CannPal Animal Therapeutics, a Sydney-based pharmaceutical technology startup, is looking to raise A$6 million ($4.74 million) in its initial public offer (IPO) on the Australian Securities Exchange (ASX) slated for October 2017.
CannPal has successfully lodged a prospectus with the Australian Securities and Investments Commission (ASIC) and intends to issue 30 million shares at an issue price of A$0.20 per share. It forecasts an expected market capitalisation of A$18.5 million.
Founded and led by managing director Layton Mills, CannPal aims to develop cannabis-based veterinary products that can be administered as pain relief to companion animals. Mills is also the co-founder of Canberra-based natural health foods trader Tanlay Food Group.
Since inception in 2016, it has grown to a team of 13 but currently lacks revenue streams as it is focused on R&D and clinical trials of its product.
The decision to list on the ASX stems from its desire to raise the public profile of its cannabis products, in addition to raising capital for R&D of its product pipeline as well as finance the clinical trials of its CPAT-01 drug.
The company previously closed an A$500,000 seed round in June 2016 from unnamed investors. It added to this with a second oversubscribed seed round of A$1 million that it closed in March 2017.
Early in its development, due to the social taboo of cannabis products, the company applied for and was granted a sponsor fee waiver from the FDA that permitted it to conduct its research without the associated fees, as well as validate it and overcome the stigma associated with cannabis products.
It has also entered into a strategic collaboration agreement with ASX-listed Zelda Therapeutics Ltd, which will see them work together on research and look to exploit opportunities of mutual interest in both the human and animal pharmaceutical markets. CannPal is looking to strengthen business ties with Zelda Therapeutics by inviting the latter’s shareholders to participate as a priority applicants in the IPO.
Following Canada, Israel, and more than half the US states, who through varying approaches have legalised medicinal marijuana, Australia intends to grow its own medical marijuana industry. However, fragmented regulations and a lack of confidence among doctors in prescribing medical cannabis inhibit its growth.
Licenses ranging from cultivation and research to manufacturing have been issued by Canberra, while as at July 2017, at least 10 cannabis-related firms are listed on the ASX.
The growth of medical cannabis is driven by a growing recognition of its application in treating chronic pain, arthritis and migraines, with US-based analyst Grand View Research estimating the market to reach $55.8 billion by 2025 with the US, while Bloomberg predicts this will grow to $50 billion by 2026 in the US.