Citron Pushes Down CV Sciences. Does It Make Sense?

Aug. 21, 2018 3:48 PM ETCV Sciences, Inc. (CVSI)GWPH, INSYQ, ZYNE114 Comments
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Villamayor Capital


  • CV Sciences focuses on manufacturing and selling plant-based Cannabidiol products along with developing therapeutics utilizing synthetic Cannabidiol.
  • Citron Research tells that the bull case is based on rejected patents that the company has never disclosed.
  • The company lost more than one third of its market capitalization in only one day. The collapse seems massive.

With Citron tweeting about the intellectual property of CV Sciences, Inc. (OTCQB:CVSI), CVSI has seen its shares going down from $9 to $3.40 in just one day. After studying the business of CV Sciences, the value erosion seems too large as the company's core business is not R&D, but the commercialization of Cannabidiol. The market needs to calm down and study the company's revenue sources closely.

Research And Development Is Not The Company's Core Business

Incorporated initially in Texas on December 9, 2010, but later incorporated to Delaware, CV Sciences focuses on manufacturing and selling plant-based Cannabidiol products along with developing therapeutics utilizing synthetic Cannabidiol.

The company is separated into two business segments; consumer products and specialty pharmaceutical. The largest segment is the consumer products business segment, which is in charge of manufacturing and selling the company's CBD brand PlusCBD™. CV Sciences distributes more than 50 stock-keeping units and also sells raw materials to consumers for resale into the market. The company seems to be interesting due to its relationships with European suppliers of raw materials. The fact that the company serves as a distributor for other vendors seems very beneficial. It shows that CV Sciences has built connections in the industry, which should be appreciated.


The specialty pharmaceutical business segment is focused on developing synthetic cannabinoids to treat wide range of medical conditions. This segment does not seem to be that important for CV Sciences. The company does not seem to have a lot of patents as of today. It is clearly mentioned in the annual report. The CVSI-007 is the company's first patent-pending product candidate. The image below provides further information on this matter:

Source: 10-K

The only patent received is "Novel Process for Generating Hemp Oil with a High CBD Content" from the U.S. Patent and Trademark Office:

This article was written by

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Former hedge fund analyst, I look for companies growing at a large pace as well as arbitrage and event-driven opportunities.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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