CanniMed Therapeutics (TSX: CMED) priced its initial public offering at $12, selling 5mm shares through a syndicate led by AltaCorp Capital to raise $60mm. The underwriters, which also included Canaccord Genuity, Clarus Securities, Mackie Research Capital and Haywood Securities, may exercise an option to purchase an additional 750K shares within 30 days of the closing, which is expected to be December 29th. The deal was priced at the high-end of the $10-12 range provided earlier this month, and it was increased by 10% from the initial 4.545mm shares. The IPO, which follows the recent RTO of Emblem earlier this month, marks the 11th publicly-traded Canadian licensed producer, with several other LPs expected to begin trading within the next few months.
Based in Saskatoon, CanniMed Therapeutics represents the recent combination of CanniMed and Prairie Plant Systems. The company is also developing a cannabis production facility in Michigan. Following the IPO, but not including the over-allotment option, the company has 19.843mm shares outstanding, giving it a market capitalization of approximately $240mm at the IPO price of $12. CanniMed intends to use the proceeds as follows: Approximately $21.0 million to fund the expansion of production at our Saskatoon, Saskatchewan facilities, approximately $8.0 million to fund the development of an additional cannabis oils manufacturing facility and related equipment, approximately $5.0 million to fund the purchase of additional equipment, approximately $6.0 million to fund the expansion of SubTerra facility in White Pine, Michigan, approximately $3.0 million to fund further clinical trial and the balance to be allocated to working capital and general corporate purposes.
The Saskatoon facility, currently with 97K sq. ft. of production space, has the ability to produce 7mm grams per year. For the first nine months of the fiscal year ending 10/31/16, the company generated sales of $6.635mm on a pro forma basis, selling 548K grams of dried cannabis at an average price per gram of $8.33 and 655K ml of cannabis oils at an average price of $2.50 per ml. Total revenue during the period grew 54% from year-ago levels for the first three quarters of FY15.
Unlike the vast majority of LPs, with the exception of Aphria, which has a 15% stake in an Arizona medical cannabis cultivation operation, CanniMed has interests in the United States. The company’s wholly owned subsidiary, SubTerra, has applied to Michigan for a cannabis production license and will be applying to the DEA for a license to supply medical cannabis to third parties for clinical research purposes. It expects that the country will move cannabis from Schedule I to Schedule II, a change that would allow it to have a first-mover advantage in providing pharmaceutical-grade medical cannabis.
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