Key Takeaways; Cannabis Sector
- Cannabis stocks rallied thanks to TerrAscend uplisting to the Toronto Stock Exchange.
- Canopy Growth’s is in danger of going out of business: The company announced debt reduction initiatives to salvage the situation.
- Organigram reported third quarter fiscal year 2023 financial results.
Key Takeaways; Psychedelic Sector
- Awakn completed sale of Awakn clinic in London.
- Cybin announced the development of a scalable psychedelic facilitation training program, EMBARK.
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.
Top Marijuana Companies for Week
#1: TerrAscend
Cannabis investors finally found some relief in the beginning of this month as cannabis stocks experience a much-needed boost, thanks to TerrAscend Corp. (OTC: TRSSF) uplisting to the Toronto Stock Exchange (TSX).
After enduring a bear market for nearly two years, cannabis investors were eagerly waiting for a catalyst to turn the tides, and it seems TerrAscend’s uplisting just did that. The move itself didn’t directly lead to the surge in cannabis’s stock values, but it was the response from financial giant Morgan Stanley that ignited the buying frenzy.
After uplisting to TSX, TerrAscend received recognition from Morgan Stanley, which removed the company from its restricted list. This means that investors can now trade TerrAscend’s stock like any other on the TSX, signaling a major step forward for the company.
This news had an immediate positive impact on the cannabis sector, with US Cannabis ETF experiencing a 3.7% increase following the announcement. TerrAscend’s stock witnessed a significant jump of 2.5% to reach $1.71. Although it has a way to go to reach its 52-week high of $3.09.
TerrAscend’s uplisting opens the possibility of being listed on a major American exchange as an American Depository Receipt (ADR). ADRs facilitate foreign companies with the opportunity to trade in major exchanges in the United States, which opens new avenues for growth and investment opportunities.
TerrAscend’s successful uplisting has not gone unnoticed by other cannabis companies. Many are closely monitoring these developments and may attempt to replicate TerrAscend’s strategy. While not all companies can restructure in the same way to uplist, it’s clear that TerrAscend’s move has set a positive precedent for the industry.
#2: Canopy Growth
Canopy Growth Corp. (NASDAQ: CGC), one of the largest cannabis companies in the world, is facing a significant setback as its stock plunged over 40% on Friday after receiving a warning from NASDAQ regarding its stock falling below $1 for a period of over 30 consecutive days.
To address its financial situation, Canopy Growth announced a series of agreements aimed at deleveraging its balance sheet. The company entered into privately negotiated redemption agreements with holders of its unsecured senior notes due July 15, 2023, as well as agreements with certain lenders under its term loan credit agreement. According to the company, these measures are expected to reduce Canopy’s total debt by approximately $437 million over the next six months and lower annual interest costs by $20 to $30 million.
Canopy Growth’s Chief Financial Officer, Judy Hong, expressed satisfaction with the agreements, stating that they would enable the company to preserve cash and strengthen its balance sheet. Hong also highlighted the company’s ongoing cost reduction program and its commitment to long-term value creation. “We are pleased to have worked constructively with our lenders to reach these agreements which enable Canopy Growth to preserve cash, and further improve its balance sheet through accretive and meaningful reductions in its overall debt,” said Judy Hong.
In addition to the debt reduction initiatives, Canopy Growth said it will retain around $92 million in cash by settling approximately $193 million in aggregate principal amount of its existing notes. The company stated that it will also make a cash payment of $93 million to reduce $100 million of principal indebtedness under its credit facility. Furthermore, Canopy Growth said it expects further principal reductions through asset sales.
However, despite the efforts to improve its financial position, Canopy Growth has faced skepticism from analysts and investors. Fitch Ratings downgraded the company’s long-term issuer default rating (IDR) from CCC- to RD due to recent debt swaps and operational concerns.
#3: Organigram
Organigram Holdings Inc. (NASDAQ: OGI) reported a drop in net revenue and rising operating costs in its financial results for the third quarter ending May 31, 2023. The company saw a 14% decrease in net revenue to $32.8 million compared to the same period last year, mainly due to a decline in recreational flower sales. This decline led to increased costs of sales and a decrease in gross margin.
Despite the challenging financial results, Organigram’s CEO, Beena Goldenberg, remains optimistic about the company’s future. Goldenberg expressed confidence in Organigram’s strategy and stated that the company is focused on sustainable long-term growth. “Our outlook moving into next year remains positive with the foundation now in place to deliver continued growth,” Goldenberg said in a press statement.
Organigram’s CFO, Derrick West, attributed the decline in sales and margins to some producers inflating THC values on their labels. He stated that Organigram has taken steps to increase whole flower THC levels to meet consumer demand. “We believe that based on this progress we will return to positive adjusted EBITDA in Q4 Fiscal 2023,” he said.
Looking ahead, Organigram said it expects higher net revenue in the fourth quarter, mainly due to the growth of its expanded product line across multiple categories. The company also stated that it anticipates improved adjusted gross margins and a return to positive adjusted EBITDA. In addition, Organigram said that it believes its capital position is healthy and that it has sufficient liquidity available for the near to medium term.
Top Psychedelic Companies for Week
#1: Awakn
Awakn Life Sciences Corp. (OTC: AWKNF), announced the completion of the sale of its subsidiary, Awakn London Limited, which operates the Awakn Clinics London in the United Kingdom. The subsidiary was acquired by Awakn Via Amitis Ltd., which is a joint venture between Via (formerly WDP), a leading UK healthcare charity, and Amitis Group, a private UK investment company.
As part of the agreement, Awakn granted Awakn Via Amitis Ltd. an exclusive license to certain elements of its healthcare services intellectual property within the UK. Additionally, Awakn Via Amitis Ltd. obtained a non-exclusive license for Awakn Kare, a proprietary treatment for alcohol relapse prevention, within the UK. In return, Awakn will receive a share of the revenue generated by Awakn London Limited.
The sale of Awakn Clinics London represents an important milestone for Awakn Life Sciences. The transaction allows the company to focus its resources on its research and development (R&D) programs while ensuring continuity of care for clients and employees in London.
Awakn CEO Anthony Tennyson expressed satisfaction with the completion of the sale, emphasizing that it enables the consortium of Awakn Via Amitis Ltd. to leverage its experience and partnership with the NHS to expand and scale the clinics business. He also expressed confidence in the consortium’s ability to expand and scale the clinic’s business, benefiting a broader range of patients in need of effective treatment options.
#2: Cybin
Toronto-based Cybin Inc. (NYSE: CYBN) announced the development of a scalable psychedelic facilitation training program called EMBARKCT . This new program is an evolution of the existing EMBARK Training Program.
The EMBARK program, launched in 2021, provides foundational training for psychedelic facilitators to deliver skillful and ethical care in working with psychedelic therapeutics. EMBARKCT aims to increase Cybin’s capacity to screen, qualify, train, and certify facilitators for future pivotal studies of its lead candidates, CYB003 and CYB004, potential treatments for major depressive disorder and generalized anxiety disorder, respectively.
Additionally, Cybin said it’s hoping to leverage the newly established codes by the American Medical Association (AMA) to attach its Embark Training Program to insurance reimbursement. The AMA recently introduced new Current Procedural Terminology (CPT) Category III codes that specifically address the need for continuous in-person monitoring and intervention during psychedelic medication therapy.
The implementation of these codes, which will become effective on January 1, 2024, is a crucial step toward standardizing psychedelic treatments and integrating them into mainstream medical practices. By establishing a standardized way to identify procedures and collecting data to support broader use and potential FDA approval, the AMA codes create a clearer path for insurance reimbursement for these emerging therapies.
With the development of EMBARKCT and the support of the AMA’s CPT codes, Cybin is taking significant steps toward revolutionizing mental healthcare and expanding the accessibility and acceptance of psychedelic-based therapies.
