Key Takeaways; Cannabis Sector

• Tilray spent $5.1 million on two new artisan beer companies; The Company also reported profitable second quarter fiscal year 2022 financial results.
• Organigram reported first quarter fiscal 2022 results; ATB Capital analyst Frederico Gomes raised Organigram target price from $2.65 per share to $3 per share.

Key Takeaways; Psychedelic Sector

• Awakn Announces Positive Results From Phase II A/B Clinical Trial.
• Atai announces FDA IND clearance for PCN-101 R-ketamine program.
• Cybin announced IRB approval for sponsored study using Kernel Flow tech to measure psychedelic effects on the brain.

The cannabis sector, like any other evolving industry, sees highs and lows on a regular basis. Last year, the possibility of legalizing aided the sector’s growth, but legislative delays shattered those hopes.

That isn’t to say that marijuana stocks should be avoided entirely. Whether or not legalization occurs, the market will continue to grow swiftly, and domestic cannabis companies will continue to expand aggressively. Despite their strength, some of these cannabis companies’ stock prices have fallen as a result of the recent sell-off in the sector. However the industry still has enormous potential for growth.

Below are the top trending companies in the cannabis and psychedelic sectors during this week.

Top Marijuana Companies for Week

#1: Tilray

According to a new regulatory filing, marijuana company Tilray Brands, Inc. (NASDAQ: TLRY) paid $5.1 million (6.4 million Canadian dollars) in cash and equity for two California craft beer brands, Alpine and Green Flash, in late 2021.

According to a filing with the US Securities and Exchange Commission (SEC), Tilray purchased the assets from WC IPA on December 17, 2021, in exchange for 366,308 Tilray shares worth $3 million and the remainder in cash. WC IPA had acquired the assets in a foreclosure sale in 2018.

Tilray’s latest venture into the craft beer market was first reported by the Brewbound publication.

The Alpine and Green Flash acquisitions came a little more than a week after Tilray paid $102.9 million for Colorado-based Breckenridge Distillery and a year after the New York company paid $300 million for Atlanta-based SweetWater Brewing Co. Aphria Inc. purchased SweetWater in late 2020, just before completing its merger with Tilray last year.

Tilray’s latest acquisitions are part of its long-term plan to join the US cannabis market. And they come as Tilray and AB InBev, the parent company of Budweiser, quietly ended their partnership.

In an earlier interview at the time of the SweetWater purchase, Carl Merton, Chief Financial Officer of SweetWater, said, “(SweetWater) has an incredible reach to a consumer that is already thinking about cannabis, and this acquisition allows us to access that consumer, years in advance of federal legalization. If federal legalization happens two years from now, that’s two years we have to talk to that consumer about our brands.”

Tilray stated in the SEC filing that the Alpine and Green Flash acquisitions are part of the company’s strategic objective to grow into all 50 states of the United States. However, Tilray CEO Irwin Simon remarked on a conference call with analysts this week that he doesn’t anticipate cannabis legalization coming in the United States for at least the next two years; but on the European market, he was more hawkish.

In other news, Tilray reported net revenue of $155.1 million (196 million Canadian dollars) in the quarter ended November 30. The revenues are well below average estimates of $170 million in cannabis sales, and the company blamed coronavirus-related challenges that include; supply-chain difficulties, and a smaller share of the vital Canadian market.

In addition to high net revenue, the New York-based company reported a $5.7 million net profit in the third quarter, which is quite an improvement compared to a loss of $34.6 million the previous quarter. As a result, Tilray claimed to be the market leader in Canada.

Tilray also unveiled the new name of its parent company, Tilray Brands.

The decreased sequential revenue is mostly due to fewer cannabis sales, which fell 16.6% to $58.8 million in September-November from the prior quarter. Gross sales plummeted 28.8% to $49.5 million in the company’s primary Canadian adult-use market, while medicinal cannabis sales dipped 5.3 percent to $7.9 million. Marijuana sales accounted for only 37.9% of total revenue, a decrease from the previous quarter, when cannabis accounted for more over 40% of total revenue.

With $68.9 million in sales, or 44.4 percent of revenue, distribution was the company’s largest sector in the quarter. Wellness revenue declined 7.5 percent from the prior quarter, to $13.8 million; Revenue from beverage alcohol declined by 11.4 percent, to $13.8 million; International gross sales increased to $13.7 million; and European revenue was $74.9 million, down 1.4 percent from the prior quarter.

Tilray’s CEO recognized that the company has lost market share in Canada, but added that the company will not lower prices as aggressively as some competitors.

Tilray Brands Inc. engages in the research, cultivation, production, marketing, and distribution of medical cannabis products. The company operates through five segments: Cannabis Business, Distribution Business, Beverage Alcohol Business, Wellness Business, and Business Under Development. The shares of the company trade as TLRY on the NASDAQ and Toronto Stock Exchange.

#2: Organigram

OrganiGram Holdings Inc. (NASDAQ: OGI) announced its results for the first quarter, on Tuesday, January 11. According to Organigram’s first-quarter financial figures, the company’s deficit narrowed to 1.3 million Canadian dollars ($1 million) as adult-use revenues increased by more than 70% over the previous year-ago period.

Organigram stated in its financial report for the quarter ended Nov. 30, 2021, that gross sales of recreational marijuana increased to CA$38.8 million, up from CA$22.5 million a year ago. As for the net revenue, it was CA$30.4 million, excluding excise taxes. This was an increase of 23% from the previous quarter.

Organigram’s international wholesale sales of medical cannabis were CA$3.4 million in September-November, up from CA$240,000 a year earlier.

In terms of revenue and market share growth, the company outperformed large competitors during the past year. According to Organigram, the company increased its market share in Canada from 4.4 percent in the first quarter of fiscal 2021 to 7.5 percent in November 2021, the fourth-best in the sector. In addition, the corporation stated that it will achieve profitability one quarter earlier than projected.

“While we previously projected to achieve positive adjusted EBITDA in Q4, with the purchase of Laurentian that will be accelerated to Q3 fiscal 2022,” CEO Beena Goldenberg said in a statement.

In addition, Organigram’s adjusted EBITDA loss of CA$1.9 million in the third quarter was better than analyst forecasts, which were for a loss of CA$5.3 million.

In December, Organigram acquired Quebec producer Laurentian Organic in a deal worth at least CA$36 million. Organigram then doubled its investment in Hyasynth Biologicals, a cannabis biosynthesis firm, in January.

Additionally, in a note to investors, ATB Capital Markets analyst Frederico Gomes said Organigram is closing in on the No. 3 position in market share in Canada. Rival producer Canopy Growth currently holds the No. 3 spot. In addition, Gomes reiterated its “Sector Perform” rating and raised the target price from $2.65 per share to $3 per share.

“While the Canadian recreational cannabis market remains fragmented and highly competitive, we believe that OGI is one of the best positioned LPs due to its capital position, diverse brand and product portfolio, and credible path to profitability,” Gomes wrote.

Organigram Holdings Inc., through its subsidiaries, produces and sells cannabis and cannabis-derived products in Canada. Organigram shares trade as OGI on the NASDAQ and the Toronto Stock Exchange.

Top Psychedelic Companies for Week

#1: Awakn

Awakn Life Sciences Corp. (NEO: AWKN) (OTC: AWKNF) announced ground-breaking positive data from their Phase II A/B trial. The results of the world’s first controlled trial on Ketamine-Assisted Therapy for the treatment of Alcohol Use Disorder (AUD) were published in the American Journal of Psychiatry.

The experiment was directed by Professor Celia Morgan, Awakn’s Head of Ketamine-Assisted Therapy for Addiction and Professor of Psychopharmacology at the University of Exeter. As a result Awakn acquired the intellectual property (IP) to the therapy under license for use in further research, its clinics in Europe, and its partnerships globally.

The positive Phase II trial outcome, as well as Awakn’s newly formed relationship with the NHS and the University of Edinburgh, opens the path for the trial to move forward to Phase III; With the ultimate goal of obtaining regulatory clearance for Ketamine-Assisted Therapy for the treatment of AUD in the UK via the NHS and possibly in other countries.

The 96 patients with severe AUD who participated in the double-blind placebo-controlled trial were randomly assigned to one of four groups: 1) three ketamine infusions (0.8 mg/kg IV over 40 minutes) plus proprietary manualized therapy (KARE); 2) three saline infusions plus KARE therapy; 3) three ketamine infusions plus alcohol education; and 4) three saline infusions plus alcohol education.

The trial’s primary outcomes were 1) days abstinent in the six months following treatment, and 2) relapse at the six-month follow-up. The results showed that ketamine combined with KARE therapy resulted in total abstinence in 162 of 180 days over the next 6-month period, resulting in an increase in abstinence from roughly 2% prior to the study to 86 percent after the trial. The results for relapse at 6 months showed that the Ketamine + KARE group had a 2.7 times lower probability of relapse than the placebo plus alcohol education group.

The secondary outcomes of the study identified further encouraging results including improvements in liver function across numerous distinct markers, a statistically significant decrease in depression after three months, and an increase in the ability to experience pleasure.

In addition to the primary and secondary endpoints, Prof. Morgan discovered additional substantial effects in the reduction of heavy drinking days. The Ketamine plus KARE group had an average of 12 heavy drinking days six months after the experiment ended; this is a significant drop compared to prior trials in this field, and it is widely assumed that real-world data is significantly higher. There was also a considerable reduction in the risk of mortality in the KARE group; without treatment, 1 in 8 patients would have died within 12 months; after treatment, that number dropped to 1 in 80.

Awakn announced that it will hold a conference call to go through the results in further detail.

#2: Atai

Atai Life Sciences N.V. (NASDAQ: ATAI), a clinical-stage biopharmaceutical company striving to revolutionize the treatment of mental health diseases, announced on January 12, that the US Food and Drug Administration (FDA) had granted IND clearance for a clinical DDI trial of PCN-101 (R-ketamine). Atai plans to initiate the study early this year through its platform company Perception Neuroscience.

PCN-101’s distinct features could distinguish it from currently available antidepressants and fulfill crucial patient demands, such as the potential for fast action and anti-suicidal effect. In this patient population, rapid onset of action is critical, however frontline selective serotonin reuptake inhibitors (SSRIs) can take up to 12 weeks to provide maximum benefit, and suicidality affects up to 30% of treatment-resistant depression (TRD) patients at some point during their lives.

R-ketamine has shown in preclinical animal models of depressed behavior that it has the potential to provide longer persistence and a potentially more favorable safety and tolerability profile than S-ketamine, allowing for at-home use.

In addition, after a single intravenous dose of another formulation of R-ketamine, patients with TRD experienced a quick, sustained antidepressant response with limited dissociative side effects, according to a third-party, open-label trial.

This clinical DDI experiment will run concurrently with a recently launched Phase 2a proof-of-concept trial in TRD that was recently initiated in Europe. In addition, Atai plans to conduct a bioavailability study in 2022 to bridge the IV and subcutaneous formulations of PCN-101, demonstrating the drug’s potential for self-administration.

#3: Cybin

On January 11, 2022, Cybin Inc. (NYSE: CYBN), a biopharmaceutical company focused on “Psychedelics to Therapeutics,” announced that an Institutional Review Board (“IRB”) had approved a Company-sponsored feasibility study using Kernel’s quantitative neuroimaging technology, Kernel Flow, to measure ketamine’s psychedelic effect on cerebral cortex hemodynamics.

Cybin will retain an exclusive interest in any innovations identified or developed as a result of its independent review of the feasibility study findings, as part of its sponsorship of the project.

The study was also granted Investigational New Drug (“IND”) approval by the US Food and Drug Administration (“FDA”) in October 2021, and enrollment is planned to commence in early 2022.