Arzneimittelbehörde in North Rhine-Westphalia has just accredited TerrAscend’s facility in Mississauga, Ontario. It has secured a sales and distribution agreement with German pharmaceutical wholesale Iuvo Therapeutics GmbH and it expects its products to hit German shelves this quarter.
“Just five months ago, TerrAscend became the first North American operator with scale operations in both Canada and the U.S.,” said chief executive Dr. Michael Nashat. “Upon commencement of shipments this quarter, through our partner iuvo in Germany, TerrAscend will be the first and only global cannabis operator with sales in the three largest markets in the world.”
The firm will now target increased distribution in these markets and bolster its sales force accordingly.
A Wealth of Opportunity in Germany
Germany legalized medicinal marijuana in March 2017, but it is totally reliant on imports to meet patient demand. It has just begun a domestic cultivation scheme, with Canadian firms Aurora, Aphria, and Wayland chosen as the first producers licensed to grow German cannabis, but production will be of a relatively small scale and it will take a while for them to build their facilities and yield their first crops.
Germany is the world’s fourth-largest economy and it, therefore, represents a huge opportunity for firms set up for E.U. exports. A report from Prohibition Partners estimates that the European cannabis market will eventually reach €56.2 billion ($62.6 billion), of which €37.5 billion ($41.8 billion) will be medicinal and the rest recreational. Germany will be the clear leader, ahead of the Netherlands and Italy, according to various projections from different analysts.
Iuvo already has a cannabis specific import and distribution license in adherence with EU GMP standards and it has distribution agreements in place with various German retailers and pharmacies.
Ambitious Revenue Targets for 2019
Shares in TerrAscend closed at $8.11 on Thursday, May 2, following news of the expansion into Germany. That is an increase of 39% since Dec. 31, 2018, when it was trading at $5.82.
The firm recently provided its Q4 2018 financial results, which showed revenues of C$5 million for the three months to Dec. 31. That represents a sequential rise of 178% on the C$1.8 million it brought in during Q3. Its loss widened from C$778,000 or C$0.02 per share to C$11.7 million, or C$0.13 per share, as it invests in expanding its sales footprint and production capacity.
It expects to achieve C$135 million in revenue in 2019 thanks to its purchase of U.S. marijuana retailer The Apothecarium. It has dispensaries in California and Nevada and it is expanding into New Jersey.
It has increased the size of an equity offering to between US$40 million and $50 million and it expects the funding round to close by mid-May. It plans to use that capital for strategic acquisitions and to procure new licenses across the U.S., while increasing distribution in the markets it operates in.
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