Aphria Inc. (TSX: APH) has invested $11.5 million in Scientus Pharma by way of a secured convertible debenture
SmallCapPower | August 18, 2017: Aphria Inc. (TSX: APH) Tuesday announced that it has invested $11.5 million in Scientus Pharma by way of a senior secured convertible debenture. The Debenture has a two-year term, bears interest at the rate of 8%, paid semi annually, is convertible into the common shares of Scientus Pharma at the rate of $2.75 a share and is secured by a first charge on all of the current and future assets of Scientus Pharma.
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Scientus Pharma, a vertically-integrated biopharmaceutical company, is raising the bar of cannabinoid products from medical-grade to pharmaceutical-grade. Leveraging its proprietary, patent-pending formulation and processing technologies, Scientus Pharma is committed to leading the medical cannabis market towards pharmaceutical standards in manufacturing, formulations and dosing.
Related: Aphria Inc. CEO Vic Neufeld Like You’ve Never Seen Him Before
Aphria CEO Vic Neufeld stated, “Their proposed pipeline of new and innovative products represent a major step forward for cannabinoid based medical products in Canada. Gaining access to their dealer’s licence provides Aphria immediate access in the short-term to enhanced global opportunities.”
In July, Aphria Inc. announced that it had entered into a major wholesale supply agreement with Scientus Pharma. Under the terms of the Agreement, Aphria is committing to supply over 25,000 fully grown medical cannabis plants over the next 12 months to Scientus Pharma. The first delivery, under the agreement will occur in the middle of Aphria’s second quarter of 2018. Aphria expects to generate over $1.2 million of revenue from the wholesale supply agreement in each full quarter of shipments, with gross margins consistent with previously executed wholesale agreements.
This investment in Scientus Pharma shows that Aphria is looking beyond the recreational market for cannabis and gives investors a taste of where of the cannabis industry is likely heading – into the multi-billion dollar pharmaceutical industry once legalization goes global.
In terms of valuation, Aphria currently trades at TTM price to sales value of 39.94x, price to book value of 3.85x and trailing P/E of 64.62x.
Disclosure: Neither the author nor any of the principals at Small Cap Power, or their family members, own shares in any of the companies mentioned above.
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