FEB 25 2021 BY MICHAEL BERGER
Last year, we highlighted MediPharm Labs Corp. (TSX: LABS) (OTCQX: MEDIF) (FSE: MLZ) as one of the most misunderstood and undervalued cannabis companies. Following a series of transformational announcements, we remain bullish on the business and believe that our readers need to be aware of how the story has advanced so far this year.
A few weeks ago, MediPharm Labs announced an important milestone and was issued a Cannabis Drug License (CDL) from Health Canada. The license is necessary for the company to manufacture and supply cannabis-based drugs. The products that are allowed with a CDL include pharmaceutical prescription drugs that have a drug identification number (DIN).
Through this achievement, MediPharm is positioned to be an essential part of the pharmaceutical industry supply chain and we consider this to be a major market opportunity for it. During the last few years, interest in pharmaceutical products that are derived from cannabis has been steadily increasing. MediPharm’s management team executed flawlessly on a strategy to be granted a CDL and we consider this to be a testament to the strength and perseverance of the management team.
Unlike many publicly traded cannabis companies, MediPharm is led by a management team that is focused on executing on previously announced growth initiatives and the granting of the CDL is a perfect example of this.
Going forward, the opportunity for MediPharm with its existing pharmaceutical customers to produce existing approved cannabis drugs or develop and manufacture new and innovative drugs through later stage clinical trials is significant and believe the market is missing out on something substantial.
Another reason we are favorable on the granting of the CDL is due to the potential for MediPharm to work with additional large and smaller pharmaceutical companies. Currently, there are thousands of active cannabis focused clinical trials taking place and we expect the CDL to serve as a substantial growth driver for the business over the long-term.
In the near-term, MediPharm is well positioned to supply cannabis based pharmaceutical drugs and active pharmaceutical ingredients (APIs) to other CDL license holders and clinical research trials for novel drug discovery. We believe the market is discounting the impact that this initiative will have on the business and find the risk-reward profile to be favorable.
During the last year, MediPharm has reported transformational developments and we expect these changes to lead to revenue growth, margin appreciation, and multiple expansion. At current levels, MediPharm is trading at a substantial discount to its peers and believe this disconnect is going to change as the management continues to execute and create value for shareholders.
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