UK Cannabis Firm Raises £1.05M Via Discounted Offering, Expands Partnership With Danish Medical Marijuana Producer

The London-listed cannabis-focused pharma company Celadon Pharmaceuticals Plc CEL raised £1.05 million ($1.37 million) by selling 2.63 million new ordinary shares at 40 pence per share. This price is about 23.8% lower than the previous day's share price of 52.5 pence. The discounted fundraiser may have caused a 20% drop in Celadon’s shares on Tuesday, writes Proactive Investors.

These shares will start trading on AIM (a UK stock exchange) around 17 Sep. 2024, with cash settlement on 18 Sep. 2024. The fundraising was handled by Global Investment Strategy UK Limited, which will receive a cash fee along with warrants for 131,250 new shares.

 “Celadon is grateful to the investors who have participated in the Fundraising, and to the Subscriber and lender for their re-confirmed commitments to the company," stated James Short, chief executive officer of Celadon. "The Group’s ongoing conversations with alternative potential lenders continue with a view to securing the long-term future for the business.Following this morning’s announcement of the Group’s strategic collaboration with Valeos Pharma A/S, the Fundraise and ongoing funding discussions give the Group confidence in the long term value of the Group.”

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Partnership With Danish Medical Marijuana Producer

The first UK-based medical cannabis manufacturer will be granted a Home Office license to sell its products also announced Tuesday a strategic collaboration with Valeos Pharma A/S, a Danish pharmaceutical company and licensed producer of medicinal marijuana.

Celadon and Valeos have entered into a framework agreement whereby Celadon has agreed to license certain of its genetics for cultivation by Valeos.

Under the agreement, Celadon will buy medical marijuana products, cultivated from both its own and Valeos’ genetics, to supply product to its existing and prospective European customers. It will also licence the IP to assist Valeos in refitting their existing cultivation and growing rooms at its Danish EU-GMP facility.

Celadon will provide Valeos with access to its harmaceutical medical cannabis genetics for an agreed fee. Through the use of its IP and genetics, Celadon and Valeos are targeting to increase the product yield and quality of Valeos’ growing rooms by up to 100% , about 3 tons of annual cultivation capacity, which could be worth up to £30 million of pharmaceutical grade medical marijuana per year.

In return, Celadon will receive 50% of the increased revenue generated from Valeos’ upgraded facility, with the option to settle in cash or equity, worth up to £1.7 million annually.

Additionally, Celadon will establish a Danish subsidiary to streamline operations and supply cannabis directly from within the EU, which will help meet growing demand, particularly in light of relaxed regulations in Germany. Celadon has secured the first right of refusal for Valeos’ harvests for up to five years, ensuring a steady supply of its exclusive cannabis genetics to its European customers.

The production from Valeos’ upgraded facility is expected to begin in Q1 2025, subject to licensing approvals from the UK and Danish authorities.

Financial Updates

As of Sep. 10, Celadon had £48,000 in cash. After obtaining funds from the newest fundraiser the company will have £1.046 million, which should cover its needs until Dec., the company said in a press release.

Celadon is still waiting for additional funds from the delayed payments. The company will issue its financial statements by the end of Sep. when it will also update it cash position.

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