Hellenic Dynamics could be at the forefront of Europe’s growing multi-billion-euro medical cannabis sector. The European cannabis market is expected to reach €37 billion by 2027, twice the size of the Canadian and North American markets combined.
Hellenic Dynamics (LON: HELD) launched its long-awaited Initial Public Offering on the Main Market of the London Stock Exchange on Monday 5 December, shortly after raising £1.125 million of new shares in an oversubscribed equity raise. It is the first medical cannabis company to achieve the main market listing.
Hellenic Dynamics operates from a 195,506 square-meter facility in northern Greece, which in full production is capable of producing over 54,000kg of dried medical cannabis flowers per annum. The facility benefits from low power costs as well as local, competitive skilled and semi-skilled labour rates.
For the next 12 months, the Company will continue to its core strategic objectives, which are to fulfil two term sheets for the offtake of THC-dominant medical cannabis products into Germany’s advanced medical cannabis market, secure further supply lines into the UK, increase total cultivation area in line with the European cannabis demand.
Davinder Rai, CEO of Hellenic Dynamics, commented: The listing marks an important milestone not just for Hellenic Dynamics, but for millions of patients across Europe who are looking to be prescribed THC-dominant medical cannabis.
Hellenic Dynamics is more committed than ever in its ambition to be the dominant supplier of high-quality and competitively priced dried medical cannabis flowers to patients across all 25 European counties that allow medical cannabis by prescription.
Hellenic Dynamics: a brief overview
HELD was established in 2018 — which seems an age away but really isn’t — as a licensed cultivator and supplier of pharmaceutical-grade medical cannabis products. Operating from a dedicated 195,506 sqm facility in Northern Greece, it plans to export tetrahydrocannabinol (THC) containing dried medical cannabis flowers and flower extracts across Europe. THC is the key active ingredient of the cannabis plant.
For context, the European medical cannabis market was worth some €4.09 billion in 2019 and is expected to rise at a CAGR of 29.6% to €43.3 billion by 2027. Even a small slice of this market could see HELD shares rise exponentially.
Its higher THC dosage medical cannabis — as opposed to recreational — has already been approved for use in the UK, Germany, and much of the rest of Europe for dozens of conditions. These include common complaints such as anxiety, MS, PTSD, and Tourettes, and less well-known ailments with few proven treatments such as Gastaut and Dravet syndrome.
Rai has specifically highlighted the use of medical cannabis in treating chronic pain, arguing the condition is ‘one of the most expensive issues for the NHS and 26% of the UK population is suffering from it.’ With a million people in the country now using illegal unregulated recreational cannabis at present, he wants HELD ‘to be the supplier of choice to the NHS of high-quality, competitively priced and fully regulated THC-dominant medical cannabis.’
For balance, it’s worth noting that while the drug is legalised for medical use, and there is plenty of evidence of efficacy, there is some way to go with the cultural and medical acceptance of THC.
Drug reform agency Volteface recently conducted a survey highlighting the key hurdles including the need for more research for some applications, and a lack of clear governance, education, and support for prescribing cannabis products among the medical profession.
But as its use becomes more widespread, this problem should dissipate. And happily, given the long-term prospects, HELD is a company which is best invested in over the longer term.
It was awarded its Greek government-issued cultivation licence for 40,000 sqm back in 2019, with no limits on THC content, production volume, or export quantities. This makes it potentially one of the most lucrative European licences for the growing market.
Where next for Hellenic Dynamics post-IPO?
The company notes that there is mounting evidence that specific cannabis genetics have differing effects against particular pain indicators. Therefore, it has entered into multiple strategic partnerships, including with the American Farm School, Dimitra, and the Athena Research Centre to study the effects of these genetic components, with a view to conducting further research into their effects on pain indicators in human trials. This will allow it to build a valuable proprietary IP-protected library of THC-dominant genetics.
The company’s integrated model spans the cultivation of the plant, production, processing, and distribution. And it boasts low power usage and skilled labour costs by dint of its location in Greece.
In the near term, HELD already has two initial off-take term sheet agreements in place for its first target market, Germany. For perspective, Germany is the largest medical cannabis market in Europe with over 31 tons of medical cannabis flower imports in 2020 providing 300,000 patients access via prescription.
The country, which by some measures operates the largest economy and most political power within the EU, has also drafted a legislation framework which could make it legal for adults to own up to 30g of cannabis for recreational use.
Aside from expanding into this primary target market, HELD’s other strategic priorities include securing further supply lines into its secondary target market (the UK) and continuing to increase its total cultivation area.
Key financial data will be released when it first reports earnings as a Main Market member, and at this point, it is very possible that the Hellenic Dynamics shares could see a spectacular rise.
This article has been prepared for information purposes only by Charles Archer. It does not constitute advice, and no party accepts any liability for either accuracy or for investment decisions made using the information provided.
Further, it is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
