Australian medicinal cannabis manufacturer Little Green Pharma’s (ASX: LGP) commercial strategy of significantly expanding its footprint into the lucrative European markets is set to receive a large cash injection to the tune of up to $27 million (before costs) via a share placement and share purchase plan.
The Company will issue 34 million new fully paid ordinary shares at an issue price of $0.65 per share, with the $22m placement receiving strong support from high-net-worth investors and attracting several new institutional investors to the register.
In addition, LGP will also offer a share purchase plan to eligible shareholders to raise up to a further $5 million.
The proceeds of the placement and SPP will assist the Company to execute its next phase of growth internationally, with a particular focus on Europe.
Earlier this month LGP announced it had achieved a major milestone in its export-led global sales strategy with the first commercial shipment of cannabis flower medicines delivered to Berlin-based Deutsche Medizinalcannabis GmbH (“DEMECAN”) in Germany.
This follows LGP’s first commercial shipment of 2,400 units of GMP-manufactured medicinal cannabis oils to Germany in late 2020.
Commenting on the shipment, LGP Managing Director Fleta Solomon said:
“Our partnership with DEMECAN represents a significant foundation on which to build LGP’s access to the German market. For the past year, we have worked closely with DEMECAN through a highly rigorous audit and qualification process, to ensure LGP’s cannabis flower medicines meet all applicable EU GMP and German quality requirements.”
DEMECAN is the only independent German company that covers the entire medicinal cannabis production chain; from cultivation to processing and manufacturing, through to distribution to pharmacies.
The initial shipment, comprising 500 x 15g units of high-THC cannabis flower medicines, is due to arrive in Germany this week, and commences the three-year term of the Purchase Agreement between the parties.
Under the terms of that agreement LGP has agreed to export up to 1,000kg of dried flower and 10,000 units of medicinal cannabis oil product, per annum.
The delivery of this shipment follows a rigorous 12-month audit and qualification process between LGP and DEMECAN’s quality and commercial teams to ensure compliance with all applicable EU and German regulatory requirements.
The German medicinal cannabis market is the largest medicinal cannabis market in Europe and is anticipated to reach €7.7 billion (A$12.22 billion) by 2028. It is also a significant market for cannabis flower medicines, with flower sales representing ~21% of the market in Germany.
With this shipment, LGP joins a small group of international cannabis producers able to supply cannabis flower medicines into Germany and is only the second producer to not require their cannabis flower medicines to be irradiated.
The shipment continues LGP’s strong momentum in Europe, having also been appointed as a primary medicinal cannabis oil manufacturer (in partnership with Intsel Chimos, a leading French pharmaceutical distributor) for a national French medicinal cannabis trial.
The two-year trial will assess safety and quality of medicinal cannabis medicines for the French public and is planned to recruit up to 3,000 patients over its duration.
The trial will be the only pathway for the supply of cannabis medicines into France for next two years, with positive results tipped to catalyse legalisation of medicinal cannabis in France.
LGP’s role as a primary supplier is anticipated to provide the Company with a first mover advantage in the event medicinal cannabis is legalised in France following the trial.