Key Takeaways; Cannabis Sector

• Village Farms expanded Canadian cannabis brands into growing UK market.
• Agrify reported improved performance in the Q3 2023 financial results.
• Trulieve secured a $25 million loan and welcomed a new CFO.

Key Takeaways; Psychedelic Sector

• Awakn’s AWKN-P001 advanced to phase III after promising phase II a/b trial results
• Atai invested $50 million in Beckley Psytech to accelerate development of rapid-acting psychedelic medicines.

This week was the inaugural week of 2024, a year poised to be a dynamic rollercoaster of highs and lows in the ever-evolving landscape of the cannabis and psychedelic sectors. As we step into the unknown, anticipation runs high, especially in the cannabis sector, where investors eagerly await potential shifts in marijuana regulations, hinting at rescheduling and the elusive promise of federal legalization. Simultaneously, the psychedelic realm is breaking barriers and going mainstream, emerging as a potential solution for various underlying medical conditions.

Below is a weekly roundup on the cannabis and psychedelic sectors. In this ever-evolving landscape, we explore the major developments and groundbreaking initiatives happening among companies operating in these industries; from advancements in medical research, therapeutic applications to shifts in legal frameworks and current market trends. Make sure you join us throughout the year as we report on the unfolding events in these sectors—how they transpire, why they matter, and the profound impacts they carry.

Top Marijuana Companies for Week

#1: Village Farms

Village Farms International, Inc. (NASDAQ: VFF), based in Vancouver, British Columbia, successfully launched its premier cannabis brands, Pure Sunfarms, and The Original Fraser Valley Weed Co., in the United Kingdom (UK). This marked the company’s entry into its fourth overseas medical cannabis market, with the products being distributed by 4C Labs, a leading UK medical cannabis company. The move comes as part of the company’s broader strategy to tap into the rapidly growing international market for medical cannabis.

The UK market has witnessed substantial growth, particularly since the government’s decision to allow bulk imports in 2020. Village Farms’ entry into the UK market signifies a significant milestone in its global expansion efforts. Through its subsidiary, Pure Sunfarms, the company is now exporting its preferred Canadian-grown cannabis products to various international destinations, including Germany, Australia, Israel, and the UK, collectively representing a population of over 185 million.

Village Farms CEO Michael DeGiglio expressed enthusiasm about the launch, stating, “This launch of our leading BC-grown cannabis brands is a game-changer for patients in the UK, the third most populated country in Europe.” DeGiglio further emphasized the company’s success in international markets and its commitment to delivering high-quality products.

Greg Dobbin, President, and CEO of 4C Labs, the distribution partner in the UK, also expressed confidence in Village Farms’ products resonating with UK consumers. Dobbin stated, “Village Farms is known to be the best in the world at delivering such quality, with stable supply, and we are confident these brands will resonate with UK consumers immediately upon launch.”

The UK shipment marks a pivotal moment for Village Farms, contributing to its fast-growing international sales segment. For the nine months ending September 30, 2023, the company reported international sales of 5.1 million Canadian dollars, a significant increase from the previous year’s 1.9 million. As the UK medical cannabis market continues to expand, Village Farms aims to establish a dominant position, building on its success in Canada and other international markets.

#2: Agrify

Agrify Corporation (NASDAQ: AGFY), a leading provider of innovative cultivation and extraction solutions for the cannabis industry, recently announced its financial results for the third quarter ending September 30, 2023. Despite a decline in revenue, the company reported a significant reduction in net losses and highlighted successful cost-cutting measures that led to the “lowest historical net loss” since its inception.

For the third quarter of 2023, Agrify reported a revenue of $3.1 million, down from $7 million in the same period in 2022. However, the gross profit improved to $1 million compared to a loss of $4.1 million in the third quarter of 2022. The net loss attributable to Agrify stood at $2.1 million, a substantial improvement from the net loss of $57.4 million in the same quarter of the previous year.

Despite these improvements, Agrify acknowledged liquidity concerns, reporting only $200,000 in cash, cash equivalents, and marketable securities as of September 30, 2023.

Raymond Chang, Chairman and CEO of Agrify, expressed satisfaction with the company’s various initiatives, stating, “The historically low net loss of $2.1 million is encouraging and good evidence that we are moving in the right direction. The team remains committed to turning the business profitable in the shortest time possible.”

Agrify’s Q3 2023 financial results indicate a positive shift in its performance, driven by effective cost-cutting measures and strategic decisions. Despite revenue challenges, the company’s focus on reducing losses and improving gross profit is noteworthy. However, it remains crucial for Agrify to address liquidity concerns and navigate the competitive landscape as it works towards achieving profitability.

#3: Trulieve

Florida-based Trulieve Cannabis Corp. (OTC: TCNNF) recently finalized a significant financial move, securing a new commercial loan of $25 million at an 8.31% interest rate for a five-year term. This strategic financial maneuver aims to support the company’s ongoing operations and enhance its cash position.

Trulieve utilized one of its Florida cannabis cultivation sites as collateral for the loan, with First Federal Bank acting as the lead agent in the deal. This move is seen as a means to provide the company with greater flexibility as it prepares for growth catalysts in the dynamic cannabis industry.

Kim Rivers, Trulieve CEO, highlighted the importance of the loan in a statement, stating, “This loan provides Trulieve greater flexibility and bolsters our cash position as we focus on preparing for growth catalysts.” John Medina, CEO of First Federal Bank, emphasized the significance of the cannabis industry in Florida, describing it as “an important and complex sector with a significant presence.”

In addition to the financial developments, Trulieve also announced the appointment of Wes Getman as the new Chief Financial Officer (CFO), effective January 1. Getman brings 25 years of experience in accounting and finance, having worked with notable companies such as Blue Bird Corp., Grant Thornton, and PricewaterhouseCoopers. Prior to joining Trulieve, he served as a partner at business management consultancy WilliamsMarston.

Top Psychedelic Companies for Week

#1: Awakn

Awakn Life Sciences Corp. (OTC: AWKNF) successfully completed a Phase II a/b clinical trial for AWKN-P001, a groundbreaking therapeutic aimed at treating Severe Alcohol Use Disorder (SAUD). AWKN-P001 combines the use of racemic ketamine, administered intravenously, with carefully designed psycho-social support to address the challenges of SAUD.

When coupled with therapy, Awakn’s innovative approach has demonstrated a significant reduction in the likelihood of relapse in Alcohol Use Disorder patients. The Phase II a/b trial results revealed remarkable success, with participants in the active arm achieving an 86% abstinence rate at 6 months post-treatment. This marked a stark contrast to the 2% abstinence rate observed pre-trial and the 25% rate seen with the current standard of care for SAUD.

AWKN-P001’s development aims to establish a licensed therapeutic for SAUD and set a regulatory precedent for combining drugs with psycho-social support to treat addiction. The therapy has already progressed to Phase III, having received regulatory and ethical approval in the second half of 2023. Awakn has secured a grant from the UK Department for most of the the Phase III trial’s costs, with the company’s expenses capped at approximately US$1 million.

#2: Atai

Atai Life Sciences N.V. (NASDAQ: ATAI), a psychedelic biotech company, made a substantial investment of $50 million in Beckley Psytech Limited, a clinical-stage biotechnology company focusing on transforming short-duration psychedelics into fast-acting medicines for neuropsychiatric conditions. The investment comprises a $40 million direct investment for ongoing research and an additional $10 million to acquire shares from existing shareholders.

Atai’s investment will grant them a 35.5% ownership stake in Beckley Psytech, with additional rights such as 1:1 warrant coverage, the ability to appoint and hold three seats on the Board of Directors, and a time-limited right of first refusal on future sales or transfers of commercial rights.

Atai’s CEO, Florian Brand, emphasized the diversity of their drug candidates, recognizing the individuality of neuropsychiatric patient populations; “When it comes to mental health, there is no one-size-fits-all solution, and the diverse pharmacology of our drug candidates acknowledges the heterogeneity of neuropsychiatric patient populations. Looking ahead to the next 12 months, adding to our already strong pipeline of potential catalysts, we anticipate this investment will lead to several additional meaningful clinical readouts, including topline results from the BPL-003 Phase 2b study, expected in the second half of 2024,” Florian Brand said in the press statement.