BOARD & GOVERNANCE

The Directors recognise the importance of sound corporate governance, which should be commensurate with the size and complexity of the Company, and in the interests of Shareholders. The Directors consider that the Company complies, so far as practicable, with the QCA Corporate Governance Code published by the Quoted Companies Alliance to the extent appropriate having regard to the size and nature of the Company.

The Board is responsible for the overall management of the Group including the formulation and approval of the Group’s long-term objectives and strategy, the approval of budgets, the oversight of Group operations, the maintenance of sound internal control and risk management systems and the implementation of the Group’s strategy, policies and plans. While the Board may delegate specific responsibilities, there is a formal schedule of matters specifically reserved for decision by the Board. Such reserved matters include, amongst other things, approval of significant capital expenditure, material business contracts and major corporate transactions. The QCA Code recommends at least two members of the Board comprise non-executive directors determined by the Board to be independent.

The Board comprises seven directors, two of whom are executive directors and five of whom are non-executive directors, reflecting a blend of different experience and backgrounds. Robert Barr, David Firth, Elizabeth Shanahan and Dr. Steven Hajioff are considered independent and as such, the Company complies with the requirements of the QCA Code in this regard. The Board meets regularly to consider strategy, performance and the framework of internal controls. To enable the Board to discharge its duties, all Directors receive appropriate and timely information. Briefing papers are distributed to all Directors in advance of Board meetings. All Directors have access to the advice and services of the Company Secretary, who is responsible for ensuring that the Board procedures are followed, and that applicable rules and regulations are complied with. In addition, procedures are in place to enable the Directors to obtain independent professional advice in the furtherance of their duties, as required.

PRINCIPLES OF GOVERNANCE

The Company has articulated its strategy and business model on its website, is also included in detail within its 2022 Admission Document, which can be found here. A summary is included below.

The Company is a UK-based pharmaceutical group that is focusing on growing highly controlled indoor hydroponic, high THC cannabis for use within medicinal products used to treat chronic pain. Through LVL, the Company has also commenced the planning of research into cannabinoids for use in chronic pain and, through Kingdom, has commenced research into the treatment of other conditions such as autism, within the UK’s highly regulated market.

The Company has received a Home Office Licence following approval from the Medicines and Healthcare products Regulatory Agency (the “MHRA”) to apply for the licence, allowing it to legally grow medicinal cannabis in the UK for the purpose of producing test batches of cannabis oil to support its application to the MHRA for registration as a manufacturer of medicinal product APIs.

The receipt of MHRA registration will enable the business to then supply medicinal cannabis (in the form of an API to manufacturers of finished medicinal products, which in this case is an extracted oil used in the finished pharmaceutical product) with a high THC content in the UK, allowing it an opportunity to enter what is expected to be a substantial, extensively regulated and fast-growing UK market.

Based upon the company’s progress to date, the Directors believe it is ideally positioned to execute its strategy and in doing so, deliver long-term value for shareholders.

The Company recognises the importance of engaging with its shareholders and reports formally to them when interim and full year results are published.

The Board also seeks to engage with shareholders to understand their needs and expectations, primarily through meetings with the Executive Directors, both individually as required, and at annual general meetings, at which all shareholders are welcome.

The Non-Executive Directors may be contacted by shareholders who wish to raise matters with them, and the Non-Executive Chairman may attend meetings with institutional investors and analysts as required.

Investors may contact the company directly through the investor enquiries email address noted on the company’s website.

As a UK based pharmaceutical Company operating in a nascent and rapidly growing medicinal cannabis market, the company recognises the significant benefit both the manufacturing of high content THC cannabis and research into the use of cannabinoids can have for easing the pain and suffering of many patients afflicted by conditions such as autism.

By addressing the unmet needs of patients with chronic pain, the Company has the potential to dramatically improve the quality of life for thousands of individuals across the UK.

The Company is therefore committed to the highest standard of corporate social responsibility in conducting its activities, and these are outlined further within its Admission Document, which can be found here.

The Board has identified and implemented what it believes to be an appropriate approach to risk management for a Company of its size, scale and complexity.

The Company’s approach to risk management and the principal risks it faces, along with what it does to mitigate those risks, is included in the Company’s Admission Document, and in due course will be included in its annual report and accounts.

As a result of the regulated environment the Company operates within, it takes a very prudent approach to managing risk across the business. These risks are captured in a risk register which is reviewed monthly by the executive management team, and are reviewed by the Board at each Board meeting as required. The risk register is regularly updated and presented to the Board at the half year and year end.  Any proposed amendments to the register will be made and any action points identified from the review reported to the Board.

In addition to the Company’s risk register, it also has a comprehensive risk management framework in place to proactively manage operational risks. This is driven by two principal Standard Operating Procedures (SOP), Risk Management Planning and Risk Assessment.  Risk Management Planning SOP establishes a procedure for the policy that outlines the Company’s approach to identifying, evaluating and managing the risks to the business and the operations and services it provides. The Risk Assessment SOP establishes a procedure for the policy that outlines the Company’s approach to carrying out risk assessments and defining the actions thereafter. In addition to these SOPs, there are a number of other SOPs covering the businesses operations, personnel, environmental matters.

The Company also receives regular feedback from its external auditors on the state of its risk management and internal controls.

The Board consists of a Non-Executive Chairman, Chief Executive Officer and Chief Financial Officer, and four Non-Executive Directors. The biographies of the Directors can be found here.

The Board has determined that for the purpose of the QCA Code, Robert Barr, David Firth, Elizabeth Shanahan and Steven Hajioff are considered to be independent, and therefore represents a majority of the Board. Robert Barr is the Company’s Senior Independent Non-Executive Director.

The Board intends to meet formally at least six times a year to consider strategy, performance and the framework of internal controls. In addition to this, the Board calls are scheduled in between formal Board meetings, and the Board will also meet more regularly as required in and around certain corporate events.

To enable the Board to discharge its duties, all Directors will receive appropriate and timely information. Briefing papers will be distributed to all Directors in advance of Board meetings.

The Nomination Committee identifies and nominates for the approval of the Board candidates to fill board vacancies as and when they arise. The Nomination Committee also has responsibility to regularly review the structure, size and composition (including the skills, knowledge, experience and diversity) of the Board and make recommendations to the Board with regard to any changes. The Nomination Committee meets as and when required.

All Directors will have access to the advice and services of the Chief Financial Officer, who will be responsible for ensuring that the Board procedures are followed, and that applicable rules and regulations are complied with.

In addition, procedures will be in place to enable the Directors to obtain independent professional advice in the furtherance of their duties, if necessary, at the Company’s expense.  In particular, the members of the Audit Committee receive technical updates from the Company’s external auditors to keep them abreast of the latest accounting, auditing, tax and reporting developments.

The Directors also receive regular briefings and updates from the Company’s Nomad in respect of continued compliance with the AIM Rules, the Market Abuse Regulation.

An annual review of the effectiveness of the Board will be conducted through interviews with the Non-Executive Chairman.

The performance of individual Executive Directors is reviewed by the Non-Executive Chairman and also the Remuneration Committee, with more details provided in the annual report and accounts.

The Nomination Committee is responsible for succession planning of the executive leadership team and makes recommendations to the Board for the re-appointment of any Non-Executive Directors if and when necessary.

Succession planning is reviewed on an ongoing basis alongside the capability of the executive management team and Directors.

Morality and ethics are central to the Company’s values and define how the Company and its employees interact with all stakeholders of the business to ensure the Company builds an impactful and enduring organisation, which benefits both its shareholders and wider society.

The Company’s employee handbook, which is read by all employees as part of their induction, provides further specific detail of the policies in place to promote and support ethical behaviour and values.

The roles and responsibilities of specific Directors and Board Committees, as well as the list of matters reserved for the Board, are available on the Company’s website.

The Board meets formally at least six times per year. Each Committee has terms of reference outlining the specific responsibilities delegated to it.

The terms of reference of each Committee can be downloaded below:

Audit Committee Terms of Reference

Remuneration Committee Terms of Reference

Nomination Committee Terms of Reference

The appropriateness of the Board’s structures and processes are reviewed through the ongoing Board evaluation process and on an ad hoc basis by the Non-Executive Chairman together with the other Directors, and these will evolve in parallel with the Company’s objectives, strategy and business model as the Company develops.

The Company is committed to open communications with all its stakeholders.

The Company communicates progress and material developments throughout the year through regulatory news service announcements (both regulatory and non-regulatory) and in more detail in its interim financial statements and annual report and accounts.

Results of shareholder votes are made public on the Company’s website after the meetings concerned.

BOARD COMMITTEES

The Company has established Audit, Nomination and Remuneration Committees.

AUDIT COMMITEE

The Audit Committee has David Firth as chairman, and has primary responsibility for monitoring the quality of internal controls, ensuring that the financial performance of the Group is properly measured and reported on and reviewing reports from the Group’s auditors relating to the Group’s accounting and internal controls, in all cases having due regard to the interests of Shareholders. The Audit Committee meets at least two times a year. Elizabeth Shanahan and Robert Barr are the other members of the Audit Committee.

Terms of Reference - Audit Committee

NOMINATION

The Nomination Committee has Alexander Anton as chairman, and identifies and nominates, for the approval of the Board, candidates to fill board vacancies as and when they arise. The Nomination Committee meets at least once a year. Elizabeth Shanahan and Robert Barr are the other members of the Nomination Committee.

Terms of Reference - Nomination

REMUNERATION

The Renumeration Committee has David Firth as chairman, and reviews the performance of the executive directors and determine their terms and conditions of service, including their remuneration and the grant of options, having due regard to the interests of Shareholders. The Remuneration Committee meets at least twice a year. Robert Barr and Alexander Anton are the other members of the Remuneration Committee.

Terms of Reference - Remuneration

 

ENVIRONMENT

Celadon uses a highly controlled indoor cultivation environment in order to produce plants to the tightest pharmaceutical tolerances and cannabinoid content. Hydroponics is used to grow plants in a soilless substrate, with mineral salts dissolved into high quality filtered water and delivered direct to the roots of the plant. Micro-zoned sensors monitor every aspect of the environment in real time; from the room’s temperature, lighting cycles and humidity, to the plant’s mineral absorption and transpiration rates. This allows Celadon to build a data bank of optimal growing conditions for each strain, as well as adjust the room automatically.

TRACKING

Celadon has a bespoke “track and trace” system throughout the production process, providing complete transparency. Each plant is given a unique QR code, allowing it to be traced from its origins through to the final product. IOT boxes are used to automatically feed data into the system, from environmental data to the product’s weight, at each stage of production. This provides full visibility over the production process, as well as inventory tracking and accurate cost analysis which feeds into our accounting systems.

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Medical Cannabis Market, Transparency Market Research May 2022

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Stannard et al, (2016) Traditional opioids for chronic non-cancer pain: untidy, unsatisfactory, and probably unsuitable

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Stannard et al, (2016) Traditional opioids for chronic non-cancer pain: untidy, unsatisfactory, and probably unsuitable

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Stannard et al, (2016) Traditional opioids for chronic non-cancer pain: untidy, unsatisfactory, and probably unsuitable

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ENVIRONMENT

Celadon uses a highly controlled indoor cultivation environment in order to produce plants to the tightest pharmaceutical tolerances and cannabinoid content. Hydroponics is used to grow plants in a soilless substrate, with mineral salts dissolved into high quality filtered water and delivered direct to the roots of the plant. Micro-zoned sensors monitor every aspect of the environment in real time; from the room’s temperature, lighting cycles and humidity, to the plant’s mineral absorption and transpiration rates. This allows Celadon to build a data bank of optimal growing conditions for each strain, as well as adjust the room automatically.

TRACKING

Celadon has a bespoke “track and trace” system throughout the production process, providing complete transparency. Each plant is given a unique QR code, allowing it to be traced from its origins through to the final product. IOT boxes are used to automatically feed data into the system, from environmental data to the product’s weight, at each stage of production. This provides full visibility over the production process, as well as inventory tracking and accurate cost analysis which feeds into our accounting systems.

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Legalised in 2018

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Legalised in 37 States Limited Federal legalisation

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Legalised in 2016

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Legalised in 2016

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Legalised in 2016 Rapid growth to >200k patients (2019-21)

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Legalised in 2001

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BUSINESS DESCRIPTION

 

Celadon Pharmaceuticals Plc is a UK based pharmaceutical company focused on the research, cultivation, manufacturing, and sale of breakthrough cannabis-based medicines. Its primary focus is on improving quality of life for chronic pain sufferers, as well as exploring the potential of cannabis-based medicines for other conditions such as autism.

Its 100,000 sq. ft UK facility operates to an EU-GMP standard and comprises indoor hydroponic cultivation, proprietary GMP extraction and manufacturing and an analytical and R&D laboratory. The Company's subsidiary, LVL, owns a MHRA conditionally-approved clinical trial using cannabis based medicinal products to treat chronic pain in the UK. Celadon also has a minority interest in early-stage biopharma Kingdom Therapeutics which is developing a licenced cannabinoid medicine to treat children with Autism Spectrum Disorder.

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COUNTRY OF INCORPORATION/OPERATION

 

Celadon Pharmaceuticals Plc is incorporated in England and Wales and is listed solely on the London Stock
Exchange Alternative Investment Market (AIM), and is subject to the UK City Code on Takeovers and Mergers.

TIDM: CEL.L
ISIN: GB00BDQYGP38

There are no restrictions on the transfer of Celadon Pharmaceutical’s shares.

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AIM SECURITIES IN ISSUE

 

The following information is correct as at 10th January 2023.

The Company’s issued share capital comprises

61,669,773 ordinary shares

Each with a nominal value of 1 pence

So far as the Company is aware, 71% of its issued share capital is not in public hands.

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