Avicanna Reports Second Quarter 2020 Financial Results and Provides Corporate Update

Avicanna Reports Second Quarter 2020 Financial Results and Provides Corporate Update

Avicanna Reports Second Quarter 2020 Financial Results and Provides Corporate Update


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  • Successfully launched advanced “medical cannabis 2.0” products under RHO Phyto™ brand nation-wide in Canada through Medical Cannabis by Shoppers™, a subsidiary of Shoppers Drug Mart
  • Revenue increase of 172% from $260,903 in Q1 2020 to $709,468 in Q2 2020, and a substantial increase from $16,571 in Q2 2019, coupled with 8% cost reduction from Q1 2020, and 31% cost reduction from Q2 2019
  • Continued to fortify cannabinoid research and clinical leadership position in Canada with advancements with several collaborations with world class institutions including the MC-RWE by UHN

TORONTOAug. 17, 2020 /CNW/ – Avicanna Inc. (“Avicanna” or the “Company) (TSX: AVCN) (OTCQX: AVCNF) (FSE: 0NN) a biopharmaceutical company focused on the development, manufacturing and commercialization of plant-derived cannabinoid-based products announces results for the three and six months ended June 30, 2020.

Aras Azadian, Chief Executive Officer of Avicanna, commented “We continued to make strategic, scientific and commercial progress during the quarter while optimizing our global operations, which is demonstrated through quarter to quarter revenue increases and cost reductions. We are at an inflection point where our differentiated and advanced product lines are commencing sales in major markets and we are demonstrating evidence of our diversified business model which is comprised of  seeds, API, advanced finished products, and royalties from intellectual property. Furthermore, we continue to fortify our thought leadership position within the medical community in Canada with various world class research collaborations, which now include the strategically significant real-world evidence trials on our RHO Phyto products available in the Canadian market.”

First Quarter Financial and Operational Highlights

  • The Company continued to make strides in its strategic commercial initiatives, leading to an increase in revenues of 172% from $260,903 in the first quarter of 2020 to $709,468 in the second quarter of 2020, and an increase of 4,181% from $16,571 in the second quarter of 2019. In addition, the Company was able to reduce general and administrative costs by approximately 8% from $3,185,943 in the first quarter of 2020 to $2,924,462 in the second quarter of 2020 and a decrease of 31% from $4,243,276 in the second quarter of 2019. The Company has approximately $3.9M of inventory available for sale.

Three Month

Q2 2020

Q1 2020

Q2 2019

Revenue

$709,486

$260,903

$16,571

G&A

$2,924,462

$3,185,943

$4,243,276

  • The Company announced the co-development of a cannabinoid-based product for treatment of COVID-19 related lung inflammation in partnership with the University of Toronto, with additional support and funding from the Mitacs Accelerate Program grant (the “Mitacs Grant”). Dr. Christine Allen is a global leader in the research and development of pharmaceutical formulations and for the past three years, Avicanna and Dr. Christine Allen’s research group (“CARG”) have developed novel cannabinoid-based products for commercialization. The combined expertise of Avicanna and CARG will fast-track the development of advanced pharmaceutical formulations of cannabinoids and their route to market.
  • The Company announced the successful registration of the Company’s initial line of products for its CBD-based derma-cosmetic product line, Pura H&W, in the European Union. The Company is anticipating the commercial launch of its Pura H&W line in the United Kingdom in the third quarter of 2020. Avicanna successfully met all regulatory requirements of the European Commission’s Cosmetic Product Notification Portal (the “CPNP”). In addition to the clinical studies conducted on two of the registered products, Avicanna has provided the CPNP with long-term stability studies on these initial SKUs along with primary skin irritation evaluations for the entire portfolio in order to certify the safety and stability of the Pura H&W formulations.
  • Through its genetics and seed division, Avesta Genetica, Avicanna completed its first industrial-scale seed harvest in Colombia. Approximately 80 million premium and feminized cannabigerol (“CBG”) dominant seeds were successfully harvested. The seeds have been tested for germination and attained feminization rates of 99%, which are considered premium within the global seed market. The seeds will be utilized for sales, exports, and local production. Additionally, the Company’s first ever export of hemp seeds (genetics) was approved by the Colombian government, which was also the first export of cannabis or hemp seeds in Colombian history.
  • The Company entered a strategic manufacturing and intellectual property (“IP”) licensing agreement with MediPharm Labs Inc. (“MediPharm”). Under the terms of the agreement, MediPharm will use its manufacturing capabilities under its Good Manufacturing Practice (“GMP”) certification in Canada to produce Avicanna’s advanced RHO Phyto medical cannabis products, and Pura H&W topicals for sale by Medical Cannabis by Shoppers. The partnership provides Avicanna with a route to market for Canadian and international sales, as well as pharmaceutical manufacturing for clinical trials with its Canadian research hospital collaborators. Additionally, Avicanna will grant MediPharm a license to use proprietary Avicanna formulations to develop additional white label branded products for the domestic and international market. MediPharm’s pharmaceutical and GMP-certified manufacturing capabilities and its international supply chain capabilities will be leveraged to produce and deliver the proprietary finished products to partners worldwide.
  • At the height of the COVID-19 pandemic, the Company closed a non-brokered private placement for approximately $2.56 million, issuing 3,200,000 units at a price of $0.80 per unit. The financing primarily included strategic partners, including Tasly International Capital Limited, a division of Tasly Holding Group Co., Ltd., a large healthcare and pharmaceutical group in China.
  • The Company reduced its operating cash outflows by approximately 40%, for the six months ending June 30, 2020, compared to the six months ending June 30, 2019.

Recent Developments

  • The Company’s RHO Phyto medical cannabis products launched on the Medical Cannabis by Shoppers portal, commencing with the “Micro Drop” oil formulations. Micro Drop oil formulations are the first of the RHO Phyto formulary of advanced medical cannabis products available for patients and health care practitioners on the Medical Cannabis by Shoppers platform. This product line includes advanced formulations under the “Cannabis 2.0” regulations that have undergone years of research and development and been manufactured under GMP standards by MediPharm. RHO Phyto sublingual sprays and topical products are expected to be available through the Medical Cannabis by Shoppers platform in the third quarter of 2020, with capsules to follow in the fourth quarter. Medical Cannabis by Shoppers is a subsidiary of Shoppers Drug Mart Inc.
  • On August 11, 2020, the Company announced a strategic partnership with Red White & Bloom Brands Inc. (“RWB”), a multi-state operator active in the U.S. cannabis and hemp sectors, for the distribution of and commercialization of Pura H&W Hemp-Derived CBD-Based Topical Products in the United States. RWB will pay Avicanna an upfront fee in the amount of CAD$250,000 in cash, along with minimum purchase requirements, including the purchase of USD$250,000 worth of product within the first six months of the term, for the rights to be the exclusive distributor of Avicanna’s Pura H&W branded cosmetic products in the US. Under the agreement, RWB also has the right to purchase Avicanna’s cosmetic products for distribution into the US and certain other territories under brands of RWB’s choosing. The initial product offerings under the agreement will include body and face lotions, cosmetic creams, gels and serums, as well as soaps and bath bombs.
  • Avicanna, in collaboration with CARG at the Leslie Dan Faculty of Pharmacy at the University of Toronto, was awarded additional non-dilutive funding in the form of a peer-reviewed grant by the Natural Sciences and Engineering Research Council of Canada (“NSERC“) to develop a cannabinoid-based formulation for the treatment of COVID-19 related lung inflammation. This peer reviewed grant provides funding support in addition to the recently awarded Mitacs Grant.
  • In collaboration with Dr. Jibran Khokhar, an Assistant Professor at the University of Guelph, Avicanna was also awarded a two-year NSERC Alliance grant to evaluate the neurobiological underpinnings of cannabis toxicosis in a preclinical model, and to test the potential efficacy of Avicanna’s naturally-derived cannabinoids and formulations for treatment of tetrahydrocannabinol (“THC“) overdose.
  • In anticipation of the launch of the RHO Phyto product line in Canada, Avicanna hosted its third annual symposium, “Medical Cannabis 2.0”, on July 21st, 2020 through a virtual format. The presentations focused on the evolution of medical cannabis including the Avicanna led advancements in R&D for novel cannabinoid delivery forms and formulations. Presenters including Dr. Ruth Ross (Professor and Chair, Department of Pharmacology & Toxicology, Faculty of Medicine, University of Toronto, Senior Scientist, Campbell Family Mental Health Research Institute, Centre for Addiction and Mental Health) and Dr. Hance Clarke (Staff Anesthesiologist, Director Pain Services, Director Good Hope Ehlers Danlos Clinic, Medical Director of The Pain Research Unit, Department of Anesthesia and Pain Management, Toronto General Hospital, University Health Network, Associate Professor, Department of Anesthesia, University of Toronto). Over 1,000 participants attended the symposium.
  • Avicanna announced that its RHO Phyto line of products will be participating in a Medical Cannabis Real-World Evidence (“MC-RWE“) clinical study at the University Health Network (“UHN“) in partnership with Medical Cannabis by Shoppers. The study will be led by Dr. Hance Clarke, Director of Pain Services at Toronto General Hospital, and will examine the efficacy of a select group of medical cannabis products including Avicanna’s RHO Phyto line of products on patient reported outcomes of pain, sleep and anxiety. All products used in MC-RWE must complete analytical testing through select testing laboratories and entered through the TruTrace StrainSecure™ platform. This provides Avicanna with a second commercial channel to the Medical Cannabis by Shoppers portal for its medical products to UHN, which is Canada’s largest network of research hospitals and doctors.

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