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Canopy Growth shares surge after reporting smaller-than-expected loss – Financial Post

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Shares of Canopy Growth Corp. soared as much as 20 per cent Friday, as the company reported shrinking losses and better-than-expected cannabis revenues in its fiscal third quarter.

The results were a marked departure from consecutive quarterly revenue declines some of the biggest licensed producers have experienced over the past nine months due in part to the slow ramp-up of retail stores in Ontario, quality concerns and high pot prices relative to the black market.

The Smiths Falls, Ont.-based licensed producer reported an adjusted EBITDA loss of $92 million, versus $156 million in the previous quarter, owing largely to a vast reduction in operational expenses and corporate overhead which plunged by 59 per cent quarter over quarter.

Canopy’s net revenue rose 13 per cent quarter-over-quarter to $123.8 million, excluding a major restructuring charge the company took in its second quarter from returned products — specifically, its line of CBD-heavy soft-gel capsules.

“A key priority for us has been to reduce cash burn. And that will continue to be a priority for the business going forward,” said newly-appointed CEO David Klein on a post-earnings call with analysts.

The combination of weak sales, product returns and a high cash-burn rate over the past year has compelled cannabis companies, including Canopy, to restructure their businesses, cut unnecessary costs and improve corporate governance in a drive to achieve profitability.

Canopy’s competitors Tilray Inc. and Aurora Cannabis Inc. laid off hundreds of workers last week.

Last summer, Canopy began a major rejigging of its business by firing its co-founder and longtime CEO Bruce Linton after consecutive quarters of disappointing results. Klein, former chief financial officer of Constellation Brands Inc. — a major shareholder in Canopy — took over as company CEO in January.

“We are not going to run out of cash. We have a lot of levers to pull in that regard. We have to slow our capital expenditures and we will pull back with M&A activity,” Klein told analysts on the call.

Canopy’s Canadian cannabis revenue was $83.5 million for the quarter, a nine per cent increase from the previous quarter. Much of that came from cannabis sales to provincial retailers, due in part to 140 new cannabis retail stores becoming active in the last three months of 2019.

Domestic recreational sales directly to Canopy’s own retail stores increased by 16 per cent, while Canadian medical cannabis sales increased 5 per cent quarter-over-quarter.

Canopy’s acquisition last year of vape pen company Storz & Bickel, and skincare firm The Works brought in an additional $33.4 million in revenue for the licensed producer this quarter, up 42 per cent from last quarter.

“We were particularly encouraged to see Canopy print a solid sequential increase in its recreational sales in a period where many of its peers are anticipated to see flat to lower revenues to end 2019,” wrote Canaccord Genuity Corp. analyst Matt Bottomley in a note to clients.

Canopy also reported a gross margin of 34 per cent, driven primarily by a strong performance in its domestic recreational business, and the bump in revenue from its non-cannabis businesses.

“Sales are 15 per cent ahead of consensus and EBITDA loss is $17 million better than expected. International acquisitions helped, but certainly the domestic market improved sequentially. Better cost management is starting to show,” wrote Pablo Zuanic, a cannabis analyst with Cantor Fitzgerald.

Some analysts on the call expressed concern over the licensed producer’s relatively high inventory levels, and ability of the domestic market to absorb that supply. Between March 31, 2019 and Dec. 31, 2019, Canopy’s inventory soared from approximately 262,000 kilograms to 623,000 kilograms.

Cannabis companies had been stocking up on inventory in the lead-up to the legalization of cannabis 2.0 products — vape pens, edibles and topicals — but the slow opening of retail stores across the country and the vaping health scare have caused substantial supply chain hiccups.

Canopy’s chief financial officer Mike Lee acknowledged that the company needed to “get better” at “connecting consumer demand signals to the inventory that we are building.”

In light of the oversupply situation, the company curtailed production in one of their largest greenhouse facilities in Delta, B.C., Lee said.

“We are going to continue to make sure we are not stocking out at retail, but at the same time, we need to bring down our total inventory balance. We need to be able to both decrease our inventory and stay on the shelf in stores,” Lee told analysts on the earnings call.

Chris Damas, an independent cannabis analyst and author of The BCMI Report, attributed Canopy’s stock surge to short-covering. “The lack of big ‘blow-up’ bad news from Canopy and steady-as-she-goes revenue improvement after the Aurora Cannabis debacle is welcome,” he wrote.

• Email: vsubramaniam@nationalpost.com | Twitter:

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Shoppers Drug Mart Surrey staff member tests positive for COVID-19 – Vancouver Is Awesome

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The parent company of Shoppers Drug Mart, Loblaw Companies International, confirmed Wednesday that another one of its Surrey employees tested positive for the novel coronavirus.

The employee, who tested positive on a presumptive COVID-19 test, last worked at the 8962 152 St. store location on Friday.

Loblaw regularly updates its COVID-19 page with all positive COVID-19 cases in its stores, by province, in the last 15 days

However, it does not release any personal information about employees.

Last month, multiple Shoppers Drug Mart locations issued notices that team members tested positive for COVID-19.

On Tuesday, health officials announced 96 new coronavirus cases in the province.

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How close are we to a coronavirus vaccine? – National Post

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AstraZeneca has had to pause trials twice after participants fell seriously ill and while work has resumed in the UK and elsewhere, the research remains on hold in the US.

Vials of a COVID-19 vaccine candidate, a recombinant adenovirus vaccine named Ad5-nCoV, co-developed by Chinese biopharmaceutical firm CanSino Biologics Inc and a team led by Chinese military infectious disease expert, are pictured in Wuhan, Hubei province, China, March 24, 2020. Photo by China Daily via REUTERS

Which countries have bought doses so far?

Despite global appeals from the WHO for countries to pursue multilateral deals that provide for the equitable distribution of doses, the trials have sparked a multibillion-dollar flurry of vaccine dealmaking by national governments.

The US government’s Biomedical Advanced Research and Development Authority is the biggest spender so far, having distributed more than $10bn in funding for vaccine candidates, either via direct financing or through vaccine procurement agreements.

Bar chart showing amount spent on COVID-19 vaccine candidates in billions of dollars
On a per-capita basis, the UK has built the largest and most diversified vaccine portfolio, according to data from Deutsche Bank, having pre-ordered more than five doses per citizen spread across six leading vaccine candidates. The UK is followed closely by the US, Canada and Japan.

A laboratory technician supervises capped vials during filling and packaging tests for the large-scale production and supply of University of Oxfords COVID-19 vaccine candidate, AZD1222, conducted on a high-performance aseptic vial filling line on September 11, 2020 at the Italian biologics manufacturing facility of multinational corporation Catalent in Anagni, southeast of Rome, during the COVID-19 pandemic. Photo by VINCENZO PINTO/AFP via Getty Images

In total, dealmaking by the US, UK, EU, Japan and other rich nations has meant wealthy countries representing just 13 per cent of the world’s population have bought more than half of the leading vaccine candidates’ promised doses, according to Oxfam, the charity.

Covax, the global vaccine procurement facility, designed to ensure the equitable distribution of doses, only this week secured the participation of 64 higher income countries. The Coalition for Epidemic Preparedness Innovations, one of the founders of the facility, has invested up to $895m in nine COVID-19 vaccine candidates that will be distributed under the programme.

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COVID-19 vaccines are being developed at record pace. And that's a serious concern – National Post

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Part of the problem is that the science keeps shifting, evolving. Is COVID airborne or not? What’s the size of a particle, a droplet? “Should you be six feet away, should it be three feet, should it be 2,000,” Johnson said. “It’s not wrong, it just looks like science doesn’t know.”

Safety, need, big-pharma conspiracies and does-science-actually-know-what-it’s-doing are the main features that appear among the “not-sure’s,” Johnson said.

“But we also see it — and I think this is even more scary — in the yes’s, the ones that say ‘they would get a vaccine’, who then inside are thinking, ‘yeah, but I wouldn’t be first in line. I’m going to wait until my whole street, everybody I know has it, and if they’re still standing a few months later I’ll get one.’”

Among the narratives he’s read: What happens if you have the first shot at the same time as the flu shot? What happens if I’ve already had antibodies in me and I have the vaccine, is that bad? “These are the things occurring to them.”

Dozens of vaccines are now being tested in humans. It’s not clear which strategy will be the most successful. The best vaccines are the ones that most closely mimic a natural infection, without making the person sick, or killing them.

Vaccines use parts of the virus — in the case of most of the frontrunner vaccines, the spike protein the virus uses to attach to and enter cells— to goad the body into making an immune response.

A COVID vaccine doesn’t have to be as good as vaccines against highly infectious viruses like the measles, said McMaster University’s Dr. Matthew Miller, an infectious diseases researcher.

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