$18M will help CPH progress near-term revenue initiatives
Creso Pharma (ASX:CPH) has received firm commitments to raise $18M, a sum that significantly shores up its balance sheet.
The company will issue approximately 94.7 million shares at an issue price of 19 cents.
Billionaire rich lister John Hancock (son of mining magnate Gina Rinehart) will join the register in a sign of strong support from leading Australian and international institutions.
Further support was given by independent global fund manager L1 Global along with Finfeed parent company Stocks Digital.
The issue price represents a 17.4% discount to the last traded price of 23 cents on 23 March 2021.
CPH will use the funds to progress a number of value accretive opportunities including Phase II and Phase III clinical trial initiatives with target acquisition company Halucenex Life Sciences Inc.
Halucenex is an established psychedelics company focused on developing treatments for Treatment Resistant Depression in individuals suffering from PTSD, and other mental health illnesses.
While this acquisition is still subject to shareholder approval, once approved it will mark CPH as the first 100%-owned psychedelic medicines company listed on the ASX.
Halucenex is currently focused on progressing clinical trials to research the efficacy of psilocybin to treat and alleviate Treatment Resistant Depression in individuals suffering from PTSD and other mental illnesses.
Its clinical trials will explore the efficacy of psychedelic molecules on a range of mental health conditions such as depression and Post Traumatic Stress Disorder.
This could open up a highly lucrative vertical for CPH as it builds its footprint in the alternative medicines sector.
The psychedelics movement is growing at a rapid rate, with early stage investors now entering:
- CNBC: Peter Thiel backs Berlin start-up making psychedelics in $125 million round
- Business Insider: Kevin O'Leary of 'Shark Tank': Why I'm betting big on psychedelics, and how investors should be thinking about this opportunity
- Bloomberg: ‘Magic Mushroom’ Company Goes Mainstream, Jumps 71% Post-IPO
- Forbes: NYU Establishes Center For Psychedelic Medicine With $10 Million From MindMed, Philanthropists
- Fortune: Business gets ready to trip: How psychedelic drugs may revolutionize mental health care
Expansion in all facets of CPH’s operations
Funds will also be deployed to expand CPH’s current nutraceutical offerings, scale up operations at its wholly-owned Canadian subsidiary Mernova Medicinal Inc., in line with recent increasing demand for Mernova’s products, and progress a dual listing on the OTCQB (OTC).
CPH announced its intention to list on the OTC on 23 March, a move that has proved lucrative for several other ASX listed companies that have done the same thing:
- Novonix was as high as 152% and is currently up 79%
- Tinybeans is up 36.9% since its OTC announcement
- FYI Resources Ltd has only been trading on the OTC for a month and is up 48%
- European Metals Holdings Ltd is up 85% in the three months since its OTC listing
As Finfeed reported “Listing on the OTC is expected to unlock significant shareholder value and provides CPH with access to one of the largest investment markets in the world at nominal cost”.
CPH believes that with a strong cash balance, it is well positioned to attract new partners and explore complementary acquisition opportunities, ahead of the pending federal legalisation of recreational cannabis in the US.
“We are extremely pleased to have generated such strong interest and support for the Placement and I would like to welcome a number of new investors to the register,” Non-executive Chairman Adam Blumenthal said.
“The Board and management would also like to thank new and existing shareholders for their commitment to Creso Pharma.
“The Placement was very well bid and leaves Creso Pharma well-funded to progress a number of near term revenue generating initiatives.
“Keyshort-term focus will include finalising the acquisition of Halucenex and undertaking clinical trials.
Importantly, the acquisition provides the Company with access to another lucrative vertical and potential revenue stream. We will also be ramping up our nutraceutical division and preparing for the anticipated legalisation of cannabis in the US through our Canadian operations.”