Bear Market in Cannabis Stocks Forces Israeli MMJ Firm to Postpone IPO
One of the largest cannabis IPO’s of 2019 has officially been shelved until market conditions improve. Breath of Life International (BOL Pharma) was planning to raise roughly $150 million through its initial public offering (IPO) on the Toronto Stock Exchange (TSX). Those plans are now on hold as the company looks to preserve its valuation amid turbulent times in the cannabis sector.
According to Breath of Life, the company had revenues of $3.5 million in 2018 and $1.1 million in Q1 2019. The IPO would have been priced at $27 – $32 per share. The company listed BMO, Bank of Nova Scotia and Cowen as the joint book-runners for the planned IPO.
“We are sitting on the fence waiting for the market conditions to get better. When the market is ready to be bullish, we’ll go ahead immediately,” said Breath of Life CEO Tamir Gedo.
Cannabis stocks have been in a downtrend since the beginning of Q2 2019 and the market has seen selling intensify over the last few months fueled by negative news stories involving CannTrust (TSX: TRST) (NYSE: CTST), poor earnings from Canopy Growth (TSX: WEED) (NYSE: CGC) and Aurora Cannabis (TSX: ACB) (NYSE: ACB) and most recently the vape crisis. Investors are flocking towards the sidelines in an attempt to protect capital.
The cannabis sector is cyclical and many believe the most recent correction will benefit the market in the long run as valuations now look much more attractive.
“The recent decline in pot stocks is healthy, as valuations had risen to unsustainable levels,” stated Gedo.
The Breath of Life CEO plans to wait for a catalyst to boost investor confidence before moving forward with its TSX IPO.
Earlier this year, TMX Group’s President of Capital Formation for Equity Markets Loui Anastasopoulos commented on the IPO saying it “has the potential to be one of the largest life sciences IPOs that we’ve seen in a long time.”
“I would like to see something which is more solid, for instance, that some companies are getting into profitability or at least balance, and they’re starting to behave according to market demand and supply. Right now most of the companies are not sustainable,” added Gedo.
Breath of Life International (BOL Pharma) is the only company in Israel that is fully accredited under the CMPR throughout the main elements of the value chain. Only IMC-GMP certified companies are able to distribute medical cannabis products domestically to pharmacies and will be able to export internationally. BOL Pharma’s first targeting export markets are in the EU as well as Canada and Australia.
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