Investor
Ideas #Potcasts, #Cannabis News and #Stocks on the Move; Episode 464 (NYSE: $ACB)
(TSX: $ACB.TO) (OTC: $CTTH) (TSX:
$WLLW.TO)
Delta, Kelowna, BC, September 8, 2020 (Investorideas.com Newswire) www.Investorideas.com, a global news source covering leading sectors including marijuana and hemp stocks and its potcast site, www.potcasts.ca release today’s podcast edition of cannabis news and stocks to watch plus insight from thought leaders and experts.
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Today’s podcast overview/transcript:
Good
afternoon and welcome to another episode of Investorideas.com
"Potcast" featuring cannabis news, stocks to watch as well as
insights from thought leaders and experts.
In
today’s podcast we look at a few public and private company announcements.
Aurora
Cannabis Inc. (NYSE:
ACB)
(TSX:
ACB)
announced an
update on its business operations along with certain unaudited preliminary
fiscal fourth quarter 2020 results. The Company also announced the appointment
of Miguel Martin as its new CEO which is detailed in a separate announcement
released this morning.
"Over the last six months,
Aurora has focused on building the infrastructure and capabilities necessary
for a successful and diversified business," stated Michael Singer,
Executive Chairman and former Interim CEO of Aurora. "The first phase of
our business transformation, which is now substantially complete, included the
rationalization of our cost structure, reduced capital spending, and a more
prudent and targeted approach to capital deployment. As a result, we now have a
far more efficient asset base and infrastructure to supply our key global
markets. I am delighted to now be transitioning the CEO responsibilities to
Miguel and I am confident that Aurora is in a strong position to succeed under
Miguel's leadership."
"Material progress has been
made to optimize our Canadian operations and put Aurora on a much stronger
footing," stated Miguel Martin, newly appointed CEO of Aurora. "With
market leading brands and a culture rooted in innovation and science, I now
feel even more confident in the opportunity to create a global leader in a
rapidly growing industry."
Today, the Company is providing the following
updates:
Preliminary
Unaudited Net Revenue, Adjusted Gross Margin and SG&A Results for Q4 2020
Net revenue in Q4 2020 is expected
to be between $70 million and $72 million, compared to $75.5 million in Q3
2020. Cannabis net revenue is expected to be between $66 million and $68
million, compared to $69.6 million in Q3 2020. We expect adjusted gross margin
before fair value adjustments on cannabis net revenue to be within a range of
46%-50%, with lower gross margins expected from non-cannabis business segments.
As previously stated, Aurora has
focused on prudently managing its sales, marketing and administrative
("SG&A") costs in the second half of fiscal 2020. Aurora
successfully reduced SG&A costs (which include R&D spending) from over
$100 million in fiscal Q2 2020 down to an expected range of $60 to $65 million
in fiscal Q4 2020, excluding approximately $3 million of non-recurring costs
related to the business reset and $2 million of costs associated with divested
businesses.
Cost
Rationalization and Near-Term Revenue Plan
The Company is now operating at its
quarterly SG&A run-rate in the low $40 million range, and expects
operational cost reductions from facility closures up to $10 million per
quarter starting in the second half of fiscal 2021. With a tailwind of growth
in the Canadian recreational market, the Company is better positioned for its
next phase focused on profitability.
Under Aurora's new CEO, the team
expects to be focused on executing a tactical plan intended to (1) grow
Aurora's leading market share in key profitable Canadian consumer categories
(2) protect and enhance Aurora's leading market share in Canadian medical, (3)
grow our international medical business and (4) build leading brands under
Reliva in the US CBD market. Ultimately, Aurora believes that it is capable of
supporting significantly higher levels of net revenue in the future without a
corresponding level of growth in SG&A.
Impairment
Charges
As previously announced, and as part
of the business transformation and cost reset, Aurora expects to record a
number of balance sheet adjustments in Q4 2020 to recognize market realities
and to position the Company for future performance. These adjustments include
previously announced fixed asset impairment charges, now expected to be up to
$90 million, due to production facility rationalization, and a charge of
approximately $140 million in the carrying value of certain inventory,
predominantly trim, in order to align inventory on hand with near term
expectations for demand. Approximately 40% of the expected inventory provision
relates to the non-cash IFRS fair value adjustment within inventory. Although
the business prospects for Aurora remain strong, under IFRS, management is
required to recognize the impact of overall industry risk, and to consider the
book value of the Company relative to current market capitalization.
Accordingly, the Company expects to recognize a non-cash write-down of goodwill
and intangible assets in the range of $1.6 to $1.8 billion.
In addition, and consistent with a
focus on financial discipline and the drive to positive Adjusted EBITDA, Aurora
announced today that the Company and the UFC have agreed to mutually terminate
their partnership. For Aurora, this decision reflects the evolution of the
realities of the cannabis market and a focus on near term profit pools. In
connection with this decision, the Company expects to make a one-time payment
of US$30 million to terminate the contract in Q1 2021, which is expected to
avoid more than $150 million in fees, research costs, and marketing activation
expenses over the next five years.
CTT
Pharmaceutical Holdings, Inc. (OTC:
CTTH), an innovative life sciences company with a portfolio
of IP in novel drug delivery systems, today
announced that it has entered into a business development
partnership with 3 Rivers Biotech, a pre-eminent tissue culture company. Under
the agreement, 3 Rivers will leverage its network of suppliers to and manufacturers
of Consumer Packaged Goods (CPG) to secure commercial partnerships based on
CTT's patented sublingual wafer technology.
Additionally, the agreement includes
the ability for CTT to utilize 3 Rivers' operational capabilities to execute
technology transfers and project implementation for new customers, providing a
cost-efficient and de-risked expansion of CTT's operational capacity.
3 Rivers' is one of few companies
with a successful track record in the consistent, commercial-scale supply of
tissue-culture-based clones for a variety of sectors, including the hemp
industry. As a trusted partner, 3 Rivers is very well positioned to engage in
meaningful discussions within its network to explore the potential for
commercial partnerships on behalf of CTT.
CTT's rapidly dissolving sublingual
wafers deliver active ingredients through the buccal/mucosal route, which
provides a number of key advantages over other delivery mechanisms, meeting
important current market dynamics. These advantages offer CPG companies the
opportunity to expand their portfolios with a well-differentiated, high-margin
product offering on rapidly growing market segments.
● Rapid onset CTT's strips
dissolve quickly in the oral cavity (5-15
seconds), with the active ingredient rapidly absorbed into the bloodstream
● Increased bioavailability the
active ingredient, once absorbed, can bypass the liver's first-pass effect,
improving therapeutic outcomes and efficacy through improved bioavailability
● Safe smoke-free delivery
bypassing lungs and digestive system
● Ease of use taken orally, not
requiring water or swallowing
● Accurate and consistent dosing precisely
determined and consistent potency of the active ingredient, a critical
advantage over most other form factors
● Increased adherence the
ease of use and discrete administration can help increase positive adherence
outcomes
● Large target markets
suitable for a wide range of applications in medical, wellness and recreational
markets
Marc Lakmaaker, SVP Commercial
Development for CTT, stated, "3 Rivers is a trusted partner at the root of
the value chain for a growing number of companies in the CPG sector. Its
network in large geographic markets, such as North America, China and Europe,
creates a very significant opportunity for CTT to accelerate growth. The
partnership also provides additional implementation bandwidth, which further
de-risks our expansion efforts in a cost-effective manner."
Dr. Kevin Mehr, VP of Sales at 3
Rivers, added, "We believe that CTT's sublingual strips provide a unique
and compelling commercial proposition for many companies in our network across
a wide variety of sectors. The science behind CTT's technology, the
effectiveness of its products, the Company's successful track record in
bringing a new technology to market, and the caliber of its people, clearly
differentiate CTT from its competition. We believe that these factors will
greatly facilitate our ability to build new partnerships, and we look forward
engaging with our network, on behalf of CTT."
Willow
Biosciences Inc. (TSX:
WLLW) (OTCQX:
CANSF) announced that
its subsidiary - Willow Analytics Inc. - will receive advisory services and
conditional funding from the National Research Council of Canada Industrial
Research Assistance Program ("NRC
IRAP") supporting a research and development project to advance
production of its varin cannabinoids, using its proprietary biosynthetic
platform.
"We welcome the advice and
funding from NRC IRAP to support our rare cannabinoid development
platform," said Dr. Mathias Schuetz, Willow's Vice-President of Research
& Development. "This support is an important catalyst for us to
advance our strain development capabilities and will enable us to progress from
lab-scale work to pre-commercialization scale up."
Willow has built a strong reputation
as a high-quality, high-purity biosynthetic cannabinoid producer. Its yeast
fermentation production platform, initially developed for cannabigerol ("CBG") and cannabidiol ("CBD"), has shown impressive
success and Willow expects to be the first company to biosynthetically produce
material amounts of cannabinoids. By varying the feedstock used in its
fermentation platform, the Company has made significant progress on developing
strains for its varin series of cannabinoids and will use the NRC IRAP funding
to accelerate the commercialization plan for these cannabinoids.
Trevor Peters, Willow's President
& CEO, added "By using the platform technology that has allowed us to
advance our CBG program ahead of schedule, we are able to expand our portfolio
and pursue fermentation-based production of additional cannabinoids. We have
made strong progress with our varins development to date and expect the varins
program to reach scale-up phase in the first half of 2021 and market-ready
levels in the second half of 2021."
The varins series of cannabinoids
that Willow is developing include cannabigerovarin ("CBGV"), cannabidivarin ("CBDV") and tetrahydrocannabivarin ("THCV"). These varin cannabinoids are considered minor or rare
cannabinoids as they occur naturally in cannabis plants at less than one
percent of biomass, making them challenging and costly to produce via
cultivation. Despite the lack of supply, there are advanced clinical trials and
significant recreational interest due to the possible therapeutic benefits of
the Varin cannabinoids, including uses for autism, diabetes and as an appetite
suppressant.
Investor ideas reminds all
listeners to read our disclaimers and disclosures on the Investorideas.com
website and that this podcast is not an endorsement to buy products or services
or securities. Investors are reminded all investment involves risk and possible
loss of investment.
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