Celadon Pharmaceuticals Plc (CEL), a London-listed cannabis-focused pharma company, has secured £1.05 million ($1.37 million) through a share sale. The company issued 2.63 million new ordinary shares at 40 pence per share, a 23.8% discount from the previous day’s closing price. This discounted fundraiser may have contributed to a 20% drop in Celadon’s share price on Tuesday, according to Proactive Investors. The new shares will begin trading on AIM (a UK stock exchange) on September 17, 2024, with cash settlement on September 18, 2024.
The fundraising was facilitated by Global Investment Strategy UK Limited, which will receive a cash fee and warrants for 131,250 new shares. Celadon’s CEO, James Short, expressed gratitude to the investors and highlighted the ongoing discussions with potential lenders to secure the company’s long-term future. He also emphasized the importance of the strategic collaboration with Valeos Pharma A/S, a Danish pharmaceutical company and licensed producer of medicinal marijuana.
This strategic partnership is a major milestone for Celadon. Under a framework agreement, Celadon will license its genetics to Valeos for cultivation. Celadon will then purchase medical marijuana products, derived from both its own and Valeos’ genetics, to supply its European customer base. The company will also provide Valeos with its intellectual property (IP) to enhance Valeos’ existing cultivation and growing rooms at its Danish EU-GMP facility.
Celadon will receive a fee for providing Valeos with access to its pharmaceutical medical cannabis genetics. By leveraging its IP and genetics, Celadon and Valeos aim to increase the yield and quality of Valeos’ growing rooms by up to 100%, potentially boosting annual cultivation capacity to 3 tons, which translates to an estimated £30 million worth of pharmaceutical-grade medical marijuana per year. Celadon will receive 50% of the increased revenue generated from Valeos’ upgraded facility, with the option to settle in cash or equity, potentially amounting to £1.7 million annually.
Celadon will also establish a Danish subsidiary to streamline operations and supply cannabis directly from within the EU, addressing the growing demand for medical cannabis, particularly in light of relaxed regulations in Germany. To ensure a steady supply of its exclusive cannabis genetics to its European customers, Celadon has secured the first right of refusal for Valeos’ harvests for up to five years. Production from Valeos’ upgraded facility is expected to commence in Q1 2025, subject to licensing approvals from the UK and Danish authorities.
As of September 10, Celadon had £48,000 in cash. Following the successful fundraiser, the company will have £1.046 million, sufficient to cover its needs until December, as stated in a press release. Celadon is currently awaiting additional funds from delayed payments. The company will issue its financial statements by the end of September, including an updated cash position.
