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Alex Carlson
Published on
September 11, 2017
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In our previous report we discussed the financial results of APHRIA INC COM NPV (OTCMKTS:APHQF) for the quarter and year ended May 31, 2017. In that report we saw how Aphria grew quarterly revenue by double-digit percentage and yearly revenue by triple-digit percentage.In this report we continue to analyze Aphria and look at the recent developments around the stock and their potential impact on the share price. But before we do that, we’ll let you catch a glimpse of Aphria’s share price action. APHQF Daily ChartAphria has released several important announcements in the recent weeks. In this report we are going to discuss its response to a regulatory issue, investment in a firm that develops marijuana-based treatments and extensive partnership with a global cannabis company.Business In case you wonder what business Aphria does, here’s what you should know. APHQF is a producer, supplier and seller of medical cannabis in Canada. The company also has a footprint in the US. Aphria describes itself as one of the lowest cost cannabis producers in Canada, a profile that helps it to win side businesses. For example, Aphria provides consultation and support services to other firms venturing into cannabis production business.Recent developmentsAphria on August 21, responded to a statement by Canada’s securities exchange operator TMX Group regarding regulatory engagement. In that response, Aphria stated that it had received a confirmation from TMX Group than CDS ban on clearing of securities issued by companies with marijuana-related operations in the US didn’t exist.The statement by TMX Group helped provide clarity to securities issuers and investors on the matter of CDS clearing. Aphria has had marijuana-related operations in the US since 2015.On August 15, Aphria announced that it invested in HydRx Farms – a company that also goes by the name of Scientus Pharma.Aphria said it made an investment of $11.5 million in the company by way of debenture. The debenture has a two-year term and earns interest at the rate of 8%, which is paid semi-annually. The debenture is convertible to common shares of Scientus Pharma at the rate of $2.75 a share.Why is investment in Scientus Pharma important for Aphria and its shareholders?Scientus Pharma is a biopharmaceutical company that focuses on developing cannabis-based drugs to treat debilitating diseases that affect crucial organs such as the brain.

"We are excited to enhance our relationship with industry leader Scientus Pharma. Their proposed pipeline of new and innovative products represents a major step forward for cannabinoid based medical products in Canada. Gaining access to their dealer's license provides Aphria immediate access in the short-term to enhanced global opportunities," said Aphria CEO Vic Neufeld.

SourceAphria on August 9 disclosed an extensive strategic partnership with Nuuvera, a Canadian global cannabis company.The strategic partnership between Aphria and Nuuvera is organized in five parts. The first part involves Aphria investing $2.0 million for equity stake in Nuuvera.The second part involves Aphria supplying Nuuvera with an increasing amount of cannabis harvest. The third part of the deal involves Aphria selling half of its 200-acre land on Mersea Road 8 in Leamington to Nuuvera for $4.0 million in cash. Aphria acquired the 200-acre land in Leamington in January 2017. It said that it is going to make a profit from the sale of a portion of that land to Nuuvera.The fourth part of the Aphria -Nuuvera partnership involves Aphria providing consultancy services to Nuuvera on the design and build of a greenhouse facility that will sit on the land it is acquiring from it in Mersea. For the consultation service, Aphria will earn a fee equivalent to 8.0% of the amount Nuuvera will spend to build the facility.Finally, the fifth part of the deal involves operating the Mersea greenhouse facility on behalf of Nuuvera for a fee. According to Aphria, it expects to earn more than $10 million annually from running the Mersea facility on behalf of Nuuvera.

"This is an exciting strategic partnership for Aphria and Nuuvera. By combining our unparalled experience in cannabis production with Nuuvera's extensive international network, we will bring the best of two leaders to meet the growing global demand for cannabis," said APHQF CEO Vic Neufeld.

SourceConclusionThe TMX Group clarification on CDS clearance served to reduce anxiety among investors in securities of Aphria and it has the potential to clear the way for the company to raise additional capital easily to invest in more growth.The investment in Scientus Pharma increased the exposure of Aphria to one of the most promising segments of legal marijuana: medical marijuana.The partnership with Nuuvera provides Aphria with multiple opportunities to monetize its experience and expertise in cannabis production.Therefore, these have the potential for creating more room for shares of Aphria to move higher.We will be updating our subscribers as soon as we know more. For the latest updates on APHQF, sign up below!For the complete story, check out our full coverage on APHQF.Image courtesy of Kathryn Stuart via FlickrDisclosure: We have no position in APHQF and have not been compensated for this article.

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