Tetra Bio-Pharma acquisition of Panag Pharma gets thumbs up at Paradigm

A new acquisition for Tetra Bio-Pharma (Tetra Bio-Pharma Stock Quote, Chart: TSX:TBP) turns the company into a vertically integrated pharma company, says Paradigm Capital analyst Rahul Sarugaser.

This morning, TBP announced it had reached an agreement to acquire Panag Pharma Inc. for $12-million, plus potential milestone payments.

“We are very pleased to announce this news to our shareholders, Tetra CEO Dr. Guy Chamberland said. “We have been working with Panag for over a year and as a combined entity we will have a robust product pipeline of cannabinoid derived drugs for development as prescription or OTC drugs. Tetra is not just acquiring assets and intellectual property, we are joining a group of world-renowned cannabinoid experts that will help take Tetra to the next level as a pharmaceutical company.”

Saraguser says this changes the profile of TBP from cannabis company with pharma interests to a true biopharma stock.

“As a biopharmaceutical company with broadening upstream strength in drug discovery and early-stage clinical development, TBP is evolving into a fully integrated biopharmaceutical company with an alluring pipeline for larger Pharma companies seeking new assets,” The analyst says. “TBP’s rigorous and skillful navigation of international regulatory architectures is a signal that it is, indeed, a biopharmaceutical company developing cannabis drug products, and not the other way around. TBP is a Q4 Top Pick that we see as the next GWPH.”

In a research update to clients today, Saraguser maintained his “Buy” rating and one-year price target of $1.75 on Tetra Bio-Pharma, implying a return of 62 per cent at the time of publication, including dividend.

Saraguser thinks TBP will generate Adjusted EBITDA of negative $2.0-million on revenue of zero in fiscal 2018.