Companies in this category research and develop medical treatments using cannabis and hemp-derived ingredients. These ingredients include major cannabinoids (such as THC and CBD), minor cannabinoids, and the discovery of new active pharmaceutical ingredients. This category also includes companies aiming to produce non-plant-derived cannabinoids based on attributes of cannabinoids extracted from plants.
Results from some early clinical trials around major cannabinoids (such as THC and CBD) have been promising, suggesting that medical cannabis may be used to treat conditions ranging from epilepsy to chronic pain. Further investment in research may help verify these trials and substantiate medical cannabis as a viable treatment option. Additional research around other molecules in the cannabis plant, such as terpenes and minor cannabinoids, could lead to first mover advantages for companies conducting that research.
A comprehensive intellectual property strategy may help successful pharmaceutical and biotech players lock in and protect the value stemming from their research and development efforts.
We believe the acquisition landscape in the pharmaceuticals and biotech category makes this a compelling area for investment. Both sectors have a deep history of M&A, with larger companies often acquiring early-stage companies. In these deals, companies typically look for experienced management teams, support from peer-reviewed research, and strong intellectual property. With large companies from these industries now eyeing the cannabis sector, we believe this vertical will provide strong returns.
1Source: U.S. National Library of Medicine - “ClinicalTrials.gov” (as of February 2020)
2Source: Prohibition Partners - “The Global Cannabis Report” (2019)
This is not an offer to sell or a recommendation to trade in any securities. This information is provided as of the date hereof. This document contains data obtained from third parties that RIV Capital has not independently verified. This document also contains forward-looking information within the meaning of Canadian securities law, which is based on certain assumptions. While management believes these assumptions are reasonable based on information available as of the current date, they may prove to be incorrect. Many assumptions are based on factors outside of RIV Capital’s control and actual results may differ materially from current expectations. Forward-looking information involves risks, including, but not limited to, the risk factors set out in RIV Capital’s most recent Management’s Discussion and Analysis and Annual Information Form. You should not place undue reliance on forward-looking information. Except as required by applicable law, RIV Capital assumes no obligation to update or revise any forward-looking information to reflect new events or circumstances.
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