega-3 supplement market, very, very soon, depending on certain estimates. Probably within the next year, maybe two.

So there’s an exciting opportunity happening for our industry in CBD in the United States, and recent legislation, or not legislation but opinions rather, coming from the UN in terms of what we can do with CBD now globally and de-scheduling it, the recommendations that they’re now putting forward to committee, is really, really fascinating for this business.

So I think yes, marijuana, yes, THC, but we’ll see CBD and we’ll see a diversity of products, really not just in Canada, but for the world.

Brandon Colwell:   Well, absolutely, right? And there’s a lot of people who, I believe it’s going to be a two-pronged thing: there’s going to be a fad, like a lot of people, we saw kale coming through, and that’s one aspect, but in no means will it stop there. I think it’s going to actually be a very large trend to fall out as well, going into those products.

Jim Hamilton: Brandon, when you look at, for example, nutrition supplements, I’ll tell you where the greatest kind of consumer patronage is: when a product you can feel, and when it’s in a delivery form that’s pleasing. And probiotics are a great example. You know, when you take a probiotic, you know, your digestion, your gut health, you can feel it. And if you can deliver that in a delivery form that’s pleasing to the consumer, you get tremendous compliance.

And I think we’re going to see that in this industry too, because when you talk, consumers often say, yes, we haven’t seen all these double-blind placebo trials; I don’t need that, I know when I take this product I feel better.

Brandon Colwell:   Exactly.

Jim Hamilton: It helps me. And I think that will make for a very, very interesting consumer segment.

Brandon Colwell:   Yeah. I’m trying to think of what company had done this, actually. It was last year, there was a study that was being done in the United States on CBD and cannabinoids on gut rot and colitis, and how that is proving that having a high-cannabinoid diet actually helps you combat things like colitis and bad gut rot. I thought of that fascinating, because they’re already starting to go into these different areas where they’re showing these different drinks and different elements actually will be helping you.

Because I’ve been saying for years, I believe that, just like when we look at people with Vitamin D deficiencies or whatever it be, we’re going to be looking at this five years from now, maybe even sooner, and realize because of our endo-cannabinoid system, we’re going to actually have a cannabinoid deficiency, and we’re going to look back like, How did you not know? Of course you were having aches, of course you were having…but we’re not there yet, but we’re close.

Jim Hamilton: Brandon, it’s just beginning, and for me it’s just beginning. And it’s very classic when you compare it to other consumer product segments. You know, they start as kind of simple industries, single-entity products, but the research -where science leads, markets follow. We’ll see an explosion of science, I believe. A lot of it will be in domestic Canada, and I think this is, you talked about regulations earlier; I think Canada has such an opportunity here to be really a hub of research for this entire industry going forward, and I think we’re going to see that, and it’s going to come.

Right now, you’ve got a good consumer experience and belief structure in the category, but it will be fuelled by science, and it will go much more broader-base.

As I’ve said on the show before and with others, I think we’re really at the dawn of a macro-global consumer product phenomenon, and it’s really an exciting time to be part of this industry.

Brandon Colwell:   Absolutely. Economics is my background, and I’ve been saying for the longest time that cannabis, for years people used to make fun of me, that I believe it’s going to be the largest commodity. It’s going to surpass wheat, it’s going to surpass all of these different things, because cannabis can be used, and I’m including hemp with this, because cannabis is both sides of the plant, male and female – I would love to see, because you can use it not just for wellness products. Not just for consumption if you’re looking to feel better, whatever it be; but also just the products. Like people don’t realize what is transpiring right now. It’s remarkable what’s going to come of this.

Jim Hamilton:   And Brandon, I come from sort of the large corporate world before coming into Neptune, and I know so many of these people and these large consumer brands, and it’s interesting, in the conversations I have with them, and how it’s rapidly evolving. And when I started that conversation with some of them a year or two years ago, they said, Jim, what’s happened to you? [laughter] And now, they’re like, hey, get over to our office, you know, we really need to talk to you. What is going on?

And you see a whole new dialogue happening with the major corporations. And I do think, ultimately, this business, like I guess as I said earlier, will follow the track of many other industries. It will eventually be occupied and driven by large consumer products businesses. I mean, Constellation of course is kind of one of the first movers, but I think you’re seeing an increasing acknowledgement with major corporations around the world for the space. It’s going to be very exciting, the next few years.

Brandon Colwell:   Absolutely. We went from your research in cannabis to, here’s millions of dollars, get me something as fast as you possibly can. Find that patent.

Jim Hamilton: [laughter] But I think for people in this industry, where we’re committing a lot of our time and energy, Brandon, is, it’s not enough, you know, again, to have, you know, simple extracts. It’s the purification of those extracts, it’s the quality of those extracts, but it’s also the formulation, ultimately, of those extracts, with the right formula of terpenes and other components in a delivery system that is stable, that delivers on a specific consumer need.

So it’s quality formulated against a consumer need; and I think if companies can get that formula right and collaborate with other companies to get that formula right, it’ll be a recipe for great success going forward.

Brandon Colwell:   Absolutely. Now, making it more specific now on Neptune itself, what type of products or what type of formulations are you releasing? You know what, this is going to be the staple of our company; this is what we’re going to be really pioneering in 2019 with, or are you a little bit more broader, you want to go for numerous areas, you want to get numerous segments?

Jim Hamilton: Yeah – our first, you know, we’re not a brand company. You know, Brandon, first of all, our roots and our competencies are in B2B relationships and collaborating with other companies. We’re first and foremost an extraction company. We talk publicly about our 200 metric tonnes of capacity that are coming online, but your video that just ran before, we have already built and constructed the equivalent of a 6,000 metric tonnes of extraction capacity.

Brandon Colwell:   That’s massive.

Jim Hamilton: And it’s, you know, not licensed; we still have to put the cameras on it and do a few things like that, but it is constructed and ready to go. And you would never do that, Brandon, a facility of that size, for a Canadian market. But if you believe that this is a global consumer product phenomenon, that kind of scale and that kind of quality will be necessary.

The formula in nutrition products, getting more specific to your question, is in collaboration with marketers, as we did with our Omega-3 business with krill oil or Mega Red as an example of a consumer product, is marrying some consumer research with those compounds. We did it with krill, we’re looking at it now, and we’re very interested in the combination of cannabinoids with certain other active ingredients that could be helpful for absorption. For example, Omega-3 fish oils or krill oil, for that matter, through the phospholipid profiles, you could get more efficacy. Especially it’s interesting from a chronic inflammation as an example. If you’re taking for knee pain –

Brandon Colwell:   That’s going to be a huge one. Massive, massive.

Jim Hamilton: We’re really interested in that area.

Brandon Colwell:   And it’s fascinating because, like you said, it could be inflammation; we went from inflammation to gut rot, we went to feeling good, we went to something that we thought was just going to be a fad or something that people were going to enjoy. It truly is remarkable where all these items are going to be coming from, and all the different segments that are going to expand. But the one interesting part is that there are very few people who are specifically looking to specialize in extracts and specialize in having these products.

I’ve said this for the longest time: anyone can grow a plant in your backyard. You may not grow it too well, but you can grow a plant in your backyard. How many people are going to be in their backyard trying to formulate, I’m going to extract the CBD out of this? I’m going to make my own oils today? Not many. If they do, I’ll be very – good on you, if you actually are able to do that, but that’s where there’s going to be one: I think the prices are going to be sustainable, just through a consumer standpoint, which means this is going to be a much more valuable product for a longer amount of time compared to, say, flower, which we’ve seen it in Washington and those different areas; it went down really quickly.

I think that’s a really interesting area where there’s not that many people saying ‘I want to specialize in this’, which fascinates me, personally, because that’s going to be one of the larger aspects of cannabis in my personal opinion.

Jim Hamilton: Brandon, look: we all aspire and think we’re great consumer products marketing people. We’re not. I mean, we have opinions [laughter], you know, we look out for these guys, but we’re not – but I think it’s really important in business to stick with what you know, and we’re not cultivators in the same time either. We have no competency there, but we do know extraction, purification, formulation and clinical research. We’re going to stick to that core competency, and we’ll partner with cultivators and growers, and hopefully we can have good relationships there, and we’ll do the same thing with brand business.

But our core focus is that, and we think it’s a great space to be in; but quality, consistency, purity, formulation delivery systems…we think that’s a great place to be, and that’s where we’re focused right now.

Brandon Colwell:   Absolutely. And lastly, I was going to ask one question: if there’s one thing about 2019 that you are most excited about, whether it be leading the company or for your company in general, what would that be?

Jim Hamilton: We are so excited to get started in this business. We’ve been around for a number of years, we’re a trader on NASDAQ, TSX, we’ve been there for 20 years. But there’s nothing like being in an industry segment that is just flowering and growing and developing. To be there and be there at this moment is the most exciting time.

So, to be licensed and up and running and – it’s very motivating for our team, and it’s a great place to be, and it’s a lot of fun. We’re happy to be part of this industry, Brandon.

Brandon Colwell:   Absolutely. You can tell as well, you’ve got a lot of passion towards this; I appreciate that very much. I mean, I’ve interviewed a lot of people now, and it’s interesting to see each company come on, though. They’ll say what their pitch is, they’ll say certain things; you can tell some people, it’s not really their background, or they don’t have as much, sometimes, you know, they’re not exuding the fact that they really love what they do. I can see that right now, I appreciate that very much, as you need that in this industry to really push forward and make that position for your company.

But also just in general, what you’re doing for consumers in general – it’s a shift. It’s not just money, it’s not just dollars; we really are shifting our opinions. There’s a cultural shift, and I think when these products are coming in there, we’re getting a lot more people off the stuff in their medicine cabinets right now for a more natural product. I’m excited about that, and it’s nice to see companies like yourselves having a little piece of that and pushing that forward. I appreciate it very much.

Jim Hamilton: Brandon, thank you. Are we allowed to make jokes about James now?

Brandon Colwell:   Yes, we can, yeah, let’s do it. Can we do it right now? It’s Valentine’s Day, we can still make those jokes.

Jim Hamilton: That’s good, that’s good.

Brandon Colwell:   Well, I appreciate very much for you coming on the show.

Jim Hamilton: Brandon, thank you very much, it was my pleasure.

Brandon Colwell:   Thank you very much, and for our viewers, if they want to find out more, your website, really quickly, so they can go and look you up even further.

Jim Hamilton:

Brandon Colwell:   Very easy and what it is. Thank you very much.

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.