Company achieved first High-THC cannabis sales
in Colombia, continued focus
towards higher margin medical businesses
- Company held $20 million in cash
at the end of June 2020, after
closing Q1 with $24 million
- Cash used in Q2 was $4 million
compared to $12 million in Q1 and
$10 million in Q4 2019
- Despite COVID-19 pandemic, and with prudent cash management,
Company achieved meaningful progress across its medical cannabis
and health services business units in Q2, including acceleration of
medical cannabis sales in Colombia, and receipt of full authorization to
commence CBD medical cannabis sales in Peru
- Achieved significant milestone in surpassing 1,000 medical
cannabis patient prescriptions in Colombia in the first 10 weeks of sales
activity and by the second week of August the Company had issued
more than 1,500 prescriptions, subsequent to the quarter
- Launched teleconsultation platform in Colombia, strengthening Company's COVID-19
response and giving patients vital access to health services and
doctors trained to prescribe medical cannabis
- Successfully delivered first medical cannabis prescriptions for
patients participating in Project Twenty21 in the United Kingdom (UK), subsequent to the
quarter
- Entered into medical cannabis sales and distribution agreement
with Locatel, a pharmacy, healthcare products, and medical
equipment retailer with a database of over 2 million patients in
Colombia
- Signed an exclusive agreement with Medlive, a leading marketer
and distributor of pharmaceutical products serving 3,000 clinics,
hospitals and pharmacies in southern Brazil
- Received authorization from Colombia's National Narcotics Fund for the
sale of magistral preparation of high-THC medical cannabis. As a
result, Khiron became the first and, to date, only company fully
authorized to manufacture and sell high-THC medical cannabis for
patient prescriptions in Colombia
- Entered the German medical cannabis market, Europe's largest, signing an agreement with
Nimbus Health for Khiron branded medical cannabis product import
and sales
TORONTO, Aug. 24, 2020 /CNW/ - Khiron Life Sciences
Corp. ("Khiron" or the "Company") (TSXV: KHRN), (OTCQX: KHRNF),
(Frankfurt: A2JMZC), a vertically
integrated cannabis leader with core operations in Latin America and Europe, announced today its financial results
for the quarter ended June 30, 2020.
These filings are available for review on the Company's SEDAR
profile at www.sedar.com All financial information in
this press release is reported in Canadian dollars, unless
otherwise indicated.
Summary of Key Quarterly Financial Results
Canadian
dollars
|
3 Months
ended June
30 2020
|
3 Months
Ended June 30
2019
|
6 Months
ended June
30 2020
|
6 Months
Ended June 30
2019
|
|
$
|
$
|
$
|
$
|
Revenues
('000s)
|
1,670
|
2,208
|
3,571
|
4,299
|
Gross profit before
fair value adjustments ('000s)
|
319
|
382
|
756
|
794
|
General and
administrative costs ('000s)
|
(4,531)
|
(5,463)
|
(10,378)
|
(9,934)
|
Net loss
('000s)
|
(5,713)
|
(9,518)
|
(14,950)
|
(17,521)
|
Adjusted EBITDA
(1) ('000s)
|
(3,855)
|
(7,056)
|
(9,720)
|
(12,724)
|
Net loss per share
(basic and diluted)
|
(0.05)
|
(0.10)
|
(0.13)
|
(0.20)
|
Weighted average
shares outstanding ('000s)
|
116,546
|
95,973
|
116,579
|
87,808
|
1.
|
Adjusted EBITDA
(earnings before interest, taxes, depreciation and amortization or
in this case loss) is a non-IFRS measure calculated as net loss
before tax as reported under International Financial Reporting
Standards and adding back share-based compensation, fair value
adjustments on biological asset, transaction fees, depreciation,
interest expense and non-recurring items. Refer to the Company's
MD&A for a reconciliation.
|
Discussion of Operations for the Three Months Ending
June 30, 2020
The Company recorded a net loss of $5.7
million in the second quarter of 2020. This compares to a
net loss of $9.5 million in the prior
year second quarter. On an adjusted EBITDA basis Q2 2020 was a
$3.9 million loss compared to the
adjusted loss of $7.1 million in Q2
2019. The reduced adjusted EBITDA loss is largely due to
lower general and administrative spending and the progression from
research and development to commercial cultivation activities
resulting in the capitalization of operating costs to inventory in
Q2 2020.
Q2 and the impact of COVID-19 – starting in March 2020, the Company's health centres
experienced a decline in patient visits due to the Colombian
government's strict quarantine regulations limiting the number of
patients that could visit, including the suspension of surgeries.
By June, however, the health centres have significantly increased
the number of patient services approaching the levels experienced
at the beginning of the year, including complex services such as
surgeries. The Company experienced a 27% decline in service
revenues in Q2 2020 compared to Q2 2019. The Company reacted
quickly to the potential impacts from the pandemic and initiated
several cost cutting measures. In comparing Q2 2020 general and
administrative costs to Q1 2020, the Company saved approximately
$1 million dollars.
Despite the challenges faced with COVID-19, the Company
progressed its strategy and sold both low- and high-THC medical
cannabis through its health centres in Colombia. Revenue contributions were not
significant in the quarter, but prescriptions and sales are
accelerating on a weekly basis. Cultivation is focused on growing
for ultimate sales purposes and less spending on research and
development. In Q2 2020, the Company capitalized $0.5 million in operating costs to inventory and
recorded its initial fair value gain on biological assets of
$0.7 million.
Management Commentary
"I am proud to report that
despite the global impact of COVID-19, we have been able to
responsibly move our business forward and continue building a
strong position in the medical cannabis space to ensure sales
growth in Colombia, and sales
entry into new markets in the UK, Peru, and Germany. In Q2 the Company focused sales
activity on our higher margin medical businesses, while ensuring
prudent cash management across all operations. Our clinics remained
operational through the pandemic as a designated essential service,
allowing us to generate medical cannabis sales and conduct revenue
generating medical procedures, subject to pandemic restrictions,"
comments Alvaro Torres, Khiron CEO
and Director.
"The pandemic has been an extraordinary health and economic
event, but at Khiron we moved quickly to shift our strategic
approach to limit global expansion, alter marketing methods and
conserve cash while maintaining an overall strategic direction to
improve the quality of life of our patients and consumers. This has
enabled us to continue to make progress under difficult conditions
and positions us to be a global cannabis leader. This progress
would not be possible without our remarkable global team, partners
and stakeholders who I would like to thank for their continued
dedication and commitment," continued Alvaro Torres.
Webcast and Q&A
Khiron invites individual and
institutional investors, as well as advisors and analysts, to
attend a webcast and Q&A to discuss the Company's second
quarter fiscal 2020 results.
DATE: Monday, August 24, 2020
TIME: 11:00am EDT/8:00am PDT
PRESENTERS: Alvaro Torres, Khiron CEO and Director,
and Chris Naprawa, Khiron Chairman
FORMAT: Live 20 minutes presentation and Q&A session
REGISTER
LINK: https://event.on24.com/wcc/r/2584069/2FAA39C7AF2B3ADDA058E63DFE9AA017
About Khiron Life Sciences Corp.
Khiron is a
vertically integrated medical and CPG cannabis company with core
operations in Latin America, and
operational activity in Europe and
North America. Khiron is the leading cannabis company in
Colombia and the first company
licensed in Colombia for the
cultivation, production, domestic distribution, and international
export of both low and high THC medical cannabis products. The
Company has presence in Mexico,
Peru, Uruguay, Brazil, UK, Spain and Germany, where it is positioned to begin sales
of medical cannabis.
Leveraging its first-mover advantage, and patient oriented
approach, Khiron combines global scientific expertise, product
innovation, agricultural infrastructure, wholly-owned medical
clinics, and online doctor education programs to drive prescription
and brand loyalty to address priority medical conditions. Its
Wellbeing unit launched the first branded CBD skincare brand in
Colombia, with KuidaTM
now marketed in multiple jurisdictions in Latin America, the US and UK. The Company is
led by Co-founder and Chief Executive Officer, Alvaro Torres, together with an experienced and
diverse executive team and Board of Directors.
Visit Khiron online at www.khiron.ca, investors.khiron.ca and on
Instagram @khironlife.
Cautionary Notes
Forward-Looking Statements
This press release may contain certain "forward-looking
information" and "forward-looking statements" within the meaning of
applicable securities legislation. All information contained herein
that is not historical in nature may constitute forward-looking
information. Khiron undertakes no obligation to comment on
analyses, expectations or statements made by third-parties in
respect of Khiron, its securities, or financial or operating
results (as applicable). Although Khiron believes that the
expectations reflected in forward-looking statements in this press
release are reasonable, such forward-looking statement has been
based on expectations, factors and assumptions concerning future
events which may prove to be inaccurate and are subject to numerous
risks and uncertainties, certain of which are beyond Khiron's
control, including the risk factors discussed in Khiron's Annual
Information Form which is available on Khiron's SEDAR profile at
www.sedar.com. The forward-looking information contained in this
press release is expressly qualified by this cautionary statement
and is made as of the date hereof. Khiron disclaims any intention
and has no obligation or responsibility, except as required by law,
to update or revise any forward-looking information, whether as a
result of new information, future events or otherwise.
Neither the TSXV nor its Regulation Services Provider (as that
term is defined in the policies of the TSXV) accepts responsibility
for the adequacy or accuracy of this press release.
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SOURCE Khiron Life Sciences Corp.