AnalysisEuropean Cannabis Stocks Review: Celadon Shares Jump After Regulatory...

European Cannabis Stocks Review: Celadon Shares Jump After Regulatory Win, IM Cannabis Closes Private Placement, & More From SEED

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IM Cannabis 

IM Cannabis saw its stock price jump by nearly 10% this week after it announced the receipt of US$500k in funding in a private placement led by two company insiders. 

On January 13 the international NASDAQ-listed cannabis operator IMC announced plans to launch a non-brokered private placement of a minimum of 400,000 units and a maximum of 2.96m units at a price of $1.25 per unit. 

Alongside this, IMC offered an additional 2m units at the same price for gross proceeds of $2.5m, to be led by ‘company insiders’ CEO Oren Shuster and major shareholder Rafael Gabay. 

Both were offered on the same terms, seeing each unit consist of one common share and one purchase warrant entitling the shareholder to purchase an additional share at $1.50 for 36 months.  

On Tuesday (January 17), the company announced that the first tranche of this funding from the private placement had closed, with 400,000 units of the company being sold for aggregate proceeds of $500k. 

It also announced that it had closed a non-brokered private placement of 1.16m units on the same terms and at the same price for aggregate gross proceeds of $1.45m, led by the two insiders, though these will be subject to a statutory hold period of four months and one day.

Following the share purchase, Mr Shuster saw his holding in the company increase from 13.4% to 20.5%, while Mr Gabay’s stake increased from 11.5% to 12.9%. 

The fundraise comes just months after IMC stock returned to trading following a 10:1 consolidation, effectively staving off looming delisting from NASDAQ. 

In July, BusinessCann reported that IMC had been warned by the stock exchange that it would face delisting by January 9, 2023 if its stock price did not return above $1 for 30 consecutive days. 

With IMC’s stock price in continual decline since July, the company’s shareholders approved a reverse stock split in October 2022, seeing its shares return to trading in November at an inflated price. 

As part of ongoing cost-cutting measures to bring its finances under control, IMC also announced in November that it planned to pull its operations in Canada and relinquish control of its wholly owned subsidiary Trichome Financial Corp. 

Alongside its recent funding announcement, IMC announced that a ‘stalking horse bid’ for Trichome had been approved by the Ontario Superior Court of Justice. 

This method sees a company make an initial bid on the assets of a bankrupt company, which acts as a low-end bidding bar so that subsequent bidders cannot underbid the set price. 

The consideration, made by L5 Capital, is for approximately C$6.3m, including a base cash purchase price of C$5m.

Celadon Pharmaceuticals

This week, AIM-listed Celadon Pharmaceuticals announced that it had received Good Manufacturing Practice (GMP) approval from the Medicines and Healthcare products Regulatory Agency (MHRA) for the manufacturing of cannabis Active Pharmaceutical Ingredients (APIs). 

This is a major step forward towards commercialisation for the company, which now has a GMP licence to both cultivate and manufacture in the UK. 

It is understood to be the first company since GW Pharma to receive a licence to manufacture high-THC cannabis API. 

Celadon has now reportedly notified the Home Office to request an update to its existing licence to reflect its new GMP status. 

Its current licence allows it to grow high-THC cannabis ‘for the purpose of producing test batches of cannabis oil to support its application to the MHRA’. 

Now that its application is complete, it needs to have its licence amended by the Home Office so that the cannabis it grows can be used to produce its API, subsequently allowing it to sell to third parties. 

Celadon said that while there was ‘no guarantee that the Home Office will update the current licence’, it was ‘confident that the licence will be updated in due course’. 

The news sent Celadon’s shares up around 10% this week. 

Its CEO, James Short, said: “Today’s announcement is the culmination of four years of hard work. 

“I would like to thank the team and our loyal shareholders for their support and belief in our vision as we continue our journey of putting the patient first in ensuring they can access the cannabis-based medicines they so desperately need.”

SEED Innovations 

SEED Innovations also saw a 10% share price increase this week. It came after its investee company Little Green Pharma announced ‘record’ quarterly results, though due to SEED’s relatively small holding (2.8%) in the company, it’s not clear whether this news alone was responsible for its share increase. 

The Australian medical cannabis company reported a 35% increase in ‘customer cash receipts’ to A$6m in the three months to December 31, 2022. 

LGP also saw unaudited revenues rise from $4.9m to $5.3m month-on-month, and from $3.7m year-on-year. 

According to the company, cash receipts outpaced reported revenues due to outstanding receivables from the previous quarter being collected, alongside the receipt of deposits for sales in January. 

The revenue increase was attributed to a 20% increase in domestic flower sales, despite missing a shipment of flowers to Demecan. If this shipment had been made, the company says sales would have jumped 65% during the quarter. 

The company did not disclose its losses for the quarter, which hit $7.5m in the six months to September 30, 2022. 

It also celebrated the close of a $4 placement during the period, alongside a $2m share purchase plan which closed on Monday (January 16). 

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