Cannabis is a high-growth industry with a rapidly changing environment. The companies discussed in this article are ASX-listed medicinal cannabis players. Medicinal cannabis companies are increasingly catching attraction from investors.
As medicinal cannabis is a dynamic and rapidly changing prospect, the companies engaged in this sector are actively expanding their reach to capture the maximum addressable market. This can be noticed with the recent news releases by these three companies that have noted their progress in the commercialisation of the products.
More importantly, medicinal cannabis players are pursuing clinical research activities to unlock the hidden potential of cannabis as a medicinal product. Medicinal cannabis has the prowess to disrupt the existing healthcare systems, as the industry grows with new capabilities and products, which could suppress the demand for the products being used currently as a standard of care.
Let’s discuss the three ASX-listed medicinal cannabis companies.
MGC Pharmaceuticals Ltd (ASX: MXC)
On 16 October 2019, the company notified about the growing use of its medicinal cannabis products among patients.
Reportedly, in Australia and the United Kingdom, the company has passed the milestone of 600 prescriptions, increasing from 400 at the end of September. The products of the company include phytocannabinoid derived medicines.
The growth in the number of prescriptions depicts the company’s strengthening position in each market. Meanwhile, the products of the company are also being utilised in the treatment through ongoing clinical research.
Further, the commercialisation of the products is consistent with the MXC strategy of becoming a world-leading bio-pharma company through international distribution agreements. The company has developed two proprietary products in house through its R&D division – CannEpil® and MXP100, which are being commercialised.
In addition, the company’s seed to pharmacy strategy emphasises to keep the intellectual property under its custody, consisting each of the stages in product development.
As per the release, the company is actively engaging with designated distributors to onboard additional clinics along with independent medical professionals to improve the accessibility of its phytocannabinoid derived medicines.
In the UK, the company’s distributors are Grow Biotech PLC and IPS Specials, providing direct access in the UK medicinal cannabis markets with a network of approx. 5,500 pharmacies.
In Australia, the company has selected Health House International and Cannvalate as its regional distributors. Tetra Health promotes patient access, providing education on the use of medicinal cannabis. Besides, Cannabis Access Clinics engages with patients to promote medicinal cannabis therapies.
More importantly, the payment terms in the industry include a period of 90 days post the sale. Therefore, the impact of the payment terms would be seen in revenues.
On 18 October 2019 (AEST 01: 59 PM), the stock of MXC was trading at $0.035. In the past three-month period, the stock has delivered a return of -36.36%. On a YTD basis, the return of the stock is -14.63% and -55.70% over the past one year. Besides, the market capitalisation of the company was ~$47.83 million, with ~1.37 billion shares outstanding.
Althea Group Holdings Limited (ASX: AGH)
On 18 October 2019, AGH announced to have completed the acquisition of Canadian-based contract extraction and manufacturing entity, Peak Processing Solutions.
In another announcement on 16 October 2019, Althea Group Holdings reported operational updates, and cash flow statement for the quarter ended 30 September 2019 (Q1).
Reportedly, the company progressed with patients and prescription numbers in the September quarter, resulting in increased revenue from sales. Over 2,300 patients were prescribed with the company’s medicinal cannabis products as of the end of Q1.
October has seen a strong start with the patient number increasing to 2,557 along with the increase in the number of Health Care Professionals (HCPs) prescribing the company products to the patients. The company recorded unaudited revenue of ~$755k in the September quarter compared to ~$411k in the prior quarter.
As per the release, the company accelerated the expansion during September, and it entered into a transaction to acquire Peak. The target company is regulated under the new Canadian regulations, focusing on extraction and toll processing. Peak is also engaged in contract manufacturing of cannabis-infused edibles, drinks, nutraceuticals and cosmetic products.
Further, the target company has also applied for the industry’s first large scale cannabis process licences. Althea Group Holdings has also recently successfully completed a $30 million institutional capital raising to support acquisition and other strategic growth initiatives.
In the UK, the company’s medicinal cannabis was prescribed in late July this year, following the receipt of an export permit by the federal government’s Office of Drug Control. Additional shipments are planned by the company, pending approval from the UK Home Office.
Media has also reported on the company’s growing market in the UK with a share of approx. 75% of all medicinal cannabis imports in the country, as of August 2019. The company continues to work with the UK Home Office to remove industry-wide inefficiencies and obstacles to improve patient access in the market.
Besides, the company remains assured that the patients’ number would increase in the future, as the UK medicinal cannabis market is in the early stages of growth. The company’s wholly-owned – MyAccess Clinics opened its second store in the UK.
On 18 October 2019 (AEST 02:11 PM), the stock of AGH was trading at $0.650, up by 2.362% relative to the last close. In the past three-month period, the stock has delivered a return of -46.19%. On a YTD basis, the return of the stock is +139.62 and +16.51% over the past one year. Besides, the market capitalisation of the company was ~$148.02 million, with ~233.1 million shares outstanding.
Elixinol Global Limited (ASX: EXL)
Recently, the company signed an exclusive distributor agreement for Finland. Accordingly, the company’s wholly-owned Dutch subsidiary – Elixinol BV signed an exclusive agreement with Harmonia Life Oy.
The agreement allows the distributor to market the company’s products for five years via several retail channels. The exclusivity of the agreement is dependent on achieving minimum annual sales targets.
Further, the expected contribution to revenues is not material in the short term, but it depicts execution of the global expansion strategy, particularly the current European footprint of the company.
On 18 October 2019 (AEST 02:15 PM), the stock of EXL was trading at $2.135, down by 0.234% from the last close. In the past three-month period, the stock has delivered a return of -45.82%. On a YTD basis, the return of the stock is -20.45% and +11.17% over the past one year. Besides, the market capitalisation of the company was ~$295.09 million, with ~137.89 million shares outstanding.
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