Celadon Pharmaceuticals recently released its first substantial business update since becoming the first British cannabis company since GW Pharmaceuticals to list on the Alternative Investments Market (AIM) in March this year.
Its first four months as a publicly listed company took place amid one of the most financially tumultuous times in modern history, coming to market just days before Putin’s invasion of Ukraine, which saw an exodus of investors away from cannabis towards more traditionally secure investments.
Despite Celadon’s dramatic initiation and subsequent 40% drop in stock price, the company’s CEO James Short remains unperturbed, focusing instead on the company’s ambitious long-term goals, including leveraging its Canpain trial overseas, and securing a contract with the NHS.
Celadon’s First Quarter
Celadon has, by its own admission, been relatively quiet since listing, but published its first ‘business update’ for investors in late June, detailing what it called ‘significant progress’ towards becoming a licensed commercial medical cannabis seller.
First and foremost, this involves securing MHRA registration and a subsequent Home Office licence enabling it to begin selling cannabis commercially.
Celadon became one of the first companies in the UK to receive a Home Office licence to grow high-THC cannabis, and as of May the company says it has now produced six batches at its 100,000 sq. ft facility in the Midlands.
These batches are now being used to support the company’s application for a licence to produce and sell GMP-standard Active Pharmaceutical Ingredients (APIs).
The company’s CEO James Short told BusinessCann said the company is ‘on target’ to receive its MHRA inspection ‘at some point this year’.
“I would like to get the inspection and the approval before the end of this year.”
The company says its enlarged grow facility is set to become operational in Q1 of next year, seeing it previously earmark around £5m of its IPO cash towards its construction.
Mr Short explained that its current Phase 1 growth area is capable of producing ‘a couple of million pounds worth of product’ per year, but Phase 2 will see this jump to around £20m, representing around three tonnes of cannabis flower.
With an eye on mitigating what it called ‘inflationary cost pressures’ surrounding the construction of its Phase 2 facility, Mr Short said he is hopeful the company will be able to sell some of the cannabis it is producing ‘both in the UK and internationally’.
Canpain Study
The company also offered some insight into the progress of the Canpain Study, launched by its majority-owned subsidiary LVL Health back in April.
In July, the company officially began the onboarding of patients for the feasibility stage of the trial, aimed at providing evidence of patient interest in the study before granting approval for a far larger trial of up to 5,000 patients.
Mr Short admits the process so far has ‘been slow’, which he attributes to a much stronger than expected patient response after widespread press attention led to thousands of applications it had to handle.
Critics of the study have previously pointed to the costs involved in taking part, with only applications from existing LVL patients being considered for the trial, which requires a £99 joining fee then a subsequent £299 a month.
According to Mr Short, ‘unfortunately, some patients in UK just can’t afford it no matter what the cost, it’s such a shame’.
He added that this was ‘great evidence’ he plans to present to the Ethics Committee and NICE, stating that should the NHS open its doors to medical cannabis reimbursement ‘these are the people you’re going to be helping’.
Furthermore, he said that should the study be approved, this would see GPs, rather than just specialist doctors, being given the ability to refer patients.
Future Plans
DLA Piper, which advised Canaccord Genuity, Celadon’s Nominated Adviser, said at the time of Celadon’s listing that this gave the company ‘a compelling foundation from which complementary M&A opportunities could be executed’.
Mr Short stated that the recent stock market turbulence has ‘rebalanced the price of businesses within our sector’.
However, he stated that any potential M&As would ‘really have to make sense’ and that they wouldn’t be conducted ‘just for the share price’.
While its initial target market for both LVL and its cultivation arm will be the UK, Celadon says it is open to international opportunities, including potentially leveraging the LVL Canpain trial alongside the supply of its products as a ‘holistic package’.
“Rather than just supply volume of product, what we could do is actually take our LVL trial to other countries, and deliver the trial and our product. So, it’s a holistic service; we don’t just ship product.”
However, the ‘icing on the cake’ for Celadon would be securing an NHS contract.
“I think it will happen, but I think it’s a few years away, because it’s data led. It’s going to take us baby steps to do it. It’s not going to be an overnight fix. That’s why we acquired LVL. And in the short to medium term, we can get some revenue through.”
He added that he believes there is a ‘step in between’ where we are now and having medical cannabis fully prescribed on the NHS, ‘and that’s called managed service’.
“The NHS have procured many services for many years. I used to run psychiatric hospitals, and I used to sell that service to the NHS.
“Managed services are a holistic package. Rather than just, say, purchasing this cannabinoid, it means purchasing the service, i.e. the doctor, the assessment, the nursing and the product.
“That’s the step I think they’ll take as a baby step, and that’s still huge.”
