Q3 2022 Medipharm Labs Corp Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to the metaphor Labs 2022 third quarter financial results Conference call. Please be advised that today's conference is being recorded before we begin. Please note. The following caution respecting forward looking statement, which is made on behalf.
Have a met a farm labs and all its representatives on this call.
The statements made on this call will contain forward looking information that involve risks and uncertainties actual results could differ materially from a conclusion forecast or projection in the forward looking information certain material factors or assumptions were applied in drawing a conclusion or making a fort.
Cast or projection as reflected in the forward looking information.
Additional information about the material factors that could cause actual results to differ materially from the conclusions forecast or projections in the forward looking information and the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward looking information are contained in medafor.
M labs filings with the Canadian provincial Securities regulators, which are available on the SEDAR website at SEDAR Dot Com I will now pass the call to David Pittock T O a metaphor I'm. Please go ahead Sir.
Thank you operator, and good morning, everyone. We appreciate you joining us for meta farm Labs 2022 third quarter financial results Conference call. Joining me on the call today are key strong <unk>, president and great country, the company's Chief Financial Officer.
I will address some of our strategic achievements and growth opportunities and then hand, the call over to Keith and Greg to provide more detail on the quarterly results.
Yeah.
Our team is focused on driving revenue, both organically and through selective opportunistic M&A activities.
Concurrently we are executing against several priority to optimize the business and drive towards profitability and positive cash flow.
We are executing these plans, while maintaining net of farms mid to long term orientation and investment in the pharma opportunity.
I wanted to acknowledge the challenging circumstances in the industry.
As you are aware there are several of our peer companies that are struggling with profitability and cash flow issues.
Many are carrying significant debt raising funds through debt or equity is problematic in the current environment and.
And some companies are even facing insolvency.
Meta farm by contrast is a very strong balance sheet, we have no material debt.
With the proceeds from our Australia business as of today, we had a cash balance of around $23 million and.
And I'm happy to share that through the Australian closure and significant Opex and head count reductions, we have successfully reduced our quarterly burn rate from about $6 million per quarter to around $4 million per quarter.
Getting to profitability and positive cash flow requires strong execution on many fronts addressing issues with gross profit.
With Opex and working capital.
I'm pleased to report that the team has made progress during Q3 on all of these initiatives.
In October we closed the previously announced sale of <unk> Labs, Australia allow.
Allowing us to further leverage our GMP facility and Barry.
The sale generated just over 6 million Canadian and cash proceeds we have already begun producing and shipping you down volume from our Barrie, Ontario facility. The sale enables us to deploy cash into our existing operations and against potential future M&A, while lowering operating expenses by about $4 million.
Annually.
Staying with Opex savings for a moment the head count reductions, we announced last quarter will be fully implemented by Q4. This will result in $3 million in annual savings starting this quarter.
Regarding working capital the finance team has done a good job of bringing rigor to the cash management cycle. We will continue to focus on tight cash management and you can expect further improvements in 2023.
With respect to gross profit we.
We have completed a line by line review of our entire product portfolio and are in the process of increasing prices.
<unk> costs were even eliminating product lines that are not contributing to the bottom line.
We are committed to ensuring that new product revenues or gross margin accretive and are not willing to generate volume for volume sake.
But we have good news on the revenue front, our Canadian business continues to strengthen and despite well publicized market wide challenges in Q3 headwinds, notably in the Ontario and BC markets.
<unk> provincial sales grew 28% quarter over quarter and 81% versus prior year.
Speaking of growth our team continues to make progress on all fronts pharma and international medical as well as the Canadian market. As a reminder, the core strategy is to position met a pharmacy that go to pharma grade cannabinoid API supplier pointed.
Pointed towards the international pharma cannabinoid space, we will continue to drive growth and profitability through the international medical and Canadian businesses as a solid bridge to the larger but longer term pharma opportunity.
And the pharma opportunity continues to gain momentum.
We continue to position the company to capitalize on the potential of new candidates based drug.
In our pharma space, we are creating relationships to provide API or active pharmaceutical ingredient.
And finished good format for future marketable drug products in.
In the World of research, we are becoming the go to partner for fully funded clinical trials.
Some of you may have seen our recent global Mail article featuring Mcmaster University.
<unk> commented that they evaluated over 50 Canadian cannabis license producers before they could find one that met health, Canada pharmaceutical research requirement for GMP products.
I am proud to say that we are the one qualified GMP clinically capable supplier that mcmaster found and that we have shipped clinical research materials to Mcmaster in Q3.
We are also supplying API to several ongoing drug development and research efforts right now.
We have partnered with an international pharmaceutical company to supply API to support an abbreviated new drug application filed with the FDA.
<unk> has now been filed and while it will take time to develop this is representative of the type of partnerships. We will continue to focus on.
If even one of the several pharma products in development were to be successful it could completely change the pace of this company.
As we mentioned last quarter.
In Canada. The government appointed Science Advisory Committee has just released a number of recommendations in relation to over the counter OTC CBD.
CBD Hoffe Park.
<unk> participated and providing feedback to health, Canada on proposed legislation in relation to CBD.
Our drug establishment license and natural health products, GNP licenses and award winning CBD product portfolio.
<unk> is the only purpose built cannabis facility ready to participate in this market evolution today.
This report if implemented could make CBD available through Canadian and HP market channels, increasing access to a much larger base of consumers versus today's cannabis retail channels.
Subject to how some of these recommendations are implemented we believe that met a farm it already uniquely positioned to supply a full portfolio of NH fee and GMP compliant products today again, our GMP pharma quality approach positions us today to be one of the few ready players to address this fast emerging.
<unk> market opportunity.
Before I close I'd like to turn to M&A briefly.
Given our strong balance sheet with no material debt and 23 billion of cash.
We are actively positioning met a farm as an acquirer of choice. We're taking a very focused approach here. There is many opportunities for companies urgently in need of partners.
But opportunities need to fit our unique capabilities in the medical pharma global and Canadian business segments needs to accelerate our move to profitability.
We're working with experienced advisors to identify and vet opportunities in Canada and internationally and have already reviewed several potential transactions.
We will be very prudent both with our balance sheet and with our stock as we actively look for deals that would further our strengths while driving returns for shareholders.
So to summarize while we have lots of work to do we've made real progress and we are on the right track I'm proud of the team's efforts during the quarter on the sales pipeline on our revenues on the decrease in our operating expenses and our work on the balance sheet. We are in a very solid cash position and are managing our burn rate down we built.
We have one of the strongest balance sheets amongst our peer group and as a result are in a very strong position to benefit from coming M&A and consolidation opportunities.
We will remain focused on executing our strategy, which we expect will position the company to generate solid returns for shareholders.
I'll now pass the call over to Keith Keith Thanks, David in Q3, we saw significant progression in sales compared to both Q3.
Last year in Q2 of this year net sales of $7 3 million is the best revenue quarter since Q2 2020.
At that time, we had a much different business model and the industry selling prices of cannabis concentrates were much higher.
In Q3, we shipped 252000 units of finished goods versus 173000 units in Q2 and 136000 units in Q1.
Quarterly volume increase of 85% year to date with this trend we have successfully pivoted and diversified our business.
Two years ago over 90% of our business was BTB and mostly in Canada.
Today, we have a diversified business model were less than 10% of our sales are <unk> and over 40% are international.
We have a robust presence in the pharma medical and Canadian adult use market.
All of these diverse segments have been built from a base of near zero and are all growing today.
Many farm continues to maintain its leadership in the Canadian wellness space in Q3, we were the number two producer and the oil category with 16% market share.
This isn't an area, where we can win given our quality expertise and differentiated product like.
This category also saw the impact of changes in the Canadian cannabis industry, where for the first time, we saw quarterly decrease in the number of supplier.
Including the exit of a licensed producer that was in the top five of the category.
As more producers exit the extraction market, we are well positioned to benefit.
Our award winning oil portfolio and the rest of our product line is driven by innovation.
And to this end, we have launched 14, new unique skus since Q2 <unk>.
Including four new international GMP Skus for the U K and Brazilian market.
This represents a 75% increase in launches compared to Q2, and a 250% increase over Q3 of last year.
So far in 2022, we have launched 25 unique skus, which is an increase from the 12 launched over the same time period in 2021.
This also speaks in a large degree to the shift in our business from bulk b to B to finished goods.
In May we entered the domestic power space and with $1 6 million in sales in this category since its launch we have experienced great demand.
This was done with limited number of Skus and collect provinces subsequent to the quarter, we have launched our flower skus in Quebec, and two additional flower Skus in Ontario.
In Q3 International revenue increased both compared to Q2 and Q3 of last year.
Increases can be contributed to commercial sales of GMP finished goods to Brazil, and the U K and bulk isolate sales to Australia.
In the quarter, we made our first shipments to Germany from our <unk> facility.
And with the sale of our Australia operations, All international GMP products will now be shipped from Canada.
Yeah.
In Germany, where we've been selling since 2021, we continue to see positive indications.
Including the current coalition government that has made cannabis legalization a key priority.
With our experience in Germany paired with existing partnerships with market leading companies such as static pharmaceuticals, we are poised to continue to succeed as this market grows.
Brazil's medical cannabis market is estimated to be worth $116 million by 2025.
<unk> is set up for success in this market, having completed the very difficult product authorization process for two skus in 2022.
We are currently the only Canadian producer to successfully complete this process in Q2, we received our first commercial purchase orders and important authorizations for Brazil, and we made our first sale during Q3.
As a first mover in this country, we expect more orders to follow as we register additional products and complete replenishment.
During Q3, we also completed R&D and commercial scale development on pharmaceutical drug Dronabinol, which is a 95% purity of THC isolate.
This is used as the pharmaceutical API and is widely used as a compounding drugs by pharmacies in Germany.
And that market turn happened all at the second highest prescribed non flower cannabis products behind pharmaceutical drug at the Badlands.
Summarize our unique position in the Canadian domestic wellness international medical and pharmaceutical markets will enable <unk> to scale rapidly without the need for additional capital licenses or resources.
We have launched many new products in Canada, where we continue to build domestic growth. This segment has seen an impressive 81% increase year over year.
Globally, we have a rich pipeline of opportunity and we are managing new product launches and the quickly accelerating international medical cannabis market.
I will now pass the call to Greg to discuss Betty Farm financial Greg.
Thanks, Keith and good morning, everyone in our prior calls we discussed the importance of growing our international revenue base through organic and inorganic initiatives.
Dosing kasper and driving towards profitability as top priority.
Pleased to report we made progress on all of these initiatives in Q3.
As David noted at the end of August we completed the execution of our restructuring plan that saw a 30% reduction in the Canadian non manufacturing head count.
This initiative will save $3 million on an annualized basis with Q4 being our first full quarter to benefit from these savings.
In addition on October six subsequent to Q3, we closed the transaction to sell our Australian facility to 75, new Australian dollars or.
$6 4 million Canadian dollars.
This transaction has several key benefits one it will reduce our annual operating expense by $4 million.
Two it will consolidate our global supply chain and production capabilities into our GMP facility Berry to drive further efficiencies and.
And three it strengthened our balance sheet with the additional $6 4 million of cash received in October enabling us to continue to execute our strategy.
Together, the Canadian restructuring and the sale of our Australian facility will save $7 million on an annualized basis with these savings fully realized starting in Q4.
In addition, we reduced our Q3 cash flow into $2 5 million as we continue to focus on reducing working capital to help generate cash.
Turning to the P&L performance for the third quarter.
Revenue for the third quarter increased 66% on a sequential basis from $4 4 million in Q2 to $7 3 million.
Revenue in the provincial sales channel grew 28% on a sequential basis and 81% on a year to date basis net sales increased to $3 5 million in Q3, and $8 8 million year to date.
This growth is driven by our new and innovative product the launch of our shelter wildlife brands in May 2022, and select investments, we made in sales and marketing.
However, as we continue to shift our business towards the end products. This growth was offset by a reduction in our tolling and <unk> business.
This shift is in line with our strategy as we are decreasing our reliance on the less stable and less profitable <unk> market segment, and increasing focus on the more sticky and profitable Canadian adult use and international medical and pharmaceutical markets.
Canadian domestic revenue increased 28% sequentially to $3 9 million in Q3 from three zero in Q2.
International revenues increased 156% sequentially to $3 4 million in Q3 from $1 3 million in Q2.
As discussed in prior quarters. This revenue segment will fluctuate as the market matures and we expect Q4 to decline relative to Q3, largely due to the sale of our Australian business International revenue represented 46, 5% of total revenues in Q3, and 40% on a year to date basis.
This segment will continue to grow over the next year with our gains in existing markets and with our expansion into new markets, such as Brazil, and the United Kingdom.
Gross profit for Q3 was negative $1 2 million compared to Q2 gross profit of negative <unk> 5 million.
Q3, gross profit was impacted by a <unk> $4 million of selective inventory and some international sales at lower margin to move older inventory.
General and administrative expenses in the quarter decreased sequentially from $4 7 million in Q2 for $3 5 million in Q3 Q.
Q2 included severance for restructuring of zero point $8 million.
Adjusting for severance general and administrative expense declined zero point $4 million.
This decline was largely driven by our restructuring completed in August .
In addition to the $3 million cost reduction we discussed previously we continue to look at further opportunities to reduce expenses.
Marketing and selling and R&D expenses of $1 $7 million and 0.3 million respectively. In Q3 were consistent with Q2.
These investments will vary as we selectively allocate resources to advance our capabilities and product portfolio with a vision to become one of the most sophisticated cannabinoid producers in the world and capture a sustainable portion of the global cannabinoid medical and pharmaceutical markets.
Other operating expense of $1 3 million was driven by a noncash write down of Australian assets to fair value less cost to sell.
Adjusted EBITDA for Q3 improved $1 3 million from negative $6 3 million in Q2 to negative five zero million.
Moving to a few notable items on the balance sheet.
Trade and other receivables declined from $14 8 million in Q2 to $13 7 million at Q3 with a continued focus on collection.
As discussed in previous quarters, there is one large customer or a total of approximately $8 5 million at the end of Q3, which is subject to legal proceedings.
During Q2, we received a favorable summary judgment with respect to this legal proceeding awarding 94 $9 $8 million.
This is a positive outcome from any farm. However, this customer has appealed the summary judgment and thus there is still work to be done to collect this cash.
Adjusting for this one customer trade and other receivable is $5 2 million.
Our focus on cash and working capital is paying off as our cash balance on September 30 was $19 5 million, which decreased $2 5 million from June 30. As noted previously. This does not include the $6 4 million collected for the Australian sale in October .
Although we still have work to do to get the profitability and become cash flow positive Q3 was a step in the right direction.
Sales and adjusted EBITDA improved both sequentially.
And year over year.
$7 million of annualized savings was realized with the implementation of our restructuring plan and the sale of our Australian subsidiary.
Kasper reduced relative to prior quarters with continued improvements in working capital.
And today, we have approximately $23 million of cash and are virtually debt free.
Finally, given the strength of our balance sheet relative to our peers. We are very well positioned as we looked at the M&A landscape with many transformational opportunities with that I'll turn it over to the operator to open the line for questions.
At this time I would like to remind everyone in order to ask a question. Please press Star then the number one on your telephone keypad.
Well pause for just a moment to compile the Q&A roster.
Your first question comes from Aaron Grey with Alliance Global partners.
This is Robert Smith on for Aaron Gray, Thank you for the questions.
So my first question nice to see the sequential increase in sales, particularly to.
Australia and Germany.
Given the international sales can be volatile wanted to see if you might be able to provide additional color on your line of sight to sequential growth continuing on the international front and how does that differ between legacy markets and the new markets, such as UK and Brazil.
Yes.
Good morning, Thanks for thanks for the question. This is Keith here.
Definitely correct.
We were very happy to see the growth that we saw on the international sales but.
But as we mentioned in the past it is something that is a little bit lumpy by nature, just for the fact that onboard new customers and some of the important.
I think.
We've been building on the base.
Building the base of customers and growing that business in some countries I think in Q4, we may see a slight decline like for example in in Germany, where we don't see as much regulatory action in the month of December .
Due to holidays in that country, but then when we look at other new.
Emerging markets for us such as the UK and Brazil.
To see substantial growth quarter over quarter in those areas.
Yeah.
Great.
And then for my second question looking more specifically at Germany. The health Minister that we spoke about putting details on the adult use market.
Could you speak more to how labs plans to capitalize on the market, especially given the initial plans call for production beat up domestically does that have a notable impact and how would you look to leverages style relationship in the adult use market.
More geared towards the medical market.
Thanks, Joe that's a great question, it's something that we're watching very closely.
And we saw the draft of the regulations and we're waiting to see some of those things are finalized we will.
A lot of experience in Germany, we've been shipping there since the beginning of 2021, we have some great partners, there, most notably probably staff.
I think that we will be able to participate in that market going forward I think.
<unk> itself is built on being a medical pharmaceutical candidates company, sorry strength will remain in the medical market. There I think what's really great about.
Countries like Germany is medical cannabis has covered so in countries like Canada, where we saw the legalization.
Candidates for adult use kind of stalled some growth in the medical market.
We don't expect to see that same stalling in places like Germany, where patients are getting in most cases full coverage after that medical product do you think that patients will continue to see candidates in the therapeutic benefit of it to treat the different indications.
We are still quite happy and quite bullish on the German medical market and kind of waiting and seeing what that looks like on the adult use market.
Great. Thank you if I could.
More question.
<unk>.
Specifically in Canada, we've seen both larger and smaller players to emphasize.
You mentioned drew.
On your industrial and large even exit the market to focus more on international could you speak a little bit more to that and how you view the Canadian market today in your business and the opportunities to be profitably in the market given the competitive environment.
Yes, it's Steve I'll take a.
Ill talk to that we see diversification is a pretty important part of all of these markets are growing at different rates and different things that are happening in each of the different markets around the world. So our Canadian presence is actually pretty important.
Sure.
And.
If your question is are we deemphasizing.
Our Canadian.
Side of our business in fact no.
We have significant investments in sales and marketing.
<unk> channel in the market.
Through a direct sales force and we're seeing incredible growth in the Canadian market. So.
Wow.
Our global sales represent between 40%, 50% of our revenues are growing nicely our Canadian business is actually growing very well we've launched.
Many many products this year.
Been very successful in retaining market. So we're actually feeling pretty good about what's going on for us at least in the Canadian market right now I'm sure that address your question or anything to build on that.
Yeah.
Yes, no that's great. Thank you.
Your next question comes from the line of Scott Fortune with Roth Capital Partners.
Hey, Good morning. This is Nick on for Scott I, just wanted to go back to the international side could you just provide an update on what you've seen in terms of pricing just specifically in Germany, and the margins there and if you could just add a little color on the growth you've recently seen on the status side just in terms of overall penetration that would also be helpful. Thank you.
Good morning, Nick Thanks for the question.
We are seeing some correction in that market.
Both in Germany, and other countries as far as pricing goes it is starting to level out so we haven't seen.
Something as aggressive as some of the <unk>.
Legalized states or in Canada, and I think as I mentioned earlier the coverage is a key parts of that because consumers are not out of pocket. These patients do have coverage, we're not seeing as much.
Pressure on pricing, especially for extracts so in the oil category.
Where was the strongest I, we're not seeing that at all because it is primarily a medical product.
Our market, where a patient goes on pace I think youll continue to see kind of.
Pricing up and down as kind of that market matures. So we're really happy to kind of use of specialty products out of that I did mentioned on the call. We've done some extensive development entre and abnormal which is upon the drug in Germany by compound pharmacies and that does happen.
Selling price and a great margin.
Form any farm so we're really looking forward.
<unk> seen that launched.
The things that we're doing to curb that I think the.
The second part of your question just how are we seeing on growth we mentioned before in the past status approach in Germany has been.
Very methodical as far as Onboarding physicians and patients are slowly so rather than going in and making a deal with them.
Honesty that does distribution, they're getting right to the patient for the physician level and we're seeing that grow month over month. So every month.
That is <unk>.
Those are growing and their candidates division.
And so that will fall through back to many pharma as I mentioned before there are many farms sales are a bit lumpy as we will do bigger motive and then they'll sell through those over 60 to 90 days and then we will replenish.
The sales on the actual satisfy our very smooth.
Nice softening client.
Great I appreciate that color and then just second one from me on the margin side could you just provide an update on the gross margins in Canada, and just kind of a strategy around leveraging the sourcing environment.
Kind of improve that line item.
Just recently, what you've seen them on the procurement side, Canada would be helpful.
Yes, I can take that.
Some color so as we as we said in the recorded remarks.
Our <unk>.
Gross margin did decline couple items in there as we were looking at reducing inventory, which helped cash. So we did some selective.
Sales at lower margins reduced cat.
We also had some production mix change, which lower overhead and we are focused on improving margins. So we have a couple of initiatives underway, which we've talked about in our remarks on pricing. So we're focused on increasing pricing to improve margin and we're also focused on selectively reducing cost in various product groups.
And third we have also eliminated certain product lines, where the margin is.
Not where we'd like it to be so what those initiatives. We do expect to see improved gross margin as we move forward here.
Great Thats it from me I appreciate the color.
Yeah.
Your next question comes from the line of Timmy Chen with BMO capital markets.
Hi, good morning, Thanks for the question.
First I wanted to start off with a clarification.
Does that in Q4, Youre expecting a sequential decline in international revenues, partly because of the sale of the Australian facility I wasn't sure why that way.
Contributor because I thought now producing our international products and your Canadian facility and there was another comment you made that in Germany in Q4.
Because there's no regulatory action given the holiday that that may affect your sales.
Why would that be like when you're talking because you can't get new product authorization in that line.
Yeah. Good morning, Jami. Thanks for the question I think so on the Australia side.
You are right we have taken on the majority of that revenue through our Canadian facility. We did do some activities in Australia that we're polling by nature. So we would take in Australia.
Raw material that was owned by another producer there and turn it into a concentrate product incentive factor that is something that we couldnt capture back.
Into Canada, so those tolling activities, we can do just because of August .
Would it make sense to send the raw material from Australia to Canada, and then back to Australia.
And then on the the Durbin side.
There is no clear indication of what closed for the month of December .
As we mentioned we have a lot of experience in Germany, and it's something that we've seen last year and even the year before that we were registering products in 2020, and 2021 were doing replenishment. So we will continue to do.
Any deliveries from Canada, we have some even in the coming weeks.
Sometimes around December for some of that to slow and that could be anything from labs releasing products to customers.
Leasing products back to us. So it's just something that we are keeping on our radar.
Okay I understand.
And your comment about looking to raise prices on some of your products with interesting because the cannabis industry.
Generally has just seen an overall trend of more price decline in compression. So I'm wondering if you could just elaborate on where you see opportunities that you think you're able to actually raise prices.
Yes, that's a really good question and one that we're spending lots of time on both with.
With buyers and yeah and internally.
Certainly the environment to date has been one of declining prices.
And.
Certainly the competitive environment has required all.
Manufacturers and sort of follow and decrease prices I think were seeing some not just with us but with other Lps I think we're starting to see first of all the leveling prices and then just the ultimately selling below cost is stopping not just with us, but we're seeing kind of in the marketplace in general So where do you think of it.
It is actual price increases or mix NV, refusing to selling below cost or when launching new products be much more thoughtful in terms of the price point to make sure that it is at least contribution margin accretive that's kind of a new headspace that wasn't probably in <unk>.
Industry at all and not within our company, either which is very high on our radar screen now having said that we actually have been successful in products that would surprise you in getting prices in the provincial.
Two provinces increases and we're not talking <unk>.
Dramatic, but if you are thinking that.
Everything is going up by 8%.
Getting marginal increases in the marketplace.
The market actually seems pretty receptive to that and so that isn't going to be something that changes overnight.
Save the industry or our company sort of instantly.
But I think the new messaging around both internally externally and in the market.
Around much more responsible.
Approach to call it the volume versus price perspective.
Is when it's starting and it's certainly a very well established and obviously, where you have differentiated products, it's easier to do.
Differentiated and established brands, it's easier to have difficult conversations and the conversations are going on not just in the Canadian marketplace, but basically every contract I think we mentioned on line by line review of our pricing and profitability and so price is one of the levers that we're looking at cost.
Per product level is one of the leaders were looking at the cash flow associated with any individual product on track and we're revisiting contracts that we already have so I would think of.
Price as one of the levers, but I can think of it more as.
An incredible attention to detail line by line to make sure that everything we put out there certainly on a go forward basis is profitable and anything that is dramatically challenging historically in our portfolio, we're addressing as well.
Got it Okay and last question for me is is there anything more you can say about the API you contributed in the quarter today, new drug application I'm curious, what's the what what is the new drug application anything more you can say that that would be helpful. Thank you.
Yes.
We thought it was important to.
To update investors on some of the work that we've done.
Many farm is probably a global leader in the characterization of pharmaceutical CBD.
With that and with our drug that was wood license.
Master file with the U S FDA gives us opportunity to supply API too.
Total company.
In Q3, we provided API for new novel drug applications.
Yeah.
Very long by nature, as well as abbreviated new drug application, an abbreviated new drug application is basically a generic application. So our pharmaceutical partner is targeting.
Current.
Pharmaceutical drug with cannabinoid doesn't API and they're filing a generic for that.
We are being a little bit restricted in some of the information that we're doing there is a competitive advantage of not fully disclosed and that's for a pharmaceutical partner, who would prefer that we don't get into too much details, but as the final makes its way through the process, we will be able to continue to update all of our stakeholders.
Okay.
Okay. Thank you.
Yeah.
There are no further questions I will now turn the call over to David pick CEO for closing remarks.
Thank you operator, I just want to thank everyone for joining us today, everyone have a great week and we will look forward to speaking in the new year.
Thank you for participating this concludes today's call you may disconnect at this time.
Yes.
Yeah.
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