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ASX cannabis shares stage a comeback after the March bear market

ASX cannabis shares are staging a comeback after the depths of the March bear market. Auscann Group Holdings Ltd (ASX: AC8) shares are up over 15% this morning, and 57% from March lows. AusCann has now commenced clinical evaluation of its products.

Cann Group Ltd (ASX: CAN) shares have also recovered from March lows, up 50%, as the company brings its first products to market. 

AusCann commences clinical evaluation

This morning, AusCann announced the commencement of its first clinical evaluation. The phase 1 study will evaluate the pharmacokinetics of 2 formulations of an orally administered THC/CBD combination. Volunteers have been recruited, with 1 group to receive a 2.5mg dose and the second a 10mg dose. Dosing of the first subjects has been completed.

The study will provide information to inform dose selection and assist medical professionals in prescribing AusCann’s hard shell capsules. AusCann CEO Ido Kenyon said, “we are very excited to be progressing this important study to provide evidence-based information to medical professionals about our unique hard shell capsule.”

The study is expected to be completed this calendar year. It is the first of many studies planned by AusCann to better understand and prove the benefits of using controlled dose medicinal cannabis. 

Cann Group products ready for commercial release

Cann Group announced the first of its product formulations, dried cannabis flower and cannabis oil from Australian grown cannabis, was ready for distribution at the start of the month.

The company revised its strategy in January in response to demand-supply disruptions in the global medicinal cannabis market. The revised strategy focuses on initially meeting Australian demand as export markets continue to be developed. The Group has also reduced operating expenses including a reduction in headcount of 25% and elimination or deferment of $7 million in annualised costs. 

Cann Group is continuing to progress funding options for its Mildura facility. The company plans to proceed with the first stage of the facility which will have an annual capacity of 25,000kg of dried flower. The Board has advised that market volatility relating to COVID-19 impacts may delay a decision on funding until the end of the financial year. 

Cann Group believes it has sufficient working capital to support operations through the remainder of the financial year. It issued $8 million in convertible notes in February to provide working capital. The immediate priority remains securing funding for the Mildura facility. In the meantime, however, Cann Group is seeking to progress potential supply agreements with third parties in Australia and overseas. 

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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