The medicinal cannabis industry has experienced explosive growth in recent years, and with that growth has come a flurry of high-value exits. From multinational corporations acquiring smaller startups to massive all-stock deals, the medicinal cannabis sector has proven to be a lucrative and exciting place for investors and entrepreneurs alike. In this article, we’ll take a look at some of the biggest and most notable exits in the medicinal cannabis industry to date.
One of the earliest and most notable exits in the industry was from British biopharmaceutical company GW Pharmaceuticals that specialises in the development of cannabinoid-based medicines. It is known for developing the first prescription drug derived from the cannabis plant, Epidiolex. GW Pharmaceuticals was publicly listed on the NASDAQ stock exchange in the United States in 2013 through an initial public offering (IPO). The IPO raised $150 million in capital for the company, which it used to fund further research and development into cannabinoid-based medicines.
The decision to go public was taken by the company in order to secure a more stable source of funding for its R&D activities and to provide liquidity for its shareholders. The company had been operating for several years prior to the IPO and had developed a number of promising cannabinoid-based medicines, including Sativex, a spray used to treat symptoms of multiple sclerosis. The GW Pharmaceuticals IPO helped to raise awareness of the potential therapeutic benefits of cannabinoids, as well as the scientific evidence supporting the use of these compounds as medicine. This, in turn, helped to increase investment in the sector and encourage other companies to develop cannabinoid-based medicines. The success of the GW Pharmaceuticals IPO demonstrated the growing investor interest in the medicinal cannabis industry, and showed that there was a strong demand for publicly-traded cannabis-related companies. Its success helped to validate the industry and paved the way for further investment and growth in the sector. GW was subsequently acquired by Jazz Pharmaceuticals in 2021 for $7.2 billion.
Another exit example can be seen in Arena Pharmaceuticals, an American biopharmaceutical company that has a cannabinoid-based bowel disease treatment and focuses on developing drugs for various other therapeutic areas, including cardiovascular, central nervous system, and inflammatory diseases. It was acquired by Pfizer for $6.7 billion in March 2022. The acquisition was a cash transaction and aimed to expand Pfizer’s portfolio in the obesity and metabolic disease space, where Arena had several promising candidates in their pipeline. With the acquisition, Pfizer gained access to Arena’s proprietary technology and expertise in developing therapies for obesity and related metabolic disorders. This was an important acquisition as it showcased the interest of big pharma in endocannabinoid system therapeutics and their willingness to operate and invest in the area.
Aelis is a French biotech company that focuses on the development of innovative treatments for the management of various medical conditions, including cancer, autoimmune diseases, and other serious diseases. Aelis has raised €25 million ($28.4 million) in an Initial Public Offering (IPO). The company is traded on the Euronext Paris market under the symbol “AELIS”. Aelis is developing a new class of drugs, called signalling specific inhibitors of the CB1 receptor (CB1-SSi), to access several therapeutic areas without available treatments. The company has two drug candidates in clinical trials, including AEF0117 for disorders caused by excessive cannabis use, and AEF0217 for cognitive deficits such as those associated with Down syndrome. The funds raised from the IPO will be used to accelerate the development of the drugs and support the selection and development of other candidates for the treatment of brain disorders.
There have been a number of noteworthy exits in the production and retail sub-sectors, however, the majority of these deals are all-stock, with the majority of cannabis producers and retail cannabis companies suffering significantly in the public markets. This suggests a key advantage of the cannabinoid life sciences sector which have been shown to generate significant real value and cash exits. Example retail and production exits include:
- MedMan Enterprises, an American cannabis retailer acquired by PharmaCann in a $682 million all-stock deal in 2019
- Tilray inc., a Canadian cannabis company acquired by Aphria in 2020 for $4 billion
- Acerage Holdings was bought in 2019 in an all-stock deal by Canopy Growth for $3.4 billion
- MedReleaf was acquired by Aurora Cannabis as part of an all-stock deal in 2018 for $2.5 billion
- CV Sciences, had a NASDAQ IPO in 2015 for $128.5 million
In conclusion, there are an increasing number of multi-billion dollar exits in the medical and pharmaceutical cannabis sector, the larger and cash generating of which can be seen to be focussed within the life sciences sector. This further confirms Oskare Capital’s thesis of investing in life sciences and ecosystem opportunities in order to realise the greatest upside, both in terms of returns and patient outcomes.