FSD Pharma Reported Q3 Earnings after Losses


Nov. 20 2020, Updated 4:53 p.m. ET

Cobourg-based cannabis operation FSD Pharma (HUGE.CN) (FSDDF) recently announced its third-quarter earnings fiscal 2019 results on November 29. The results are for the three month period ending on September 30, 2019. Since the time of the announcement, the stock has been trading in the same line. Currently, it’s trading at $4.89.

Article continues below advertisement

FSD Pharma financial highlights

FSD Pharma started selling medical cannabis in August 2019. The company recorded $12,805 in revenue for the quarter. This implies a decline of 8% from the revenue of $13,833 in last year’s third quarter. The company’s last year’s third quarter is mainly from subleasing a part of its facility in Cobourg, Ontario, to third parties.

Further, the company reported -$12.9 million in operating loss. This implies a 330% decline from the prior-year third-quarter operating loss of $12.9 million. This steep increase in the operating costs is mainly due to expenses in developing the business, renovation expenses, and expanding the Cobourg facility.

Also, the company reported $16.7 million in net loss for the quarter. This implies a decline of 328% from the prior-year third-quarter net loss of $3.9 million. The current quarter’s net loss per share stands at $2.20.

In addition to increased operating expenses, the company incurred losses in fair values of its investments. Also, the company reported $2.9 million in cash used in operating activities, implying a decline of 38% from third-quarter fiscal 2018. The company currently holds a cash balance of $7.3 million.

Article continues below advertisement

Operational highlights

FSD Pharma raised $4,596,285 from investors, including members from the board of directors and the senior management under the private placement. The company closed the first tranche on October 1 and the second tranche on November 4. The private placement proceeds will be used for the company’s bioscience division Expansion, Research, and Development of new products, and other general corporate expenses.

Further, the management recently added former Congressman Stephen Buyer to the company’s board of directors. The management expects his leadership and industry experience to move to strengthen the board’s profile.

In addition to this, the company signed a letter of intent to institute a collaboration with Canada-based World Class Extractions Inc. (WDEXF). This collaboration is expected to help develop and maintain a processing center at FSD Pharma’s Cobourg facility.

Further, this collaboration provides revenue opportunities from producing pharmaceutical-grade flowers to oil-based products. This might be a good opportunity for the company due to increasing demand in the medicinal cannabis market.

Management’s take

FSD Pharma continued to work to transform the company into a biotech pharmaceutical R&D company. The company is focusing on developing a pipeline of synthetic compounds approved by the FDA (US Food and Drug Administration) to target the human endocannabinoid system. These products will help treat central nervous systems diseases, autoimmune skin disorders, and musculoskeletal system diseases.

Additionally, management plans to initiate Phase 1 trials for human safety and tolerability trials during next year’s first quarter. Further, the company is setting up licenses to begin sales of medical cannabis from its Cobourg facility next year.

Dr. Raza Bokhari, MD, executive co-chairman and CEO of FSD Pharma, said, “To date in the fourth quarter, we have generated $260,000 from the sale of medical cannabis, which represents a meaningful increase in our revenue from our core business. With more than $70 million in cash and non-cash assets, we believe we have reasonable financial means to advance the strategic objectives of FSD Pharma to transform into a specialty, biotech pharmaceutical R&D company.”


More From Market Realist

    • CONNECT with Market Realist
    • Link to Facebook
    • Link to Twitter
    • Link to Instagram
    • Link to Email Subscribe
    Market Realist Logo
    Do Not Sell My Personal Information

    © Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.