Israeli medical cannabis producer Breath of Life International Ltd. (BOL) cut its valuation for a pending Toronto Stock Exchange initial public offering by about 17%. According to a Canadian regulatory filing on June 14, the company is seeking to list 14% of its shares at a fully allotted valuation of CAD 1.02 billion (USD 827 million), compared to a previous valuation estimate of about $1.19 billion, following its May 23, 2019 prospectus.
Breath of Life produces medical cannabis and cannabis products — including 99%-pure cannabinoids — distributed primarily through pharmacies. The company currently supplies 48 pharmacies from its single facility in the southern Israel kibbutz of Revadim. It is targeting export markets in the E.U., Canada and Australia.
According to the prospectus, BOL showed revenue of $3.5 million in 2018, up from $3 million in 2017, and posted a net loss of $29.3 million, compared with a $6.4 million loss a year earlier. The IPO proceeds will be used to expand operations to Portugal resulting in an annual manufacturing capacity of more than 870,000 kilograms of dried cannabis in Israel and Portugal combined by the end of 2020, the prospectus said.
BOL set a price range of CAD 27-32 per share (USD 20-USD 23.80). Underwriters are BMO Nesbitt Burns Inc., Cowen and Company LLC, and Scotia Capital Inc.
BOL expects to take advantage of recent changes in Israel’s medical cannabis regulatory framework, which went into effect in late April. Under the changes to the country’s long-established medical cannabis program, there is no longer a fixed limit on the number of patients who can be prescribed medical cannabis; the number of physicians allowed to prescribe medical cannabis has been expanded; and, all pharmacies can be certified to distribute medical cannabis.
As a result of the framework changes, BOL forecasts that the number of approved medical cannabis patients in Israel will quadruple to 120,000 by 2022, from 30,000 last year. Earlier in the year, the government approved the export of processed and finished medical cannabis product.
The Israeli government sees a significant economic opportunity in medical cannabis. Various published forecasts peg the sector to be worth from $260 million to as much as $1.1 billion by 2022. In the last year the government committed the equivalent of more than USD $3 million to more than a dozen studies on boosting medical cannabis growing and cultivation.