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Tilary Buys Alef Biotechnology to Build Base in Latin America


Tilray, Inc. TLRY announced that it has acquired its existing Chile-based import and distribution partner, Alef Biotechnology SpA (“Alef”).

Tilray purchased all the outstanding shares of Alef Biotechnology for nearly C$5 million ($3.86 million). The purchase consisted of C$4.75 million in Tilary Class 2 common stock and C$250,000 in cash paid at closing. The transaction is subject to Alef Biotechnology achieving certain business milestones within a period of 12 months after closing and a standard working capital adjustment.

With the acquisition, Tilray will expand its global footprint and strengthen its presence in Latin America. The company will be able to import, produce and distribute Tilray branded medical cannabis products in Chile, and create a base to distribute products throughout Latin America. The Chilean government has been a pioneer in cannabis market in Latin America, and the acquisition of Alef will enable Tilary to establish its presence in this market.

Per the agreement, Tilary will retain the current CEO of Alef Biotechnology, Alan Nudman, and Ariel Nudman, the Chief Sales Officer. The two executives are expected to oversee the strategic expansion of Alef Biotechnology on behalf of Tilary.

Shares of Tilary have jumped 476.0% since it went public in July 2018, against the industry’s decline of 2.3%. The stock got a boost when CEO Brendan Kennedy showed optimism regarding cannabis companies in a show with CNBC. He reportedly stated that pharmaceutical companies have to start thinking about partnering with cannabis companies as a "hedge" against the burgeoning marijuana industry. Per the CEO, cannabis is a substitute for prescription painkillers and prescription opioids. Hence, an investor in a pharmaceutical company or a pharmaceutical company itself will have to hedge the offset from cannabis substitution.

The cannabis space is grabbing headlines, of late. In August 2018, Constellation Brands, Inc. STZ also increased its stake in Canopy Growth CGC.

Zacks Rank & Key Pick

Tilary currently carries a Zacks Rank #3 (Hold).

A better-ranked stock in the biotech sector is Amgen Inc. AMGN, sporting a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Amgen’s earnings per share estimates have moved up from $13.95 to $13.98 for 2018 and from $14.39 to $14.42 for 2019 in the past 60 days. The company delivered a positive earnings surprise in three of the trailing four quarters with an average beat of 4.29%. Share price of the company has increased 18.5% year to date.

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