Willow Biosciences Inc. (“Willow” or the “Company“) (TSX: WLLW) (OTCQB: CANSF) has released its financial and operating results for the three and nine months ended September 30, 2021, reporting significant advancement in its operations and strong liquidity.
“We continued to make significant strides forward in the third quarter and are well positioned to be the global leader in biosynthetically produced cannabinoids,” said Trevor Peters, Willow’s President and Chief Executive Officer. “From our vantage point, we can see the larger players in the consumer-packaged goods ecosystem becoming increasingly more bullish on the health and wellness aspects of the cannabis industry. It has been our view all along that these entities need an ultra-pure, sustainably sourced ingredient supply to meet their long-term demands, and Willow’s technology platform enables their entrance into this space.”
Highlights for the Quarter
- On July 20, 2021, Willow announced that it had added cannabinol (“CBN“) to its development program. Early research indicates that CBN may be effective as a sleep aid or sedative, in addition to other potential health benefits.
- On July 20, 2021, the Company announced the formation of a senior level Environmental, Social, and Governance (“ESG“) committee to oversee sustainability integration efforts and to provide a direct line from operations to the board of directors on all ESG matters. ESG priorities for Willow in 2021 and 2022 include ESG strategy development, data management on identified safety, environmental, and social KPIs, target-setting, and internal and external stakeholder engagement.
- On September 21, 2021, Willow announced that it had increased its production titer by >400% and has carried out additional fermentation runs yielding tens of kilograms of ultra-pure CBG at >10,000 L fermentation scale, since its first commercial scale run in March of 2021.
- On September 21, 2021, Willow announced that it had developed a process for production of ultrapure cannabigerolic acid (“CBGA“). Samples are available for customer assessment and product development.
- During the quarter, Willow added fermentation capacity to its lab in Burnaby, British Columbia, and subsequent to the quarter, the Company’s wholly owned subsidiary, Willow Analytics, received a cannabis research license from Health Canada to operate in this expanded portion of its lab.
- Willow ended the quarter with strong liquidity, including approximately $35.7 million of cash on hand as at September 30, 2021.
Operational Update
In March 2021, Willow completed its first commercial scale fermentation run of cannabigerol (“CBG“) with its manufacturing partner at their European facilities. The product from this first run was primarily used for customer samples and to provide material to Cellular Goods PLC (“Cellular Goods“) as a part of their June 2021 supply agreement. Since this initial production run, Willow has increased its production titer by >400% and has carried out additional fermentation runs yielding tens of kilograms of ultra-pure CBG at >10,000 L fermentation scale. The Company continues to make significant titer improvements to its strain, with further production runs planned through the end of the year.
As stated previously, Willow has also engaged a regulatory consulting group to attain an Independent Generally Recognized as Safe (“GRAS“) conclusion for Willow CBG that is required for use in food and beverage applications and continues this process which will be completed in 2022.
During the third quarter of 2021, the Company added resources and expertise to manage commercial production and further expand its R&D capabilities to grow its product portfolio. Willow has expanded its Burnaby, British Columbia and Mountain View, California teams to include manufacturing, quality and regulatory groups, along with additional R&D scientists focusing on strain optimization and process development. Willow also added fermentation capacity to its lab in Burnaby, British Columbia, and subsequent to the quarter, the Company’s wholly owned subsidiary, Willow Analytics, received a cannabis research license from Health Canada to operate in this expanded portion of its lab.
With Willow’s lead proprietary yeast strain now producing biosynthetic CBG at commercial scale, and agreements in place to generate product revenue, Willow’s R&D teams are now focused on development of cannabidiol (“CBD“) and tetrahydrocannabinol (“THC“) programs for commercial manufacture. In addition to Willow’s commercial development programs for CBG, CBD and THC, Willow’s R&D team continues to develop biosynthetic processes for cannabidivarin (“CBDV“), cannabigerovarin (“CBGV“), and tetrahydrocannabivarin (“THCV“), and has added an additional development project for production of CBN from its biosynthetically derived CBD or THC. Early research indicates that CBN may be effective as a sleep aid or sedative, in addition to other potential health benefits. The Center of Disease Control’s Sleep and Sleep Disorder Program states that one in three adults in the United States do not get enough sleep, a crucial component for good health, and CBN is increasingly being incorporated into consumer products designed to improve sleep quality.
Financial Update
Willow ended the quarter in a strong financial position, with approximately $35.7 million in cash on hand.
The Company’s financial results are summarized as follows:
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As at September 30 |
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2021 |
2020 |
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Balance sheet ($000’s): |
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Cash and cash equivalents |
35,729 |
9,092 |
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Total assets |
41,043 |
16,049 |
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Shareholder’s equity |
34,347 |
3,627 |
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Weighted average shares outstanding: |
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Basic (000’s) |
123,545 |
78,892 |
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Diluted (000’s) |
136,597 |
78,892 |
Outlook
Willow completed its first commercial scale fermentation run of its first cannabinoid, CBG, in Q1 2021 and signed up its first multi year commercial agreement with Cellular Goods in Q2 2021. This agreement was a significant turning point in the lifecycle of the Company as it demonstrates that Willow has the full technical and business development capabilities to meet customer demands. During the remainder of 2021, Willow plans to continue to optimize its commercial process for CBG, supply product to customers, seed commercial samples to new potential customers, and build out a robust order book for 2022, which the Company expects to be its first full year of commercial production and sales. CBG is a rare cannabinoid and Willow is at the forefront of developing that market.
The Company has two distinct objectives at this time. The first is to continue to work with larger groups to lock up supply agreements for its biosynthetically produced CBG. The second is to continue to advance the development of its portfolio of other cannabinoids to bring them forward to commercialization. While the timing of the first is harder to predict, the Company is currently engaged in very promising discussions with interested third parties and believes that its core technology will be significant in helping to enable the more traditional consumer-packaged goods entities enter the cannabinoid space.
With $35.7 million of cash on the Company’s balance sheet as at September 30, 2021, favourable regulatory regime changes being discussed in the United States, a first commercial production run completed and first commercial agreement signed, the Company is in a position of strength to execute on its business plan. While the market for biosynthetically produced cannabinoids is new, Willow is at the forefront of this industry and will continue to demonstrate itself as a market leader.
A full description of Willow’s third quarter 2020 results can be found in Willow’s unaudited condensed consolidated interim financial statements and related management’s discussion and analysis which are available on SEDAR at www.sedar.com.
