Earlier this year, we issued an update on Relevium Technologies (RLV.V) (RLLVF) and believe that this is an opportunity to be following. The last month has been quite busy for the company and we are excited about the recent developments. Relevium represents a multi-faceted growth opportunity that is working to capitalize on some of the most attractive verticals of the cannabis industry.
One of the reasons we are excited about Relevium is due to its attractive operating structure and we believe that this enhances its overall growth prospects. Currently, the company operates through two wholly-owned subsidiaries which we have highlighted below:
- BGX E-Health LLC (BGX): BGX markets dietary supplements, nutraceuticals, sports nutrition and cosmeceuticals primarily through its Bioganix brand portfolio in the United States and Europe. Bioganix is currently being sold by some of the world’s largest retailers including Walmart.com and Amazon.com.
- Biocannabix Health Corporation (BCX): BCX is focused on creating a vertically integrated medical cannabis company for the endo-medicinal products for pediatric care into the Canadian market.
Through a series of growth initiatives, Relevium has been developing a premium line of products and we are favorable on the continued execution. The company’s strategy for developing and growing its brands includes expanding its product offerings, adding new distribution channels, and developing partnerships that add value through exclusive formulations.
Although Relevium has been able to significantly advance its fundamental story, the market has not responded accurately to the recent developments and we believe that this opportunity is flying under the radar. During the last month, the company has recorded some major milestones and we have provided an update on the latest developments.
Reports a Significant Investment and Planned Acquisition
Last week, Biocannabix executed a letter of intent to acquire 30% of Weedsense Inc., a late stage applicant for standard processing and federal medical sales licenses. Weedsense is building a wholesale and distribution business in Montreal and will be working with licensed producers/processors and will be distributing directly to medical patients through a network of pharmacies and clinics. Weedsense also plans to service the recreational market by acting as a distributor to provincially-sanctioned wholesalers such as the Ontario Cannabis Store (OCS) or Société Québécoise du Cannabis (SQDC).
Weedsense can also act as a secured third-party logistics (3PL) partner for other market participants who seek direct access to the Quebec market for their products. Weedsense has applied for a standard processing and medical sales licenses through Health Canada and is constructing an EU GMP compliant facility in Montreal. Weedsense expects to be fully licensed by the fourth quarter of 2019 and obtain the EU GMP certification shortly after.
The investment into Weedsense provides Biocannabix with the capability to import, export, warehouse, package and sell directly to medical patients and hospitals in a secure and compliant manner. Under the agreement, Biocannabix has the option to acquire 100% of Weedsense after the granting of the licenses by Health Canada. One of the reasons we are favorable on this transaction is because it is conditional on the granting of the licenses by Health Canada. This relationship will help Biocannabix in its mission to become a leader in providing safe, organically sourced endo-medicinal products for pediatric care int the Canadian market. T his could prove to be a major value driver to the entire business.
The idea behind Weedsense from the beginning has been to offer patients the best possible service as well as fairly priced premium products. We believe that the cannabis industry needs a patient centric wholesale/distribution platform and we will monitor how the team is able to execute on this.
Issues Update on its Cannabis and CBD Strategy
Earlier this month, Relevium released an update on its positioning and strategy regarding medical cannabis and CBD market opportunities . This update came after the FDA held a public hearing on its role in regulating cannabis-derived products such as CBD as nutritional supplements.
The FDA’s position is that although hemp is no longer an illegal substance under federal law, the FDA continues to regulate cannabis products under the Food, Drug, and Cosmetic Act (FD&C) and Section 351 of the Public Health Service Act. Therefore, and until their position changes, any cannabis product marketed with a claim of therapeutic benefit, regardless of whether it is hemp-derived, must be approved by the FDA before it can be sold. The statement also confirms that the addition of CBD to food products and dietary supplements is unlawful.
The public hearing was the first of many steps towards allowing CBD as a supplement, which would then allow companies like Relevium, who fall under the supplement jurisdiction of the FDA, to provide current and future customers with trusted nutraceutical formulations containing full-spectrum CBD through its LeefyLyfe and Bioganix brands across the US.
Under the FD&C Act, cosmetic products and ingredients are not subject to pre-market approval as long as the product does not make a health claim. This is important since the company is also testing skin care formulations under its Push and Pull brand formulated with CBD. This is something we are watching since the new skin care line is expected to serve as a major growth driver for the Bioganix family of products.
The European authorities in Europe and the UK have taken similar positions to the US by allowing the sale of full-spectrum hemp oil and hemp CBD as long as no medical claims are made. We have been bullish on the European CBD opportunity due to size of the population and the existing demand for these products.
In Germany, in order to be able to make a medical claim, companies have to register their products with the health authorities to obtain a PZN (Pharma-Zentral-Nummer), which is a national code for medicine identification across Germany. A PZN is needed for a company to make health claims and for the company’s products to be sold through pharmacies across the country. Through a strategic partnership with a German company, Relevium is working to have several formulations registered under a PZN and plans to market these products available through pharmacies and major health portals.
Relevium has also been aggressively pursuing South American opportunities. Initially, Biocannabix was focused on building out a facility in Canada but the high costs associated with this project, the company to pivot its strategy. Instead, Biocannabix is looking away from cultivation, at other segments of the industry with the Weedsense transaction, while securing and controlling plant genetics and extracts from South America. We are favorable on the economics associated with cultivation in South America and will monitor how the team is able to execute on this opportunity.
An Opportunity to be Watching
When looking at Relevium Technologies, we see an under-appreciated opportunity that has significant catalysts for growth. We believe that the recent pressure on the stock is waning and we see the tides potentially turning for Relevium Technologies. The US symbol (OTCQB: RLLVF) recently received DTC edibility .
During the last year, Relevium has reported several significant developments and has been generating much stronger revenues. This is an important trend and one that we will continue to monitor. We expect to see continued growth as the company’s products continue to gain traction and find this to be significant. The recent investments and acquisitions have significantly enhanced the company’s overall growth prospects, and this is an opportunity that we will continue to closely monitor.
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