The Kanabo (LSE:KNB) share price jumped as much as 9% last week after it announced a new partnership with Medocann Group. This near double-digit growth has helped elevate the stock by just over 20% since its IPO in February this year.
The details
Under the newly signed agreement, Medocann and Kanabo will collaborate to develop new medical products. The goal is to utilise Kanabo’s preclinical data and Medocann’s genetics bank to discover new medicinal treatments based on cannabis flowers and extracts.
Earlier in the year, the firm announced its intention to acquire another medical cannabis company called Materia. Assuming this deal is approved by both shareholders and regulators, Kanabo will gain immediate access to a distribution network of pharmacies in Germany. This is relevant because, under the partnership with Medocann, the new co-developed products will be exclusively distributed by Kanabo in the UK and German markets.
Management expects this collaboration to generate sales upwards of €9m (£7.6m) over the next three years. However, this may fluctuate in line with the price of raw materials over time, specifically cannabis.
What does this mean for the Kanabo share price?
There continues to be an aura of mystery surrounding Kanabo’s revenue stream. The firm has yet to publish any financial statements that include sales figures. However, earlier this year, the company confirmed that its first shipment of medicinal cannabis cartridges was shipped to the UK.
Regardless of the value of this shipment, the latest partnership with Medocann undoubtedly fortifies the group’s revenue stream. And it injects several million euros into the income statement. While profits are unlikely to emerge any time soon, this looks like another step forward for the Kanabo share price.