MMJ Group’s non-cannabis investment in COVID-19 testing technology has growth potential

MMJ Group Holdings Ltd (ASX:MMJ, OTC:MMJJF) recently invested in Brainworks Foundry Inc, which is an integrated digital health and pathology company operating in the United States.

Brainworks has designed a best-in-breed, highly scalable polymerase chain reaction (PCR) testing process, using DNA barcoding, which significantly reduces the cost and turnaround time of next-generation gene-sequencer analysis for COVID-19 samples.

This testing process was first deployed for COVID-19 PCR testing in October 2020 after receiving an Emergency Use Approval from the US FDA.

COVID-19 testing is here to stay

COVID-19 has had an impact on the world that few would have guessed 18 months ago.

We now live in a world of case counts and vaccine delivery trackers.

With the rapid spread of the Delta variant, a realisation that even the vaccines’ may not be a final solution has taken hold.

Not to mention how the world is likely to react to the next variant or indeed the next virus that spreads.

As such, testing is here to stay and become the foremost tool that governments and private organisations across the world will use to combat the spread of new diseases.

In that context, MMJ believes innovative approaches to mass testing will be a high growth sector.

Large-scale gene sequencing pathology lab

Brainworks has demonstrated the validity of its approach via a large contract with a group of state colleges and has recruited highly capable scientists who have specialised in scaling up new tests.

The company is also headed by entrepreneurs who have a solid track record of innovation in newly emerging fields.

Brainworks will use the proceeds from its pre-IPO equity financing of US$3.7 million to establish its first large-scale gene sequencing pathology lab in Alameda, California.

This will allow them to service up to 150 markets across the US and provide end-to-end gold-standard PCR COVID testing in under 24 hours.

Results will be delivered via the secure Brainworks digital health platform.

News flow from cannabis investments

Combined with Vintage Wine Estates, MMJ is moving towards a 25% non-cannabis portfolio allocation.

While the non-cannabis portion of the portfolio has been growing, there has been significant activity in the cannabis portion as well despite what’s been a challenging macro environment for the sector.

In August, cannabis valuations took a step back in Canada and the U.S.

MSOs (multi-state operators) are underperforming despite what is actually great performance on the actual sales and operations side.

Despite the bearish market sentiment, MMJ’s portfolio companies continue to outperform.

The following are some highlights from August:

• Weed Me continues to outperform and break revenue records each month in FY21 and is now also consistently profitable.
• Harvest One launched a new line for sleep gummies in the American market under the Dream Water brand, which will hit distributors and retailers in September. This launch will increase growth in the company’s traditional distribution and retail channels and improve overall channel penetration by leveraging the company’s expertise in branding, marketing, and distribution.
• Entourage Health reported Q2 earnings and are showing consistency in generating high revenues bringing the company ever closer towards being cash flow positive.

In August, MMJ stock gained about 3% compared with MMJ’s benchmark Alternative Harvest Index which declined nearly 9% over the same period.

Story by ProactiveInvestors

Source: https://www.proactiveinvestors.com/companies/news/960210/mmj-groups-non-cannabis-investment-in-covid-19-testing-technology-has-growth-potential-960210.html