For DanCann, the aim is clear – to give patients who lack treatment options a better life through medical cannabis and cannabinoids. After building a solid portfolio of products, the next step for the Danish pharma company is commercialisation. In order to take this step, the company is now conducting a rights issue that, if fully subscribed, can raise 28.5 million DKK. BioStock talked to CEO Jeppe Krog Rasmussen to find out more.
In 2018, medical cannabis was legalized in Denmark, and a medical cannabis Pilot programme was initiated with the aim of enabling physicians to prescribe cannabis for medical use to patients who have not benefited from traditional alternatives. Back then, life science entrepreneur Jeppe Krog Rasmussen identified the business opportunities within this field, thus founding DanCann Pharma.
Today, DanCann is a licensed production and distribution company that focuses on discovering, developing, manufacturing, and commercializing new therapeutic cannabinoids.
The company’s projects – based on a core cultivation technique that was initially developed by NASA – target a range of diseases where today’s medicines are unable to provide sufficient treatment effect, or for which there are no treatment options available. Hence, the company’s mission is to give patients without existing treatment options a better life through medical cannabis and cannabinoids.
German deal worth 40 million DKK
On August 29, 2022, DanCann Pharma signed a supply agreement with WEECO Pharma GmbH for the German market valid from 2023 to 2025, worth at least 40 DKK million. Under the terms of the agreement, DanCann Pharma will sell and export flower products to WEECO Pharma with its main focus on Tetrahydrocannabinol (THC) genetics and potential candidates. WEECO Pharma will purchase, import, package, market, and distribute the products to the European medicinal cannabis marketplace.
Rights issue to reach commercial breakthrough
DanCann Pharma expects to achieve its commercial breakthrough during 2023, partly through the binding supply agreement with WEECO Pharma, but also by introducing new products under the Pilot Programme.
DanCann Pharma is about to raise capital for a pre-money of approximately 17 MDKK. The company has historically – until today – raised more than 80 MDKK and major commercial milestones lies ahead. The company will post-transaction have a valuation of approximately 46 MDKK, if fully subscribed, and will at this point have raised more than 110 MDKK in growth capital since its foundation. Furthermore, DanCann Pharma expect to have 60-100 MDKK in revenue within 3-5 years, and to hit breakeven during 2024 based on this transaction.
The rights issue will be conducted from 31 October 2022 to 11 November 2022 and will be a partially (77 per cent) guaranteed rights issue of units corresponding to a total of approximately 28.5 million DKK.
The CEO comments
BioStock reached out to CEO and founder Jeppe Krog Rasmussen, to learn more about the share issue and future prospects of DanCann expanding its business on the medical cannabis and cannabinoids market.
Jeppe, first of all, can you summarise what DanCann has achieved during the last 12 months?
– We have worked intensively to refine and purify our products in our production facilities. We have tested and analysed in order to comply with our own – and market – expectations. We will be able to supply the market with stable products with a high content of THC without the use of radiation in the process. Furthermore, we have strengthened our organization with key professionals in key positions in order to be ready for the forthcoming commercialization of DanCann Pharma.
What products do DanCann offer today and do you plan to diversify into more products in the coming year?
– We import a number of flower products from Dutch manufacturer Bedrocan. These products are available under the Danish Pilot Programme and can be prescribed from Danish doctors. We are currently working on adding an oil product to the portfolio. Following the approval of Biotech Pharm1, our production facilities, we will start exporting our own biomaterials to the German market.
In September, you initiated a collaboration with Horsted Institute. Can you brief our readers of the aim of this partnership and how the potential findings will be used to propel your sales and gain wider acceptance for medical cannabis?
– A major issue with medical cannabis is the lack of documentation for effects and side effects. Horsted Institute wish to show how treatment with medical cannabis can replace treatment with traditional medicines. A variety of patients suffering from different diseases have been selected and are carefully monitored through their own registrations on their smartwatches. The monitoring gives real time responses to developments in the patient’s treatments, and we look forward to receiving the results next month. Hopefully a positive outcome will help opening more people’s eyes for possible treatment with medical cannabis in Denmark and Scandinavia.
What would a potential EU-GMP-approval for Biotech Pharm1 from the Danish Medicines Agency mean for the company?
– The approval is essential for DanCann Pharma. The most important milestone so far. We have had the approval as a (future) goal since our foundation more than four years ago and now we are getting very close to the finish line, which is actually also a start line, as the approval will open a new world of interesting business opportunities for us. This is our licence to operate: We are transforming from being a development project into actual operations.
What are your hopes that the deal with WEECO Pharma GmbH will lead to in the long run?
– The WEECO-deal is an important recognition of DanCann Pharma. WEECO Pharma GmbH is one of the most important participants on the German Market and the agreement must be seen as an acknowledgement of our professional approach to the market. We expect the agreement with WEECO will open doors for us on other European markets, and negotiations with interested parties are already lined up.
What makes DanCann Pharma unique, and in what regards do you have a competitive edge in this, relatively speaking, new area?
– We set the bar high. We have established high-end facilities which only very few competitors can match. We have eliminated contamination factors in our fully automized facilities, and this enables us to deliver identical products every time. Product uniformity is extremely important for the patients who must be able to fully rely on the contents of their medication. And we have been able to produce biomaterial with high contents of THC without the use of radiation, which makes us quite unique.
Can you talk about your roadmap to reach break-even and beyond – towards the commercial breakthrough?
– Following the EU-GMP approval we will start complying to the WEECO agreement in 2023, and besides this, the company expects to close its books for the output from Biotech Pharm1 for the period of 2023-2025 before end-2022.
– The company will in parallel continue expanding its portfolio of imported products under the Danish Pilot Programme for medical cannabis, and with this more partnership agreements will be announced in the near future, and we will continuously be looking for new market possibilities. Furthermore, DanCann Pharma expect to have 60-100 MDKK in revenue within 3-5 years based on the two business for biomaterials and import and distribution of medical cannabis products to the Danish market under the Pilot Programme, and to hit breakeven during 2024 based on the funding raised in this transaction. This without the business leg of inflicting new cannabinoid-based drugs and pharmaceuticals, which belongs to the period after 2025.
What do you see in the future of medical cannabis and cannabinoids, in helping patients in need of new therapeutics?
– Cannabis and cannabinoids have for a long period been subject to strict conditions, among other things due to a UN convention back in the days, also under the auspices of medical and therapeutic purposes, which is why we have still only just seen the beginning in terms of the potential in this regard. There is a huge amount of R&D going on in the area, and especially the area around pain relief is super interesting, as an alternative to the classic opioid preparations we know as of today.
– In Denmark alone, approx. 1,300,000 people (over 18 year) suffer from chronic pain constantly or episodically, which is more than 20% of the total population. Examples of conditions are osteoarthritis and osteoporosis, but patients with MS (multiple sclerosis) and pain and nausea from chemotherapy can also count in this category.
– Among the 1,300,000 patients in Denmark suffering from chronic pain, there are at present approx. +500,000 patients being treated with strong opioids (i.e., fentanyl, morphine, and oxycodone). Medicinal cannabis can be used as a supplement – to reduce the use of strong opioids – to give patients a better quality of life as these strong opioids are very addictive and have strong negative side effects.
– Cannabis and cannabinoids can potentially disrupt many diseases, and on a global level, where DanCann Pharma mainly has its focus on pain patients, which today is manly treated with opioids, that counts a market value of USD 25.4 billion in 2018.
Right now, DanCann is conducting a rights issue. How will the proceeds be used and will you and the board participate in this funding?
– Approximately 55% of the net proceed from the rights issue will be used for operation costs in order to finalize the EU-GMP process and to finalize the development of the inhouse product portfolio. 20% will be used for further development of the product portfolio and 25% of the net proceeds will be used for repayment of loan. Both our Board of Directors and parts of the executive management team will participate in the transaction.
Finally, what would a broader legalisation in countries like the US and Germany have on the market and acceptance of cannabis?
– Germany is not just Europe’s largest economy, but also the EU’s most important “influencer”, and according to the industry, a legalization there will be of decisive importance. Our German neighbours are often the forerunners of new measures, which are subsequently widely spread to the rest of the continent. And it is also our clear expectation that this will happen in the cannabis area, and that Germany can play a decisive role and start a domino effect for the rest of Europe in connection with further acceptance and legalization of cannabis.
– The stigma is a big challenge, but as more and more studies document the positive effects of cannabis and cannabinoids in various contexts, there are clear signs of general acceptance from patients, professionals, and NGO’s, which increasingly recognize cannabis and cannabinoids as a real alternative to traditional and conventional treatment options. However, there is still some way to go towards acceptance and recognition.
– All forms of legalization and easing of regulatory conditions, which provide easier access for patients and consumers, help to create a strong incentive for companies in – and close to – the industry. And just over the last year, the manufacturers have noticed a markedly greater interest both among investors and among the many patients who hope for easier and cheaper access to the products. The industry is thus experiencing an increased form of acceptance, regardless of whether it is about pharma/biotech, medical cannabis, or cannabis for recreational use.
– De-criminalization on the largest and most influential markets in the world will hopefully open for further acceptance and help eliminate the stigmatization that still exist.The content of BioStock’s news and analyses is independent but the work of BioStock is to a certain degree financed by life science companies. The above article concerns a company from which BioStock has received financing.