I would now like to turn the conference call over to your host, Jamie Kokoska, Vice President, Investor Relations. Please proceed.
Thank you, Celine. Good afternoon, everyone, and thank you for joining us for our fiscal first quarter 2022 results conference call. Discussing Numinus's performance today are Payton Nyquvest, founder and CEO, and John Fong, Chief Financial Officer. Joining them for analyst questions at the end of our formal remarks is Evan Wood, Chief Medical Officer. The following discussion may include forward-looking statements that are based on current expectations and are subject to a number of risks and uncertainties.
The risks and uncertainties that could cause our actual financial and operating results to differ significantly from our forward-looking statements are detailed in our MD&A for the quarter ending November 30, 2021 and in our other Canadian securities filings available on SEDAR. Numinus does not undertake to update or revise any forward-looking statements to reflect new events or circumstances, except as required by law.
Our first quarter results were made available earlier this afternoon. We encourage you to review our earnings release, MD&A, and financial statements, which are available on our website as well as sedar.com. As a reminder, all figures discussed on today's call are in Canadian dollars. I'll now turn the call over to Payton Nyquvest, Chief Executive Officer.
Thanks, Jamie, and good afternoon, everybody. Before I provide my comments, as I acknowledged in our last earnings call, again, I'd like to extend the utmost gratitude that our work is conducted on the unceded homelands of the Musqueam, Squamish, and Tsleil-Waututh peoples and on the sovereign indigenous lands and territories across Turtle Island. We are committed to a path towards reconciliation through continuous learning, reciprocity, and humility. Our first quarter laid the groundwork for many of the milestones we've achieved over the last several weeks.
We completed the acquisition of the Neurology Centre of Toronto and developed a clinic integration process to follow as we continue building out our wellness clinic network. We launched ketamine-assisted psychotherapy for depression services and developed a formal training program for therapists that will allow us to further expand this offering.
We completed the clinical trial protocols for the upcoming study for our proprietary natural psilocybin formulation, which will be enrolling participants soon, as soon as regulatory approvals are granted. We began work on several interesting discoveries at Numinus Bioscience, and some of which have already led the development of patent applications. We prepared for our uplisting to the Toronto Stock Exchange, which occurred on December 16.
Even with all this work underway, I'm pleased to say that both of our business divisions saw meaningful revenue growth in the first quarter compared to the previous quarter. Numinus Health saw revenues increase 62%, and Numinus Bioscience saw revenue growth of 56% sequentially from Q4 2021. We're very pleased with how our business is performing and how our growth strategy is progressing. Now let me discuss our recent activities in more detail.
In Numinus Health, all five of our wellness clinics saw increase in client appointments compared to the previous quarter, with ongoing demand in traditional therapy services and increased interest in ketamine-assisted psychotherapies. Overall, client appointments throughout our wellness clinics increased 92% compared to the previous quarter, supported in part by the acquisition of the Neurology Centre of Toronto in September. On a same-store basis, not including NCT, appointments still grew an impressive 42% relative to last quarter.
The amendments Health Canada made to the Special Access Program just this month have further increased inquiries about accessing other psychedelic-assisted psychotherapies. This announcement was a major milestone for Canadians seeking access to non-traditional treatments, including the use of psychedelic medicines, and we are continuing to work closely with Health Canada and in our clinics in order to provide those who qualify for the psychedelic-assisted therapy treatments they need.
Ketamine for depression treatments were initially launched in two of our locations during the fiscal first quarter. Initial interest in these services has been very positive, and we are in the process of expanding those services to two more clinics now. This is due in part to our recently finalized ketamine-assisted psychotherapy training program for therapists, which will soon be provided through virtual training sessions scheduled over the next two months.
This training program will expand the number of Numinus therapists qualified to provide KAP sessions to clients and will allow us to further scale these services as we grow our clinic network. We expect future training programs for other psychedelic therapies can be based on this training program and will ensure consistent quality care will be available to our clients with their chosen therapists at any of our wellness locations.
As I mentioned earlier, in September, we welcomed the addition of the Neurology Centre of Toronto. This acquisition has provided us with an important entry into the Toronto market with a well-respected and revenue-producing medical clinic that is providing incremental cash flows to our clinic operations. It will also expand our service offering to provide psychedelic-assisted care for those suffering with neurological conditions, something that further differentiates Numinus' wellness services from other providers in our sector.
As a reminder, all of our wellness clinics provide a wide range of mental health care services alongside psychedelic-assisted treatments, and these include traditional therapies, group therapies, couple therapy, and now neurological care. Collectively, these services will continue to drive reliable revenue streams and cash flows across our clinic network as we grow our psychedelic therapy offering in line with regulatory reform.
The recent changes to Canada's Special Access Program will now allow us to apply for patients to access psilocybin and MDMA-assisted therapies when approved by Health Canada. We're pleased to be able to offer these therapies with some of the most highly trained therapists throughout our network of purpose-renovated clinics designed for these specific treatments. Our expertise and experience in providing these psychedelic therapies demonstrated through our involvement with MAPS-sponsored and in-house research trials is something that we're very proud of.
In fact, we are about to launch two clinical studies to further advance research on the merits of both psilocybin formulation and MDMA during therapy. First, we're excited to begin the phase I study of our own proprietary naturally derived psilocybin extract formulation. The application for this two-part study, known as HOPE, has already been submitted to Health Canada.
Following their anticipated approval, we will begin this clinical trial in partnership with a contract research organization to ensure its swift completion and full compliance with drug development expectations of health regulators. This proprietary formula was de-developed to stably deliver psilocybin and other synergistic compounds and is derived using a patent-pending technology developed in our lab. This phase I will specifically evaluate the bioavailability and tolerability of this formulation among healthy volunteers.
We expect to begin enrolling volunteers for this study in the next few weeks. Assuming positive results from phase I, we anticipate this study will lead directly to a phase II clinical study to evaluate the efficacy of this product.
As we announced just yesterday, we are also very pleased to have completed the necessary steps to begin enrolling participants for the MAPS Public Benefit Corporation study to evaluate MDMA-assisted psychotherapy for post-traumatic stress disorder. This study has recently received regulatory approval from Health Canada, ethical approval from an institutional review board, and a Section 56 exemption from the Controlled Drugs and Substances Act, which allows us to use MDMA throughout the duration of the clinical trial.
This trial will be open to eligible Canadian participants who were previously enrolled in the placebo arm of the MAPS parent study, who were unable to receive treatment due to COVID-19 restrictions. Numinus is hosting and managing the Canadian sites for this trial at its two new research clinics in Montreal and Vancouver. This is an exciting next steps for the MAPS extension study and MDMA-assisted therapies.
We look forward to collaborating with MAPS more closely in the future. At Numinus Bioscience, we are continuing to make remarkable discoveries and expect to submit additional patents in the coming quarters. Our key focus is on delivering products and formulations that can be implemented in therapy, and future patent applications will most likely be related to efficient processes, effective formulations, and the discovery of bioactive pathways. As a reminder, we are concentrating on defensible research and innovations, as well as establishing research excellence and compliance for regulatory bodies.
Just recently, we acquired several additional species of psychedelic mushrooms, which will further expand the breadth of our research and expect to make many more discoveries that are not yet published. Genetic testing of these mushroom species is already underway.
During the first quarter, we also developed proprietary psychedelic drug tests with new toxicity and potency scans. These new tests have accelerated Numinus' research capabilities and may also generate new revenue streams through third-party product testing. Overall, we're pleased with how our business performed during the quarter, with strong revenue growth achieved in both our business divisions, positive gross margins, and some early indications margin expansion will continue as we benefit from the economies of scale and the standardization of clinic process.
We're proud of the fact that we're building a business model that can scale rapidly and look forward to seeing the benefits of this strategy as we execute our growth strategy. With that, I'll now turn the call over to John to review the first quarter financial results in more detail. After which, we'll provide some commentary on the outlook.
Over to you, John.
Thanks, Peyton, and good afternoon, everybody. Our first quarter results reflect many of the growth initiatives we've undertaken in the last year. Both the acquisitions of Mindspace and the Neurology Centre of Toronto contributed to our significant year-over-year revenue growth. Our positive positive growth margin and a rebalancing of our revenue streams weighted more towards clinic operations. In total, revenue for the first quarter grew 60.9% from just last quarter and more than doubled from the first quarter last year to CAD 790,000.
Our clinic operations produced 82% of our revenue this quarter, compared to just 14% in the same quarter last year, demonstrating the shift in our business model towards operating an increasing number of wellness clinics.
First quarter revenue from Numinus Health was CAD 640 thousand, a 62% increase from just last quarter, and an almost twenty-fold increase from the CAD 33 thousand generated in the same quarter last year. Numinus Bioscience generated CAD 142 thousand during the first quarter, a 56% increase from last quarter, but a 28% decline from Q1 last year as we ceased cannabis-related activities throughout the past year to refocus our resources on advancing our psychedelic-centered service offerings.
While our business has grown, our cost of revenue has increased less than revenue growth, which provided a positive gross margin of 6.5% during the first quarter, in line with our previous quarter, and a meaningful improvement from the negative 16.6% margin generated in the first quarter last year.
Total gross profit for the first quarter of 2022 was CAD 51,000, a 60% increase from last quarter when we first began generating positive gross profit. Overall, corporate expenses grew alongside the expansion of our business and totaled CAD 5.3 million during the quarter, compared to CAD 1.9 million in the same quarter last year. Included in this quarter's expenses were transaction costs related to the acquisition of NCT, higher sales and marketing expenses, and a 268% increase in research and development activities compared to the same quarter a year ago.
Overall, cash outflows during the quarter was CAD 3.9 million, in line with our expectations of CAD 1 million-CAD 2 million per month with our current business platform.
The loss of the quarter was CAD 5.4 million or CAD 0.03 per share, which is a 13% improvement compared to the CAD 6.2 million loss we incurred just last quarter, excluding a non-cash impairment charge from Mindspace. In terms of liquidity, we ended the quarter with a strong balance sheet and CAD 53.9 million of cash on hand. With revenue streams offsetting some of our expenses, we continue to be well-positioned financially to sustain our business model and pursue our long-term strategy. With that overview of our financial results, I'll turn the call back over to Peyton for some closing remarks. Peyton?
Thanks, John. Health Canada's amendments to its Special Access Program is a significant first step towards what we hope will be an even greater access to psychedelic-assisted therapies in the future. The positive feedback Health Canada received from its stakeholders and the public about the support for psychedelic medicines in particular have given us some even more confidence that the public opinion and positive clinic's research results will drive further accessibility to these important medicines and therapies in the future.
With that in mind, we are committed to our growth strategy of building a world-class portfolio of client-facing wellness clinics that will cater to where we think regulatory reform will lead in three to five years from now, with clinics designed specifically to provide the very best set and setting for all types of psychedelic therapies in the future, alongside a variety of supportive traditional therapy services.
Compared to other clinic operators in our sector, Numinus is differentiated by delivering a holistic and wide-ranging offering of mental health services. This strategy also ensures that our clinic revenue streams are well-diversified and always anchored with reliable cash flows generated through traditional therapy and neurological services. This comprehensive approach also helps to build a community of loyal clients who feel safe, understood, and welcomed at our clinics, which in turn builds long-lasting repeat customer relationships.
We have also already invested time and capital into developing the infrastructure needed to efficiently operate a network of clinics and believe that these technology, HR, and training processes will allow us to drive margin expansion as we leverage economies of scale going forward. We continue to review clinic growth opportunities across North America and have already identified several potentially attractive additions for our business.
We aim to add at least five additional clinics to our platform by the end of 2022 and potentially more. As I have said before, our clinic expansion strategy is grounded in what works strategically and economically. We're focused on building our brand awareness and operational scale while also driving margin improvement in the business. We will only pursue opportunities that meet all of our criteria. Until we complete our clinic due diligence, market research, and acquisition negotiations, no opportunity is guaranteed.
I look forward to updating you over the course of the year as discussions with these clinics' owners progress. As investors gain a better understanding of the drivers of the psychedelic sector, we're beginning to see renewed interest in the space.
While there are a variety of companies focused on different aspects of the industry, we remain confident in our market position and our growth strategy going forward. Specifically, we have a strong balance sheet with more than CAD 54 million of cash on hand. We're generating growing revenue streams in both of our business segments, and we're working with some of the industry's most respected organizations, including MAPS.
I expect we'll see some consolidation in our sector over the next several quarters, with those of us who are well-capitalized and strategically differentiated given the opportunity to capture a larger share of the market. We're very pleased with our methodical approach to growth with the investments in scalable infrastructure and our established revenue streams and minimal cash burn have firmly positioned us to be a growth-focused leader in the sector.
With that, I'd like to open the call to questions from analysts and institutional investors. Over to you, operator.
Thank you. At this time, I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad. Again, that is star then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. We have a question from [Sep] Manuchehri with Eight Capital. Your line is open.
Thanks, and good afternoon. Congrats on the margin improvement, and obviously your leadership positioning continues to be even more salient day by day. Just a question from me on to start with the supply side. When you guys speak about your positioning as a holder of a Dealer's Licence, does that position you right now with the SAP program differently than, let's say, a month ago? Do you have increased discussions with any parties that are interested in accessing your active ingredients? Can you kind of characterize that if that has changed?
Yeah, I can touch on that quickly. It's Peyton, and then I'd probably hand it over to Evan. You know, the changes to the Special Access Program clearly, you know, obviously have come fairly quickly, and I think a lot of groups are still trying to figure out how the supply side for Special Access is going to work. We're definitely uniquely situated, not only with the licensing that we've got, but also our familiarity with the compounds and with Health Canada. Evan, I don't know if you have any comments about that.
Yeah. I think certainly for U.S. producers of psychedelic products, so whether that would be an organization like Usona or MAPS, to be able to import into Canada, organizations would need to have a dealer's license to be able to do that. That's important. Sorry, Sep, what was your other question?
Just with regards to, I guess, if you've had increasing discussions with people interested in your supply and whether it's psilocybin or other active ingredients, if that has ticked up since the SAP approval or if things are still pending in terms of your positioning and your ability to distribute.
So I think it's fair to share, and you know, it's not state secret that we're absolutely in conversation with different groups in terms of supplying a partnership and that kind of thing. But I probably can't share more than that in terms of any sort of agreements and things that are being reached around that. As Payton alluded to, this is a bit of a unique situation with the Special Access Program because it's really not for psychedelics, it's for all substances.
Normally a drug would have a single, you know, company bringing forward a patented drug, where in the case of psilocybin, there's a number of groups, including our own, that are developing products.
In the case of MDMA, it's really just MAPS that is the main drug developer that's out in front. We continue to work closely with MAPS and for our own product development or looking to align our efforts with that. I feel pretty confident that we've done a good job with that. Probably nothing more than that for putting out in the public domain until more formal agreements are reached.
Perfect. I think you led right into my next question around any ability to kind of move forward on MDMA will likely be linked in MAPS, and you guys are obviously their key Canadian partner. I'd love to know how does the access to the compound itself differ for other players versus for you when you have a Dealer's Licence and a relationship? Would companies and networks of clinics be reaching out to MAPS, or would they be reaching out to you?
Payton, maybe I'll just jump in there. I think, you know, both our organization and MAPS are about access, and so I can't really speak for MAPS' perspective on this. Certainly, our Dealer's Licence would enable us to support other efforts. You know, at this point, MAPS' focus is really on getting approval through the FDA and Health Canada with its drug, and won't wanna be, you know, just releasing its product willy-nilly to groups that, you know, aren't being appropriately vetted to ensure they can deliver the MAPS intervention safely and according to their protocols.
Obviously, we've got lots of experience with them, so we like to feel like we're well-positioned with them.
Really in terms of who they're providing drug to and how they'll go about that is really up to MAPS. I know from my conversations with them, they're, you know, up to their elbows in a phase III trial, their second phase III trial, and that's their focus. They're also about access and for patients suffering with treatment-resistant PTSD. With this program now opening, they're certainly obviously interested to see what this might mean.
Okay. You would be potentially a conduit for basically MAPS in Canada. Would that differ? Would that require an MOU, or does your existing relationship serve to kind of basically have you do the dose forms and get the supply from MAPS for approved patients?
Yeah. Pete, maybe I'll let you answer that.
Yeah. I think the existing relationship certainly lets us get off the ground and start to get applications in while we continue to explore more opportunities to work with MAPS.
Understood. What is the nature of the application process right now as you, is it tinkering with the applications themselves and kind of having a back and forth with Health Canada, or have there been approvals that have come through already? Can you kind of characterize where we are?
Yeah. I can jump in with that. Yeah, there's a couple of things. There's the drug supply that needs to be, you know, acceptable to Health Canada and so the drug product provision is an important consideration. The other is the in-clinic readiness. You know, appropriately trained therapists, the physical infrastructure, you know, all of the kind of consent forms and screening and safety elements that, you know, we have a fair amount of experience with.
The Special Access Program is for individual patients who individual physicians will apply on their behalf if they meet that serious or life-threatening condition.
All of that, you can imagine, is being worked through right now in terms of everything from the supply to the safe provision of what's a new intervention. I think, you know, for our organization, we're about, you know, safe and accessible. There's a priority around access, but also making sure that we do this properly so that, you know, there's no setbacks for patients or obviously the industry with not taking, you know, great care with the delivery of these interventions. I expect we'll have much more to share on the next quarterly update, and at this point, probably shouldn't say more than that.
Okay. Would it be correct to assume there's some sort of pre-qualification process in place, like you're saying, to kind of understand the patients that are qualified before you apply to Health Canada? Or, do you already have an ability to do that, and are you kind of assembling a roster of different patient groups and doing them all together? Is it incremental? Can you kind of characterize the cadence here?
Yeah. Yeah, 'cause we've had, you know, multiple conversations with Health Canada, and they've been really clear that their preference and different groups can say different things, but straight from the horse's mouth at Health Canada is they really wanna see individual physicians applying on behalf of individual patients. They don't wanna see, you know, sort of cohorts apply for and that sort of thing. They're really looking to have this be a Special Access Program as it's defined for individual patients.
The distinction being from other, you know, in comparison to, for instance, the U.S.'s Expanded Access Program as it's been set from the PATH for MDMA, and it's a limited number of patients under a protocol, whereas the Health Canada Special Access Program technically doesn't place those kind of limits.
It's really about individual physicians on behalf of individual patients. We'll know more as we go in terms of their willingness to grant access to these medications that aren't yet approved in Canada. My hunch is they're gonna be looking for appropriate diagnoses of eligible patients and organizations where physicians are embedded that can safely deliver these interventions. We feel like we're well positioned to do that for sure.
Particularly, I gather, with the MDMA from MAPS, the training from MAPS that a number of your clinicians have. Is that every clinician that you currently have that's trained in that delivery, or is that a majority? Can you characterize that?
Yeah. I don't have those numbers in front of me, but I think off the top of my head, and don't quote me, I think 26 Numinus-affiliated therapists have done the training. That may be an underestimate, I fear. The vast majority of the core Numinus therapists have done the MAPS training and or are in the MAPS training right now. Yeah, but to your point about, you know, particularly MDMA, I certainly feel like we're well positioned with MDMA because of, you know, the trials that we've done with MAPS and our work with them going back some time.
I actually think we have a number of industry leaders with expertise in psilocybin-assisted psychotherapy, you know, thought leaders within our team that have done the CIIS training and have gone to, you know, actually participate in legal psilocybin-assisted psychotherapy programs as part of their practice and training and the work that we've been doing to prepare ourselves for the phase I trial with psilocybin. I feel like, you know, we're very well positioned, if not out in front with that as well. I feel, you know, confident.
Yeah. Certainly.
In our ability across the psychedelic substances that we're using.
Certainly. I think you led right into my next question on the psilocybin trial that you're doing with psilocybin. I understand it's a two-component study, and the second component has a comparator arm comparing to synthetic psilocybin. Will there be an interim readout after the first part is done where you compare just alone?
Yeah, that's our intention because of course, you know, the landscape from a policy perspective is shifting. What we've done is we've set up the trial with an off-ramp if regulations were to change, for instance, and Canada were to establish a, you know, sort of a medical access regime for psilocybin. Because I think psilocybin is a naturally occurring molecule with the historical use as a kind of sacred medicine for hundreds of years warrants a different type of regulatory regime than something like MDMA, which is a synthetic molecule that's kind of on the drug development pathway.
Yeah, we would probably off-ramp to, you know, the sort of medical access model.
The phase IB is intended to be on a totally traditional rigorous drug development path towards an FDA kind of Health Canada approval with a comparator that would generally be necessary in phase I as part of that and would enable us to pivot into phase II on the drug development path.
Understood. Like, what do you think about in terms of timelines and the cadence of enrollment? I know, I think, Payton was mentioning pursuing the work with a CRO to kind of accelerate that. How do you kind of think about the timing? I know in the current environment it's hard to pin down timing and enrollment cadence.
Yeah.
With healthy volunteers, I imagine you might be able to get. Yeah, I don't
Yeah, you're exactly right. I don't think enrolling will be a challenge. It's probably more just the regulatory issues that are beyond our control, you know. We're working with a contract research organization. I have a huge amount of confidence in the protocol and, you know, all of the sort of rigorous activity that goes into a clinical trial. You know, regulators and Health Canada and their approval processes, we're kind of at their mercy.
You know, I don't think anybody saw Omicron coming and, everyone at Health Canada is still working at home, et cetera. These types of things create delays that are difficult to forecast. Yeah, we've reached the milestone of having everything to the point where it's been submitted to Health Canada for their review.
Assuming we hear back from them according to their usual schedule, I expect we'll get into enrollment in the spring. This isn't gonna be one of these clinical trials that takes a year to enroll people. I expect we'll be able to enroll people rapidly and close out that part A of the study and be able to report out on that quite quickly.
Understood. Just with regards to, I guess, the timing as we get to kind of springtime discussions, there's gonna be more talk around regulation changes down south near the U.S. with the midterm elections. Does the West Coast of the U.S. seem more particularly enticing when it comes to expansion opportunities because of some of the deregulation, or is it just areas that you see more amenable to reimbursement? Like, how do you think about expansion opportunities? What is priority when it comes to kind of the geographic split? Or is it kind of Canada's priority right now because of the SAP program?
Payton, I'll let you take that, and then I can add some color if you like.
Yes. Yeah, I can hop in there. Certainly, you know, the changes to the SAP program, while continuing to sort of validate the approach we've taken around focusing in Canada, really now looking to transition and expand into the U.S. as well. In terms of the West Coast, I think it's more so obviously if you follow the track of some of the decriminalization movement, there's certainly states and jurisdictions that are maybe a little more educated or interested in psychedelic therapy and a stronger support.
Obviously keenly watching the Oregon psilocybin movement that's been happening and there's still some more clarity that's needed there to better understand what that platform is going to look like.
I think in terms of expansion, certainly the states like California are demonstrating an interest in psychedelic therapy through the decriminalization movement, but certainly spread out a little bit. We'll continue to focus on those jurisdictions that have shown a keen interest in psychedelic therapy. Evan, if you've got any more thoughts.
Yeah. It just depends on the molecule. I think I totally agree with what you've said, Peyton. Certainly, ketamine, I don't think there's a geographic split. What's interesting is, you know, Seth, you'll know, even you know, Texas and some of these other more rightward-leaning states that are looking at right-to-try legislation. It seems like psychedelics is not gonna have the same kind of cultural baggage that cannabis has.
It seems to me that when we're talking about first responders and veterans across the board, you know, there isn't that sort of left-right split, you know, West Coast versus, you know, Southern U.S. kind of thinking. I think, you know, in my own experience in Canada, some of the biggest drug policy reforms came under more conservative-leaning governments.
Yeah, it just remains to be seen how this all unfolds.
Thank you so much for the deep insight as always, and congrats on the top line growth and the more than CAD 50 million cash puts you in a strong position amidst some of the consolidation that looks to be ahead in the industry. Excitedly looking forward and we'll continue to be of support. I'll hop back in the queue.
Thanks, Suthan Manuchehri.
Thank you. There are no further questions at this time. I would now like to turn the call back over to Payton Nyquvest, CEO.
Thank you everybody for joining us for the conference call today. We look forward to speaking with you in April when we report our fiscal second quarter results.
This concludes today's conference call. Thank you for participating. You may now disconnect.