STENOCARE has seen double digit price rises across both the Copenhagen NASDAQ and the Frankfurt Stock Exchange, jumping 17.5% and 10% respectively over the past week.
This recent uptick follows three months of consistent share price declines for the Danish medical cannabis oil producer, an experience shared amongst the majority of its European peers.
While this ongoing downturn in European cannabis stocks has forced many cannabis companies into near dormancy, Stenocare plans to ramp up its momentum of growth even further.
Its CEO Thomas Skovlund Schnegelsberg told BusinessCann: “The way that we look at it now is the opportunity. Competition is struggling, all of the North American companies are scaling down or even exiting. So that leaves a great spot for a company like Stenocare.
“We are building momentum here and we certainly don’t want to lose that. You’ll probably see us become even more aggressive in our ambitions.”
A Busy 2022
This momentum has been building since the start of 2022, when it announced to investors that it had received approval from The Danish Medicines Agency to sell its THC oil across Denmark as part of a pilot programme.
The news saw Stenocare’s stock jump to heights not seen for nearly a year in January 2022, as not only would it become the sole supplier of medical cannabis oil products in the country, but it would once again be able to generate revenue in its home market following a two-and-a-half year hiatus.
In 2019, Stenocare had three separate medical cannabis oils on the market in Denmark, but made the decision to remove these from sale after its Canadian supplier CannTrust’s licence to produce and sell medical cannabis was revoked by Health Canada.
Though Mr Schnegelsberg said he found ‘no quality issues’ with the batches received from CannTrust, he ‘decided we could not justify importing the product’.
“Basically if you cannot comply with the regulatory requirements in your home market, we don’t want to risk patient safety in our market. So we stopped that relationship and pulled out the products.”
By the time these products were pulled from the market in late 2019, Stenocare was reportedly generating revenues of 4.5m DKK (£500,000), a sizable chunk of the total 30m DKK in medical cannabis product sales between 2018 and 2020.
“I think most people, both our investors, our shareholders, and our competitors probably would have expected a lot of other products to have been approved in those two and a half years.”
According to Mr Schnegelsberg, this unexpected delay in returning to native revenue generation, is due largely to a significant shift towards pharmaceutical quality standards from the Danish regulators.
“The requirements the standardisations have has been much stricter this time around. I would imagine that the volume of documentation and lab tests and so on has probably multiplied by a factor of five. Stuff we didn’t even consider in the application two or three years ago has become critical.”
In May this year, Stenocare announced that it had delivered its first batch of THC oil to the Danish market, which Mr Schnehelsberg says is a ‘big deal for Stenocare, we are the guys that brought it to market’ in the first place.
He added that he believes Stenocare ‘can fairly easily recreate’ the sales run rate it achieved with its three oils back in 2019.
“At the end of this calendar year, we expect to have a quarterly run rate which would be equal to where we left off.”
The Danish Market
The oils are being sold in Denmark as part of a pilot programme, which was extended in May 2021 for another four years, in which time the company expects sales to ‘expand quite significantly,’ with another two products currently undergoing approval.
“The expectations that we have and the way that the politicians have been talking about this trial programme, it’s not that they don’t think it’s going to continue after 2025. I think what they’re trying to learn from the pilot is what kind of legislation is needed? What is the scope? How should it be managed?”
Mr Schnegelsberg explained that he believes the Danish Health Minister extended the programme ‘to help better set the framework for permanent legalisation’.
Despite driving the two-and-a-half year delay in getting products to market, he also believes that the country’s stringent regulatory scrutiny ‘feeds back into the supply value chain’, not only forcing partners to meet these standards but ensuring a smooth transition into new territories.
“We can piggyback on all the lessons that we’ve learned in Denmark. And I think the Danish authorities are probably some of the strictest that we have in Europe. So if you can successfully complete a process here in Denmark, that sets a very high bar.”
One such new territory is the UK, where Stenocare launched three of its oil products in February this year, including the same product recently approved in Denmark.
While this is the largest medical cannabis market Stenocare currently operates in, Mr Schnegelsberg said: “Even though the market has been legalised for a number of years, I would probably not exaggerate when I say people are a bit disappointed by the actual number of patients in the market.”
He believes this is due to two reasons, the concentration of medical cannabis dispensaries in Greater London, leaving many outside the capital struggling to gain access, and price.
“In the UK, at the end of the value chain, there’s a lot of margins put on top of products, making it fairly expensive for patients to actually pay for both the consulting fee, prescription fee, and the actual product.
Stenocare now reportedly aims to ‘address affordability and accessibility’ issues by launching an online dispensary in the country.
This dispensary, which the company is hoping to launch later this summer depending on certification, will begin in Greater London, then ‘move into areas where there is less coverage and start off work training doctors’.
“We’ll be working with local partners and cannabis experts, we don’t come in and pretend to be experts on the UK market dynamics.
“Hopefully we can keep the cost and therefore affordability to a more reasonable level, because that’s what we’ve done in Denmark and that’s what we’ve done in Sweden. So we would like to also do that for the UK patients.”
Beyond the UK, Stenocare plans to break into at least one other European market by the end of the year ‘to meet (its) own target’, adding that it currently ‘qualifies’ to enter two or three.
“I would be very dissatisfied if we don’t at least have one more country to talk about by the end of this year,” Mr Schnegelsberg concluded.