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Tuesday, November 24, 2020

CV Sciences Inc (OTCMKTS:CVSI) Gets Back Off the Canvas

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A few days ago, CV Sciences Inc (OTCMKTS:CVSI) was crushed on what we called “a big left hook” in reference to famed short-seller Andrew Left, and his tweet attempting to paint CVSI as a possible fraud case. As we pointed out in that piece, the stock has been a major momentum pick because of its market-dominant position in the booming CBD products space, not because of the IP issue (a USPTO hiccup) that Mr. Left used to nail the stock. We suggested it might be a good idea to view the dip as an opportunity. So far, the stock is up as much as 75% since we published that article.

To help foster that action, the company just announced that it has fully repaid the promissory note payable to Wiltshire, LLC in cash, thus avoiding any remaining interest payments due on the Note. “The Company’s strong financial performance and resulting cash flow have allowed us to fully repay this Promissory Note in cash nearly nine months ahead of the original due date. By prepaying this debt, the Company avoids further payments associated with this Promissory Note and we are now completely free of debt other than ordinary course payables,” stated Joseph Dowling, Chief Executive Officer of CV Sciences.

CV Sciences Inc (OTCMKTS:CVSI) bills itself as a life science company, focuses on developing and commercializing novel therapeutics utilizing synthetic Cannabidiol (CBD).

CVSI operates two distinct business segments: a drug development division focused on developing and commercializing novel therapeutics utilizing synthetic CBD; and, a consumer product division in manufacturing, marketing and selling plant-based CBD products to a range of market sectors, including nutraceutical, beauty care, specialty foods, and vape.

Following the CanX Acquisition in December 2015, CV Sciences commenced its preclinical drug development program during the second quarter of 2016. The Company’s drug development efforts include pursuing synthetic-based Cannabidiol drug candidates in areas that have the potential to provide significant improvements in therapeutic patient treatments with sizable addressable markets.

The company was formerly known as CannaVEST Corp. and changed its name to CV Sciences, Inc. in January 2016. CV Sciences, Inc. has primary offices and facilities in Las Vegas, Nevada and San Diego, California.

CV Sciences Inc is led by Michael J. Mona, JR. founder of CV Sciences, Mr. Mona possesses over 30 years of senior management experience in a range of industries including real estate/construction, industrial farming, chemical processing and consumer products. Mr. Mona is a recognized industry leader in hemp farming operations and chemical extraction and has established a global supply chain of hemp-derived products.

According to company materials, “CV Sciences, Inc. (CVSI) operates two distinct business segments: a drug development division focused on developing and commercializing novel therapeutics utilizing synthetic CBD; and, a consumer product division in manufacturing, marketing and selling plant-based CBD products to a range of market sectors. CV Sciences, Inc. has primary offices and facilities in Las Vegas, Nevada and San Diego, California.”

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As noted above, volatility has been the big story, with shares of CVSI all over the map in recent days. But the bounce has been strong. The view ahead will hinge to some extent on how real the company’s legal issues are as a result of the Citron attack.

Mr. Dowling added, “Our record Q2 2018 results reported on August 1, 2018, demonstrated the strong performance of our market-leading consumer products division, which generated $20.4 million of sales and $3.8 million of net income for the first six months of 2018.  By significantly deleveraging our balance sheet, we have the ability to maximize our key opportunities: to scale-up operations and take advantage of the rapidly expanding hemp CBD industry, and focus on our drug development division, which continues to make progress through the pre-clinical phase. We remain confident that our continued prosecution of our patent related to the Company’s drug candidate CVSI-007 should result in an issued patent with proprietary technology.”

Currently trading at a market capitalization of $600M, CVSI has a significant war chest ($7.2M) of cash on the books, which must be weighed relative to about $867K in total current liabilities. CVSI is pulling in trailing 12-month revenues of $33.3M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 202.5%. This may be a very interesting story and we will look forward to updating it again soon. Sign-up for continuing coverage on shares of $CVSI 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 $CVSI, either long or short, and we have not been compensated for this article.

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