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Here’s why this ASX cannabis share is moving higher today

The Auscann Group Holdings Ltd (ASX: AC8) share price is trading higher this morning after the medicinal cannabis company announced the appointment of a distributor for its products in Australia. 

New distribution agreement 

AusCann has entered into an exclusive distribution agreement with Clifford Hallam Healthcare (CH2) to store and distribute AusCann’s pharmaceutical products in Australia, effective immediately. AusCann has consolidated its warehousing and logistics operations under the agreement, which is cost effective and extends its distribution network in Australia. 

The agreement with CH2 replaces the Heads of Agreement signed in January 2018 with Australian Pharmaceutical Industries Ltd (ASX: API). The Heads of Agreement was discharged by mutual agreement between AusCann and Australian Pharmaceutical Industries to enable both parties to engage with additional commercial partners in the field of cannabinoid based medicines. 

Under the agreement with CH2, products will be supplied to pharmacies by CH2 for AusCann in compliance with regulations governing the supply of an unregistered medicine. The agreement has a term of 12 months with an option to extend. 

Steps towards supply of AusCann capsules 

The agreement with CH2 marks another step on AusCann’s path towards making its hard-shell capsules available for clinical evaluation and prescription to patients in the first half of 2020. 

Earlier this month, AusCann announced the release of its low-dose cannabinoid capsules. The medical marijuana company told the market that it had completed the manufacturing, testing and release of low-dose cannabinoid-based capsules in a commercial batch. This followed the successful manufacture, testing and release of a commercial batch of cannabinoid-based capsules in December. 

The release of both types of capsule confirms AusCann’s ability to customise cannabinoid dosing, allowing for individualised patient treatment. The capsules provide a medical solution that offers regulated doses in conformance with pharmaceutical quality and regulatory requirements. 

Reliable, stable, and standardised medicines are critical to generating quality clinical evidence for cannabinoid-based medicines. This evidence is a prerequisite to market expansion and broader medical acceptance by healthcare professionals. 

Controlled dose formulations

The Therapeutic Goods Administration’s guidance suggests that the general principle for medicinal cannabis dosing should be “start low, go slow”. Medical marijuana providers therefore need to provide doctors and their patients with controlled dose formulations in different doses to allow for personalised treatment. 

AusCann intends to make its capsules commercially available for prescription to patients in Australia through the Therapeutic Goods Administration’s special access scheme and authorised prescriber scheme. 

AusCann CEO Ido Kanyon said, “Our ability to customise dosing in an accurate and scalable way will enable doctors to personalise dosing. Providing true to label customised dosing and enabling customisable treatment of the patient is what differentiates our product in the market.”

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Motley Fool contributor Kate O'Brien has no position in any of the 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 Scott Phillips.

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Kate O'Brien