Pot Stocks or Cannabis stocks have gained a lot of popularity in Australia, given that medicinal cannabis was legalised in Australia in February 2016. Various companies have quickly progressed with the various clinical trials of the related medicinal products in order to take advantage of the shortage in supplies and make a contribution towards the treatment of several types of medical conditions.
Why Cannabis is the favourite choice for Investors?
Agricultural Industry as a major contributor to GDP
According to the latest report by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), the agricultural industry in Australia is the major contributor to the national GDP growth. Australia’s position and export powerhouse are well-positioned to capitalise the growing needs in the medical world. Medicinal cannabis is already legalised in the country, which means the investors have the opportunity to earn huge profits, as there are ample of opportunities available for cannabis stocks in the market.
Cannabis is a Recession Proof
It is very early to categorise cannabis as consumer staples . One can easily consider Cannabis due to its relative inelastic demand among patients and recreational consumers, which means that the demand for the product remain would not be affected by the general conditions of the economy.
AusCann Group Holdings Limited (ASX: AC8)
AusCann Group Holdings Limited is an Australia based pharmaceutical company. The company has expertise across all aspects of medicinal cannabis. AusCann is engaged in production and sale of high quality, clinically validated cannabinoid medicines to patients.
AusCann Releases Hard Shell Capsule for Clinical Evaluation
On 18 December 2019, the company stated that it has finished testing of its proprietary cannabis-based hard-shell capsules and released them for clinical evaluation.
AusCann Group Holdings Limited is currently working towards a commercially focused, short clinical evaluation. The company's capsule formulation is a unique demonstration of medicines prepared from cannabis, and the goal of clinical evaluation is to provide key exposure information to make informed dose selection. The company will release the details once the clinical evaluation begins.
All the capsules which were developed by the company were clinically tested and fulfil all the parameters set by the Australian Therapeutic Goods Administration (TGA). The company’s aim is to initiate the commercially availability of hard-shell capsules during the first half of 2020.
The company’s CEO commented:
Reinstated on Pershing Securities Limited Cannabis List
On 13 December 2019, the company has announced that it has been reinstated on Pershing Securities Limited Trading Cannabis List. The initial restriction followed the decision from Bank of New York Mellon Corp (BNY Mellon) to restrict trading in US cannabis-related securities. As a result, the BNY Mellon took a similar stance on a number of Australian Securities Exchange listed cannabis securities, including AusCann Group Holdings Limited.
Post a thorough review, the company has been determined to be fully compliant under the cannabis securities policy implemented by the Bank of New York Mellon Corp and added to Pershing’s trading cannabis list from 12 December 2019.
Results of Annual General Meeting
On 29 November 2019, the company declared the results of the Annual General Meeting for FY 2019. Below are the resolutions which were passed during the AGM:
- Adoption of The Remuneration Report
- Election of Dr Marcel Bonn-Miller as Director
- Approval of 10 per cent Placement Capacity
- Approval of 2019 AusCann Salary Sacrifice Share Plan
- Amendment to Constitution
AusCann Agreement with Aspen Pharamacare
On 25 November 2019, the company has announced that it has appointed TGA licensed Aspen Pharmacare Australia Pty Ltd to provide the packaging for its medicinal cannabis products.
Aspen Pharamacare agreement with the company is set initially for three years and can be stretched and would include GMP packaging services for the company’s proprietary hard-shell capsules. These will be manufactured under the company’s contracted partner, PCI Pharma and will be packed by the Aspen in the ready-to-distribute condition at its Australian facility.
This pact between the AusCann and Aspen Pharmacare is the result of a comprehensive analysis which revealed a considerable cost benefit for packaging services that was outsourced by Aspen. Aspen Pharmacare Australia is a subsidiary of Aspen Pharmacare Holdings Limited which is the largest listed pharma company in South Africa.
September Quarterly Updates
On 25 October 2019, the company provided activity report for the quarter ended 30 September 2019. A few highlights from the announcement are as follows:
- Net cash used in operating activities of the company was $2.0 million.
- Cash and cash equivalents at the end of the period stood at $32.48 million.
- The company has estimated a total cash outflow of 5.525 million for the next quarter.
- The company has conducted the investor webinar on its operational and strategic objectives.
- Dr Marcel Bonn-Miller has been appointed as a Non-Executive Director to the company’s Board.
- Construction of product development and R&D facility remains on budget with a practical completion date by the end of 2019.
The company’s financial performance for FY 2019 can be accessed here
Stock Performance of AusCann Group Holdings Limited
The stock of AC8 was trading at $0.24 on the ASX on 20 December 2019, up by 2.128 per cent (at AEDT 12:55 PM). The company has approximately 317.05 million outstanding shares and a market cap of $74.51 million. The stock has generated a negative return of 34.72 per cent in the last six months and a negative return of 62.70 per cent on year to date basis.
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