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Retail Investor's Perspective
For this case study, let’s walk through what may be the key facets of the due diligence exercise.
We will assume that CMED (CannImed Therapeutics Inc) made your short list of companies for investment consideration. You should scroll back to our basic tenets appearing in the From The Retail Investors Perspective article in this issue Magazine and create a checklist.
To start, navigate to CMED’s website. From this site, you can access financial statements, corporate governance, etc. Make a note to only visit legitimate sites and not sites that are actually paid promotional sites or you may get lured into thinking a webinar with a CEO is real when in fact it is part of a paid marketing package.
To visit CMED’s medical site as part of your due diligence please navigate to this website. Separating their websites between their medical and their corporate may make the overall experience more user friendly from a patient and medical practioner perspective who may not want to be navigating through investor presentations and other such information.
By checking the Health Canada website, you learn that CMED is licenced to sell dry and oils. They do not have a cultivation or production licence. So far so good and you move to the next checkbox in your due dilligence.
Does this not seem odd that CMED only has sales licences?
If you did not stop on your own and just recorded that they only had sales licences then you need to be sure to
start asking yourself the question “does that make sense?” at each step in the due dillgience process. In other words, why invest in CMED and not the company that supplies CMED with their top quality pharma grade inventory (if publicly traded)?
From your background research (on the CMED websites), you learned that they were the sole source supplier to Health Canada since 2000. Back to their website and you navigate to “About” and find your answer there. CMED is a subsidiary of Prairie Plant Systems Inc and sure enough it has cultivation and production licences. A review of the parent site also depicts a diversified portfolio of holdings that includes CMED.
By checking TMX Money, you confirm their current share price, shares outstanding, and current market cap. The low number of outstanding shares stands out. Download their most recent Investor Presentation noting too that is current.
Trading on the Toronto Stock Exchange provides some with added comfort knowing some retail and insitutional investors may opt to only purchase shares of industry companies that trade on the TSX. The recent CSA Bulletin with respect to industry companies with US operations may be of concern to some. CMED has no US operations or investments.
From SEDAR, their filingd are current and their most recent financial statements confirm increasing patient counts and revenues. Their annual revenues are trending towards CAD$20M
CanniMed Therapeutics Inc.
TSX:CMED
As At Date 10/27/2017
Shares Outstanding: 22,670,933 (per tmxmoney)
Share Price: $11.53 Market Cap: $261,395,857