Country seeks to shed its cocaine image for cannabis.
Country seeks to shed its cocaine image for cannabis.
The Daily Hit is a recap of cannabis business news for Nov. 30, 2022.
International Cannabis Reform Ramps Up in Europe, South America
Global cannabis reform is gaining momentum. What started as a ripple in three countries has become a global policy movement. While many countries, primarily in Africa and Asia, continue to ban cannabis, a hotbed of reform activity is transpiring everywhere else. Read more here.
Cannabis Company Finds Novel Solution to Real Estate Woes
After struggling to find a downtown office landlord willing or able to house its headquarters, one of Chicago’s publicly traded marijuana companies has found a different solution: moving to a massive apartment complex. Verano Holdings (OTC: VRNOF) (CSE: VRNO) signed a 12-year lease for roughly 25,000 square feet in the office portion of Three Old Town Park. Read more here.
Eleventh-Hour Lobbying Push for SAFE Banking Under Way
The clock is ticking on the current Congressional session, with the 535-member body set to adjourn for the two-year cycle on Jan. 3. With that, the fate of the SAFE Banking Act is still very much up in the air, with no solid intel about exactly what will happen to the measure. Read more here.
SpringBig to Cut Nearly One-Quarter of Staff
SpringBig Holdings Inc. (Nasdaq: SBIG) will cut 23% of its staff in an effort to “right-size its expense structure,” the company announced Wednesday. The staff cuts, which total 37 positions, will be undertaken through layoffs and attrition. Read more here.
Latest cannabis earnings:
Icanic Brands Co.
Icanic Brands Co. (CSE: ICAN) (OTCQB: ICNAF), a multistate operator of premium cannabis brands in California, reported sales of $7 million for the quarter ended Sept. 30, a year-over-year increase of 180%. The company reported a net income for the period of $10.6 million. Read more here.
TerrAscend Corp. (CSE: TER) (OTCQX: TRSSF), a North American cannabis operator, announced that its subsidiary, WDB Holding MI Inc. (DE), and all subsidiaries of TerrAscend refinanced an existing senior secured term loan of $55 million. The amendment provides for a senior secured term loan with a principal amount of $25 million, plus incremental term loans of $30 million at the option of TerrAscend. Read more here.
Franchise Global Health
Franchise Global Health Inc. (TSXV: FGH) (FRA: WV4A) reported revenue of $11.9 million for the third quarter of 2022, a year-over-year increase of $11.7 million. The company noted that during the quarter, it entered into an agreement to acquire Flora Growth Corp. (Nasdaq: FLGC).
A change in the Colombian government interrupted insurance payments for medical cannabis.
The Daily Hit is a recap of cannabis business news for August 29, 2022.
Khiron Life Sciences Corp. (TSXV: KHRN) (OTCQX: KHRNF) posted results that showed healthy margins despite revenues slightly slumping over the quarter amid the company’s international bid. The pharmaceutical cannabis company announced today its financial results for the second quarter ending June 30, 2022.
Khiron’s second-quarter revenues totaled $4.47 million, down 3% versus $4.6 million in the same period last year; and $2.8 million sequentially, according to the SEDAR filings. The company recorded a net loss of $2.2 million versus $4.8 million in the same quarter last year; and $4.5 million sequentially. Earnings went from a loss of one cent per share versus a loss of 3 cents per share in the same period last year.
“The results of the first half of the year and Q2 2022 demonstrate that we are a disciplined company building sustainable growth, reducing costs and optimizing cashflow, able to reach profitability in the near term,” said CEO Alvaro Torres. “During Q2 2022, we made key decisions to continue to build our global platform with the strategic acquisition of Pharmadrug in Germany, the opening of our new flagship clinic in Rio de Janeiro in Brazil, as well as our new mid-sized clinic and pharmacy in Bogota in one of the city’s busiest shopping centres.”
Gross profit before fair value adjustments for the second quarter was $2.2 million, up 5% quarter-over-quarter and 114% year-over-year, despite the lack of sales in Germany. The medical cannabis segment represented 89% of Khiron’s total gross profits, versus 70% a year ago.
Total gross margin before fair value adjustments for the second quarter increased to 50%, driven by growth in the highly profitable medical cannabis segment. The gross margin in the medical cannabis segment increased to 76%. The total gross margin for Khiron’s Health Services segment for the second quarter was 13%, up from 8% in the previous quarter due to improvements in margins in Colombia’s Zerenia operations; offset by the losses incurred in the early stages of Zerenia Clinics UK.
The company also recorded its lowest ever Adjusted EBITDA loss of $2.3 million, down 30% quarter-over-quarter and 39% year-over-year.
Khiron continued its cost-cutting initiatives to streamline its operations. Expenses in the second quarter fell by 16% to $5.5 million from the same period last year. The company said the expense reduction was driven by cost savings efforts mainly in corporate governance, salaries, and investor relations; offset by an increase in selling and marketing expenses in the growing U.K. cannabis market.
Khiron had $40 million in total assets, with $13.7 million in property, plant, and equipment, a high-quality medical cannabis inventory of $8.2 million, as well as healthy bookkeeping with credit-worthy clients in Colombia and Europe of $4.4 million, and $600,000 in financial debt.
The company also ended the quarter with net cash of $5.8 million, having spent $2.0 million on operating activities during the quarter and a total of $4.8 million in the first half of the year, versus $10.4 million in the first half of last year. The company attributed the savings as a result of actively managing the working capital cycle, improving collection times for the company’s accounts receivable, and extending payment terms on its accounts payables.
“These steps, coupled with the growing patient loyalty we experience across our bigger markets, will continue to drive Khiron’s leadership in Latin America and Europe,” said Torres. “This is possible because of an incredible team across many countries and continents who are committed to improving the quality of life of patients, and who continue to work very diligently to ensure we become indispensable to our patients in every market.”
Khiron Life Sciences Corp. (TSXV: KHRN) (OTCQX: KHRNF) announced today its financial results for the quarter ended March 31, 2022, with revenues increasing 65% to $4.6 million and a 28% sequential increase from the fourth quarter. The company’s net loss was essentially flat at $4.5 million.
Khiron reported revenue in medical cannabis of over $2.6 million in the quarter, a 470% increase from the prior year and a 32% increase from the fourth quarter. Europe (the UK and Germany) represented 53% of all medical cannabis revenue, compared to 10% in Q1 2021. The net change in cash and cash equivalents of –$3.3 million, compared to –$8.6 million in Q1 2022, ending the first quarter with $5.1 million in cash. Khiron attributed its balance sheet improvement to actively managing the working capital cycle, improving collection times for its accounts receivable, and extending payment terms on its accounts payables while reducing overall general and administrative costs and increasing its high gross margin medical cannabis business.
“Khiron is the top-selling medical cannabis brand in Latin America and one of the top-selling brands in the United Kingdom,” said CEO Alvaro Torres. “Our unique approach will continue to generate double-digit revenue and gross profits quarter over quarter in markets poised to become significant in the coming years. Our focus is to leverage the infrastructure we have built to continue driving sales in our target markets while maintaining discipline in our expenses so we can achieve profitability in the near future, and then continue to look for more growth opportunities in Latin America and Europe.”
Khiron’s European expansion and continued growth in Colombia, are driving its medical cannabis segment growth. In the first quarter, Khiron surpassed $1 million in medical cannabis revenues in the United Kingdom. In Colombia, Khiron continues to be a market leader in medical cannabis with its vertically integrated approach and leverage of insurance coverage in its clinics. Over 82% of sales were sold through insurance coverage, and over 84% of the sales were sold to returning patients, who are now purchasing up to 1.8 bottles per month.
PharmaDrug Inc. (CSE: PHRX) (OTCQB: LMLLF) reported that it has entered into an agreement with Khiron Life Sciences to sell all of the outstanding securities of Pharmadrug Production GmbH, the company’s wholly-owned German subsidiary, a medical cannabis distributor, with a Schedule I European Union narcotics license and German EuGMP certification allowing for the importation and distribution of medical cannabis to pharmacies in Germany and throughout the European Union. Under the terms of the share purchase agreement, the company has agreed to sell 100% of the securities of Pharmadrug GMBH for consideration consisting of 5,500,000 common shares in the capital of Khiron and a non-interest bearing promissory note in the principal amount of $1,100,000 which note will be payable one year from the date of issue.
Daniel Cohen, the Company’s Chairman and Chief Executive Officer commented, “We are excited to be entering into this transaction with Khiron as it is a major step towards the company’s shift into a pure-play biotech strategy. We believe Khiron is perfectly positioned to take full advantage of the asset and believe PharmaDrug should ultimately yield the most value for Pharmadrug Production through and equity ownership in Khiron.”
Mr. Torres added, “The results of Q1 2022 continue to showcase the success of Khiron’s global expansion and the corporation’s unique “patient-first” strategy.
Khiron Life Sciences Corp. (TSXV: KHRN) (OTCQX: KHRNF) announced its financial results for the year ended and quarter ending on December 31, 2021. In the fourth quarter, Khiron reported revenue of $3.6 million an increase over last year’s $2.5 million for the same time period. The net loss mushroomed to $19.2 million over last year’s net loss of $2.3 million for the same quarter.
In 2021, the total revenue increased over 60% YoY to $12.8 million compared to the previous year. the net loss for the full year was $33million versus 2020’s net loss of $24 million.
Khiron is forecasting revenue of $4.5 million for the first quarter of 2021.
“The success we have experienced in Europe so far is due to Khiron’s ability to leverage our novel understanding of medical cannabis in Latin America, driven by our health services strategy and validated by the extraordinary evidence we build every day from the data generated in our clinics,” said Alvaro Torres, Khiron CEO and Director. “Khiron is currently one of the top-selling brands of medical cannabis in the UK, and we have grown our market share rapidly in Germany. We recently opened our first hybrid Zerenia clinic in the UK, and we have received excellent adoption from both patients and doctors.”
In April, Khiron announce the opening of a new Zerenia clinic location and a new retail pharmacy in Colombia. Following the announcement at the beginning of the year by the Government of Colombia on mandatory insurance coverage for medical cannabis products, Khiron opened a new clinic location in the city of Bogota, with a maximum annual capacity of 40,000 consults per year. The new clinic, located in El Ensueño shopping mall in Bogota´s fastest-growing district with more than 850,000 people, will allow the company to continue its market leadership in Colombia and offer more services to existing and current patients. In addition, the company has opened its first retail pharmacy location within this shopping center. This pharmacy will allow the Company to sell medical cannabis products to patients outside its own Zerenia network and dispense High and Low THC medical cannabis to insurance companies in the country.
Mr. Torres continued, “In Colombia, growth was partly due to our efforts to ensure insurance coverage for patients by the country’s principal insurance companies. To date, in Colombia, our Zerenia Clinics have served more than 20,000 individual patients with medical cannabis. In Peru, we obtained key final product registrations (“Alixen”), and we will continue to grow as we introduce new THC-based formulations to the Peruvian market. During the second half of the year, we sold our first Khiron-branded product in Brazil, a market of more than 230 million people. We are currently completing construction of our first clinic in Rio de Janeiro, and introducing THC-based medications, which will position us as one of the top companies in medical cannabis in this country. As we focus on our B2C medical cannabis strategy, Khiron has also decided to discontinue sales of our Kuida CBD-based cosmetics product line. Although we are very proud of the brand we created, it is clear that our biggest growth opportunities are within the medical cannabis sector, where revenue is increasing quickly. In addition, the Company no longer requires our cannabis cultivation license in Uruguay as we are currently exporting our products directly from Colombia. The Uruguay asset was purchased in 2019 for a total consideration of approximately 8.5 million shares.”
Khiron Life Sciences Corp. (OTCQX: KHRNF) reported its financial results for the quarter ending September 30, 2021 with total revenue of C$3.5 million growing over last year’s revenue of C$1.9 million for the same time period. Khiron also delivered a 50% year-over-year reduction in a net loss of –$3.3 million versus –$6.7 million for the same quarter in 2020.
“In Q3, we achieved strong results and broke revenue and profitability milestones, surpassing our first million dollars in medical cannabis revenues and gross profits. Prescription growth were driven by our patient-focused operations in Colombia and Germany. In the first 9 months of 2021, we have already exceeded 2020 medical cannabis sales by more than 600% while maintaining medical cannabis margins of over 89%. ” comments Alvaro Torres, Chief Executive Officer and Director of the Company.
Mr. Torres continues, “As expected, Europe is becoming a more significant region for Khiron, representing 31% of our medical cannabis revenue. With the opening of Zerenia Clinics in the UK, we have now established an international clinic footprint that will continue to drive sustainable growth in the future. A year ago, our company was just starting medical cannabis sales in Colombia, and now we have 15 clinics, in 5 countries, and soon in Mexico. We are very excited about our quarterly growth rate, and the growing evidence that Khiron is fulfilling its mission to improve the quality of life of our patients.”
Khiron noted that it is starting the fourth quarter with a cash balance of $15.4 million and a working capital balance of $26 million, However, in the company filing it cautioned that the company must prudently manage its cash and maintain its liquidity amidst the material uncertainty of incoming cash flows. In the filing, the company stated, “While the company will avail itself of financial relief measures, management believes that the company should have sufficient liquidity to continue operations for at least the next twelve months, satisfy all commitments and repay its liabilities arising from normal business operations as they become due.” Khiron said it has implemented cost reductions in salaries, marketing, and
other administrative functions and that capital expenditure programs were postponed, where possible.
Latin American cannabis company Khiron Life Sciences Corp. (TSXV: KHRN)(OTCQB: KHRNF) stock slid on news of the company’s second-quarter earnings. Khiron delivered a net loss for the three months ending June 30, 2019, of $10.6 million or $0.11 per share versus last year’s net loss of $6.2 million causing the company stock to drop by over 4% to lately trade at $1.15.
Khiron reported that its revenues of $2.2 million came from the sale of services at its clinics and sale of its cosmeceutical products, both of which began in the fourth quarter of 2018. The company said that revenues were in line with expectations and gross profits were consistent with the first quarter of 2019.
“We are pleased to report significant progress during the Q2 financial reporting period, including revenue generation, expansion of our Kuida cosmeceutical retail network, a growing and more profitable patient base at our ILANS clinics, closing of a $28.75 million bought deal and commencement of full operations at our completed Colombia lab facilities,” said Alvaro Torres , Khiron CEO and Director.
The company also delivered an adjusted EBITDA loss of $7.7 million for the second quarter, which was $2.7 million higher than last year and was attributed to the “growth of the business and readiness to grow in multiple countries.” In addition, Khiron said that it incurred $1.1 million in research and development costs in the second quarter of 2019 which were related to operating costs at the company’s cultivation site.
Mr. Torres added, “We are about to commence commercialization of our CBD strains of cannabis for medical purposes and subsequent to the quarter have received TSXV approval to bring Kuida to the U.S. market. As we strengthen our position in other jurisdictions, including Europe, to be ready for business as regulations open for us, our leadership, research, medical and operational teams continue to be fully focused towards our mission to be a Latin American cannabis leader with global growth.”
The medical cannabis producer Khiron Life Sciences (KHRNF) is positioned to secure a significant share of the cannabis market in Latin America, according to a report released Canaccord Genuity, initiating coverage on the company with a speculative buy rating at a C$3.00 per share target rate.
This comes right as the company announced that it signed a non-binding memorandum of understanding (MOU) with Fundacion Daya, Chile’s leading medical cannabis institution and the holder of Chile’s only medical cannabis license through DayaCann, a joint venture entity established between Fundacion Daya and AusCann Group Holdings Ltd.
Chile And Fundacion Daya
Fundacion Daya and Khiron plan to cultivate a minimum of 5 tonnes of dried flower in Chile exclusively for Khiron to be used to formulate two products targeting patients with neuropathic pain and epilepsy. The two companies also plan to start clinical trials led by medical teams directed by Khiron and Fundacion Daya. The goal is to be able to distribute products by the first quarter of 2020. As part of the partnership, Khiron will provide Fundacion Daya the equivalent of $1 million USD over a period of 2 years.
In the report, Canaccord lists six specific reasons as the basis for initiating coverage on Khiron; which is as follows: first-mover advantage, a replicable platform for Latin America, its current patient network, a highly experienced management team, near-term catalysts, and valuation.
Operating in Colombia, Khiron is one of the few cannabis companies with a presence in Latin America. As a country, Colombia has several conditions that are advantageous to cannabis cultivation; including optimal climate for cultivation, operating costs that are on average 65-90% cheaper than in Canada, and a market of up to 700,000 patients. Khiron’s production capacity is 16,900 kilograms per year, allowing the company to service roughly 100,000 patients.
Replicable Platform for Latin America
Khiron intends to replicate their Colombia strategy in other Latin American countries, with the entire marker reportedly worth roughly $8-$9 billion. Viewing Mexico as the next front for expansion, Canaccord believes that Khiron is positioned to add ~$1/sh for every 50,000 patients it can secure.
Current Patient Network
Through strategic Alliances and its education platform, Khiron has approximately 3,000 doctors and 400,000 patients within its network, and with the company’s recent $7 million acquisition of ILANS clinic, another 100,000 would also come into its network. This acquisition plays a significant role in Khiron’s valuation.
Highly Experience Management
Canaccord was encouraged by Khiron’s management team’s focus on delivering long-term shareholder value. Particularly the report pointed out Khiron CEO Alvaro Torres building SNC-Lavalin Colombia from two to 2,000 employees and the addition of Vincente Fox, the former President of Mexico, whose influential scope could prove critical to Khiron securing new business ventures.
A confluence of upcoming short-term events have also helped strengthen Khiron’s position; including the launch of its Kuida Cosmeceutical line, the start of clinical operations, and the start of commercial cannabis cultivation and sales. Potential insurance coverage for medical cannabis could also potentially double the per share target price if volumes and prices increase as projected.
To come to their speculative buy rating, Canaccord used a sum-of-the-parts DCF Model; reflecting an EV of $210 million and a 2020E EV/EBITDA multiple of 9.2x. Risks to their target include the pricing of cannabis in Colombia, the closing of the ILANS acquisition, patient conversion rates, and receipt of commercial quotas.
Khiron is currently trading at around C$1.86 per share, with a market cap of approximately C$116 Million. It trades at $1.43 on the OTC Markets.
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