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#Cannabis Stock News: CanniMed Therapeutics Inc. (TSX: CMED) Reports Financial Results for Q2 2017


SASKATOON, Saskatchewan - June 12, 2017 ( Newswire) CanniMed Therapeutics Inc. (TSX: CMED) ("CanniMed" or the "Company") today released its financial results for the three and six months ended April 30, 2017.

CanniMed's strong sales momentum continued in the second quarter. Demand for oils has accounted for progressively more of the Company's production, and CanniMed's recently announced oils processing facility is designed to accommodate foreseen growth of this key product group. Recent export sales for pharmacy distribution, together with the Company's arrangements with PharmaChoice and discussions with other Canadian pharmacy chains provide clear indications of future market channels for medical cannabis, and CanniMed is focussed on this expected evolution.

Second Quarter 2017 Highlights


  • Sales of $3.7 million in the quarter were 66 per cent higher than in the comparable period of the prior year (year-to-date sales of $7.1 million were 78 per cent higher than the first half of the prior year).
  • Concentrated cannabis oils sales revenues, which commenced in the first quarter of 2016, accounted for nearly 50 per cent of total revenues for the current quarter.
  • Higher sales revenues were driven by rising demand, as dried equivalent medical cannabis sales in the second quarter increased 72 per cent from the comparable period in 2016 to 373 kg., at an average selling price of $9.80 per gram (year-to-date sales of 714 kg. were 77 per cent higher than in the first half of 2016, at an average selling price of $9.54 per gram).
  • The number of active patients increased to more than 14,000(1).
  • Adjusted EBITDA from continuing operations(2) was $(0.3) million for the quarter and $0.2 million year-to-date.
  • Net loss of $1.8 million for the quarter ($5.1 million net loss for the first half of the year included $2.4 million loss on derivative instruments, relating primarily to conversion rights on debentures that were either exercised or expired during the first quarter).

(1) Active patients are registered patients with a current and valid Health Canada registration on file.

(2) Adjusted EBITDA is a non-IFRS measure with no standard definition under IFRS. See the "Non-IFRS financial performance measures and reconciliations" section of this MD&A.


  • Commenced work to design and build a new cannabinoid oils processing facility to increase current oils capacity.
  • Signed a letter of intent with PharmaChoice, a member-owned cooperative that represents more than 700 independent pharmacy owners across Canada, to collaborate on pharmacist education and the distribution, sale and marketing of medical cannabis products.
  • Independent laboratory testing returned a clean Certificate of Analysis with "not detected" levels for each of the 56 pesticides, fungicides and plant growth regulators (PGRs). The laboratory test results were consistent with the Company's production processes, which do not use pesticides, fungicides or PGRs.
  • Signed a definitive agreement with CTT Pharmaceutical Holdings Inc. to license CTT's Orally Dissolvable Thin Film ("ODF") Wafer technology patents for use in developing a new oral delivery system.

Recent Developments

  • Subsequent to the second quarter, the Company completed the first shipment of commercial cannabis oil to enter Australia through the sale and delivery of 3,600 ml of CanniMed® Oils. Upon completion of the first shipment, the Company received three additional import permits, issued by the Australian Department of Health for an additional 360,000 ml of CanniMed® Oil products to be shipped by the end of September 2017, subject to receipt of export permits from Health Canada, which are in process.
  • Also, subsequent to the second quarter, the Company sold 12,960 ml of its CanniMed® Oils to the Cayman Islands where dispensing of the CanniMed® Oils to patients with a valid medical document has begun.

"We are continuing to build our capabilities in all areas, to meet growing national and international demand," said Brent Zettl, President and CEO of CanniMed. "The completion of our IPO, the $22 million reduction of long-term liabilities during the first half of the year and our recent expansion into the Australian and Cayman markets (with potential further expansion into other countries) demonstrates our leadership position in the cultivation and sale of pharmaceutical-quality cannabis products. The Company's capital expansion plans will continue to build momentum for increasing herbal and oil production to meet the demands of our markets."

Financial Review

Revenue for the three months ended April 30, 2017 increased to $3.7 million from $2.2 million for the comparable period in the previous fiscal year. This increase was attributable to a 72 per cent increase in dried marijuana equivalent sales to 373 kg. The increase in sales quantities was partly offset by a price cap implemented by Veterans' Affairs Canada. Year to date, revenue increased to $7.1 million from $4.0 million in the first half of 2016.

(1) Adjusted EBITDA is a non-IFRS measure with no standard definition under IFRS. See the "Non-IFRS financial performance measures and reconciliations" section of this MD&A.

Corporate Activities During the Quarter

Letter of Intent with PharmaChoice

During the quarter, the Company signed a letter of intent with PharmaChoice, a member-owned cooperative that represents more than 700 independent pharmacy owners across Canada, to collaborate on pharmacist education and the distribution, sale and marketing of medical cannabis products. The parties intend that CanniMed will be responsible for producing and delivering accredited pharmacy education programs to PharmaChoice pharmacists and pharmacy technicians across Canada.

In addition, CanniMed and PharmaChoice intend to enter a definitive agreement for distribution of medical cannabis through PharmaChoice pharmacists in Canada upon completion of the first provincial legislation change that allows such distribution.

Agreement with CTT Pharmaceutical Holdings Inc. to License CTT's Orally Dissolvable Thin Film Wafer

The Company signed a definitive agreement with CTT Pharmaceutical Holdings Inc. during the quarter, to license CTT's Orally Dissolvable Thin Film ("ODF") Wafer technology. This industry-first collaboration will enable CanniMed to exclusively develop and commercialize this novel, smoke-free, drug delivery system in Canada.

The agreement includes the licensing of six patents related to cannabinoid and opioid delivery for pain management. In addition to specified initial payments, the Company will pay a royalty of 5 per cent of gross sales of products using the licensed delivery technology.

Independent Laboratory Analysis of CanniMed Products for Pesticides, Fungicides and Plant Growth Regulators

In response to market concerns about the use of pesticides in medical cannabis products by some companies, CanniMed commissioned an independent laboratory analysis of the Company's herbal cannabis products. Four lots of CanniMed's proprietary strains (CanniMed® 22.1, CanniMed® 12.0, CanniMed® 9.9 and CanniMed® 1.13) were analyzed. The laboratory's testing of each analyzed lot for 56 known pesticides, fungicides and plant growth regulators ("PGRs") returned a clean Certificate of Analysis with "not detected" levels for each of the 56 pesticides, fungicides and PGRs. The laboratory test results were consistent with the Company's production processes, which do not use pesticides, fungicides or PGRs.

Capital Projects

Cannabis Oils Production Facility to Increase Existing Capacity

The Company has commenced planning and engineering for a GMP-compliant ethanol extraction facility with the capacity to supply the equivalent of 12 million 60 ml bottles of CanniMed® Oil per year. The initial cost estimate for the facility is $10.5 million over a 20 month schedule to commissioning. Scheduling and costs will be further refined during the detailed design phase of the project.

Cannabis Growth Facility

During the fourth quarter of 2016, the Company began plant growth and production within its new 62,000 square foot POD plant growth and production facility. In order to meet forecasted market growth and demand, CanniMed has commenced planning for POD 2.

The Company's expansion capital plans for POD 2 include the engineering, design and construction of an approximately 62,000 sq. ft. production and processing facility. This proposed single-story, concrete structure is expected to be located within the 100-acre site of the Company's existing Canadian production, processing and administrative facilities. Preliminary design and engineering of POD 2 has commenced and construction is expected to take approximately 18 to 24 months. When completed, the facility is expected to consist of growth chambers and related processing capacity designed to add approximately 5,000 kg of annual production capacity to the Company's existing production and processing facilities (giving the Company a combined total of 12,000 kg of annual production capacity).

Non-IFRS Financial Measures and Reconciliations

The Company utilizes non-IFRS financial measures as supplemental indicators of operating performance and financial position. These non-IFRS financial measures are used internally by the Company for comparing actual results from one period to another. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company's performance and ability to generate cash flow. Accordingly, such information is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") and Adjusted EBITDA

The Company uses EBITDA and Adjusted EBITDA as a supplemental financial measure of its operational performance. Management believes EBITDA to be an important measure of its capacity to generate cash flow from operations as it excludes the effects of items which primarily reflect the impact of long-term investment and decisions and finance strategies, rather than the performance of the Company's day-to-day operations. The Company measures EBITDA as net earnings (loss) from continuing operations plus income taxes expense (recovery), interest expense and depreciation and amortization. Adjusted EBITDA removes non-cash expenses such as loss on derivative instruments, share-based compensation and non-cash expenses within cost of sales.

The Company believes that these measurements are useful in measuring the Company's ability to service debt, meet other payment obligations and in comparing the Company's financial performance from period to period. Furthermore, Management believes that certain investors and other stakeholders use this information to evaluate the Company's performance. The following table provides a reconciliation of the Company's calculation of EBITDA and Adjusted EBITDA:

About CanniMed Therapeutics Inc.

CanniMed is a Canadian-based, international plant biopharmaceutical company and a leader in the Canadian medical cannabis industry, with 15 years of pharmaceutical cannabis cultivation experience, state-of-the-art, GMP-compliant production process and world class research and development platforms with a wide range of pharmaceutical-grade cannabis products. In addition, the Company has an active plant biotechnology research and product development program focused on the production of plant-based materials for pharmaceutical, agricultural and environmental applications.

The Company, through its subsidiaries, was the first producer to be licensed under the Marihuana for Medical Purposes Regulations, the predecessor to the current Access to Cannabis for Medical Purposes Regulations. It was the sole supplier to Health Canada under the former medical marijuana system for 13 years, and has been producing safe and consistent medical marijuana for thousands of Canadian patients, with no incident of product diversion or recalls.

For more information, please visit our websites: (patients) and (investors).

Notice Regarding Forward Looking Statements

This news release contains forward-looking statements within the meaning of applicable securities laws. All statements that are not historical facts, including without limitation, statements regarding future estimates, plans, programs, forecasts, projections, objectives, assumptions, expectations or beliefs of future performance, are "forward-looking statements". Forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "estimates", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.

Forward-looking statements are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of CanniMed Therapeutics Inc. to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including the risks described in CanniMed Therapeutics Inc.'s documents filed with applicable Canadian securities regulatory authorities which may be viewed at . The forward-looking statements included in this news release are made as of the date of this news release. CanniMed Therapeutics Inc. does not undertake to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise, unless required by applicable securities legislation.

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