Australian Cannabis Index | HMMJ Rebalances as Creso Targets Psychedelics

The index remains bullish on the US market, as a number of regulatory reforms are expected to supercharge the cannabis industry during 2021.

After dipping at the start of last week the 'Horizons Marijuana Life Sciences Index ETF' (HMMJ) has rebounded once again, following news that the index completed its latest quarterly rebalancing. 

While there were eleven new pot stocks added to the HMMJ's portfolio this quarter—including GrowGeneration Corp (NASDAQ:GRWG) and WeedMD (CVE:WMD) among others—the majority currently operate within the Canadian market, which was attributed to the sector's strong performance during the latter half of 2020. 

After the Canadian cannabis sector's powerful resurgence in late 2020, all eyes were on the industry's forward momentum into 2021. We have continued to see strong sales momentum across the provinces and an increasingly competitive marketplace, as highlighted by the amount of new additions to HMMJ – all positive signs for the sector's ongoing health.Horizons Marijuana Life Sciences Index ETF President and CEO, Steve Hawkins

However, the index also remains bullish on the American cannabis industry, as a number of regulatory reforms are expected to make their way to Congress during 2021, which may supercharge the US market.     

The most notable of these is the Secure And Fair Enforcement (SAFE) Banking Act, which will grant long-overdue legal protection to financial institutions—such as insurance providers and major banks—that provide services to US cannabis companies. 

"With key cannabis reform bills slated for introduction and voting in the coming months, 2021 might prove to be the year that defines marijuana legalization in the United States," Horizons President and CEO Steve Hawkins said.  

"Following the recent passage of marijuana legalization in Mexico, the United States is now flanked on both its borders by countries with legal marijuana regimes. Not only could that create greater social and economic pressure for federal reform, but it offers the multi-state operators additional markets for potential expansion once the opportunity is available."

Conversely, the six-month performance of the Australian Cannabis Index experienced its fourth consecutive week in decline, while Australia's All Ordinaries and the S&P 500 continued to perform well, with the latter recording its fourth straight quarterly gain.

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

Creso Pharma

The Australian pharmaceutical producer, Creso Pharma (ASX:CPH) ended the month on a high note, after shares in the company climbed by 5% following the announcement that its target acquisition company, the leading extraction specialist, Halucenex Life Sciences, had partnered with Advanced Extraction Systems Inc (AESI) to develop "high quality psychedelic extracts" derived from psilocybin mushrooms.

As part of the agreement, Halcunex will also develop a GMP certified naturally extracted product for use in future clinical trials aimed at optimising psilocybin dosage levels and standardising extract efficacy.

It is very pleasing to see Halucenex make such significant progress in a short period of time. The agreement with AESI and subsequent fabrication of a leading extraction system will provide Creso and Halucenex with a first mover advantage in terms of psychedelic product and delivery methods, which could in turn lead to a number of revenue generating and treatment outcome opportunities. The Company has a number of growth initiatives planned in the near term across North America and Europe and we look forward to providing ongoing updates to shareholders.Creso Pharma Non-executive Chairman, Adam Blumenthal

The partnership is expected to provide Creso and Halcunex with a considerable first mover advantage, as many of its competitors do not have access to the technology needed to extract psychedelic compounds.

While the project is subject to approval from Health Canada, Halcunex has confirmed that it expects the receipt of the Dealers License imminently, with approval for the License Amendment anticipated within a subsequent 45-day period.

"This agreement with AESI is a major development for a number of reasons. Firstly, the ability to extract psychedelic compound concentrates will allow us to progress the development of a number of delivery methods with broad applicability, including capsules, sprays, tinctures and lozenges amongst others, which may result in a higher standard of treatment," Halucenex Founder & CEO Bill Fleming said.

"Additionally, the extracted product will allow us to analyse, characterise and compare the major components in various psilocybe mushroom strains through our established laboratory setting, leading to initial research and the potential entourage effects of psychedelic compounds.

"Further, we anticipate that considerable future research will be undertaken between synthetic and botanical psilocybin to fully understand the benefits it can offer. Having the extraction system in place and the ability to produce solvent-free distillate in-house will be key for future comparative bioactivity studies."

Later that week Creso also announced that it will be launching three new CBD tea products under its establish cannaQIX® brand.

The tea products were produced using the company's newly developed CBD taste and content optimising technology, and are expected to be rolled out to a distribution network of over 2,100 pharmacies, drug stores, and retail chains throughout Switzerland.

Additionally, further European territories such as Germany have also been earmarked by the company for a potential near-term expansion.

"We are proud to have completed the finalisation of this groundbreaking technology for our new CBD tea products, which opens a number of new and globally applicable opportunities for Creso Pharma," Commercial and Development Director Dr Gian Trepp said.

"The new products and formulation provide a very tasty CBD tea that will become a key component in the future production of the cannaQIX® lozenges. We look forward to providing further updates on future product additions and our European expansion initiatives."

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

Botanix Pharma

The Australian dermatology developer, Botanix Pharmaceuticals (ASX:BOT), announced last week that it had received ethics approval for an expansion of the parameters of its planned BTX 1702 Phase 1b clinical study.

The newly revised study design— which makes use of the company's proprietary drug delivery system Permetrex—will now also explore the formulation's potential efficacy for the treatment papulopustular rosacea.

Moderate to severe papulopustular rosacea patients are greatly in need of new therapies to treat the signs and symptoms of the disease which has such a tremendous emotional impact. BTX 1702 offers a novel potential option for papulopustular rosacea with a unique mechanism of action which could target several aspects in the pathogenesis of the disease and we are very excited to be initiating this clinical study with leading investigators in Australia and New Zealand.Botanix Pharma President and Executive Chairman, Vince Ippolito

The study's broadened focus is also good news for investor, as papulopustular rosacea is an extremely common chronic inflammatory skin disease that which affects more than 16 million patients in the US and up to 415 million people worldwide.

According to a statement from the company, the Phase 1b study will now be a randomised, double blind, vehicle-controlled study focusing on patients with moderate to severe papulopustular rosacea, with the goal of enrolling approximately 120 patients across eleven dermatology clinic sites throughout Australia and New Zealand.

Patients aged 18 to 65 years old are currently eligible to be enrolled, while changes to the study's design have been made to enable increased data capture and provide further insights into the unique delivery capabilities of Permetrex as a vehicle for drug application. 

Botanix Pharma believes that the addition of these process to the study design "will greatly enhance quality of the study data, and reduce the potential for site-to site assessment variances".

"The company is well funded to progress both its dermatology and antimicrobial platforms, with the recent receipt of the $6.85 million R&D Tax Incentive in addition to the $19.2 million in cash held by the Company at 31 December 2020," a statement from Botanix Pharma said. 

"Botanix also continues to assess complementary opportunities and partnerships for dermatology and antimicrobials products that can be rapidly brought to market which leverage the company's broad management experience capability and experience."

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

Cann Group

Last week the Cann Group (ASX: CAN) announced that it had partnered with Emyria Limited (ASX: EMD) to pursue the accelerated registration of a unique, low-dose, CBD-only capsule with the Therapeutic Goods Administration (TGA).

If successful, the drug's registration on the Australian Register of Therapeutic Goods (ARTG) would allow it to be sold over the count in pharmacies—without the need for a doctor's prescription—giving the company access to a substantial new revenue stream.

Satipharm CBD has already completed robust stability testing as well as Phase 1 clinical trials as required by the TGA. This allows us to move straight to pivotal clinical outcomes trials saving significant time and money. An experienced Contract Research Organisation (CRO) has already been engaged to manage these trials. Further, at Emyria, we already have deep insights into how the Satipharm product performs clinically, having written over 400 Satipharm prescriptions to more than 170 patients. This de-risks the pivotal clinical outcomes trials required as an important first step towards registration with the TGA.Emyria's Managing Director, Dr Michael Winlo

Under the terms of the agreement, Cann Group's proprietary Gelpell microsphere technology will be utilized as a drug delivery medium for Emyria's EMD-003 drug, which will then be used as the basis for seeking a Schedule 3 registration for treating unmet needs in mental health.

Once construction is complete the company also intends to incorporate the manufacturing of its microsphere formulation into Cann's new production facility near Mildura, while Emyria's experienced drug development and clinical team will guide the registration program.

Insights from Emyria Data—which includes robust safety, efficacy and patient preference data for more than 3,500 patients—will also be used to guide the pivotal clinical trials that are in advanced stages of planning.

"Cann Group is pleased to partner with Emyria to accelerate the registration of a Schedule 3 medicine. We anticipate there will be a large patient demand for a TGA registered CBD medicine that is convenient to patients and demonstrates the highest standards of quality, safety and efficacy," Cann Group CEO Peter Crock said.

"We believe our microsphere technology – with improved bioavailability – fits well with Emyria's drug development programs, which have the potential to accelerate registration with the TGA due to Emyria's extensive real-world data, national clinical site network and previous drug development experience."

"We are also working to bring the Gelpell pharmaceutical GMP manufacturing line to Cann's Mildura production facility which, when commissioned at the end of this calendar year, will become the largest cannabinoid medicine production facility in Australia."

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.