Celadon Pharmaceuticals PLC (AIM:CEL) more than doubled in value after a supply deal to enable it to meet a German medical cannabis contract signed just over a year ago.
The deal comes in the nick of the time for the AIM-listed biotech, which in January said it only had a cash runway until March.
Under the new arrangement, Danish partner Valeos will give Celadon up to 3 tonnes of annual cultivation capacity, enabling the AIM-listed group to accelerate the supply of pharmaceutical-grade EU-GMP cannabis Active Pharmaceutical Ingredient (API) products.
In particular, this means the German cannabis supply contract, which is expected to generate up to £26 million in revenue over its three-year term, with £8.7 million annually.
In addition, a first invoice has been raised with Valeos, said the statement, with regular revenue now expected as the Danish group expands its facility further using Celadon's genetics and IP.
James Short, Celadon's chief executive, said: “This is a pivotal moment for Celadon as we see the early results of our collaboration with Valeos come to life.
“By leveraging Valeos' cultivation capacity and our proprietary genetics and IP, we will be able to expedite supply to our existing customers, including our key German contract, while simultaneously creating a new revenue stream for the company”.
“We look forward to strengthening our collaboration with Valeos and exploring further opportunities to meet the growing demand for high-THC medicinal cannabis across Europe."
Shares rose 25p to 41p.