Can Pot Stocks Survive Coronavirus? Glance at AGH, THC, CGB

  • May 09, 2020 AEST
  • Team Kalkine
Can Pot Stocks Survive Coronavirus? Glance at AGH, THC, CGB

Novel coronavirus disease or COVID-19 pandemic has disrupted lives, businesses and communities, with several businesses ceasing their operations amid lockdown and social distancing norms implemented by governments across the globe, as they attempt to gain control of the situation.

Cannabis, however, seems to be one of the few sectors that remains majorly unaffected by seasonality. Amid the coronavirus situation, wherein people are under self-quarantine and lockdowns, marijuana sales have skyrocketed. Initially, many medical cannabis patients and advocates were worried that amid lockdown they would not gain access to marijuana; however, several reports have highlighted strong sales of marijuana.

ALSO READ: What's happening in the Cannabis space?

Cannabis industry has always been amongst the most debated sectors across the globe, and in recent years, there has been a significant development in the industry.

Outside Canada, Australia has one of the largest medicinal cannabis markets that is regulated by the federal government. Medicinal cannabis products manufactured in Australia are required to be produced under a Good Manufacturing Practice (GMP) licence, and the Australian government through the Office of Drug Control (ODC) and the Therapeutic Goods Administration (TGA) regulates medicinal cannabis in the country.

In Australia, the TGA granted approval for more than 42k SAS Category B applications (individually considered by the TGA based on the information provided) for unapproved medicinal cannabis products, as of 30 April 2020, with number reaching 3,378 in the month of April 2020, according to the Australian Department of Health. Approvals of medical cannabis prescriptions remained steady in the recent past in Australia, as the nation crawled down for its war against COVID-19 pandemic.

In this backdrop, let us get acquainted with three ASX-listed cannabis stocks- AGH, THC, CGB.

Althea Signs Supply and Distribution Agreement with Nimbus Health

Althea Group Holdings Limited (ASX:AGH), which is an ASX-listed licenced medicinal cannabis player, caters to patients with debilitating diseases. The Company engaged in the supply of pharmaceutical grade cannabis formulations and operating in the cannabis markets of Australia, Germany and the UK, has plans to expand its operations in the Asian and European regions.

Agreement finalised for product supply and distribution in Germany

On 1 May 2020, the Company announced to have executed a 3-year supply and distribution agreement with Nimbus Health GmbH, which is a pharmaceutical wholesaler in Germany accounting for nearly 25% market share of medicinal cannabis sales in the European country.

Under the agreement terms, Nimbus would distribute and sell AGH’s complete range of medicinal cannabis formulations in Germany under the brand name of Althea, starting in the second half of the calendar year 2020.

In addition to receiving payment for the supply of products and half of net profit on sales, AGR would also retain ownership of all patient data (real-world anonymized) that would be collated via Althea Concierge™.

Revenue Up ~39% in March Quarter

Althea registered its best quarter on record despite seasonality, initially due to bushfires and lately owing to COVID-19 pandemic.

Highlights from cash flow front-

  • Althea recorded unaudited revenue of approximately $1,524,359 for the March quarter, representing an increase of 39% from the December quarter;
  • For the March quarter, cash receipts from customers stood at $1,487,679;
  • Unaudited revenue noted at $606,351, best month on record and up by ~30% from February;
  • The Company reported cash outflow for the March quarter of approx. $1.4M less than forecast
  • Fully funded, the Company exited its March quarter with nearly $15.07 million cash on hand.

At the end of three months to March, the Company had nearly 5.8k patients, with new patient additions of 596 in March. The number of Healthcare Professionals who prescribed the medicinal cannabis products of Althea also rose to 509, as of 31 March 2020.

Source: ASX Announcements

On 8 May 2020, AGH stock fell by 1.266% to close the day’s trade at $0.390 per share with AGH boasting a market cap of $92.16 million. The Company has nearly 233.31 million outstanding shares on ASX.

Cash Receipts Growth of 44% for THC Global in Q1 FY2020

Australia-based leading medicinal cannabis player, THC Global Group Limited (ASX:THC) has three key cannabis licences- for research, cultivation and manufacturing of cannabis. Located in Southern Hemisphere, the Southport manufacturing facility of THC is one of the most extensive pharmaceutical GMP cannabis manufacturing facilities across the globe.

Securities of THC Global were placed in a trading halt on 8 May 2020 upon the Company request, as it plans to release a material acquisition announcemnet in the coming days. The trading halt would remain in place until the announcement is released to the market or commencement of normal ASX trade on 12 May 2020, whichever happens earliest.

On 30 April 2020, THC Global reported its Appendix 4C for the first quarter of FY2020 (ended 31 March 2020.

  • The Company highlighted that 100% Australian produced TGA GMP medicines (medicinal cannabis based) would be available for prescription from the end of May 2020;
  • Australian produced medicines of the Company are both TGA and EU GMP enabling export;
  • THC Global reported that in the first quarter 2020, the Company registered cash receipts of more than $1.2 million, up more than 44% year on year (YoY);
  • Operations in Australia and Canada continue amid the COVID-19 pandemic, without any significant interruption due to ongoing turmoil;
  • THC remains funded through 2020 with a $4 million funding facility secured without dilution to shareholders;

Moreover, the Company closed first quarter of FY20 with Southport Manufacturing Facility expansion involving a long-term lease of adjacent asset to the facility.

THC stock last traded on ASX at $0.300 on 7 May 2020, with the Company boasting a market cap of $42.23 million and nearly 42.23 million outstanding shares.

Cann Global Delivers Operational Update for First Quarter

ASX-listed Cann Global Limited (ASX:CGB) is one of the leading players in medical cannabis and hemp industries. The Company works under the provision of legislations to make certain that the future in medical cannabis as well as natural foods would enable consumers, health care specialists and patients to get access to the right information, along with highly effective, sustainable, and safest formulations.

Operational Update- Recently, the Company released its March 2020 quarterly activities and cashflow reports.

Pharmaceutical division update- CGB revealed that CannTab reached a significant milestone on 2 March 2020 by receiving its Health Canada processing and sales licence, enabling CannTab to provide commercial quantities of the Canntab range to the Australian and global markets.

Update from Food Division- T12 & Hemp Hulling Co (HHC)- An Australian owned operation

As the Company operates in the health & wellness industry, CGB is considered as an essential business, consequently, it is working towards serving customers by taking suitable measures to ensure that CGB comply with the Australian Health Guidelines.

In addition to this, the Company highlighted that for its business, health risk is low and simple hygiene practices similar to those used to protect against flu, will avoid the spread of coronavirus and other infections. The manufacturing & processing branch of CGB, Hemp Hulling Co is SGS HACCP Certified and already adheres to strict hygiene, health & safety standards while its production & dispatch areas have always been closed to the public.

CGB also provided an update related to its distribution partner Costco, mentioning that the second & third part of the Costco order was delivered during the quarter. Costco, which opened its latest store in Perth, ordered a pallet of Hemp Seed Oil capsules, with sales reported to be steady. Moreover, T12 has been keeping a close eye on sales at the Costco North Brisbane store, and as of March, three-fourth of a pallet of Hemp Oil Capsules had been sold from that particular location.

On 8 May 2020, CGB stock climbed by 14.286% to close the day’s trade at $0.008 per share, with the Company boasting a market cap of $ 23.38 million and nearly 3.34 billion outstanding shares on ASX.

 


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