The San Diego, CA-based manufacturer, one of the older and better-established companies in the field, had reported a disappointing start to the year with Q1 year-over-year sales declining by 41%. The company’s second quarter saw revenue increase from $4.8 million in Q1 to $5.1 million in Q2, a decline of only 5% from Q2 2020.
And of this revenue, 39% came from new products launched in the last 12 months, CEO Joseph Dowling said during an earnings call with investment analysts, according to a transcript of the call on seekingalpha.
“Second quarter execution was solid as we continued to focus on targeted growth opportunities, product innovation and cost efficiency initiatives. We delivered sequential growth for the first time in two quarters as revenues increased 6% compared to the first quarter,” said Dowling.
The company also reported that its total retail distribution in Q2 was over 7,800 stores as of June 30, 2021, marking a significant increase from 6,325 stores a year earlier.
Two new products were launched in the second quarter: PlusCBD Calm and Sleep. The products are both gummies and are positioned to help support healthy stress responses and sleep cycles for people getting back to their normal routines.
PlusCBD Calm gummies contain 10mg of CBD derived from sustainable hemp, plus 5-HTP and L-Theanine. PlusCBD Sleep gummies also contain 10mg of CBD, along with melatonin, magnolia bark and lemon balm.
“We are very pleased with new products launched in May of Q2, our PlusCBD Calm and Sleep gummies, which have both received strong consumer and retailer response,” said Dowling. “Both of these products are aimed at meeting the primary needs of our target customers, which is to help them sleep and manage the stress and challenges of day-to-day life.
“We are also confident that our ongoing product development pipeline with numerous product launches set for the second half of 2021 will generate incremental revenue across several channels.”
The company also noted that its CV Defense immune product, which features PEA (palmitoylethanolamide) as its principal active ingredient, received the NutraIngredients-USA Award for Immune Support Product of the Year.
“The potential for immunity products during these uncertain times is strong. And clearly, this award recognizes the quality and relevance of this unique product,” said Dowling
Unpredictable regulatory pathway
Dowling also commented on the on-going regulatory uncertainty, noting that the company is committed to “working with government and industry association stakeholders to fill scientific and regulatory gaps needed for full regulation of CBD as a dietary supplement and topical ingredient.
“In July, the U.S. House of Representatives passed an amendment to a must-pass Appropriations Bill that instructs FDA to proceed with CBD rulemaking within 180 days after enactment. This sends a strong message to FDA, which is to regulate CBD now,” he said. “If FDA fails to act, we have been working with our allies in Congress on gaining bipartisan momentum for H.R.841, the bill known as the Hemp and Hemp-Derived CBD Consumer Protection and Market Stabilization Act of 2021. This CBD legislation provides a clear set of regulations for a mature and regulated CBD industry and would accelerate brand contraction by eliminating non-compliant bad actors.”
Dowling also acknowledged the FDA rejections of two new dietary ingredient notifications (NDINs) filed by Charlotte’s Web and Irwin Naturals.
“Unfortunately, FDA continues to take the position that CBD found in a full spectrum hemp extract is the same article or ingredient as high dose CBD isolate found in the drug, Epidiolex. And despite evidence that they are very different substances being offered to consumers at much lower doses, this is still a very big sticking point,” he said.
“FDA's response is really disappointing, but we think it was very predictable,” he added. “I think you're aware that what we documented for safety of our hemp extracts was through a self-affirmed GRAS process, but we did not submit the data with the FDA because we just felt the current conditions were not right for a successful NDI filing. And this is because while Congress has made it clear it wants FDA to regulate CBD as a supplement … FDA has just consistently responded by asking for help from Congress, really in the form of new authority and resources to manage CBD.
“When we met with FDA last year to discuss filing NDI, it was clear to us that FDA would be dragging its feet until Congress addresses the FDA's request and the conflict with the drug version of CBD.”
In addition, Dowling highlighted that CV Sciences' drug division recently announced results from its collaborative study with UC San Diego validating the efficacy of CBD treatment in reducing nicotine dependence.
“This research supports our continued efforts to develop a treatment for smokeless tobacco addiction, which affects millions of people and represents a worldwide treatment market estimated at over $2 billion,” said Dowling. “We believe that CBD has a significant role in both consumer and pharmaceutical products. Along with our nicotine cessation program, we are pursuing additional medical indications for possible drug development with active intellectual property and proof-of-concept efforts in progress.”