3 Pot Stocks - ZLD, CPH, AGH

  • Jul 07, 2019 AEST
  • Team Kalkine
3 Pot Stocks - ZLD, CPH, AGH

The cannabis market is expected to grow multi-fold in the next decade, given the legalisation of Cannabis around the world for its medicinal properties and recreational purposes. Three important pot stocks are Zelda Therapeutics Limited, Creso Pharma Limited and Althea Group Holdings limited. Let’s dive deeper into the company’s recent developments influencing their stock prices.

Zelda Therapeutics Limited (ASX: ZLD)

Zelda Therapeutics Limited (ASX: ZLD) develops range of cannabinoid-based products to cure various medical ailments. It follows a 2-pronged strategy, which comprises a human clinical trial programme focused on eczema, autism and insomnia with activities in the USA, Chile and Australia. The other strategy is a pre-clinical research programme to examine the cannabinoids effects in pancreatic, brain and breast cancer as well as research to examine the potential for cannabinoids for the treatment of diabetes-related cognitive decline. The company recently announced that the St Vincent’s Hospital Ethics and Governance Committees approved its Phase 1 Opioid reduction trial.

This is the first clinical trial to be designed with a primary end-point evaluating the effectiveness of a full range plant-derived cannabis preparation containing CBD and THC to reduce opioid dependence in chronic non-cancer patients. On success, the trials are expected to have an immediate impact on the major markets, where opioid addiction and overuse is a major problem.

March ‘19 Quarter Key Highlights: The net cash outflow from operating activities and net cash & cash equivalent at the end of quarter was reported at $1.17 Mn and $3.24 Mn, respectively. Under the operational update, the insomnia clinical trial evaluated the safety and efficacy of a cannabinoid extract containing THC and CBD in patients with symptoms of clinically diagnosed chronic insomnia. With an aim to assess the effectiveness of medicinal cannabis to reduce opioid dependence in patients with chronic non-cancer pain, Zelda undertook an opioid reduction study in collaboration with St Vincent’s Hospital in Melbourne. It also collaborated with Children’s Hospital of Philadelphia for its observational autism study, which aims to better understand the efficacy of medicinal cannabis treatment in patients diagnosed with autism. There were other collaborative efforts, which are going on and expected to deliver positive results.

Operating Cash Flow for March ‘19 Quarter (Source: Company Reports)

On the stock information front, at market close on July 5, 2019, the stock of Zelda Therapeutics was trading at $0.047, down 4.082%, with a market capitalisation of ~$37.01 Mn. Today, it reached day’s high at $0.049 and day’s low at $0.046, with a daily volume of 1,643,242. Its 52 weeks high was at $0.095 and 52 weeks low at $0.033 with an average volume of 675,419 (yearly). Its absolute returns for the past one year, six months and three months are -46.15%, -3.92%, and -3.92%, respectively.

Creso Pharma Limited (ASX: CPH)

Creso Pharma Limited (ASX: CPH) has an engagement in the development, registration and commercialisation of pharmaceutical-grade cannabis and hemp-based nutraceutical products and treatments. Subsequently, the completion of the Mernova Medicinal facility in Halifax, Nova Scotia, Canada, enables the group to involve in the cultivation and extraction of cannabis products for sale. The company recently announced that it has reduced secured loans by $5,150,000 through issue and conversion of convertible notes in order to get acquired by a Canadian listed Cannabis company, PharmaCielo Limited.

March ‘19 Quarter Key Highlights: During the period, the company was granted the license to cultivate cannabis at the Creso’s state-of-the-art Mernova Medical facility in Nova Scotia, Canada. It expects to generate revenues from the Mernova facility by the month of June 2019, under the three year supply agreement with TerrAscend Canada, which is a wholly-owned subsidiary of TerrAscend Corp. Under the agreement, TerrAscend has agreed to buy a minimum of 100 kg of cannabis flower per month from Creso, following the license grant to the company by the Canadian Authority to sell cannabis. The volume of cannabis flower has been estimated at CAD 6 Mn per year in sales.

The company continued its growth operations across Australasia, Europe and North America. It raised $3 Mn in a placement to support the sale and marketing of its human and animal products such as cannaQIX®10, cannaQIX®50, anibidiol®2.5 and anibidiol®8, in Europe and Canada. Its commercialised products continued to generate revenues and the company expects to launch its four new CBD hemp-oil and hemp-seed oil-based products.

In another update, Israel’s parliament passed a law for exporting medicinal cannabis and approved a new regulatory structure regarding the foreign ownership of Israeli medicinal cannabis operations. Creso via its 74% stake in a JV with Israel-based Cohen Propagation Nurseries Limited, will help the company to reap benefits by the supply of cannabis strains, which were previously unavailable from Israeli cannabis producers.

In Central America, Creso appointed Dr Ricardo Salazar as a Primary Medical Advisor during the quarter. The company sees the Columbian market as a significant opportunity with its owned entity, i.e. Kunna Canada Limited and its Colombian subsidiary.

In South Asia, the company signed a binding agreement (letter of intent) with Ceyoka Health Ltd, which is one of Sri Lanka’s leading pharmaceutical distribution companies. The partnership is focusing on commercialising Creso’s flagship medicinal cannabis product cannAFFORD®50 and will then look to explore a wide range of other joint initiatives.

Revenues from the sale of human and animal products during the quarter were CHF 119,690 (approximately $167,633). Creso is set to see the benefits of its expanded distribution network in the coming quarters with CHF 716,610 (Approximately $1,000,000) in firm orders already placed by repeat customers for delivery in Q2 and Q3. Creso is pleased with the level of additional interest received from customers to-date and is dedicated to further driving strong sales performance in the coming quarters. The Mernova construction expenditure for the quarter was CAD$1.69 Mn ($1.78 Mn). Revenues from the company’s cultivation activities in Canada are expected to commence in Q2 2019.

Operating Cash Flow Data for March ‘19 Quarter (Source: Company Reports)

On the stock information front, at market close on July 5, 2019, the stock of Creso Pharma was trading at $0.485, down 2.02%, with a market capitalisation of ~$74.72 Mn. Today, it reached day’s high at $0.495 and day’s low at $0.485, with a daily volume of 126,331. Its 52 weeks high was at $0.705 and 52 weeks low at $0.300, with an average volume of 542,251 (yearly). Its absolute returns for the past one year, six months and three months are -22.05%, -7.48%, and 8.79%, respectively.

Althea Group Holdings Limited (ASX: AGH)

A medical cannabis company, Althea Group Holdings Limited (ASX: AGH) supplies medicinal cannabis products in Australian continent. The company through Althea MMJ UK Ltd, a wholly-owned subsidiary, recently announced that it has advanced its relationship with the United Kingdom-based advisory committee, Independent Scientific Committee Drug Science with an aim of benefitting as many patients through its medical cannabis prescription in the United Kingdom.

Drug Science’s “Project TWENTY21” (‘the Pilot’) is the UK’s first national pilot for medical cannabis. Project TWENTY21 aims to enrol 20,000 patients before the end of 2021and is expected to officially launched by 18th July 2019. AGH is one of the few players selected to supply medicinal cannabis on commercial terms.

In the first instance, Project TWENTY21 will be targeting patients, including those in the following categories, specifically focusing on patients in which alternative treatment has failed:

  • Chronic pain
  • PTSD, with a focus on the veteran community
  • Anxiety
  • Multiple sclerosis
  • Tourette’s syndrome

March ‘19 Quarter Key Highlights: During the period, around 511 patients have been prescribed Althea medicinal cannabis products from May 2018, with an average month-on-month increase of 146%. In addition to the patient record, unaudited sales increased by 151% q-o-q to $0.18 million for the period. In addition to reaching 511 patients, 128 Healthcare Professionals around Australia have already prescribed Althea medicinal cannabis products. The company believes increasing the number of HCP’s utilising its Althea Concierge platform is key to significantly increasing the number of patients being prescribed medicinal cannabis in Australia.

The net cash outflow from operating activities and investing activities for the quarter was reported at $1.154 million and $0.29 million. The cash and cash equivalents at the end of the period was reported at $18.64 Mn.

Operating Cash Flow Data for March ‘19 Quarter (Source: Company Reports)

On the stock information front, at market close on July 5, 2019, the stock of Althea Group was trading at $1.055, up 1.932% with the market capitalisation of ~$210.43 Mn. Today, it reached day’s high at $1.060 and day’s low at $1.040, with a daily volume of 445,805. Its 52 weeks high was at $1.140 and 52 weeks low at $0.175, with an average volume of 640,879 (yearly). Its absolute return for the past six months, three months and one month are 290.57%, 146.43%, and 62.99%, respectively.


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