Might as well celebrate a green day with markets settling down. US$0.25 and C$0.34 with moderate volume.
One thing to take into the New Year is that all of the successes that are baked into the share price are gone.
Normally, the share price reflects lots of promises expected to be achieved and as a result, new announcements reinforce the current price and only a new promise pushes things up.
The current share price reflects the whole market ignoring potential and holding cash. Soon this money will return and the expectations on success will start to push the share price up as promises are accepted as realistic again. Currently, our Market Cap is C$58 million which is barely three times the cash in the bank. As Tom Tinne mentioned earlier today, we are back where we started.
However, we have come further down the road and we have new promises on the way. Here is a short list of potential value drivers in over the next 30 days:
1. Obviously, the unnamed CMO partner - This is not factored in and I don't think it ever was. No prediction on the lift but if our 'lil partner turns out to be a name brand company ...
2. Glaucoma partner - we know that this is not the focus of the current investors and it is a latent asset. A partnership deal with a valuation of $20-60m could give us a $1 on the share price. But we have to note that it is worth zero if there is no partner. So current value per share could be C$0.01 - 0.05 today.
3. Pain - far too early in the pipeline to give it a value today but this is also a partnering strategy. Partnership deals can come out of the woodwork very quickly or not at all. I think today this could be C$0.01 to 0.03 but like above, an early partnership could put C$0.50 on the share price.
4. INM-750 - there some value recorded here but without permission to go to the clinic, it will be undervalued. Just getting permission in the form of an IND filing, will give the share price a big boost. The the next big boost will be at Phase II trials I suspect as early as first half of 2020. Today the value is probably C$0.10 - 0.15. Traditionally, clinical phase biotechs can have a valuation of C$200m - 500m. That should add C$1 in the first half of 2019 and possibly C$2 - 3 if this gets broad exposure in the USA as helping kids with EB
5. Biosynthesis - is a short route to profit. There is a huge potential for the research-use-only market as well as a therapeutics market. Big pharma likes a predictable supply chain and preferably one they can control from end to end. CBD from farms in the Congo could be really cheap but hardly a predictable, stable and with guaranteed quality. The licensing value from biosynthesis alone is a huge potential. It is obvious from the change in focus that the last round of investors are here for biosynthesis. This represents close to C$0.60 of our current C$0.34 valuation ... that's about 190% of where we are today. With a bit of marketing or an announcement of our 'lil CMO, could drag us back to the old valuation right away and with a potential multiplier.
6. Patents - More patents on the different Cannabinoids to further lock down access to the minor cannabinoids and widen the moat. Further preclinical research accessing other minor cannabinoids from biosynthesis becomes the oyster no one else has access to is a very nice place to be.
7. Socially Responsible Big Pharma - We need to feed the world - bet you didn't think about this one - similarly when biofuels started to replace food crop production a decade ago, there was a big push back. Prices of veggies in Canada are expected to rise as greenhouses are converted from tomatoes to cannabis. This will push governments to ensure that cultivation licenses are limited and feeding people will come first. Big Pharma will need to demonstrate social responsibility and not acquire products at the expense of food cultivation. There is only one way to provide cannabinoids without replacing food production. Biosynthesis is the only socially responsible answer.
8. Revenues - we are literally staring at commercial scale revenue in 2019. Like I can't can't begin to tell you how much that tickles the testicles. Not just revenue, but predictable revenue that can grow rapidly regardless of the price of CBD and THC. We are looking at producing stuff that no one else can. We will be first to market and can lock down long-term contracts with guaranteed production numbers. Both Big Pharma and investors like predictability ... A LOT!
Lots of things to drive both short term and long term value!
#STMF
