Khiron Life Sciences Corp (CVE:KHRN) President on Definitive Agreement to Acquire NettaGrowth

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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.

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Khiron Life Sciences Corp (CVE:KHRN) (OTCMKTS:KHRNF) (FRA:4KH) President Chris Naprawa addresses the company’s recent stock volatility. Naprawa clears up a misconception created when the company announced it had signed a definitive agreement for the acquisition of NettaGrowth International. Naprawa explains the move was originally disclosed on January 25 and that the confusion stemmed from Khiron commencing US press releases with the announcement of the definitive agreement. Naprawa discusses the rapid evolution of the Latin American cannabis market and Khiron’s monitoring of changing regulatory frameworks. While Khiron is often grouped with domestic cultivators, it is more accurately described as a multi-jurisdiction medical and CPG company, according to Naprawa. Khiron is a leader in the emerging cannabis cosmeceutical space and Naprawa anticipates that the company’s CBD cosmetic products will be available in up to 400 stores in Colombia by the end of this quarter. Naprawa discusses the possibility of Kuida products being available in the US by the end of the year, as a result of Khiron’s JV with US-based Dixie Brands Inc (CNSX:DIXI.U) (OTCMKTS:DXBRF) (FRA:0QV).

Transcript:

Narrator:        Khiron Life Sciences Corp is a Latin American-based pharmaceutical company that develops and commercializes medical cannabis products. Khiron has core operations in Colombia and is fully licensed in the country for the cultivation, production, domestic distribution, and international export of both THC and CBD medical cannabis.

In May 2018, Khiron listed on the TSX-Venture, becoming one of the first Colombian-based, medical cannabis companies to trade on any exchange globally.

Khiron Life Sciences Corp is listed on the TSX-Venture under the ticker symbol KHRN.

James West: Chris Naprawa joins me now. He’s the president of Khiron Life Sciences, trading on the TSX-Venture under the Symbol KHRN. Chris, welcome back.

Chris Naprawa: Thank you, James.

James West: Chris, your stock has been volatile. If I was a trader, I could make money on this stock. What’s driving the volatility in your stock right now?

Chris Naprawa: Well, I think first of all, we’ve had some comps come out that are that have been higher value and that helped lift our stock. I think we’ve executed very well in our multi-country strategy that’s helped lift it more recently. I think we could have done a little bit better job on a couple communication pieces. Up until now we only disclosed, we put out our press releases on the Canadian wire, that was just disseminated through the internet for the US wire. On April 9, we decided to put stuff out on the US wire and that first announcement was the definitive agreement to buy NettaGrowth. So, if you were only on US wires, it made it look like that announcement was made on April 9, when in fact, it was announced on January 25. When the stock was halted when we did that deal, the stock was at $1.61, and that was the deemed price for the deal. So, if that was your first time seeing that press release on April 9 that said we just bought this company for 8.5 million shares of $1.61, when the quote the day before was $3.63, you have right to be upset. So, I got all these emails and all these phone calls and I thought it’d be just a great to come on and just talk about how we’ve got to go back and look at that January 25 disclosure.

So now going forward we disclose everything on both wires. We’ve kind of hit a critical mass of US shareholders. We have thousands of thousands of US shareholders now, so we’re going to continue to strive to do a better job. I think we always make our best effort on communication and being completely transparent, but we want to make sure that we’re super consistent on this stuff.

James West: You bet. Okay, so that being said, if I was a gambling man, which I absolutely am, and I’m looking at all of the companies that are going into billion dollar-plus valuations, I look at Latin America and there are a couple of companies flirting with a billion dollars-plus. Khiron strikes me as the company that deserves to be closest to that valuation, based on the fact that you are the most well-developed company in terms of market share in Latin America. You’re in Colombia, you’ve got things happening in Peru, you’ve got Brazil coming down the pike. So give me an overview of all that’s happening in Latin America.

Chris Naprawa: Well, Latin America is evolving so quickly, we’ve got a team of people, we’ve got I think eight or nine regulatory professionals now on the team, we follow these developments very, very closely. We have people on the ground, of course in Mexico, in Brazil, in Peru, Chile, Uruguay, Brazil and we are not only trying to be there for when the legislation comes down the pipe, but to really understand it and influence to the extent we can prior, and communicate. As you know, Juan Diego Alvarez was the author of the cannabis legislation in Colombia. He’s a sought-after regulatory expert. We have excellent dialogue with all the governments there and his former peers at all the different governments. We get lumped in lot of time with the local cultivators, which is really not our business, we are a medical company, we’re consumer packaged goods company, we’re multi-jurisdictional. And we’ve said to the world: once we’ve got our platform built in Latin America, we’re going to take on the rest of the world. There are direct flights to Europe from South America, people might be surprised to know, so we’ll be there. The United States, we’ve never said that we’re not going to be there either, we never said we’re not going to be there. We want to be big enough and if you look at some of the fabulous companies that have been developed out of Latin America from InBev on, and there’s many, many examples. Why can’t we be one of those?

James West: Sure absolutely. You are one of the only companies that I’ve seen out there that has this large focus on cosmeceuticals. There’s a natural sort of affiliation or affinity for cosmetics in CBD. So, what’s the status of that whole business rolling out in terms of the CBD-infused cosmeceuticals?

Chris Naprawa: Yeah, we’re the first I think, we’re still the only ones, who have a CBD product. There’s some hemp stuff out there, but they don’t have a pure CBD product. We rolled that out as a commercial business in November last year. I think we’ll probably be in Colombia maybe between 300 and 400 stores by the end of this quarter, is kind of a target, and that’ll pretty much cover Columbia. In that time, you’ll see us be in Peru, we’ve already got products approved in Peru and we’re working through all the regulations and all the other countries to get there. As you know, we’ve got our JV with Dixie Brands. I wouldn’t be surprised if you saw Kuida on the US shelves sometime this year.

James West: Well, that’s fantastic. Okay, so Chris the volatility that we’ve seen. Is that something that investors can expect to continue and be kind of representative of trading opportunity or is that going to sort of mellow out now?

Chris Naprawa: Well, who knows? But anybody that’s in the cannabis business, or certainly investors in the cannabis business, has got to get used to volatility. It seems like every 12 weeks or 16 weeks we have a massive correction and something great happens, like with the Canopy news this morning with Acreage. There’s always another catalyst. I think the cat is out of the bag, you’re going to see more Fortune 500 companies get into this business, and the more that we can have distribution, products on shelves, to have all that plumbing ready to go, I think we’ll be more attractive to one of those.

James West: Right? So do you see Khiron as a takeout target for a large multi-country, multi-continent operator?

Chris Naprawa: I if think somebody wanted to step into this business and be a meaningful player in our jurisdiction and actually sell products and be in those markets, I think we’re a very attractive prospect. I hope we get to execute our strategy on our own because we have a long, long way to go. We built an amazing foundation. We have an amazing team. We have the ability to execute and hopefully we can be left on our own to do that.

James West: You bet. All right, Chris great update. We’ll leave it there for now and have you back soon.

Chris Naprawa: Thanks, James.

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.

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