- The cannabis industry is a broad one and expected to grow over 14% by 2027, driven by improved legalisation and acceptance of cannabis for treating patients with chronic disease.
- Althea’s subsidiary Peak has achieved its Standard Processing Licence from Health Canada through which it can start the commercial operations in Canada.
- MGC Pharmaceuticals expects its COGS to decline with the modified Poisons Standard.
- MGC recently signed a convertible securities financing agreement with Mercer to provide funding of up to a total of A$15 million.
- AusCann Group completed its first clinical study of its unique orally administered tetrahydrocannabinol and cannabidiol combination.
The global cannabis market, according to media reports, was valued at ~US$123 million in 2019. Experts believe that it would grow at CAGR of over 14% between 2020 till 2027. At present, improved legalisation and acceptance of cannabis for treating patients diagnosed with chronic disease has led to the industry’s growth. Looking at the vast scope of this field, some of the ASX-listed companies are focusing more on this relatively untapped area.
Cannabis is used for medicinal as well as recreational purposes. In most states in Australia, permission from a medical practitioner is required to consume medicinal cannabis products. These medical practitioners are required to check for any relevant state/territory consents to recommend a specific medicinal cannabis product to a patient.
In this field, the Therapeutic Goods Administration (TGA) is a regulatory body for therapeutic goods in Australia. It is responsible for ensuring the availability of therapeutic goods for supply in Australia. Further, it also checks whether these therapeutic goods are safe and fit for their intended usage or not.
TGA, recently, decided to modify the existing Poisons Standard to down schedule cannabidiol to let more accessible via a new Schedule 3 entry. This would enable cannabidiol (CBD) products to become available as OTC. Further, with the change in the schedule, those pharma companies dealing in cannabis would also be able to reduce their COGS.
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In this article, we would focus on three ASX-listed cannabis players – Althea, MGC and AusCann.
Althea Group Holdings Limited (ASX:AGH)
Althea Group Holdings Limited is an Australian licensed producer, supplier as well as exporter of pharmaceutical class medicinal cannabis.
Althea Subsidiary Peak Processing Granted Canadian Cannabis Licence:
On 14 September 2020, the Company announced that its 100% owned subsidiary, Canada-based Peak Processing Solution (Peak) had achieved its Standard Processing Licence from Health Canada. With this license, AGH’s subsidiary Peak Processing Solutions would be able to start the commercial operations in Canada.
Now, Peak Processing would be manufacturing Cannabis 2.0 products for third parties. Apart from that, it would supply medicinal products to pharmaceutical operations of Althea. Hence, it would also help in reducing the cost of goods sold.
The subsidiary also signed an agreement with Blum Beverage Company Inc (Blum), a Canadian non-alcoholic beverages company. Under the deal, Blum can place an order for Peak Processing to produce as well as distribute cannabis beverages which contain 5mg of tetrahydrocannabinol on behalf of Blum.
Althea Group, in its announcement, confirmed that its subsidiary is well placed to capitalise on the Canadian boom in Cannabis 2.0 products comprising cannabis-infused beverages, edibles, concentrates and topicals.
CBD products to become available OTC as per proposed TGA reclassification:
On 09 September 2020, Althea Group supported the interim decision taken by the TGA to modify the existing Poisons Standard to down schedule cannabidiol to let more accessible via a new Schedule 3 entry.
With the proposed changes, the Australian patients would now be able to buy CBD products upon discussion with a pharmacist. There would be no requirement for a prescription to take these products.
In the last six months, AGH shares have delivered an impressive return of 181.08%. By the end of the trading session on 18 September 2020, AGH shares zoomed up by 11.538%, at A$0.58. The Company has a market cap of A$121.32 million, with 233.31 million outstanding shares.
MGC Pharmaceuticals Ltd (ASX:MXC)
A European based biopharma company, MGC Pharmaceuticals Ltd, on 14 September 2020, highlighted that it is in a good position to take advantage of the proposed changes by the TGA (down scheduling specific CBD products to Schedule 3 status). With these proposed changes, certain low-dose medicinal CBD products would be dispensed OTC by the pharmacists to patients without a prescription.
Besides, MXC has initiated the clinical program to develop new products that fit into the criteria of the proposed Schedule 3 registration.
Signed Convertible Securities Financing Deal with Mercer Street:
On 10 September 2020, the Company announced that it had entered into a convertible securities financing agreement with Mercer Street Global Opportunity Fund, LLC to provide funding of up to a total of A$15 million. Mercer Street Global Opportunity Fund, LLC is a US-based investment group. It will provide the first tranche of A$2.25 million to the Company upon the fulfilment of the closing requirements via the issue of 2,475,000 convertible note. Each convertible note has a face value of A$1 to Mercer Street.
The funding would begin in September 2020 and will be used for:
- Funding manufacture for sales of ArtemiCTM and MXC’s phytocannabinoid medicinal products in new critical markets, including the UK and Brazil.
- Funds would also be used for completing the ongoing clinical trials. It includes the accomplishment of Phase II clinical trial of COVID-19 targeted formulation ArtemiCTM and speeding up of clinical trial of CannEpil® Phase IIb. The funds would also support continuing with Glioblastoma brain cancer research.
In the last six months, MXC shares have delivered a decent return of 41.18%. By the end of the trading session on 18 September 2020, MXC shares dropped by 4.167% and stood at A$0.023. The Company has a market cap of 39.38 million, with 1.64 billion outstanding shares.
AusCann Group Holdings Ltd (ASX:AC8)
AusCann Group Holdings Ltd is a pharma company that focuses on the development, manufacture as well as the supply of cannabinoid-based medicinal products in Australia and abroad.
On 14 September 2020, AusCann Group announced the conclusion of the first clinical study of its unique orally administered tetrahydrocannabinol and cannabidiol combination by combining AC8’s proprietary Neuvis platform of self-emulsifying powder in hard-shell capsules.
In this process, around 28 healthy volunteers were enrolled, with 25 subjects completed the study. The absorption profile of the Company’s product was the same as that of the comparator oil formulation and the TGA-registered oral spray, Sativex.
There were lesser treatment-related adverse events using the Company’s product as compared to comparator oil and Sativex.
The Company expects that an investigator-led Phase IIA study of AusCann’s product in patients suffering from chronic neuropathic pain would start in the second quarter of FY2021.
In the last six months, AC8 shares have delivered a negative return of 3.03%. By the end of the trading session on 18 September 2020, AC8 shares tumbled by 6.25% and stood at A$0.15. The Company has a market cap of 50.73 million, with 317.05 million outstanding shares.
Cannabis companies that sell both medicinal weed and recreational pot. Marijuana stocks to look at. Marijuana mergers and acquisitions. Dispensary data analytics. Upcoming marijuana IPO’s Those phrases have become increasingly common as marijuana legalization spreads. Global spending on legal cannabis is expected to grow 230% to $32 billion in 2020 as compared to $9.5 in 2017, according to Arcview Market Research and BDS Analytics. As of June 29, 2018 the United States Marijuana Index, despite a lot of uncertainty around regulations, has over the past 1 year gained 71.49%, as compared to about 12% gain seen by the S&P 500."