Neptune Wellness Solutions stock (NASDAQ: NEPT) hits a new high, surging 19.4 percent higher as of Friday. The surge comes at the wake of Neptune’s announcement of its recent multi-year agreement with a prominent Canadian cannabis company, Tilray, to offer extraction and purification services. (NASDAQ: TLRY).
Agreement with Tilray
The Deal with Tilray is slated to be a very significant milestone for the Canada- based company, Neptune Wellness Solutions. Having been in the industry for many years, this agreement could provide a major boost and publicity for the company. Accordingly, Neptune has planned to provide for purification and extraction services to the cannabis major, Tilray.
Though not many financial aspects of the deal had been unveiled, the agreement extends for a duration of three years, where Tilray is stipulated to provide Neptune with 125,000 kilograms of hemp and cannabis biomass for the company to process. Neptune is slated to process around 20 percent of the total volume in the first year.
The agreement has several fold benefits to Neptune – First, it will exceedingly boost revenues of the company.
Second, Tilray is a significant and prominent leader in the cannabis industry. The CEO of Neptune, Jim Hamilton, stated that working with Tilray, a company with worldwide recognition is very thrilling and beneficial to growth, while the Chief Executive Officer of Neptune also commented that, “The size and length of this contract is a testament to the strength of our commercial, scientific and operations teams.”
Having Tilray added to their clientele would definitely bring more attention to Neptune’s services involving extraction and purification and aid in landing more customers.
Interestingly, Tilray isn’t the first big customer to sign up with Neptune, as last year, a multiyear extraction deal was sanctioned between Neptune and Canopy Growth.
However, the recent deal with Tilray is not expected to bring money right away to Neptune as the company is expected to receive the first shipment of hemp and cannabis only around September 2019, as stated by Tilray.
For Neptune, the agreement can open up new opportunities in the Canadian and US market. The Canadian market for cannabis-related products is, in fact, anticipated to open in October 2019 which in turn could create additional demand for extraction services; the kind Neptune provides.
They are also making steadfast entry into the growing market of US, with the company declaring in May having acquired a North Carolina-based hemp processor SugarLeaf Labs as part of its U.S. extension strategy.
About Neptune Wellness Solutions
In its early days, when the company was still called Neptune Technologies and Bioresources, it concentrated on nutraceuticals and had developed innovative technologies in the likes of extraction and purification process.
But as the cannabis industry began to boom, Neptune decided to enter the marijuana market employing its already developed skillset and expertise to the cannabis industry, while also changing its name to Neptune Wellness Solutions.
The company has its own plant in Quebec, where cannabis is processed and has also acquired the required license to do so.
Neptune Wellness Solutions Stock Scenario
The stock of NEPT rose to a good $4.63 after increasing 16.70% and recently surged to a new high of $4.75, this session. Furthermore, Neptune’s stock is now priced at $6.17 on the TSE, soaring at 15.50%. The Tilray stock is now up 8.60% to $38.77.
The stock of the company (Neptune) had been on a steady rise since April, gaining almost 50 %. An important factor that contributed to the upward swing is the announcement of the company about its foray into the hemp and cannabis industry.
Neptune has also detailed out that orders for purification and extraction services have been unfailing, which may have further aided the momentum.
Interestingly, Tilray stocks are still in the red by 49% halfway into the year, while Neptune’s shares have continued to soar with the stock registering 65% growth this year.