Australia's top 20 cannabis companies
9 July 2020, Written by Matt Ogg and David Simmons
Let's not beat around the bush. The last 12 months have been nothing short of a rollercoaster ride for cannabis investors, as oversupply and quality problems in North America sent shares in the industry plunging and dragged ASX-listed stocks down with them.
In this list, last year's number one Elixinol is now in 13th position. Creso Pharma (ASX: CPH), which in mid-2019 was riding high on a $122 million takeover offer, abandoned that deal and has fallen off the list entirely.
And it isn't as if Creso's board would have been wiser in retrospect to take the money and leave; the offer from PharmaCielo was scrip-based, and the TSX-listed company too has seen a downward turn in its fortunes.
Creso's situation is emblematic of the industry at large. Despite the negative sentiment driven by global market fundamentals, it is actually progressing on numerous fronts; revenue rose seven-fold in the first quarter, it has signed distribution partnerships in three continents, and management is upbeat about promising legislative developments for cannabis in Israel.
Similarly, Australia's top 20 cannabis companies have taken great strides towards building an industry at home and abroad. Prescription numbers are rising rapidly, new production facilities are in the works along with improved manufacturing capacity, new players like Canada's Cronos and Valens are on the scene, and market leaders are testing innovative technologies and business models.
Yet if it weren't for the inclusion of new top dog Ecofibre, whose business focus may be hemp but its strength in CBD product sales and research make it a cannabis industry force to be reckoned with, the market capitalisation of this list would have dropped by $1 billion year-over-year to around $800 million.
Instead, the market capitalisation of Australia's top 20 cannabis companies stands at $1.58 billion, representing a slight drop on last year with Ecofibre accounting for almost half that value.
The other two companies to fall off the list were hydroponics tech group Roto-Gro International (ASX: RGI) and CBD-based oral spray developer SUDA Pharmaceuticals (ASX: SUD).
In their place are Little Green Pharma (ASX: LGP) which blazed onto the ASX with an IPO in February, and Avecho Biotech (ASX: AVE) which has teamed up with Tasmanian Alkaloids (TasAlk) to apply its drug delivery platform to medicinal cannabis.
Others may well have been included had this list been published at a different time. Such is the volatility of the sector, which rather ironically targets anxiety disorders and stress for the large part.
In terms of major recent developments in Australia, as of 31 January 2020 recreational cannabis has been legalised in the ACT with adults allowed to hold 50 grams of cannabis and cultivate two cannabis plants. But when the breakthrough was announced in September last year, many industry experts were sceptical about the benefits it would bring.
Meanwhile, the first company to receive Australian licences to research and grow medicinal cannabis - Cann Group (ASX: CAN) - could make a decision any day now on how to proceed with its $184 million production facility in Mildura.
Another major event to look out for will be the referendum coming up later this year on the legalisation of cannabis in New Zealand, and ASX-listed companies including Cann Group and THC Global (ASX: THC) are trying to get in on the action with partnerships across the Tasman Sea.
According to numbers from the Office of Drug Control (ODC), there are now 31 companies with Australian manufacturing licences for medicinal cannabis and a further 26 with import licences, although the ODC's list only includes those who consent to being published.
In its 'Oceania Cannabis Report' second edition published in April, Prohibition Partners estimated there were around 2.1 million cannabis users in Australia, and just over 18,500 medicinal cannabis patients as at 1 January this year. The report forecasts the value of Australia's cannabis market will jump from around US$40 million currently to a whopping US$1.23 billion by 2024.
"Oceania is fast emerging as a global contender in both the medical cannabis and adult-use space thanks to increasingly liberal attitudes in the region," Prohibition Partners group managing partner Stephen Murphy said in the report.
"Australia in particular punches above its weight in relation to the number of publicly listed companies trading on the Australian stock exchange (ASX). With over 30 companies currently listed, this is considerably more than the number of publicly listed companies in all of the countries in Europe combined.
"In the face of global upheaval, which the COVID-19 coronavirus pandemic represents, the continued growth of companies such as Little Green Pharma and the opportunities for investors that such growth provides is a welcome good-news story in uncertain times."
In last year's list we highlighted how Australia had become an unlikely hub for the booming global cannabis industry. There have certainly been setbacks from an investment standpoint since then, but the continued arrival of major global players and commitments made by home-grown cann-preneurs demonstrate how much promise this sector has if the legislative environment works in its favour.
1. Ecofibre (EOF)
Head office: Sydney
With its roots in hemp food and backed by an advocate who has pumped serious capital into medicinal cannabis research, Ecofibre has taken the ASX by storm since its IPO in March last year.
For Countplus founder and Ecofibre chairman Barry Lambert, the quest to make medicinal cannabis accessible is personal.
"Our granddaughter, Katelyn, has suffered from catastrophic and incurable epilepsy, but since taking Full Spectrum Extract she is now seizure free," Lambert said, in reference to a CBD tincture Ecofibre sells under its 'Ananda Hemp' brand.
"Instead of being in a 'vegetated' condition, unable to walk, talk or control her body, she is alive and enjoying life.
"Sadly she has some brain damage because we didn't learn about the benefits of Hemp Extract soon enough, but if she remains seizure free she will be able to enjoy a 'normal' life."
In his quest to help Katelyn and others like her, before joining Ecofibre in 2015 Lambert and his wife gave $33.7 million to the University of Sydney for research into cannabinoid therapeutics, and that initiative has been replicated at Thomas Jefferson University in Philadelphia.
After making substantial investments in Ecofibre, Lambert recruited Eric Wang to drive the group's businesses in the United States, where it has a production facility in Kentucky and has become a leader for hemp-derived CBD in pharmacies.
In the third quarter alone revenue was up 42 per cent at $14.2 million, avoiding the disruption that affected much of the industry. However, COVID-19 restrictions and civil unrest have impacted the business and it withdrew its second half guidance in June.
A month earlier the company had secured a deal to sell its Ananda Hemp range of topical creams and salves at major US pharmacy chain CVS, although with a start date of December. In the US the group has also launched a line of Hemp Black-branded washable face masks as personal protective equipment (PPE).
But it was in February that Ecofibre made a breakthrough announcement which, whilst not as significant as the US market, hits much closer to home.
Until then most of its Australian businesses consisted of selling hemp food (Ananda Food) to Woolworths, sold under the Macro health brand, but this year the Ananda Health line of CBD products was brought to our shores.
Ecofibre is the first Australian company to import medicinal cannabis into Australia from the United States, and is on a mission to give Australian patients greater access to high quality and affordable hemp-derived cannabis extract.
This launch is in response to, and in support of, the Senate Inquiry into the 'Barriers to Patient Access to Medicinal Cannabis in Australia'. Ecofibre has lodged a submission to the inquiry advocating for broader access for Australian patients.
"As an Australian company with the No. 1 CBD brand in U.S. pharmacies, we felt we had an obligation to improve patient access and affordability issues in Australia. We're using our U.S. team, production efficiencies and pricing power to benefit Australian patients," Lambert said after the launch.
"While Australia has a more complicated and less efficient regulations for CBD products, it's our home market and it's why Ecofibre is committed to launching Ananda Hemp in Australia; an affordable, high quality hemp derived cannabis range of tinctures and gel capsule," added Wang.
On 2 July, Ecofibre announced patient enrolment had begun for a Phase II clinical trial at the Lankenau Institute for Medical Research in Philadelphia using Ananda Health products, aimed at treating chemotherapy-induced peripheral neuropathy (CIPN).
"We are proud to be the first in the United States to study the impact of hemp-derived full spectrum CBD on CIPN, a condition that affects approximately 25-50% of pediatric and adult cancer patients undergoing neurotoxic chemotherapy," said oncologist Dr Marisa Weiss, who is leading the FDA-approved study.
"This level of research is necessary to answer the global call from the medical community, patients, and regulatory bodies seeking effective treatment of this difficult, common chemotherapy side effect."
2. Cann Group (CAN)
Head office: Melbourne
This time last year there were six cannabis companies on the ASX with a market capitalisation above $100 million. Now there's just two; new addition Ecofibre and industry stalwart Cann Group.
The last 12 months have been a period of flux for the industry and Cann Group is no exception with its value cut roughly in half, but the Melbourne-based group has returned to form.
A nationwide distribution deal with Symbion, the first arrival of THC oil formulations from Canadian partner Aurora Cannabis, and capacity building for its own production, have all been cause for positive sentiment at Cann Group which finally began its commercialisation phase late last year.
But another key objective is to develop a local supply chain in Australia. On 7 January these ambitions were given a boost when ASX-listed partner IDT Australia started extracting the first medicinal cannabis medicine from Cann's locally-grown cultivars with good manufacturing practices (GMP).
"This facilitates the manufacture of finished product formulations and puts us a step closer to launching our own locally sourced and produced range of medicinal cannabis treatments to satisfy both domestic demand and to help develop valuable export pathways," said CEO Peter Crock, who is also chairman of the Medicinal Cannabis Industry Australia (MCIA).
Just a few weeks later Cann Group made the call that global supply-demand disruptions warranted a "strategic reset", prompting exports to take a back seat while the company focused primarily on the Australian market.
To put help its finances in order, Cann Group announced a 25 per cent cut to its headcount and either eliminated or deferred around $7 million in annualised costs.
Despite the challenges of COVID-19 it didn't take long though before exports were back on the radar. On 21 April the company executed a five-year supply agreement with Pure Cann NZ, in which it is a part owner, and in late May Cann Group announced two new export supply agreements in Europe.
By the time the European deals were signed, the group was onto its third CFO in the space of six months. Former CFO Richard Baker resigned in December and was replaced by Reena Dahiya in an acting CFO role until her job was made permanent on 25 February.
However, just two months later Dahiya took up a new opportunity with tech solutions company Leidos, and her shoes were filled by Greg Bullock, who had been on a short-term contract as Cann's strategy and planning manager.
After framing its objectives and making the appropriate moves to put them in motion, there is still one critical piece of the puzzle for Cann Group its Mildura production facility that is yet to be built but ties into so many of its supply plans.
The outbreak of COVID-19 has delayed Cann Group's final decision on how to proceed with commissioning the first stage of the project, which in its 1A phase will enable annual production of 12,500kg of dried cannabis flower.
Cann was originally planning to build the project in one hit with the capacity to produce 70,000kg annually, but a glut in global markets prompted a more measured approach of scaling up according to demand.
Planned investment in the project over three stages is estimated at $184 million - almost 1.5 times Cann Group's market capitalisation - of which $47 million was already spent on acquiring the site as well as existing buildings.
At the end of the March quarter the group's available $6.6 million in funding, predominantly in cash, was well short of its requirements to build Stage 1.
That was exactly what it got, overwhelmingly so, at a general meeting June where existing investors demonstrated they were more than willing to sacrifice some dilution for the Victorian cornerstone project to go ahead this year.
"Obviously the resolutions were strongly supported and the virtual platform we were required to use given current circumstances worked well," Crock said after the meeting.
"The result gives Cann Group flexibility in terms of its future growth plans, one of which being our expansion at Mildura."
Any day now, Cann Group will be rattling the tin for extra funds in a stock market where cheap capital has been obliging for a wide cross-section of ASX-listed companies.
3. Althea Group (AGH)
Head office: Melbourne
The withdrawal of Canadian investor Aphria was a major blow for Althea in October, but as one door closes another opens.
Althea's patient numbers in Australia surpassed 5,000 by the end of February, and in early March the UK Home Office changed import restrictions to prevent delays or interruptions for cannabis-based products.
This put Althea on a high, allowing it to import and hold larger quantities at any given time, building on the work already done in the UK where it notched its first patient prescription in June last year.
When the announcement was made, Althea's CEO and founder Josh Fegan emphasised the importance of working with the country's health officials, and was under no illusions about the challenges ahead.
"Recognising that there is limited information in the UK market to support Healthcare Professionals and patients, Althea continues to roll out its proprietary education platform, Althea Concierge," said Fegan, who won the Trailblazer category at the Melbourne Young Entrepreneur Awards 2019.
"The platform will provide crucial real-world evidence for prescribers, which we believe is necessary for regulators to fully understand medical cannabis use in areas of unmet need.
"Real world evidence gathered in Althea Concierge is also key to Althea products potentially being prescribed and reimbursed through the NHS (National Health Service) in the future."
This week the company went a step further with the web-based platform, launching online sales via Althea Concierge as well as a new interactive treatment plan.
The move is an Australian first with plans to replicate the upgrade in the UK soon, allowing Althea's medicinal cannabis products to be delivered to patients' doors directly, thus avoiding visits to doctors and pharmacies which can be burdensome.
Doctors will be able to prescribe Althea's products over the platform in conjunction with video telemedicine.
"The ability for contactless sales is probably the biggest development yet for medicinal cannabis in Australia," says Fegan.
"You need to have a lot more than just a quality product in the highly regulated prescription cannabis space and Althea's ongoing investment in technology, provides us with a premium value proposition that we believe none of our competitors possess to provide educational information and track."
The new interactive treatment feature gives doctors the ability to set up fully customised dosage reminders for the patient, who in turn can record their medication usage and provide feedback to the doctor.
In late March the company announced it was shipping more product to the UK than ever before, and its Canadian subsidiary Peak Processing Solutions had completed its custom 3,716sqm facility in Ontario on budget and with only a slight delay to the intended timeline.
The facility's completion was followed by the submission of an evidence package to Health Canada, including a full video tour of every room, which is the final step towards gaining a Standard Processing Licence.
Most facilities in the Canadian industry are built to produce cannabis dried flower products and basic cannabis extracts, but Peak Processing specialises in the manufacturing and distribution of "Cannabis 2.0" products such as cannabis-infused beverages, edibles, concentrates and topicals.
Peak's prospects were given a boost on 22 June when it signed a binding beverage production agreement with Collective Project Limited to manufacture and distribute cannabis-infused canned beverages on its behalf.
As at 30 March, Althea was also in the enviable position of having zero debt, $1.8 million in inventory and approximately $15 million cash on hand.
In the face of COVID-19 challenges, the company has worked closely with health care providers (HCPs) to promote telehealth services, fast-track the use of electronic prescriptions and launch e-commerce sales via Althea Concierge.
Building on a Memorandum of Understanding (MoU) signed in November, in May Althea entered a three-year supply and distribution agreement with Nimbus Health GmbH in Germany, which accounts for around 25 per cent of the country's medicinal cannabis sales.
Althea expects to send its first shipments under the German deal in the second half of this calendar year, and will receive payment for products supplied to Nimbus along with 50 per cent of the net profit on sales.
4. Zelira Therapeutics (formerly Zelda Therapeutics) (ASX: ZLD)
Head office: Perth
With close to a decade of medicinal cannabis research under the belt of Zelda Therapeutics' founder Mara Gordon, the time was right in October last year to take things to the next level with a ground-breaking merger.
ASX-listed Zelda had made a name for itself in the research space prior to its merger with US-based medicinal cannabis product developer Ilera, but commercialisation was its weak point.
That's why the merger, completed in December 2019, was such a vital moment. Now called Zelira, the listed entity now has its sights firmly set on becoming a money-making pharmaceutical company.
The two entities are complementary, with Ilera providing direct access to the USA and Zelda providing access to the Australian, German and United Kingdom markets. As a merged company revenue will be generated by Ilera's recently launched proprietary cannabis formulations under the HOPE brand.
"The merger will create one of the world's leading medicinal cannabis companies with a rich pipeline of clinically validated products under development and unique access to the world's largest and fastest growing cannabis markets," said former Zelda chairman Harry Karelis.
"As markets for medicinal cannabis become increasingly regulated, our strategy of undertaking robust clinical trials to validate and differentiate our products is being recognised as being at the forefront in the sector."
The legend of Zelda Therapeutics began in California in 2011 with cannabis company Aunt Zelda's and its founder, health sciences entrepreneur Mara Gordon, who now sits on the advisory board of Zelira,
The company has since spent years researching the medicinal benefits of cannabis on a range of ailments including insomnia, opioid addiction, chronic non-cancer pain, and autism.
A new partnership with Melbourne-based medicinal cannabis company Levin Growing will see Zelira add research into chronic pain treatment in retired athletes to its library of cannabis intelligence.
With the merger now complete Zelira can harvest the fruits of her labour.
"Our ability as a merged company to immediately capture growth opportunities in the rapidly expanding global medicinal cannabis market will be significantly enhanced," Zelira chairman Osagie Imasogie said.
"Ultimately, our objective is to deliver high quality, clinically validated products and options to patients and physicians."
That quest is well underway following a $4.58 million capital raise completed in February designed to assist Zelira's plans to launch multiple products into global markets and to advance its insomnia and opioid addiction trials.
The placement increased the company's cash position to approximately $5.78 million before costs, with Zelira director Dr Richard Hopkins contributing $50,000 of his own money into the raise.
5. THC Global (ASX: THC)
Head office: Sydney
By virtue of creating a vertically integrated supply chain over the last year, the aptly named THC Global (ASX: THC) has rapidly risen up the ranks of the Top Cannabis Companies list in 2020.
Over the last three years THC has made a name for itself as one of the fastest-moving suppliers of medicinal cannabis in Australia. From growing to manufacturing to distribution, THC is in the driver's seat.
A new manufacturing facility in Southport, a production centre Bundaberg and the acquisition of national cannabis clinic network Tetra Health are all part of THC's canabidiol crusade.
It has now been almost a year since THC received a manufacture licence for cannabis at the Southport Facility, dubbed the 'largest bio-pharma extraction facility in the Southern Hemisphere'. With the centre is now up and running THC is able to produce its own product.
Of course, a manufacturing and development facility is only going to be useful if you have a steady supply of raw materials coming in. Naturally, THC had a solution for that problem.
In September 2019 the company announced it has secured a lease over a prime site for cannabis production in Bundaberg, Queensland.
The site includes 6.6 hectares of existing hydroponic greenhouses plus an additional 180,000 sqm of agricultural land suitable for open-field cannabis or hemp cultivation.
With the foundations for its own supply chain in place and a product in development, THC had just one last hurdle to overcome: getting the medicine to those who need it.
This was solved in May 2020 when THC announced it had acquired cannabis clinic network Tetra Health for $3 million.
That deal was completed on 1 June 2020, and has given THC access to Tetra's network of medical practitioners, comprising more than 600 referring physicians, 30 prescribing physicians and a national network of dispensing pharmacies.
This gives THC access to a list of 10,000 prospective patients, all interested in the medicinal benefits of the cannabis plant.
By June 2020 THC has already witnessed an increase in patient enquiries of 30 per cent.
"Through the acquisition of Tetra, THC is advancing the industry across the chain, enabling the Company to increase accessibility and reduce costs of medicinal cannabis medicines to Australian patients, by cutting out intermediary markups and handling costs," THC said.
The acquisition of Tetra came at the right moment for THC; just over a week before it was completed the company announced that its first Australian-produced medicinal cannabis product was available for prescription to patients under the Special Access Scheme.
Released under THC's Canndeo brand, the product is a full-spectrum cannabidiol medicine and is distributed via Tetra's network of physicians.
Everything seems to be falling into place for THC. As its supply chain was coming together the company continued to work with other global cannabis leaders from around the world on importing and distributing the drug in Australia.
Of particular note is its recently struck supply deal with MGC Pharma (ASX: MCX), another company on this list.
The agreement saw MGC Pharma provides THC Global with a source of medicinal cannabis products to be packaged and made available to Australian patients under THC's Canndeo brand.
The deal also saw the two ASX-listed companies agree to collaborate in the future to supply those that need medicinal cannabis with the product, including products from THC's Southport Facility.
More recently THC linked up with a leading grower of medicinal cannabis to develop and manufacture Cannatrek-branded products from its Southport facility.
In return for the extraction and manufacturing, Cannatrek will deliver THC an equal quantity of dried cannabis flower for THC to use in its own medicines.
THC's Tetra Health will also make Cannatrek medicine available for prescription and supply via its network of prescribing physicians.
The Southport facility has also come in handy as THC enters the white-labelling business. In late June the group announced a partnership with New Zealand-based Medleaf Therapeutics that will see THC to produce and supply white-labelled medicines.
6. AusCann Group (ASX: AC8)
Head office: Perth
Just as the company was launching its hard-shell capsules to market, kicking off clinical evaluations and nestling into a new nationwide storage and distribution partnership, AusCann announced the surprise resignation of its CEO Ido Kanyon in May.
Kanyon cited personal reasons for his departure, just 12 months after joining the team from US-based Teva Pharmaceuticals.
He is expected to leave for good within the next four months and is sharing leadership responsibilities with non-executive director Dr Marcel Bonn-Mill in the meantime.
His exit means that by the December quarter AusCann will have a new CEO in addition to its relatively new chairman Max Johnston who started in January, as well as chief medical advisor Dr Marc Russo who came on board in March.
This chief medical advisor role is very important for companies like AusCann as they engage in outreach to make it easier for doctors to prescribe medicinal cannabis.
In Russo's case, the medical outreach program will expand to include peer-to-peer education, guidance for clinical evaluation and the sharing of clinical best practice.
The aim is that these engagements will be supported by hard science explaining the medical effects of AusCann's unique form of hard-shell CBD (cannabidiol) capsules.
On 28 April, the company announced recruitment had been completed and clinical evaluations had begun independent clinic Nucleus Network, exploring the pharmacokinetics of AusCann's capsules in healthy volunteers.
"We are very excited to be progressing this important study to provide evidence-based information to medical professionals about our unique hard-shell capsule," Kanyon said when the trial commenced.
"This is the first of many studies planned by AusCann to better understand and prove the benefits of using controlled dose medicinal cannabis for medical treatment."
Pending any issues with COVID-19, the study is expected to be finished by the end of the year, at which point an exclusive storage and distribution agreement with national pharmaceuticals provider Clifford Hallam Healthcare (CH2) will be valid for another two months until February 2021.
There is, however, an option to extend the agreement, which earlier this year replaced a previous arrangement with Australian Pharmaceutical Industries Limited (API).
AusCann is 13 per cent owned by North American cannabis industry giant Canopy Growth Corporation, and as at 31 March it had $24.7 million in cash as well as no debt.
A $1.2 million boost from the Australian Government's Research and Development Tax Incentive Program meant its net cash outflows for the March quarter stood at $1.4 million.
7. Little Green Pharma (ASX: LGP)
Head office: Perth
In February yet another cannabis company blazed onto the Australian Stock Exchange, smoking past the competition and landing in the Top 10 of Australia's top cannabis companies.
That company was none other than Little Green Pharma, a Perth-based vertically-integrated cannabis manufacturer founded by managing director Fleta Solomon in 2016.
LGP landed on the ASX following an oversubscribed initial public offering (IPO) of $10 million with investors in tow intrigued by the potential of its oil-based medicinal cannabis products.
The newcomer quickly made its mark after announcing a major UK distribution deal on the same day that it listed; a breakthrough for Australian-produced cannabis oils.
The significance of this deal is hard to understate considering the potential of the UK market; according to Prohibition Partners the UK industry is forecast to grow to £1.05 billion by 2024.
The first export of 1,000 units of LGP's products to the UK left Australia in June, and were distributed by Astral health, a UK-based specialist importer and subsidiary of the LYPHE Group.
With a newly constructed expansion of its cultivation facility the company is building the foundation to meet heightened demand for medicinal cannabis globally.
Completed in late March the newly expanded WA-based cultivation facility will have the capacity to manufacture more than 110,000 bottles of medicinal cannabis oil per annum, approximately 10 times the company's former production capacity.
With nine new flowering rooms, rolling benches, computer-timed LED lighting, climate control and irrigation control, the expanded cultivation facility is certainly state-of-the-art.
In the weeks following the IPO the newly-listed company continued to get runs on the board by bagging a three-year export deal with German cannabis giant Deutsche Medizinalcannabis GmbH.
LGP also received a vital Australian Manufacturing Licence giving the company the green light to produce its own cannabis extracts in-house, meaning LGP could boost capacity to meet both Australian and offshore demand for its oil-based cannabis products.
Another key regulatory milestone was reached in mid-May when the company received another new Manufacture Permit to allow LGP to manufacture cannabis extracts for supply to holders of Therapeutic Goods Administration GMP manufacturing licences to produce finished medicinal cannabis products.
Ultimately LGP says this latest achievement will reduce manufacturing costs and improve manufacturing efficiencies.
With a cash position of approximately $6 million, left over from the company's IPO, the company is poised to continue investing in its growth.
8. Incannex Healthcare (ASX: IHL)
Head office: Melbourne
Over the past year Incannex Healthcare has lifted its market capitalisation by close to $13 million, risen seven spots in the Top Cannabis Companies list, and has effectively become an entirely different company.
With Incannex moving full steam ahead into the cannabis space the company reported record sales in the June 2020 quarter, achieving cash sales receipts of $617,000.
"After sourcing a great range of medicinal cannabis manufacturers, we have been unrelenting in our efforts to grow cash sales of the Incannex range of products," says IHL CEO Joel Latham.
9. Botanix Pharmaceuticals (BOT)
Head offices: Perth
As the health community grapples with the challenges of antibiotic resistance, Botanix Pharmaceuticals has been recognised for its "front-line" approach to finding new ways for preventing bacterial infections after surgery.
While the world's attention was mostly focused on COVID-19 in late April, Botanix announced a breakthrough that was largely ignored by the share market.
Botanix's antibacterial platform product BTX 1801 became the first cannabinoid (CBD) program globally to receive Qualified Infectious Disease Product (QIDP) designation from the US Food and Drug Administration (FDA).
The QIDP program aims to incentivise the development of novel antibacterial or antifungal products, giving holders five years of regulatory exclusivity as well as a fast-tracked "priority review" towards FDA approval of a New Drug Application (NDA).
"Botanix is extremely proud to receive QIDP status from the FDA," Botanix president and executive chairman Vince Ippolito said at the time.
"This achievement is built on the back of solid pre-clinical research that demonstrates to the FDA that BTX 1801 has the potential to prevent post-surgical infections.
Australian Society for Antimicrobials president and Murdoch University chair of public health, Professor Geoffrey Coombs, speaks highly of Botanix's efforts.
"Better infection prevention measures are desperately needed in surgical settings to combat the growing global development of antibiotic resistance," Coombs said after the designation was given.
"Nasal decolonisation agents like BTX 1801 may represent a front-line approach towards reducing post-surgical infections, improving patient outcomes and overall reducing the economic burden on the healthcare system."
After travel restrictions in WA caused setbacks, the company expects to complete a Phase 2a clinical study in the September quarter to test the product's effects on staph and golden staph in the nose of healthy adults.
Arriving on the ASX in 2016 via a reverse takeover, Botanix has traditionally had a strong focus on CBD-based skincare solutions, particularly conditions such as acne, dermatitis, eczema and psoriasis.
But unfortunately in March the company announced a Phase 2 Study into the use of BTX 1204 on patients with moderate atopic dermatitis did not achieve its goals in terms of safety and efficacy, slashing the share price in half; an experience that may explain the lack of fanfare from investors at the FDA announcement a month later.
In August last year the company completed a $40 million capital raising to support its international ambitions, at the same time as announcing Richard Peterson as its new CFO and Howie McKibbin as COO. Both are based in the United States.
This raising added to around $4.7 million in cash or cash equivalents at the end of FY19, having fallen by around $12.6 million over the course of that year.
In contrast at the end of March 2020 the company had more than $30 million in cash, bolstered by that raising and a $7.6 million research and development (R&D) tax refund.
Expenditures on its various studies and initiatives ultimately deepened the company's FY20 first-half loss by 67 per cent to almost $7 million, but at the same time revenue rose 62 per cent to reach $7.66 million.
10. IDT Australia (IDT)
Head office: Melbourne
It has now been just over two years since IDT Australia drew upon four decades of pharmaceutical manufacturing experience to pivot towards the budding medicinal cannabis sector.
Through its partnership with Cann Group (ASX: CAN) and a leadership team stacked with former CSL Behring, Mayne Pharma and Hospira execs, IDT has carved out a special niche in a global industry that is increasingly demanding Good Manufacturing Practice (GMP) certification.
In December IDT conducted the first commercial-scale resin extraction from Australian-grown cultivars of cannabis, harvested by Cann Group which has distribution channels established at home and abroad.
Since then IDT has also successfully packaged cannabis oil and cannabis flowers in bottles, all to GMP standards as it seeks to put its Boronia facility in Melbourne on the map as a major producer of cannabis biomass active pharmaceutical ingredients (API).
IDT also aims to produce commercial quantities of finished dosage forms (FDF) of medicinal cannabis, converted to tinctures, liquids and solid oral doses in tablets and capsules.
Amidst all these milestones to lift IDT's technical clout, the group received another boost in late May when Cann Group announced it had executed two new export supply agreements with European and UK partners.
The products associated with those deals are to be manufactured by IDT Australia.
"Cann's newly executed export agreements are great news for IDT," the company's CEO Dr David Sparling said at the time.
"Expanded export channels allow us to scale-up our manufacturing and supply operations even further and the parties can leverage off IDT's experience exporting GMP pharmaceutical products to Europe and our dealings with the European regulators."
The company was already seeing "meaningful revenues" start to flow for its medicinal cannabis manufacturing activities in the first half of FY20, although the company still ran at a loss of $1.18 million.
At the end of last year IDT Australia had around $6.7 million in cash and cash equivalents as well as $2.7 million in undrawn commercial loan and overdraft facilities with National Australia Bank (ASX: NAB).
11. Medlab Clinical (MDC)
Head office: Sydney
In the medicinal cannabis industry some companies focus heavily on sales, others have more of a research bent, and then there's Medlab Clinical which does both.
Founded by Sean Hall after he sold his family's companies FIT-BioCeuticals and Hall Drug Technologies to nutraceuticals giant Blackmores (ASX: BKL) in 2012, Medlab recently chalked up record sales for its NanaBis mouth spray.
In the March quarter sales were up 217 per cent quarter-on-quarter, but the increased demand coupled with supply chain limitations from COVID-19 actually led Medlab to run out of stock in May. Backorders have since been fulfilled however.
In late April the group also pivoted to apply the delivery platform its sprays are based on to the anti-malarial drug chloroquine, whose properties have received some hype including from a world leader - as a COVID-19 treatment candidate.
Whether this side project will continue is yet to be seen given since then The Lancet and the New England Journal of Medicine have retracted the very studies that led to hopes around a novel use of chloroquine and hydroxychloroquine towards COVID-19 in the first place.
But where science has been more in MedLab's favour has been in a Phase 2 clinical trial at the Royal North Shore Hospital (RNSH) in Sydney, where NanaBis proved safe and efficacious for patients suffering pain from breast and prostate cancers.
According to an update at the end of April, since the completion of that trial the majority of patients have ethically continued on NanaBis, free of charge.
MedLab also has an Observational Study underway with hundreds of patients enrolled to review the impacts of NanaBis on their health over a 12 months period, and as of February it was developing protocols for a Phase 3 trial to be used in Australia and the USA.
The company, owned 26.9 per cent by Hall, is also making strides in its corporate partnerships.
At the end of January it executed a commercial agreement with Tasmanian Alkaloids (TasAlk) to take on production and analytical services, allowing for significantly ramped up manufacturing, increases in overall product quality and a stronger manufacturing compliance for TGA, FDA and EMA.
In early June Medlab announced its first three batches had been received from TasAlk; a milestone Hall described as "very exciting", with the partnership allowing for a drastic increase in production capacity over the short term.
Medlab then went on to announce its first UK order in late June for a new hybrid cannabinoid, Mg Optima Relax + CBD, manufactured for its UK partner Cultech Ltd as part of an exclusive distribution agreement.
"This is our first meaningful export for this trade agreement, and I see this as a start of great potential as we develop UK markets," Hall said at the time.
"This product (Mg Optima Relax + CBD) is not for Australia because of our laws relating to CBD use, but primed for other global legal markets.
"We would envisage a more global play regarding this product, as most Westerners are well versed in the benefits of magnesium, and hence its relatively easy to understand the synergistic benefits of combining Magnesium and CBD."
As at 31 March, Medlab had around $6.4 million in cash and cash equivalents, in addition to $1.675 million worth of unused financing facilities available.
12. MGC Pharmaceuticals (ASX: MXC)
Head office: Perth
Though it describes itself as "European based", MGC Pharmaceuticals' roots are more than enough to justify its inclusion in this list, with an Australian co-founder in Brett Mitchell, its financial headquarters in Perth and a sizeable contingent of Australian investors.
The approval would see MGC translate its research efforts into the effects of cannabis on viral infections to inflammatory complications in coronavirus-infected patients in a double-blind placebo controlled clinical trial.
However, MGC says its experience using natural active ingredients like phytocannabinoids create synergies with those used by Swiss PharmaCan,and could allow it to play an important role.
The scope of the study was recently expanded to Mahatma Gandhi Mission's Medical College & Hospital in India after the World Health Organisation cottoned onto the research work being done by MGC.
The success of this new line will be supported by the recent granting of an import licence from the Office of Drug Control (ODC) in Australia, enabling MGC to bulk import medicinal cannabis products for storage, distribution and sale across Australia.
13. Elixinol Global (EXL)
Head office: Sydney
What began as a US-Australian partnership to create a world-leading cannabis and hemp brand is in tatters for now, but restructuring efforts were enough to convince shareholders to raise $11 million in May for Elixinol's survival.
As last year's number one on this list, it would be an understatement to say Elixinol has had a rollercoaster year. It was more like The Giant Drop, losing 94 per cent of its value since July 2019.
By the end of March Elixinol only had $11 million in cash left, compared to a cash burn of $9 million while it was culling staff numbers to stay afloat.
It was a quarter marked by the shock announcement in February that Elixinol would be selling Hemp Foods Australia (HFA) - its partner in the 2018 IPO - to Chinese company Shanghai Shunho New Materials Technology Co for $500,000.
The decision to exit HFA was part of a strategy to make Elixinol a pure-play hemp-derived canibidiol (CBD) company with a more focused branding model, but it came with a hefty impairment tag of $12.5 million.
The announcement coincided with the decision to discontinue subsidiary Nunyara, which had scrapped plans to apply for an Australian medicinal cannabis licence.
This led to a further impairment charge of $4.8 million. At the time of writing negotiations for the sale are ongoing, and Elixinol has also sold its majority stake in a Japanese subsidiary for around $200,000.
Rubbing salt in Elixinol's wounds, the HFA deal fell through in late May when Shunho claimed a condition of the share purchase agreement (SPA) wasn't met due to COVID-19 impacts.
Oliver Horn - the company's third CEO in the space of a year - was still optimistic despite the transaction's breakdown, emphasising HFA's The Essential Hemp and Grounded food brands still enjoyed strong brand recognition.
"HFA's hemp based and cruelty free Sativa skincare range also offers opportunities to meet consumers' growing need for more natural personal care products," said Horn, a former CEO of Swisse Wellness who was appointed from non-executive director to the Elixinol top job in April.
"In light of the termination of the SPA, we will continue to run the HFA business pending an evaluation of all potential opportunities available with the business."
Horn replaced Stratos Karousos, who had only taken over the CEO position from co-founder Paul Benhaim last July after the latter made the shift to become chief innovation officer.
The co-founder also became chairman in April after Andrew Duff resigned from the board. Benhaim owns a 28 per cent stake in Elixinol, although this has been diluted from the 39.6 per cent he held at the start of the year.
Alongside Horn, Benhaim has spearheaded a brand relaunch of Elixinol's products supported by a new digital and e-commerce strategy under the moniker "Kind of Amazing".
"We've secured wide reaching distribution agreements due to our global reputation for high quality broad spectrum CBD products and 20 years of experience in the hemp industry," Horn said in an update on 5 May.
"We are optimistic about our business outlook despite the current US CBD category and COVID-19 challenges.
"Our vision is to build the most innovative nutraceutical CBD brand in the world that does good for the planet and its people."
Benhaim can take solace in knowing Elixinol is still a leader in the UK and Europe, a growth market where it has a strong position in hemp-derived CBD nutraceuticals. But structural challenges remain in the US Elixinol LLC itself hails from Colorado where a slower than expected regulatory progress prevails, leading to an "under-regulated, oversupplied and highly competitive market".
"Our company has gone through a significant period of change following the events of 2019," he said.
"During this time the company, myself included, have given much consideration to how we can learn from the actions of the past, and we have strengthened the systems, protocols and personnel in place to ensure the company has and maintains a strong focus on both compliance and commercial opportunities."
14. Bod Australia (BDA)
Head office: Sydney
From a tie-up with Swisse Wellness to a spike in prescriptions of its CBD-based MediCabilis medicine for patients suffering from chronic pain, Bod Australia is on the move.
It has now been almost a year since Swisse's parent company H&H Group took out a minority investment in Bod for $7 million, identifying it as "leading the way with clinical trials and innovation programs".
This partnership allowed Bod Australia's hemp-based wellness products access to 2,000 Australian stores as of March, including Chemist Warehouse, Coles and Priceline Pharmacy; all branded with the Swiss logo.
"Swisse's Hemp product roll out is a strategic move for the brand as we focus on offering innovative wellness solutions that respond to consumer shifts and growing demand," Swisse managing director Nick Mann said at the time.
"We are preparing our business for the legalisation of CBD in Australia, so we can take advantage of the market with product innovation in partnership with Bod."
In the financial year to 20 May almost 3,500 prescriptions were filled for MediCabilis, including Bod's first prescriptions in the UK Bod's "springboard into Europe" according to CEO Jo Patterson, who highlights "rigorous patient and physician education initiatives" to help scale the business.
More than half of Bod's MediCabilis volume are repeat prescriptions, and a few months ago the group also introduced two new CBD isolates. The churn rate amongst patients is low at around a quarter, with 74 per cent of prescriptions used to treat chronic pain, epilepsy, and stress and anxiety disorders.
Between its hemp and CBD divisions, in FY20 revenue reached $5.92 million of which a massive 42 per cent was received in the fourth quarter alone.
"This is an exceptional result for Bod. In the last year, we have invested considerably in building our two core divisions and this hard work is now paying off. Revenue growth from the last two quarters clearly reflects this," Patterson said on 2 July.
"Demand for our innovative products is now translating into sustainable revenue streams and we are confident that this will only increase as we generate more sales from existing products, introduce new products and enter new markets."
The company is also one of a small group of medicinal cannabis players participating in Project Twenty21 in the UK, designed to create the largest body of evidence for the efficacy of medicinal cannabis.
The project aims to have 20,000 patients enrolled by the end of 2021, and Bod Australia expects at least 1,000 of them will be prescribed MediCabilis. On 24 June, another Aussie cannabis company Althea entered a Memorandum of Understanding (MoU) for the project through subsidiary MyAccess Clinics.
15. MMJ Phytotech (ASX: MMJ)
Head office: Sydney
The cannabis sector is a fairly speculative industry for investors, with plenty of highs and lows.
But with its broad globally positioned portfolio MMJ Phytotech offers investors the opportunity to diversify their exposure to a wide world of cannabis.
The company, established in early-2015, has built up a steady portfolio of cannabis-focused investments, totalling $47 million at 31 May 2020.
While the majority of its investments are in Canada-based companies, there is some exposure to growing Australian entities.
These include Martha Jane Medical, a NSW-based medicinal cannabis company with a broad approach to the industry. The company researches, grows, distributes, and develops cannabis products with a direct focus on the Australian sector.
The other Australian-related investment for MMJ is in MediPharm Labs. Technically a Canadian company, MediPharm operates a 900sqm cannabis extraction facility in Victoria that services the Australian domestic medicinal cannabis market.
Capital is allocated across a broad spectrum of cannabis industry activities, from cultivation and extraction to product development, manufacturing, retail and patient access programs.
16. Eve Investments (EVE)
Head office: Melbourne
There has been a buzz around Eve Investments as its tea tree oil and honey shipments take off, but the waiting game continues for its development of CBD-infused honey.
It has now been almost two years since EVE announced it was leasing 15 acres of organic farmland in northern NSW to THC Global (ASX: THC) to cultivate medicinal cannabis, and just over a year since the grower committed to extending the lease to more than 37 acres.
The deal includes an off-take agreement for EVE to be given exclusive access to THC Global's medicinal cannabis for development by subsidiary Meluka Honey on novel cannabis-blended products.
But for planting to begin THC Global needs to be granted a licence to grow on the property.
In September 2019 EVE said the relevant licence applications were expected to be received that year, but at the time of writing approval still has not been granted and the latest indication is that the licence is expected in 2020.
"From an EVE perspective we are reliant on THC to gaining their licence and commencing production before we can develop our CBD-infused honey range," EVE Investments managing director Bill Fry told Business News Australia.
The partnership also gives EVE access to THC's significant botanicals extraction capabilities, which will be beneficial for product development.
To put the group's operations in context, THC's proposed usage of its land still only constitutes around 1.7 per cent of EVE Investments subsidiary Jenbrook's 2,000-plus acres of tea tree plantations in northern NSW.
17. Rhinomed (RNO)
Head office: Sydney
Sales of Rhinomed's nasal respiratory products 'Mute' and 'Pronto' have been gathering pace in the USA, but COVID-19 has delayed market entry for its CBD-infused sprays.
Since signing a 12-year licensing agreement in October 2018 with Columbia Care LLC, the largest medicinal cannabis provider in the US, Rhinomed has been working towards the marriage of its patented systems with the growing industry.
Data from US-based drug store retailers places Rhinomed's Mute technology in third place for the nasal strip category, so the company has strong market-backed fundamentals in place to incorporate CBD in its platform to target sleep apnoea and other sleep-related conditions.
Rhinomed has licensed the platform to deliver a 'drug' in this case medicinal cannabis formulations and CBD.
The design and formulation work has been completed and device production was underway earlier this year, leading to expectations in March that the first order would be delivered to Columbia Care in late April.
However, the virus outbreak has put those plans on hold for now.
"Due to the impact of the COVID-19 pandemic the company has agreed with Columbia Care to temporarily halt production of the nasal device," the company said in its quarterly results on 27 April.
"This allows Rhinomed to prioritise production of its core Mute, Pronto Sleep and Pronto Clear product, to ensure continuity of supply and to meet increasing demand from global customers.
"We expect to be able to update investors on the resumption and progress of this [medicinal cannabis] program during FY20Q4."
That update did not eventuate in FY20, but when asked whether the deal was dead, CEO Michael Johnson told Business News Australia it was not.
In the company's annual report in October last year, chairman Ron Dewherst outlined a 12 to 24-month roll-out of products with Columbia Care, directed at sleep, decongestion, anxiety and other conditions, along the same lines as Rhinomed's natural essential oil Pronto range.
"Most important, the validation of our ability to effectively deliver medical cannabis, via a reliable dosing system and in a safe manner, is a pathway for us to explore and address the delivery of other drugs nasally," Dewherst said.
18. Cann Global (ASX: CGB)
Head office: Sydney
In August 2019 Cann Global made its return to the ASX after a whole year of absence, during which the cannabis company realigned its business away from bauxite mining towards a complete focus on pharmaceuticals.
The company's share price has not yet recovered and sits at an all-time low of $0.005 per share at the time of writing.
Newton John claims the formulations helped her in three main areas: pain relief, increased mobility, and increased healthy blood count numbers.
Shareholders were similarly impressed by Cann Global's announcement that it had struck up a deal with big-box retailer Costco.
The company identified booming opportunities in Vietnam and signed an exclusive distribution contract with EPCO Foods in September 2019, but its jump into Laos was derailed by COVID-19 border closures.
Operations in Laos were facilitated by Cann's subsidiary Cann Global Asia (CGA), and saw CGA sign a deed of arrangement with Sun Agriculture Promotion Industry and Commercial Co (SUN) to use its hemp licences to cultivate and process hemp in Laos.
The South African project has been established as a joint venture with partner Koegas Medicinal Herbs.
However, because of South Africa's strict COVID-19 restrictions, CEO Sholom Feldman told Buisness News Australia that the company is putting the project into a "temporary holding pattern" until the country and its economy can begin to reopen.
19. CannPal Animal Therapeutics (CP1)
Head office: Sydney
Patience is a virtue for the Young Entrepreneur Award-winning founder of CannPal Animal Therapeutics Layton Mills.
Years of research and development coalesced into a commercialisation agreement with the Commonwealth Scientific and Industrial Research Organisation (CSIRO) in January this year.
Securing the agreement, which gives CannPal the exclusive global rights to commercialise the patented MicroMAC microencapsulation technology for use in the field of animal therapeutics, followed an 18 month-long trial.
The trial demonstrated that CannPal could successfully encapsulate its oil formulations, enabling the company to add hemp and cannabis oils to a wide range of product applications for animals.
The agreement was a boon for investors at the time, with the share price in CannPal skyrocketing by 73.91 per cent to $0.20 per share on 6 January 2020.
"We are starting with a small-scale commercial evaluation with the new product format to get some feedback from consumers," says Mills, who was named Australia's number 64 Top Young Entrepreneur in 2019.
"Pending that goes well we can make some decisions to move forward. We are very mindful on conserving capital to make sure we hit milestones that we previously communicated to the market."
The CSIRO deal has the potential to turn CannPal into a money-making company; research is costly, and meant the company posted a comprehensive loss for FY19 of $2 million.
At the end of Q4 FY2020 the company had a cash balance of $2.42 million, with operating outflows totalling $594,000.
In its half yearly report the company announced it was bringing in $696,000, up 99 per cent on the prior corresponding period, but was still generating a loss of $513,000.
Further green shoots are showing in the United States where the Food and Drug Administration, Centre for Veterinary Medicine (FDA-CVM) Office of New Animal Drug Evaluation (ONADE) has established an Investigational New Animal Drug (INAD) file for CannPal's cannabinoid-derived drug candidate CPAT-01.
Essentially, this was the first step for CannPal in having its drug approved for use in the US market.
"The establishment of our INAD file is a significant regulatory milestone for CannPal, and an important step on the pathway to the potential authorization of an animal health drug," says Mills.
"We have made significant progress on the development of CAPT-01, and are excited to be able to discuss the regulatory pathway with the FDA-CVM at the upcoming Pre-Submission Conference."
These efforts have now culminated in another breakthrough. Mills recently announced on his LinkedIn page that the company's max chews are available exclusively on Amazon to US residents.
CannPal founder and managing director Layton Mills
20. Avecho Biotech (ASX: AVE)
Head office: Melbourne
Avecho Biotech, formerly known as Phosphagenics, has a long history of working in the biotechnology space developing its own proprietary drug delivery platform.
Called TPM, the delivery platform is based on tocopheryl phosphate, an enhanced form of Vitamin E, and took 15 years to develop.
The company's delivery platform has generated a reputation in the biotech scene for its proven ability to enhance the oral, dermal, and transdermal absorption of drugs and nutrients, as well as their solubility.
However, it wasn't until April this year that the company began to be considered as a player in the Australian medicinal cannabis game.
Within the space of two weeks the company signed two key agreements with medicinal cannabis companies to see how TPM could work with cannabinoid-based drugs.
The first agreement was with US-based cannabis resources company Purisys to receive supply of pharmaceutical grade cannabidiol and dronabinol.
Avecho said it decided to move into this space following corroborating experiments conducted by Purisys, demonstrating that TPM can increase the solubility of cannabinoids. As such, Avecho commenced development of new oral products using Purisys' cannabinoids.
Soon after, Aevcho penned an agreement with Tasmanian Alkaloids (TasAlk) for the supply of natural medicinal cannabis products, with the ultimate goal of investigating how TPM may increase the oral absorption of natural cannabinoids from medicinal cannabinoid products.
"As the use of natural cannabis extracts expand, the lack of differentiation between products is already becoming apparent," Avecho executive chairman Greg Collier said when the TasAlk agreement was announced.
"Avecho's TPM may offer a unique solution, with the potential for patent protection, for companies striving to better differentiate their own medicinal cannabis product in this already "busy" marketplace."
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Business News Australia
Author: Matt Ogg and David Simmons