The company has made huge strides this year, including the launch of a skincare line and the addition of celebrity endorser and former New England Patriots tight end Rob Gronkowski.
After presenting at the most recent leg of the Benzinga Cannabis Capital Conference in Chicago, Jonathan Conforti, the vice president of corporate development at Abacus, sat down with Benzinga to discuss the company's advancements and future plans.
HG: Abacus is relatively young as a publicly traded company, but has been in business for four years and has an interesting history. How have things changed for the company over the last several years and since going public?
JC: Abacus was established in 2014 when CBD was still a novelty in the U.S. and there were only a few companies in the sector.
We began as a subsidiary of a dermatological pharmaceutical company that invested in research and development of CBD and developed a proprietary line of topical pain relief products.
The products are unique in that they contain all-natural ingredients, including hemp extracts, as well as active pharmaceutical ingredients. The first market we pursued were health care practitioners that dealt with pain: chiropractors, massage and physical therapists.
Our professional brand, CBDCLINIC, worked so well that they became the go-to products, and we are the clear leaders in this segment.
In early 2019, Abacus went public through an RTO in Canada, and this summer began trading on the OTC market under the ticker symbol “ABAHF.”
Going public has given us the financial strength that is required to achieve national scale, and CVS Health Corp (NYSE: CVS) bringing us onto their shelves is the first step in achieving that goal.
HG: How has the competitive market changed since the passing of the 2018 Farm Bill? How has your product rollout been received by the market?
JC: After the passage of the Farm Bill in late 2018, the category exploded and we received our first orders for our consumer brand, CBDMEDIC.
As awareness grew, we saw consumers searching for information about high-quality products. However, it is very difficult to identify a quality product from the hundreds of products offered online.
The most stringent quality checks are performed by the major retailers, and so consumers look to the brands — of which there are relatively few — that make it onto national retailer shelves. They know that these have passed multiple and ongoing quality tests.
Our line of CBDMEDIC products was developed based on a deep understanding of science and expertise in formulation. Our products combine hemp extract, active pharmaceutical ingredients and other natural ingredients and are manufactured in a cGMP-compliant and FDA-audited facility.
These factors — in addition to the breadth of our product line, which covers different therapeutic indications including pain relief, skincare and first aid — have contributed to a very strong reception by both the retail chains as well as consumers.
We are currently available in 19 retail chains and 4,600 stores, including CVS, Bed Bath & Beyond Inc. (NASDAQ: BBBY) and others. We continue to attract new retail chains who want to carry our CBDMEDIC product line and expect this to continue at a healthy pace for at least the next few quarters.
HG: What are the differences and similarities between the demographics of the pain relief line and the skincare line?
JC: The demographics of our customers vary based on our wide variety of products.
Even within our pain relief line, we address multiple segments such as arthritis, active sport, muscle and joint and foot pain. Each of these segments has their own profile and each represents a significant market.
Our acne treatment products skew to a younger demographic, and our first aid products, which cover therapeutic indications such eczema and itch and rash, are targeted to an indication and less specific to a demographic.
What we have found is that the wide range of CBDMEDIC products means we reach different demographics, and our core message as a company that is based in science and offers effective all-natural products that address specific therapeutic indications resonates very well with consumers.
HG: How has the company’s celebrity partnership with Rob Gronkowski affected awareness of your products? How will the new product line compete in a budding U.S. market?
JC: In August, we announced our partnership with three-time football world champion Rob Gronkowski.
During a press conference, Gronkowski urged major sports organizations to reconsider their stance on CBD and spoke about how effective our products were in treating his pain.
He has a very authentic story to share and people responded to his message; awareness of our products and our company increased significantly as a result.
We continue to work closely with Gronkowski and support his advocacy efforts. We also shared with the market that we plan to launch a sports and wellness line of ingestible products with him. You can expect this to be brought to market in the first half of 2020.
We believe these products will do well. They will be proprietary products based on solid science and formulated with the same level of care and efficacy as our successful topical products.
HG: What are the short-term plans for expansion? What do you anticipate in terms of growth in the next three to five years?
JC: In the short term, we expect the U.S. market to be the main driver of growth for Abacus.
If you consider that there are 100,000 retail pharmacy location in the U.S. and that we are currently in less than 5%, there is a lot of growth ahead.
We believe 2020 will be an inflection period where the large retail chains that we are working with will significantly expand the number of stores [in which] they roll out our products, and our growth will follow this trajectory.
Our CBDMEDIC brand is a leader in the market, and we expect this will be increasingly apparent over the next few quarters.
Additionally, the soon-to-be-launched Gronk-inspired line of products is also expected to provide meaningful growth for us.
We are also investing efforts in establishing a presence in Europe, and expect Europe and potentially other territories to be a healthy driver of growth in the medium term.
It’s exciting to be a part of such a fast-growing industry, and we believe we are making the right decisions to set the business on a path that will see it growing for many years.
Former New England Patriots tight end and Abacus Health spokesman Rob Gronkowski. Photo courtesy of Abacus Health.
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