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April 6, 2020, 10:33 a.m. EDT

Canopy Growth’s Vaporizer Device Gets Health Canada Approval

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Apr 06, 2020 (Market Realist via COMTEX) -- On April 3, Canopy Growth /zigman2/quotes/200603886/composite CGC -20.03% /zigman2/quotes/202205609/delayed CA:WEED -20.80% announced that Health Canada issued a medical device license for Volcano Medic 2--its vaporizing device. Storz & Bickel, a subsidiary of Canopy Growth, developed the product. Canopy Growth acquired the German vaporizer design and manufacturer in December 2018 for approximately 145 million euros. The medical device license allows device distribution to patients, clinics, and medical institutions in Canada. Also, the license allows the distribution through Spectrum Therapeutics--Canopy Growth's medical cannabis division. Earlier, Europe and Australia approved the device for medical use.

Compared to the original Volcano Medic, Volcano Medic 2 has various improved features for patients. Notably, the device is eligible for tax deductions in Canada. Also, patients can get device reimbursement from health insurance companies in Germany. Speaking on the approval, Canopy Growth's chief medical officer, Mark Ware , said, "Storz and Bickel is internationally-known for its best-in-class device design and manufacturing. This license will allow us to offer even more options for patients who may be interested in vapourizing whole-flower dried cannabis as an alternative method of medicating."

Impact of the license on Canopy Growth

In the third quarter of fiscal 2020, which ended on December 31, 2019, Canopy Growth reported revenue of 14.8 million Canadian dollars from its Canadian Medical Cannabis division. The revenue formed approximately 11% of the company's total gross revenue. I think that the approval could boost the company's medical sales in Canada. Meanwhile, the company faces tough competition in the medical cannabis sector from Aurora Cannabis /zigman2/quotes/210559470/composite ACB -8.21% , Aphria /zigman2/quotes/207425803/composite APHA -1.86% , and OrganiGram /zigman2/quotes/209289540/lastsale OGI -6.95% .

On the recreational cannabis front, Canopy Growth has already introduced some of its Cannabis 2.0 products like chocolates and cannabis-infused drinks. On March 16, The Deep Dive reported that the company started shipping its first marijuana-infused beverage, Tweed Houndstooth & Soda, to retailers on March 11. Constellation Brands has invested approximately $4 billion in the company for a 35.6% stake. With support from Constellation Brands, I think that Canopy Growth is well-positioned to acquired significant market share in the cannabis-infused beverage category.

Stock performance

Health Canada issuing the medical device license didn't impress investors. On April 3, Canopy Growth stock fell by 4.4%. Weakness in the broader equity market might have led to a fall in the company's stock price. So far, Canopy Growth has lost 31.4% of its stock value this year. Meanwhile, the company has outperformed Aurora Cannabis and Aphria. During the same period, Aurora Cannabis and Aphria have fallen by 59.5% and 41.4%, respectively. Meanwhile, OrganiGram has returned 28.5% YTD. Read Does Canopy Growth Look Attractive after Yesterday's Fall? to learn more.

COMTEX_364240274/2648/2020-04-06T10:33:26

/zigman2/quotes/200603886/composite
US : U.S.: NYSE
$ 17.37
-4.35 -20.03%
Volume: 25.31M
May 29, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$6.07 billion
Rev. per Employee
$115,039
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/zigman2/quotes/202205609/delayed
CA : Canada: Toronto
$ 24.21
-6.36 -20.80%
Volume: 7.22M
May 29, 2020 4:22p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$8.47 billion
Rev. per Employee
$150,142
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/zigman2/quotes/210559470/composite
US : U.S.: NYSE
$ 14.08
-1.26 -8.21%
Volume: 10.73M
May 29, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$1.55 billion
Rev. per Employee
$94,401
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/zigman2/quotes/207425803/composite
US : U.S.: NYSE
$ 4.23
-0.08 -1.86%
Volume: 7.15M
May 29, 2020 4:00p
P/E Ratio
47.53
Dividend Yield
N/A
Market Cap
$1.13 billion
Rev. per Employee
$147,410
loading...
/zigman2/quotes/209289540/lastsale
US : U.S.: Nasdaq
$ 1.74
-0.13 -6.95%
Volume: 9.98M
May 29, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$301.16 million
Rev. per Employee
$49,972
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