Danish Medical Cannabis company announces swathe of updates as it seeks fresh funding
DANISH medical cannabis operator Stenocare has published a flurry of operational updates over the past month as it hopes to raise up to DKK30m in a new rights issue.
Alongside the launch of a new IT platform which enables doctors to set up their own medical cannabis clinics, Stenocare has announced the launch of its products into Germany for the first time, marking its sixth and largest market to date, as well as ‘significant progress’ in the developments of its ‘next generation’ of cannabis oils.
The stream of announcements, some of which were reportedly ‘unexpected’, come as the company seeks to welcome new investment to fund its ambitious plans for the coming 12 months, and expand into even more markets across Europe.
This morning, the company announced that its initial rights issue was oversubscribed at a subscription rate of around 127%, seeing the company raise a total cash subscription of DKK13.6m.
The rights issue
On May 15, Stenocare announced the launch of a new rights issue aiming to raise gross proceeds of up to DKK29.7m.
The raise, according to Stenocare’s CEO Thomas Skovlund Schnegelsberg, will be made in three individual transactions, and is being conducted for three main reasons.
Stenocare’s initial rights issue, offering 2.3m new shares at a price of DKK4.58 (53p) each, commenced on May 24, 2023 and came to a close last week (June 08).
Stenocare was initially hoping to raise a maximum of DKK10.7m (£1.23m), with pre-subscription commitments in cash of DKK3.2m and guarantee commitments of DKK6.1m already in place.
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A second tranche of 1.1m shares aiming to raise a maximum of DKK7.8m is planned to be launched in December 2023, with a third leg planned for June 2024, looking to raise a further DKK11.2m.
“It’s not like we’re going to take in DKK30m right now, because we don’t need it. But we know we’re going to need it at different stages,” Mr Schnegelsberg told Business of Cannabis.
He went on to explain that the funds will be used for three core goals, the first and most simple is to pay off its short term debts and ‘improve our balance sheet’, which currently amount to a total of DKK10.6m, DKK2.3 of which will be repaid out of the initial rights issue.
The second core aim for the investment is the investment in ‘current markets that we have to drive sales’, with the company expecting to break even across its current operations by the end of the year.
Furthermore, Stenocare will funnel some of its newly raised cash into expanding into new markets, with another launch expected by the end of the calendar year and a goal to hit a ‘minimum of 10 countries’.
Stenocare now operates in six countries across Europe, including Denmark, Sweden, Norway, UK and Australia, and as of May 25, Germany.
The medical cannabis oil producer announced last month that its products have now been approved for sale in Germany, Europe’s largest market by some stretch, by Federal Institute for Drugs and Medical Devices (BfArM).
Via a partnership with local operator ADREX Pharma, which Stenocare says it has been working with ‘intensively’ since 2022, the company expects the launch its 10mg/mL THC and 10mg/mL CBD oil by August 2023.
While Mr Schnegelsberg said that the Bfarm approval had happened ahead of expectations, with it initially expected to come through ‘after summer’, he remained ‘humble’ about the potential opportunities this new market would bring for the company.