Mid-Week Update: Could the Leafy Green See Gains of 1,300% Over the Next Year?
We check in with our three Alpha contestants for the week and see that one jumped up to lead yesterday with 5% gain in less than 24 hours. Investors are hyped up about the potential gains to be made in cannabis. And in a sector so new, the opportunities are going to be endless...as long as you know when to get in.
We’ve still got a few weeks to know what the FDA is thinking when it comes to cannabis. And we will bet, it’s not actually going to clear anything up.
Consumers and investors will still be navigating medical vs. recreational, natural vs. synthesized, CBD vs. THC…the list goes on and on. Either way, investors are still really hyped up about cannabis as an investment opportunity. And as we’ll see today, that excitement could help you lock in some amazing gains over the next few months…
First up, we’ve got CannTrust (CTST), out federal licensed and regulated producer of medical cannabis located in Canada. Its claim is one of the largest facilities in North America and proprietary greenhouse technology allowing the company to reduce costs below traditional indoor facilities and greenhouses. The company just released its first quarter earnings yesterday.
Harvested production for the quarter exceeded over 9,400kg. That’s an increase of 96% over the prior quarter and a 400% growth compared to the first quarter of the previous year. And as any investor or business owner knows, those are the numbers that you want to see after making large investments. The fruition of the investment years is pouring in.
The company saw record quarterly revenue for the quarter with a 115% increase over the first quarter of 2018. But this is only the beginning of the investments the company has planned.
During the first quarter, the company made investments to enhance the extraction equipment and automate labeling. The management definitely wants to make sure it can keep its leadership in the Canadian markets by continuing to product at lower costs.
If that wasn’t enough to get investor’s excited, the company also announced yesterday that it had finalized a letter of intent with Societe Quebecoise du Cannabis, a corporation in Quebec. This letter of intent allows CannTrust to provide cannabis for the recreational market in the province of Quebec which is an important milestone for national distribution.
Shares opened Monday at $5.78 and closed yesterday at $6.07. At one point yesterday shares jumped as high as $6.40, but then settled back down. So, at the end of the day that’s a 5% increase. If we break it down each day, Monday, shares did absolutely nothing. Meaning the shares increased 5% in just one day of trading!
Next up, we’ve got clinical-stage biotech company, Cara Therapeutics Inc. (CARA). The company has its portfolio of CR845 kappa opioid receptor and CR701 cannabinoid receptor agonist.
The company announced its first quarter earnings last week. Cara continues to enroll patients in the phase 3 trial of it’s KORSUVA injection. Right now, there are two ongoing trials that will support worldwide filings of the KORSUVA injection.
Other applications of KORSUVA are in phase 1 & 2. Both of these are for an oral version. The expectation is to roll them out a few months apart. The more applications that doctors can use KORSAVA for, the more profits that the company will see when it gets to market.
The company reported a net loss of $22 million for the first quarter of 2019, which is a little more than the first quarter of 2018. This makes perfect sense for where the company is right now. There are more applications in the pipeline and more ongoing trials that require funding.
Shares opened on Monday at $18.63 and closed yesterday at $18.22. That’s a drop 2.2% over the first 48 hours of the trading week.
Finally, we’ve got biopharmaceutical company Corbus Pharmaceutical. Corbus has a pipeline of compound in all stages of the FDA clinical trial process. It also has a portfolio of over 600 compounds it plans on introducing into the pipeline a few at a time. The theory is continued revenues for many years to come, even as generics come to market.
Corbus also reported first quarter results last week. Its drug LENABASUM continues to advance towards a market date of 2020. During this first quarter, the company completes a licensing deal for LENABASUM with a company in Japan. Corbus received $27 million up front and there is the potential for $173 million in milestones and double-digit royalties.
Right behind it is clinical candidate CRB-4001 that is expected to state clinical studies at some point this year.
For the first quarter, the company lost approximately $26 million. This is double the first quarter of the previous year. Again, this makes sense. The company is focused on completing more clinical trials than it was the year before. There are even other application of LENABASUM that are entering phase 2 trials.
We mentioned on Monday that last week a law firm announced the filing of a class action lawsuit claiming the company changed data to conceal a study’s lack of statistical significance. When the market learned the truth, investors suffered damages that need to be repaired. Monday was the last day that investors could request appointment as lead plaintiff.
Shares opened at $7.20 on Monday and then closed yesterday at $7.21. That’s flat for the first two days of the trading week.
That makes CannTrust our mid-week leader. It will be interesting to see how shares prices hold out for the rest of the week. Sometimes we see investor excitement due to an earnings release and then the buzz is gone by Friday.
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You know we’ll be back Friday to see how the rest of the week shapes out.