NanoSphere Health Sciences (CSE:NSHS) is a Cannabis Nanoparticle Delivery Leader: Ubika Research

Equity Research Healthcare Technology and Cannabis | Small Cap August 29, 2018
Patrick Smith | Analyst | Ubika Research Patrick@UbikaResearch.com | 1 (647) 444-5506
Richard Waxman | Associate | Ubika Research Richard@UbikaResearch.com | 1 (647) 770-2185

”NanoSphere

Market Data (CSE:NSHS)

Price (August 28, 2018)$0.49

52 Week Range $0.30 – $1.16

Market Cap (M)$47.1

Current Shares Outstanding (basic, M) 96.1

Current Shares Outstanding (fully diluted M)109.0

Free Float38%

Average Daily Volume (30 Days)91K

Last Reported Cash (M)* US$2.3

Total Assets (M)* US$2.8

Total Debt (M)*US$0.0

Headquarters Vancouver, BC., Canada

Website www.nanospherehealth.com

Management

Robert Sutton CEO & Chairman

David SuttonPresident, COO & Director

Dr. Richard KaufmanCSO & Director

Dr. Terry GrossmanCMO

Victor GoncalvesEVP

Jim EwingCFO (US)

Bennet LiuCFO (CAN)

Kate WellsCMO

Stephanie Hopper Director

Michael Iverson Director

Toby Lim Director

*as of March 31, 2018 All figures in CAD unless otherwise stated. Source: Company Reports, Thomson Reuters

Price Performance

NanoSphere Health Sciences Inc. (CSE:NSHS, OTC:NSHSF)

Company Description

NanoSphere Health Sciences is a healthcare technology company specializing in the controlled, rapid delivery of therapeutic agents via patented smart nanoparticles. The Company is developing various applications for its proprietary delivery system platform for use with cannabinoids, nutraceuticals, pharmaceuticals, cosmeceuticals and animal health

Company Highlights

  • The Company’s patented cannabis nanoparticle delivery system improves the effectiveness and onset time of cannabinoids and other therapeutic compounds. The NanoSphere Delivery SystemTM carries precision-metered dosages of bioactive compounds to the bloodstream and target receptors with increased potency, greater therapeutic potential and decreased risk of adverse effects. The tangible results are more effective medical and recreational cannabis products, producing a predictably powerful and longlasting effect that requires a lower dosage of THC CBD.
  • Growing brand and product pipeline in a developing market. No single brand has established itself as the dominant player in the cannabis space yet. For cannabis products other than dried flower and oil, there remains even less brand establishment. NanoSphere’s Evolve brand has the opportunity to gain first-mover market share through its transdermal product platform. We expect enhancement of its presence upon the launch of the intranasal and intraoral products.
  • Broad patent protection that includes the future opportunity to expand into non-cannabinoid therapeutics. The Company plans to pursue opportunities in the nutraceutical, pharmaceutical, over-the-counter medication, animal health and skin care markets.
  • High-margin business model includes revenue sharing and royalty agreements with local operators. The Company currently generates revenue from operating partners in Colorado, with sales in California and Arizona slated to begin before the end of Q3/2018. Sales from Canada and at least six other states are anticipated to begin in 2019.

Financial Highlights & Valuation

We are initiating coverage of NanoSphere with an estimate of $0.75/share. We utilize the EV/EBITDA methodology for our valuation. Our valuation is derived using a 10x multiple applied to our 2020E adj. EBTIDA estimate, adding our year-end 2020E cash estimate of $8.9M and all ITM warrants and options for $1.1M, equating to a market value of $118.2M. We utilize a fully-financed share count.

Trades at a discount to peers. NSHS currently trades at 13.6x our 2019E EBITDA estimates of $3.3M, a discount to Intermediate and Junior cannabis companies, which trade at an average of 18.2x and 52.5x, respectively.

To read our full disclosure, please click on the button below:

The Content contained on this page (including any facts, views, opinions, recommendations, description of, or references to, products or securities) made available by SmallCapPower/Ubika Research is for information purposes only and is not tailored to the needs or circumstances of any particular person. Any mention of a particular security is merely a general discussion of the merits and risks associated there with and is not to be used or construed as an offer to sell, a solicitation of an offer to buy, or an endorsement, recommendation, or sponsorship of any entity or security by SmallCapPower/Ubika Research. The Reader should apply his/her own judgment in making any use of any Content, including, without limitation, the use of any information contained therein as the basis for any conclusions. The Reader bears responsibility for his/her own investment research and decisions. Before making any investment decision, it is strongly recommended that you seek outside advice from a qualified investment advisor. SmallCapPower/Ubika Research does not provide or guarantee any financial, legal, tax, or accounting advice or advice regarding the suitability, profitability, or potential value of any particular investment, security, or information source. Ubika and/or its affiliates and/or their respective officers, directors or employees may from time to time acquire, hold or sell securities and/or commodities and/or commodity futures contracts in certain underlying companies mentioned in this site and which may also be clients of Ubika’s affiliates. In such instances, Ubika and/or its affiliates and/or their respective officers, directors or employees will use all reasonable efforts to avoid engaging in activities that would lead to conflicts of interest and Ubika and/or its affiliates will use all reasonable efforts to comply with conflicts of interest disclosures and regulations to minimize the conflict.