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Why the MGC Pharmaceuticals Ltd share price rocketed 21% today

The market may have sunk lower today, but that hasn’t stopped the MGC Pharmaceuticals Ltd (ASX: MXC) share price from rocketing higher.

At the time of writing the pot stock is up a whopping 21% to 5.2 cents.

Why did it rocket?

Last Thursday the medicinal cannabis company placed its shares in a trading halt pending an announcement relating to its European operations.

This morning that announcement was finally made and revealed that MGC has signed an agreement with the Biotechnical Faculty of the University of Ljubljana in Slovenia to begin a three-year comprehensive botanical research program.

In order to facilitate the research program, the Slovenian Ministry of Health has granted the Biotechnical Faculty a full medical cannabis license which allows it to grow and conduct botanical research with MGC for all strains of CBD and THC medical cannabis.

Ultimately the two parties aim to develop medicinal cannabis strains tailored for specific medical indications which include epilepsy, chronic pain, and the side effects of oncology.

Management believes the program will create critical new genetic intellectual property, giving it a strong competitive advantage for future production operations.

Should you invest?

As well as MGC, Auscann Group Holdings Ltd (ASX: AC8) is also in the process of developing products to treat epilepsy and chronic pain.

At this stage it is near impossible to know which company will come out with the winning product or whether the product will then be accepted by enough prescribing physicians to generate sufficient sales to make it a viable business.

Whilst this is promising news and the Biotechnical Faculty of the University of Ljubljana is led by a talented team, I feel it is still too early for an investment.

In the meantime I would suggest investors look at these fast-growing shares instead. They may not be as exciting as pot stocks, but in the long-term they could provide just as strong returns in my opinion.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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