Tilray Shares Take A Breather, Despite Deal Announcement

After more than doubling over four sessions, moving from $109.05 last Friday to $214.06, shares of Canadian pot producer Tilray Inc TLRY pulled back.

After a freefall that began at 10:30 am that lasted until midsession, the stock found support around the $170 level. The stock was down 17.62 percent at $176.35 at the close Thursday. 

What Happened

IntelGenx Technologies Corp. IGXT, which services the pharma industry using its VersaFilm drug delivery platform, announced it has signed a non-binding letter of intent with Tilray to co-develop and commercialize oral film products infused with recreational and medical cannabis.

IntelGenx and Tilray will fund the project on a 20-80 basis, with the former having the right to manufacture and supply the co-developed products to the latter.

In return, IntelGenx is eligible to receive a fixed single-digit royalty on net product sales.

Tilray retains the exclusive, worldwide marketing and distribution rights for the co-developed products.

Why It's Important

The venture attempts to capitalize on the impending Oct. 17 legalization of recreational marijuana in Canada.

What's Next

Pursuant to the agreement, Tilray will make an investment in IntelGenx by purchasing 1.25 million shares at 80 cents per shares.

IntelGenx said it intends to use the proceeds of the private placement for VersaFilm product development.

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