Lifespot Health has received an investment of nearly $ 800,000 from Ela Capital of Toronto.
Lifespot Health (ASX: LSH) has announced a significant investment by the major Canadian cannabis mutual fund Ela Capital, which will be a great accomplishment for the Australian cannabis industry and provide the necessary boost to accelerate the development of its Medihale vape device.
Earlier this month, Lifespot completed the issuance of 22.3 million shares in a 1-to-4 non-waivable prorated rights issue announced before Christmas. Priced at $ 0.07 each, the placement raised $ 1.56 million before expense, resulting in a shortfall of approximately 11.3 million shares.
The company announced to the market today that the deficit had been placed with Ela Capital in Toronto and raised the additional $ 793,070.
This is especially important, according to Lifespot, as it appears to be the first time a major North American cannabis mutual fund has invested in an Australian company.
Speaking to small caps, Matthew Golden, Chief Executive Officer of Lifespot said the company is thrilled to have its first-of-its-kind investor and expects many other North American cannabis mutual funds to follow suit.
“I think it will signal the start of a wave in North America [cannabis-focused] Investment firms are coming to Australia … because they see Australia as a major growth market, ”he said.
Cannabis mutual funds
Ela Capital is an investment and advisory firm providing capital and services to cannabis, medical device and life science companies and companies.
Since 2015, the company has made several investments in the cannabis life science industry, including the creation and whereabouts of a major shareholder in TerrAscend Corp (CNSX: TER), a multi-billion dollar cannabis multi-state operator (MSO) in the USA.
According to Lifespot, Ela Capital’s stake in the company “will be both financial, advisory and provide growth opportunities for Lifespot medical devices to enter the lucrative medical markets of North America and Europe.”
In its own press release, Ela Capital said it will leverage its expertise and networks to provide Lifespot’s medical cannabis sales opportunity, access to differentiated, patented inhalable technology products, leading regulatory expertise, and marketing opportunities in Canada, the United States and Europe Access to diversified pools of public and private capital worldwide.
First investment of its kind
Lifespot believes this will be the first time a major North American cannabis mutual fund has acquired an interest in an Australian company.
Now there have been ASX stocks like Cann Global (ASX: CGB) that have partnered with Canadian partners, and companies like Cann Group (ASX: CAN) and Elixinol Global (ASX: EXL) that sell cannabis products to Canada.
The Cann Group was also once backed by Canadian producer Aurora Cannabis (though they sold their stake late last year), but this is still one cannabis breeder investing in another.
There’s also Australian company MMJ Group Holdings (ASX: MMJ) that has turned into a cannabis investment company and has a number of cannabis ventures around the world, including Canadian growers Embark Inc and Harvest One Cannabis.
While this appears to be the first investment in reverse, Golden believes that more North American investors see the growth potential of the Australian medical cannabis market.
“While there is a medicinal cannabis element in Canada, it is a recreational market.
“Australia is largely a medical market and I see companies like Ela Capital realizing the value of a medically validated inhaler vapor with medically validated and registered products where Australia is going and where Lifespot is definitely headed,” he said.
Medical cannabis vape studies
The rights issue was intended to raise additional funds to expedite clinical trials of Lifespot’s Medihale medical cannabis inhalation device.
Before the rights issue, the company had announced that it would define study protocols and initial target disease areas by the first quarter of 2021, as well as secure non-company inhalation devices for the trials.
Clinical safety, proof of concept, and pharmacokinetic studies should begin in the second quarter.
Discreet and portable device
Vaping differs from smoking in that it doesn’t burn cannabis, but instead heats it to just above its critical temperature to convert it to vapor and release the medicinal compounds.
The benefits of vaping include the cheaper cost, quicker onset, and avoidance of many of the side effects of smoking flammable cannabis or ingesting oil.
There are currently Australian registered steamers on the market, but Mr. Golden described them as expensive, large, and clunky – not as “portable” as they are marketed.
Lifespot, on the other hand, aims to develop a device based on the model of an e-cigarette that makes patient discretion considerably easier and yet offers the quality expected from a registered medical device.
“Most patients looking to treat a disease generally want to be very discreet – they don’t want people to see they are taking medication, regardless of what it is,” Golden said.
He said this was all the more the case with cannabis as the public perception of the way it is used remains negative.
“For people who want discretion – who want something they can easily hold in their hand, breathe in a few times without realizing it and put it back in their pockets – there is nothing like a medically registered steamer.”
Mr Golden said another difference for Lifespot is the use of a pod system where the cannabis e-liquid is in a sealed pod made by the manufacturer and cannot be refilled with any product from the street.
Not only does this provide security in the supply chain, but it also ensures that the patient is receiving a controlled dosage of a “high quality pharmaceutical product designed to help with their condition,” he added.