The Little Green Pharma Ltd (ASX: LGP) share price is smokin' hot today, up 13.2% to 22 cents on news of an oversubscribed capital raise.
The ASX All Ords cannabis share came out of a trading halt this morning after the company announced a successful $5 million institutional placement.
Let's look into the details.
Little Green Pharma share price soaring
In a statement, Little Green Pharma said it has secured "firm commitments" for a $5 million placement.
These commitments are from new and existing institutional and sophisticated investors.
Just over 27 million new shares will be issued at a price of 18 cents per share.
The funds will be used to repay a loan note, which "refreshes the company's balance sheet for future growth".
Little Green Pharm hopes to reach break-even point soon by executing current and proposed supply agreements in Europe and driving more sales in Australia.
The company is also working on reducing operational costs.
Little Green Pharma CEO Fleta Solomon said:
We are confident the business's current momentum will allow it to continue growing sales and leveraging domestic and international medicinal cannabis market opportunities.
The new Little Green Pharma shares will start trading on 31 March.
Other news nudging this ASX cannabis share higher
We first heard about the trading halt and proposed capital raise on Wednesday.
That same day Little Green Pharma announced a "strategic alliance" between its psychedelics subsidiary, Reset Mind Sciences, and Health Insurance Fund of Australia (HIF).
Reset and HIF plan to build a proof-of-concept mental health treatment facility.
The facility will provide psychedelics and psychotherapy to eligible patients.
Reset and HIF will conduct a study to help HIF decide whether to provide member coverage for the treatment.
This follows the Therapeutic Goods Administration (TGA) down-classifying two psychedelics to enable their use in treating mental illness.
The psychedelics are MDMA for post-traumatic stress disorder (PTSD) and psilocybin for treatment-resistant major depressive disorder.
Only a psychiatrist can prescribe the psychedelics. The new rules come into effect on 1 July.
In a statement, Little Green Pharma said the TGA's 'down-scheduling' of MDMA and psilocybin means Australia "will become the first market in the world to recognise psychedelics as medicines … ".
The news caused the Little Green Pharma share price to skyrocket by 46%, as we covered on the day.
Reset Mind Sciences CEO Shaun Duffy said the TGA's decision was "truly groundbreaking".
He elaborated:
There is a significant body of research emerging in Australia and globally for the use of psychedelics to treat mental health conditions and this decision allows the use of these drugs for the mental health conditions that have demonstrated the most potential in the research.
Last month, Little Green Pharma received Human Research Ethics Committee (HREC) approval for a clinical trial in the use of psilocybin for patients with treatment-resistant depression.
