- Generated 31% sequential quarter-on-quarter growth in Q4 2020, driven by normalized clinic operations and more than doubling of medical cannabis sales.
- Benefited from medical cannabis insurance coverage in Colombia effective December 2020. Insurance coverage continues to be a catalyst for growth in Colombia, with more than 7,500 prescriptions filled in Q1 2021 versus over 3,300 in Q4 2020.
- Maintained strong domestic pricing, with an average sales price of $58 per unit in Colombia during the fourth quarter.
- Positioned for growth with sales execution underway in four countries (Colombia, Peru, UK and Germany), and first sales anticipated in Latin America’s largest markets (Brazil and Mexico) this year.
- Well-capitalized with $21.6 million in cash as of December 31, 2020.
TORONTO, April 29, 2021 /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 year ended and quarter ended December 31, 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.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization or in this case loss) is a non-International Financial Reporting Standards (“IFRS“) measure calculated as net loss before tax as reported under IFRS and adding back share-based compensation expense, transaction fees, unrealized gain on changes in fair value of biological assets, depreciation and non-recurring items. Refer to the “Non-IFRS Measures” note below for further information and the Company’s MD&A for a reconciliation.
Q4 2020 highlights
- Total revenues in Q4 2020 reached $2.5 million, reflecting sequential quarter-on-quarter growth of 31%, as patient consultations at Company-owned clinics returned to pre COVID-19 levels and Medical Cannabis Product revenues more than doubled over Q3 2020. Fourth quarter revenue growth was flat year-over-year, due to lower Health Services and Wellbeing Product revenues, offset by Medical Cannabis Product sales of $234,000.
- The Company continues to benefit from favourable market conditions and vertically integrated operations, generating gross margins of 92% on its Medical Cannabis Product segment in Q4 2020.
- The Company continues to prudently manage expenses, with fourth quarter selling, general and administrative (“SG&A“) expenses declining 22% year-over-year. Following cost reductions implemented earlier in the year, Q4 2020 SG&A expenses of $5.9 million increased 3% sequentially from Q3 2020.
- On November 26, 2020, the Company completed a bought deal financing selling 32,200,000 units at a price of $0.45 per unit for aggregate gross proceeds of $14,490,000.
- In December 2020, the Company announced that, following a directive by Colombia’s federal government, Colombia became one of the first countries to extend national health insurance to include medical cannabis as a first line therapy for patients. As a result, Medical Cannabis Product sales increased significantly starting December 2020, contributing to sequential quarter-on-quarter revenue growth of 113% in Q4 2020.
- In December 2020, the Company initiated its satellite clinic expansion strategy, opening its first location in Medellin, Colombia’s 2nd largest city.
- As of December 31, 2020, the Company had cash of $21.6 million and working capital of $29.1 million.
2020 Annual Highlights
- During the year, the Company commenced medical cannabis sales in Colombia, Peru, and the UK, becoming the first Company to sell medical cannabis magistral preparations in Colombia and Peru, and medical cannabis flower in Scotland.
- In 2020, the Company launched its Zerenia medical clinic strategy, opening its flagship Bogota, Colombia location in May 2020 and first satellite location in Medellin, Colombia in December 2020.
- In September 2020, Khiron was declared a National Strategic Project by the government of Colombia, simplifying and accelerating regulatory processes for the Company in the country.
- In 2020, the Company filled approximately 5,700 prescriptions in Latin America, generating total Medical Cannabis Product sales of $370,000, including $234,000 in the fourth quarter.
- In total, the Company generated total revenues of $8.0 million and gross profit of $1.5 million in 2020. While COVID-19 had a negative impact on Health Services revenues and margins, particularly earlier in the year, the Company was able to largely offset declines through prudent expense management.
Subsequent events and 2021 highlights
- With the start of medical cannabis insurance coverage in Colombia in December 2020, the Company filled approximately 135% more prescriptions in Q1 2021 than in all of 2020. Additionally, in Q1 2021, 60% of medical cannabis prescriptions filled in Colombia were fully covered by insurance.
- Returning medical cannabis patient volumes continue to improve, increasing from 20-25% of total monthly patients in Q3 2020, to nearly 50% in Q1 2021.
- Between Q2 2020 and Q1 2021, filled prescriptions per Health Care Professional (HCP) increased from 0.9/day to 4.5/day at Khiron’s wholly-owned clinics.
- Following the initial success of the Medellin satellite clinic, the Company opened three additional satellite clinics in Colombia in Q1 2021 with plans to open another three locations by June 2021. Additionally, the Company plans to deploy its Zerenia™ medical cannabis clinic and telehealth strategy in Mexico, building on the success of its vertical integration strategy in Colombia.
- Khiron Academy, the Company’s medical cannabis e-learning certification, has been completed by hundreds of physicians across Latin America and Europe and was accredited for UK Continuing Professional Development.
- In March 2021, the Company successfully exported its Colombian-registered cannabis strains, in the form of live clones, from Colombia to Europe. This represents the first shipment of medical cannabis live plant material to Europe from Colombia and is expected to accelerate access to European markets as the Company executes on its asset-light growth strategy in the United Kingdom and Germany.
- In March 2021, Khiron commenced sales in Germany with the successful delivery of EU-GMP medical cannabis products. Khiron 1/14 (High CBD flower) has been used to treat indications such as anxiety, substance-use disorder and migraines.
- In April 2021, the Company introduced Khiron 1/14 (High CBD flower) in the UK. Prescribing specialists will also be able to prescribe smaller quantities of Khiron flower products in 5-gram jars.
Management commentary
“2020 marked a turning point for the Company as we transitioned from start-up mode to the sales execution phase of our strategy. Despite the many challenges brought on by the global pandemic, our team persevered and had many significant accomplishments in 2020, including first medical cannabis sales in Colombia, Peru and UK, along with Germany in March 2021, the launch of our telemedicine platform and Zerenia clinics, and expanded patient access through medical cannabis insurance coverage in Colombia. As we progress through 2021, I remain very optimistic about the year ahead. We are very well positioned to leverage the knowledge, experience and infrastructure developed over the last year, to accelerate growth both at home and abroad,” comments Alvaro Torres, Chief Executive Officer and Director of the Company.
Webcast details
Khiron invites individual and institutional investors, as well as advisors and analysts, to attend a webcast and Q&A to discuss the Company’s Q4 2020 financial statements and further activities.
DATE: April 30, 2021
TIME: 10:00am ET/7:00am PT
PRESENTERS: Alvaro Torres, Khiron Chief Executive Officer and Director, Joel Friedman, Khiron Chief Financial Officer, and Chris Naprawa, Chairman of Khiron’s Board of Directors
FORMAT: Live 30 minutes presentation & Q&A session
REGISTER LINK:
https://event.on24.com/wcc/r/3138835/FCAA726D3D5230BBB75B745ADE070626
