The U.K. medical marijuana company which is backed by Snoop Dogg’s venture firm is targeting Big Pharma in its latest fundraising round. The drug makers getting involved in cannabis would help validate the rapidly growing European industry.
The Oxford Cannabinoid Technologies Ltd. is working on breaking down cannabis extraction to their constituent parts to investigate the potential uses of the drug in immunology, oncology, neurology and pain relief said OCT Chairman Neil Mahapatra. The firm is looking forward for a $50 million funding which should suffice its finance until about 2024, he said.
As of now, no public stock offering is planned until around that time, though a listing could come earlier. When the firm raised money in 2018, OCT scored fund raising from the venture arm of tobacco giant Imperial Brands Plc and Casa Verde Capital LLC, the West Hollywood, California-based venture firm which has Snoop Dog among its partners.
With the growing popularity of cannabis use for health benefits, this time around, major pharmaceutical companies are also on the call list. Mahapatra said that if these companies can get involved, they can only be good for the industry. Big Pharma would help escalate the funds in the pharmaceutical company and help legitimize medical potential of cannabis, he said.
Drug makers assimilate the long-term grind of actually bringing cannabis as a medical drug to the market, he said. It would help ease on the short-term pressures to deliver the returns put on cannabis firms after the boom in the recreational marijuana in Canada.
The pharma industry has been incorporating cannabis in their framework via licensing deals with GW Pharmaceuticals Plc, the U.K company which makes cannabis derived multiple sclerosis medicine Sativex and a treatment for epilepsy, Epidiolex. A unit of the Switzerland’s Novartis AG also signed a partnership deal with Tilary Inc., a Canadian pot company last year. However, pharma companies are yet to tap into a substantial market in an efficient manner.
The size of the opportunities of cannabis related drugs in the medical industry could be possibly large. Bank of America Merrill Lynch estimates the European legal market for cannabis could be worth around $60 billion a year by 2026. While U.K. broker Cenkos Securities Plc sees the medical market for cannabis estimating at $75 billion a year by 2030.Legalization of cannabis for medicinal purposes is on its way, however, at different stages in different places.
A deeper Insight
Mahapatra says that he kind of fell into cannabis. He majored in biology at the Oxford University, ran a private equity and venture investments for the Jacob Rothschild, a financier. After this, he left to find London based private equity outfit Kingsley Capital Partners LLP, where he works as a managing partner.
OCT is a joint venture between the university and Kingsley, which is sparked by a meeting Mahapatra had with an old biology teacher. A deeper interest in the cannabis market was brought in by two major events around the world: the boom and legalization of cannabis in North America and Mahapatra’s mother who was diagnosed with cancer.
Mahapatra was shocked at the latter, which spurred him to research and read anecdotal stories where people claimed their tumours vanished after they started smoking weed. He says that there is a long way to delve in the cannabis research and the world still hasn’t explored its potential, the massive change it could bring in the medical industry. In Europe, identifying investments was also tough, which is exactly why OCT was created, says Mahapatra.