Growth Navigator: Cannabis, Copper & Psychedelics

Cannabis Stocks Come Back to Life

It’s been a very volatile year for the cannabis sector. The Horizons Marijuana Life Sciences (HMMJ) ETF was up as much as 140% (Feb 2021), only to give it all back over the course of the year. A similar story played out for the AdvisorShares Pure US Cannabis ETF (MSOS), at it’s peak in February it was up 50%.

Since November 4th the sector has staged a strong recovery from the lows, the MSOS ETF is up 18% and the HMMJ ETF is up 7%. The rally is driven by an improving political climate to push forward cannabis legalization in the US. Republican members of Congress brought forward a bill on Monday to legalize marijuana federally, Rep. Nancy Mace (Republican from South Carolina) is sponsoring the bill.

In the following tables we examine cannabis stocks by country, valuation and performance YTD.

In Canada Tilray, Sundial and Organigram have towered over their peers in YTD performance; up 52%, 70% and 68% respectively. Village Farms and Sundial screen the cheapest in the group on ’22 P/S.

CANADA ’22 P/S YTD %
TILRAY (TLRY) 6.6x 52%
CANOPY (CGC) 9.0x -43%
CRONOS (CRON) 17.4x -19%
SUNDIAL (SNDL) 3.1x 70%
AURORA (ACB) 6.5x -3%
VILLAGE FARMS (VFF) 2.0x -16%
ORGANIGRAM (OGI) 6.9x 68%

In the US, Trulieve, Green Thumb and Cresco have had the best performance YTD relative to peers. Among the large MSOs (multi-state operators), Cresco, Verano, Ayr and Trulieve screen the cheapest on 2022 P/S. Among the smaller US operators Harborside, Cansortium, Red White & Bloom all trade below 1x 2022 P/S.

U.S. ’22 P/S YTD %
TRULIEVE (TRUL) 3.7x -2%
CURALEAF (CURA) 4.2x -17%
GREEN THUMB (GTII) 4.6x -5%
CRESCO (CL) 3.0x -5%
TERRASCEND (TERR) 5.2x -37%
VERANO (VRNO) 3.2x N/A
AYR (AYR/A) 1.6x -11%
JUSHI (JUSH) 2.3x -21%
GOODNESS (GDNS) 1.7x -10%
COLUMBIA C. (CCHW) 1.6x -47%
HARBORSIDE (HBOR) 0.5x -57%
CANSORTIUM (TIUM) 0.9x -11%
RED WHITE & B (RWB) 0.3x -22%
PLANET 13 (PLTH) 4.5x -23%

 

Sierra Metals: Temporary Challenges at Bolivar Impacted Q3 Results, Dividend Initiated

Sierra Metals (NYSE:SMTS, TSX:SMT) released Q3 2021 results that were negatively impacted by temporary challenges at their Bolivar mine. The company reiterated the strength of their balance sheet, commitment to production growth and shareholder return.

Dividend Initiation

On November 5th the company declared an annual dividend for 2021 of $0.03 per common share ($5 million), payable on December 7th, 2021. The base dividend of $0.03/share will be topped up with an additional amount for shareholders based on the available cash flows generated each year after accounting for capital spending.

Sierra Metals Trades at a Deep Discount vs. Peers

Looking at updated valuation metrics (Bloomberg consensus, November 10th, 2021), Sierra Metals trades at a deeply discounted valuation multiple relative to its copper peers across all metrics.

  • 77% discount on forward price-to-cashflow
  • 75% discount on forward EV-to-EBITDA
  • 75% discount on forward price-to-sales

Psychedelics in Focus

HAVN Life Enters into Distribution Agreement to with Australia’s Woke Pharmaceuticals

HAVN Life Sciences Inc. (CSE: HAVN) (OTC: HAVLF) has announced it has entered into agreement with Sydney-based Woke Pharmaceuticals Pty Ltd. for the exclusive white label supply and distribution of their line of natural health products in Australia, New Zealand, and China.

Woke Pharmaceuticals plans to distribute HAVN Life natural health products through Australian retailers, including major supermarkets and other retail outlets. Woke will also pursue distribution through various e-commerce portals (i.e., Australia and New Zealand Amazon sites). The market for dietary supplements in Australia and New Zealand was estimated to exceed $3.7 billion in 2020.

We had an in-depth interview with Tim Moore, CEO of HAVN Life and discussed their strategic positioning in the Psychedelic Market and discussed the supply agreement within their distribution network. Tim also explained the regulatory challenges of working with psilocybin and the market potential of functional mushrooms.

Interview with James Lanthier, CEO of Mindset Pharma

We reconnected with James Lanthier, CEO of Mindset Pharma for an update on the psychedelic company’s activities and their approach to the industry. He gave us an overview of their fiscal year, and their chemical design strategy used in developing second generation drugs. We continued to discuss their screening and evaluation process for prospective clinical candidates; he outlined their upcoming catalysts for Q4 2021 & Q1 2022.

Field Trip Health 2Q 2022 Results

Field Trip reported its second fiscal quarter 2022 results for the three-month ended September 20, 2021 and provided a business update.

Highlights:

  • Field Trip announced plans to advance its novel psychedelic compound, FT-104 to clinic for Treatment-Resistant Depression and Postpartum Depression as its lead indicators
  • Investing in infrastructure – nine clinics currently in operation and nine others under construction or about commence in construction
  • Field Trip earned patient services revenues of $907,816 from its Toronto, New York, Santa Monica, Chicago, Atlanta, Houston and Amsterdam clinics, an increase of $813,284 – 860% over the comparative quarter ended (September 30, 2020) of $94,532 and an increase of $40,416 or 5% over the prior fiscal quarter

PharmaTher Announces Positive Results for their Psilocybin Microneedle Patch

PharmaTher Holdings (OTCQB: PHRRF) (CSE: PHRM) announced that it has successfully completed its research study evaluating MicroDose-MN™ – a propriety microneedle (MN) patch for the intradermal delivery of psychedelics, in delivering psilocybin.

Highlights:

  • Delivery psilocybin via microneedle patch unlocks potential for desired dosage forms and pharmacokinetic profiles for improved safety and effectiveness.
  • PharmaTher will complete their microneedle path research programs with other psychedelics before the year end
  • Pursuing Phase 2 clinical studies in 2022 with psilocybin and other psychedelics

PharmaTher believes it has an acceptable prototype for completing IND-enabling studies with the aim to conduct studies in 2022. The details of their research program will be published in a scientific journal.

COMPASS Pathways Phase 2b Clinical Trial Results

COMPASS Pathways (CMPS) announced much-anticipated results from its groundbreaking Phase 2b trial results of their COMP360 psilocybin therapy for Treatment-Resistant Depression (TRD).

The study found that a single dose 25mg dose of COMP360 psilocybin (in conjunction with psychological support), generated a rapid response that lasted up to 12 weeks.

There were 12 people in the study out of 233, who exhibited suicidal behavior of thoughts, or who showed intent to harm themselves.

We see the results of this study as a powerful catalyst for the entire psychedelic industry and raises the value of COMPASS as they continue with their psychedelic drug development program.

Sierra Metals is a market awareness client of Capital 10X.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

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