NewsMarketsLSE Entrant Cellular Goods Quizzed By Investors In Unique...

LSE Entrant Cellular Goods Quizzed By Investors In Unique Social Media Event

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FOLLOWING a highly-successful London Stock Exchange listing the senior managers of UK synthetic CBD firm Cellular Goods took to Reddit for a Q&A session with investors.

The AMA (Ask Me Anything) event involved the core team of Cellular Goods; CEO Alexis Abraham, COO Eric Chang and Head of R&D Alexia Blake.

The key takeaways from the event are that Cellular will launch its first products this Autumn – a CBD face mask and serum – and then its sports range in early 2022.

It is expecting to break even at the end of ‘its year two’ and is in talks with two leading retailers;  one a major player online (possibly Amazon, Redditers speculated!) and the second possessing a significant High Street footprint.

£100m-plus Market Cap

Cellular debuted on the LSE last Friday with its share price rising sharply from 5p to over 20p before falling back to around 15p at the start of this week, giving it a market value of over £100m at the peak.

The company took the unusual step of opening its book to 6,000 retail investors through the Primary Bid website at the 5p price. Many of those investors took advantage of the AMA on Sunday evening.

Mr Abraham elaborated on its communication initiatives saying:  “I think the best way to connect with people is through transparency and dialogue – which is why we are doing tonight’s AMA.

“And, for me perhaps more important than staying in the media spotlight is engaging the broader public – who are all our potential consumers – through a programme of podcasts, AMAs, and other media around the science and studies that underpin our products and cannabinoids in general.”

As well as the cosmetics and sporting ranges the company says it is developing a pet range and would be exploring opportunities in edibles and drinks. 

Synthetic CBD

Quizzed on why it is taking the synthetic, and not the natural CBD route (see panel below), Mr Abraham said: “There is for sure a place for both but because of batch consistency, lack of issues around pesticides etc and the scaleability and substantial ecological advantage we are committed to bio-synthetically sourced cannabinoids.”

The company said it is outsourcing the production of its products to Somerset-based Arcania.

DB Ventures has taken a 5% stake in the business with Mr Abraham saying: “We’re really excited to have David Beckham Ventures as an early investor but there have not yet been any discussions about future involvement.”

Mr Abraham elaborated on something that many in the industry have identified in this emerging sector – the lack of any leading brands

Go-To Brands

He said: “We are operating in a new consumer goods sector which is still at an early stage of its growth and as such this sector is highly fragmented. There is no one credible go-to brand which provides us with a great opportunity.”

Analysing the Q&A the Share Buyers website praised the company for giving retail investors a ‘fantastic opportunity to get involved’.

It added: “The driver of any further substantial gains in Celluar Goods share price will only be due to sentiment and interest in the wider cannabis market during the short-term. 

“It clearly has a sound management team in place, is using the Beckham-brand to great effect and is playing in some exciting spaces with strong growth potential.

“However, to win in these spaces will take time and will be a strong challenge; not only to break-into the markets but also displace substitute offerings – such as in the Movement space.

WHY CHOOSE SYNTHETIC CBD

Simon Lapthorn, Head of European Sales at US synthetic CBD firm Pureform, believes synthetic CBD will be the trigger that entices the main consumer brands into the market.

He told BusinessCann: “Their reach and clout will completely revolutionise the CBD marketplace, bringing the assurance  of big brands to consumers and turbo-charging an already fast growing market.

“If you buy Vitamin C it is almost certainly synthetic and we see CBD going the same way and being made in the UK and the US avoids import the issues that effect CBD.

While synthetic CBD at $15,000 a kilo can be three or four times the price of plant CBD he highlights how there is no intra-batch variability, and a lack of THC means there are significant savings to be made in the testing and manufacturing processes. 

He added: “Given that the average dose of CBD is 20mg, every extra $1,000 per kg for synthetic CBD would only add 2 cents to a product price – not much for the added purity and consistency required by major brands.

“To get to the same purity with hemp derived CBD would be expensive. This allows more therapeutic doses to be offered. For example BioSportArt CBD gel is up to 10x times stronger than our natural CBD competitors, while being completely safe for adults.”

The main image shows the equipment used in the manufacture of biosynthetic cannabinoids and is used with the permission of Cellular Goods PLC and Willow, a biosynthetic cannabinoid manufacturer.

Peter
Peter McCusker is an experienced news and business editor, who believes it’s time to fully embrace the multiple, proven, medical benefits of the cannabis plant.

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