Australian Cannabis Index | Credit Suisse Group Ceases Pot Stock Transactions

The fallout of this decision can already be seen in the performance of the AdvisorShares Pure US Cannabis ETF, which has seen its share price dive by more than 20% since February 2021.

There was shock and confusion in the North American cannabis industry last week, after news broke that the international banking firm, Credit Suisse Group, had announced to customers that it will no longer be executing stock transactions for US-based cannabis companies.

At this point it is still unclear what the overall impact of this decision will be, however according to Reuters—which initially broke the story—the move may have directly influenced a significant number of pot stock selloffs that occurred in recent weeks.

[When] Credit Suisse pulled custodian [services] on cannabis stocks, a number of large investors in the space lost their ability to custodian the stocks. That led to a significant selloff.Ascend Wellness Holdings CEO, Abner Kurtin

The fallout of this decision can already be seen in the performance of the US-focused cannabis exchange traded fund, AdvisorShares Pure US Cannabis ETF (NYSE:MSOS), which has seen its share price dive by more than 20% since February 2021.

However, the COO and portfolio manager of MSOS, Dan Ahrens, argued that the US cannabis market is still the best bet for retail and institutional investors.

"There's a lot of excitement surrounding the cannabis investment space right now and for a variety of a reasons," MSOS COO Dan Ahrens said.

"We firmly believe that the U.S. cannabis market provides a compelling long-term investment opportunity that clearly differentiates itself from other areas of the globe."

"Investors must exercise careful due diligence when navigating cannabis and we believe MSOS' unique, actively managed investment mandate delivers a sought-after solution to the marketplace."

Similarly, the outlook of the 'Horizons Marijuana Life Sciences Index ETF' (HMMJ) also experienced a sharp decline on Thursday—plummeting to just 29.92% on the six-month performance chart—while the Australia Cannabis Index also fell to -2.75%.

In contrast, the S&P 500 and Australia's All Ordinaries continued to maintain their upward momentum when compared to December 2020, recording a gain of 20.61% and 14.55%, respectively.

Keeping this in mind, let's examine some of the ASX-listed shares that drove the market forward last week.

Botanix Pharmaceutical

The Australian dermatology and antimicrobial company, Botanix Pharmaceuticals (ASX:BOT), announced a clinical development update of its antimicrobial platform last week, which has yielded the identification of a new indication targeting the prevention of bloodstream infections in haemodialysis patients.

According to clinical data, synthetic cannabidiol has a unique "bactericidal mechanism of action" that is capable of rapidly killing Staphylococcus aureus (Staph aureus) and even drug-resistant Staph aureus (MRSA) without generating unwanted antimicrobial resistance.

We are very excited to announce the clinical development update for our BTX 1801 antimicrobial platform. Our assessment indicates that haemodialysis patients with central venous catheters are at considerable risk of bloodstream infections, with no currently approved treatments.Botanix Pharma President and Executive Chairman, Vince Ippolito

Additionally, Botanix recently announced positive top-line data from its BTX 1801 Phase 2a study, which successfully demonstrated the efficacy of its BTX 1801 formulation in aiding the nasal decolonisation of Staph aureus.

As a result, the company announced that it has identified its target indication for next phase of clinical development for BTX 1801, the nasal decolonization of Staph aureus in patients undergoing haemodialysis treatment.

This decision was made following recommendations from key opinion leaders and an extensive assessment of clinical data, along with a review of potential market opportunities related to the condition.

"BTX 1801's novel mechanism of action has been shown to rapidly kill Staph aureus and MRSA without generating resistance, and the recent positive Phase 2a study data demonstrated the clinical utility of BTX 1801 as a nasal decolonisation agent," Botanix Pharma President and Executive Chairman Vince Ippolito said.

"This represents a potential novel approach for removing sources of bacteria to prevent bloodstream infections in haemodialysis patients, representing a valuable market opportunity to significantly lower the health system impact of haemodialysis infections."

Disclaimer: Past performance is not an indicator of future performance.

Zelira Therapeutics

The Australian medicinal cannabis company, Zelira Therapeutics (ASX:ZLD),  announced the successful launch of its HOPE product range in the District of Columbia (Washington DC), in conjunction with its distribution partner, Alternative Solutions LLC.

As part of the deal, Zelira will receive a licensing fee and ongoing royalties on sales of HOPE within this territory, which is expected to see significant patient uptake due to the product's previous success in the Pennsylvania market.  

The successful launch of HOPE in Washington DC is a huge step forward in Zelira's strategic focus on expanding access to HOPE™ throughout the USA. We look forward to partnering with Alternative Solutions to support the growth of our product in these new markets.Zelira Therapeutics Managing Director, Dr Oludare Odumosu

The company also noted that Washington DC has reciprocity with 32 other US states, which should greatly expand potential access to the HOPE range, as patients are capable of legally purchasing medical cannabis at approved Washington dispensaries.

"We are thrilled to partner with Zelira in bringing HOPE to Washington DC and look forward to bringing patients scientifically formulated medicines they can trust," Alternative Solutions CEO Matt Lawson-Baker said.

Last month Zelira also generated excitement when it published its latest quarterly revenue report, which showed record quarterly product sales and licensing revenues of A$225,000 for the Q3 FY21 period, representing an increase of 249% on the prior six months.

The company also has a suite of new products that are planned for launch over the next two quarters, which means that Zelira should be well-positioned to generate additional diversified revenue streams.

"Our long-term focus to develop a portfolio of clinically validated and scientifically formulated cannabinoid medicine and consumer products is starting to bear fruit," Zelira Therapeutics Managing Director, Dr Oludare Odumosu said.

"The strong growth in March quarter revenue marks a key turning point for the company."

"We are well placed to build on the March quarters' momentum and accelerate our progress in 2021 as we launch new products and expand into new geographies."

Disclaimer: Past performance is not an indicator of future performance.

MGC Pharma

There was big news from bio-pharma developer MGC Pharmaceuticals (ASX:MXC) last week, after the company announced that it had received a $1 million purchase order from Swiss PharmaCan AG (SPC) for its anti-inflammatory drug, ArtemiC Rescue.

This marks the second wholesale purchase order made by SPC under its three-year supply and distribution agreement with MGC Pharma, which has a minimum shipment quantity of 40,000 units per quarter.

Receiving a second order on such a large scale from Swiss PharmaCan demonstrates the increasing demand for our product ArtemiC Rescue, and its associated benefits. Our team in Slovenia has been working tirelessly to ramp up production to ensure rapid deployment of this order, and any subsequent orders that may be received.MGC Pharma Managing Director, Roby Zomer 

The company has also confirmed that it is currently seeking approval for ArtemiC Rescue—which can be used to alleviate the inflammatory symptoms of COVID-19—as a healthcare supplement in a number of additional markets.

This decision was made in response to the receipt of further results from the Phase II clinical and preclinical studies on ArtemiC, after the company met with the American Food and Drug Administration (FDA).  

Based on the FDA's recommendations and MGC Pharma's most recent research data, the company will now initiate a sub-trial for patients who complete the Phase III trial, observing them for an additional three months to document the post COVID syndrome symptoms.

"The findings from the phase II clinical trials which are supported by the completed preclinical trial results, continue to demonstrate the effectiveness of ArtemiC in treating patients with different variants of COVID-19," MGC Pharma Co-founder and Managing Director Roby Zomer said.  

"We are now looking to get ArtemiC into more territories as a supplement and herbal health product following these findings."

Alongside this, the company is also making considerable progress on the long-term development of its other Investigational Medicinal Product (IMP), CimetrA, which was approved by the Israel Government for phase III clinical studies last month.

Disclaimer: Past performance is not an indicator of future performance.

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Hugo Gray
Hugo Gray

Hugo Gray is a Melbourne-based journalist with a body of work that covers a diverse range of topics, including immigration law, sex technology, and now the rapidly expanding cannabis industry.