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CB2 Insights

CB2 Insights opens new chapter as medical cannabis data supplier begins CSE trading

The Toronto company is busy meeting what it says is significant demand by building a data asset covering the medical cannabis sector

A marijuana plant
The company has 28 cannabis evaluation and education clinics in 12 US states

CB2 Insights (CSE:CBII) began a new chapter Wednesday when it started trading on the Canadian Securities Exchange.

The Toronto company is busy meeting what it says is significant demand by building a data asset covering the medical cannabis sector. 

"We are thrilled to be bringing CB2 Insights to the public markets and are confident that the CSE will give us a solid foundation to build on our current growth trajectory and provide additional exposure to new shareholders," CEO Prad Sekar said in a statement.

Shares of the company were trading at C$0.36 in Wednesday's CSE trading.

Filling data demand

There is a lack of medical cannabis data, according to the company, which is aiming to be a front-runner in filling demand. It proves predictive analytics tools, data-driven software and services. In addition, the company operates 28 cannabis evaluation and education clinics in 12 states.

When it comes to educating the medical community and having cannabis accepted as a form of medical treatment, clinical trials for cannabis are still years away. For now, much of the data has been anecdotal and, therefore, subjective, according to the company.

CB2 concentrates on real-world evidence obtained from data outside randomized trials and generated during routine clinical practice. The company has created what it says are game-changing tools that engage the medical community and provide the data doctors and other professionals need to recommend with confidence cannabis-based medicines.

The company gathers the data and creates real-world evidence through its proprietary software and clinical service brands. The company says it has collected data from more than 300,000 patient interactions.

"We have been focused on bringing a heightened level of objective, actionable insights to the medical cannabis space," Sekar said.

Three brands – so far

Under the company’s umbrella, there are currently three brands: practice management software Sail, used by clinics and general practitioners to evaluate patients for medical cannabis; Canna Care Docs, which provides educational services and evaluations; and TokeIn: a cannabis dispensary loyalty mobile app.

Further acquisitions are in the cards, according to Sekar.

He is aiming to acquire 6 to 8 clinics in 2019, adding that its goal is a 50% compound annual growth rate in clinic revenue for the four-year period from 2018 to 2022.

The company recently completed a C$5.74 million non-brokered private placement priced at $0.50 per unit, with each unit consisting of one share at C$0.50 and one-half warrant at C$0.80.

The placement was led by Merida Capital Partners, a New York-based private equity fund that focuses on funding cannabis-related businesses and has invested in a range of cannabis companies including KushCo Holdings Inc (OTCMKTS:KSHB) and GrowGeneration Corp (OTCMKTS:GRWG).

Merida accounted for C$3.68 million of the C$5.74 million raised, according to CB2.

Company valuation

As of its recent financing, CB2’s valuation was two times its projected 2019 revenue of $20 million. That is a substantial discount to the 4.5 to 4.9 valuation multiples generally seen in the cannabis industry, according to the company.

The funds will help expand CB2’s footprint through acquisitions of US medical cannabis evaluation clinics.

“With our background as clinical practice management operators, our team has proven our ability to increase the revenues and profitability of acquired clinics while reducing patient churn,” said Sekar in a recent statement. “The scale we are building is not simply for a roll-up; we are using the data we gather within our operations to bring real-world evidence to the medical cannabis space and to develop new predictive analytics tools for all industry stakeholders.”

CB2 provides what it says is a crucial tool that can help physicians gain a better understanding of the patient landscape with information on which cannabis-based medicines are being sought and how those medicines are actually working. CB2 says it's filling a gap through insights supported by data.

The company says it's uniquely positioned at a promising intersection, positioned as a consolidator and provider of cannabis data in an industry that is constantly shifting and demanding reliable information.

–Dennis Fitzgerald contributed to this article–

Contact him at [email protected]

 

Quick facts: CB2 Insights

Price: $0.17

Market: CSE
Market Cap: $12.84 m
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