Shares of Neptune Technologies & Bioressources (NASDAQ:NEPT) saw gains as high as 24% on Wednesday after announcing that it has entered into a multi-year agreement with Canopy Growth (NYSE:CGC)
As part of the agreement, Neptune will be supplementing Canopy Growth’s extraction, refinement, and extract product formulation capacity.
President of the company’s Cannabis business, Michel Timperio, commented, “We are truly excited to partner with such a great company as Canopy Growth. This multi-year agreement, including minimum volume commitments, will be supported by Neptune’s decades of experience in extraction, purification and formulation of value added differentiated science-based products.”
President of Canopy Growth, Mark Zekulin, stated, “Extract products are key to the future of the global cannabis industry and we’re taking the right steps to significantly increasing our production capacity to capture this opportunity. We were the first to introduce extract based cannabis Soft gels and this agreement supports our development of a wide range of extract products to meet the demand of these growing market segments as we prepare our operations for greater product diversification.”
“When combined, this significantly increased extract production capacity, coupled with extract focused research, positions Canopy Growth to meet the demand of patients and consumers in Canada and around the world. Neptune’s existing throughput capacity will complement Canopy Growth’s owned extraction capacity to support extraction requirements for the world’s largest cannabis production platform totaling 5.6 million sq. ft.,” continued Mr. Zekulin.
“Today’s agreement represents an important milestone in our cannabis growth strategy and validates our repositioning into larger global markets characterized by growth. Neptune has a history of producing high quality products for the natural health sector and is well positioned to apply and lever this experience to cannabis products,” added Jim Hamilton, the President and CEO of Neptune.
It was earlier this month that Neptune released its fourth quarter and year-end results.
“During the fourth quarter, we sustained an intense pace of activity in developing the cannabis business opportunity, meeting with potential suppliers and partners while continuing to move forward with the regulatory licensing process. As of today, having committed more than 90% of our $5 million approved capital plan to work on site security, license compliance and CO2 extraction, we remain on track and on budget to complete the first Phase of our cannabis commercialization strategy in the middle of 2018. Simultaneously, we began work on Phase II and successfully completed solvent lab scale trials. As a consequence, we are very excited that the Board approved the $4.8 million investment for Phase 2 capacity expansion,” said Mr. Hamilton.
He concluded, “Fourth quarter revenue from our Solutions Business was the best quarter ever and grew 14.9% year-over-year when using the comparable 3-month periods. As we move into fiscal 2019, we are keenly focused on executing our strategy to establish Neptune as an innovative health and wellness products company focused on the extraction, purification and formulation of cannabis oil ingredients and differentiated products to serve customers globally. With a healthy cash balance of $26.7 million at year-end derived from exiting the krill oil manufacturing business, we have the financial strength to fund our cannabis business opportunity through commercialization based on our current timeline of developments.”