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Tuesday, December 1, 2020

Where to Draw the Line for Aphria Inc (OTCMKTS:APHQF)

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The action in the cannabis space has been something less than compelling over the past three weeks, leading to high growth names, such as Aphria Inc (OTCMKTS:APHQF), plotting similarly less than compelling chart patterns. However, in the midst of this decline, it is our job to analyze the individual case studies and seek out where value may be under construction. Such a case may be in the making for APHQF.

To wit: Aphria just announced that it completed its largest international shipment of cannabis oil to date to Australian medical life science company, Medlab Clinical Limited (ASX:MDC). According to the release, “The shipment is part of the previously announced agreement between Aphria and Medlab in which Aphria produces and supplies high-yield cannabis extracts for Medlab to be used in a human trial to test the management of intractable pain in oncology patients – the first trial of its kind globally.”

Aphria Inc (OTCMKTS:APHQF) bills itself as a company that produces, supplies, and sells medical cannabis in Canada. Its cannabis products include dried flowers and cannabis oils. APHQF sells its products through its online store and telephone orders, as well as MMPR licensed producers.

The company offers sativa, indica, and hybrid medical marijuana products, as well as cannabis oils. It also provides support services in the form of medical consultations, group therapies, and rehabilitation to veteran and first responders.

The company sells its products through its online store or phones, as well as engages in the wholesale shipping of medical marijuana plant cuttings and dried buds to other licensed producers. Aphria Inc. is headquartered in Leamington, Canada.

According to press materials, “APHQF is one of Canada’s lowest cost producers, produces, supplies and sells medical cannabis. Located in Leamington, Ontario, the greenhouse capital of Canada. APHQF is truly powered by sunlight, allowing for the most natural growing conditions available. We are committed to providing pharma-grade medical cannabis, superior patient care while balancing patient economics and returns to shareholders. We are the first public licensed producer to report positive cash flow from operations and the first to report positive earnings in consecutive quarters.”

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As noted above, shares of the stock have recently been pulling back in a move that threatens to test levels last seen during the spring. If we see declines continue, it is important to have a laundry list of chart levels on the radar for possible opportunities. According to our analysis, the level that appears to be flashing on the chart in neon lights is $6.25 per share. The stock may not get there, but if it does, be ready.

“Aphria is proud to support Medlab’s important and vital clinical research on the use of medical cannabis as an alternative treatment for pain management,” said Vic Neufeld, Chief Executive Office at Aphria. “Medlab was our very first international partner, and as Aphria expands its operations around the globe, we will continue support the advancement of medical cannabis research through these valuable partnerships.”

Dr. Sean Hall, Chief Executive Officer at Medlab said “Trial design, implementation and management is critical to developing a new, accepted drug – the work we are undertaking is to expand the medical toolkit especially with regards to current usage of opioids in patients with intractable pain. Trial work is progressing with recruitment underway, further patients accessing the trial product (NanaBis™) under the Australian Special Access Scheme (SAS) is providing early, exciting and promising results.”

Currently trading at a market capitalization of $1.68M, APHQF has a significant war chest ($119.4M) of cash on the books, which is balanced by about $8.6M in total current liabilities. One should also note that debt has been growing over recent quarters. APHQF is pulling in trailing 12-month revenues of $30.6M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 100.6%. We will update the story again soon as further details emerge. Sign-up for continuing coverage on shares of $APHQF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $APHQF, either long or short, and we have not been compensated for this article.

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