Hello Maze, it's not great to be down on your investment - if I hadn't invested in any cannabis stocks my portfolio would be in the green even with this virus. I also respect the view of long term holders who have been in the red for years, that's not fun and plays on your mind.
But in regards to some of the milestones you've highlighted, aren't you a touch optimistic?
- Licensing milestones - they have a few deals sure, but they haven't started selling product into any of them except Pennsylvania, which they inherited as part of the merger. Of the 34 odd US states that allow medicinal cannabis, they have two licensing deals and none of the big four states, California, Texas, NY, Florida. Licensing is a work in progress, and the market will want to see more here. IMO, this is not a value driver (yet).
- Maiden revenues milestones, ZLD has not had a 4C with income, sure they're getting one this quarter, but as far as the market is concerned ZLD is at $0. The main revenue milestone will be when they get past the performance targets that were part of the merger, the last of those kicks in at $2.5 million in US sales. I don't know how long it will take to get there, but if they do that quickly, the market will call that a success. If it takes two years to achieve, that won't be good. IMO, maiden revenue's in itself is not a value driver - revenue growth is a value driver.
- Clinical trial validation for Insomnia, this was excellent news, but the market didn't react due to CR shares coming online the same day. Then two days later the corona jitters hit hard, and everything tanked. And it's pretty safe to say that due to the crap year cannabis stocks had in 2019, investors are very cautious at present, medicinal cannabis is not considered a safe place to park your money in troubled times.
In saying all that, there should be a lot to announce over the next year as they have laid out a clear plan, and the market will judge them against these plans. Launching products, getting new licensing deals done, updates on existing trials, and most importantly, strong revenue growth. They've talked up a big game for this year, and if they can pull it off, then I think the market will sit up and take notice. It's time for Osagie and co to show us why this merger was such a good idea - a strong execution of the ZLD project is required.
The whole medicinal cannabis industry could do with some good news. Medlab halted last week with results expected from their Phase 2 cancer pain drug, and Botanix has their Phase 2 dermatitis results due end of March. Hopefully, there are a few winners, and medical cannabis becomes attractive for investors more broadly. It will be interesting to see how the market reacts to these anns - including ZLD more detailed insomnia ann end of March.
My time frame here is at least a year (unless they do something idiotic). In 12/18 months, ZLD will either be in 2 situations which will determine my sentiment.
- Revenue is on the up, Osagie and co have hit their targets, and the share price has responded, they don't need to do a CR quite yet, but if they do they can do it at a premium. Happy days.
- Revenue has been disappointing, and the US targets haven't been achieved. Another CR is a must to keep going and needs doing at a discount rate. Not happy days at all.
I remain optimistic at the moment, but ZLD could do with some good luck as this virus has come at a particularly bad time, hopefully like SARS it disappears with the warmer weather in the northern hemisphere. Patience is key as always (although I understand this wears thin for long-termers).
Good luck, everyone.
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