Althea has completed a A$10.64m capital raise to expand its pharmaceutical operations as the firm continues to pursue a joint medical and recreational cannabis strategy.

The company said the funds, raised from new and existing investors, will boost working capital and support expansion in Australia, Europe and other international markets.

But it received a subdued reaction from the market, with Althea shares closing at $0.255c last night, down 10.2%.

josh fegan
Althea CEO Josh Fegan

News of the fundraising came as Althea reported revenue of $10.02m from its Australian and UK medicinal cannabis operations in the year ending June 30, with its Canadian recreational cannabis subsidiary Peak Processing Solutions generating $1.52m.

Chief executive Josh Fegan said the company was gearing up for growth in both the medical and recreational segments.

“This is a determining year for AGH and while we anticipate exciting growth from Peak, we also continue to see record sales from Althea,” he said.

“Revenue from the sale of cannabis-based medicines has the potential to grow materially faster this year, particularly in Europe, where we see similar patterns to the Australian market in the early days.”

Medical revenue, of which Australia generated $8.5m, was up from $5.05m in FY20. Registered patient numbers hit 20,322, the company said.

Peak, meanwhile, which has signed a manufacturing deal agreement with Canopy Growth-owned Supreme Cannabis, is anticipating revenues of at least $15m in FY22.

“This revenue forecast represents approximately 14% utilisation of Peak’s annual capacity, meaning the business has a significant runway to capitalise on the strong momentum and accommodate further growth,” Althea said.

“In addition to existing customers, Peak has a very active pipeline and anticipates adding several more high-quality customers prior to the end of 2021.”

Under the arrangement with Supreme Cannabis, Peak will perform hydrocarbon extraction services to create concentrate products for Supreme utilising its cannabis inputs, with minimum orders of around CA$600,000 in year one.

On the capital raise, Fegan said Althea was pleased to have received “strong interest” from new and existing investors.

“We look forward to updating the market with news regarding our progress in established territories, as well as our ongoing international expansion,” he said.