Specialised cannabis research-company MediPharm Labs Corp. (TSX: LABS) (OTCQX: MEDIF) (FSE: MLZ), has announced record finished goods shipments of 550,000 units in the fourth quarter of 2020, demonstrating significant growth during the period.
Founded in 2015, Canadian-based MediPharm Labs specializes in the production of purified, pharmaceutical-quality cannabis oil and concentrates and advanced derivative products. The company is also the first and only producer to launch consumer sized 99% pure CBD Isolate in Canada.
“Shipment volume is a key measure that illustrates growing market demand and our ability to meet that demand through our GMP-certified facilities,” said Keith Strachan, President and Interim CEO, MediPharm Labs. “This new milestone is something to celebrate but also to surpass as we focus all efforts on accelerating growth and improving profitability in 2021 consistent with the action plan introduced in November.”
Of the units shipped, 100,000 were owned private label MediPharm Labs Stock Keeping Units (SKUs) compared to 25,000 SKUs respectively in the third quarter.
“Demand signals for our proprietary formulations are strong with several already becoming top sellers in many provinces,” said Strachan. “In fact, Ontario Cannabis Store sales data show that MediPharm Labs’ CBD 50 Plus Formula oil ranks as the third best-selling CBD oil in the province and number five best-selling in the overall oil category. Our reputation for quality and purity is resonating with consumers, provincial distributors and our B2B customers.”
Included in Q4 shipments were 25 different vape SKUs, reflecting the ongoing ramp up of production and contract manufacturing for many top cannabis brands that count on MediPharm Labs for value-added service and consistent GMP-quality output.
Of particular note during the period has been the performance of Avicanna’s RHO Phyto medical formulary line.
The RHO Phyto line consists of advanced oral and topical delivery forms of medical cannabis extracts including oil drops, sublingual sprays, soft-gel capsules, and topical creams and gels. All RHO Phyto formulations are designed to maintain the stability of the cannabinoids to ensure more consistent clinical effects over the course of treatment.
Produced by MediPharm Labs under license, the range has experienced an incredibly successful launch with overwhelmingly support from the Canadian medical community which has seen uptake by some 300 prescribers and 20 clinics.
MediPharm Labs has ramped production of six RHO Phyto products to date and expects to continue to increase output to support consumer demand and Avicanna’s plan to expand RHO Phyto SKUs to 10 in 2021.
During Q4 2020, MediPharm Labs entered a supply agreement with Nova Scotia Liquor Corporation and shipped initial orders to the province. Nova Scotia recently opened additional cannabis stores as part of its growth plan. The Company now has retail distribution agreements with six provinces: B.C., Alberta, Saskatchewan, Manitoba, Ontario and Nova Scotia.
“We made additional investments in our sales team and we began to reap the benefits in the fourth quarter,” said Mr. Strachan. “We added sales resources with the goal of expanding our B2B partnerships, growing market share within our existing provincial distribution footprint and targeting new provincial and retail distribution opportunities. These activities form part of our improvement strategy for 2021.”
In the execution of its brand strategy, which the Company introduced during 2020, MediPharm Labs also became the first and only producer in Canada to launch a consumer-sized, 99% pure CBD isolate in Canada. This has broadened the company’s marketplace to include consumers who favour an all-natural, high-quality/high-potency cannabinoid wellness supplement.
Retailers in six provinces received their first shipments of LABS Cannabis CBD Crystalline Isolate in Q4 2020. Initial sales have been strong as MediPharm Labs’ CBD Isolate remains the only product available in its class.
At the end of 2020 MediPharm Labs introduced “LABS Cannabis – Formulated for Life”, a new health and wellness product suite focused on bringing innovative and high-quality cannabis formulations products that integrate into lives of consumers.
To further its research base, the Company also initiated a new clinical trial at the end of 2020 which aims to evaluate the effectiveness of MediPharm Labs proprietary GMP cannabis-derived formulations and medical products to Treat Chronic Kidney Disease Patients and Improve Quality of Life.
With 37 million, or more than 1 in 7, adults in the United States estimated to have chronic kidney disease (CKD), the opportunity for a potential treatment derived from Cannabis is significant, and could offer MediPharm Labs a huge market for its products.
The positive news has had a similar impact on the company’s share price and stock is currently favoured by investors. According to MarketBeat MediPharm Labs Corp. has received a consensus rating of Hold. The company’s average rating score is 2.25, and is based on 1 buy rating, 3 hold ratings, and no sell ratings. According to analysts’ consensus price target of C$1.98, MediPharm Labs Corp. has a potential forecasted upside of 157.1% from its current price of C$0.77.
With an improving regulatory climate across all the company’s products it is looking likely that 2021 will continue to be a year of significant growth for MediPharm Labs.
Author: Matthew Driver, Senior Analyst