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- Medicinal cannabis group Cilo Cybin officially opened its IPO to the market on Thursday.
- It plans to expand offshore into the psychedelics market.
- The company believes that while the psychedelics market is still small, it has major potential.
- For more financial news, go to the News24 Business front page.
Medicinal cannabis group Cilo Cybin, which officially opened its initial public offering (IPO) to the market on Thursday as a special purpose vehicle company (SPAC), has plans to branch into the lucrative psychedelics market offshore in the next 12 months.
Speaking after the opening of its IPO process, CEO Gabriel Theron said the company’s plan all along was to initially bed down its cannabis business, which supplies fast-growing cannabis businesses in Australia and elsewhere, before looking into expanding into psychedelics such as MDMA and 'magic' mushrooms.
"MDMA and psilocybin (the psychedelic compound in certain mushroom varieties) are now legal in Australia with doctors allowed to prescribe them. And we’ve already had a lot of doctors reaching out to us from Australia asking whether we can supply them based on our company name (Cilo Cybin). We’ve told them not yet, but we are speaking to regulators (here in South Africa) and engaging with them to see how we can get a licence to start manufacturing MDMA and psilocybin for those markets such as Australia."
He said while the psychedelics market globally was "still small", it had major potential, with more countries expected to start relaxing regulations.
"So that is the plan for the next 12 months. While the market is not that big, it’s something small that we can start building and doing more research on."
Theron believed that in time there would even be an official market created for Lysergic Acid Diethylamide, the psychedelic drug commonly known as LSD, that was popularised in the 1960s by counter-culture psychologist Timothy Leary and chemist Owsley Stanley. He expected it to be increasingly decriminalised globally, with doctors expected to prescribe it for the treatment of depression, anxiety and post-traumatic stress.
Meanwhile, though, the company is focusing on its IPO process, which officially closes on April 12, but which Theron says is likely to be completed well before then. Theron said this meant that the company was on target to finally list on the JSE’s AltX by April or at the latest, May.
A SPAC, which is generally backed by big business names, lists on a bourse with no commercial operations and with the express purpose of raising money for potential acquisitions or takeover targets.
In the case of Cilo Cybin, the plan after listing the SPAC is for it to acquire its first target asset, namely the business Cilo Cybin Pharmaceutical and its 2 500m2 facility in Midrand. Following this, it would look to graduate to the JSE’s main board, which Theron said could take place later this year.
Cilo Cybin had originally eyed a December 2022 listing for its SPAC, but was unable to reach the minimum capital requirement threshold of R50 million, initially raising R20 million by the date in question.
Then late last year, it managed to secure the minimum funding by ALPS, a Malaysian group, which now also owns a 10% interest in Cilo Cybin Pharmaceutical and wanted to come to market in December 2023.
But Theron said there were a number of regulatory approvals it had to secure, which pushed out the IPO to early 2024.
In terms of its requisite funding, ALPS has invested about R54 million, with Cilo Cybin looking to raise another R7.1 million (or about 10% of the company) from the public.
After listing either in April or May, the company would then bed down its first acquisition as originally planned, and then look to shift to the main board later this year.
As far as its medicinal cannabis business is concerned, Theron said the markets it is supplying in Australia, for instance, are growing dramatically, which augurs well for its future:
Theron said the group was also busying itself with expansion plans to "ensure that we can service the demand that is coming".
Cilo Cybin’s long-awaited entry onto the bourse is one of the first IPOs for the JSE this year. The JSE confirmed on Thursday that WeBuyCars will be the first when it lists on 11 April.
Valdene Reddy, director of capital markets at the JSE, said the bourse was "excited to see a much healthier pipeline of listings for the year", welcoming WeBuyCars and Cilo Cybin as the first IPOs for the year.
"An increase in and demand for new capital raises is a promising sign of shifts in market dynamics," said Reddy.
