OK to export to U.S. sends Tilray shares on wild ride
B.C. pot producer’s stock up 38 per cent
TORONTO Shares in marijuana company Tilray Inc. went on a wild ride — surging by more than 90 per cent then briefly dropping into negative territory and rebounding — one day after the licensed producer said it got approval to export medical cannabis from Canada to the U.S. for a clinical trial.
The stock closed at more than US$214, up 38 per cent, after being halted five times within one hour.
The drastic swings in the stock follow a nearly 30-per-cent jump on Tuesday after the Nanaimo, B.C.- based firm announced it got the green light from the U.S. Drug Enforcement Administration to export cannabis in capsule form to a researcher at a university in the U.S., where the drug is still illegal at the federal level.
Tilray will be exporting to the University of California San Diego capsules with two active ingredients — cannabidiol and tetrahydrocannabinol, better known as CBD and THC — extracted from the cannabis plant for a clinical trial as a potential treatment for essential tremor, a neurological disorder that causes uncontrollable shaking. The one-year trial is scheduled to begin in 2019.
Tilray completed its initial public offering in July with its shares priced at US$17 per share.
The licensed producer’s market capitalization was roughly US$19.9 billion at close.
The massive surge in Tilray Inc. has delivered a multi-billion dollar windfall for a little-known private equity fund backed by investor Peter Thiel. Privateer Holdings Inc., a Seattle-based fund started seven years ago to focus on the marijuana business, holds 76 per cent of Tilray.
Thiel’s Founders Fund became the first institutional investor in the cannabis industry through Privateer Holdings’s US$75-million Series B financing round in December 2014, according to the company’s website.
Thiel, 50, was an early investor in Facebook Inc. and is known for making unconventional investments in different industries. Founders Fund has also backed Airbnb Inc., Lyft Inc., Space Exploration Technologies Corp. and Palantir Technologies Inc.
Brendan Kennedy, Michael Blue and Christian Groh founded Privateer in May 2010 and the firm later invested in Tilray. The trio effectively owned about 45 per cent of Privateer’s holdings in Tilray as of March 31, according to the company’s prospectus. When Tilray’s unlisted Class 1 shares are included, Privateer’s holdings rise to almost 75 million shares, worth more than US$15 billion.
Kennedy, 46, serves as Tilray’s CEO. “Our long-term vision is if a patient walks into any pharmacy in any country in the world that has legalized cannabis, that patient should be able to obtain a Tilray product. That’s our global goal,” he said in an interview from New York.
Tilray is investing in production capacity in Portugal so it can supply products to the EU from within Europe, he said. The company also has its High Park brand for the recreational market in Canada, which has secured supply agreements with seven provinces and territories, Kennedy said. The company also has a deal to develop medicinal cannabis with the Canadian division of Novartis AG of Switzerland.