What Triggered Preferred Dental’s Rise Of 225% In Just 2 Days?

Preferred Dental’s (CA: PDTI – $0.07 & US: PDDTF – $0.04) share price rose 125% on 2.7 million volume on Thursday, and another 225% yesterday, after announcing a joint venture with Gillespie Farmer’s Delight Company Ltd. (GFDCL) to expand on PDTI’s line of organic CBD based dental products. The market loved this news as this was record volume for the Company with more shares traded in one day than over the previous three months. This new rush of day traders and momentum investors buying on headlines may do research on PDTI and like what they see.

In our last article on PDTI, we outlined the Company’s cogent plan to disrupt the dental industry in 2019, an industry that hasn’t changed in decades and is in desperate need of disruption:

Now that new investors are taking a look, they have an opportunity to see that PDTI is far more than a cannabis keyword day trading opportunity; as the Company has a legitimate chance at garnering significant revenues and profits in a fairly short order for a start-up. There are many cannabis companies out there and the plant will eventually commoditize. But there are few, if any, dental technology companies out there that would be innovative and capable enough to bring CBD products to this industry. So open-minded investors who are willing to give PDTI a chance, may be embarking on a once-in-a-lifetime opportunity to benefit from a disruption in the dental industry.

Joint Venture Values PDTI at $0.13 And Provides Cheap And Reliable Access To CBD

GFDCL is in the development stage of establishing a 240 acre hemp growing and CBD extraction facility located in Jamaica. As part of the joint venture, GFDCL and PDTI will do a share exchange whereby PDTI will exchange 5,000,000 of its common shares for a 22.5% stake in GFDCL, equal to 9 million shares. Based solely on the property value of the current lease purchase currently under consideration, PDTI’s 22.5% stake is worth $650,000 Canadian, equivalent to valuing PDTI at $0.13 per share.

In addition to the favorable valuation, upon successful completion of the joint venture, PDTI will receive a proportionate share of GFDCL’s net profits without any obligation for its capital needs. PDTI will be able to procure a consistent high quality, low cost supply of white labelled CBD product at cost-plus preferred pricing, giving PDTI “best price” access for its branded product line PDT Wellness. Securing a reliable source of raw materials is imperative for any manufacturing company.

Additionally, this deal provides potential for a very strong passive investment for PDTI as GFDCL ramps into production. Working closely with their excellent team of master extractors, PDTI will also be able to develop patentable strains and formulas. These will be specific to the growing body of research supporting use of CBD in dental specific applications, in addition to treatment of patients’ pain and anxiety at a time when the field is attempting to respond to the opioid crisis with safer alternatives as CBD goes mainstream.

Investors Came For The Headlines But Should Stay For The Patents

While investors got excited over the CBD deal, PDTI’s core business will be from the sale of dental abutments in the United States, Brazil and globally. The Company took a significant step towards that by announcing the grant of a patent for its Evolutionary Accessory Series (EAS) on May 7th. The patent specifically covers 3D applications for creating custom dental abutments for dental implants. PDTI’s system is much more than a new product. It will enable the dental industry to finally join the rest of society in the 21st century by making dentistry a more convenient, efficient and comfortable experience for patients and dentists alike. People dislike the dentist so much mainly because they have been using the same standard procedures for major dental work for decades. PDTI can change all that, whether or not “CBD” is attached to the process in some way.

The Company said it best in a news release on November 22, 2017: “The importance of this revolutionary breakthrough is not limited to the huge savings in time offered by 3D printing technology, but more importantly results in decreased production costs of individual abutments. Custom abutments can now be prototyped and manufactured in house with minimal capital cost.”

Patients receive a better fitted product through 3D printing technology while dental offices save enormous time and money. Twelve EAS 3D printed custom abutments can be created in twenty-seven minutes compared to the existing milling process which takes two to three times that time for ONE abutment.

Patent protection is important because we believe that the Company’s products will catch on and medical device companies that have overlooked the dental industry might start looking at this industry for opportunities if they see a small company having success. With a strong patent portfolio and being a first-to-market mover, PDTI becomes a much more convenient buyout target rather than to try to compete with it.

Conclusion: The Next Major Milestone Is Getting Products To Market

With PDTI having gotten some recognition in the capital markets with its CBD deal, now is the time for the Company to get new shareholders engaged in the entire story. Having secured CBD supply for its PDT Wellness line and strengthened its patent portfolio, the next step is getting its products to market – namely dental offices in the United States, Brazil and eventually the rest of the world.

The dental industry works similarly to any medical industry, where a medical device company would need ambassadors who can help educate their medical practitioner peers on the merits of the devices. PDTI has built a world class team of advisors who have all see the potential of the EAS system – a team which includes internationally recognized lecturers, researchers and educators such as Dr. Igor Pesun (Division Head Prosthodontics, Restorative Dentistry, University of Manitoba) and Dr. Rodrigo França (Head of Dental Materials, University of Manitoba).

This team joins Dr. Fiuza, the dentist who is performing the first EAS implants in Brazil, as valuable early stage acceptors of PDTI’s product line that will go a long way to market acceptance in United States and Brazil. Only a few dozen dentists doing one implant a week is enough for PDTI to get to breakeven. That alone should support an investment for risk-tolerant investors at less than a 5 million market cap. Smallcaps Recommendation: BUY.

For important disclosures, please read our disclaimer.