"A few months ago, Jazz Pharmaceuticals plc (Nasdaq: JAZZ) acquired GW Pharmaceuticals for more than $7 billion and the transaction represented a major milestone for the cannabis industry.
GW was the first company to bring a cannabis-based therapy through US Food and Drug Administration (FDA) clinical trials and proved there are medical benefits associated with cannabis.
The size of the acquisition was eye-popping, and we have been focused on identifying companies that are focused on the biotech side of the cannabis industry. MediPharm Labs Corp. (TSX: LABS) (OTCQX: MEDIF) (FSE: MLZ) is a Canadian cannabis company that has expanded the business and we are favorable on how the management team has been executing.
MediPharm is Positioned to Record Strong Growth
Although MediPharm’s trend has been to the downside, we believe the business is positioned to record strong growth and are favorable on its leverage to the biotech industry. Earlier this week, MediPharm announced a research partnership master agreement with McMaster University. The relationship is expected to play a key role in the cannabis research and drug development that is being conducted by MediPharm and believe the market does not appreciate the growth prospects that are associated with it.
MediPharm’s cannabis drug license and expertise positions it to supply clinical trial material, assist in investigation protocol and provide regulatory support for multiple trials. Three initial proposed clinical trials will evaluate the effectiveness of proprietary tetrahydrocannabinol (THC) and cannabidiol (CBD) drug candidates for indications that include pain, insomnia associated with major depression, and uremic pruritus.
MediPharm is considered to be a global leader in specialized, research-driven pharmaceutical-quality development and manufacturing of cannabis active pharmaceutical ingredients (API) and derivative products. We are favorable on the amount of value that can be generated through the relationship and will monitor how the story advances from here.
A Growth Story that is Flying Under the Radar
Over the next few months, MediPharm is expected to make additional announcements in regards to specific projects that fall under the agreement as well as the projects that receive support from Health Canada.
At current levels, we believe that MediPharm has a compelling valuation and a favorable risk-reward profile. The company has been quietly executing on the biotech side of the cannabis industry and we are bullish on this aspect of the story.
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