Medipharm Labs Corp - MEDIF stock

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OTC Symbol: MEDIF | OTC Tier: OTCQB | Related ticker symbols: TSX: Labs, FWB: MLZ

Company Details

Medipharm Labs Corp [OTCQX: MEDIF, TSX: Labs] is a Canada-based pharmaceutical company that engages in the production and distribution of pharmaceutical-grade cannabis oil and concentrates for the Canadian and international markets. It formulates, processes, packages, and sells cannabis extracts and advanced cannabinoid-based commodities. The firm focuses on the downstream secondary methodology, distillation, and cannabinoid isolation and purification. It also provides select international clients with GMP flower sourcing, packaging, and distribution services, and distributes dried flower and pre-roll products. MediPharm’s shares are listed for trading on TSX under the Labs symbol, on OTCQX under the MEDIF symbol, and on the Frankfurt Stock Exchange under the MLZ ticker symbol.

Background

MediPharm was founded in 2015 by Patrick McCutcheon. It was incorporated on January 23, 2017, under the Business Corporations Act as POCML 4 Inc. in line with TSXV policies. The company amalgamated with 2645354 Ontario Inc., its wholly-owned subsidiary on October 1, 2018, leading to a reverse take-over of the resulting company by MediPharm Labs, and the resulting company proceeded as MediPharm Labs Corp. The company’s stock commenced trading on TSXV in October 2018 and was elevated to the Toronto Stock Exchange in July 2019. The firm’s operations are currently carried out via MediPharm Labs, its 100%- owned subsidiary, which has several licenses including a standard processing license, a research license, and a Drug Establishment License. Medipharm is headquartered in Barrie, Canada.

Summary Business Operations

The company’s business is rooted in pharma, steered by research, and propelled by innovation. Its business operations are segmented into three portions: Canadian Adult Use and Wellness, International Medical Cannabis, and Pharmaceutical & Business to Business (B2B). MediPharm specializes in the production of purified, pharmaceutical-quality cannabis oil and concentrates and quality derivative products utilizing its GMP-certified facilities and ISO standard-built rooms. The firm leverages its credentials to continue supporting the growing global cannabinoid-based API needs and to generate value for investors.

It has heavily invested in expertise, a research-focused team, state-of-the-art technology, downstream purification procedures, and purpose-built plants to produce pure, trusted, and efficiently dosable cannabis products for its customers. Through its wholesale and white-label platforms, the company majors in the formulation, processing, packaging, and distribution of cannabis active ingredients and advanced cannabinoid-based products for domestic and global markets. The firm advances dried flower and pre-rolls for the adult recreational market via the Wildlife Cannabis brand.

MediPharm Labs brands incorporate formulated oils; MCT oil and Olive oil, capsules, and soft chews. The firm operates an enormous GMP-certified space and ISO standard built 70,000 sq. ft. facility in Barrie, Ontario. The company holds various certifications for its operations including a Drug Establishment License in North America, a Research and Development License, a Natural Health Product license issued by Health Canada, Cannabis Processing and Sale, a Cannabis Drug License issued by Health Canada for the manufacture of cannabis-based medicines, and it is GMP Certified; accredited by Australia’s Therapeutic Goods Administration to manufacture cannabis-infused medicines and pharmaceutical ingredients. It emphasizes quality sourcing and testing of cannabis oil and finished goods to ensure a steady supply of safe quality products to end-users.

Mission

MediPharm aims to utilize its practices, purpose-built infrastructure, and research-oriented team to become a trusted global leader in industrial-scale manufacturing of high-quality, cannabinoid-based derivatives.

Recent Corporate Developments

MediPharm and VIVO Cannabis Inc. closed a definitive arrangement agreement in December 2022. According to the agreement, MediPharm agreed to absorb all of VIVO’s issued and outstanding shares in an all-equity business combination transaction exercised by way of an agreement under the Canada Business Corporations Act guidelines. VIVO is a medical cannabis company that possesses research, production, and sales licenses. It operates a Canada-based online medical cannabis sales platform, an indoor cultivation site, a web of medical cannabis patient clinics, and global branded sales in Australia and Germany. A collaborative forecast by the management of both companies showed that the resulting firm could achieve a positive EBITDA margin of between $7 million to $9 million per year.

The company also finalized the sale of MediPharm Labs Australia Pty Ltd, its subsidiary, in Q3, 2022, and received gross proceeds of approximately $6M. The sale significantly reinforced the company’s balance sheet, deflated its cash burn, and enhanced utilization at its Canadian GMP facility. The move was part of the firm’s restructuring approach that the management believes could lower Canadian non-manufacturing headcount by roughly 30% and potentially cut annualized expenses by $3M.

MediPharm closed a research support agreement with the Keck School of Medicine of University, Southern California, to carry out a randomized double-blind placebo-controlled Phase 2 trial on the effectuality of THC and CBD to treat hospice-eligible individuals diagnosed with dementia and experiencing agitation.

Financials

The company recorded an upward net revenue trajectory of $13.3M in 2022, up 71% from $7.8M in 2021 for the Adult Use and Wellness segments. The company concentrated its sales efforts on consumer MediPharm branded commodities and international medical opportunities. As of the end of Q4, 2022, the firm had $24M in cash, was materially debt free, and had exclusive ownership of its assets, including the GMP facility. David Pidduck, MediPharm CEO, expressed his delight at the path taken by the company to drift its focus from Canadian B2B sales and quit less profitable ventures. He added that the arrangement with VIVO would continue to propel the company’s business and facilitate its growth.

Leadership

Management and Board of Directors

David Pidduck, Chief Executive Officer

• Has over 20 years of experience working in Pharmaceutical companies across Canada and internationally
• His previous roles in the industry circled portfolio and channel diversification, transformation, and driving revenue and profit-growing projects
• Holds an Honors BBA from Wilfred Laurier University and an EMBA from the Kellogg School of Business at Northwestern University

Other executives include:

• Chris Taves, Chairman of the board
• Shelley Potts, Independent Director
• Chris Halyk, Independent Director
• Miriam McDonald, Independent Director
• Dr. Michael Bumby, Independent Director

Legal Issues

On July 27, 2022, MediPharm Labs was awarded a favorable judgment concerning a $9.8M supply agreement discourse by the Ontario Court of Justice. MediPharm filed a Claim in court against one of its long-term cannabis concentrates customers on January 24, 2020. The complaints touched on the customer’s failure to settle due payments for products shipped for and received by the latter and deposits owed to the firm for not yet shipped goods. The defendant filed its defense against the charges on February 24, 2020, which were dismissed by the court.