Pot stock Althea raises another $6m to pursue multi-channel strategy
Health & Biotech
Health & Biotech
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Medical cannabis company Althea Group (ASX:AGH) announced a new capital raise this morning.
The company said it’s raised another $6m via a share placement to sophisticated investors. It also expects to raise another $3m from eligible retail shareholders via a share purchase plan.
Althea completed the share placement by issuing 13,636,364 new shares priced at 44c each, a discount of 10.2 per cent to yesterday’s close of 49c. Shares in the company were unchanged in morning trade.
Based on AGH’s projections, the funds will be allocated evenly across a range of different business functions.
More than one-third of the new funds ($3.7m) will go towards research and development for low-dose CBD products.
The company said it’s prioritising Australian CBD products that can be sold via pharmacy channels as a Schedule 3 drug, pending the TGA’s final ruling (currently scheduled at some point in December) on down-scheduling.
“If CBD is not down-scheduled, funds will be allocated to the remaining Research & Development items,” Althea said.
The company said it also plans to carry out more R&D on “a range of Cannabis Health Products (CHPs) for sale in Canada”.
Althea’s Canadian subsidiary, Peak Processing Solutions, recently secured a distribution deal for its range of cannabis-infused beverages — a deal AGH said is expected to bring it revenues of around $105,000.
Althea acquired Peak for $5.8m after raising $30m from investors in July 2019 at $1 per share, a 122 per cent premium to the issue price of today’s share placement.
The company also said it plans to allocate $2m towards increasing the headcount in its sales team, with more “in-field representatives educating doctors about Althea medicinal cannabis”.
And it wants to spend around $2m on building up product inventory — part of a plan to ensure it has sufficient stock to meet 3-6 months of forecast sales at any one time.
As part of the share placement, Althea advised that its substantial shareholder, Aphria Inc, had initiated an off-market transfer of 12.25m shares in the company (equal to a 5.25 per cent stake) at 41c per share.
The transfer marked Aphria’s exit from the company, following the execution of a block trade in October 2019 where it sold 36.697 million non-escrowed AGH shares at 40 cents each.