20/02/2020 - 15:07

Little Green Pharma falls on debut

20/02/2020 - 15:07

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Little Green Pharma began trading on the ASX today, with its shares closing 10 cents below the price of its initial public offering, despite signing a five-year supply contract with a UK pharmaceutical company overnight.

Fleta Solomon owns the second largest stake in Little Green Pharma with around 15 per cent of shares. Photo: Little Green Pharma

Little Green Pharma began trading on the ASX today, with its shares closing 10 cents below the price of its initial public offering, despite signing a five-year supply contract with a UK pharmaceutical company overnight.

LGP closed at 35 cents per share, after issuing 22 million shares at 45 cents per share to raise $10 million in its IPO.

It’s the second medicinal cannabis business to list on the ASX this month, with Emerald Clinics also being hammered by investors.

Emerald shares closed today at 12 cents per share – well below the 20 cents per share at which it raised $6 million in its IPO.

The listing of LGP and Emerald comes more than two years after a flurry of listings by medicinal cannabis stocks on the ASX.

The share price of nearly all those companies has fallen sharply since their listings.

Founded in 2016, Little Green Pharma is a medicinal cannabis business involved in the production, distribution and research of marijuana-based products.

Last night, LGP signed a binding agreement to supply medicinal cannabis to Astral Health, a UK-based importer and distributor of medicinal cannabis products.

A subsidiary of LYPHE Group, a conglomerate of companies that focus on medicinal cannabis, Astral Health is one of few pharmaceutical companies in the UK to hold a licence operate cannabis clinics.

Ms Solomon said the agreement was an important milestone, and that it would provide the company with an early mover advantage in what is anticipated will be a large medicinal cannabis market.

“The agreement positions LGP as one of very few companies with GMP medicinal cannabis products to supply into the UK and Europe and follows our first purchase order from Germany,” she said.

“We are excited to be working with LYPHE Group, who hold a commanding share of the UK patient market.”

According to materials accompanying LGP’s listing, Canada-based cannabis investment firm Elixxer owns the largest stake in the company with 23 per cent of the company’s shares, while LGP managing director Fleta Solomon owns the second highest stake at around 15 per cent.

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