Here’s What You Missed in Cannabis, Psychedelics This Week

In this week’s “Rising High,” The Fly’s recurring series focused on cannabis and psychedelic stock news, The Fly looks back on earnings, a potential reverse merger and a partnership.

CANNABIS FIRMS REPORT EARNINGS: On Monday, Innovative Industrial Properties (IIPR) reported fourth quarter adjusted funds from operations per share of $2.28 on revenue of $79.2M, which compared to AFFO per share of $2.12 on revenue of $70.5M last year. At year-end, IIP’s footprint comprised 108 properties totaling 8.9M rentable square feet in 19 states. (read more) Following the report, Roth MKM raised the firm’s price target on Innovative Industrial Properties to $115 from $110 and kept a Buy rating on the shares. The company’s Q4 results outperformed expectations on increased rent that was 96% collected, tenant reimbursement, and building improvements on base rent, the analyst said. Investors are not fully valuing the REIT’s upside on its base business, new relet tenants, and improving tenant free cash flow sustainability to drive growth, the firm added. (read more) Meanwhile, Piper Sandler raised the firm’s price target on Innovative Industrial Properties to $103 from $85 and kept a Neutral rating on the shares. While the outlook for cannabis is improving, based on the likelihood for HHS to downgrade this drug to schedule 3 from schedule 1, which will allow operators to take advantage of normal course tax deductions, the reality for Innovative Industrial Properties remains a still cautious investment market where capital remains precious, the firm noted. (read more)

Additionally on Monday, Heritage Cannabis (HERTF) reported a Q4 loss per share of (C$0.01) on revenue of C$11.4M, which compared to a loss per share of (C$0.03) on revenue of C$11.1M last year. “Remaining true to our vision of sustainable growth, Heritage continued to optimize our products in 2023 while maintaining a close focus on production efficiencies, operational spending, and high gross margin sales, all of which were key in achieving growth in gross margin of over 50% for the year and 628% for the quarter compared to last year, showing a very promising trend for the start of this year,” said CEO David Schwede. (read more)

On Wednesday, Green Thumb Industries (GTBIF) reported Q4 earnings per share of 1c on revenue of $278M, which compared to a loss per share of (22c) on revenue of $259M last year. Green Thumb CEO Ben Kovler said, “As I look to the future in 2024 and beyond, I am very optimistic—we have industry-leading brands that are gaining momentum, the best team in the business, a loyal and growing customer base, and the financial flexibility to keep riding the Green Wave.” (read more) On Thursday, Roth MKM raised the firm’s price target on Green Thumb Industries to $21 from $16 and keeps a Buy rating on the shares. The company delivered another strong beat with Q4 revenues ahead of expectations and adjusted EBITDA of $90.8M beat estimates, generating industry-leading $71M in operating cash flow, the analyst said. (read more) Additionally, Needham raised the firm’s price target on Green Thumb to $15.50 from $11 and kept a Buy rating on the shares. The company ended 2023 with better-than-expected revenue and EBITDA growth, with margin surging to the highest rate in over two years, though inventory depletion, stabilization in the largest markets, and a greater contribution from higher-margin recent adult-use markets like MD, CT, and NJ should bode well for sustaining the gross margin, the analyst said. (read more)

Avant Brands (AVTBF) also reported 2023 gross revenue of $30.2M on Thursday, up 33% compared to 2022. The company said, “Despite the short-term challenges, Avant remains committed to aggressively competing in the Canadian adult-use market while expanding its global distribution channels. The company anticipates significant growth from global sales, with expected increases in gross revenues ranging between $8.2M and $8.7M for the first quarter of 2024. This growth trajectory aims to further solidify the position of BLK MKT as a globally recognized ultra-premium cannabis brand.” (read more)

On Thursday, Cronos Group (CRON) reported a Q4 loss per share of (12c) on revenue of $23.9M, which compared to a loss per share of (20c) on revenue of $22M for the same period last year. Cronos anticipates that the net change in cash will be positive in 2024. “In 2023, we significantly improved our cash flow from operations driven primarily by operating expense savings, while simultaneously expanding our portfolio of borderless products in Canada and Israel and entering two international markets, Germany and Australia,” said CEO Mike Gorenstein. (read more)

Trulieve (TCNNF) also reported Q4 results on Thursday with an adjusted loss per share of (12c) on revenue of $287M, which compared to an adjusted loss per share of (18c) on revenue of $298M last year. “Last year we successfully executed on our plan to bolster our business resilience with a focus on cash generation and preservation while making investments to support future growth,” said Kim Rivers, CEO. “Fourth quarter momentum was underpinned by improved consumer trends. We entered 2024 in a position of significant strength just as the outlook for industry growth and reform brightened. With strong cash generation and a clearly defined strategy, Trulieve is best positioned for the coming wave of meaningful growth catalysts.” (read more)

Additionally on Thursday, Verano Holdings (VRNOF) reported Q4 revenue of $237M, which compared to revenue of $225.9M for the same quarter last year. The company issued Q1 revenue guidance of a 5%-7% decline versus the prior year period as the growing dispensary count in New Jersey continues to normalize. “I’m incredibly proud of our performance in 2023, highlighted by key wins across all aspects of the business,” said CEO George Archos. “As excitement and anticipation builds in the industry, 2024 has the potential to be a game-changing year, and Verano is well positioned to continue capitalizing on growth opportunities both in the current regulatory environment and from any state or federal reform.” (read more)

PSYCHEDELICS FIRMS REPORT EARNINGS: On Thursday, Compass Pathways (CMPS) reported a Q4 loss per share of (53c), which compared to analyst consensus of a loss per share of (33c). CEO Kabir Nath said, “We continue to progress our two phase 3 trials of COMP360 in treatment-resistant depression with top-line data expected this year and next. While our overall Phase 3 trial completion remains on track with the ‘006 study expected in mid-2025, we are experiencing some enrollment delays in the ‘005 trial, resulting in a slight delay to our guidance for that trial. In parallel, we are actively preparing for commercialization and have commenced a number of collaborations with mental health providers in the US to understand the patient care experience and to investigate models for the delivery of scalable COMP360 psilocybin treatment within various care settings, if approved by the FDA. We are also excited to provide a full data set from our phase 2 study in individuals living with post-traumatic stress disorder this Spring after an initial safety data readout late last year.” (read more)

On Wednesday, Mind Medicine (MNMD) reported a 2023 loss per share of ($2.44), which compared to a loss per share of ($1.84) for 2022. “2023 was a highly productive year for MindMed, which concluded with positive Phase 2b results for MM120 in the treatment of adult patients with GAD,” said CEO Rob Barrow. “We believe the initial data we shared validates our scientific understanding of MM120’s mechanism of action and shows the potential to have a best-in-class product profile compared to today’s standard of care. We look forward to sharing 12-week safety, efficacy, and durability data and results from our Phase 1 pharmacokinetics bridging trial to support the advancement of our MM120 oral dissolving tablet formulation into pivotal clinical trials at our virtual investor event in March. Looking further into 2024, we anticipate several additional milestones, including one-year follow-up results from an investigator-initiated clinical trial of lysergide in anxiety disorders conducted by our collaborators at University Hospital Basel. We will be working closely with the FDA to finalize our Phase 3 development program for MM120 in GAD and expect to hold our End-of-Phase 2 meeting with the FDA in the first half of the year. This is intended to enable the initiation of our Phase 3 clinical program in the second half of the year.” (read more)

IM CANNABIS ANNOUNCES POTENTIAL REVERSE MERGER: IM Cannabis (IMCC) announced Wednesday that it has entered into a non-binding term sheet and a loan agreement with Holding Company, with Israel-based Kadimastem, a clinical cell therapy public company traded on the Tel Aviv Stock Exchange, whereby the parties will complete a business combination that will constitute a reverse merger into the company by Kadimastem. The transaction will be effected by way of a plan of arrangement involving a newly created wholly-owned subsidiary of IMC and Kadimastem. The resulting issuer that will exist upon completion of the transaction will change its business from medical cannabis to biotechnology and, at the closing of the transactions, Kadimastem shareholders will hold 88% of the common shares of the resulting issuer and the shareholders of the company will hold 12% of the resulting issuer share. Parties may agree, in the definitive agreement, on a different structure of equity in lieu of the warrants with a similar result. The transaction is an arm’s length transaction. Prior to closing, IMC’s existing medical cannabis operation and other current activities in Israel and Germany will be restructured as a contingent value right. To facilitate the sale of the legacy business, a special committee of IMC’s Board of Directors was formed, which will oversee the potential sale in collaboration with legal and financial advisors. The proceeds from the sale of the legacy business will be utilized to settle debts and distribute the remaining balance, if any, to CVR holders. As a condition of closing, Kadimastem will have approximately $5M in gross funds, at closing including capital raised concurrently with the completion of the transaction from existing shareholders and additional investors. (read more)

AURORA PARTNERS WITH SCRIPT ASSIST: Aurora Cannabis (ACB) announced Wednesday the partnership of Aurora Medicine UK with Script Assist, a medical cannabis prescription platform in the UK. Designed to support UK patients on their journey of well-being, the Script Assist platform provides access to high quality medication through their portal. Script Assist will make available an extensive range of medical cannabis products from Aurora’s portfolio of products. Starting in March three newly launched, hang-dried and hand-processed flower products from Aurora’s EU GMP facilities in Canada will also become available on www.scriptassist.co.uk: Pedanios 26/1 EHD-CAand Pedanios 28/1 CMK-CA with a high THC content, as well as Pedanios 10/10 EQI-CA with balanced THC/CBD content. “Together with our new partner, we are committed to further improve the UK medical cannabis landscape by providing patients with access to premium, high-quality products through Script Assist’s innovative technology solution,” said Trisha Cassidy, Managing Director, Aurora UK & Ireland. “We believe it is necessary and critical to expand not only access to products, but also provide valuable information to guide patients through their medical cannabis journey. We are proud to be a trusted partner for their health.” (read more)

ENVERIC TO SELL CANCER-RELATED PATENT PORTFOLIO: Last Friday, Enveric Biosciences (ENVB) announced the company has agreed to sell one of its cancer-related patent portfolios for an undisclosed amount. Enveric plans to continue to focus and invest in the development of its lead candidates EB-003, a neuroplastogen designed to eliminate hallucinations, and EB-002, formerly EB-373, a synthetic prodrug of the active metabolite, psilocin. The patents and applications being sold disclose and claim the synergistic combination of cannabidiol and second therapeutic agents for the treatment of cancer. The divested portfolio includes patents issued in the U.S., Australia, Canada, China, Europe, and Japan, with patent applications pending in Canada, Israel, and Korea. Enveric retains no ownership rights in the divested portfolio, any companies owned by, or to be formed by the recipients. “We are quite pleased to unlock value from cannabinoid-related IP, which we believe holds considerable value for patients but is no longer central to our core strategy that is focused on the development of EB-003 and EB-002,” said CEO Joseph Tucker. “This transaction will provide the opportunity for Enveric to continue its focused investment in developing neuroplastogens for the treatment of mental health disorders, while providing foundational patent protection for our undisclosed purchasers who we anticipate will pursue research, clinical trials, and commercial development of cannabidiol-based therapies to treat specific types of cancer.” (read more)

Additionally on Thursday, Enveric Biosciences announced that it has signed three non-binding term sheets with an undisclosed biotechnology company to pursue the out-licensing of three classes of compounds. The compounds come from Enveric’s extensive library of over 1,000 novel molecules generated using the company’s Psybrary platform and proprietary computational chemistry and artificial intelligence drug-discovery system. The three term sheets contemplate that the undisclosed licensee would receive exclusive, royalty-bearing global licenses to develop and sublicense the assets, along with cash buyout options and future option rights to substantially related assets in the Enveric portfolio. The licensee would assume responsibility for all future preclinical and clinical development for all human and/or animal pharmaceutical applications. The term sheets further provide that, Enveric could be eligible to receive future development and sales milestone payments and execution fees for the three licenses, which in total could add up to $200M, assuming certain conditions are met, including receiving approval for the investigational new drug applications and completing Phases I through III testing of the licensed products. Royalty rates on each of the three licenses could range from 2.5% up to 10% on future sales, depending on meeting certain sales criteria. (read more)

CANNABIS/PSYCHEDELIC STOCKS: Publicly-traded companies in the space include Acreage (ACRHF), Audacious (AUSAF), Atai Life Sciences (ATAI), Aurora (ACB), Ayr Wellness (AYRWF), BZAM (BZAMF), Cannara Biotech (LOVFF), Canopy Growth (CGC), Chicago Atlantic (REFI), Clearmind (CMND), Clever Leaves (CLVR), Cresco Labs (CRLBF), CordovaCann (LVRLF), Columbia Care (CCHWF), Curaleaf (CURLF), CURE Pharmaceutical (CURR), CV Sciences (CVSI), Cybin (CYBN), Delic Holdings (DELCF), Delta 9 (DLTNF), Entourage Health (ETRGF), Fire & Flower (FFLWF), Flora Growth (FLGC), Trees Corporation (CANN), Goodness Growth (GDNSF), Greenlane (GNLN), GrowGeneration (GRWG), Hemp (HEMP), High Tide (HITI), India Globalization Capital (IGC), Indiva (NDVAF), InterCure (INCR), Wellbeing Digital (KONEF), Khiron Life Sciences (KHRNF), Lotus Ventures (LTTSF), Lowell Farms (LOWLF), Lucy Scientific Discovery (LSDI), MediPharm (MEDIF), MedMen (MMNFF), NewLake Capital (NLCP), Numinus (NUMIF), Optimi Health (OPTHF), Organigram (OGI), Planet 13 (PLNHF), Red White & Bloom (RWBYF), Reunion Neuroscience (REUN), Revitalist (RVLWF), RIV Capital (CNPOF), Relmada (RLMD), RYAH Group (RYAHF), Safe Harbor Financial (SHFS), SNDL (SNDL), Sproutly (SRUTF), Skye Biosciences (SKYE), Stem Holdings (STMH), Sunniva (SNNVF), Tetra Bio-Pharma (TBPMF), Tilray (TLRY), Tryp Therapeutics (TRYPF), Village Farms (VFF), Wesana Health (WSNAF), Zynerba (ZYNE) and 4Front Ventures (FFNTF).