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Hot Pot Stocks: Aurora Cannabis vs. GW Pharmaceuticals. Which Cannabis Stock To Buy?

By Cristine Felt 

Aurora Cannabis vs. GW Pharmaceuticals: Which Cannabis Stock To Buy?

In this time and age when cannabis industry is simply blooming, it appears even an inexperienced rookie could try their hand at buying cannabis stocks and shares without the slightest fear of losing. Indeed, the global market is thought to be worth some astonishing $150 billion, with the prognosis of hitting $272 billion by 2028. You may have envisioned that world popular “shut up and take my money” meme already, but it’s not that simple (as usual). Stocks rise and fall, so it’s best to rely on the companies that have been around for a while and are doing a pretty good job, to say the least – Aurora Cannabis and GW Pharmaceuticals.

But which one is a tad better? Let’s make a brief comparison.

Aurora-Cannabis-LogoAurora Cannabis

Aurora Cannabis is a Canadian cannabis producer which was founded in 2013. The company deals with the production and distribution of medical and recreational cannabis. Just saying their business is based in Canada speaks volumes. Ever since the country has legalized cannabis use in October last year, the sales have been rising, and it was excellent news for experienced players such as Aurora Cannabis.

They had a 20% market share in the last quarter of 2018. As one of the largest marijuana producers, and with expectations to produce astounding 500,000 kilograms in the near future, it appears they are a force to be reckoned with. Moreover, Aurora is Germany’s main cannabis supplier, and this European country is expected to follow Canada’s suit soon. In addition, it also exports products to 20 other countries in five continents. What is more, the announced shortage of cannabis supply is without a doubt an excellent opportunity for the company. Their latest market cap is $9.042B.

But, what about the drawbacks?

For one reason, their overall business in 2018 was not as stable as it may have seemed. Their general performance was quite disappointing, and they were listed as one of top five worst Canadian cannabis stocks. The last quarter turned out great due to the consequences of the messy legalization, which Aurora benefited from.

gwphGW Pharmaceuticals

On the other hand, we have a British biopharmaceutical company and a true pioneer in the industry. They are globally well-known due to a product of theirs called Sativex, an oral spray that is extensively used in the treatment of multiple sclerosis. They reaped huge success with it, and it is sold as a prescription drug in the UK, EU, New Zealand, Israel and Canada. GW Pharmaceuticals was set up in 1998, and their vast research experience is bearing fruit once again with the latest breakthrough in medical cannabis industry in the form of Epidiolex. In its essence, this drug is a purified CBD, and one of the reasons why Epidiolex is a revolutionary prescription drug is the fact that it was recently approved by the U.S. Food and Drug Administration for patients suffering from different types of seizure. Bearing in mind its CBD content, this is definitely an unprecedented event. Obviously, the company has made a huge step into the US market and was recognized as trustworthy (even 2-year-olds are can be prescribed Epidiolex). Naturally, the sales are expected to skyrocket and reach $1 billion per year, or even $2 billion. By the way, GW Pharmaceuticals market cap is 5.131B.

So, everything seems to be going great, but… What the company did not prepare for, and it is a bit surprising bearing in mind their experience, is the huge demand for the new drug which has surpassed the expectations and caused the shares to drop by 3% (!). Which is worse, the doubt in their business management was triggered by a simple tweet of a dissatisfied father. It makes one wonder if GW Pharmaceuticals can rise to the challenge.

Taking everything into consideration, we believe that GW Pharmaceuticals’ future shines a bit more brightly than Aurora Cannabis’. The latter is definitely a huge producer and distributor, but GW Pharmaceuticals seem to be producing medical cannabis of such high quality that even the FDA had to approve of it. After all, the winners have always been those who were able to offer something unique, extraordinary and extremely high-quality, no matter the industry, and GW Pharmaceuticals appear to be one of them.

Aurora Cannabis to Acquire Mexico’s Farmacias Magistrales S.A.

First License to Import, Manufacture, Store, and Distribute Medical Cannabis Containing THC in Mexico

CANADA: Aurora Cannabis has announced that the Company has entered into a Letter of Intent to acquire all of the issued and outstanding shares of Farmacias Magistrales, subject to customary due diligence provisions, the completion of definitive agreements, and regulatory and government approval.

As previously announced, Farmacias recently became Mexico’s first and only federally licensed importer to date of raw materials containing THC, gaining the necessary licenses, facilities, and permissions to import raw THC material, and manufacture, store, and distribute medical cannabis products containing over 1% THC. This transaction firmly establishes Aurora’s first-mover advantage in one of the world’s most populous countries, where more than 130 million people will have federally legal access to a range of Aurora’s non-flower medical cannabis products containing THC.

Under the regulations governing the Mexican medical cannabis market, domestic cultivation, import or sale in Mexico of dried flower products is prohibited. Consequently, Farmacias is the only company to date with the ability to supply THC containing products, and the only THC-containing offerings available initially will be Aurora-sourced higher-margin derivative products.

Aurora Cannabis Increases Cornerstone Investment in Cannabis Retailer Choom with Additional $20,000,000

CANADA: Aurora Cannabis and Choom Holdings, an emerging adult use cannabis company that has secured one of the largest retail networks in Canada, have announced that the companies have completed a non-brokered private placement of a debenture in the principal amount of $20,000,000 in Choom by Aurora, convertible into common shares of Choom at a conversion price of $1.25 per Common Share, with a four year maturity date. Aurora has also secured the right to acquire up to 40% of the Company at $2.75 per Common Share.

Choom is currently developing a network of retail stores which will feature a curated selection of products from various licensed producers with a strong focus on elevated customer experiences. Choom has secured the rights to 45 retail opportunities across Western Canada, rapidly expanding its commercial presence in highly strategic locations. This includes a total of 45 applications submitted, with 27 development permits and 18 building permits received from the various municipalities. In all cases the retail opportunities are subject to the necessary provincial and municipal government approvals.

With the investment from Aurora, Choom intends to accelerate its sophisticated retail channel expansion in the Canadian adult use market, and is committed to establishing Choom as a dominant national cannabis retail brand.

“Choom has developed a strong brand identity that radiates throughout its developing network of retail stores, which is well aligned with Aurora’s overall adult usage strategy,” said Terry Booth, CEO of Aurora. “Through this strategic investment, Aurora further diversifies its retail strategy, with additional retail opportunities across Western Canada, and future potential opportunities in the Ontario market. We are pleased to increase our stake in Choom and support them as they execute on introducing their unique retail brand to Canadian cannabis consumers.”

Chris Bogart, President & CEO of Choom, added, “This is a transformational investment from Aurora, one of the world’s leading cannabis companies, that helps accelerate our growth and expand our retail footprint to be one of best positioned and largest retailers in the country. Aurora’s continued confidence and investment allows Choom to provide high quality cannabis to a broader market of consumers across the entire country and expedite our expansion and the roll out of store openings.”

Aurora Cannabis Announces Application To List On The NYSE

CANADA: Aurora Cannabis announced today that the Company has filed an application to list its common shares on the New York Stock Exchange.

Listing of the Company’s common shares on the NYSE remains subject to the approval of the NYSE and the satisfaction of all applicable listing and regulatory requirements. Aurora anticipates that, subject to receipt of all required approvals, trading in its common shares on the NYSE will commence before the end of October 2018. In advance of the intended listing, the Company has filed a Form 40-F Registration Statement with the United States Securities and Exchange Commission.

Aurora Cannabis is coming to the NYSE

Aurora Cannabis is coming to the NYSE

Aurora’s shares will trade on the NYSE under ticker symbol “ACB”, the same symbol the Company’s common shares currently, and will continue to, trade under on the Toronto Stock Exchange. Aurora will also continue to trade on the OTCQX under the ticker symbol “ACBFF” until completion of the NYSE listing. Upon receipt of all required approvals and completion of the formal listing process, the Company will publicly announce its first trading date on the NYSE. Aurora furthermore intends to voluntarily delist its shares from the OTCQX at such time.

“Through our NYSE listing, Aurora joins an established group of mature global brands with improved access and exposure to an engaged international institutional investor audience,” said Terry Booth, CEO of Aurora. “Aurora’s high-paced execution has made it one of the world’s leading cannabis companies. We have grown from being a licensed producer with a single facility, to a horizontality differentiated and vertically integrated global organization with a funded production capacity in excess of 500,000 kg a year, sales and operations on five continents, and a team of more than 1,500 employees.”

Mr. Booth added: “Our purpose-built, indoor grow facilities, designed to meet the stringent requirements for furnishing product to international markets, have made Aurora the largest supplier of medical cannabis in Europe. We are also well-prepared for the launch of the domestic adult consumer use market in Canada with a portfolio of strong consumer brands and coast-to-coast provincial supply arrangements covering 98% of the Canadian population. I am proud of our achievements to date, and look forward to updating the investor community as we continue to execute on our aggressive growth strategy.”

 

Aurora Cannabis Announces $200 Million Debt Facility With Bank Of Montreal

CANADA:  Aurora Cannabis has agreed to a new $200 million debt facility, with a potential upsize to $250 million, with the Bank of Montreal (“BMO”).

The facility will consist of a $150 million term loan and a $50 million revolving credit facility (together, the “Loans”), both of which will mature in 2021. A short period after the implementation of Bill C-45 in October 2018, the Company may request an increase of up to a further $45 million to the term loan subject to agreement by BMO and satisfaction of certain legal and business conditions. BMO will also be providing up to $5 million in other credit instruments. Closing of the debt facility is subject to completion of final due diligence, negotiation of definitive documentation, and satisfaction of conditions precedent customary to a financing of this nature.

The debt facility will be primarily secured by Aurora’s production facilities, including Aurora Sky, Aurora Mountain, and Aurora Vie. Strategically located at Edmonton International Airport, Aurora Sky is the world’s most technologically advanced cannabis facility, projected to produce in excess of 100,000 kg per year of high-quality cannabis at low per gram costs, and slated to deliver its first harvest this week.

“Having successfully met all of BMO’s stringent risk assessment and other due diligence criteria to establish this facility reflects well on the maturity, progress and prospects of Aurora, as well as the quality and economic value of our production facilities,” said Terry Booth, CEO. “This is by far the largest traditional debt facility in the cannabis industry to date. The funds provide us additional fuel to complement our end-to-end portfolio of vertically integrated, geographically and horizontally diversified assets, aimed at building a pre-eminent global cannabis company with a superior margin profile.”

Glen Ibbott, CFO of Aurora, added, “The shift to traditional debt financing is significant.  Our cost of capital continues to decrease, providing us a distinct competitive advantage as we execute on our growth strategy. The non-dilutive nature and attractive pricing are consistent with Aurora’s commitment to generating shareholder value. We believe this is a major milestone in the cannabis industry and a validation of our operational effectiveness. It also marks an exciting new stage of our long-term relationship with BMO, a Tier 1 bank with a sterling domestic and international reputation.”

The Loans can be repaid without penalty at Aurora’s discretion. The pricing of the Loans is a set margin over the BMO CAD Prime Rate or a Bankers’ Acceptance of appropriate term. Based on the current BMO CAD Prime Rate, the interest payable is expected to be in the mid to high 4% per annum range over the term of the Loans.

Aurora Cannabis Finalizes Largest Acquisition In Cannabis Industry History

CANADA: Aurora Cannabis has announced today that with the second take-up under its offer to acquire all of the outstanding shares of CanniMed Therapeutics, the Company now owns approximately 95.9% of CanniMed common shares. The Company intends to acquire the remaining outstanding shares it does not already own through a compulsory share acquisition, pursuant to the Canada Business Corporations Act.

The transaction unites Aurora, one of the world’s largest and fastest growing cannabis companies, with CanniMed, a pioneering cannabis company that has been operating in the industry longer than any other competitor, and whose brand strongly resonates with the medical community. The combined entity, under the Aurora banner, creates a global medical cannabis leader, and will continue to pursue an aggressive strategy of rapid technological and product innovation, and international expansion.

Management Commentary

“We are delighted to have finalized the largest transaction to date in the cannabis industry,” said Terry Booth, CEO. “We are now combining CanniMed, the pioneer of the Canadian cannabis industry, with Aurora’s best practices, innovations, funded production capacity, distribution network, and rapidly growing international footprint. This acquisition and the resulting synergies transform Aurora into a leading company in the global medical cannabis space. We believe that our combined assets, capabilities, and brand strength, as well as our consistent execution, position us very well to gain significant share of the global market. We have commenced integrating the organizations, and look forward to reporting on our progress, innovations and other corporate developments in the coming months as we continue to execute our growth strategy.”

Track Record and Reputation with Medical Community Create Platform for Accelerated Growth

CanniMed (previously Prairie Plant Systems Inc.), was granted a contract in 2000 by Health Canada to produce medical cannabis, making it the longest standing federally regulated producer in Canada.

With an 18-year track-record, 13 of which as the sole supplier to Health Canada, and not a single product recall, CanniMed has built an impressive reputation with the Canadian and international medical community, and has developed, organically, a network of over 5,000 referring physicians. Aurora management believes that CanniMed produces and distributes the most physician-prescribed cannabis oil in the Canadian medical cannabis system.

CanniMed’s standing with the cannabis community will also be rapidly elevated following its successful integration with Aurora, through the company-wide adoption of the Aurora Standard, harnessing Aurora’s industry leading best practices, and an inclusive, compassionate, and enlightened approach to cannabis culture and community.

 

Aurora Cannabis Increases Stake In Hempco To 35%

CANADA: Aurora Cannabis and Hempco Food and Fiber announced that Aurora has exercised 10,558,676 warrants to purchase common shares of Hempco for total proceeds of $4.3 million to Hempco. Consequent the warrant exercise, Aurora now owns 21,117,352 Hempco common shares, reflecting an ownership interest of approximately 35%.

“With this further investment by Aurora we are now very well capitalized to accelerate our various strategic initiatives to drive growth at Hempco,” said Diane Jang, CEO of Hempco. “Since taking the helm at Hempco, we have made a number of tactical and strategic moves that position the company well to take advantage of a number of opportunities in the health lifestyle food supplements market, as well as for the pet and equine markets. Additionally, with the positive vote on the second reading of Bill C-45 in the Senate, implementation of the new Cannabis Act is that much closer, which would position us very well for whole-plant utilization and further acceleration of our business plan. These funds, and the presence of a large, stable shareholder, puts Hempco in a strong position to pursue a multitude of opportunities and create further shareholder value.”

Terry Booth, CEO of Aurora, added, “This additional investment in Hempco was anticipated from Day 1 of our strategic partnership. We are pleased with the work done by Diane and her team, and look forward to supporting Hempco’s growth initiatives and capitalizing on the multiple opportunities this partnership creates for us. In addition to the warrants exercised, we intend exercising our option to buy founder shares, and take our position to north of 50%.

Metro Cannabis Sues Aurora After Being Denied Retail Marijuana License For Cannamart

COLORADO:  The city of Aurora “manipulated the process” of selecting who would receive a license to sell recreational marijuana in the city, according to a lawsuit filed Tuesday by a business owner who was denied a license.

In the suit, Metro Cannabis, which sought to open a recreational pot shop called Cannamart, claims that Aurora miscalculated who should receive a license by improperly rounding scores.

Metro Cannabis subsequently said in the lawsuit that a hearing officer for the city who heard the company’s appeal acknowledged “a clear mathematical error” but denied the license anyway.

The lawsuit, filed in Adams County District Court, is the first legal challenge of Aurora’s convoluted process of awarding recreational marijuana licenses based on a point system.

New Report: Legal Cannabis Market Projected To Grow 27% CAGR By 2023

IRELAND: The legal cannabis market is projected to register a CAGR of over 27% by 2023, according to “Global Legal Cannabis Market 2019-2023” a new report just added to ResearchAndMarkets.com.

The latest trend gaining momentum in the market is the use of advanced techniques in cannabis cultivation. According to the report, one of the major drivers for this market is the rapid legalization of cannabis. Further, the report states that one of the major factors hindering the growth of this market is the health hazards associated with the consumption of cannabis products.

Market Trends

  • Increasing demand due to growing number of patients who need cannabis for medical use
  • Use of advanced techniques in cannabis cultivation
  • Rising mergers and acquisitions in the cannabis sector

Key Players

  • Aphria
  • Aurora Cannabis
  • Canopy Growth Corporation
  • CV Sciences
  • Tilray

Canadian Cannabis Companies Seeking Higher Stakes in Australian Market

CANADA: As investor excitement continues to climb in Canada over the upcoming legalization of cannabis on July 1, 2018, major Canadian companies are already setting their sights on the next big legal cannabis market-Australia.

Big players in the Canadian cannabis space already have started to stake claims “Down Under” where medical cannabis is beginning to take hold.  Notable companies include Aurora Cannabis (TSX: ACB), Canopy Growth Inc. (TSX: WEED) (OTC: TWMJF), CannTrust Holdings Inc. (CSE: TRST) (OTC: CNTTF), MedReleaf Corp. (TSX: LEAF) (OTC: MEDFF), and MYM Nutraceuticals Inc. (CSE: MYM) (OTC: MYMMF).

Australian consumers are already undergoing a very quick renaissance into the cannabis market, with several developments happening in the past few months.

After Australia’s federal decision that low-THC hemp seeds were fit for human consumption, almost instantly hemp beer and other related products hit the market.

Australian-listed companies are already starting to see major gains, as the country’s first corporate cannabis production is set to begin in 2018.

Stock prices on several Australian companies are beginning to take off, as the reality of Australia as a viable cannabis market for years to come, sets in.