The Daily Hit is a recap of the top financial news stories for Wednesday, October 16, 2024.

On the Site

Judge gives initial OK to $8M Aurora Cannabis class-action settlement

The suit accused Aurora of engaging in a $21.7 million “round-trip sale” to artificially juice its numbers.

Read more here.

California revokes cannabis license of K.U.S.H. Collective, embargoes company’s products

The embargo affects nearly 200 individual products manufactured or distributed by K.U.S.H.

Read more here.

Delaware governor signs cannabis banking protection bill

The move makes room for institutional access as the state prepares to kick off its adult-use market.

Read more here.

Bright Minds stock jumps over 3,000% in five days

Bright Minds says nothing has material has changed in response to the stock move.

Read more here.

In Other News

RIV Capital

RIV Capital entered a distribution partnership agreement with Siban Holdings, which is broadly known as Nabis, to facilitate distribution for RIV’s branded products to licensed retailers across New York state.

Read more here.

Flora Growth Corp.

Flora Growth Corp. appointed Omar Sharif Jr. as a special advisor to the company, a role in which he will focus on guiding Flora Growth’s initiatives aimed at advancing inclusion, social equity and diversity within both the company and the cannabis industry at large.

Read more here.

Psychedelic drug company Bright Minds Biosciences Inc. (NASDAQ: DRUG) saw its stock rocket higher by 1,445% to close the day at $38.49 as the stock rose $36 per share. The stock opened at $2.67 per share and has mostly traded in the range of $1-$2 over the past year. It has moved over 3,000% in five days.

What’s unusual about the move is that the company had four million shares outstanding and 100 million shares traded. The company only had a market cap of $14 million prior to the move, but that has ballooned to $171 million.

Bright Minds issued a press release saying it was unaware of any material changes. The stock is already selling down by roughly 17% today in early trading. Many biotech traders are calling the move a short squeeze which is when option holders are forced to enter the market and buy the stock to cover their position. When multiple option traders have no choice but to buy, the market experiences an imbalance of too many buyers and not enough sellers pushing the stock price higher and higher.

AdvisorShares ETF (NASDAQ: PSIL) had its portfolio weighting change for Bright Minds by 59% with the stock move. Portfolio Manager Dan Ahrens was speaking on The Dales Report after the close and noted the stock also traded up by 120% the prior day.  PSIL is an actively managed ETF versus one that tracks an index. He stated that he decided not to trim any positions after the first day and let the stock ride to see if it would go higher.

When the stock continued to push higher, Ahrens said he went on the hunt to find out what was happening to cause the stock to move. “We’re searching for information. We’re putting calls into the company. We’re searching wherever we can find,” he said.

For right now, it seems to be a Game Stop type of thing, said Ahrens

He added there might be news coming out in the next couple of days that would solve the mystery if there is one.

Bright Minds last reported earnings in August when Green Market Report wrote that the company was still in a pre-revenue stage and hadn’t brought any drugs to market. It only recently reported some revenue but it was due to a tax credit. The company was continuing to search for investors and other possible revenue streams.

Anthony Varrell, a commentator for The Dales Report said in the interview, “If this did this on no news, a stock doesn’t move like that unless someone knows something. And if someone knew something and it did that, someone’s getting their door knocked on.”

New York-based biotech firm Bright Minds Biosciences Inc. (Nasdaq: DRUG) filed its fiscal third quarter earnings on Wednesday, reporting net income of C$413,843 for the period that ended June 30, a dramatic year-over-year turnaround from the C$1.4 loss for its third quarter in 2023.

Losses for the fiscal year-to-date came to C$1.8 million, the company noted in a management discussion filing, down year-over-year from a loss of C$5.8 million in the preceding fiscal year. The one-time quarterly anomaly of net income for the company, which is still in the pre-revenue stage, is likely thanks to a “substantial tax credit” it reported receiving during the quarter.

Going forward, Bright Minds said it intends to raise more working capital through “dilutive equity financings” and “additional investment opportunities,” and noted it’s open to “strategic partnerships and licensing opportunities.”

Bright Minds also reported ongoing work with several of its drugs that are still in development, including treatments for rare pediatric epilepsies and depression. But because it has not yet brought any drugs to market, company leadership is still on the lookout for investors and other possible revenue streams.

“The company’s current and expected cash resources are sufficient to satisfy working capital requirements of running the operations for the following 12 months,” Bright Minds reported.  “However, the company has not realized a source of revenue. Therefore, management will continue to seek new sources of capital to maintain its operations.”

As of June 30, Bright Minds had C$6.2 million in total assets, including C$6.1 million in cash, against C$178,628 in total liabilities.