Something new just happened in the cannabis industry. GW Pharmaceuticals raised $252 million, post-capital raise, GW Pharmaceuticals will have $514 million in cash on hand.
This ~$250mil raise, by a ~$3bil UK pharma company that exclusively produces, processes, researches, develops drugs, and markets products derived from whole plant cannabis, real marijuana, is an industry first and is more than the total amount of capital invested in the entire industry in 2015 into over 150 public and private companies in the cannabis industry. This gives GW Pharma a war chest to do research and development, drug trials, market and distribute the drugs they make, and to defend the many patents they hold that are almost certainly being violated by many companies selling CBD oils and other cannabis health and wellness products worldwide.
This also marks the first time multiple major wall street financial institutions have underwritten a cannabis drug company. And while Bank of America will not provide traditional banking services or lending to companies operating cannabis companies that cultivate, process, promote or sell cannabis products, they are all about collecting fees for raising capital for GW Pharma and helping the company grow, process and sell cannabis, a federally illegal substance in the US.
This is an important development that is basically going unnoticed. This is the first time a cannabis company retained the services of the world’s largest financial institutions to underwrite a deal for a company that is producing a federally illegal Schedule 1 drug. 3 of the largest investment banks are participating in the capital raise of a cannabis company, and they will profit doing so. It shows that Wall Street is willing to get involved in this controversial and growing industry. Wall Street is beginning to take notice, and if the cliché, follow the money still holds, the US government and Big Pharma companies will be getting more and more involved.
According to GW Pharma filings, the Use of Proceeds:
• Approximately $75.0 million to fund pre-launch commercialization activities for Epidiolex;
• Approximately $30.0 million to fund further expansion of our Epidiolex manufacturing capability to meet anticipated medium and long-term demand;
• Approximately $25.0 million to fund manufacture of Epidiolex inventory in preparation for launch;
• Approximately $30.0 million to fund the expansion of the market opportunity for Epidiolex through clinical development of other orphan indications;
• Approximately $20.0 million to fund the advancement of other pipeline opportunities; and
• The remainder for other general corporate purposes, including working capital.
Morgan Stanley, BofA Merrill Lynch and Goldman, Sachs & Co. are acting as joint book-running managers for the offering. Cowen and Company is acting as lead manager and Piper Jaffray is acting as manager.