Mr. Aras Azadian reports

AVICANNA REPORTS FULL YEAR 2023 AUDITED FINANCIAL RESULTS

Avicanna Inc. has released its year-end 2023 results and audited financial statements.

Two thousand twenty-three financial highlights:

• Revenue growth of 314 per cent, from $4-million in 2022 to $16.8-million in 2023, largely driven by the acquisition of Medical Cannabis by Shoppers from Shoppers Drug Mart and the launch of the MyMedi website.
• Substantial revenue growth was achieved with a 19-per-cent increase in operational expenses.
• North American gross margins improvement of 28 per cent, to reach 45 per cent, when compared with 2022.
• Consolidated gross profits increased by 500 per cent, from $1.1-million in 2022 to $6.7-million in 2023.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) loss of $4.2-million, a 49-per-cent improvement from a loss of $8.3-million in 2022.
• Cash used in operations of $1.38-million -- an 81-per-cent reduction compared with $7.4-million in 2022.

"Two thousand twenty-three was a tremendous year for Avicanna, where we solidified our leadership position in the Canadian medical cannabis sector through our proprietary products and the launch of MyMedi.ca. We have successfully demonstrated the scalability of our revenues and made significant improvements in our fundamentals while advancing all our business pillars. Additionally, we demonstrated consistent progress on our R&D [research and development], and pharmaceutical initiatives, which as a result rewarded us with significant new opportunities, including the approval of our first indication-specific drug in early 2024," stated Aras Azadian, chief executive officer at Avicanna.

Additional highlights

Acquisition of Medical Cannabis by Shoppers (the business)

On July 31, 2023, Avicanna acquired specific assets of the business from Shoppers Drug Mart, Canada's largest retail pharmacy chain, including inventory and equipment, for approximately $2.6-million and an earnout, based on net revenues, for a period of two years. First launched in Ontario in January, 2019, the business provided patients access to medical cannabis products from more than 30 cannabis brands. Over the past four years, the business supported tens of thousands of patients and worked with patient groups to facilitate access to medical cannabis.

Over 96 per cent of active patients from Medical Cannabis by Shoppers transitioned to the MyMedi website. The company developed infrastructure to offer insurance reimbursement services for patients through several private insurance providers and public institutions, including eight provincial worker safety boards -- these account for over 65 per cent of the platform's revenue combined.

Canadian commercial advancements: The company introduced new proprietary formulations resulting in a 51-per-cent year-over-year increase in the number of finished products sold during 2023. The company closed the year with 27 commercially active SKUs (stock-keeping units) in Canada, across 133 total commercial listings, an increase of 131 per cent from the year ended in 2022. Commercial listings were concentrated primarily in the medical channels where the company had 81 listings across seven different medical platforms, including the MyMedi website. Expansion onto new medical platforms, including Spectrum Therapeutics and Canna Farms substantially improved access to the company's own proprietary medical products for patients across Canada.

Post-year-end highlights

Avicanna obtained its first indication-specific drug registration with Trunerox. Trunerox was approved in Colombia by the Colombian National Institute of Drug and Food Surveillance (El Instituto Nacional de Vigilancia de Medicamentos y Alimentos (INVIMA)) as a drug for the treatment for severe seizures related to Lennox-Gastaut syndrome (LGS) and Dravet syndrome (DS). The approval allows Avicanna to manufacture and commercialize Trunerox in Colombia for the approved indications, which are two rare epileptic disorders classified as epileptic encephalopathies. Trunerox is Avicanna's proprietary oral formulation with 10 per cent cannabidiol (CBD) and is manufactured under good manufacturing practices (GMP) utilizing CBD manufactured at Santa Marta Golden Hemp SAS (SMGH). Trunerox has not been approved as a drug in Canada by Health Canada.

Avicanna announced a supply and licensing agreement with a multinational pharmaceutical company. The exclusive supply agreement is for two of Avicanna's proprietary topical products, including the Ultra CBD cream, which is a 3 per cent CBD localized cream developed for dermatology conditions, and the CBG transdermal gel, which is a 2 per cent CBD and 0.5 per cent cannabigerol (CBG) gel targeting local inflammatory and pain conditions. The exclusive supply agreement for the European region is expected to launch these products in six European countries during 2024.

Avicanna announced a new research collaboration with a multinational European-based pharmaceutical company. The research collaboration is to initially assess the company's proprietary SEDDS (self emulsifying drug delivery systems) technology in combination with the multinational European-based pharmaceutical company's various drug delivery and pharmaceutical formats. The collaboration will gain a better understanding of proprietary dosage forms with precisely standardized delivery and enhanced bioavailability of cannabinoids.

Avicanna and Ease Labs Pharma granted commercialization approval for a pharmaceutical preparation in Brazil. The first pharmaceutical preparations containing tetrahydrocannabinol (THC) produced in Brazil were approved by the Brazilian Health Regulatory Agency (ANVISA), under the RDC 327 regulation and GMP-certified manufacturing standards in Brazil. The full spectrum active pharmaceutical ingredients (API) are to be supplied by SMGH, under a multiyear active pharmaceutical ingredients supply agreement entered in 2021. Ease Labs is expected to make the product available in pharmacies with a medical prescription by the end of June, 2024.

The company will host an earnings call at 8:30 a.m. Eastern Time on April 2, 2024. Interested parties may join the earnings call on-line.

About Avicanna Inc.

Avicanna is a commercial-stage international biopharmaceutical company focused on the advancement and commercialization of evidence-based cannabinoid-based products for the global medical and pharmaceutical market segments. Avicanna has an established scientific platform, including R&D (research and development) and clinical development, leading to the commercialization of more than 30 proprietary, evidence-based finished products and supporting four commercial-stage business pillars:

• Medical cannabis formulary (RHO Phyto): The formulary offers a diverse range of proprietary products, including oral, sublingual, topical and transdermal deliveries with varying ratios of cannabinoids, supported by continuing patient and medical community education. RHO Phyto is an established leading medical brand in Canada, currently available nationwide to patients across several medical channels and continues to expand into new international markets.
• Medical cannabis care platform (MyMedi website): MyMedi.ca is a medical cannabis care platform formed with the aim to better serve medical cannabis patients' needs and enhance the patient journey. MyMedi.ca is operated by Northern Green Canada Inc., and features a diverse portfolio of products and bilingual pharmacist-led patient support programs. MyMedi.ca also provides specialty services to distinct patient groups such as veterans and collaborates with public and private payers for adjudication and reimbursement. MyMedi.ca provides educational resources to the medical community to facilitate the incorporation of medical cannabis into health care regimens.
• Pharmaceutical products (Trunerox) and pipeline: Leveraging Avicanna's scientific platform, vertical integration and real-world evidence, Avicanna has developed a pipeline of proprietary, indication-specific pharmaceutical products that are in various stages of clinical development and commercialization. These cannabinoid-based drug candidates aim to address unmet medical needs in the areas of dermatology, chronic pain and various neurological disorders. Avicanna's first indication-specific pharmaceutical drug, Trunerox, was approved Q1 2024 by the Health Authority of Colombia, INVIMA, as an adjuvant treatment for seizures associated with Lennox-Gastaut syndrome and Dravet syndrome.
• Active pharmaceutical ingredients (Aureus Santa Marta): Active pharmaceutical ingredients supplied by the company's majority owned subsidiary, Santa Marta Golden Hemp SAS, is a commercial-stage business dedicated to providing a various forms high-quality CBD, THC and CBG to the company's international partners for use in the development and production of food, cosmetics, medical and pharmaceutical products. The business unit also forms part of the company's supply chain and is a source of reliable input products for its consumer retail, medical cannabis and pharmaceutical products for globally.

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