European Cannabis Stocks Review: Northern Leaf Seeks Funding For IPO, MGC Reports ‘Strongest Half-Year To Date’, & More From Jazz Pharmaceuticals

Northern Leaf 

Jersey-based medical cannabis cultivator Northern Leaf is reportedly aiming to raise a further £3m in pre-IPO funding with a view to going public later this year. 

Should it successfully launch an IPO, it would mark the culmination of a two-year long campaign to go public, after announcing similar plans to ‘go public later this year’ back in 2021. 

At the time, the road was paved for Northern Leaf, which was the second company in history after GW Pharmaceuticals to receive a commercial licence to grow medical cannabis in the British Isles, to establish itself as one of the early frontrunners in the market. 

With a £14m over-subscribed pre-IPO fundraising round secured in March 2021, everything looked set for the cultivator to ride the ‘green wave’ of positive investor sentiment towards cannabis and become one of the first tranche of UK cannabis companies to list on the London Stock Exchange, alongside the likes of Kanabo, MGC Pharmaceuticals and Oxford Cannabinoid Technologies.

Since 2021, updates from the company have been scarce and progress appears to have moved at a snail’s pace, with Northern Leaf still in the process of attaining its EU GMP certification for its 75,000 sq. ft facility, again expected to be secured later this year. 

A source close to the company told Proactive Investors: “This sign-off is extremely time-consuming and difficult to attain, but will give Northern Leaf access to high-value medical markets across Europe where their products will be dispensed.”

Comparisons can be drawn with Hellenic Dynamics, a UK-headquartered cannabis company which became the first pure-play cultivator to list on the LSE late last year. 

It, too, first announced plans to launch an IPO in 2021, but soon found ‘as a fully fledged medical cannabis cultivator producing THC dominant products, it wasn’t going to be an easy process’. 

Hellenic’s Vice President, Davinder Rai, explained to BusinessCann that since it approached the financial watchdog in July 2021 regarding its IPO, it has ‘for want of a better word, been teaching the FCA exactly what a cannabis cultivator can do, and what it can’t do’, adding that companies which follow will ‘100%’ have an easier time. 

A source close to the company told Proactive Investors: “The last year has been tough, but in many ways, it has allowed us to put in place the building blocks to create a successful company, underpinned by the highest levels of regulatory compliance and a focus on quality and consistency.”

MGC Pharmaceuticals

MGC Pharmaceuticals published its half-year financial results this week, days ahead of announcing the appointment of a new Lead Broker and new Company Secretary.

In the six months to December 2022, MGC reported revenues of A$2.66m, up around 4% on the same period a year earlier, making it the company’s ‘strongest half-year to date’ for a second consecutive year. 

This was driven by a A$1.389m (US$1m) order of its Artemic drug to its US supply and distribution partner AMC Holdings in December, seeing Artemic sales hit A$1.5m across the period, representing 57% of the company’s total revenue. 

A further A$1.1m was brought in from ‘cannabinoid product sales’, representing 41% of the company’s total income over the interim period, with the remaining revenue made up of ‘consultancy and other services’. 

Gross profits for the period also doubled from A$607k to A$1.2m over the period, but operating losses grew from A$7.9m to A$11.1m. 

This included a A$3.1m write-off/impairment expense relating to the acquisition of Israeli firm MediCaNL on April 21, 2021. The company says performance since the acquisition has been ‘lower than expected’, and the group’s impairment testing determined that the recoverable amount of the CGU (cash generating unit) was nil as of December 2022. 

MGC also announced in an RNS on March 1 that it had appointed Peterhouse Capital as its new lead broker, replacing Turner Pope, as part of ‘the company’s UK-focused corporate strategy with respect to future equity capital market financings’. 

In the same release, MGC revealed that its Company Secretary David Lim, credited with overseeing ‘the transition of the company’s corporate structure to one that is significantly more organised and well positioned for the future’, has stepped down. 

Mr Lim will now be replaced by Mr Rowan Harland and Mr Arron Canicais of SmallCap Corporate Pty Ltd, a Perth-based corporate advisory firm.

Jazz Pharmaceuticals 

The pharmaceutical giant and manufacturer of Epidyolex also reported its full-year results this week, revealing an 18% sales increase to $3.7bn in 2022. 

This was driven in large part by ‘meaningful Epidyolex growth’, seeing net product sales increase 12% to $736.4m year-on-year. 

During Q4 last year, Jazz completed the ‘pricing and reimbursement’ process for the commercial launch of Epidyolex in France, while enrolling its first patient for Phase 3 trials of Epidyolex for Dravet syndrome, Lennox-Gastaut syndrome and tuberous sclerosis in Japan.

The company’s second cannabis-based medicine, Sativex, also saw sales increase from $12.7m to $16.8m during the period. 

Looking ahead, Jazz says revenue guidance for 2023 is between $3.675bn and $3.875bn, ‘underpinned by expectations of continued growth in net sales of Xywav, Epidyolex and the oncology portfolio.

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