Medical marijuana company Creso Pharma eyes ASX

With governments considering allowing medical marijuana usage, one company is poised to capitalise.

A new market for medical marijuana is being anticipated.

Newly formed medical marijuana company Creso Pharma is poised to hit ASX boards next month, eyeing off a growing global market that could soon expand to Australia.

The group’s chairman and co-founder Boaz Wachtel is a familiar name in the space, having been a co-founder of the first medical marijuana company to list on the local exchange — MMJ Phytotech.

Phytotech has endured a turbulent existence since a stunning debut in January last year that saw its shares more than double, before being rocked by the sudden departure of chief executive Ross Smith just two weeks after listing.

It most recently traded at 26c a share, which still represents a 30 per cent lift on its listing price.

On the surface the story of Creso Pharma, whose operations are centred on Europe and Canada, is remarkably similar as it is looking to raise the same amount as Phytotech — $5 million, at the same price of 20c a share.

If it ain’t broke, don’t fix it.

However, Mr Wachtel — who retains a stake in Phytotech but is no longer involved in its operations — said his new venture was looking to take a different approach in the increasingly crowded medical cannabis field. “Creso merges pharmaceutical expertise with the medical cannabis industry for the first time,” he told The Weekend Australian.

The group’s chief executive, and another co-founder, Miri Halperin Wernli, has previously worked with global pharma giants Merck and Roche.

The Creso IPO comes as the federal government and several state governments push toward the legalisation of cannabis for medical purposes, with the NSW government last weekend the first state permitted to conduct cultivation research.

Adam Blumenthal, a co-founder and board member of Creso Pharma as well as a director of lead adviser EverBlu, said the group saw opportunities in Australia in the medium term as policymakers moved to pull down barriers.

“There’s definitely going to be a market for medical marijuana here,” he said.

At the moment the group’s operations are centred on Europe and Canada, although it is in talks regarding opportunities in South America and the Middle East.

The company’s first product will be designed to service both the human and veterinary markets and should be ready by the end of 2017, Dr Wernli said, with a “steady stream” of products in the pipeline.

Creso tapped EverBlu Capital as lead advisor on the deal, a newly founded boutique investment bank that was only incorporated on June 3. The group is run by Macquarie Capital alum Darrin Blumenthal, with the Creso Pharma float its first IPO since founding.

A roadshow promoting the float concluded Friday, with Adam Blumenthal saying the feedback pointed to the raising closing early on the back of “very significant” investor interest.

Should the IPO proceed as planned the group will be added to ASX boards in mid-September with a valuation around $11.5m.