Germany’s new legalisation strategy hits stocks
Last week’s announcement from the German Health Minister Dr Karl Lauterbach has seen the stock in a number of companies with significant operations in Germany take a hit.
As reported by Business of Cannabis, the reaction from the German cannabis business community has been lukewarm.
Firstly, the announcement was another ‘Eckpunkte’ or white paper, seeing no meaningful draft legislation published on which businesses could plan, and providing yet more uncertainty for investors.
Secondly, and more importantly, Germany’s new path leaves little if any room for the swathe of businesses that have been investing in the region in the hopes of being first movers in the upcoming recreational market.
German-listed medical cannabis operator Cannovum has seen its stock drop by 36% on the Dusseldorf Stock Exchange (DSE) since April 12, when the new plans were announced.
Similarly, DSE-listed Synbiotic, which has stated its ambition on its website to become the ‘biggest beneficiary’ of the recreational opportunity, has also seen its stock price drop by 27% since the announcement.
International operators such as Aurora and Tilray, which both have a significant foothold in the German medical cannabis market and were frontrunners to potentially capitalise on the adult-use market, were not immediately impacted by the news.
However, the wider ramifications of the announcement are yet to be felt, and some industry stakeholders believe the decriminalisation of cannabis through social clubs could in fact lead to a boon for the medical market, thanks to a reduction of stigmatisation.
Ananda
The Aquis Stock Exchange-listed company managed to retain its stock price gains from last week, which saw its stock rise 60% to levels not seen since June 2022.
The uptick came as the company announced that its recently acquired subsidiary MRX Global has two medical cannabis oil formulations ready for launch, and has reached an agreement in principle with two UK medical cannabis clinics to begin offering one of them as a prescription.
This means that Ananda now expects the commercial launch of its MRX1 CBD oil to take place in June this year, with a website due to be launched before this date.
Furthermore, Ananda says its MRX1 compound is currently being prepared for stability trials ahead of the commencement of two Phase II clinical trials in the UK with £1.55 million of grant funding.
The trials are thought to be the first two cannabis randomised control trials (RCTs) in the UK since GW Pharmaceuticals’ trials for Epidyolex and Sativex, and Ananda says it is ‘very hopeful’ that its product could soon be funded for prescription on the NHS.
Elsewhere, the company’s cultivation arm also achieved what it described as a ‘significant step forward’, as its in-house-developed second-generation seeds were successfully germinated.
Ananda said it believes this is the ‘first time that a “selfed” (when the plant breeds with itself) cannabis seed has been successfully germinated’, enabling the company to ‘significantly accelerate’ progress to the sixth-generation seeds.
Ananda’s CEO Melissa Sturgess said: “We have always maintained that building our business carefully will reap dividends.
“It is no coincidence that we are now in a position to launch medical cannabis oils and getting close to constructing our medical cannabis flower processing facility, at the same time as Prohibition Partners, one of the leading industry commentators, predicts that the UK will become the second largest medical cannabis market in Europe this year.”
Futura Medical
The pharmaceutical company has seen its shares jump nearly 20% this week following the launch of its flagship MED3000 product in the UK.
MED3000, sold in the UK as Eroxon, is a erectile dysfunction treatment and is now available to purchase in high-street retailer Boots, online and in stores, across the UK without a prescription.
The formulation uses Futura’s proprietary DermaSys skin delivery method, which is also being developed by the company to deliver CBD through the skin, which the company calls a ‘uniquely stable cannabidiol formulation, effective penetration for enhanced therapeutic benefits with fast, effective and long-lasting action.’
The product’s launch has received generous media coverage across a number of the UK’s national publications, and represents the company’s transition into revenue generation.
Eroxon’s launch came just days after Futura released its full-year results for December 2022, in which it reported a net loss of £5.85m, up from £4.96m in 2021.
Research and development costs over the period were attributed to £4.13m of these losses, up from £3.77m a year earlier, which reflected the ‘continuing manufacturing scale-up activities ahead of anticipated Eroxon launches’.
As of the end of 2022, Futura reported a cash balance of £4.03m, with cash burn for the year totalling £6.34m, again largely attributed to R&D, including its FDA clinical studies.
While the company says the launch of Eroxon in the UK is a ‘significant milestone’, it remains focused on achieving FDA approval for its product in order to access the US market.
“Achieving FDA approval remains a critical focus, as it will significantly de-risk MED3000 and optimise the negotiating position as discussions regarding US commercialisation rights progress,” it said in its recent results.
In an interview with Proactive Investors, the company’s CEO James Barder said he was confident of receiving FDA approval this quarter, and that revenues were ‘now rapidly coming over the horizon’.
