Calgary, Alberta – November 12, 2020 – Willow Biosciences Inc. ("Willow" or the "Company") (TSX: WLLW; OTCQX: CANSF) has released its financial and operating results for the three and nine months ended September 30, 2020, reporting significant advancement in its operations and strong liquidity.
"The third quarter represented another significant move forward for us, as we completed our first pilot campaign as part of our final development stage before we begin commercial production, which is anticipated to commence around the middle of 2021. From the pilot, and with our well-advanced downstream process, we were able to produce appreciable quantities of CBG as sample material at greater than 99% purity with no detectable THC. We saw significant demand globally for our sample CBG from a variety of cosmetic, food and beverage, and nutraceutical companies looking to qualify our product for commercial purchase in 2021. Building on these results, we plan to run at least one more pilot in the fourth quarter of 2020 to both further optimize our process for commercial production as well as meet the demand for sample material of CBG from potential customers. We are well positioned, both financially and technically, to start producing at scale in 2021 and transition from a research-based enterprise to a company with revenue generating operations."
Highlights for the Quarter
• Willow continued to operate safely and effectively during the during the quarter, as it has since the beginning of the on-going COVID-19 pandemic. The Company's highest priority remains the health and safety of its employees, partners and the communities where it operates. Throughout the quarter Willow continued to maintain measures that have been put in place to protect the well-being of these stakeholders and is proud of the dedication of its workforce to maintain safe operations and business continuity during the on-going pandemic.
• As a result of reaching development milestones ahead of schedule and in collaboration with its development partner, Albany Molecular Research, Inc. ("AMRI"), Willow successfully completed its 500 litre pilot program in Q3 2020, making it the first company to produce material amounts of cannabinoids biosynthetically.
• Willow successfully developed a scalable process for producing cannabigerol ("CBG") with greater than 99% purity and no detectable THC.
• Willow expanded its product portfolio with the generation of lab strains producing the Varin Cannabinoids, Cannabigerovarin ("CBGV"), Cannabidivarin ("CBDV"), and Tetrahydrocannabivarin ("THCV"), for further optimization toward commercial targets.
• Willow began trading on the OTCQX Best Market, an upgrade from the OTCQB Venture Market. This allows US investors to find current financial disclosure and Real-Time Level 2 quotes for the Company on www.otcmarket.com.
• Willow ended the quarter with strong liquidity, including approximately $9.1 million of cash on hand as at September 30, 2020.
• Subsequent to the quarter, on October 29, 2020, the Company issued 17,692,307 units at a price of $0.65 per unit for gross proceeds of $11.5 million. Each unit consists of one common share of Willow ("Common Shares") and one half of one Common Share purchase warrant of Willow (each whole warrant, a "Warrant"). The Warrants have a strike price of $0.85 per Common Share, a 24-month term and a forced accelerator clause that allows the Company to force exercise of the Warrants if Willow trades at a 20 day VWAP of $1.20 or greater.
During the third quarter of 2020, Willow further improved its cannabinoid production process through a combination of strain and fermentation optimization and developed a commercially relevant downstream process for production of greater than 99% pure CBG. This CBG process was successfully scaled to a 500-litre pilot scale in the third quarter of 2020 by Willow's development partner, AMRI, to provide pure CBG samples for evaluation by prospective consumer packaged goods customers. Willow will continue to optimize its process at pilot scale with the goal of advancing to larger, commercial-scale fermentation vessels in the first half of 2021. Willow is in the final stages of selecting its late-stage development and manufacturing partner(s).
The success of the Company's proprietary yeast production platform has enabled Willow to initiate work on the Varin Cannabinoids during Q3. Willow has developed initial lab strains for production of CBGV, CBDV and THCV, and is now focused on strain and fermentation process optimization at bench scale to further increase the production of Varin Cannabinoids toward commercial targets. Third party scale up work for the Varin Cannabinoids is expected to commence in the first half of 2021 and be completed in the first half of 2022. First production of research samples of the Varin Cannabinoids is expected in the second half of 2021, with commercial sales in the first half of 2022.
The Company also continued to make substantial progress to increase production of CBD and a yet-to-be-disclosed cannabinoid through application of its proprietary strain engineering technologies. In-house strain and process optimization will continue through 2020 with scale-up development starting in early 2021.
Willow ended the quarter in a strong financial position, with approximately $9.1 million in cash on hand.
The Company's financial results are summarized as follows:
\ Three months ended
\ September 30
\ 2020 2019
Balance sheet ($000's):
Cash and cash equivalents 9,092 24,042
Total assets 16,048 38,623
Shareholder's equity 3,627 24,727
Weighted average shares outstanding
Basic and diluted (000's) 78,892 78,634
Willow anticipates transitioning into a revenue generating development company in 2021. In the coming months and quarters, the Company will be selecting its first manufacturing location and partner to start commercial production. Concurrently, the Company is working to secure commercial customers for its first cannabinoid, CBG, with the goal of having a robust order book when commercial production commences. Willow is seeing significant interest from multiple jurisdictions for CBG, as well as other cannabinoids Willow is developing manufacturing processes for.
Given the scalability of biosynthetic production via fermentation, Willow has the capacity to significantly ramp up production to both meet demand and lower per unit production costs. As a result of the high purity profile, consistency, safety and environment sustainability associated with Willow's manufacturing technology, the Company is seeing strong demand developing for its cannabinoids from a variety of consumer products companies.
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.
About Willow Biosciences Inc.
Willow is a Canadian biotechnology company based in Vancouver, British Columbia, that produces high purity, plant-derived compounds that provide building blocks for the global pharmaceutical, health and wellness, and consumer packaged goods industries. Willow's current focus is in the production of cannabinoids for the treatment for pain, anxiety, obesity, brain disorders, among other significant indications. Willow's science team has a proven track record of developing manufacturing technologies for high purity compounds in pain and cancer treatments. Willow's manufacturing process creates a consistent, scalable and sustainable product that allows for the discovery and development of new life changing drugs.
For further information, please visit our website at www.willowbio.com or contact:
President and Chief Executive Officer
T: (403) 669-4848
Troy Talkkari, CFA
Vice President, Corporate Development
T: (403) 618-1117
202, 1201 5th Street SW
Calgary, AB T2R 0Y6
This news release may include forward-looking statements including opinions, assumptions, estimates and the Company's assessment of future plans and operations, and, more particularly, statements concerning: Willow's revised milestone projections, including the timing and quantity of development scale-up (including further pilot projects) and commercialization scale-up; the timing of commercial sales and revenues resulting therefrom; expected cost reductions from commencing commercial production; discussions with potential customers (including the size of orders therefrom), manufacturing partners and other key stakeholders; timing for the selection of a manufacturing location and partner; the ongoing COVID-19 outbreak and its impact on the Company; the market size potential of the synthetic cannabinoid industry, the demand for Willow's products and Willow's ability to capture market share; Willow's entry into new global markets; and the business plan of the Company, generally, including cannabinoid research and production. When used in this news release, the words "will," "anticipate," "believe," "estimate," "expect," "intent," "may," "project," "should," and similar expressions are intended to be among the statements that identify forward-looking statements. The forward-looking statements are founded on the basis of expectations and assumptions made by the Company which include, but are not limited to: the success of Willow's strategic partnerships, including the development of future strategic partnerships; the financial strength of the Company; the ability of the Company to fund its business plan using cash on hand and existing resources; the market for Willow's products; the ability of the Company to obtain and retain applicable licences; the ability of the Company to obtain suitable manufacturing partners and other strategic relationships; and the successful implementation of Willow's production strategy, generally. Forward-looking statements are subject to a wide range of risks and uncertainties, and although the Company believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will be realized. Any number of important factors could cause actual results to differ materially from those in the forward-looking statements including, but not limited to, risks associated with: the cannabinoid industry in general; the success of the Company's research and development strategies; infringement on intellectual property; failure to benefit from partnerships or successfully integrate acquisitions; actions and initiatives of federal and provincial governments and changes to government policies and the execution and impact of these actions, initiatives and policies; import/export and research restrictions for cannabinoid-based operations; the size of the medical-use and adult-use cannabinoid market; competition from other industry participants; adverse U.S., Canadian and global economic conditions; adverse global events and public-health crises, including the current COVID-19 outbreak; failure to comply with certain regulations; departure of key management personnel or inability to attract and retain talent; and other factors more fully described from time to time in the reports and filings made by the Company with securities regulatory authorities. Please refer to the AIF and the MD&A for additional risk factors relating to Willow, which can be accessed either on Willow's website at www.willowbio.com or under the Company's profile on www.sedar.com.
Any financial outlook and future-oriented financial information contained in this document regarding prospective financial performance, financial position or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action based on management's assessment of the relevant information that is currently available. Projected operational information contains forward-looking information and is based on a number of material assumptions and factors, as are set out above. These projections may also be considered to contain future-oriented financial information or a financial outlook. The actual results of the Company's operations for any period will likely vary from the amounts set forth in these projections and such variations may be material. Actual results will vary from projected results. Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein.
The forward-looking statements contained in this news release are made as of the date hereof and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, except as required by applicable law. The forward-looking statements contained herein are expressly qualified by this cautionary statement.
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