Tilray To Supply Medical Cannabis To France; Shares Gain 14%

Shares of Tilray jumped 14% in Tuesday’s morning trading after the cannabis producer said that it was selected by the French national health agency to supply GMP (Good Manufacturing Processes) certified medical cannabis products to patients in the country.

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Tilray (TLRY) will distribute medical cannabis products through the French National Agency for the Safety of Medicines and Health Products (ANSM) for medical experimentation in the country.

The cannabis producer will supply medical cannabis products to French patients in the country for the duration of the experiment, which is scheduled to last for a period of 18 months to 24 months. The experiment is due to begin in the first quarter of this year.

Tilray’s CEO, Brendan Kennedy said, “Today’s announcement marks another milestone for Tilray as we expand operations in Europe. We are proud to be able to offer access to a variety of high-quality, pharmaceutical-grade medical cannabis products to the ANSM while supporting patients in need in France.”

As a part of the experiment, cannabis products will be administered to those patients for whom current treatments do not provide relief from their symptoms and for therapeutic indications.

Tilray said that it has the necessary regulatory approvals in place to participate in the experiment and intends to supply medical cannabis products from its facility in Portugal. (See TLRY stock analysis on TipRanks)

In December, the company announced a merger with Aphria with a combined pro forma equity value of $3.9 billion and pro forma revenues of $685 million. One of the aims behind the merger is to pursue growth opportunities in Europe through Aphria’s distribution facility in Germany and Tilray’s cannabis production facility in Portugal.

Following the merger announcement, Northland Securities analyst Michael Grondahl assigned a Hold rating on the stock.

“The cannabis production facility in Portugal has significant export capabilities and tariff-free access to the EU, as well as access to more than 13,000 European pharmacies,” Grondahl wrote in a note to investors. “Management expects to reach 30% market share in Canada, increasing to ~3,000 stores via taking share, innovation, new products and new stores opening up coming out with different strains.”

“Legalization to occur in more countries in Europe, with France to implement a medical cannabis program and it is likely that 28 EU member countries will legalize medical cannabis within the next 24 months and TLRY is well positioned to capitalize,” the analyst summed up.

Overall, Wall Street analysts are sidelined on the stock. The consensus is a Hold with 7 analysts suggesting a Hold, one analyst recommending a Buy, and one analyst has a Sell. The average price target of $11.95 implies 30.5% downside potential to current levels.