Priding itself on providing truly organic cannabidiol (CBD) products Dragonfly Biosciences will list on the ASX as it expands into the Asia-Pacific region.

Organic vertically integrated seed-to-shelf cannabidiol (CBD) company Dragonfly Biosciences is seeking to raise $10 million when it launches on the ASX later this month.

Trading under the Dragonfly CBD brand, the UK-based company owns the entire value chain, from their certified organic farms, extraction facilities and laboratories used for producing premium CBD products.

Dragonfly CBD products have been voted Best CBD Product in 2020 by Boots UK, a major health, beauty and pharmacy chain in the UK and Ireland.

Dragonfly’s product distribution extends into national grocery and specialty chains including Tesco, Sainsbury’s and Amazon UK, securing their status as a market leader in the region.

The company also has former English champion alpine ski racer Chemmy Alcott as a brand ambassador.

Dragonfly is issuing 50 million shares at A$0.20 through the IPO and intends to raise A$10M, which it will use for accelerated global expansion and further product development.
Finexia Securities will act as lead manager of Dragonfly’s IPO and receive 5 million shares upon its successful listing on the ASX.


Organic CBD products key to Dragonfly’s success

Dragonfly CEO Regan Saveall said the company is focused on organic and the high-quality production of Tetrahydrocannabinol (THC) free products. THC is the main psychoactive compound in cannabis producing the high sensation.

In recent years there has been growing medical research and interest into the beneficial use of CBD, particularly as an anti-inflammatory to treat a range of medical conditions.

“Once there is more education around how CBD can help people then consumers will want to be sure they get a pure product and know where it has come from,” Saveall said.

To show compliance at every stage of production Dragonfly has decided to grow, extract, and formulate its products.

“When talking to retailers, regulatory bodies or customers we can show at every stage of the process we are using the best quality and practices,” Saveall said.

“We provide a certificate of analysis with every batch of product we make which really sets a standard in terms of ensuring it is THC free and has the right levels of CBD.

“We did some research, and the main finding was consumers wanted to trust the product they were buying.”

Dragonfly grows its Cannabis Sativa L variety on 650ha of organic accredited farmland in Bulgaria with plans to expand to 950ha.

“We start with organically-accredited soil, use organic fertilisers and you only keep up that accreditation by maintaining those farming practices,” Saveall said.

Dragonfly has global agriculture practice accreditation with a dedicated large scale extraction facility and formulates its products in partnership with another EU-GMP accredited operation.

“You won’t necessarily find other CBD companies with truly organically grown cannabis and EU-GMP isn’t required to get on the shelves in the UK or other countries, but we believe it shows you have a premium product,” Saveall said.

He said the accreditations the company has worked hard to achieve will also help it expand worldwide, particularly in Australia and the Asia-Pacific region.

“We can show the regulatory bodies all of our accreditations which makes it easier for us to meet the necessary compliance requirements,” he said.


ASX listing key to Asia-Pacific expansion

 Saveall said the company was attracted to an ASX listing for several reasons, including expanding its crops to Australia.

“We would be looking to also grow in Australia which would give us a full-year supply because at the moment we are planting around March when the ground is warm and harvesting in August and September,” he said.

“There is another half of the year where we could be cultivating and growing crops in Australia which would be a good way to essentially double our capacity.”

He said Australia had stable, developed capital markets but was also leading the world in its understanding of cannabis-related businesses.

“Australia has a well-developed reputation in the health and wellness industry and more specific to CBD has a clear regulatory regime which you don’t necessarily find the world over,” he said.


TGA clears the way

In February Australia’s Therapeutic Goods Administration down-scheduled CBD oils and pills as schedule 3 substances, rather than schedule 4.

The TGA also increased the allowable dose from 60mg to 150mg of cannabidiol (CBD) to be sold in pharmacies without a prescription if they’ve been included on the Australian Register of Therapeutic Goods.

“The TGA has a clear process to get approval in Australia which is a very big plus for a CBD company because it can be ambiguous in many countries,” Saveall said.

While a well-known cannabinoid company in the UK, Dragonfly is working to develop the brand in Australia and achieve TGA approval as part of its strategic plan of gaining a foothold in the Asia-Pacific region.

“Asian countries will look and think if it meets the requirements for Australia then it must be a quality product,” Saveall said.

“We already have special access scheme approval by the TGA for two of our products and are working to get full approval.

The company is distributing its products through ASX-listed international medicinal cannabis distributor Health House International. It also has a partnership with Australian company eCargo Holdings to distribute its products in Asia.

“Our products are on sale in Hong Kong, and we have put aside around a quarter of our raise for marketing and brand awareness to make Dragonfly a household name in Australia and the APAC region,” Saveall said.

Dragonfly is also looking to expand into the US market with moves underway to legalise use of medicinal cannabis at the federal level.

“We have been talking to companies in the US where there is a real appetite for quality cannabinoid products,” he said.

“Because we are in Boots, its alliance with US pharmacy Walgreens has given us a really good foothold for an expansion in the country and to take advantage of any legislative changes.”

This article was developed in collaboration with Dragonfly, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.