earnings Archives - Green Market Report

StaffStaffNovember 25, 2020
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3min630

Planet 13 Holdings Inc. (CSE:PLTH) (OTCQB:PLNHF) reported that revenues rose 36.5% to $$22.8 million for the third-quarter ending September 30, 2020, versus last year’s $16.7 million. The company also delivered a net income of $0.2 million as compared to a net loss of $1.7 million in 2019. The net income before taxes was $3.4 million as compared to a net income of $0.3 million last year for the same time period.

“Our performance in the third quarter exceeded expectations – leading to our highest quarter of sales ever,” said Larry Scheffler, Co-CEO of Planet 13. “Despite being impacted by the ongoing global pandemic and our Las Vegas SuperStore only at 50% capacity, we achieved 36% higher revenue compared to pre-COVID quarters. This is a testament to the strength of Planet 13’s business model and the success of the operational improvements we put in place to ensure our ability to serve local customers. As Las Vegas returns to normal and the economy recovers, we will undertake further strategic initiatives to grow revenue at the SuperStore and increase our sales to local customers in Las Vegas.”

The operating expenses, excluding non-cash compensation expense and depreciation and amortization, was $7.2 million in the quarter versus $6.7 million in 2019, an increase of 7.9%.  The third-quarter 2020 adjusted EBITDA of $6.2 million was higher than the 2019 Adjusted EBITDA of $3.4 million.

“In the third quarter, our in-house brands contributed 25% to SuperStore revenue – continuing to be one of the most recognized and fastest-growing segments within the Planet 13 portfolio. In the wholesale market, we saw increasing sales month over month throughout the quarter and continuing into October. Building on this momentum, we continue to invest in cultivation with our recently announced acquisition of a 45,000 square foot facility in Las Vegas, better positioning us to supply wholesale and retail sales within the state,” commented Bob Groesbeck, Co-CEO. “We are excited to leverage our knowledge and experience from Nevada to California, with the opening of our new dispensary in Santa Ana in 2021 – the world’s second-largest dispensary. Planet 13 is well-capitalized, and we look forward to executing on future expansion into other major growth markets.”

Post Quarter Updates

Following the end of the third quarter, the company listed the following highlights in a statement:

  • On October 13, 2020, Planet 13 announced the addition of non-cannabis retail space to the Las Vegas SuperStore.
  • On October 19, 2020, Planet 13 announced expanding the dispensary floor of the Las Vegas SuperStore.
  • On October 19, 2020, Planet 13 announced a CDN$20 million bought deal public offering.
  • On October 20, 2020, Planet 13 announced an upsize to bought deal public offering to CDN$25 million.
  • On November 5, 2020, Planet 13 announced the closing of a CDN$28.8 million bought deal public offering.
  • On November 20, 2020, Planet 13 announced opening the Medizin dispensary.

Debra BorchardtDebra BorchardtNovember 25, 2020
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5min581

Vireo Health International, Inc. (OTCQX: VREOF) reported that its revenue rose 67% to $11.9 million for its third quarter ended September 30, 2020 versus $7.1 million for the same time period in 2019. Net income in the third quarter was $122,252 versus a net loss of $14.6 million in the 2019 third quarter.  Vireo said the favorable improvement in net income was primarily driven by the one-time gain of $16.4 million on the divestiture of the company’s former PAMS subsidiary.

Vireo reported that it generated revenue in seven states during the third quarter: ArizonaMarylandMinnesotaNew MexicoNew YorkOhio, and Pennsylvania. Total revenue, including contributions from discontinued operations, increased 68% year-over-year to $13.4 million.  Retail revenue was approximately $9.9 million in the quarter, an increase of 61% versus $6.2 million in Q3 2019. The increase in retail revenue was principally due to greater patient enrollment and average revenue per patient in Minnesota and New Mexico, as well as contributions from retail dispensaries in Pennsylvania. Wholesale revenue of $2.0 million increased by $1.1 million as compared to $980,921 in Q3 2019, with the increase primarily driven by the growth of wholesale operations in Maryland.

“Our third-quarter results demonstrate the improving nature of our business and success of recent initiatives to improve operating and financial performance,” said Chairman and Chief Executive Officer, Kyle Kingsley, M.D. “For the past several quarters we’ve been focused on positioning our vertically-integrated portfolio of assets to produce sustained and profitable growth, and we believe today’s results are an encouraging indicator that we’re nearing a critical inflection point in cash flow generation from operations.”

EBITDA was $8.1 million during the quarter, compared to a loss of $15.9 million in 2019 for the same time period. Adjusted EBITDA was a loss of $675,808 in Q3 2020, as compared to a loss of $5.2 million in Q3 2019.

Dr. Kingsley added, “Thanks to the hard work of our teams improving costs and manufacturing efficiencies, Vireo is positioned to improve margins as we continue growing our Green Goods retail dispensary footprint and benefit from likely tailwinds of regulatory changes. Each of our current development projects remains on time and budget, and with seven new dispensaries expected to open before the end of Q1 2021 and the potential for a majority of our state-based markets to pass adult-use legislation within the next year, we believe Vireo is poised for strong improvements in revenue growth and profitability.”

Outlook

Dr. Kingsley concluded, “As we exit fiscal year 2020, we’re focused on successfully completing our capacity expansion projects in ArizonaMaryland, and New Mexico, as well as our planned dispensary openings in MarylandMinnesota, and New Mexico. However, cash inflows from the forced redemption of warrants and exercise of the PDS purchase option materialized sooner than we anticipated, and our improving liquidity position has enabled us to begin evaluating additional investment opportunities. We expect to provide the investment community with an update on development initiatives and their potential impacts to our long-term operating and financial outlook in the spring of next year.”


StaffStaffNovember 24, 2020
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4min1080

Plus Products Inc. (CSE: PLUS) (OTCQX: PLPRF)  released its unaudited financial and operational results for the third-quarter ending September 30, 2020, with revenues growing slightly to $3.7 million versus net revenues of $3.5 million for the same time period in 2019. Plus also trimmed its losses to $(1.5M) in the quarter versus ($9.5) million for the same quarter in 2019 representing an 84% improvement.

“The third quarter was an exciting period for PLUS as we continued our steady progress towards profitability, achieving 40% gross margins for the first time and consuming just $0.4M in cash,” stated Jake Heimark, Co-founder, and CEO. “Commercially, we took significant steps in expanding our product portfolio in both size and purpose with two new product launches. We delivered the most concentrated cannabis gummy in the California market to consumers with our HI-CUBES product line, a launch that was followed shortly by the introduction of our first line of sleep-focused products. A majority of consumers looking for cannabis-centric sleep aids are still unsatisfied, a finding made clear by the success of PLUS SLEEP, which sold into over two-hundred accounts during the first two months following its launch.”

During the quarter, Plus said it continued to have strong cannabis revenues in the California adult-use market with contributions from the Nevada adult-use market and its national hemp CBD product line. In July, the company increased the wholesale price of its core product line, resulting in a temporary slow-down in sales during the first two months of the period. Plus also said that it finished the quarter on a high note with strong sales in the final month and expects fourth-quarter net revenues to exceed $4.0 million.

Heimark added, “While sales in the third quarter were not as robust as the first half of the year, we believe the short-term slow-down in sales, mostly attributable to the price increase on our core product line, will be well worth the improved unit economics and long-term sustainability of the PLUS brand on shelves. In Nevada, despite manufacturing complications during the initial wave of COVID-19 restrictions, PLUS achieved over $1.5 million in retail sales during its first year on shelves while maintaining a spot as a top-5 brand in a market with over 50 competitors. With the expectation of profitability on the horizon, over $12.5 million in cash on hand, and one of the leading edibles brands in the industry’s largest legal market, we believe PLUS is poised for continued growth over both the short and long term.”

Looming Debt

Plus said it is actively working towards a solution to address the maturity of its 8% unsecured convertible subordinated debentures totaling C$25 million that mature on February 28, 2021 and expects to engage PI Financial Corp. to support its efforts related to this matter.


Debra BorchardtDebra BorchardtNovember 24, 2020
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5min630

Jushi Holdings Inc. (CSE: JUSH) (OTCMKTS: JUSHF) delivered revenue of $24.9 million for the third quarter ending September 30, 2020, which was an increase of 67% over the second quarter. Still, the company reported a net loss of $30 million or $0.31 per diluted share, compared to a net loss of $9.3 million, or $0.10 per diluted share, in the second quarter. The earnings and revenues both missed estimates by Yahoo Finance for revenue of $27.8 million and earnings of ($0.08).

Jushi attributed the increase in revenue to the strong growth at the BEYOND/HELLO stores in Illinois and Pennsylvania, a partial contribution from the recently acquired Pennsylvania grower-processor permit holder, and improved market conditions in Nevada. On a same-store sales basis, the company said that revenue increased by approximately 45%, compared to the second quarter of 2020, excluding two temporarily closed stores in Philadelphia. The company said that the $20.7 million increase in net losses in the third quarter was driven primarily by the increase in the derivative warrant liability prompted by the rise of its share price from $1.31 on June 30, 2020, to $2.44 on September 30, 2020, partially offset by a net gain on a business combination, higher revenue and gross profit.

“Jushi delivered another outstanding quarter, generating revenues at the high-end of our previously provided guidance range and achieving Adjusted EBITDA profitability for the first time in the Company’s history,” said Jim Cacioppo, Chief Executive Officer, Chairman and Founder of Jushi. “Our strategic roll out continues and I’m pleased with the initial reception following the recent openings of our latest BEYOND/HELLO retail stores in Santa Barbara, California and Reading, Pennsylvania. As previously announced, we are also looking forward to opening our first retail dispensary in Virginia, two additional stores in Illinois, and further enhancing our newly acquired grower-processor facility in Scranton, Pennsylvania.”

The company also noted that the adjusted EBITDA of $1.9 million was a $3.1 million improvement over the second quarter of 2020. Jushi also said that it had $43.2 million of cash and marketable securities on the balance sheet as of September 30, 2020, and approximately $73 million on pro forma basis for same period including the October equity raise.

Outlook

Mr. Cacioppo added, “We continued to see strong momentum in the business as we exited the third quarter, and as a result, we expect to see further expansion in revenue and profitability through the balance of the year. We continue to optimize our operations, including allowing more transactions to be fulfilled through our online reservation system at BEYOND-HELLO.com, adding additional point-of-sale stations in our stores in Illinois and Pennsylvania, and leveraging data analytics to offer more targeted promotions. We have also upgraded our talent by adding several new hires in the third quarter with expertise in retail, cultivation, and security. The positive impact of these changes is just beginning to be realized, and we expect to be able to continue to deliver strong results in the fourth quarter and full-year 2021.”

Mr. Cacioppo added, “As a result of our expectation for continued strong operating results for the remainder of the year, we are increasing our fourth quarter 2020 revenues guidance from $25 to $30 million to $28 to $30 million and expect fourth-quarter 2020 Adjusted EBITDA to be between $2.5 and $3.0 million. For the first quarter of 2021, we expect revenues to be between $37 and $40 million and Adjusted EBITDA to be between $4.0 to $5.0 million. We are also maintaining our 2021 revenue guidance of $205 to $255 million and our 2021 Adjusted EBITDA guidance of approximately $40 to $50 million.”

The stock was lately trading at $3.31, not far from its 52-week high of $3.59.

 


Debra BorchardtDebra BorchardtNovember 19, 2020
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5min1170

Tilt Holdings Inc. (CSE: TILT) (OTCQB: TLLTF) reported a decline in revenue to $40.4 million for the second quarter of 2020, which was a drop of 12% from the prior-year period.  The net loss was $4.6 million versus a net loss of $9 million in the previous quarter. The company also told investors that it sold its technology platform Blackbird.

“In the third quarter we saw sequential growth across our core Jupiter and plant-touching operations reflecting our diversified position within the growing U.S. cannabis industry,” said Mark Scatterday, CEO of Tilt. “We also reported record adjusted EBITDA that was positive for the third consecutive quarter, a result of our actions to right-size the business while strengthening our platform to scale as a preferred B2B partner to the cannabis industry.”

Sells Blackbird

When TILT first came together as a disparate group of companies, investors had a hard time understanding how all the pieces would fit. Management spent an inordinate amount of time explaining how these pieces would be synergistic. Now it seems, Tilt is going to focus on its biggest member of the family Jupiter, the vape company and is getting out of the tech platform business. Tilt announced that its subsidiary Baker Technologies, Inc. had agreed to sell Yaris Acquisition, LLC known as Blackbird to Slam Dunk, LLC, a Nevada limited liability corporation controlled by Tim Conder, TILT’s Chief Operating Officer and a member of the board of directors of the company. The company said the total valuation of the deal was $15 million and selling Blackbird results in a cut of $3 million in expenses quarterly.

“We continue to believe that the Blackbird platform offers a comprehensive technology solution capable of bringing cannabis brands, retailers, and consumers together on a single platform,” said Gary Santo, President of TILT. “Unfortunately, the marketplace for such solutions is fragmented and hyper-competitive with multiple players offering disparate systems at irrational prices and creating headwinds for sustained profitability.”

“Blackbird is effectively a start-up company contributing 4% to our revenue year-to-date while requiring additional capital and resources in order to achieve scale,” continued Santo. “Given the growth potential within Jupiter and our cannabis operations, we believe the opportunity costs associated with continuing to invest in the platform are not in our shareholder’s best interests. Upon closing, we expect this transaction to significantly improve profitability and free up cash flow that can be redeployed to grow our core businesses, while the proposed structure will allow TILT to participate in Blackbird’s future success.”

Focus On Jupiter

Following the vape crisis, Jupiter struggled, but it seems to have recovered and Tilt has decided to focus its efforts here. Scatterday said on the company’s earnings call, “In the third quarter, Jupiter returned to generating positive top-line growth and with its lean centralized and highly productive operating footprint, it continues to be a steady positive cash flow engine for TILT. Momentum picked up throughout the quarter as order patterns returned to normal and large customers continued to increase their order size. In September, we shipped the record number of total cartridges. Our disposable product category is still being impacted by the effects of COVID, where tourist centric markets like Nevada are still feeling the effects.”

 


Debra BorchardtDebra BorchardtNovember 18, 2020
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4min1490

Cresco Labs Inc.  (OTCQX: CRLBF) released its unaudited financial results for the third quarter ending September 30, 2020, with revenue hitting $153.3 million. This was a 63% sequential increase over the second-quarter revenue of $93 million and an even bigger jump over last year’s revenue of $36 million for the 2019 third quarter. This also easily beat the Yahoo Finance average analyst estimate for revenue of $115 million. Cresco Labs attributed the increase in revenue to wholesale growth driven by an increase in harvests from expanded capacity in Illinois and Pennsylvania and strong growth in California. Retail growth was driven by strong sequential same-store growth and two new store openings in Illinois.

The company also delivered a net income of $4.9 million for the quarter versus last year’s net loss of $85 for the same time period last year.

“Cresco Labs entered the third quarter firing on all cylinders achieving record levels of revenue, profitability, and cash flow. We remain the number one operator in the industry focused on, and delivering results in, the wholesale distribution of branded products. Our retail is outperforming, and we are generating substantial operating leverage,” said Charles Bachtell, Co-founder and CEO of Cresco Labs. “Comparing Q1 to Q3, we increased revenue by $87 million while keeping SG&A flat. The investments we made to support growth are paying off, and as a result our profitability has grown dollar for dollar with gross profit. Because of the decisions we’ve made, the changes we’ve managed through and the hard work devoted by our team over the last 12 months, Cresco Labs has substantiated itself within the very top tier of the industry and confirmed the value that is driven by our differentiated strategy. This is a unique story of strategic breadth, depth and execution. As we look toward our next phase of growth, it’s rinse and repeat – the playbook will be applied to more states and, again, we will achieve meaningful, material market positions.”

Operational gross profit as a percentage of revenuwas 53%in the quarter as compared to 47% in the prior quarter driven by increased efficiency in our expanded Illinois and Pennsylvania facilities. The adjusted EBITDA  was $46.4 million, which was an increase of 182% sequentially driven primarily by higher revenue, increased operational gross profit across our largest markets and strong SG&A control which dropped dramatically as a percentage of revenue.

The company also noted that its net cash provided by operating activities was $17.8 million, compared to $9.9 million used in Q2. The increase in cash provided by operating activities was driven by increased operating leverage across the business as the Company scales.

 


Debra BorchardtDebra BorchardtNovember 17, 2020
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5min730

The smoking accessory e-commerce giant Greenlane Holdings, Inc. (Nasdaq: GNLN) reported that its net sales fell 20% to $35.8 million in the third quarter ending September 30, 2020 versus $44.9 million in the 2019 third quarter. This narrowly topped the Yahoo Finance analyst estimates for revenue of $35.7 million.

The net loss for Greenlane was $13.7 million versus a net loss of $8.9 million in the 2019 third quarter. The company also delivered a loss per share of ($0.35) which missed the analyst estimates for a loss per share of ($0.10).

Greenlane attributed the drop in revenue is largely attributable to the company’s decision to move away from low-margin nicotine sales typically JUUL pods, to focus on higher-margin products. On a sequential basis, Q3 2020 net sales increased 10% from $32.4 million in the second quarter of 2020. Sales of nicotine products decreased to approximately $3.5 million in the third quarter, from approximately $21.1 million in the same time period of 2019. Net sales of Greenlane branded products grew to approximately $5.6 million, representing 15.5% of total revenue in the third quarter of 2020, as compared to approximately $3.4 million in the third quarter of 2019, or 7.5% of total revenue.

“During the third quarter, with the help of our new senior leadership team, we acted on several key initiatives related to our go forward category emphasis, organizational structure, and related staffing levels. Building on the success we’ve achieved in growing Greenlane brands and non-nicotine sales year over year by 65% and 36%, respectively, we’ve taken additional decisive steps to de-emphasize certain product lines, invest in our fastest growing and highest margin opportunities, and further reduced our headcount by 4.5%,” said Aaron LoCascio, Greenlane’s Chairman and Chief Executive Officer. “While this has had an impact on our Q3 financials, we believe these decisions have positioned Greenlane to return to near-term profitability and long term success.”

Cutting Expenses

Greenlane is sitting on top of $40.0 million in cash and had total debt was $8.2 million as of September 30, 2020, compared to $47.8 million and $8.3 million, respectively, as of December 31, 2019. Year to date, cash used in operating activities was $3.8 million, compared to $33.5 million in the prior year, an 89% improvement. Greenlane said it continues to actively manage its balance sheet to fund its growth initiatives and potential M&A opportunities.

Benefits of Branding

In the third quarter, gross profits were $2.5 million, or 6.9% of net sales, compared to $6.4 million, or 14.3% of net sales in the third quarter of 2019. The company recorded write-offs and adjustments of $4.8 million to damaged and obsolete inventory. Excluding the impact of these inventory adjustments, gross margin would otherwise have been $7.3 million and gross profit margin would otherwise have been 20.4% or 610 basis points higher than the  2019 gross profit. Greenlane expects the overall gross margin to expand from the current adjusted levels of 20.4% as it executes on its strategic vision with Greenlane Brands at its core.

Mr. LoCascio added, “We are building a comprehensive suite of high-quality, Greenlane branded products which will enable us to capture more of the margin on each product we sell. At the same time, we continue to work very closely with our brand partners to launch innovative new products into the market leveraging our best-in-class global distribution platform. I remain very encouraged that we are on track to enter 2021 on a solid footing, returning to positive adjusted EBITDA in the first quarter as a result of the changes we have implemented.”


Debra BorchardtDebra BorchardtNovember 17, 2020
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5min920

Florida-based Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) reported revenue of $136.3 million for the third-quarter ending September 30, 2020. This was a 13% sequential increase over the second quarter and topped the Yahoo Finance analyst estimate for revenue of $131 million. Trulieve also delivered a positive net income of $17.4 million, or $0.15 per diluted share, easily beating the Yahoo Finance analyst estimate of $0.22.

“Following an outstanding quarter, industry-leading profitability, and our recent entry into two additional states in the northeast, Trulieve has never been better positioned for the future.  Our third quarter was especially memorable because we introduced the long-awaited edibles product lines to our offerings and announced our acquisitions in Pennsylvania, where we see tremendous growth potential. Just last week the Pennsylvania acquisitions closed, and we were awarded a processor license in West Virginia. We also recently achieved our 2020 goal of opening 68 stores nationwide and expect our strong growth to continue,” stated Kim Rivers, Trulieve CEO.

The company also reported GAAP adjusted EBITDA of $65.8 million and has a solid cash position with cash and cash equivalents of $193.4 million as of September 30, 2020. Operating expenses rose by 15% to $37.9 million.

Year-to-date the company has reported roughly $352 million in revenue. Trulieve said during its last earnings release that it was forecasting 2020 revenue to be in the range of $465 million to $485 million. This puts the fourth quarter on target to deliver roughly $150 million in revenue and it would only have to report approximately $113 million to meet the low end of that estimated range. 

Expansion

While Trulieve is known for its large footprint in the state of Florida, the company has been on a push to expand into other states. The recent acquisitions of PurePenn LLC and Solevo Wellness, which closed on November 12, 2020, have helped the company plant its flag in Pennsylvania. It was also awarded a processor permit in West Virginia. Trulieve opened nine stores in the third quarter and recently achieved its 2020 goal of 68 stores nationwide.

“We want to thank the Office of Medical Cannabis for their comprehensive and thoughtful approach during this process, and we look forward to building a positive relationship with the state of West Virginia,” said Kim Rivers, CEO of Trulieve. “We are truly excited to be entering a sixth state. As a processor, we look forward to bringing our Trulieve brand to West Virginia through wholesale opportunities, partnering with other companies to bring their products to market in the state, and executing on our strategic vision to be the leading customer-focused cannabis brand in the United States, with depth in the markets we choose to operate in. Our plan is to be operational as soon as possible to provide access to the patients in West Virginia.”

The stock was lately trading at $26.95, near the top end of its year high of $27.79.

 


Debra BorchardtDebra BorchardtNovember 16, 2020
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3min1570

MediPharm Labs Corp. (TSX: LABS) (OTCQX: MEDIF)  announced its revenues fell to $4.9 million for the third quarter ending September 30, 2020, versus $13.9 million for the second quarter of 2020. This was a massive decline from last year’s revenue of $43 million for the same time period. The company also delivered a net loss before tax of $15.4 million, compared to a net income of $5.3 million for last year’s third quarter. It also increased sequentially from a loss of $3.7 million in the second quarter.

MediPharm said that the decline in revenue was due to lower bulk extract volumes and average selling prices, which were partially offset by growth in formulated finished goods sales, up 30% to provincial distributors throughout Canada, and sales from MediPharm Labs Australia. The company told investors in a statement that based on agreed customer production schedules, it expects revenue from its portfolio of domestic and international sales agreements to grow beginning early in 2021 and will be complemented by new sales of LABS Cannabis products.

“Economic conditions including the oversupply in the Canadian bulk crude resin and distillate markets, along with the impact of COVID 19, continue to challenge the industry,” said Pat McCutcheon, CEO, MediPharm Labs. “We are now focused on doing more to drive profitable revenue and address weaknesses including reducing our cost structure. We have taken immediate steps to improve our costs and organizational alignment against which we have put an action plan in place that will create value and enable us to achieve our potential.”

The company reported its gross profit was ($10.6 million) and gross margin was (214%) compared to a gross profit of $2.2 million and a gross margin of 16% in the second quarter of 2020. This was primarily due to a $6.3 million non-cash write-down of inventory to net realizable value and a $1.5 million write-down of non-current deposits given to vendors for capital expenditures. The gross profit was $$14.7 million for the 2019 third quarter.  The negative Adjusted EBITDA was $7.3 million.

The company said that it had a cash and equivalents balance of $36.5 million on September 30, 2020.

C Suite Changes

Following the end of the quarter, MediPharm announced the departures of Robert Kwon, Chief Financial Officer, and the company’s Chief Marketing Officer. A search process has been initiated for a new CFO while the role of Chief Marketing Officer will not be directly filled and but will be covered by the company’s new VP of Sales.


Debra BorchardtDebra BorchardtNovember 12, 2020
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5min1090

Psychedelic company Compass Pathways plc (Nasdaq: CMPS) reported its financial results for the third quarter of 2020 and gave an update on recent progress across its business. The company reported a net loss of $16.6 million and essentially no income as the company is focused on research at this time. The company has cash of $196.5 million as of 30 September 2020, which is expected to fund operations into 2023.

George Goldsmith, Chairman, CEO and Co-founder, Compass Pathways, said, “This has been a significant quarter, with an IPO that gives us the funds needed to advance our mission and transform mental health care. Recent hires for the company build further important expertise within our strong leadership team, including in data science and digital health, which will be core to the future of mental health care. We remain fully focused on execution of our phase IIb trial investigating our COMP360 psilocybin therapy for treatment-resistant depression and, with scientific partners in our recently established Drug Discovery Center, are also evaluating the potential of early stage compounds to address mental health challenges.”

Expenses

R&D expenses were $6.9 million for the quarter versus $3.1 million during the same period in 2019. The change was primarily related to increased activities associated with the company’s ongoing development of COMP360, increased share-based compensation, and other increases in personnel costs to support the development of COMP360. G&A expenses were $6.6 million for the quarter versus $3.1 million during the same period in 2019. $2.1 million of the increase was related to share-based compensation expenses, and there were also increases in legal and professional fees, personnel and consulting expenses, and facilities costs.

Company Update

Compass said in a statement, “We have continued to make steady progress with our phase IIb clinical trial of COMP360 psilocybin therapy for treatment-resistant depression. We are opening a new trial site in Berlin, Germany, this month, bringing our trial to 21 sites in 10 countries. While the COVID-19 pandemic has impacted our trial, our plan to report data from this trial in late 2021 remains unchanged.”

On 5 August 2020, the company entered into a sponsored research agreement with the University of the Sciences in Philadelphia, PA, to establish a Drug Discovery Center. The Center is exploring and developing optimized psychedelic and other early-stage compounds targeting the 5HT2A receptor, a receptor in the brain that is recognized as a promising target in the treatment of mental health illnesses.

In July 2020, Compass was granted its second UK patent, adding to our US patent and German utility model, and including claims covering crystalline psilocybin, pharmaceutical formulations, medical uses, and a method of manufacturing. The US patent, granted in December 2019, was the subject of a petition for post-grant review, filed on 21 February 2020; the petition was dismissed on the merits on 20 August 2020.

New Team Members

Our team has continued to expand and we have been pleased to welcome several new colleagues to our leadership team during the quarter and post-period. Linda McGoldrick joined our board of directors in September 2020, bringing healthcare and life sciences experience from a range of public and private companies, and non-profit organizations, including Financial Health Associates International, Zillion Inc, Veos plc, and Kaiser Permanente International. In 2018, Linda was appointed by the Governor of Massachusetts to serve on the state’s Health Information Technology Commission. Greg Ryslik PhD joined us on 9 November 2020 as Senior Vice President, Data Science, Machine Learning and Digital Health Research, and Stephen Schultz will join us on 1 December 2020 as Senior Vice President, Investor Relations. Greg is a data scientist and AI (artificial intelligence) executive; he is an instructor at Stanford Continuing Studies and has held senior positions at Mindstrong and at Tesla Inc. Stephen has more than 30 years’ experience in investor relations and joins us from GW Pharmaceuticals; he has previously held senior roles at Amarin Corporation, Acusphere, and Shareholder.com. Earlier in the quarter, Steve Levine MD joined us as Vice President, Patient Access; Steve was formerly Founder and CEO at Actify Neurotherapies. Sarah Bateup was appointed Head of Therapy Research and Training, having previously been Chief Clinical Officer at Ieso Digital Health.



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