HMMJ Pushes Past Australian Cannabis Index After Georgia Election Victory

Industry experts believe that a Democrat-controlled Senate may be more amenable to cannabis legalization at the federal level, after years of GOP-driven opposition.

The cannabis industry staged a comeback this week, after investor enthusiasm bubbled over in response to the results of the Georgia Senate runoff elections, which have radically boosted the possibility of nationwide marijuana decriminalization in the US.

Democratic candidates Jon Ossoff and Raphael Warnock both managed to win their senatorial race, giving the party a majority vote in the Senate—and with it, unified control of the government—for the first time in almost a decade.  

The tide is turning here in Georgia, and I believe we are going to continue pushing further left as Atlanta, Athens, Savannah, and Augusta continue to grow.NisonCo Public Relations Manager, Zane Bader

When trading opened the following day cannabis investors were in a bullish mood, as shares in industry heavyweights Canopy Growth Corporation (TSE:WEED) and Aurora Cannabis (TSE:ACB) rose by approximately 18% and 17%, respectively, while the value of stock in Tilray (NASDAQ:TLRY) spiked by more than 19%.

And it's not hard to see why, as many industry experts believe that a Democrat-controlled Senate may be more amenable to the prospect of federal cannabis legalization due to the Republican Party's ongoing opposition to decriminalization efforts.

This can also be seen if we turn our attention to the overall strength of the market, as the HMMJ ETF—which acts as a benchmark for the North American cannabis industry—surged ahead this week, outperforming the Australian Cannabis Index by 33.96 to 4.21, respectively.    

The AORD and S&P 500 have also both continued to enjoy steady gains following the temporary market collapse that took place in response to the arrival of the coronavirus pandemic in early 2020.  When weighted against the index's six-month performance the S&P 500 was shown to be up 19.63 by close of trading Friday, while the AORD recorded a 14.65 increase.      

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

Cann Group

The ASX-listed cannabis manufacturer Cann Group (ASX:CAN) enjoyed a generous 5% rise in its share price this week, after the company announced a new deal with German cannabis distributer iuvo Therapeutics Limited.

The announcement generated considerable excitement from investors, as the deal has netted Cann an entry ticket into Germany's highly coveted medicinal cannabis market.

We believe this initial order represents the largest shipment of product produced in Australia for export markets and is a tangible sign of iuvo's commitment to servicing its growing customer base with safe, quality GMP standard medicinal cannabis.Cann Group CEO, Peter Crock

This was achieved via a strategic investment from Cann—representing a $1 million (CAD) "cornerstone commitment"—which came was part of a larger fundraising push by iuvo Therapeutics.

Under the terms of the agreement, Cann now owns approximately 2% of the company's ordinary issued shares, and was also granted exclusive external rights to supply iuvo Therapeutics wholly-owned subsidiary—which is known as iuvo Germany—with medicinal cannabis extracts until 31 December 2021.

Once the deal was finalized iuvo Therapeutics subsequently placed an initial 19,000 unit purchase order for Cann's medicinal cannabis products, which are currently scheduled for shipment to the German market before the end of February

According to the Managing Director of iuvo Therapeutics, Daniel Seidl, the deal represents an important step forward for both companies. 

"This strategic investment will enable iuvo to expand its patient reach throughout Germany and Europe," Seidl said.

"Cann Group's extracts are manufactured from Australian GMP Cannabis flower, providing regulatory, investment and supply security in a market with superior pharmaceutical standards," said, Managing Director of iuvo.

And if you're wondering what all the fuss is about, it's important to remember that Germany is currently one of the most lucrative medicinal marijuana markets in the world, which led Prohibition Partners to predict that the country's cannabis industry could be worth up to €7.7 billion by 2028.

In fact, new data from the National Association of Statutory Health Insurance Funds (GKV) also recently indicated that Germany's cannabis industry recorded more than €75 million in insured medicinal marijuana sales during the first half of 2020.

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

Bod Australia

Bod Australia (ASX:BDA) enjoyed a sudden spike on Thursday this week, after shares in the company opened at 0.50 after reaching 0.43 at close of trading on the previous day.

This boost was attributed to the company's ongoing sales growth over the last six months, which saw Bod fulfill 3,941 MediCabilis prescriptions, representing a 114% increase over the same period in 2019.

It is very pleasing to see strong growth and continued support from patients and physicians for our MediCabilis product. MediCabilis is commonly prescribed for a range of chronic conditions, but most noticeably chronic pain and anxiety. To treat these kinds of conditions, patients will always require a GMP pharmaceutical grade, standardised and consistent product. This is one of the key competitive advantages of MediCabilis and one of the reasons behind the company's strong repeat prescription growth.Bod Australia CEO, Jo Patterson

In fact, since July 2019 Bod Australia has filled over 8,000 prescriptions of its flagship product, MediCabilis, which is used to treat chronic pain, anxiety, and a range of other conditions.

Repeat prescriptions also accounted for 62% of total sales volumes during this period, which highlighted the company's rapidly growing reputation amongst patients and prescribers alike. 

The CEO of Bod Australia, Jo Patterson, chalked up its growing market share to strong brand recognition in Australia and continued product uptake, along with the company's ongoing nationwide clinical observational study.

The multi-clinic MediCabilis study was launched by the company to investigate the drug's potential efficacy in treating anxiety disorders, insomnia and post-traumatic stress disorder (PTSD).

This could be incredibly lucrative for Bod, as the PTSD therapeutics market alone is forecast to reach over $1 billion in value by 2026—according to a study from Credence Research—while experiencing a CAGR of 4.5%.

"We expect strong demand for MediCabilis to continue across Australia and this growth will continue to add to our revenue profile," Patterson said.

"Board and management look forward to updating shareholders on sales progress in the coming months."

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

MGC Pharma

Stock in MGC Pharmaceuticals (ASX:MXC) continued to gradually climb throughout the week—reaching 0.26 per share by close of trading Friday—after riding the ongoing wave of investor goodwill brought on by the company's recent attention-grabbing announcements.

The company successfully locked down a $5 million cash grant from the Malta government's enterprise fund only a few weeks ago, which will be used to renovate and expand MGC Pharma's Clinical Research Organisation (CRO) facility.

MGC Pharma is very committed to our operations in Malta and helping to build a responsible and viable industry to support the island's emerging Pharma and Cannabis industries. We have been working closely with Maltese Authorities and Malta Enterprise and now have a tremendous opportunity to establish a European hub for our anti-inflammatory product, ArtemiCTM, which is continuing to have positive clinical trial results.MGC Pharmaceuticals Managing Director, Roby Zomer

Once the renovations are complete the site will be a fully functioning GMP-certified manufacturing facility—which should prove to be a substantial asset to the company—as it intended to function as the production hub for MGC Pharma's COVID-19 anti-inflammatory product, ArtemiC.

"Malta Enterprise has been working closely with MGC Pharma Ltd, for almost two years now. We are very proud that their activities in Malta, will now also involve the production of ArtemiC, a treatment whose effectiveness against the COVID-19 virus is currently being scientifically and clinically proven," Malta Enterprise Fund CEO Kurt Farrugia said.

"The production of ArtemiC in Malta, will continue to strengthen our position as the ideal hub for advanced manufacturing and scientific development, and Malta Enterprise, as a strategic partner for anyone seriously interested in investing in Malta."

The announcement of this grant proved particularly timely for MGC Pharma, as last month the company also published highly encouraging data from its Phase II Clinical Trial for ArtemiC, which confirmed that 100% of the COVID-19 patients treated with the drug had successfully met the primary and secondary endpoints.

Additionally, none of the patients in the treatment group required additional oxygen, mechanical ventilation, or admission to intensive care during the clinical trial. In comparison, up to 23.4% of the placebo group required some form of medical assistance during the study.

The clinical trial data is also supported by supplementary in vitro and in vivo studies, which have already demonstrated the mechanism of action and safety profile of ArtemiC.

As a result of the data, ArtemiC is now open to a range of potential market opportunities, including diseases related to cytokine storm such as autoimmune diseases, inflammatory GI diseases, and even flu and chemotherapy patients.

"The results we have seen from ArtemiCTM to date provide a transformational opportunity for the company," MGC Pharma Managing Director Roby Zomer said.

"The safety and efficacy demonstrated on COVID-19 patients has now opened the opportunity for a whole range of other indications related to cytokine storm."

"The company will now look to progress the immediate opportunities for ArtemiCTM while continuing to pursue further clinical developments."

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.