Key Takeaways; Cannabis Sector

• Tilray launched first commercial cannabis flower grown in Germany
• Ayr Wellness missed Q3 estimates amid rising competition and consumer pressure
• SNDL announced the renewal of the CA$100 million share repurchase program
• Ascend Wellness is focusing on cost savings measures amid mounting losses in Q3 2024

Key Takeaways; Psychedelic Sector

• GH Research reported widening losses amid rising clinical trial costs
• Enveric Biosciences secured a $62M licensing deal for psilocin prodrug
• Atai reported $26M loss in Q3, despite making advances in their psychedelic drug development 
• Awakn is pioneering therapeutics for trauma and addiction

Below is a weekly roundup of what happened this week in 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: Tilray

Aphria RX, a subsidiary of Tilray Medical, a division of Tilray Brands, Inc. (NASDAQ: TLRY) (TSX: TLRY), launched its first commercial medical cannabis flower, cultivated at its facility in Neumünster, Germany. This marked a significant milestone for Tilray as it expands its medical cannabis operations under Germany’s newly implemented Medicinal Cannabis Act (MedCanG).

In July 2024, Tilray’s Aphria RX became the first company to receive a cultivation license under MedCanG, allowing them to produce and manufacture medical cannabis for commercial sale in Germany. The newly launched strains, which were selected from top-performing varieties popular in Canada, are grown in an indoor facility with the aim of meeting the needs of medical cannabis patients.

Denise Faltischek, Tilray’s Chief Strategy Officer and Head of International, expressed pride in the achievement, saying, “We are excited to launch our Made in Germany premium cannabis products, which marks a significant milestone in our mission to deliver the highest-quality medical cannabis products to patients in Germany.”

This development solidifies Tilray’s leadership in medical cannabis cultivation and distribution within Germany, a market where recent regulatory changes have reshaped the cannabis landscape. The new law, which has been in effect from April 1, 2024, legalized the possession of up to 25 grams of cannabis for adults and permitted the establishment of cannabis clubs, further supporting the expansion of the industry.

#2: Ayr Wellness

Ayr Wellness Inc. (CSE: AYR.A) (OTC: AYRWF) reported disappointing third-quarter results as the cannabis retailer faced intensified competition and tightened consumer spending. The company’s revenue for the period amounted to $114.3 million, falling short of analysts’ expectations of $120.7 million. Despite seeing growth from Ohio’s adult-use market launch, the revenue remained nearly flat year-over-year and dipped 2.6% from the previous quarter.

Ayr’s operating loss widened significantly to $17.4 million, compared to $1.4 million in Q3 2023. Adjusted EBITDA stood at $26.1 million, a margin of 22.9%, showing some resilience despite the revenue dip. Interim CEO Steven Cohen acknowledged the challenging environment, stating, “Our third-quarter performance reflected ongoing macroeconomic pressure to the consumer wallet and increased competition in select markets, which affected revenue and offset the growth from Ohio.”

Looking ahead, Ayr remains cautious, providing conservative guidance for the fourth quarter. The company expects both revenue and adjusted EBITDA to remain “essentially flat” compared to Q3 levels, with analysts projecting a slight increase to $127.3 million in the fourth quarter. “We are well-positioned to navigate the near-term environment as we focus on improving execution in our key markets,” Cohen added.

Despite the challenges, expansion efforts continue, with Ayr targeting new markets, particularly Ohio, where the company plans to open five new dispensaries in 2025. The company has also received conditional approval to operate in Virginia’s Health Service Area 1 and is progressing with medical marijuana operations in New York via its partner, Amethyst Health. 

#3: SNDL

SNDL Inc. (NASDAQ: SNDL), a Canadian cannabis and alcohol company, announced that it had received approval from its board to renew its share repurchase program, allowing for the buyback of up to CA$100 million (approximately $70.9 million) of its common shares. This program, which is set to begin on November 21, 2024, and expires on November 20, 2025, permits SNDL to repurchase up to 13.2 million shares, or about 5% of its outstanding shares. The company will purchase shares at market prices through open-market transactions, block trades, and other methods. After the program expires, repurchased shares will be cancelled.

Under its current repurchase program, which began on November 21, 2023, SNDL had authorized up to CA$100 million for repurchasing 13.1 million shares. As of November 14, 2024, the company had repurchased 727,829 shares at an average price of CA$2.77 per share.

In its third-quarter financial report, SNDL reported a slight revenue decrease of 0.3% year-over-year, totaling $236.9 million. However, its gross profit increased to $63 million, reflecting a record gross margin of 26.6%. Recently the company has also expanded through acquisitions in 2024, including the purchase of Indiva, an edibles producer, and the acquisition of the remaining shares of Nova Cannabis. 

#4: Ascend Wellness

Ascend Wellness Holdings, Inc. (CSE: AAWH.U) (OTC: AAWH) reported mixed third-quarter financial results as the company navigates increased competition in key markets. Despite a modest increase in net revenue, Ascend’s net loss expanded significantly, highlighting challenges faced in certain regions.

For Q3 2024, Ascend posted net revenue of $141.6 million, a slight increase of 0.3% from the previous year. However, the company’s net loss grew to $28.3 million, compared to $11.2 million in Q3 2023. Adjusted EBITDA also saw a decline of 14.9% year-over-year, totaling $25.1 million, reflecting a 17.7% margin. The company faced a decline in retail sales of 7.6% year-over-year, offset by a notable 20.1% increase in wholesale revenue.

In response to these challenges, Ascend is aggressively targeting $30 million in annual cost savings as part of its strategy to improve profitability. This transformation includes a reduction in corporate and retail staff by 15% and 10%, respectively, and streamlining operations to maximize asset efficiency.

Co-founder Frank Perullo, who recently took on the role of president, emphasized the company’s progress amid these changes: “We made meaningful progress during this transitional quarter as we navigated headwinds in a few of our key markets,” he said. Despite declines in New Jersey and Illinois, Ascend saw retail growth in Pennsylvania and Ohio, which helped offset some of the losses.

Additionally, during the quarter Ascend’s leadership underwent significant changes, with Sam Brill, a board member, appointed CEO, and Roman Nemchenko promoted to CFO. Brill stated, “We must focus on three financial priorities: improving profitability, maximizing asset efficiency, and enhancing cash flow generation.” The company aims to position itself for long-term growth and profitability by focusing on these objectives.

Notably, Ascend launched its new edibles-only brand, Effin’, which has quickly gained traction in stores, reaching the top spot in the edibles category at locations where it’s available.

Looking ahead, Ascend plans to continue focusing on cost management while driving growth in its key markets. With $65.3 million in cash and a net debt of $240.6 million at the end of Q3, the company remains optimistic about its ability to improve financial performance and create long-term value for stakeholders.

Top Psychedelic Company for Week

#1: GH Research

Dublin-based GH Research PLC (NASDAQ: GHRS), a clinical-stage psychedelic medicine company, reported an increased net loss of $12.1 million in third quarter 2024 financial results, compared to $5.6 million in the same period last year. According to the company, the losses were driven by rising research and development expenses, which grew to $8.4 million, and increased administrative costs, which rose from $2.6 million for the same quarter in 2023 to $4.2 million.

Despite the mounting expenses, the company maintains a strong cash position of $193.8 million as of September 30, 2024, down from $222.7 million at the end of 2023. The company stated that these funds will continue to support the development of GH001, an inhaled mebufotenin (5-MeO-DMT) and a candidate for treatment-resistant depression (TRD). GH Research also provided business updates, reporting that the enrollment for the phase 2b trial of GH001 had been completed in Q3, with top-line data expected between Q4 2024 and Q1 2025.

GH Research provided regulatory updates on the investigational new drug (IND) application for GH001, following its recent placement on clinical hold by the U.S. FDA due to device-related and inhalation toxicology concerns. The company stated that it is actively addressing these issues and has proposed a path forward to resolve the device-specific concerns.

Despite the discontinuations, the company reported that a postpartum depression trial was progressing as planned, and earlier trials for GH001 were showing promise, with 87.5% of TRD patients achieving ultra-rapid remission.

#2: Enveric Biosciences

Enveric Biosciences, Inc. (NASDAQ: ENVB) announced that it had entered into a $62 million licensing deal with MycoMedica Life Sciences for the out-licensing of its synthetic psilocin prodrug candidate, EB-002, which is aimed at treating neuropsychiatric disorders like depression. As part of the deal, MycoMedica will take responsibility for the development and commercialization of EB-002, with Enveric receiving milestone payments, royalties, and sublicensing rights. 

According to Enveric, this deal allows the company to focus on its lead candidate, EB-003, a non-hallucinogenic drug designed to promote neuroplasticity and treat severe mental health conditions. The company is set to file for FDA approval for human trials of EB-003 in 2025, as it continues to prioritize therapies that avoid the hallucinogenic effects commonly associated with psychedelics.

In its third-quarter financial results, Enveric reported a net loss of $2.1 million, a decrease from $2.8 million loss in the previous year; the company also reported a cash balance of $3.1 million as of September 30, 2024. 

Additionally, Enveric stated that it continues to explore licensing agreements for other drug candidates, including a separate agreement with Aries Science & Technology for a radiation dermatitis product. The company’s strategy is to generate non-dilutive revenue to support the development of EB-003 and expand its portfolio of neuroplastogenic therapies.

#3: Atai

Atai Life Sciences N.V. (NASDAQ: ATAI), a clinical-stage biopharmaceutical company, reported a net loss of $26.3 million for third quarter 2024 financial results, a significant drop from its net income of $43.3 million in the same period last year. Despite the loss, Atai emphasized its strong position for the future, with its psychedelic drug pipeline progressing toward clinical trials and federal approval.

“We continue to see progress and momentum across our pipeline,” said Dr. Srinivas Rao, co-CEO of Atai. “Our team is focused on executing these trials with the utmost scientific rigor and is driven by our goal of being the leader in developing new psychedelic treatment options for mental health patients.”

Atai is working on several psychedelic drugs, including versions of DMT, MDMA, and ibogaine. It plans to begin clinical trials for its DMT treatments—VLS-01 for depression and EMP-01 for social anxiety—by the end of 2024. Additionally, the company expects to release data on ongoing trials for alcohol use disorder and major depressive disorder, with further results expected next year.

“We are committed to advancing our research and believe we are well-positioned to bring these important treatments to patients who need them,” Dr. Rao added. 

Atai also has preclinical studies underway for its ibogaine treatment and is exploring novel, non-hallucinogenic 5-HT2AR agonists for potential antidepressant applications.

#4: Awakn

Awakn Life Sciences Corp. (CSE: AWKN) (OTC: AWKNF), a clinical-stage biotechnology company, is making strides in addressing unmet needs in mental health and addiction treatment. Through the development of novel therapies and medications, Awakn aims to redefine the standard of care for conditions like Alcohol Use Disorder (AUD) and trauma-related mental health disorders.

Awakn’s latest advancements focus on aminoindanes, a class of molecules with pharmacological properties similar to MDMA. These compounds stimulate serotonin, dopamine, and noradrenaline release while blocking reuptake, creating empathogenic effects essential for trauma therapy. But unlike MDMA, aminoindanes offer a patentable, targeted approach to treating trauma-related mental health disorders.

Additionally, Awakn is developing Medication-Assisted Treatments (MATs) targeting the brain circuits that drive addiction. By disrupting the neural pathways that fuel addictive behaviors, these therapies enable patients to break free from destructive cycles and engage in psychotherapy for lasting recovery.

Moreover, Awakn is also currently conducting trials for its widely known AUD-focused therapies, including a key Phase 3 study for AWKN-001. This trial, which is supported by the UK’s Medical Research Council (MRC) and other leading institutions, combines ketamine-based medication with manualized psycho-social support. The trial spans across multiple NHS sites, reflecting the scalability and the potential impact of Awakn’s approach.

Awakn CEO Anthony Tennyson and Chief Research Officer Prof. David Nutt lead the charge with a commitment to transforming care standards. Through strategic partnerships and clinical advancements, Awakn aims to deliver life-changing solutions to millions in desperate need.