End-of-Year Newsletter

CEO's Introduction and Year Roundup

As the calendar year draws to a close, I wanted to share an overview with you on what has been a very busy year for the business. Many of you will have read our summer newsletter in which I provided a roundup of the key milestones and developments for Celadon to date, but since then, as a result of the tireless dedication of all of our staff, we have made further significant progress. So, taking a look back at 2023, as a business we have:

Maintaining the momentum we generated for the business in the first half of the year was always going to be a challenge, but it is a testament to the great work of Celadon’s employees and the value of our mission to improve the quality of life for patients around the world through the development of cannabis-based medicines that we have continued to realise key milestones. As you can see, the business has made significant strides this year and we endeavour to make further progress in the new year.

I hope you all enjoy this edition of our newsletter, where we delve deeper into our progress since July, as well as look at some of the media coverage we have received throughout the year.

From myself, and everyone here at Celadon Pharmaceuticals, have a lovely Christmas break.  We look forward to sharing further updates with you in 2024.

Best wishes,

James Short
Co-Founder and Chief Executive Officer

MHRA and Home Office licence achieved

In the first half of the year, we secured all the licences we set out to achieve at our IPO in March of 2022. This includes our GMP registration from the UK’s healthcare regulator – the culmination of four years of hard work and validation for our pharmaceutical-grade indoor hydroponic cultivation.

This was undoubtedly a landmark milestone for the UK’s pharmaceutical landscape, and we received nationwide coverage, from the Financial Times to the pharmaceutical press. The development is understood to be the first of its kind since legalisation of medical cannabis in 2018, and Celadon has also joined a very select group of companies worldwide that can produce EU-GMP grade high-THC product.

In March, Celadon then received its updated Home Office licence, allowing us to now sell our product into the market.

First three sales contracts and expansion of grow facility

In May we announced our inaugural sales contract to sell our pharmaceutical-grade product to a leading UK medical cannabis company which will see us sell a minimum of £3 million worth of product over the next three years, with the first shipment expected to leave our Midlands facility in Q4 2023.

At the time of this announcement, the Company announced it was in discussions to convert additional expressions of interest in the sale of our pharmaceutical-grade product. Thanks to the diligent and hard work of our team throughout the year, we are thrilled to have entered three additional contracts – the first with a second UK pharmaceutical company and the second with a leading European medicinal cannabis company. The latter, signed in November, is our most significant to date with the potential to generate revenues of up to £26 million of product (£8.7 million annually) over a three-year term.

I am also pleased to say that the first shipment of our inaugural supply contract has been made.

2023 also saw us successfully complete the internal construction and make strong progress in the fit-out of our Phase 2 cultivation area. With the capacity of our Phase 1 grow facility fully contracted, we have decided to ramp-up our Phase 2 capacity in phases to align with demand.

Approval to roll out LVL trial

In May we announced our inaugural sales contract to sell our pharmaceutical-grade product to a leading UK medical cannabis company which will see us sell a minimum of £3 million worth of product over the next three years, with the first shipment expected to leave our Midlands facility in Q4 2023.

At the time of this announcement, the Company announced it was in discussions to convert additional expressions of interest in the sale of our pharmaceutical-grade product. Thanks to the diligent and hard work of our team throughout the year, we are thrilled to have entered three additional contracts – the first with a second UK pharmaceutical company and the second with a leading European medicinal cannabis company. The latter, signed in November, is our most significant to date with the potential to generate revenues of up to £26 million of product (£8.7 million annually) over a three-year term.

I am also pleased to say that the first shipment of our inaugural supply contract has been made.

2023 also saw us successfully complete the internal construction and make strong progress in the fit-out of our Phase 2 cultivation area. With the capacity of our Phase 1 grow facility fully contracted, we have decided to ramp-up our Phase 2 capacity in phases to align with demand.

Growing the team

Recruiting high quality, experienced team members was always a priority for us this year and we are proud to have brought on three significant members to the Celadon team:

Jonathan Turner, Chief Financial Officer
Jon officially started his role as CFO in January 2023, joining us from FTSE250 listed Oxford Instruments.

Stuart Cornwell, Business Development Director
Stuart joined us our Business Development Director in January, having worked as Managing Director at Lyphe Group, a leading medical cannabis company.

Martin Duffy, Head of GMP Operations
Martin joined Celadon in May as Head of GMP Operations having spent 25 years working in pharmaceutical manufacturing and GMP facilities.

Celadon in the media

 

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 29th September 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, 44.47% of its issued share capital is not in public hands.

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