Key Takeaways; Cannabis Sector
- Aurora reduced debt by buying back $20 million worth of convertible notes.
- Silver Spike co-led up to $170 million to CA marijuana company Shryne Group.
- Entourage Health reported record Q1 results, as revenue increased 17% to $15.8 million.
- Cansortium released revenue figures for Q1 with revenue increasing 30% to $19.7 million.
Key Takeaways; Psychedelic Sector
- Awakn initiated a follow-up behavioral study on gambling disorder.
The recent flux of psychedelics and cannabis companies into and out of profitability, as seen by their respective quarterly earnings results and yearly reports, provides an insight into what it takes to survive and prosper in these sectors. And it’s evident that strategic acquisition, development of novel therapies, and raising awareness and forming partnerships are the names of the game today, in what are still emerging industries that are clouded by challenges and potential. Below is a look at the top companies that dominated the headlines in these sectors during the course of the week.
Top Marijuana Companies for Week
#1: Aurora
Aurora Cannabis Inc. (NASDAQ: ACB), a Canadian company defining the future of cannabinoids around the world, announced on Friday, June 3, 2022 that it had repurchased an aggregate of approximately $25.3 million (US$20 million) principal amount of its convertible senior notes.
Aurora, which is based in Edmonton, Alberta, said it repurchased the notes on Friday to lower the company’s debt and annual cash interest payments. The convertible senior notes Aurora repurchased were initially offered in 2019 for gross proceeds of $345 million.
According to the company, since the third quarter, Aurora has repurchased notes worth 9.5 million Canadian dollars ($7.6 million) in annual cash interest savings. In addition, the company said that it currently has a cash balance of around CA$455 million.
According to a regulatory filing, Aurora repurchased CA$13.4 million of senior notes in the third quarter and additional CA$128 million of senior notes between the end of the quarter on March 31 and May 11. Aurora also raised $172.5 million in gross proceeds from a bought deal financing that closed earlier this week. The announcement of this deal had a negative impact on the company’s stock on Friday, May 27, when prices plunged by over 40%, causing a massive selloff. Investors will be hopeful that with the announcement that this bought deal offering has closed, stock prices will skyrocket to new highs.
#2: Silver Spike
Silver Spike Investment Corp. (NASDAQ: SSIC) announced it has co-led a senior secured term loan of up to $170 million to Shryne Group Inc. Shryne cultivates, manufactures, distributes, and retails branded cannabis products on a large scale, and owns and operates award-winning brands like as Stiiizy, which according to BDS Analytics is the top ranked brand in California and the third brand nationally.
According to Silver Spike Capital Head of Credit Frank Kotesen, the senior secured term loan is among the largest ever financial facilities offered to a private cannabis company. Shryne is a private company and according to its website, the company has 18 operating retail locations in California and 13 more in the development phase. In addition, the company has three distribution centers, with two more in the development. Shryne also has one outdoor growing facility, and two indoor grow facilities in development in Humboldt County. Additionally, the company operates three manufacturing facilities and is developing a fourth.
Based in New York, Silver Spike Capital is the parent company of Silver Spike Investment Corp, a specialized finance company that invests in the cannabis ecosystem through direct loans and equity ownership in privately owned cannabis companies.
Unfortunately, neither the names of the other loan participants nor the details of the loan were revealed, in the news release. Furthermore, it was not specified how the loan would be used.
#3: Entourage Health
On Monday Canadian cannabis company Entourage Health Corp. (TSX-V: ENTG) (OTC: ETRGF) announced its financial results for the first quarter ending March 31, 2022. Entourage reported that the total sales for the fourth quarter of 2021 was $15.8 million, up 17% from the previous quarter.
According to Entourage, the weighted average cost per gram of plants on hand from clone to harvest was $0.52 in the first quarter, compared to $0.63 in the fourth quarter. Additionally, the company also said that due to lower operating costs, the weighted average cost per gram of inventory on hand fell to $0.51 in the first quarter of 2022 from $0.66 in the fourth quarter of 2021.
In March 2022, Entourage announced that it had received an extension of its credit facilities’ maturity date from March 28, 2022, to May 31, 2022, as well as a deferral of certain financial covenants until May 31, 2022. In addition, Entourage and LiUNA Pension Fund announced the expansion of their existing credit facility on April 29, 2022, with an additional $15 million in funding available. During the announcement of this deal, Entourage said that the non-dilutive cash will be utilized for general working purposes in order to help the company grow more commercially.
Finally, in May 2022, Entourage announced proposed changes to its 8.5% unsecured convertible debentures, which would be voted on at a meeting of debenture holders scheduled for June 20, 2022.
#4: Cansortium
Cansortium Inc. (CSE: TIUM-U) (OTC: CNTMF) announced preliminary unaudited financial results for the first quarter ended March 31, 2022, on Tuesday, May 31, 2022. The company reported a 30% rise in revenue to $19.7 million, up from $15.1 million the previous year and $14.7 million in the fourth quarter. Unfortunately, there were no earnings or loss data released by the company.
However, the company did say that sales in 2022 will be in the region of $90–$95 million, which will represents a 45% increase from the midpoint of 2021. Moreover, Cansortium also expects adjusted EBITDA in 2022 to be in the $25–$28 million range, representing a 35% increase over 2021.
In addition, the company said it plans to open 4-6 more locations in Florida during 2022. They added that four of these locations have already been contracted and are in the process of being built.
Cansortium further stated that it plans to file its audited annual financial statements for 2021 and its unaudited interim financial statements for the first quarter of 2022 by June 8, 2022. They also stated that a conference call for shareholders and potential investors will be held shortly after that.
Top Psychedelic Company for Week
#1: Awakn
On Thursday, June 2, 2022, Awakn Life Sciences Corp. (NEO: AWKN) (OTC: AWKNF), a biotechnology company focused on researching, developing, and commercializing therapeutics to treat addiction with a near-term focus on Alcohol Use Disorder (AUD), announced that they have initiated a larger behavioral addiction study investigating ketamine as a treatment for Gambling Disorder.
On May 19, 2022, Awakn reported that they had completed a successful pilot study for a variety of behavioral addictions. Furthermore, Awakn filed a Patent Cooperation Treaty (PCT) for the treatment of behavioral addictions with ketamine and ketamine-assisted psychotherapy on May 26, 2022.
The larger placebo-controlled study will include 42 patients with Gambling Disorder who will undergo a memory reactivation treatment aimed at weakening the link between reward and addiction memories. This will be the world’s first study that aims to look into this technique for treating Gambling Disorder.
In addition, the study will use the latest brain imaging technique EEG (Electro Encephalography) to evaluate synaptic plasticity following the administration of ketamine. This aims to determine the window of maximal neuroplastic change. And because of the neuroplasticity, Awakn might be able to forecast when therapy will be most effective. Additionally, the researchers will also gather extensive pharmacokinetic (PK) data, examine metabolites, and look at neurological biomarkers as part of the study.
During this announcement, Awakn CEO Anthony Tennyson stated that the company is committed to help those who are suffering from addictions, and that the significant research and development milestones they have achieved in recent weeks have inspired them. He also congratulated the Awakn team of experts, as well as everyone engaged, including patients, clinicians, and caregivers, stating that none of this would have been possible without the team’s dedication.