Aurora Cannabis Inc. (ACBFF) CEO Terry Booth on Q4 2018 Results - Earnings Call Transcript

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About: Aurora Cannabis Inc. (ACB)
by: SA Transcripts

Aurora Cannabis Inc. (ACBFF) Q4 2018 Earnings Conference Call September 25, 2018 11:00 AM ET

Executives

Cam Battley - Chief Corporate Officer

Terry Booth - Chief Executive Officer

Glen Ibbott - Chief Financial Officer

Michael Singer - Chairman

Analysts

Matt Bottomley - Canaccord Genuity

Martin Landry - GMP Securities

Graeme Kreindler - Eight Capital

Fayassir Haqna - PI Financial

Operator

Good morning, everyone. Welcome to Aurora Cannabis Fourth Quarter and Year End Results Conference Call for its Fiscal Year Ending June 30, 2018. Listeners are reminded that certain matters discussed in today's conference call, or answers that may be given to questions asked, could constitute forward-looking statements that are subject to risks and uncertainties relating to our Aurora’s future financial or business performance. Actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that may affect results are detailed in Aurora’s annual information form and other periodic filings and registration statements. These documents may be accessed at SEDAR’S database found on, at sedar.com. I'd like to remind everyone that this call is being recorded today, Tuesday, September 25, 2018.

I would now like to introduce Mr. Cam Battley, Chief Corporate Officer of Aurora Cannabis. Please go ahead. Mr. Battley.

Cam Battley

Thank you, Matthew. Good morning, everyone and thank you, for joining us for today’s call. And a beautiful day in Edmonton, not a cloud in the sky and we’re smiling in the room, it’s been a good quarter. With me today are Terry Booth, our Chief Executive Officer, Glen Ibbott, our Chief Financial Officer, and our Chairman, Michael Singer.

And before moving on to the formal comments, I’d like to touch on a few bullet points and highlight to sum up what we see as a very strong year and quarter and in many ways transformative. We become very rapidly a much bigger company with global operations. Key takeaway from these results is that we’ve been executing rapidly and well on our business strategy and that strategy is working. We’ve had in excess of 200% year-over-year growth. As we will discuss a little bit later, our pro forma revenues, including MedReleaf exceeded $31 million.

We’ve seen rising gross margins. We’ve seen an accelerating shift to higher-margin derivative products. And this rising production that we’ve seen in the past several months subsequent to quarter has now taken us from two producing facilities to eight facilities in production. We’ve got rising inventory ahead of consumer legalization and that inventory is fresh, it’s not stale. It will be attractive to consumers. We’re exactly where we need to be with exactly the right capabilities at exactly the right time, and now onto the more formal comments.

So we released our fiscal 2018 fourth quarter and year end results after market closed yesterday. You can access our news release as well as our complete audited financial statements and management discussion and analysis on our Web site. Our news release, financial statements and the MD&A were also filed on SEDAR this morning. On today’s call, we'll discuss Aurora’s operational and financial results for the three and 12 months period and at June 30, 2018 and provide a general business update. We'll then open up for questions.

Fiscal 2018 was the most significant year in our history as we made dramatic progress toward our goal of building the preeminent global leader in the cannabis industry. This leadership is reflected in our consolidated revenues. While we completed the MedReleaf acquisition only in late July after the year-end had it been included in the quarter under review. Our consolidated pro forma revenues would have come in at over $33.1 million, giving you an indication of the scale of this Company compared to the rest of the industry.

Looking back just one year, we had one fully licensed facility, two under construction and funded capacity of 180,000 kilograms of cannabis per year and we're present in three countries. Today, we have eight facilities licensed for production and five sales licenses. Soon we'll have 11 facilities and funded capacity of over 500,000 kilograms or 500 million grams per year. We have operations and sales in 18 countries across five continents and habe become Europe's largest distributor of medical cannabis. But more than just achieving increased signs and reach, we've created a platform for continued growth that we can build on to further secure our leadership position.

Today, we are fully vertically and horizontally integrated. Beyond simple speed of sales, Aurora has established a deep presence in every aspect of the cannabis industry value chain. This includes plant genetics and industry leading research, facility design, extraction and formulation right through the consumer engagement and point of the sale. No other company has demonstrated this scope of penetration into the industry and this provides us with a significant advantage in addressing market trends and taking advantage of additional opportunities.

For example, through the acquisition and integration of CanniMed, MedReleaf and Anandia Labs, Aurora now has one of the largest R&D teams in the industry with approximately 40 PHPs and MFP researchers. This allows us to innovate on several fronts on plant science, cannabinoid and terpene research, preclinical and clinical studies. And in conjunction with our vertically integrated structure, this allows us to act on intelligence we gather in the market to identify opportunities and develop new high-margin products. In fiscal 2018, this team helped launch innovations such as Aurora Frost, hard and soft shell capsules and new oil types. This complements the strategic investments we made in companies to provide Aurora with innovative extraction technology, low-cost products and new drug delivery methods, such as soft gels and sublingual wafers.

Another important area of innovation for us is in client health and yield improvement. Here, much of our success can be evident through our production facilities, which consistently produce the highest quality products at the lowest cost per gram. With our wholly owned subsidiary, Aurora Larssen project, we are developing the world's most technologically advanced cannabis production facilities, which we call Sky Class facilities. These are massive scale close system hybrid indoor facilities with specialty glass roofs, a high degree of automation and full control of environmental variables. There is nothing else like it in the world. The first of its class is Aurora Sky in Edmonton, which is now fully operational with a number of base producing. And we expect it to be operating at full capacity and producing more than 8,000 kilograms per month by the beginning of calendar 2019.

Implementing a high degree of automation is a critical feature of all of our Sky Class facility that helps to dramatically decrease the cost of production. For example, at Aurora Mountain, our first facility in North Calgary, we produce about 4,800 kilograms of Cannabis per year with a staff of about 125 people. Aurora Sky at full capacity will produce over 100,000 kilograms of Cannabis, or approximately 20x the output with just three times the number of production staff. Aurora Sun in Medicine Hat and Aurora Nordic in Denmark are two further Sky Class facilities underway, which will have a combined production capacity of 270,000 kilograms per year. We anticipate that our Sky Class facilities will have cash production cost of well below $1 per gram.

This growing production profile at low cost will be very important as we strive to meet demand in all of our market segments. In about three weeks from now, a significant increase in demand will initially come from the Canadian legal consumer use market. We've been building inventory in anticipation of that market and have supply arrangements with just about every province and territory in Canada to supply a broad range of dry flower and higher margin products, such as pre-rolls, oil and capsules. We will also be participating through our strategic investment in Alcanna, Canada's largest private liquor retailer, who will be establishing a change of Aurora branded Cannabis retail stores.

They have the retail expertise and the landlord relationships to succeed in building a well-run well-located network, and are well positioned to open the maximum number of 37 stores in Alberta in year one. They also intend to open stores in the rest of the country where private retail will be committed. The opening of the Canadian market to the consumer use of cannabis is an important milestone. However, as we said previously, the international market remains the biggest opportunity and a primary area of focus in our long-term strategy. The global medical cannabis market is estimated to grow to about 10 million kilograms per year, far more than the current funded capacity of the entire cannabis industry. We recognized this early. As I said a year ago, we were in three countries. Today, we are positioned in 18 countries and counting on five continents.

Europe is a particularly strong opportunity, because of its higher level of knowledge and acceptance of medical cannabis, key to establishing our solid footprint in Europe with the excellent acquisition of Pedanios, a leading wholesale importer, exporter and distributor of medical Cannabis in the European Union based in Berlin, Germany. Through Pedanios, now called Aurora Deutschland, we have exported medical Cannabis to Italy and Malta, and we're approved as the first speed to medical cannabis operation in Malta.

We also own two of the six facilities in the world that are EU Good Manufacturing Practices, GMP certified, which ensures our continued access to these developing and restrictive markets. To further solidify our European opportunity, in August, we established Aurora Europe, our European headquarter based in Berlin. This encompasses Pedanios now Aurora Deutschland, Aurora Nordic which operates in Denmark the newly formed Aurora Italia and a number of other local companies. As you've heard, fiscal 2018 was an exciting year for Aurora where we focused on our global expansion strategy, acted on and executed on the number of opportunities and achieve strong success on all fronts.

Glen will now provide a financial review, and I'll return to provide some outlook comments and then take your questions. Glen?

Glen Ibbott

Thanks Cam and good morning everyone. The fourth quarter of fiscal 2018 continued our trend of strong quarter-to-quarter growth with solid performance in medical dry cannabis and cannabis oil sales, while at the same time, we're building inventory for the adult consumer use market in Canada and rapidly scaling up our production facilities. As a top priority, we remain committed to providing high-quality medicine to our many patients. Overall, revenue increased to $19.1 million for the quarter, up 19% from Q3.

Our results not yet include those of MedReleaf, which we acquired towards the end of July. But to give you a more comprehensive picture of the scale of the Company, on a pro forma basis including MedReleaf, our revenues for the quarter would have been over $33.1 million. Cannabis revenues for Aurora in the fourth quarter increased by 38% from the prior quarter to $14.8 million. The increase in cannabis revenue is a function of a full quarter of consolidated Cannabis sales, as well as the continuing shift in our product mix. Sale of oils accounted for over 31% of our Q4 revenue as compared to 20% in Q3. For the full year, overall revenue was $55.2 million, an increase of over 200%. Cannabis revenue was $42.8 million, up 169% over fiscal year 2017.

In Q4, we are also prepared for the consumer use market, ending June 30, 2018 with pro forma inventory and biological assets, including MedReleaf of over $88 million. Since quarter end, we've continued to add significantly to our inventory and biological assets in preparation for this market. We are in good shape to meet our commitments to all of the provinces and territories. In the quarter, Aurora also saw strong increase in gross margin to over 74% due mainly to the continuing shift to higher margin cannabis oil products.

Cash cost to produce per gram of dried cannabis sold as compared to Q3 of this financial year increased by $0.17 due to the inclusion of CanniMed less efficient production. On a standalone basis, Aurora's cash cost per gram declined to $1.35 from $1.53 in the prior quarter. This is explained by the continuing increases in productivity at our Mountain facility and lower utility costs during long winter months. I should remind you that our continued growth in Q4 was realized from two facilities only, Mountain and CanniMed.

Efficiencies from automation, scale and yield expertise are now being realized with production costs per gram expected to decrease significantly in the CanniMed facilities and other newly acquired facilities. Additionally, with Aurora Sky coming online now, we expect our cash cost to produce a gram of cannabis to be well below $1 at full-scale. The same metric applies to all of our Sky Class facilities. In the meanwhile, we continued to drive yield and efficiency improvements in CanniMed and now in Q1 2019, we have increased yield at CanniMed by well over 30%.

In Q4 2018, we continued to significantly ramp up investment in infrastructure and talent required to realize the tremendous opportunities in the Canadian and international medical cannabis markets and the upcoming Canadian consumer use market. Across the Company, headcount increased to 300 at June 30, 2017 to close to 1,500 currently. This investment in talent and capabilities, along with the remarkable pace of our execution as reflected in the number of strategic transactions completed, as well as increasing global complexity and other corporate matters, resulted in increase in G&A cost to $22.6 million in Q4 from $9.8 million in the prior quarter.

Consolidation of CanniMed’s G&A costs accounted for 25% of this increase. This has since been rationalized as part of our integration process. Our investment in sales, branding and marketing talent and initiatives, as reflected in the fourth quarter was spend of $14.8 million, up from $5.9 million in Q3 2018. Investments in our overall brand strategy included increased promotional and sponsorship activities and preparation for the impending adult use market in Canada. The inclusion of CanniMed’s sales and marketing costs accounted for 19% of the increase overall.

We are building a diversified and vertically integrated company, capable of capitalizing on the tremendous opportunities in global cannabis markets. To this end, we continued to invest heavily in several production facilities in a number of strategic assets and remain well-funded to continue executing our growth strategy. As at June 30, 2018, we had $89 million in cash and cash equivalents. Also, in June to support our domestic and international strategy, we secured a new $200 million debt facility with the Bank of Montréal with the potential upsizing to $250 million.

The new debt facility has begun to shift the capital structure of the Company, to include more traditional debt financing, thereby, lowering our overall cost of capital. During fiscal 2018, Aurora made number of investments in publicly traded companies that provide a significant strategic advantage for the Company. These investments include TGOD, Radient, Alcanna, the Cann Group and a number of others. For the publicly traded companies that Aurora has invested in the public market value of the shares, warrants and options at September 21st, last Friday, exceeded $700 million.

In conclusion, we are growing rapidly. We are in robust financial health and we have the financial means to execute on our growth strategy. We are well-positioned to capitalize on the once in a lifetime opportunity in the global cannabis market. I'll now pass the call back to Cam.

Cam Battley

Thank you, Glen. As we move into fiscal 2019, we will build on our successes realized in fiscal 2018. A key focus will be to continue integrating our key strategic acquisitions into one strong and cohesive Aurora. To achieve that, we have built a dedicated, talented internal team with strong executive leadership. A measure of our success is the integration of CanniMed, which was completed within the targeted 90 day period. We are now accelerating its its patient registration, improving cultivation techniques to increase yield and furthering product development and international expansion. This same focus on execution is now being applied to the integration of both MedReleaf and in Anandia.

Transactions like these enable us to capture margin throughout the value chain with an unparalleled ability to access new and previously restrictive market with a growing portfolio of innovative high margin products and services. Also, given the rapid pace of our growth and our increased international presence, we intend to list our security on senior U.S. Stock Exchange. In advance of such a listing, we will file a Form 40-F registration statement with the U.S. Securities and Exchange Commission. The listing of the Company's securities remains subject to exchange approval and the satisfaction of all applicable listing and regulatory requirements.

A trading date will be made public once all regulatory formalities are satisfied. Listing our U.S. shares on a senior U.S. Exchange reflects the level of corporate and business maturity and the high paced execution of Aurora. This listing provides access to a broader investor audience who gain the opportunity to participate in the Company's continued success. We are very pleased with the result of 2019. We built a vertically integrated and horizontally diversified organization across every key segment of the cannabis the value chain. We did this by focusing on the critical success factors that we believe would make Aurora the preeminent cannabis company globally. We're committed to staying on this path to deliver value for all of our shareholders.

And Mathew, if you could please now open the call for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the line of Matt Bottomley with Canaccord Genuity. Your line is open.

Matt Bottomley

Congrats on the quarter very impressive pro forma top line, couple of housekeeping questions on my part and then some strategies. First, just on the gross margin and the oil. Can you give any color as to where you see that going in the next couple of quarters with MedReleaf coming on, I think you're at about 30% of revenue this quarter. Just where do you see that tracking couple of quarters out and the impact on margins as well?

Glen Ibbott

So certainly, we've seen a shift to oil. And as Cam talked about little bit earlier with our product development, you'll continue to see a shift to higher margin products. So they may be in soft gel form they maybe another forms, but we will continue to see a move away from the dry cannabis products and into other forms and products. Certainly, we would expect to also start to see that in international markets as to our licensed tax court there. So while I can't give you a target number, I think you can expect to continue to see a shift towards those higher-margin products.

Cam Battley

This is Cam, Matt. We're going where the margin is, and you can see that it's already happening and this was as far back as the April to June quarter. So we've shifted from having about a fifth of our revenues coming from derivative products, mainly oil to now about third of our revenues coming from the higher-margin driven products, and that’s going to accelerate. For one thing, we have got just a huge number of hard shell caps and soft gels being produced right now. Unless we start to sell those, I think you're going to see the ratio of derivative product to drive lot of change and considerably more.

Matt Bottomley

And then maybe just switching to the expenses, so the G&A line this quarter obviously you guys were investing in the growth that’s going industry wide, both in Canada and internationally. What's the best way to look at that line in the next quarter, especially with MedReleaf coming on? If we look at their historical spend, is there any savings that we should be modeling in or synergies? Obviously, you have a lot of consolidation integration happening in the next quarters. So what's the best way for us to look at that G&A line?

Glen Ibbott

Well, clearly, I mean we're going have savings. This two large public companies that were scaling up to be global operators, we're going to have savings in G&A. We certainly expect to employ every single talented person at MedReleaf within the expanded organization, but we will have synergies when it comes to public company cost. So if you look to the recent MedReleaf results, they were doing the same thing we were. They were preparing for very large complex global organization and spending the money externally to do that with consultants, and certainly all the audit costs and those sorts of things. So I expect some of those costs will be rationalized the way the people costs will stay there. We have already got positions for all of those people and continue to hire to support the complexity that this business is -- rapidly becoming.

Matt Bottomley

And maybe just quickly here spend a minute here, switching more on the strategy side. One thing I wouldn’t mind getting some color on is just your view on the hemp industry here and CBD derived from hemp plant. Can you give any color on with your acquisition of Agropro, maybe what markets you think are the most attractive for near-term optionality into the nutraceutical side of the industry?

Terry Booth

I think the hemp industry I tell a lot of the people here and then I think it's going to be as bigger than the cannabis industry, not only on the CBD products that we can derive from hemp, the chaff of the hemp but the seed. The seeds are high in protein and excellent source of your omegas. Acquisitions of the Agropro in Lithuania as well as the acquisition of ICC in Uruguay are both plays that include a significant amount of hemp. Agropro is an organic supplier, the largest supplier in Europe, of hemp and they were not collecting their champ of the fields because of corporate reasons.

We are now collecting that even this year we're going to be harvesting it and the European market the CBDs is through the roof. And as you've seen in news, there is some major companies in the world that are looking at the benefits of CBD, non-psychoactive component of cannabis. So we're looking forward to it. It's an exciting new industry. We've had ample for some time now. I think we were little bit of visionaries there. And certainly the deal with RGI on mass extraction was a very key component, and we look forward to working with those partners and developing a leading hemp CBD and protein company.

Matt Bottomley

And just last question and I'll jump back in queue. Just any color on what you're seeing in the Alberta retail tendering, as well as if Ontario had any other communication since announcing their pivot to private sector? Thanks guys.

Terry Booth

I think, there are two parts and I'll answer the first part on facets camp in Ontario for reasons quite involved. So the Alberta system in my opinion and I know I am -- but I think it's the best one in the country. I think that they've done a very good job of screening and it continues to be screened. There's going to be more stores than anywhere else, 150 to begin with and there are lots of talks of an extra 100 been added of partners of course. Alcanna have done a great job in securing locations. It's -- they have been crazy with the municipalities, different systems have gained those licenses. And most of that is in place now and I think Alberta is ahead of the curve. And on Ontario we're looking for advice, they look to Aurora as well and I think that Cam is way ahead a bit on Ontario division.

Cam Battley

Yes, but we're in Ontario is a few things. First of all, we believe that the market there, the system will look very much like Alberta. Ontario is not re-inventing the wheel, something else though. They really are looking for leadership and responsibility from those that move into the retail market. And they want to make sure that the municipalities are comfortable that this is a fairly smooth system and a smooth transition. And I think that's part of the reason why you're seeing that they're starting with online sales and committing to April to actually open up bricks-and-mortar. But we're very, very bullish on the retail system in Ontario. Certainly, from our perspective, it's a huge, huge improvement over the prior system that was envisioned, the government only -- the government monopoly system.

Operator

Our next question comes from the line of Martin Landry with GMP Securities. Your line is open.

Martin Landry

Cam, at the Investor Day in July, you seemed to confident that you would have all rooms in production at Aurora Sky by September, October. And now it looks it's going to be more like December. So I’m wondering if you can give us a little bit more color as to what’s causing the delays there.

Cam Battley

I don’t think we’re seeing delays. We do have to work with our regulator and we have to abide by what health Canada allows us to do. But I think we said back then that we anticipated being at full capacity towards the -- at the end of calendar 2018 or the beginning of calendar 2019, and we’re very much on track with that and that's what matters. So we’re intending to be at full capacity at that point turning out 800,000 plus kilograms a month.

Martin Landry

And can you talk to a little bit your views on when you expect to get your sales license, and if there's any hurdles there?

Cam Battley

Actually, we believe that’s imminent. We never want to speak for the regulator, but we’re ready. We've had our harvest. We invited them in. It's, as far as we can tell, eminent subject to health Canada of course. And like I said, we don’t want to speak for them but absolutely everything is ready. We’re ready to go.

Martin Landry

And it would be very interesting for us if you can share where your inventory stands right now today in terms of kilos inclusive of MedReleaf. Is that something you can give us some color on.

Cam Battley

Well, we can't. But we’re not going to be precise just yet, remember we’re reporting our September quarter at the beginning of November, I’m going to hand it off to Glen to maybe add some comments after.

Glen Ibbott

Martin, we’re prepared for the demand from the provinces from the territories. We’re going to meet the initial POs. What we’re focused on and why I don’t want to get into specifics of those two, how much we've got is I think what’s more important is, which products you have and how quickly are they going to move. For instance, as Cam has mentioned you’re well aware of this, we’ve made a significant investment in preparing for pre-rolls that have massive inventory of pre-rolls, which we think are going to be a high demand product. But to measure that in terms of kilograms, sitting there isn’t really instructive, so I don’t want to get into that right now other than to say, we will meet all the commitments we've made in the provinces, the Canadian medical system and be able to export to Germany. But I know over the next few months, we'll be getting a lot more clarity after we see which products the provinces are going to reorder, and what sort of the demand is, so to see how many kilograms we've got right now and how along that might last. But I think it's a little bit of -- it’s a little misleading to our investors to focus on that too much, other than to say we’re prepared.

Terry Booth

Martin, I want to underline that. I mean if I'm reading between the lines, you’re asking whether we’re ready for consumer legalization. Unequivocally, yes. We've got significantly more inventory than we had at June 30th and we had a reasonable amount them. We've got our capital out more now and we've got all of our product categories ready. So we’re more than ready for consumer legalization. And more than that, our ramp up in production is happening at exactly the right time. We’re not going to be dumping old stockpiles, stale product on the market it's all going to be fresh high quality product.

Martin Landry

And does that mean that you’re not going to need to bridge any of your inventory buying from third party suppliers?

Terry Booth

No, if you take a look at -- historically, we've never wholesaled in more than between 4% and 7% of what we sold. And we have no need to do that now, we’re fine.

Operator

And our next question comes from the line of Graeme Kreindler with Eight Capital. Your line is open.

Graeme Kreindler

Just question here to expand on the upcoming retail environment specifically in Ontario with the first six months being online only. I was just wondering if you could elaborate a bit on the Company's strategy in terms of creating consumer awareness and brand recognition. And what’s going to differentiate Aurora’s products on the webpage, the benefit of going in the brick-and-mortar store?

Terry Booth

Well, I think you know and most on this call should know that, Aurora we're the first one with an app. We’re still the only one with a full scale app where you can order medical cannabis and have it delivered in many states the same day. We’ve done deals with distribution companies in Ontario. We’re going carefully speak to which ones just yet, but it was also in preparation for the medical market and shoppers' drug market and whatnot. So that’s all been in place. The brand recognition -- the work that we’ve been doing over the last four years and certainly we’ve stepped it up but then reiterated on that in the last quarter.

There’s been -- we’ve had in a constant series, there has been an ability to do a little bit of brand and advertising over this last quarter. And I think Aurora -- part of the team has worked tirelessly getting the name of their and certainly the deploy quality of the product and the product line will speak for itself. There’s more products coming online for Aurora in the not too distant future and I think it’ll be pretty impressive for the market.

Cam Battley

I want to reiterate what Terry just said about the quality, because I think that’s a critical consideration that not everybody is thinking off the top of mind. It’s not just about being on a list, it’s about the consumer experience. And the consumer experience is going to determine whether we have reorders. So of all of the arrangements the companies have made with provinces, none of these things are guaranteed if you don’t deliver if the consumer experience is not good. And that’s one of the areas where Aurora shines, the quality of our products and it's actually one of the rationale for coming together with MedReleaf. We believe that Aurora and MedReleaf were the two highest quality large LPs in the country in terms of the quality of our product.

And then the other thing is with respect to brand awareness. I am really quite amazed at how broad awareness of Aurora is across the country, especially in an environment that is very highly restrictive on a regulatory basis. The name Aurora is recognized coast-to-coast. So I think we’re exceedingly well positioned and with significant advantages over most of our peers.

Graeme Kreindler

And then my other question is, I think there’s a lot of investor excitement about the possibility of companies and outsider our industry coming in entering space, looking to partner with an LP. I was just wondering do you think having a U.S. listing, does that change your conversation at all for Aurora? And how does Aurora think of itself in terms of us being a partner of choice, or would it be open or leaning more towards more having someone come in and participating at equity upside of the company? Or is it more looking to retain flexibility through various joint partnerships?

Cam Battley

There's an awful lot untouched. Okay, so I’ll take couple of things off of top of mind and hand over to Terry. First thing is for companies that are interested, immature industries that are interested in moving into the cannabis space, I think they’re looking for a few things. I believe that we have checked off those boxes. We've established scale, quality, efficient production. We've got innovation and science that I don’t think anybody else in the sector can touch, and we've got a global footprint that’s expanding by the day. So are we well positioned to partner with potential new companies moving into this sector? Yes. But there are things that we are looking for as well.

Remember that we intend to be around in 10 and 20 and 50 years. And so there are certain things that we're looking for as well to expand our capabilities. The U.S. listing, I don't think that that affects things immediately either way. I think there is a primary effect of establishing the U.S. listing. It's simply to broaden universe of potential investors and to continue to raise the global profile of Aurora. Terry, you want to add to that?

Terry Booth

Sure, this whole notion of large companies getting into this space validates the space on a global basis. These companies three years four years ago, they weren’t even have a sniffle of what cannabis is about and now they're seeing the effects of the properties of cannabis and the demand for cannabis, not only in the medical space but also in liquor space and beverage space and in the pharma space. And there is not any product in the world that you could say that about. To try and put those to our industries on any other product, pretty difficult besides making aluminum cans perhaps. So it's exciting but we're not in the mood to be selling out anytime soon. We want to prove what we've built. We're going to continue to build it.

And when you start to see the revenues that this company is going to generate on a global basis then you will see even more attraction to coming up more from these larger companies. And it's only growing. We always say today is a smallest the cannabis space will ever be. So when we take that and we see what we've done on 1,500 employees now starting to knock it out of the park with our global footprint. Look up we're machines, we're tuned and we're ready for the challenge.

Operator

Our next question comes from the line of Fayassir Haqna with PI Financial. Your line is open.

Fayassir Haqna

My first question would be, can you provide an update on retail application process for Alcanna and how many stores should we expect to see by the end of 2018?

Terry Booth

Is that stores on a national level?

Fayassir Haqna

No, it's just in Alberta.

Terry Booth

Just in Alberta, I think, I'm try or -- predicting that by April of 2018 that they will have full 437 open and that’s all been allocated. They've done a great job of actually listing addition spaces in anticipation of more coming online and being available. So we'll be the front runner in Alberta without a doubt. You've got other retailers in the space that didn’t get the locations that they were granted. And all the locations aren’t signed yet and there is guys out there building out these stores. And that’s just going to hit for pocket books, it's going to hit their financials -- and Alcanna is publicly traded company they're being responsible, but they've done a good job of getting these stores that they need in the property locations. And at the end of the year -- what that number is, I think it's supposed to be close to 20, I'll leave that to them to answer.

Fayassir Haqna

My another question would be can you provide more color on integration process with MedReleaf and new labs?

Cam Battley

Yes, I'll take the first part of that and maybe hand it on to both Terry and Glen if they want to answer that. It's going remarkably well. And one of the things that we've been making clear is that we've made integration a core capability at Aurora, if not necessarily of core capability at every company and every industry. But it's critical to us because of our pace of acquisition and because of the number of strategic partnerships we've established. So like we said, we completed the integration of CanniMed in the prescribed 90 days. We're going to do the same thing with MedReleaf. One of the stars of the Aurora universe is André Jérôme, who is our Senior VP of integration and he has just been doing amazing work. And ironically enough we got André via the acquisition of one of our companies, H2 Biopharma, which is now our Aurora old facility in Lachute, Quebec. And so he has established an amazing team and he is managing the integration not just MedReleaf but also Anandia and doing an incredible job. Terry, do you want to add that?

Terry Booth

Sure. There are two different integrations for sure. MedReleaf is another licensed producer who have excellent facilities -- I guess there now are other facilities. And we're happy to take them on -- an amazing team, amazing science team and excellent management team. So that acquisition was certainly our star acquisition. When we went into CanniMed, as you know, it was a hostile takeover -- I wasn’t impressed but I wasn’t disappointed either. Going into MedReleaf and meeting those people in those facilities I was definitely impressed. With Anandia what we brought on there is the top -- arguably the top scientists in the world with respect to cannabis and Dr. John Page, and it is cohort Dr. Coleman. Those two guys have built a great business they led the country in the analytic testing licensed producers.

We knew there was going to be a bottleneck in testing under this adult usage system. So we could either have built out at them and we're bringing the experts. They certainly are the experts. They've proven that with their discovery of pesticides and products with their standards of testing, they use the Colorado standards, it's over and 100 pesticides they test within parts to do that, we like that. The certificate of analysis was their brainchild along with Aurora. So that's a science deal and a production deal. So they're quite different but we're quite happy to really put another piece of the puzzle I place when we brought on Anandia.

Glen Ibbott

I'm just going to add one thing. Just specifically we know exactly what we're attempting to achieve over each of these integrations. André has done a great job, he has got a background of massive integration and his experience and we go into each of these with the strategic objectives outlined what we want to get in terms of value, but we don’t think we know it all. So what we're doing with MedReleaf is across all the functions. So whether it's the cultivators or the finance department, we sit down and examine each others' processes and facilities and come up with best practices so each. And in a very constructive way critic the other functions sort of Aurora and MedReleaf, and then get together we think are what's best. So we don’t go in there thinking we know everything, we're buying companies that have some incredible talent. But that's the type of process we're going through is a really clear eye on how we're going to extract strategic value and also very open mind, because we know there is lots to earn here, we're trying to bring together the best talent, so that’s going exceedingly well. We march -- according to André's, we had a very detailed plan. He had a full-time team and we have leads in each of the functional areas who was their responsibility to make sure everything's been delivered. So as Cam mentioned earlier, it’s a core competency. And so we take it very, very seriously and want to extract that strategic value that we saw when we made the acquisition.

Unidentified Company Representative

That’s a great, great line. There is -- across the work, we have this commitment to continuous improvement. I've never in my previous career in biopharmaceuticals, seen continued improvement evolve so quickly. So we’re able to absorb lession and we’re seeing it in real time with MedReleaf right now that are enhancing our abilities on cultivation and across other functions as well at Aurora. Something else that if you want to point out as well that we’ve taken a lession from the biopharmaceutical industry specifically with respect to Anandia, we’re not going to mess with success. So we’re going to have a great light touch with Anandia, they're part of the Aurora family, they're contributing, they're complementing across operations and partners as well. But we're not going to try and bring them into a larger corporate entity. We’re going to let them continue to exercise or execute on their strategy with coordination with us but we’re not going to make the mistake that some big pharmaceutical companies did when they acquired small and really impressive biotech companies and then just killed with corporate culture, we're not going to make that mistake.

Terry Booth

Just add to the Anandia acquisition, if you remember that Cam said earlier, this is a global medical market and it has the scientists that Anandia brings to the table that are there, that are also in the countries that we’re in already. It is a very important aspect of winning the favor of the numerous health departments around the world. When we bring John Page, and Jason Dyke, and John Kelly -- Kelly and Shane, all those are docs and they're all PhD in their profession and they're all established. We have the plant scientist and we have the human scientists. So it's a full favor, if you will, of scientists that are going to address global medical need and that’s research and development, and that ties into product development and is tied with the innovation, and IT. And I don’t think there is a team in the world that touches them but maybe a couple of smaller teams in Israel in the category. But we’re in best-in-class now that CanniMed, MedReleaf and Anandia have been acquired, all three of those companies are very science driven and we’re learning a lot.

Fayassir Haqna

We’re very pleased with the update. And lastly, when do you expect to close the acquisition of ICC Labs?

Cam Battley

Last I saw, in about a month, they have a shareholder vote that they need to get through, and I’m sure that they've published date for that. So assuming the vote goes positively, I think we're targeting vote four weeks from now.

Terry Booth

And that deal by the way add the only South American real science based.

Cam Battley

It’s a lab with derivatives…

Terry Booth

Another check box…

Operator

Our last question comes from the line of [indiscernible] with [indiscernible]. Your line is open.

Unidentified Analyst

Just want to thank you guys for doing quarter-on-quarter expense breakouts, it's nice to see someone doing it sequentially it makes my job a lot easier. You have provided pro forma for sold and harvested by dollars. Can you provide for MedReleaf? Can you provide that by [grams]?

Glen Ibbott

We missed the first part of your question, you broke up a bit. Can you repeat?

Unidentified Analyst

In the pro forma's you provided that dollar values for sales. I was wondering if you could provide kilogram values for sold and produced for MedReleaf?

Cam Battley

I am not sure I’ve got at hand. If you’d like to follow-up, we can probably do that. You’re looking for like kilograms produced in MedReleaf in Q4 basically…

Glen Ibbott

Breaking out the way we did for Aurora plus CanniMed…

Unidentified Analyst

Yes. So I am interested in the delta. So having -- you provided the numbers for Aurora, which were great. I was just wondering what the numbers were for MedReleaf and their delta -- all retail, the last…

Cam Battley

I have no objection to sharing that number…

Terry Booth

So, we really -- I think you’ve said that we’re trying to establish a level of financial transparency here…

Unidentified Analyst

Well, it’s evident, very evident in your numbers. The last question I have and I’ll let you guys get back to doing what you do is, MedReleaf Exeter was the only facility on your -- in your MD&A that didn’t have a timeline attached to it. Just wondering if it’s still up in the air or what’s happening?

Terry Booth

Well, I wouldn’t call it up in the air. It’s actually on the ground.

Cam Battley

I think at Sky, we’ve got a number of projects going on right now. And our bandwidth does get stretched regardless of how quick we can hire and enhanced the bandwidth. We want to look at Exeter as a facility after we finish Nordic and Sun. I don’t know that we’ll wait that long to get going on it. But certainly the design expectations at Exeter, because it’s an older facility, are going to be somewhat complex. And we’ll assess the need when we assess the demand. The nature of Sky Class facility, it would be difficult, but it wouldn’t -- it’s not impossible. It’s a decent size facility. It is another footprint in Ontario but right now we’re focused on getting into full production with our other Sky Class facilities.

Operator

There’re no further questions at this time. I’ll turn the call back over to you.

Terry Booth

So I want to thank everybody once again for participating in our call today. And we will look forward to speaking with you again when we report our first quarter 2019 results and we hope to have just as many exciting things to talk about then as we had today. Thank you again.

Operator

This concludes today’s conference call. You may now disconnect.