ANANDA Developments has announced a number of heavyweight hires including a new COO, Head of Cultivation and Head of Plant Science, sending its stock price jumping nearly 30%.
Three months into its ‘first phase of operations’, which started nearly four years after it first listed on the Aquis Stock Exchange, the UK cultivator has moved to expand its core team to guide its operations as they ‘become more complex’.
Former Hexo Corp Master Grower Dr Nigel Gale will join the company after moving from Canada to the UK, taking the lead on plant science, while former cultivator for GW Pharma Steve Murray will head up cultivation.
Mark Spurdens, who has previously managed operations at two large UK horticultural businesses will also join as COO, and the trio are understood to have already begun ‘fine tuning’ processes.
In early February, the British cultivator announced to its shareholders that it had entered into its initial research phase and had begun growing crops at its recently completed facility in Lincolnshire.
According to Ananda’s CEO Melissa Sturges this marked the point at which the company evolves ‘from an ideas company to an operating company’, where its value will be determined by the quality of its products.
With an estimated 18 months before Ananda completes its research phase and can begin growing crops to sell commercially, it is hedging its bets on being the ‘best, not the first’ in the market.
Ananda’s initial research phase has seen it begin ‘self-crossing’ plants from 13 selected strains for six generations.
This process, which it estimates will take around 18 months, is designed to ensure that the plants will thrive in the conditions at Ananda’s growing facility, and that their genetic profiles are as stable as possible.
“By self crossing each generation of plants with itself to basically inbreed, you get a really stable set of seeds,” Ms Sturges told BusinessCann.
By removing as much genetic variability as possible and producing a crop with consistent cannabinoid, terpene and flavonoid profiles, Ananda aims to be able to pinpoint specific conditions these profiles have been proven to help.
During the process it will send plant material to Israel for analysis, then check the results against the market to see what profiles are being prescribed to treat everything from Parkinsons, to anxiety.
“So we’re looking to get stable, consistent product from a genetic perspective and from an agronomic perspective. Then we’ll be able to deliver to the market quality and consistency.”
Currently Ananda holds a Schedule One licence, issued in May 2021, allowing it to grow high-THC crops only for research purposes.
In order for it to progress to its second phase, Ananda will need to secure a ‘commercial licence from the home office, and then MHRA and GMP approval.’
Should Ananda secure its commercial licence from the Home Office, it will become only the third company based on the UK mainland to have done so.
Last year Glass Pharms, which is set to construct a two-and-a-half hectare growing facility in South West England, confirmed that it had received a commercial licence which it believes will allow it to become the first company in the UK to sell high-THC cannabis to third parties.
Since GW Pharma received the first high-THC licence in 1998, only Northern Leaf and 4C Labs, which are based in Jersey and Guernsey respectively, have received high-THC commercial licences.
Ananda says it will begin the application process during phase one, and will progress to building out its GMP facilities and bringing flower to market during phase two, then move on to exploring new oil products in phase three.
Throughout all of these stages Ms Sturges said the company will continually ‘be looking for new metabolic profiles’ and ‘what’s being prescribed successfully’.
“We want to do it in that stage process because we want to focus on really getting it right. We’re really obsessed with quality and consistency. We don’t want to rush into doing flour and oil and then sort of get it wrong with stage fees.
Best Not First Strategy
While its future business strategy is clear, any indication of when Akanda might hit these phases and begin generating revenue was less obvious.
This is in large part due to its reliance on securing various licences in order to progress, with ‘not really much precedent’ on which to base a reliable estimate.
It is also due to Akanda’s view that when it comes to market is much less important than the quality of product it brings.
“If we don’t rush the market, we can be one of the best products out there.
“We might not be the first. But if you look at any packaged goods market, which I suppose this is, best will always be first. So we don’t need to be first, we just need to be really, really good.
“We’re obviously ambitious, but our ambition is to be highly profitable and scale. Our ambition isn’t to be necessarily just big for the sake of being big, or to have market share for the sake of market share, we’re really focused on making sure we have an offering that people want, and then scale from that.”
This strategy is made easier by the fact that Ananda is not reliant on shareholders to raise funds for its expansion.
According to Ms Sturges, more than 80% of the company’s shares are owned by around 10 of its largest shareholders.
Furthermore, while it is planning to raise ‘at some point in the future’, she added that Akanda has a near ‘unlimited unsecured debt facility’ from its chairman Charles Morgan, who is reportedly prepared to continue funding the company as it progresses.
“What we don’t want to do is raise money at the wrong price. So we’ll continue to use the debt facility that we have from the Chairman, which is sort of unlimited and unsecured.
“We will go to the market as and when we feel it’s appropriate, when there’s interest in the sector, and when we feel that the proposition is right. But that’s sort of the approach we’ve taken to funding. At the moment we’re not capital constrained at all.”