We wouldn’t say it’s gone to pot, but the ASX-listed cannabis sector is facing a reality check as investors realise the medical marijuana aspirants need more than a “grow it and they will come” strategy.
Yes, medical dope is now legal here — as it is in most other key jurisdictions — but access is strictly controlled. While there’s a broad acceptance that cannabis is useful for indications such as epilepsy and cancer pain, there’s a dearth of formal clinical evidence and some doctors need to be convinced.
Rather than going through the bureaucratic hoops, many patients will continue to self medicate illegally, with less than desirable therapeutic outcomes.
The charts of most of the dope stocks show a sharp retraction from their “highs” attained between last November and January, although most are still well up on their levels of a year ago.
Reflecting the difficulty of the medical caper, the trailblazing MMJ (MMJ, 25.5c) is now focused on the recreational Canadian cannabis market via its minority-owned Harvest One. 1-Page (1PG, 16c) has also smelt the skanky breeze of change. The cashed-up shell of a failed recruitment house, 1-Page is to abandon the ASX in favour of a European domicile after buying a dope company there.
One stock that has found favour is the natural supplements outfit BOD Australia (BDA, 51c), which is pursuing a strategy of developing over-the-counter products as well as a dissolvable wafer to deliver medical cannabis products.
BOD executive chairman George Livery says that despite the awareness of the benefits of cannabis components — hemp oil is a source of desirable omega-3 and omega-6 acids — wellness groups such as Swisse and Blackmores have refused to inhale.
Livery should know: until recently he was Swisse’s strategy and corporate director.
“I guess it’s the stigma attached to the word cannabis,” he says. “They just don’t have their eyes on what’s happening in the space.”
BOD already had a range of skincare products on market and found market favour only after announcing its cannabis foray with Swiss group Linnea and Singapore’s iX Biopharma.
Describing its products and research as “evidence based”, BOD has started an early stage trial of a sublingual wafer to deliver cannabis derivatives to the bloodstream more efficiently.
BOD chief and 10 per cent shareholder Jo Patterson says BOD has a “clear point of difference” to the crowded sector.
“We started business with a vision of bringing natural medicines to the market,’’ Patterson says.
“A pharma drug is a singular molecule solution while natural medicines are complex molecules working in harmony.”
BOD has exclusive rights to the wafer, developed by iX Biopharma, which could be applied to any number of cannabis therapeutics.
The local Therapeutic Goods Administration last month gave permission for an early stage clinical trial, to test how much of the active substances get into the bloodstream compared to the standard injected delivery.
“Our hypothesis is water will slow efficient absorption of the drug into the blood stream,” Patterson says. “Intravenous delivery is the gold standard but what else can we deliver more efficiently into the blood stream. We want to avoid the organs breaking it down.”
Meanwhile, BOD continues to chalk up modest revenues from its range, which includes pregnancy supplement MamaCare, Bright Brains (anti-dozing), SediStress (irritable bowel syndrome) and the Uber Secrets (an alternative to Botox, not a certain ride share operator’s surge pricing formula).
The deals with API and Symbion cover two-thirds of the country’s chemists, or about 3500 outlets.
In conjunction with Manuka Pharma, BOD also hopes to market a hemp honey replete with the antibacterial agent methylglyoxal.
BOD shares have also been helped along by the $800 million — but now messy — takeover offer for skincare rival BWX (BWX, $5.57). BWX owns the Sukin and Trilogy brands and BOD sells a range called Pommade Divine and has the local rights to Dr Roebucks.
“The move showed the market value of these businesses and we got a little bit of a rub-off effect,” Patterson says.
BOD remains valued at $23m. MGC Pharmaceuticals (MXC) 5.5c
Our second-oldest listed “pot stock”, MGC is also in the cosmetics game. Posh British department store Harvey Nichols now stocks 18 of its cannabis-based skin care products, for $50 to $100 a pop.
MGC chairman Brent Mitchell says the company saw the success The Body Shop was having with its hemp-based products.
