ARTELO BIOSCIENCES, INC. (ARTL)·Q2 2019 Earnings Summary

Executive Summary

• No revenue and a net loss of $344,883 in the quarter ended May 31, 2019, a YoY improvement driven by a $563,966 non-cash gain from revaluing derivative liabilities; operating expenses rose to $941,288, reflecting higher G&A and professional fees .
• The company strengthened liquidity post-quarter via an $8.0M gross public offering and uplisted to Nasdaq; management cites $7.3M net proceeds as a key catalyst enabling the ART27.13 license exercise and near-term trial initiation plans .
• Pipeline progressed: ART27.13 expected to enter a Phase 1b/2a study for cancer-related anorexia toward end-2019; ART12.11 CBD cocrystal process chemistry expected to be finalized “over the next few months”; ART26.12 investigational application studies planned for Q4 2019 .
• No Wall Street consensus estimates were available via S&P Global for this micro-cap, pre-revenue biotech; comparisons vs estimates are not applicable.

What Went Well and What Went Wrong

• What Went Well

  • Liquidity improvement and market visibility: Completed $8.0M gross public offering and uplisted to Nasdaq; management highlighted $7.3M net proceeds and stronger financial position to execute programs .
  • Pipeline momentum: “We have focused on placing Artelo in a stronger financial position… This financing enabled us to exercise our option to in-license ART27.13, our lead development candidate that is expected to enter a Phase 1b/2a study… toward the end of 2019.” — Gregory D. Gorgas, CEO .
  • Non-cash gain reduced quarterly loss: Change in fair value of derivative liabilities produced a $563,966 gain, lowering net loss to $344,883 versus $577,857 in the prior-year quarter .

• What Went Wrong

  • No revenue: Company reiterated it has not generated revenues since inception; operating cash burn persisted (nine-month operating cash outflow of $1,731,580) .
  • Higher operating costs: Operating expenses increased to $941,288 from $577,857 YoY on G&A and professional fees; research and development was $184,204 vs $236,845 in the prior year quarter .
  • Going concern and controls: Substantial doubt about ability to continue as a going concern; disclosure controls and procedures were not effective as of the quarter end .

Financial Results

Note: The company effected a 1-for-8 reverse split on June 20, 2019; Q2 2019 per-share amounts are retroactively adjusted in that filing, while Q1 2019 reflects pre-split reporting, limiting direct EPS comparability .

KPIs and Operating Detail

Segment breakdown: Not applicable (no revenue) .

Guidance Changes

Earnings Call Themes & Trends

Note: No earnings call transcript was furnished; the company provided an Item 2.02 press release as the primary earnings communication .

Management Commentary

• “The first half of 2019 has been a period of transformation for Artelo… raised a total of $8.9 million to date in 2019, including our recently completed financing of $7.3 million in net proceeds with a concurrent up listing to the Nasdaq. This financing enabled us to exercise our option to in-license ART27.13… expected to enter a Phase 1b/2a study… toward the end of 2019.” — Gregory D. Gorgas, President & CEO .
• “With ART12.11… we expect to be able finalize the process chemistry over the next few months, which is an important step leading to GMP manufacturing.” — Gregory D. Gorgas .
• “We believe our FABP5 program… holds significant potential… we plan to initiate investigational application studies in the fourth quarter of 2019.” — Gregory D. Gorgas .

Q&A Highlights

• Not applicable; no earnings call transcript was located in the company’s filings for the period, with the earnings communication furnished via press release under Item 2.02 .

Estimates Context

• S&P Global/Capital IQ consensus estimates for revenue and EPS for the quarter ended May 31, 2019 were unavailable; as a pre-revenue micro-cap biotech, the company’s results are not compared to Wall Street consensus in this recap.

Key Takeaways for Investors

• Liquidity and listing upgrade materially de-risk near-term execution: $8.0M gross offering and Nasdaq uplisting improve access to capital and investor visibility; management cited $7.3M net proceeds enabling pipeline milestones .
• Near-term clinical catalyst: ART27.13 Phase 1b/2a initiation for cancer-related anorexia by end-2019 is a potential stock-moving event as dosing/weight gain endpoints are evaluated .
• Manufacturing readiness for CBD cocrystal: ART12.11 process chemistry finalization in coming months supports GMP ramp and future IND/clinical steps .
• FABP5 program advancing: Initiation of investigational application studies in Q4 2019 could clarify regulatory path ahead of anticipated 2020 oncology clinical work .
• Operating discipline vs burn: Nine-month operating cash outflow of $1.73M underscores the importance of recent financing; cash was $286,439 at quarter-end before the offering .
• Accounting/controls and going concern remain watchpoints: Substantial doubt and ineffective disclosure controls persist; monitor remediation steps post-uplisting .
• Derivative liability dynamics can swing reported net loss: The $563,966 gain this quarter reduced loss; future revaluations may introduce non-cash volatility .

Supporting documents:

• Q2 2019 10-Q for the period ended May 31, 2019 –.
• Item 2.02 8-K with earnings press release (Third Quarter 2019 financial results and corporate update) –.
• 8-Ks on offering, reverse split, and uplisting with related press releases –.