Creso Pharma Ltd (ASX: CPH) shares are falling today after the company received firm commitments to raise A$18 million. At the time of writing, the Creso share price has slumped 6.52% to 21.5 cents.
The funds raised will be deployed to undertake psychedelic clinical trials upon the completion of the company's Halucenex acquisition. Halucenex is a life sciences company focused on researching novel psychedelic compounds and developing and licensing products for the emerging global psychedelic medicines market.
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Creso share price falls on capital raise
The Creso share price is on the slide today after the company advised it has secured firm commitments from institutional, professional and sophisticated investors to raise up to A$18 million. The funds will be raised via the issue of approximately 94.7 million new shares at an issue price of 19 cents per share.
The company notes that the placement was heavily oversubscribed and strongly supported by a range of local and international groups including leading Australian businessman John Langley Hancock, S3 Consortium Holdings Pty Ltd and independent global fund manager L1 Global Master Opportunities Fund, among others.
Funds to advance clinical trials and nutraceutical offerings
Creso Pharma has recently focused its attention on its "transformational" psychedelics acquisition, Halucenex. Its phase II and phase III clinical trials will explore the efficacy of psychedelic molecules on a range of mental health conditions, such as depression and post-traumatic stress disorder, and open up another potentially lucrative vertical.
The company will also deploy funds to expand its current nutraceutical offerings via its wholly-owned Canadian subsidiary, Mernova Medicinal Inc. On 19 March, Mernova received three purchase orders valued at C$177,122.40 (A$183,019.551). These included the company's first purchase order for its pre-roll joint range, sold under the Ritual Sticks brand.
Non-executive chair Adam Blumenthal was pleased with the strong interest in the placement and believes it will position Creso to explore greater opportunities in the near-term. He said:
The Placement was very well bid and leaves Creso Pharma well funded to progress a number of near term revenue generating initiatives. Key short-term focus will include finalising the acquisition of Halucenex and undertaking clinical trials. Importantly, the acquisition provides the Company with access to another lucrative vertical and potential revenue stream. We will also be ramping up our nutraceutical division and preparing for the anticipated legalisation of cannabis in the US through our Canadian operations.
The Creso share price has increased by more than 250% over the past 12 months.
