- Launches IPO on the heels of three major market catalysts
Vancouver-based Phivida, (CSE:VIDA) (OTCMKTS:PHVAF) perfectly timed its launch on the Canadian Securities Exchange through three major market catalysts. First, in October of 2017, the World Anti-Doping Agency (WADA) removed cannabidiol (CBD) from its Prohibited Substances List, effective January 1, 2018.
Phivida offers CBD products that provide “all of the benefits, with none of the side effects.” Its products get people healthy, not high. CBD is a non-psychoactive component of hemp, and unlike THC from marijuana, shows no indications for addiction. Phivida targets a health-conscious global market with its CBD-infused functional foods, beverages, and clinical health products.
In 1998, the US Department of Health issued a patent application for cannabinoids and their medicinal properties as anti-inflammatory, anti-oxidant and neuroprotectant. A search of “cannabidiol” at www.pubmed.gov shows thousands of clinical trials to treat health conditions from chronic pain to terminal diseases.
The market for CBD-based products is growing exponentially, as active people discover the benefits of CBD from hemp oil. The cannabidiol (CBD) market is estimated to grow 700% by 2020, according to Forbes. A report by Hemp Business Journal projects that the CBD market will grow to $2.1 billion by 2020, 10-fold compared to last year’s CBD market of $202 million.
The second catalyst that boosted Phivida was in November 2017. A World Health Organization (WHO) report found no adverse health outcomes for CBD, but rather identified multiple medicinal applications.
According to the WHO, naturally occurring CBD is “safe and well-tolerated in humans (and animals) and is not associated with any negative public health effects.” Experts stated that CBD, as a non-psychoactive that doesn’t get you ‘high,’ does not induce physical dependence and is "not associated with abuse potential."
The third was the legalization of cannabinoid infused edibles (food and beverage) just two days before Phivida’s initial public offering launched. On December 17, 2017, the federal government announced the legalization of cannabinoid-infused foods and beverages in Canada. Announced as part of Bill C-45, the law’s amendments included a deadline stating that edibles (cannabinoid-infused foods and beverages) will be legal and available to the public in 2018.
These conditions were ideal for Phivida to launch its Nano-CBD infused products. Phivida was already well ahead of the curve, having launched its company, secured its backers, established key clinical personnel, set core CDB supply agreements from Europe, established its formulas, and built a business plan targeting pacific US states and global regions. Phivida created a branding strategy around its credo of “Health and Wellness, In Harmony.”
Phivida’s management experienced and diverse, with executives from global consumer beverage brands like Redbull, to Fortune 500 moguls like Proctor & Gamble, and McKesson's. The company has built a strong supply chain, operations team, and a clinical advisory of world renowned doctors and PhD’s.
By December, Phivida completed its initial public offering at $0.40 per unit for gross proceeds of $5,750,000. Cashed up, the company was ready to hit the market.
In early 2018, Phivida announced its first agreement in California. According to a recent sector report, the US market for hemp-derived CBD is growing at 55% per annum and is on pace to hit the $1 billion USD mark by 2020. The CBD market in California has been conservatively estimated at $90 million to $120 million per year. Through its agreement with Green Reef Distribution, Phivida branded products will be sold through 550 dispensaries across the state by mid-year.
This expansion in the US was followed by another agreement in Japan with Asayake Inc., the first distributor to market and sell its cannabidiol products in Eurasia Pacific.
The strategic distribution agreement with Asayake is part of a global expansion strategy to capture the health-conscious Asian Pacific market. The annual supplement sales for the region are valued at over $10 billion USD and functional foods are valued at over $21 billion USD.
With several supply and distribution agreements in the works, the next key agreement came with Nova Paths, LLC to license Phivida's cannabidiol in Oregon, a health-minded and weed-friendly state. Nova Path’s manufacturing facility in Portland is state licensed by the Oregon Liquor Control Commission (OLCC) for the distribution of cannabinoid-infused retail products.
In the state of Oregon, sales from over 300 OLCC licensed retail locations was up to $365 million USD in 2016. As of 2017’s third quarter, Oregon was on pace to increase sales volumes in all cannabinoid infused categories by over 33%, as the number of state licensed retail locations has grown to over 500.
Turning to the DSD model and internet sales, Phivida signed a global digital reseller-supply agreement on January 11 with Namaste Technologies Inc., known in the industry as the “Amazon of Cannabis.” Namaste was approved in a non-exclusive agreement as the preferred global online retailer and digital affiliate marketing partner for Phivida's products with an initial launch in Australia and Germany.
By mid-January, a brand licensing, manufacturing and marketing agreement was formed in the “green” state of Washington. Dynamic Processors LLC is licensed to manufacture and distribute Phivida and Vida+ products to Washington state's regulated cannabinoid retailers. Washington is home to around 470 regulated and licensed retail outlets, with 85 more planned for the near future. In 2017, Washington state's retail cannabinoid sales were forecast to reach almost $1 billion USD dollars, generating nearly $1 million in taxes daily, almost outperforming the state's liquor sales.
These advancements did not go unnoticed by the capital markets. The strong performance of Phivida’s stock, with a 52-week high of $2.20, had shareholders rushing to convert warrants, adding $5 million to its treasury, just 30 days after a $5.75 million IPO.
Phivida is now fully capitalized to dominate an expanding global CBD market. This sets the stage for another round of aggressive expansion by Phivida, which is poised to acquire a healthy share of a $1 trillion global health and wellness market.
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