Khiron (TSXV:KHRN) reports confirm underlying expectations
Khiron Life Sciences Corp. (TSXV: KHRN) (OTCQB: KHRNF) had two significant reports this week that confirm the expectations underlying making it the largest holding in The Cannabis Report Model Portfolio. First, they published the third quarter report for the period ended September 30, 2018 and followed that up with an announcement they have received approval to commercialize and market four key products in the Kuida® CBD cosmeceutical product line in Peru.
Although financial results will grow in importance in the quarters ahead, in this report the key number to focus on is the CAN $24,875,978 of working capital. KHRN has never been in such a strong financial position in its history and we shouldn’t forget that $24 million goes a lot further in Latin and South America.
The other important finding from the report is the amazing number of milestones KHRN was able to accomplish since the previous quarterly:
The addition of Mr. Vicente Fox, former CEO of Coca Cola Mexico and former President of Mexico to the Board of Directors.
Juan Diego Alvarez Vice President of Regulatory Affairs continues to build on his record of valuable contributions to KHRN that was able to commercialize seven wellness products in Colombia with authorization for production and sale and approval for four CBD-based products for skin and body care in Peru.
Expanded agricultural land by 17.5 hectares adjacent to the 4.5 hectares in Ibague, Colombia.
A tip of the hat to Chris Naprawa, President and Darren Collins, Chief Financial Officer for their important role in completing a prospectus offering of 14,375,000 shares for gross proceeds of $12,937,500 and completion of a warrant acceleration that raised gross proceeds of $14,007,000 from the issuance of 11,672,250 common shares at $1.20 per share.
Started Agronomical Evaluation Tests by the Colombian Agriculture Institute (ICA) to register four additional psychoactive and one non-psychoactive strain of cannabis. KHRN has some 56 strains in the registration process.
Entered the Chilean market through a memorandum of understanding with Fundacion Daya, the only medical cannabis license holder in Chile held through DayaCann, a joint venture between Fundacion Daya and AusCann Group Holding Ltd.
Launched Kuida®, the first CBD cosmeceutical brand in Colombia. KHRN’s wellness business unit was established and the Kuida® brand was introduced with store front, online and wholesale distribution channels. Sales started in October and approval was received to expand into Peru (see below).
Signed a definitive agreement to acquire the Latin American Institute of Neurology and the Nervous System ("ILANS"). ILANS has approximately 60 clinicians and physicians and represents approximately 100,000 patients and generated approximately $10,000,000 in revenues and $1,800,000 in earnings before interest tax depreciation and amortization in the December 2017 fiscal year. ILANS is a key component in KHRN’s marketing strategy.
Second, KHRN announced approval from Peru's Executive Director of the Directorate of Medical Devices and Health Products of the General Directorate of Medications, Supplies and Drugs (DIGEMID) to bring Kuida® products to a population of 32 Million people in Peru. According to the Peruvian Committee of Cosmetics and Hygiene (COPECOH) of the Chamber of Commerce of Lima (CCL) the cosmetics and personal hygiene market is anticipated to experience growth in the range of 6% – 8% in 2018. With 32 million people, Peru is the sixth country in Latin America to create a legalized medical cannabis environment with laws that allow for the production, import and commercial sale of cannabis for medical use. Peru is experiencing strong economic growth of 2.5% GDP* and according to the World Economic Forum has seen competitive gains in recent years making it among the top ten economies in the region.
With previously announced agreements in Colombia and Mexico, the Kuida® brand will be marketed to a population of almost 200 Million in Latin America.
Alvaro Torres, Founder, Director and CEO of KHRN said, “Each of these developments advances our objective to meet the medical needs of a million patients in Latin America… I am confident we can reach this objective… and firmly believe the future looks very bright for our company.”
Conclusion: with a market cap of just over $100 million, I think KHRN is so attractive, it justifies a 20% position in The Cannabis Report Model Portfolio. In addition, I don’t think this stock will be a target for tax loss sellers this year. So it you tax loss sell and want a place to reinvest the cash, the message with KHRN is ‘Don’t over wait; over-weight.’ That’s what I’ve done.