The Canadian parent company of the premier cultivator and producer of medicinal-grade cannabis in Colombia could make you very wealthy. PharmaCielo (TSXV:PCLO) debuted on the TSXV last January 18, 2019, and the stock is about to sizzle.
This cannabis IPO is very promising, even though the price has fallen from a high of $11.50 eight months ago to $4.77 today. PharmaCielo’s IPO is far from being a failure. The entire cannabis sector has been on a downtrend since April. The market also saw two consecutive quarters of pullbacks.
PharmaCielo reported a net loss of $18.4 million for the six months ended June 30, 2019, compared to $13.9 million for the same period last year. The company attributes the net loss to the share-based expense of $6.2 million, which in 2018 was $8 million.
PharmaCielo’s CEO David Attard, however, wants investors to look beyond the latest quarterly figures. He said, “The first six months of 2019 have been incredibly productive for PharmaCielo.” For the past several months, the company has been transitioning.
PharmaCielo is moving from the founding stage to the finalization of operational infrastructure before it enters a mature operational phase. It covers inventory, finished products (oils and isolates), distribution channels, sales agreements, international sales relationships, and exports.
According to Attard, the company’s platform could scale rapidly and become a value-added provider of cannabinoid inputs to cannabis organizations worldwide.
Global partnership to beat
PharmaCielo’s recent acquisition of Creso Pharma forms a formidable global collaboration. The combination of Colombia’s premier producer of medicinal-grade cannabis extracts with a leading global medicinal cannabis company would magnify PharmaCielo’s global footprint.
The company gains an instant presence in over a dozen countries from North and Latin America to Europe, Switzerland, and the Middle East plus Australia and New Zealand. PharmaCielo is in a position to expand swiftly to sell higher-margin and branded products.
The opening salvo is the commercial shipment of CBD isolates from PharmaCielo’s main base in Colombia to Creso Pharma’s headquarters in Switzerland. The first shipment is symbolic, given that Switzerland is the global capital of the pharmaceutical industry. But the initial collaboration between PharmaCielo and Creso Pharma took place in Latin America a month ago.
The partners signed a four-and-a-half-year agreement, including an option for renewal, with Uruguay-based Laboratorios Adler. Under the terms of the deal, PharmaCielo will supply Adler with CBD extracts and bottled CBD oils and veterinary products in bulk. The intended markets are in Uruguay, Bolivia, Paraguay, and southern Brazil.
Lastly, PharmaCielo’s winning edge is its operational base. The climate in Colombia is perfect for producing all-natural, high-quality cannabis products. Power outages will not affect operations or strain power grids. The company can operate under natural sunlight on a “12-hours-light to 12-hours-dark” cycle year-round.
A little more time
Give PharmaCielo a bit more time to complete the construction of its processing facility in Colombia. The facility is capable of processing 265 tons of dried flowers annually. PharmaCielo is also working to clear other regulatory hurdles, so its CBD exports to multiple global markets could proceed without hindrance.
You should be buying this cannabis IPO before anyone else. Its price could quadruple and make you wealthy sooner than later.
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Fool contributor Christopher Liew has no position in any of the stocks mentioned.