Shares in David Beckham-backed cannabis firm up 310% in early trading frenzy – Evening Standard
TRADING frenzy sent shares in Cellular Goods upward four-fold as the artificial cannabinoid company found on the London Stock Exchange today.
The tidal wave of attention from institutional and retail investors lifted the market capitalisation of the London pioneer – that counts David Beckham as an early backer – above #100 million.
Beckham’s investment vehicle DB Ventures kept a 5% stake: the value of this holding rose more than #2.5 million to 3.9m at the summit.
CEO Alexis Abraham said:”We are delighted with the tremendous support we have received from institutional funds and the unprecedented level of interest shown by retail investors for an IPO of the size. “
The firm is the latest in a string of organizations in the cannabis space to go public following a ruling by ruler the Financial Conduct Authority allowing such businesses to list on the main exchange.
However, it has one big difference: the lawful cannabis component on that its ranges of sports pain relief and skincare products will be produced is entirely artificial, made in laboratories.
Abraham said the conclusion, that will prove pivotal to the organization’s decisions and operations, came about by”happy accident” as the firm prepared to forecast and browse the regulatory and legal hurdles related to bringing a novel product – and one according to a classified drug – onto the market.
Abraham launched firm in 2018
Abraham launched firm in 2018
/ Cellular Group
He told the Standard:”We took the decision in the get-go which we’d participate with the FCA with the LSE from day one and work together.
“Once you’ve got past the general question of legality you get very quickly to the next question about THC [the prohibited active part of cannabis]. That’s not an issue since you make the job you will never bring a product to market which hasn’t been analyzed.
“But you get to the much more thorny problem of POCA [the Proceeds of Crime Act], which basically says that if something is explicitly legal in the UK, the way it was produced has a material impact on the legality of this end product.
“So let us say you are a business in the UK bringing out a organic CBD product that, state, comes in Portugal and it is being extracted from the flowers and leaves of this plant.
“From the UK you are only permitted to extract from the stem. It is an archaic legal requirement that dates back to the use of hemp, but it has been badly repurposed to attempt to pay for a nascent new industry that isn’t fully understood from the ruler.
“They are coming on in leaps and bounds and we have seen incredible involvement with the industry but of the rest of the companies operating in this area, I do not think anyone else went down the biosynthetic rabbit-hole.
“And the wonderful thing about moving down this rabbit hole to address the POCA problem was that we discovered this technology which was mind-blowingly better.”
‘The next generation of the technology could provide us cannabinoid vending machines’
CG has established relationships with manufacturing laboratories in California who are all competing to produce and refine platforms that synthesise cannabinoids.
Abraham said:”Even today now we are considering seven days to produce one batch versus about 200 days for its equivalent field-grown. On top of that you are using likely 1/200th of the power and water, then you have no problems around pesticide taint or contaminants. It is not merely a marginally superior process – it is an order of magnitude better.
“And the next generation of the technology could practically provide us cannabinoid vending machines. We feel that the cannabis boom will never come. It is likely to be all about cannabinoids and it’s the future.”
The business was founded by Abraham in 2018 after preceding roles in new development and digital strategy and today employs eight people full-time at its London hub working in partnerships with labs and manufacturers around the globe.
Money raised from the sale will be factored to creation and promotion of a range of products for skin care and sports recovery, with the earliest due to launch in September.
Each one of the first ranges, at least, will be topical treatments – oils and lotions that are wrapped or sprayed onto the skin rather than ingested.
Early next year, another selection of sports recovery roll-ons products can come to the market.
Abraham said:”There is a massive number of anecdotal evidence it seems to have advantages. We’re not going after every sort of health claim at this stage, we are not going to the medical area.
“we would like to generate a item which does not only target elite athletes and everyday gym-goers but everyone. Everyone should be able to move a little bit better whether they’re 18 or 80.”
The sports link attracted CG into contact with investors running for David Beckham’s investment vehicle DB Ventures early on.
Keen to put in the area, but cautious of any possible controversy and regulatory problems, CG’s clinical means of production lent immediate appeal.
While Beckham himself was hands-off so much, and there’s no intention of this football star fronting advertising campaigns, his expertise might be drawn on in order to help to shape the business’s future growth. DBV has kept a 5% stake.
At present, CG remains a tight-knit outfit, with only eight employees co-ordinating research, development and promotion.
Abraham said:”It was important to us not to follow that model of becoming a big bloated business and simply hiring for the sake of hiring. We have the mentality of startup combined with accessibility to capital and agility of a listed company.
“In a way, we are a company was constructed to be born throughout the pandemic. We’re all used to the Zoom calls today.
“As the sessions went on it grew more intriguing, you might feel that the curiosity building and as people went from being curious to understanding the depth of the people we have in Alexia [Blake, head of research and development] and the advisory board.”
Another key difference from the current launches of medicinal marijuana vape-maker Kanabo and biopharma firm MGC Pharma, that is developing epilepsy and dementia medication, is the IPO has been opened up to retail investors.
The transfer comes one of growing complaints from leading retail investment platforms that traders are being locked from blockbuster floats by institutional investors and investment banks, and missing out on the first price fizz which has come to follow these launches in today’s frothy equity markets.
The conclusion goes to the center of the organization’s philosophy of this connection that it wants to boost with its clients.
Abraham accepted the move has made the IPO more complicated – even 48 hours ahead the final time of launching is still to be rubber-stamped from the LSE and FCA.
He said:”PrimaryBid are an exceptional companion, and what they are doing would be to bring the necessary strictures and clarity to what is definitely a complicated process. There is an element of truth in the proposal that attracting more investors is complicated, but it is also an advantage which other people don’t bother to tap .
“I’ve had 2,000 emails since we started this retail process, a lot with thoughts and hints on how they see the business working, and what they find intriguing.
“It is very rare in my experience which you don’t find out something from the clients and if they’re willing to volunteer info freely it is incredible. We sent out a survey to everybody involved in the retail offer and we’ve had over 2,000 answer already. Almost 80% have never tried cannabinoids before but they were fascinated by the distance.
“Another thing which resonated with me go retail. . We have an unusually accessible share price. It is not like we are saying you can purchase one share or possibly a portion of a share.
“In 5p, for the price of one of the skincare products that they could have a 100 stocks and with some luck and us doing a good job of this, which will be worth something.
“There is a really fascinating story about not only owning the goods but owning a part of the company. Naturally there will be people inside for a fast buck but I hope as many people as possible get in at the start and stay with us for the journey.”