As alt-medicine (cannabis and psychedelic treatment for mental illness) regulations relax across the globe, small cap stock Creso Pharma (CPH.ASX, OTC: COPHF), operating across four continents and led by senior MindMed and ex-Canopy Growth executives, is on a rapid growth curve and angling to become a global blue chip operator.
Creso’s recent acquisition of life sciences company Halucenex places the company firmly in the race with billion dollar players such as MindMed (CSE: MMED) and Compass Pathways (Nasdaq: CMPS) as psychedelic assisted psychotherapy (PAP) takes hold in a $300 billion marketplace.
Halucinex will immediately benefit from Creso’s broad pharmaceutical knowledge and established global distribution footprint, with a clear path to near term revenue generation.
“Investors who took a stake in Creso Pharma approximately three months ago now looking at a near ten-bagger, but in management’s words ‘’we are just getting started’’ – and it could be argued, so is the share price.” – FinFeed, “Creso Pharma bags four new orders and launches Black Mamba“
60 second summary:
- Blue chip leadership: Creso Pharma (CPH.ASX, OTC: COPHF)‘s board comes stacked with industry veterans in cannabis and psychedelics, including Dr Miri Halperin Wernli, president of MindMed (the first psychedelic sector listed stock, now worth $1.3 billion), and former Canopy Growth Founder and CEO Bruce Linton.
- Seed to Sale: Four lucrative jurisdictions, four continents, five verticals with an expanding portfolio of products covering therapeutics, nutraceuticals, animal health and cosmetics.
- Entering $51bn Psychedelics Market: Creso’s acquisition of Halucenex (see Halucenex presentation here) avails them to a fully licensed psychedelics R&D facility, with a secured supply of synthetic psilocybin and fast track to early revenue generation.
- Rapidly Expanding International Sales Footprint: Operations in Canada, Australia, Colombia and Switzerland. LOI’s and/or agreements developing in U.S., Israel, Pakistan, Spain and Brazil.
- Revenue Generating Canadian facility: Managed by ex-Canopy Growth alumini, Creso’s world class, wholly owned Mernova facility in Nova Scotia is purpose built to GMP standards and is positioned for easy access to the U.S. and European markets. Scalable to 200,000 square feet.
- Exponential growth potential: As regulations ease across the globe in cannabis and psychedelics, Creso is internationally positioned to leverage exponential growth opportunities in expanding markets.
To review Creso’s complete product lineup and international presence, please see the Company’s investor presentation here [ PDF ]
Latest news release (Mar 15): Agreement to acquire established Canadian psychedelics company Halucenex Life Sciences Inc.
- Halucenex focuses on the commercialisation and R&D of novel psychedelic molecules for the treatment of Post Traumatic Stress Disorder (PTSD), Depression and other mental illnesses
- Agreement provides Creso Pharma with entry into the emerging global market for psychedelics medicines – estimated to be worth up to US$100Bni
CRESO PHARMA (ASX:CPH) (OTC:COPHF) – AN INTRODUCTION
Steady Leadership In A Sea Of Regulations
Once the home of quick doubles and triples in share price fluctuations courtesy of seemingly overnight multi-billion dollar market capitalizations, the cannabis markets have been tempestuous to say the least since approximately midway through 2018.
The last worry an investor should have is whether the leadership in their stock is capable of navigating an ever-changing regulatory landscape rife with competition.
Enter Creso Pharma (CPH.ASX, OTC: COPHF), an Australian-based seed-to-sale cannabis company currently operating on four continents.
Creso’s CEO and co-founder is Dr Miri Halperin Wernli. With nearly 25 years of strategic and leadership experience in the global pharmaceutical and biomedical industries, she is the steady hand at the rudder of not one but two separate companies.
Not only is she the CEO of Creso, but she’s also the President of Mind Medicine (MMED.NEO, MMED.OTC, MMEDF, MMQ:DE, market cap $1.3 billion CAD) which is one of the newest and hottest companies in the swiftly developing psychedelics sector. Throughout her career she’s held C-level leadership positions in R&D and in strategic marketing within global pharmaceutical companies in Switzerland and the United States.
The second noteworthy face in Creso’s lineup, and leading its Advisory Board, is former Canopy Growth (WEED.T, CGC.NYSE) CEO and co-founder, Bruce Linton. He was responsible for bringing Canopy from a plucky cannabis startup to a $15 billion valuation on the New York Stock Exchange during his six-year tenure.
Mr. Linton is still widely sought after for advisory roles, and also for his extensive contacts, influence and experience with emerging markets, and cannabis in particular. What attracted him to Creso was its intellectual property, established global distribution network, and product pipeline.
The Psychedelic Opportunity
“Psychedelics are finally having their day in the sun — not as recreational drugs but as medicines to address society’s problems with mental illness and addiction — and I’m one of the many Wall Street investors who are now backing them,” Shark Tank’s Kevin O’Leary wrote in an op-ed.
As science continues to establish the use of psychedelics as a viable means of therapy, a generational, ground floor investment opportunity has opened up for early stage investors.
Since the highly publicized March 2020 IPO of MindMed (CSE:MMED), backed by Shark Tank star Kevin O’Leary and led by Creso’s own CEO Dr. Miri Halpern, the psychedelic sector has seen a number of high profile companies list their shares for trading. MindMed’s shares have skyrocketed over 1000% since going public, to $4.30 (Feb 10) giving it a market capitalization of $1.45 billion CAD.
Most notably investors have given a further stamp of approval to the industry with Compass Pathways (Nasdaq: CMPS) IPO on September 18th at $17/share. Shares closed that day at $29, rocketing to $47 on November 27th for a gain of 175%, valuing the company at $1.7 billion (USD).
These companies’ valuations are going through the roof for good reason. They are in the early stages of staking their claim to a $100 billion/year global addressable market for mental health treatment and solutions (* Canaccord Genuity, “Around the Corner”, May 2020).
Large and emerging market opportunity
The economic burden of mental illness in Canada is estimated at C$51Bn, while COVID-19 has worsened the global mental health crisis. Morethan 340m people suffer from mental illness globally – current available treatments for mental illness have limited effectiveness and many sideeffects.
Creso has entered this early stage, rapidly expanding sector with the acquisition of Halucenex Life Sciences Inc. and is aiming to be one of the only fully vertically integrated Canadian providers of Psychedelic-Assisted Psychotherapy.
Operating a 6,000 sq. ft. medical clinic in Nova Scotia, Halucenex is fully licensed and fit for conducting clinical trials. The Controlled Drugs and Substances Dealer’s Licence allows for R&D of psilocybin, LSD and MDMA, as well as cultivation of natural magic mushrooms.
Their Controlled Substances License and CTA Permit are under application – once granted, Halucenex will be one of the only companies operating entirely out of Canada.
Critical to scalable growth and de-risking supply constraints, Halucenex has secured access to one of the largest supplies of synthetic psilocybin in Canada, guaranteeing availability for a defined clinical trial program.
The company is advancing a 3-tiered strategy involving 1) the development of a proprietary synthetic psilocybin formulation, 2) researching into interactions between synthetic psilocybin and natural mafic mushrooms and 3) becoming a clinical drug pipeline provider of psychedelic-assisted psychotherapy.
Creso’s foray into this multi-billion dollar opportunity is further galvanized by a management team with a track record of success in the psychedelic sector and a global footprint for distribution, allowing the company to more easily navigate its way toward it’s goal of becoming an industry leader.
Can Creso become the next Cannabis blue chip operator?
Creso Pharma (CPH.ASX, OTC: COPHF) has spread its supply and distribution out over four continents. Specifically, we’re talking about their headquarters, located in their home country of Australia, but also into Europe, South and North America with Switzerland, Colombia and Canada respectively.
“Canadian Cannabis Sales Skyrocketed 120 Percent in 2020” – Green Entrepreneur, Mar 4 2021
Canada was the first G7 nation to implement legalization to permit a nationwide cannabis market. Today it represents over $400 million in annual sales.
Mernova Medical is Creso’s flagship 24,000 square facility located 60 km outside of Halifax, Nova Scotia. Strategically located to supply Canadian, U.S. and European markets, the facility possesses completely automated climate control and irrigation, and is presently in phase 1 of development, offering 10 grow rooms and a total production of 3500kg per year. The facility is in advanced stages of obtaining EU GMP certification and is scalable to up to 200,000 square feet with matching developments in yield.
The buildout is only half the story, though. Here we see Creso’s sterling pedigree in action once again as the senior management team behind Mernova Medical are two more Canopy Growth veterans, Jack Yu and Isaac Allen, at managing director and vice president respectively. Both are working tirelessly to push Mernova through each new growth phase.
Ramping Up Canadian Operations
To date Mernova has inked PO’s with the Nova Scotia Liquor Corporation, Yukon Liquor Corporation and Truro Cannabis, with an established presence across Canada. The orders open potential new opportunities for new Canadian markets in Ontario and the Yukon, which recorded combined sales for recreational cannabis of more than C$300 million for 2020.
Mernova has also entered the important Israeli market by pulling in a $900,000(AUS) purchase order from Israel-based UNIVO Pharmaceuticals, a leader in the Israeli medicinal cannabis market. (Of note: Israel is considered to be a rapidly-growing medicinal cannabis market that is set to be worth roughly A$90.3 billion by 2024.)
In a highly promising commercial development, Mernova secured an agreement with the Ontario Cannabis Retail Corporation (OCRC), operating as the Ontario Cannabis Store (OCS), formally recognising Mernova as a supplier to Canada’s largest market.
Three-year supply agreement with TerrAscend Canada (commenced 2019) – Under the terms of the agreement, Mernova has agreed to sell and TerrAscend has agreed to purchase a minimum of 100 kgs of cannabis flower per month from Creso.
To further diversify its revenue base, Mernova has announced plans to launch products into the Canadian Hashish market in Q1 2021.
2020 production quota: 56.5 tonnes (world’s 2nd largest), or 22% of global supply of high-THC medical cannabis.
Cost-effective: Cost of goods sold $0.35 vs $1.57 (Canada). Trimming rate/gram: $0.10 vs $0.50 (Canada).
Kunna S.A.S is Creso Pharma’s (CPH.ASX, OTC: COPHF) wholly-owned and debt free subsidiary operating out of Medellin, Colombia. It possesses five licenses and is in the process of registering genetics and acquiring quota. What’s most interesting about Kunna S.A.S is the opportunities it reveals for the company. It establishes Creso in the Latin American market, which includes Argentina, Colombia, Chile, Mexico and Uruguay. It also places them among the few global companies, and the only company listed on the ASX, with the ability to commercially cultivate medicinal-grade cannabis in Colombia.
Switzerland is where Creso Pharma (CPH.ASX, OTC: COPHF) does the lion’s share of the R&D for their formulations, but is also used as a launchpad for deeper penetration into the European markets. Creso has successfully developed and prepared new products for launch across their animal health and human health verticals.
The Future of Pet Therapy
According to a 2020 Pet Industry Green paper jointly released by Nielsen and Headset, a leading data and analytics firm for the cannabis industry, hemp-based CBD pet products will represent 3-5% of all hemp CBD sales in the U.S. by 2025. With 74% of CBD buyers having pets, projections show that the pet sector may be the sight for the highest conversion rates in the CPG industry.
Linton says his interest in Creso Pharma stemmed from the company’s commitment to animal care, and says the work the company has already done exceeds the quality of any existing work on the potential of cannabinoids for pets.
“We’ve had a method by which humans in Canada for more than 20 years can gain access to cannabis, but we haven’t had a method by which dogs can,” he said. “I think it’s a big, underserviced, serious market.”
He says Creso has seen the uptake of its products through the distribution channel of veterinarian networks, and his goal is to see the company bring the products to North America. Mr. Linton said some of the company’s products have been used for anxiety, to manage mobility, and to help dogs as they age.
Creso’s future looks bright as the company has signed commercial term sheets for expansion into Scandinavian, Spanish, Portuguese and Brazilian markets. An agreement with wholesale distributor Farmagonto to enter the Scandinavian market, another with DHS business to enter both the Iberic (Spanish) and Brazilian retail CBD market, and last a letter of intent inked with Highnoon Laboratories to enter the Pakistan market with hemp therapeutics.
But let’s not forget about the worlds largest market, the United States, where one of the key points the Biden and Harris administration wanted to make prior to assuming the presidency was a distinct change in the official view of cannabis.
“We will decriminalize marijuana and we will expunge the records of those who have been convicted of marijuana,” said Vice President Kamala Harris during the primaries. Harris’ comments reflected the strongest position any major-party candidate for president or vice president has made on cannabis to date.
Creso Pharma (CPH.ASX, OTC: COPHF) has already commenced research and preparation to make a strong entry into the U.S. market. The Company’s arsenal of high level management, infrastructure and product offerings provide a potent recipe to succeed in a highly competitive jurisdiction.
With their agreement to acquire advanced psychedelic assisted psychotherapy company Halucenex, Creso Pharma is now officially a global cannabis and psychedelic’s company, led by blue chip management and operating across four continents.
Cannabis will always remain their bread and butter and driver for planned aggressive growth, but the the company’s foray into the red hot psychedelic’s sector, with near term revenue potential, could turn out to be a boon for investors.
Backed by billionaire investors such as Kevin O’Leary and PayPal founder Peter Thiel, the psychedelic sector has exploded onto the investment scene, creating vast wealth for early shareholders. Given Creso Pharma leadership’s intimate relationships and success in medicinal psychedelics, one can easily imagine the potentiality for success as the company commences it’s foray into this space .
Visit the company’s website to learn more: https://www.cresopharma.com/
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