Weekly Roundup on the Cannabis Sector & Psychedelic Sector

Key Takeaways; Cannabis Sector

  • SNDL reported growth in sales over last year as acquisitions helped build the company.
  • Ayr Wellness revenues rose 3% sequentially in the first quarter.
  • Curaleaf first quarter of 2023 revenue exceeded expectations.
  • Glass House Brands reported first quarter financial results and a revised revenue projection for the year 2023.
  • GrowGeneration announced a partnership with Bridgetown Mushrooms; the company also reported first quarter 2023 financial results.
Story continues below

Key Takeaways; Psychedelic Sector

  • Seelos Therapeutics provided critical clinical update and financial reports in the first quarter 2023 financial release.
  • atai reported first quarter 2023 financial results and announced key updates.
  • Awakn reported Q4 2023 and annual results.

The cannabis industry has been navigating through challenging waters in recent times, grappling with various obstacles that have left both operators and investors feeling the pressure. One significant contributing factor to this turmoil has been the continued interest rate hikes by the Federal Reserves, which have not only affected the cannabis sector but also impacted the broader markets. However, amidst the adversity, there remains a glimmer of hope and a sense of optimism fueled by the ongoing wave of decriminalization and legalization efforts taking place across various states and countries.

In this weekly roundup, we delve into the first-quarter earnings reports of prominent cannabis companies and provide a comprehensive overview of the key and noteworthy developments amongst major players in the cannabis and psychedelics sectors.

Top Marijuana Companies for Week

#1: SNDL

SNDL Inc. (NASDAQ: SNDL), a prominent player in the cannabis industry, recently reported a substantial increase in sales for the first quarter of the year. Although there was a sequential decrease in net revenue compared to the previous quarter, the company experienced significant growth when compared to the same period last year. SNDL attributed this success to strategic acquisitions, including those of Alcanna, Valens, and Zenabis.  According to the company, these acquisitions have not only bolstered SNDL’s revenue but have also positioned the company as one of the largest adult-use cannabis manufacturers and retailers in Canada.

The financial results for the first quarter ending March 31 indicated that SNDL’s net revenue fell to C$202.5 million, compared to C$240.4 million in the previous quarter. However, this was a remarkable increase from the C$17.6 million reported in the first quarter of the previous year. SNDL explained that the decrease in revenue compared to the fourth quarter of 2022 was primarily due to seasonal trends in the liquor retail segment.

Furthermore, SNDL managed to reduce its net losses to C$36.1 million for the first quarter, a significant improvement from the C$161.6 million net loss in the fourth quarter of 2022 and the C$38 million net loss in the first quarter of 2022. SNDL attributed this positive trend to various factors, including the integration of Valens, which is progressing well, and the identification of new revenue streams and cost reduction opportunities.

In terms of cannabis expansion, SNDL reported gross revenue of C$67.4 million from the cannabis retail segment in the first quarter of 2023. This represents a modest decline compared to the fourth quarter of 2022 but a substantial increase from the first quarter of 2022.

#2: Ayr Wellness

Ayr Wellness Inc. (OTC: AYRWF), a leading cannabis company, recently announced its financial results for the first quarter ending March 31, revealing a significant loss stemming from its exit from the Arizona business. While the company experienced overall revenue growth and exceeded expectations in certain areas, the substantial loss incurred highlights the complexities and challenges of operating in the cannabis industry.

Despite growing revenue by 18% to $117 million compared to the previous year’s $99.5 million, Ayr Wellness faced a staggering net loss of $197 million for the quarter. The loss was primarily attributed to discontinued operations related to the sale of the Arizona business, amounting to $185 million, net of taxes. Operating losses remained flat at $21 million, indicating ongoing challenges within the company’s operations.

The decision to exit the Arizona business was a strategic move by Ayr Wellness, demonstrating the company’s commitment to optimizing its operations. However, the financial implications of this decision were significant, resulting in a substantial loss for the quarter. It is worth noting that the company’s revenue still managed to surpass expectations, growing by 3% sequentially from the previous quarter’s $114 million.

Despite the substantial loss incurred, Ayr Wellness remains optimistic about its overall performance. David Goubert, the president and CEO of Ayr, highlighted the company’s achievements, including the growth in revenue by 18% year-over-year and a significant expansion of adjusted EBITDA margin. He also emphasized the generation of positive operating cash flow for the third consecutive quarter.

#3: Curaleaf

Curaleaf Holdings, Inc. (OTC: CURLF), a prominent international provider of consumer products in the cannabis industry, recently reported impressive year-over-year growth in net revenue for the first quarter of 2023.

Curaleaf’s net revenue for the first quarter of 2023 reached $336.5 million, reflecting a $40.5 million increase compared to the same period in 2022. The company stated that the primary drivers behind this growth were the continued expansion of retail stores and a dedicated emphasis on research and development. Notably, the company surpassed revenue expectations by nearly $5 million, showcasing its ability to deliver strong financial results.

Despite reporting a net loss attributable to the company of $54.4 million, or a net loss per share of $0.07, the company’s adjusted EBITDA stood at $73.2 million, equivalent to 22% of revenue, indicating a positive trend toward profitability.

Curaleaf also revised its full-year outlook, projecting a robust growth trajectory for 2024, 2025, and 2026. The company said that this expectation is based on the acceleration of cannabis adoption throughout Europe. Furthermore, the company also stated that it’s maintaining a strong cash position, with $116 million on its balance sheet at the end of the quarter. Additionally, it reported that it had generated $31 million in operating cash flow from continuing operations.

#4: Glass House Brands

Glass House Brands Inc. (OTC: GLASF), a leading player in the cannabis industry, recently announced its first quarter 2023 financial results and a revised revenue projection for the year 2023. Despite reporting a loss of nearly $39 million in the first quarter of 2023, Glass House stated that it remains optimistic about its prospects. The California-based company announced that it expects significant growth in both revenues and profitability, primarily driven by the rebounding wholesale market and strategic business decisions.

According to the released financial statements, Glass House Brands experienced a substantial year-over-year increase in revenues, reaching $29 million, representing a 108% growth from the previous year. However, the company also reported losses of nearly $39 million, a significant increase of 195% compared to the same period last year. The company stated that the losses were further exacerbated by a non-cash impairment charge of $23 million related to Plus Products Holdings acquisition.

Despite the losses and challenges faced in the first quarter, Glass House’s leadership maintains an optimistic outlook. CEO Kyle Kazan emphasized that their performance in Q1 demonstrates the competitive advantages of their business model, which they anticipate will lead to substantial growth in revenues and profitability in the future.

In addition to announcing the first quarter results, Glass House also revised its projections for consumer-packaged goods revenues and retail revenues. Consumer packaged goods revenues were adjusted downward to $20 million from the initial estimate of $25 million. This adjustment was attributed to the challenging retail landscape. Similarly, retail revenues from the company’s four stores were revised downward to $40 million from the initial projection of $50 million. According to the company, these adjustments were primarily driven by intense competition in the marketplace and the new stores not meeting internal expectations.

#5: GrowGeneration

GrowGeneration Corp. (NASDAQ: GRWG) and GrowLife, Inc. (OTC: PHOT) announced a multi-year partnership to develop and sell mycology supplies, entering the rapidly expanding mushroom farming industry. The partnership will begin in the Pacific Northwest and other Western states, with plans to expand nationwide.

Under the partnership, GrowGeneration will be the exclusive distributor of Bridgetown Mushrooms’ mycology products, including substrates, soils, and nutrients. This collaboration positions GrowGeneration to take advantage of the growing mycology industry and offers a complete line of mycology products to customers interested in commercial and personal mushroom farming. And with the global mushroom market expected to surpass $115 billion by 2030, the United States presents a major opportunity for mushroom companies.

In addition to the partnership announcement, GrowGeneration recently reported its financial results for the first quarter of 2023. The company generated net revenue of $56.8 million, a sequential improvement from the prior quarter, and a gross margin of 28.7%. However, comparable store sales decreased by 36.6% compared to the previous year. The company’s net loss for the quarter was $6.1 million, and the adjusted EBITDA loss was $1.8 million.

Despite the challenges, GrowGeneration is optimistic about its future growth and plans to invest in building and growing its private brands, executing strategic acquisitions, and focusing on profitable growth. Also, the company believes it is well-positioned for growth in the mushroom industry and aims to improve its margins through cost-cutting initiatives.

Top Psychedelic Companies for Week

#1: Seelos Therapeutics

Seelos Therapeutics, Inc. (NASDAQ: SEEL), a clinical-stage biopharmaceutical company focused on developing therapies for central nervous system disorders and rare diseases, recently provided a clinical update and reported its financial results for the first quarter of 2023. The company is working on various therapeutic programs targeting different diseases, including MDD, ALS, Parkinson’s disease, and neurodegenerative disorders like Huntington’s disease.

The CEO of Seelos, Raj Mehra, highlighted the significance of 2023 for the company, stating that it is the most important year in Seelos’ history thus far. He mentioned that the registration-directed study of their intranasal ketamine program, SLS-002, will be completed by the end of June 2023, with top-line data expected to be released in the third quarter of 2023. The company believes that if successful, this therapy could provide help to a significant number of people globally who experience suicidal ideation.

Seelos also provided updates on other programs. The enrollment for the SLS-005 study in ALS has been completed, and the company expects to release top-line Phase II/III data in late 2023. Additionally, Seelos announced the initiation of their first internally created gene therapy program, SLS-009, which focuses on the one-time treatment of neurodegenerative disorders such as Huntington’s disease.

Regarding the financial results for the first quarter of 2023, Seelos reported a net revenue of $808,000, primarily from grant revenue earned through their Expanded Access Program. Research and development expenses decreased compared to the same period in the previous year, mainly due to the completion of enrollment in the SLS-005 study. General and administrative expenses slightly increased. Other expenses resulted in a loss due to the issuance of common stock and warrants in a registered direct offering.

Additionally, Seelos ended the first quarter with $14.1 million in cash and cash equivalents, which represented a decrease compared to the previous quarter.

 

#2: Atai

Atai Life Sciences N.V. (NASDAQ: ATAI), a clinical-stage biopharmaceutical company focused on revolutionizing the treatment of mental health disorders, recently released its financial results for the first quarter of 2023 and provided updates on its pipeline. The report indicated that the company continues to make progress in its mission to improve the lives of individuals suffering from mental health disorders.

One significant achievement in the first quarter was the dosing of the first patient with RL-007 in a Phase 2b study for Cognitive Impairment Associated with Schizophrenia (CIAS). RL-007 is a pro-cognitive neuromodulator that aims to address the cognitive impairment commonly associated with schizophrenia.

Another promising development was the presentation of pharmacodynamic (PD) data from the Phase 1 study of GRX-917 at the Society for Biological Psychiatry Annual Meeting. GRX-917 is a deuterated etifoxine being investigated for the treatment of anxiety disorders.

Atai is also making progress with VLS-01, a potential treatment for treatment-resistant depression (TRD) using N, N-dimethyltryptamine (DMT). The company completed Parts 1 and 2 of a Phase 1 study, which evaluated the safety, tolerability, pharmacokinetics, and pharmacodynamics of VLS-01. The study showed that VLS-01, administered intravenously and using an oral transmucosal film formulation, was well-tolerated and produced dose-dependent increases in exposure.

Financially, atai Life Sciences reported a cash position of $249.9 million as of March 31, 2023, which, together with committed term loan funding, is expected to fund operations into the first half of 2026. The company’s research and development expenses increased compared to the same period last year, primarily due to advancement in R&D programs and increased personnel costs. However, general and administrative expenses decreased, driven by a decrease in taxes, stock-based compensation, accounting and legal fees, and personnel-related costs.

#3: Awakn

Awakn Life Sciences Corp. (OTC: AWKNF), a biotechnology company focused on developing therapeutics to treat addiction, recently reported its financial results and business highlights for the fourth quarter of 2023 and the entire fiscal year. The financial report shown that the company achieved remarkable progress in various aspects of its operations and had also achieved significant growth in revenue.

During the fiscal year, Awakn made substantial advancements, particularly in its lead program, AWKN-P001, which targets Severe Alcohol Use Disorder (AUD). The company has successfully established the safety and efficacy of its therapeutics and is now progressing AWKN-P001 into phase III clinical trials. Notably, most of the costs for this trial will be covered by the UK state, resulting in a relatively low cost of $1.25 million for Awakn.

Additionally, Awakn stated that it had partnered with a European pharmaceutical company to explore the repurposing of (S)-ketamine as a licensed treatment for addiction. The company is also collaborating with Catalent on a feasibility study of MDMA, utilizing Catalent’s Zydis Oral Disintegrating Tablet (ODT) technology, with the aim of shortening therapy sessions.

As for the financial results, Awakn’s clinics experienced significant revenue growth, achieving a remarkable 534% increase in revenue year on year. According to the company, this growth reflects the effectiveness of the its therapies and the increasing demand for its services. Looking ahead, Awakn aims to further increase its revenue from clinics and partnerships in the current fiscal year.

 

 

An ad to help with our costs