Pharmala Biotech Holdings Inc. (market cap: $19.51M) reported a robust performance in the first quarter of fiscal 2024, with a significant year-over-year revenue growth of 95%. The company, known for its MDMA product line, also highlighted strategic partnerships and operational efficiencies. The stock has shown remarkable momentum, surging 200% over the past six months to trade at $0.19, near its 52-week high of $0.24. According to InvestingPro data, the company has delivered a strong 20% return in the past week alone, suggesting growing investor confidence in its business model.
Key Takeaways
- Revenue increased by 95% year-over-year, driven by MDMA product sales.
- The company secured over $1.5 million through a private placement in December 2024.
- Pharmala terminated a supply agreement while forming a new partnership with RAIN Pharmaceuticals.
- The company is actively seeking non-dilutive funding for clinical trials.
Company Performance
Pharmala Biotech demonstrated strong growth in the first quarter of fiscal 2024, with revenues surpassing $1 million. This marks a 95% increase compared to the same period last year, primarily fueled by a 73% rise in MDMA product sales. The company is positioning itself for further expansion in the U.S. market, leveraging its partnerships and exploring new funding opportunities.
Financial Highlights
- Revenue: Over $1 million (95% increase YoY)
- MDMA product sales: $723,000 (73% increase)
- Customer deposits: Increased to $283,000 in Q1
- Gross proceeds from private placement: Over $1.5 million in December 2024
Outlook & Guidance
Pharmala Biotech is focusing on expanding its presence in the U.S. market and is in discussions to secure non-dilutive funding for phase two clinical trials. The company aims to announce new funding partnerships within the next three months and is exploring opportunities with the Department of Veterans Affairs and the Defense Health Agency.
Executive Commentary
CEO Nick stated, "We are seeing very significant increased sales as a result of the acceleration of government funding for MDMA research." CFO Will Avery emphasized the importance of finding a non-dilutive partner, noting, "Clinical trials, they’re expensive. We went into last year with the stated goal of finding a non-dilutive partner."
Risks and Challenges
- Potential political changes could impact psychedelic research funding.
- Slowing demand for clinical trials in Australia due to existing access pathways.
- The need to secure a U.S.-based distributor to mitigate cross-border trade risks.
Pharmala Biotech’s strategic initiatives and financial performance underscore its commitment to growth and innovation in the MDMA research sector. The company’s focus on securing partnerships and funding is crucial as it navigates the evolving landscape of psychedelic research and development. InvestingPro awards the company an EXCELLENT Financial Health Score of 4.04, suggesting strong fundamentals despite current challenges. Get access to detailed valuation metrics, peer comparisons, and expert analysis with an InvestingPro subscription.
Full transcript - Pharmala Biotech Holdings Inc (MDMA) Q1 2025:
Nick, CEO/Executive, Formala: today is our new CFO, who you probably haven’t had a chance to hear from, at least not live like this yet. This is Will Avery, everyone. Will, retired from MNP LLP, in 2023 where he was a partner, spending the majority of his time, over a twenty year career there servicing, public companies like ourselves. Will Will’s based in Toronto, where he lives with his wife and two young kids.
And he joined us back in September, Will? August, September? Something like that.
Will Avery, CFO, Formala: September. Officially in October. So that’s September.
Nick, CEO/Executive, Formala: Yeah. Yeah. Yeah. So, Will’s been Will’s been helping us with all kinds of stuff and really professionalizing the organization. So glad to have the investors, have a chance to speak to him and hear from him today.
Will Avery, CFO, Formala: Yeah. Happy to be here too. Thank you, Nick, for that intro. I’m absolutely so happy to be a part of such an awesome team here, and I look forward to what we’re gonna be able to do in the years to come. Before we get underway here, I would like to take this opportunity to refer to the cautionary wording about forward looking statements as well as the risk factors included in our MD and A as filed on SEDAR Plus on 01/29/2025.
Those statements about cautionary wording and risk factors apply to the information discussed in this webinar as of the date of this webinar being 02/06/2025. However, this webinar is intended to be a discussion of the interim results for the period ended 11/30/2024 and is not intended to be an update of the information therein to the present date. With that, I’d like to start with an overview of the key aspects of our recent financial results. During fiscal twenty twenty four, the company realized revenue of over $1,000,000 representing growth of approximately 95% year over year. This was led by growth in MDMA product sales of 723,000 or a 73% increase year over year.
In fiscal ’twenty four, the company also increased customer deposits to 208,000. In Q1, we’ve continued this growth, which has resulted in a 70,000 increase, bringing the total customer deposits to 283,000. Just to give a little background on that, generally, we require deposits that account for up to 50% of the total contract value. And while not universal to all of our contracts, many of these deposits are nonrefundable or refundable only in the event that customers’ failure to secure a clinical trial permit is based on our underlying chemistry, manufacturing, and control information, which we provide to these customers. The related customer deposits can be recognized with along with the remaining revenue when the underlying product is delivered to the customer.
Based on our experience, it is uncommon for clinical trials not to move forward. However, in fiscal twenty twenty four, we did have one such instance. And as a result, the nonrefundable deposit was taken into revenue. While we would have loved to see the growth in deposits turned into revenues in q one, our sales cycle is such that many of these customers require the issuance of their clinical trial and or import permits from the relevant regulatory bodies before we can ship the related material. Adding to that, on 10/21/2024, we terminated the supply agreement with Seacrest Labs and initiated a program to secure new distributors in both The US and Canadian markets.
We have successfully partnered with RAIN Pharmaceuticals, who are already a manufacturer and research partner of the company, and we’ve recommenced distribution subsequent to November 30. In The US, while we continue to seek a permanent distribution partner, we are currently moving forward on individual exports for US clinical trials and and have applied for the necessary Health Canada export permits to enable us to do so. Due to the highly regulated nature of our operations, all of these initiatives have taken time to accomplish. And as a result, during q one, we didn’t fulfill any shipments of MDMA product to patients under the SAP or to clinical trial customers, and our revenue was limited to the Cortexcel license fees. As mentioned, having partnered with RAIN, we’ve recommenced distribution.
And on upon securing the necessary permits, we expect to ship the related products and recognize the revenue in future quarters. Another item I’d like to highlight from our q one relates to our cost profile. So there were some new found efficiencies allowed total expenditures excluding stock based compensation, depreciation and amortization, and a loss on debt settlement to remain relatively consistent quarter after quarter despite bringing strategic team members on board. While these team members carried incremental costs resulting in overall increase in expenses, we believe we are stronger and better set up for the future with our addition. Further, some of those incremental costs were offset by cost reductions elsewhere, primarily in office and general expenses.
The final item I’d like to highlight for you all today pertains to our financing position. During the period ended 11/30/2024 and subsequent, we’ve secured funding reflective of our team’s commitment and belief in the future of the company. Firstly, we entered into a share for debt settlement with our legal counsel, taking 100,000 accounts payable off the books without using any cash. Secondly, our director group stepped up and exercised some of their outstanding options, resulting in a further 42,500 on top of the 70,000 received in fiscal twenty twenty four from the CEO. We believe that this shows a commitment of management and directors to the company’s future.
And lastly and most importantly, on 12/13/2024, we secured funding from the sale of units consisting of one common share and a half warrant, which is exercisable at 0.27 for three years for gross proceeds of just over $1,500,000 We are pleased to announce that Matthew Israeli participated as a lead investor in this private placement and as announced today, has subsequently agreed to become an advisor to the company. These inflows have strengthened our cash position for the future and combined with the conversion of our customer deposits into revenue and our partnership with Rain, we’re well positioned for our future growth. Nick, I’ll turn it back to you.
Nick, CEO/Executive, Formala: Yeah. Look guys, if I can distill down some of the stuff that Will talked about, Number one, I think, look, long time investors and shareholders of the company will know to look for the line item of customer deposits in our financial statements. New investors and shareholders may not know it, but it is sort of critical to the business, right? For, for We’ve never had a situation where our documentation is the cause for someone not to get their clinical trial approved. And that’s really the triggering factor for a refund.
So, you know, if we continue to do our jobs properly, of course, those deposits continue to fuel the growth of the company. We utilize that cash for ongoing operations, and it does get converted into revenue for accounting purposes when we actually ship the goods. We don’t control entirely when those goods are shipped. It depends on a range of factors, regulatory operations, you know, just physical operations, getting the goods to their destination. And we are always looking to improve our operational efficiency.
So, we’ll be talking in some of the questions, question and answer period about what we’re going to do around The United States, about positioning inventory. Certainly, lots of questions have come up in the last little while around tariffs and what those do to us, but we’re always looking for better ways to be more efficient and get our customer like, get our goods closer to customer, which is part of the reason why we, you know, why we started Cortexa and why we began to do manufacturing in Australia, for the Australian customer. Right? The closer we can get to that end user, I think the better off the company is in the long run. And frankly, I think it also improves our cost base, both cost of goods and of course, you know, just our operational costs.
There you know, Canada is not a low cost jurisdiction, unfortunately. So despite all being from Canada and being strong boosters of Canada, not always the best place to do your manufacturing. And certainly, shipping everything from Canada is not always the best sort of operational decision. So, with that, maybe I’ll ask Conway to start reading through some of the questions that we received in advance of the webinar. We’ll try to field all of these questions.
Now, there’s at least one person I know who may have some questions. Conway, can you just text Robert and let him know that he’s welcome to ask any questions that he has. Robert is actually a professional analyst, so I’m not playing favorites here. It’s a professional courtesy. So if he has any questions for us, he is more than welcome to ask them.
Other than that, for the investors, we have received your questions in advance and we’ll feed them one at a time. Okay?
Conway, Moderator/Support Staff, Formala: Alrighty. I’ll I’ll dive right in. When will we be moving forward with our phase two trials?
Nick, CEO/Executive, Formala: So will you take that one?
Will Avery, CFO, Formala: Yeah. I can take that one. Look. As you know, clinical trials, they’re expensive. We went into last year with the stated goal of finding a non dilutive partner to cover at least part of those costs.
That process is still ongoing. And although we have had some progress, we don’t have anything specific to report at this time. There have also been some changes reported by the Australian tax office that’s delayed our progress. We hope that we’ll be able to make an announcement by the end of this quarter, but I want to just make it clear for everyone that that timeline may shift. But we’re doing our best to keep moving all of this forward and and find that funding partner.
Nick, CEO/Executive, Formala: Yeah. I will just add, it is it is really about finding efficient ways to fund the trial at this point, the protocol. I think like, again, this is I think all well known, but the protocol is done, our trial partner is sort of in place. It’s really a question of making sure that we finance this in an efficient way, both from a tax perspective and from just, you know, not just selling shares, but also maybe finding a non dilutive partner who can help us with it.
Conway, Moderator/Support Staff, Formala: Nice. With the increasing momentum around MDMA in the industry, how does Formala plan to leverage this trend to its its advantage while also balancing its other projects and its pipeline?
Nick, CEO/Executive, Formala: Okay. And, Conway, I see Robert does have his hand up. So, maybe if you can text with him and just find out what his question is. Okay. So, number one, look, I agree.
I will say we are seeing very significant increased sales as a result of the acceleration of government funding for MDMA research, especially in The US. We are also seeing increased clinical trials in Canada, although future clinical trial demand for MDMA from Australia has slowed down a bit. I think this is somewhat logical because now there is an actual access pathway in Australia. At this time, we do see progress made in our sales pipeline as synergistic with the rest of our business. So, if we have a profitable year, we can reinvest in R and D, we can develop new drugs, etcetera.
We are also clearly monetizing our MDMA development in another way. As you would have seen a little while ago, we announced our first drug for data deal for Lineo MDMA, and that can help us a lot. I mean, it can help us with reimbursement. It can help us with product registration in certain markets. So, I would expect that we are going to do more deals like that in the future.
But, of course, the primary responsibility for the company is just to drive sales and drive revenue.
Conway, Moderator/Support Staff, Formala: Should we give Robert a chance to speak right now as he has his hand up?
Nick, CEO/Executive, Formala: Sure. I think he just asked a question. Go ahead.
Conway, Moderator/Support Staff, Formala: Robert, whenever you’re ready.
Nick, CEO/Executive, Formala: Yes. Yeah. We can. Yeah. Sorry.
Yeah.
Robert, Professional Analyst: I just wanted to know you you announced several contracts, I think, around five, but since over the last three or four months. Are you able to disclose how much those contracts in aggregate are worth to you in terms of revenue going forward?
Nick, CEO/Executive, Formala: So I think what we can do is, based on our current financials, so these would be, this would, include all of the deposits made to date. I think we were at about, Will, correct me if I’m on 280,000 in deposits?
Will Avery, CFO, Formala: Correct. Yes. 280,000 in customer deposit.
Nick, CEO/Executive, Formala: Okay. So, that would translate to, you know, at 50% deposit, that would translate to just under $600,000 in, in potential revenue out of those tar out of those, contracts. Now I will say that does not include all of the contracts that we have announced because at the time when we closed the financials in November, we hadn’t received the deposits for all of those customers. So it’s more than 600,000, assuming all of those go through, of course. But that that’s what it would have been at the time of the last financials, and I I shouldn’t front run the financials.
Robert, Professional Analyst: And do you actually when you deliver them, you deliver them in batches in, in a separate batches to at different times to the same you know, to the particular client or is it one in one one one of batch to each client?
Nick, CEO/Executive, Formala: Yeah. So okay. So sometimes. When when our client like, look, we’re in the customer service business. So, if if our clients really want multiple shipments, we will deliver multiple shipments, and we’ll recognize the revenue partially rather than all at the same time.
Right. Due to the regulatory, you know, environment that we live in, we don’t love to do that. Right. Just because, like, it’s import permits all over again and, you know, it’s it’s painful. It also costs our customers quite a bit of money.
I mean, a a controlled substance shipment just from Canada to The US can be like $3,000.
Robert, Professional Analyst: Right.
Nick, CEO/Executive, Formala: But that said, if the customer wants to pay it and they really don’t wanna hold the material or they’re worried that they’re, you know, they they if they have a long term trial and they want fresh batches of drug product along the way, yeah, well, look, I mean, the answer is yes. We will do that sometimes, but it’s not our preference.
Robert, Professional Analyst: Right. Just a couple of more questions. It seems like Lycos is, you know, preparing to, it’s been in discussions with the FDA preparing to, for a third study of its Phase three MDA assisted therapy. Are you actually since they’ve cut out their production, capacity, are you going to be supplying them?
Nick, CEO/Executive, Formala: So we have no contract with Lycos at this time. That said, we do have a very warm relationship. It’s been reported in the press that they’ve sent a number of clinical trials our way. I can confirm that that is that is accurate. So, look, if they need material, if they need support, we are happy to provide it, and we’ll we’ll just stay close to them and and be of service wherever we can.
Yeah.
Robert, Professional Analyst: And my final question is basically, can you give us a latest on your own drug development projects?
Nick, CEO/Executive, Formala: Yeah. Absolutely. So, we talked a little bit about, the the phase two trial for ALA zero two already. That’s where that is. In a similar fashion for APA, which is our our sort of tier two molecule, we’re looking at ways to do the preclinical for that molecule, and it does require preclinical because it is a net new molecule.
For that one, we’re trying to find, again, non dilutive partners who could help us finance that. Preclinical, there’s sort of two elements to it, right? There’s the chemistry manufacturing control, the manufacture of the new molecule, and there’s the actual rodent testing. Most of the rodent testing that we do at the University of Arkansas for Medical (TASE:PMCN) Sciences, at Bill Fentagrossi’s lab, that’s non GLP rodent testing. So it’s what we call proof of concept.
It is not acceptable for, for the kind of toxicological dossier that we would need to develop. And And so, so we’re, again, we’re looking for a non dilutive partner. We think we found one. Like, we think we’re close, but until the deal is done, nothing is there. So, again, hope in the next three months to be able to announce both the non dilutive funding for the ALA trial and, some non dilutive funding for the development of APA through preclinical.
But until it’s done, it’s not done.
Robert, Professional Analyst: K. Thank you for all that. Very, very informative.
Nick, CEO/Executive, Formala: Thank you, Robert. Okay. Conway, where were we at with, with the questions?
Conway, Moderator/Support Staff, Formala: Got a couple more. Is Formalas applying to VA for their trials?
Nick, CEO/Executive, Formala: So you’d look. The the answer is yes. Our contracts are not with the VA directly. That’s not how this works. So the VA funds trial sites, and we are contracted to supply a number of VA sites.
We’re also looking forward to more grant funding flowing this year, like this year being 2025, for groups such as the Defense Health Agency in The US, which had a very large public calls at $10,000,000 for MDMA PTSD research. Hope to be able to hear and announce which researchers are going to be getting that grant funding as well.
Conway, Moderator/Support Staff, Formala: Awesome. Any upcoming news from Cortexa?
Nick, CEO/Executive, Formala: So, guys, we got this all the time. We don’t we don’t front run the news. We do not announce news before it’s announced, so please don’t ask this question in the future. The news comes out when the news comes out. Go ahead, Conway.
Conway, Moderator/Support Staff, Formala: Implications for MDMA with RK’s confirmation and subsequent FDA approval over the next three months for a long term investor.
Nick, CEO/Executive, Formala: Okay. So look, I I have, just personally, on a personal note, I’ve been absolutely blown away by how the issue of MDMA assisted therapy and psychedelics more broadly have changed The US over the last few years. So when we started FARMALA, I would still say this was considered in The US like a left wing coded issue. And I think now, especially in The US more than anywhere else, it is either a bipartisan issue or even like a maybe a soft Republican coded issue. However, despite all that, I do wanna temper expectations on what will happen in The US as a result of one cabinet plan.
So regardless of of whether RFK Jr. Gets confirmed or not, you know, I I really don’t have any way of knowing what the legislative and regulatory priorities are for either the Trump administration or for him. So, I can say there’s a number of folks around the cabinet table, who are supportive. In December, I met with a new national security advisor, Mike Waltz. There have been public comments by the new defense secretary, Pete Hegseth, who’ve been you know, they’ve all been quite vocal.
They’re all veterans. They’ve all been quite vocal about their support for psychedelic assisted therapy, specifically for veterans and especially for MDMA assisted therapy. But, you know, that doesn’t necessarily translate, to, like, rapid action. So, I don’t want people to assume that one appointment to cabinet is going to be a complete game changer. It might be, but that’s not we don’t run our business that way.
That’s not how we plan. So we will keep working with our partners in The US. We do consider that a growth market for us. Certainly, that’s where we’ve seen a lot of growth in the last six months or so, and we will try to capitalize on all of the opportunities that we see there.
Conway, Moderator/Support Staff, Formala: Awesome. Good segue into the next question. Previous news release, is Formala still considering setting up in The US either for a sales office or to produce directly there to supply all of our American contracts?
Nick, CEO/Executive, Formala: Will?
Will Avery, CFO, Formala: So I’ll take this one, Nick. I I kinda touched on that in in my section. We are still looking for a US based distributor. So we anticipate doing a material amount of business in The US over the next twenty four months and expect that a US distributor will not only lower our cross border trade risk, but also just simply make our operations there more straightforward.
Conway, Moderator/Support Staff, Formala: Awesome. What do you think about the recently announced international collaboration what do you
Nick, CEO/Executive, Formala: think about the recently announced international collaboration announced between The UK, Canadian, and US Psychedelic industry leaders? Do you
Conway, Moderator/Support Staff, Formala: think it will bring significant positive change to the industry?
Nick, CEO/Executive, Formala: Okay. So this is a SCI CAN initiative. Obviously, I am the board chair at SCI CAN, but this is not an initiative that I was personally heavily involved in. I basically you’ve heard about it when it was a done deal. It was done by our executive director at Saikan.
I’m going to limit my comments to the following. Number one, Saigon is a trade association. They do influence things over the long term, but they have a mandate to work on the on behalf of the entire industry, not on behalf of any specific company. So, you know, I I like doing work with Saikan. I think a rising tide lifts all ships.
I think it’s important, but I don’t think that any initiative at Saikan will have a specific measurable impact on, like, our financial performance in the short term. In the long term, absolutely. In the short term, not so much. The other thing I will say is, you know, this specific thing, which is, basically a collaboration between, you know, trade groups and lobbying entities in three different countries, in The UK, in Canada, and in The US, is largely about exporting best practices. But I think personally, if I had to pick a jurisdiction with the best practices right now, it’s actually Australia.
So a lot of it is trying to take the Australian model and shove it into government, government ears in Canada and The UK and in The US, and we will see what the what the results are. But again, I I don’t anticipate it will bring, you know, massive sea change in the short term.
Conway, Moderator/Support Staff, Formala: Yeah. That’s all we have for submitted questions.
Nick, CEO/Executive, Formala: Okay. Yeah. Okay. Well, listen. Thank you very much for joining everyone.
Nice to the point, you know, twenty five minute webinar. In the future, we’re always happy to field questions, but we do need time to review for, you know, for something like this. We need time to review them. So, I know I see some questions sent into the chat. As per our instructions, unless you are a professional, working in, in the, as an analyst, you do need to register in advance and you need to send in your questions in advance, and we’ll be more than happy to field them.
I will try to do some more AMAs on the on the forums, but really we are quite busy in trying to get some some actual work done for the company. So that remains our our number one priority. So once again, thank you very much for joining. Will, thanks for the recap, and look forward to speaking to all of you soon.
Will Avery, CFO, Formala: Yeah. Great time today, folks. Hopefully, you all found it useful.
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