MediPharm Labs Corp.

Ladies and gentlemen, thank you for standing by and welcome to the Medifarm Labs 2024 first quarter financial results conference call. Please be advised that today's conference is being recorded. Before we begin, please note that remarks today may contain forward looking information and forward looking statements within the meeting of applicable security laws. This includes, without limitation, statements about MetaPharm Labs and its current and future plans, expectations, intentions, financial results, levels of activity, performance, goals or achievements, and other future events, trends, profitability, business growth, or developments. Forward-looking statements are made as a based on information currently available to management of MetaPharm and on estimates and assumptions made based on factors that MetaPharm believes are appropriate and reasonable in the circumstances. However, there can be no assurance that such estimates and assumptions will prove to be correct. Any factors could cause actual results to differ materially from those expressed or implied by forward-looking statements. Additional information is contained in MetaPharm Labs filings with the Canadian and provincial securities regulators, which are available on CDAR at cdar.com. The company's remarks may also contain references to certain non-IFRS financial measures, including EBITDA, adjusted EBITDA, gross profit, and actual gross profit. These measures do not have any standardized meeting according to International Financial Reporting Standards, or IFRS, and therefore may not be comparable to similar measures presented by other companies. MetaPharm believes that the non-IFRS measures referenced provide information useful to shareholders and investors in understanding our performance and may assist in the evaluation of the combined company's business relative to that of its peers. For more information, please see the section titled Reconciliation of Non-IFRS Measures, the most recent MD&A of MetaFarm, which is available on CDAR. I will now pass the call to David Pittock, CEO of MetaFarm. Please go ahead, sir.

Thanks, operator, and good morning, everyone. We appreciate you joining us for MetaFarm Labs Q1 2024 conference call. Joining me on the call today are Keith Straughan, MetaFarm's president, and Greg Hunter, the company's chief financial officer. I will address some of our highlights for the start of the year and discuss how we believe recent global market developments position MetaFarm favorably for growth. I will then hand the call over to Keith and Greg to provide more insight on some of the operational and financial results. Q1 was our best quarter in terms of revenue and adjusted EBITDA in three years. Q1 performance continues the improvement trend on our path towards profitability. We've made great progress on all fronts, revenue, gross profit, OPEX, and adjusted EBITDA. This quarter saw revenues grow almost 70% versus prior year and 7% over prior quarter. This shows not just the effects of the VEVO acquisition, which we completed last year, but strong growth in some of our international and B2B markets. Greg will discuss our significant improvements in gross profit, OPEX, and cash flow. We closed our Vivo transaction just over a year ago. We are on track in our integration efforts as we continue to realize efficiencies and synergies. Our cost reductions are expected to continue, including the rationalization of some of our manufacturing sites in the coming quarters, which we anticipate will see further efficiencies and savings throughout 2024. Our focus on EBITDA improvement continues to bear fruit. as we had less than $1 million adjusted EBITDA loss in Q1 2024. We anticipate these quarterly trends in EBITDA improvement continuing in 2024 as we continue toward break-even adjusted EBITDA. Our balance sheet is in great shape. The $17 million in cash, less than $3 million of debt, and full ownership of all our assets, including the three production facilities. Our cash position of $17 million, combined with our quarterly cash burn of about $1 million, has significantly improved our liquidity position. This financial stability positions us well for considering accretive investments in M&A and in organic growth initiatives. There are many distressed assets available today on the market, but we are being very cautious and thorough in our due diligence to ensure that any contemplated transaction would be accretive. Our experience with the VIVO integration has shown that we can quickly and profitably integrate and drive synergies with like-sized organizations. There have been many recent global developments that position MetaPharm well for future growth. Evolving regulations in Australia, Germany, and Brazil, and recent announcements in the US all point to the emerging need for stronger GMP compliant and pharmaceutically capable companies. Today, global sales represent over 30% of our revenue, and this segment grew by 75% year over year, and 33% sequentially in Q1 versus Q4. These international markets generally have more restrictive regulatory requirements, but enjoy higher margins. We've invested over many years in the foundations and capabilities for significant global growth. Quality systems, licensing, GMP facilities, IT infrastructure, clinical trial capabilities, R&D, a drug establishment license, big pharma partnerships, and global footprint and infrastructure, these are the capabilities that MediPharm is invested in, specifically to position us to benefit from the very trends we now see emerging. Our pharmaceutical, medical, and clinical approach has made us a partner of choice for pharma companies looking to enter the cannabis market in their respective countries. Our extensive suite of regulatory approvals and GMP, drug establishment license, NHP, and other licenses allow us to ship cannabis and drug products to most countries with a cannabis regulatory framework. With tightening requirements in multiple jurisdictions, we have been approached by several international companies for support with quality-focused GMP production and supply. In the last several months, we have signed a number of new B2B international agreements, including deals with local pharma companies. In Q1, we began to see some of the first revenues from these new initiatives. We look forward to further growth in 2024 as these agreements begin to generate revenue. I thought I would share our perspectives on some of these key market developments and the potential positive implications for the company. First, Australia. Australia has implemented new GMP requirements. These new tighter rules require that all products now must meet new GMP standards in Australia. This change has opened many branded and B2B opportunities for the company already driving new vape and oil sales in Q1. In Q1 2024, Metafarm medical cannabis sales in Australia saw a 64% increase from Q4 2023. The main contributor to the increase was both branded and white-labeled GMP vape sales. Now to Germany. In Germany, we expect that changes to the German legislation in removing cannabis from the narcotic list could reduce the prescribing stigma amongst physicians and drive market growth. The new regulations have opened up commercial opportunities to streamline in-country operations and expand the addressable patient base. In Q1 2024, MediPharm's Beacon Medical GMBH hosted a successful audit at its German office. This clears the path to increase branded product sales in the second half of 2024. MediPharm now has 14 product registrations under the Beacon brand in Germany. That's up from five in Q4, 2023. German medical cannabis sales had a 36% increase versus Q4, 2023. 70% of these sales were non-flour products, including oil, CBD isolate, and dronabinol. Moving to Brazil, Brazil is a challenging market to get approvals through their strict pharma regulations. MetaPharm recently completed a successful and visa audit. The company already has two approvals, And with our local big pharma partner, we expect further file approvals in the coming quarter. And the U.S. The U.S. recently, as you are all aware, the Associated Press reported that the U.S. Drug Enforcement Agency, USDA, will move cannabis from a Schedule I to a Schedule III drug. MediPharm sees this as a solid step towards recognizing the medical benefits of cannabis and facilitating further clinical research. Today, researchers face significant challenges in getting trial approvals and then dealing with the logistics of sourcing and managing clinical trial materials that may contain cannabis. MediPharm is the only purpose-built cannabis facility that has been inspected by the U.S. FDA and holds the current drug establishment license. MediPharm has been referenced in FDA investigational new drug applications and an abbreviated new drug application and a drug master file. the company has also sent multiple cannabis shipments into the US for clinical trials, which were DEA approved. In the short term, MetaPharm will use this leading FDA and DEA experience to position itself as a go-to partner for cannabis research in the US. Longer term, we believe it is likely that any new US FDA regulations will raise the bar on manufacturing quality requirements. MetaPharm will be able to use its advanced GMP process validation and pharmaceutical product characterization for launch products into the future regulated U.S. market. All of this is in addition to progressing some of our existing longer-term clinical trials and drug applications. We continue to execute in line with our plans. We now have revenue, gross profit, OpEx, and EBITDA results all trending in the right direction. We have a robust revenue pipeline with a number of new agreements signed and in the works from multiple partners in multiple markets. And as just discussed, MetaFarm also has many significant longer-term strategic growth opportunities. I will now pass the call over to our co-founder and president, Keith Strong.

Thanks, Dave.