Next Green Wave Gets One Critical Step Closer To Developing Its Proprietary Cannabis Strains With Intrexon
Next Green Wave Holdings Inc. (CA: NGW – $0.59 & US: NXGWF – $0.45) is in the news again as the Company was granted approval for Conditional Use Permits for its Extraction and Innovation Facility (known as Site C) by the City of Coalinga, CA. These permits are critical because they enable the Company to immediately start retrofitting the existing facility, which will accommodate the commercial extraction, infusion and distribution operations for cannabis oils, cannabis extracts, and cannabinoid infused products. The construction period is expected to be complete in six to eight weeks. Once final occupancy approval is given by the City, revenue-generating operations will commence during Q2.
Retrofitting Site C will occur simultaneously to the further development of the 35,000 square foot cultivation facility, known as Site A. Site A should be operational prior to Site C’s completion, with the potential for generating revenue as early as March. NGW is wasting no time in producing cannabis products to try to get a significant share of the lucrative local Californian market as soon as possible.
Site C Will Kickstart Next Green Wave’s Partnership With Intrexon
Getting Site C into operation is crucial to NGW’s business plan, because it also triggers the start of the partnership with leading biotech company Intrexon (NASDAQ: XON). As we mentioned in our initial Research Report, NGW and Intrexon will be partnering up to use its high-throughput plant regeneration Botticelli™ platform on cannabis plantlets. The intent is to develop cannabis strains in a superior manner to conventional cloning that will result in plants which are immune to harmful pathogens with improved consistency and optimized traits.
Intrexon will be investing in the laboratory infrastructure and providing its own personnel to work on the research and development at Site C, while also having nursery and cultivation space in Site A. If the collaboration between the two companies is successful, Intrexon will be entitled to royalties on Next Green Wave’s own plantlet usage and the parties will split revenues from third party sales equally.
Conclusion: NGW Offers A Favorable Valuation With Multiple Near-Term Catalysts
Being a fairly new listing with a U.S. focus, NGW is flying under-the-radar in this crowded cannabis sector despite its quick transformation from a start-up into a revenue generating company. The Company offers several near-term positive catalysts for stock price appreciation as the final steps before Site A and Site C become operational are taking place.
Moreover, the partnership with Intrexon and planned acquisition of Organic Medical Growth (OMG), to gain access to over 7,000 pharmacies in Colombia, has enabled NGW to stand out from this crowd.
NGW has 121 million shares outstanding; 155 million fully diluted. At $0.62 it has a basic market cap of CAD $75 million with a clean balance sheet that includes over $8 million in liquid assets and over $23 million in total assets with no debt. With its operating facilities being strategically located in Coalinga, it has privileged access to Los Angeles and San Francisco, as well as the rest of California.
There are numerous cannabis companies that have a lot going on right now. What is much harder to find is one that is active to the extent of Next Green Wave while still trading at less than a $100 million market cap. Smallcaps Recommendation: BUY.
|Smallcaps Recommendation: Buy||Price Target: $1.78||Latest Company Report (pdf)|
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