CV Sciences Inc (OTCMKTS:CVSI) took a serious turn for the worse last week, the CBD pure-play is failing to regain momentum. CVSI is down another 5% at the time of writing and the administration for the company is vigorously fighting back against the short specifically the report that originated from Citron Research.
To summarize, in case readers are unaware, CVSI was skyrocketing up the charts earlier this month on records profits and sales, and then Citron research released a tweet basically insinuating that CVSI’s patent portfolio was not legitimate and suspect. Of course, this cut the legs of the stock and now the stock has given away most of its gains. To defend themselves, CVSI released two statements. “As many of our shareholders are aware, our Company has been victimized by campaigns run by short sellers in order to depress our stock price, so they could make financial windfalls,” stated Joseph Dowling, Chief Executive Officer of CVSI. “We are also aware that at least one such group has boasted on social media platforms about its financial returns since their release of misleading information regarding the Company’s patent prosecution and drug development efforts.”
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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CVSI alleges that Citron created this overblown report to profit off their fall. The latter does not exactly have a spotless record, so CVSI might win the court of public opinion here – not to mention, the stock has seen a slight bounceback.
In fact, CVSI alleges that Citron blatantly fudged the facts:
“The conclusions in the complaint and in the ‘report’ by Citron Research are outright false, and demonstrate either an ignorance, a disregard, or both, of the basics of patent prosecution,” stated Mr. Dowling. “A ‘final rejection’ in the context of patent prosecution is anything but final. It by no means indicates that the applicant has failed in its efforts to obtain an issued patent.” We will continue to prosecute the ‘617 Application and plan to file and prosecute several more applications related to the inventions described in the ‘617 Application.”
Holding a capital value in the market of $375.34M, CVSI has recorded record profits and revenues – the company looked like it had really reached an inflection point – and this particular patent issue is not related to the company’s recent success or the long-term bull thesis, as we have stated before. Beside this issue, CVSI is seeing major top-line growth, with y/y quarterly revenues growing at 202.5%. We will update the story again soon as further details emerge. 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.