Organigram posts CA$90 million net loss and shares a dismal outlook
Yesterday, Organigram (OGI) reported a net loss of CA$90 mm and a net revenue decline of -27.4% YoY for their third fiscal quarter of 2020. Sequentially, net revenue dropped by -22.4% from CA$23.2 mm. The Canadian cannabis producer missed sell-side expectations – the FactSet consensus estimated net revenues of CA$22.4 mm or a -9.7% decline YoY for Q3 FY2020. Organigram also wrote off CA$19.3 mm in unsaleable inventory, wrote down CA$2.7 million in inventory to net realizable value to reflect declining prices, and incurred CA$7.9 mm in charges related to a reduced workforce.
In a statement, the company said, “The priority for us has been protecting the health and safety of our employees. This prioritization led to a significantly reduced workforce which contributed to a number of product launch delays, including our initial large format value offering, which affected opportunities to potentially capture significant market share and sales in dried flower, the largest product segment of the recreational market.”
In a bleak projection for adult-use sales, CEO Greg Engel also told analysts on Tuesday, “We anticipate it will take until Q1 fiscal 2021 before there is the potential of Organigram to reflect any meaningful incremental sales from the adult-use recreational market. There's no question it's been a challenging time for the Canadian cannabis industry, and the pandemic certainly exacerbated some of our own challenges in Q3.”
OGI was down -9.2% at the market close.
Ontario estimates CA$180 million loss in economic activity on ending cannabis delivery/pickup
According to estimates from the Ontario Chamber of Commerce, the Canadian province could lose out on CA$180 mm in economic activity if cannabis retailers are not allowed to continue providing delivery/ pickup services. The economic activity loss rises to CA$1 billion if the 450 private retail outlets which are ready to open, but whose license applications are pending provincial regulatory approval. The emergency order, which temporarily permits legal cannabis delivery/pickup amid the pandemic, is set to expire on July 29th.
Private pot shops in the province anticipate that ending legal delivery/pickup will shift users back to the illegal market. There are also concerns that reopening retail stores will not convert delivery/pickup users into brick-and-mortar customers.
Lexaria BioScience (OTCQX:LXRP/CSE:LXX) Files Application with Senior U.S. Stock Exchange for Uplisting
Lexaria, a Canadian innovator in drug delivery platforms, announced that it has filed an application to uplist in the U.S. with a senior stock exchange. The BC company has a proprietary drug delivery technology, called DehydraTECH, which improves the way active pharmaceutical ingredients (APIs) enter the bloodstream by promoting healthier ingestion methods and increasing the effectiveness of fat-soluble active molecules, thereby lowering overall dosing. DehydraTECH can be applied to different ingestible product formats, including foods, beverages, oral suspensions, tablets, and capsules, and it can increase bio-absorption by up to 5-10x, reduces time of onset from 1 - 2 hours to 10 - 20 minutes, and mask unwanted tastes for orally administered bioactive molecules.
The company believes that a successful listing should provide significant benefits to its shareholders that include increased liquidity, a much larger audience of institutional funds, improved visibility, and improved access to capital. As Lexaria increases its focus on pharmaceutical and oral nicotine applications of its patented technology, such benefits could prove to be transformative for the company in advancing its drug delivery technology.
